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Comment by bbx | Hacker News Reader

The project has reached a $196K funding while the initial goal was "only" $12K. Maybe Kickstarter should limit the amount of money to this initial goal, or at least to twice the amount of this goal.

If a project looks promising, more people are likely to pledge for it. But if Cryptrade thought $12K was enough to develop their project, that's probably all they actually needed. And $12K is both less tempting for Cryptrade to just disappear and less penalizing to everyone who pledged for the project.

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Since Kickstarter gets a 5% cut, they have no incentive to limit the amount of funding.

They have a huge incentive to keep backers comfortable with using Kickstarter. Too many "scamstarter" projects and it's their brand which takes the hit.

This makes no sense. If you are concerned, don't back a project that is already 100% funded...

I don't understand the down vote. People actively choose to back projects that are past 100% funding. This means they want to participate. Setting an arbitrary limit in order to protect people seems ridiculous when the information about funding levels is right there, in real time. How is contributing when the project is at 150% funding any more risky than when it is at 50%? You are still in for the same pledge amount.

The only legitimate concern I could see is that by allowing projects to fund well over 100%, you're potentially increasing the risk to all backers as an easier to manage 12k project balloons into a very complex and potentially hard to manage 200k project.

Yeah, but when the scamstarters are optimizing for short-term returns, who says Kickstart isn't? (Intentionally or not)

What's interesting about this situation is that if people complain (as some have) to their credit card companies and the charges bounce then kickstarter gets hit with a chargeback fee in addition to the money that was paid in. I've seen chargeback fees of between $25 and $35 per transaction.

Kickstarter doesn't get hit with these fees since Kickstarter isn't processing/receiving the payments. It appears to me that money goes directly to the project owner's Amazon Payments account, so any chargebacks would land there as well.

Even if Amazon lays the blame for the chargebacks on Kickstarter, they're probably safe. Since they're still in business, it's pretty safe to assume their overall chargeback rate is below 1% by transaction volume, as that's the threshold where processors start hassling you because Visa/MC will start hassling them. Given KickStarter keeps 5% of 100% of the volume as revenue, there's a lot of padding there to handle any chargeback fees and still be very profitable.

"It appears to me that money goes directly to the project owner's Amazon Payments account"

Interesting I didn't know that.

"Even if Amazon lays the blame for the chargebacks on Kickstarter, they're probably safe."

Given what you have said though what would be the scenario where they could even do that? If someone is setting up (as you've pointed out) an account with amazon payments then where does amazon have standing to do anything with kickstarter?

First off, I have never run a project on KickStarter so I don't know any of the details first-hand. I'm only guessing -- Amazon has a product called Amazon Flexible Payments Service. One of the things this API allows is marketplaces where you facilitate payments between buyers and sellers and take a cut of the transaction. This is probably how KickStarter works and takes their 5% cut; it's KickStarter's code and API keys that kick off the payment, and while the money ends up in the individual Amazon Payments account of the project starter, the fee gets sliced off and deposited to KS's account. So while they are not a processor or the recipient of the funds, they're still tied to every transaction; plus, they no doubt have a special arrangement with Amazon due to the amount of money they're handling and the fact that Amazon doesn't accept other crowdfunding services as customers of its payment services.

As soon as I saw how much over the minimum it had gone, I too had the same thoughts.

However I am not so sure about a kickstarter imposed maximum, as certain projects (say non physical goods) can grow indefinitely (in terms of the quantity of the product given out) but have a minimum amount before they are able to bring the product to market.

I think it is more useful for the creator of the kickstarter to set a minimum and optional maximum.

I also quite like the idea of holding some amount in escrow until progress has been made (maybe anything over twice the minimum or similar).

This seems like a good idea now that I think about it some more. The Kickstarter goal should be the minimum amount needed to get a viable product to market. Once you've figure out that you can make it, you should shift your product to a store model and direct users from Kickstarter to the store to purchase it.

Too much money in these cases may create a sense of complacency and encourage "take it and run".

We attempted to produce and sell a very similar product (in fact the kick starter creator commented on our project and thanked us for the idea): http://www.usbmemorydirect.com/cryptex_usb_drive_update_page...

We didn't go ahead with production when we realized how expensive making these USB drives would be. If they really thought 12k would be enough they were pretty naive.

I totally agree; it would also allow the creators a more realistic chance of fulfilling the original spec, whilst not getting overwhelmed by more features and possibilities. They could always allow creators to reopen the funding again, but I'm guessing most projects would follow more traditional methods at that point.

It might be a good idea for Kickstarter to only release the goal amount initially until the project lead can prove they meet their initial pledges. The remainder can get held in an escrow account and released once the project is off on the right foot.

When the goal has been hit, users are more likely to back the project than when the goal was not hit. I think Formlabs founders also explained this in their post-Kickstarter interviews- they intentionally set initial goal below what they actually needed, in hopes that it's surpassed quickly.

Wow, this is dishonest and I'd be surprised if it wasn't against Kickstarter's TOS. What happens if they made their goal but no more? Part of the point is supposed to be that if the makers don't get enough money to fully fund the project, then none of the money goes out. By setting your KS goal lower than your actual goal, you're skirting around a part of Kickstarter designed to lower risk for backers AND makers. http://www.kickstarter.com/help/faq/kickstarter%20basics#faq...

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