Can you test the market for a product without ever producing it?
CW&T is a self-described, "teeny design studio in Brooklyn" that is basically a two-person operation - designers Che-Wei Wang and Taylor Levy. I have a certain kinship with these two because we all love the Pilot Hi-Tec C pen, which unfortunately aren't readily available in North America. The .25 fine tip writes like a dream (better than most Mont Blancs out there, I think), but they look and feel like your average (and cheap!) ballpoint pen. As designers, they set out to create a simple, classy and indestructible pen that could house the 0.3 Black Hi-Tec-C Cartridge. What they came up with was something they dubbed Pen Type-A. Without knowing if there would be a market for Pen Type-A and not having the resources to turn this design concept into a business model, they turned to one of the hottest online destinations, Kickstarter, to get a feel for the potential market.
Some thing new. Something different.
Kickstarter is a simple crowdfunding platform that allows individuals to post their creative projects (everything ranging from music and film to technology and journalism) and start an online threshold-pledge system for the funding of the project In short: if you can't get a book deal, you can post your project to Kickstarter, define the budget and invite anybody and everybody who thinks it's a good idea to become a backer of the project. Kickstarter is a New York startup that was founded in April 2009. According to Wikipedia, the company has raised more than $75 million dollars for more than 10,000 projects since it got started. Even more impressive, Kickstarter has a project success rate of close to 45 per cent. (Success is defined by whether the project met or surpassed the threshold set by the project organizers). The company makes its money by taking a percentage of the funded projects.
It serves as an amazing place to see business, creativity and entrepreneurship come together.
What better way is there to know whether there is a market for your business idea than by putting that idea "out there" and enabling those who take an interest in it to put their money where their mouths are? These backers are paying customers, they just happen to be paying for it long before it is ever produced. In 2004, Chris Anderson (the editor-in-chief at Wired Magazine) wrote the best-selling business book, The Long Tail. The book describes a new economy that has emerged online because we are no longer limited by the physical retail store and how much inventory can be sold per square foot. Because of online commerce, it now makes sense for companies to sell products that used to only get bought by a handful of people because they can make serious money by selling the more obscure items to more people online, instead of only selling a lot of a limited number of more popular items.
Kickstarter is a great example of The Long Tail at work.
Apple co-founder, Steve Jobs. was known for saying that it's not the customer's job to know what they want. There's also that old Henry Ford saying, "If I had asked people what they wanted, they would have said faster horses" (although the Harvard Business Review recently published an article that claims there is no evidence Ford ever said that. More on that here: Henry Ford, Innovation, and That "Faster Horse" Quote). Regardless, we tend to think true entrepreneurs are the ones who can see into the future. The ones who recognize a new market where there isn't one. If that's the case, it also explains why there aren't that many great entrepreneurs: the risk is huge and having a true vision for a product or service that doesn't exist can be a solitary place to be...
Kickstarter does more than initiate interesting and obscure projects, it helps kick-start entrepreneurship by minimizing risk. With Kickstarter, business owners can figure out if they're producing something that people actually want, instead of producing something and then trying to create the market for it.
If that's not a game-changer, I don't know what is.
So, I bet your wondering how the Pen Type-A project went? Wang and Levy set a threshold of $2,500. On Aug. 15, they surpassed their threshold to the tune of $281,989 by more than 4,000 backers.
That sounds like a solid year of sales considering the product doesn't even exist yet.
The above posting is my twice-monthly column for the Montreal Gazette and Vancouver Sun newspapers called, New Business - Six Pixels of Separation. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original versions online here:
- Montreal Gazette - Kickstart your own economy.
- Vancouver Sun - Products people want, because they've said so.