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Comment by zitterbewegung | Hacker News Reader

I wonder why they are launching on Kickstarter and not just coming out with the product since they already are well established?

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1. Marketing

2. Kickstarter money is technically a donation, so you can spend the money right away if you need to. (taking a typical pre-order is little tricky from an accounting perspective if it's considered revenue)

Kickstarter money is technically a donation

Says who? Here's what the terms of use say:

https://www.kickstarter.com/terms-of-use#section4

Just in terms of law: it's not an investment, it's not a purchase (since there's no guarantee of backers receiving their rewards), it's not a loan. It works exactly like when your local public radio station offers t-shirts to donors. IANAL but it seems pretty clear that kickstarter revenue would be a donation from a legal perspective.

I think the actual litigation that has already occurred -- e.g., the Washington State and FTC consumer protection suits -- have treated it mostly as a purchase (money exchange for a specific obligation), and certainly not as a donation.

It's certainly not portrayed as a pure donation (money given with no specific reciprocal commitment) in Kickstarter's terms.

As a backer, I'd treat Kickstarter just like setting the money on fire.

As a project, I'd be unlikely to offer a complicated physical device that I was not yet able to produce. I might put weaselly bullshit about a reward being a great sticker and up to 1 device.

Donation is the wrong way to think of it from an accounting perspective (though perhaps not from a legal recourse perspective.) Preorders are not recognized as revenue. They are a debit (increase) to Cash and a credit (increase) to a liability that's usually Unearned Revenue. As you ship, you credit (increase) Revenue/Sales and then debit (decrease) the Unearned Revenue liability account.

Edit: renamed 'Prepaid' to 'Unearned' -- had to brush up on my GAAP nomenclature

Agreed. That's pretty much how my (UK) accountants treated my Kickstarter revenue.

They are borrowing with almost zero interest rate. You can't find a better deal.

Working capital on better terms than equity or debt. They have a proven track record, so it's not very risky to backers, and they get working capital at a very low cost.

Edit: Other comments referencing marketing make a good point. PR value is big for a massively successful kickstarter.

To get people like me to give them money in advance.

Seeing how fast backers are adding, they probably save a lot of headache by leaving the scaling to others. Kickstarter handles the traffic from user signup to charging the credit cards at the end. And Kickstarter already figured out how to do this on that scale.

Marketing...

Also, for the Core at least (the one I'm interested in) it's an early 2017 projected release date (and I have bought enough Kickstarters to know that this slips). Seems to me that a normal retail experience simply would not support this kind of anticipatory release (and it is a dealbreaker for me)

They've historically done all pre-orders on Kickstarter and were one of the first massively-successful projects to come out of it (and they shipped, too!). I'd assume it's entirely due to marketing and the ability to maximize pre-order sales.

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