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Crowdfunding’s other benefit for designers: testing the market

The Stact wine rack on Graham Williams' wall more than quintupled its $20,000 crowdfunding goal in 2012.

Jeff Vinnick/The Globe and Mail

'I'm a little bit addicted to Kickstarter," Graham Williams admits after listing the dozens of products he has sponsored through the enormously popular crowdfunding website.

The Stact wine rack on his wall more than quintupled its $20,000 crowdfunding goal in 2012. On his kitchen counter, a newly arrived vegan cheese-making kit sits next to a reusable-filter coffee pot and digital brewing scale, all of which obliterated their targets. Williams is also among the 4,000-plus backers of Bookniture, a coffee-table book that, in Cosmo Kramer fashion, folds out into a stool, a foot rest and yes, even a base for a coffee table.

"I've got at least $1,000 tied up in campaigns that haven't even shipped yet," he adds. "I love it when cool products show up on my doorstep. Suddenly, they're real and I get to incorporate them into my life."

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Williams's Vancouver condo is a showroom, of sorts, for the power of crowdfunded design. As the multibillion-dollar crowdfunding industry outgrows its roots in digital media, philanthropy and gadgetry, it is throwing a hugely significant spanner into the workings of mainstream product development and marketing.

The process allows professional designers to deal directly with consumers, which they are doing in droves. Of the 15 project categories on the Kickstarter home page, "Design" is the fourth most prolific, outstripping even video games. Back a wooden toy-train set, barbecue-skewer rack or brick-shaped LED lamp and it will be yours – so long as it reaches its funding goal and surmounts the well-documented challenges of getting prototypes to market.

Kickstarter and its chief rival, Indiegogo, have also partnered with dozens of design-oriented organizations, such as Toronto's OCAD University and New York's Pratt Institute, to curate the projects of students, staff and alumni.

Since its launch in the fall of 2013, the OCAD-Indiegogo partnership has fostered eight projects, including a minimalist snow shovel and folding electric bicycle, that together have garnered more than $250,000.

While crowdfunding is still a relatively new form of financing, it is "absolutely on the list" of startup options for OCAD's entrepreneurial community, says Katherine Roos, executive director of the university's Imagination Catalyst business-incubator unit.

After all, it addresses a timeless design challenge: "Designers have always understood that they need feedback from prospective customers as early as possible in the prototype development process, and crowdfunding provides that," Roos says. "Instead of trying to get someone to write you a huge cheque, you're reaching out to the community and engaging with them. This is fundamental design thinking. It permeates design schools, but hasn't permeated business schools yet."

This push for independence from deep-pocketed backers has even produced an Amsterdam-based crowdfunding website, called Crowdy House, dedicated to high design. But Crowdy House campaigns don't seek funding. Rather, a prototype lamp or wall sconce solicits advance orders that eventually support more extensive production.

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"Professional designers don't want to beg for money or worry about providing thank-you cards and T-shirts," co-founder Suzan Claesen explains, referring to the fractional campaign incentives commonly offered elsewhere. "They want to focus on good design and produce innovative products."

Most importantly, the curated projects on Crowdy House "shine a light on designers who might not be seen otherwise," Claesen says. "The big labels aren't always in control any more. This lets customers speak out about what they like. We call this the democratization of design."

This, in turn, is yielding innovation in unexpected places. As Stact Wine Displays founder Jamie Kasza points out: "What we're doing had been done the same way for thousands of years."

But that quiescence presented an opportunity for the Vancouver-based startup. According to Kasza, the 347 backers of its unique modular concept were thrilled when real wine racks started shipping in March of 2013, about six months after the campaign ended. The subsequent digital buzz created a built-in marketing campaign that attracted media, retailers, the interior-design trade and well-known interior designers.

"People think crowdfunding is about venture capital, but it's much more important for building an online community," Kasza says. "There's no better motivating factor than having an army of backers holding you accountable, following your progress and then sharing their excitement and creativity once the product arrives."

Combine this with a ready-made customer base and the power of the crowd easily surpasses that of capital, says Ethan Mollick, a professor at the University of Pennsylvania's Wharton business school. "I've surveyed many of the people behind Kickstarter campaigns about what the benefits are, and needing the money is never the top answer. No. 1 is gauging demand and No. 2 is building community. These days, the social network is where demand comes from. It gives consumers something to rally around."

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Add social activism to this digital rallying cry and campaigns can soar even higher. Such is the case with Winnipeg-based cane-maker Top & Derby. Canes? Innovative? Again, a crowdfunding-fuelled search for untapped design potential produced results.

"We used the campaign like a science experiment," explains founder Ben Grynol. "Our hypothesis was that people will buy well-designed home health-care products if you put them out there. Our mantra, meanwhile, is that we want to contribute to ending the stigma of disability. It doesn't make sense that we have so much choice in our lives – in terms of expressing our personal tastes and style – but have no choice in a cane."

The 2012 experiment began with $21,945 in funding on Indiegogo. Like the Stact campaign, it provided a crucial marketing push for the Chatfield – Top & Derby's ergonomically handled, walnut-shafted cane – and forged close ties not just with customers, but also with those who support T&D's cause. "We still get notes telling us how the cane has made a difference in customers' lives and how proud they are to have been catalysts for launching the company," Grynol says.

Mollick isn't surprised that multibillion-dollar companies are reluctant to acknowledge the influence of crowdfunding, despite its usefulness as "a direct window to what the trends are." It could also be used to foster innovation and improve existing products, OCAD's Roos points out, as "better products and services are always brought to market when there is better customer engagement."

If design-oriented corporations are paying attention, they're not letting on. A spokeswoman for Ikea Canada, for example, denied any connection with crowdfunding, stating that "we do not work with crowdfunding campaigns for funding or for inspiration. We work in teams consisting of our in-house designers, external designers and product developers, who altogether plan and design the products we sell."

This highly profitable in-house design process has been in place for decades, but as Mollick says, "Sooner or later consumer behaviour will force the big players to give up some of their control and start paying attention to the crowd."

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Follow Adam Bisby on Twitter: @adam_bisby

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