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Pools are Expensive (thoughts about the long tail and crowdfunding)

As the interest in crowdfunding for local projects continues to grow, we’re digging into the nitty gritty of what this actually implies. What is really being funded and what’s the extent of the community participating?

The reality of a capital project such as a building or bit of infrastructure is that it’s not going to be very mobile, so it’s going to pull most of its funding from a relatively local area. Some cities have the luxury of considering the globe, to an extent, their ‘local area’ but these are exceptional. Yet communities are hungry for ways to get their initiatives off the ground, and this shows when looking at the roster of projects on Kickstarter and other, similar sites. How realistic is it outside of global hub cities?

The Renew Newcastle project (and now Renew Australia too) has been doing valuable work in unlocking dark matter to bring new life to disused sites. Others, such as NESTA’s Neighborhood Challenge, put the focus on new services and leave the community to self-organize the appropriate location.

At this point in time, Brickstarter is primarily concerned with activities that are location dependent. A wind turbine is either here or there, and where it gets installed will effect its productivity. The site chosen for a garden effects its popularity, where a bench gets installed determines its usefulness, and so forth. As we know all too well from NIMBYism, where can be a deciding factor—for good or bad.

Let’s examine an example to test the limits of current crowd-funding approaches for capital projects.

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Source: +Pool Kickstarter page

The +Pool project was an early success on Kickstarter, utilizing for the first time (to the best of my knowledge) the site to raise money for a capital project. It’s an ingenious idea that is appealingly presented by a group of local designers and artists and the results of the funding campaign are testament to that. They asked for $25,000 on Kickstarter and received $41,647 and nearly 25,000 thumbs up on Facebook.

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Source: +Pool Kickstarter page

What are those funders funding?

They were not funding a pool, but a test of part of the filtration system. In effect, a proof of concept that takes the feasibility study one step further. Before launching their Kickstarter campaign, the +Pool team was able to secure the help of global engineering firm Arup. With donated efforts over the course of five months, Arup produced a feasibility report for +Pool that ends on a positive note. As Craig Covil, Principal at Arup, notes in the video:

“Is it really going to happen? Yes of course it will happen, but we need to get behind it. We all need to get behind it… Technically, but also from the government side with permits and approvals.”

Whereas contributors to the Glif iPhone accessory, another popular Kickstarter project, were buying a definite thing, +Pool contributors are buying into a contingent thing, an idea that may not materialize in the end. A great idea but still just a potential project, with all of the fragility that entails.

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Filtration system testing funded by Kickstarter backers. Source: +Pool Kickstarter page

This bears a bit of attention. The team are very forthright on their Kickstarter pitch video and all supporting documents, so I do not want to imply any attempt to mislead the public in their efforts. Rather, I’m dwelling on this because it gets to the significant scale of most capital projects. Funding a proof of concept for the +Pool may cost around $50,000, but building the pool itself could cost five million or more (nb: there does not seem to be an estimate for total cost yet).

Would a project with such localized appeal as a pool in Brooklyn, USA be able to attract interest from enough people that a modest donation from each would be able fund the project? And what happens when the project runs over budget, as many capital projects do? Are donors obligated to chip in for overages?

New York City is probably amongst a handful of places in the world where a local project could garner support from residents outside of the immediate area. In that sense, the specific location of the +Pool helps out and sure enough Berlin, Chicago, San Francisco, Amsterdam, and many other cities are represented on the backers list. Because of its connectivity, a place like NYC has a long tail to draw funding from. The crowd is more crowded, as it were.

What about a project in Pori, Finland with a population of 83,000? It’s a lovely place, but doesn’t have the connectivity or reach that a global hub does, nor the population. In that sense, crowd funding for a small or medium sized town is hindered by two factors: it’s relatively small population size and its lower level of global connectivity. The Long tail applies to media and ephemeral goods, such as the popularity of a musician, but it does not map so easily to physical sites. Tails in small towns never grow quite as long as those in big cities. Perhaps this explains NYC’s rodents!

Why do I blog this?

As we develop the Brickstarter concept we will have to be careful to avoid the current hype around crowdfunding. It’s powerful, but does have limits. This is the first in what will be a series of posts analyzing the use of crowdfunding and crowdsourcing websites, as well as offline tools to collect and realize the desires of a community.

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2 comments on ‘Pools are Expensive (thoughts about the long tail and crowdfunding)’

  1. David Barrie says:

    A co-operative retail venture in London – The People’s Supermarket (DOI: I am a co-founder) – recently used Facebook and Twitter to raise thousands of pounds to pay off an outstanding debt due to local government on occupation of a single premises. While we didn’t use a crowdsourcing platform, the process yielded an interesting, and I think important, lesson. We succeeded in raising the money because our business concept appeals to a broad national/international audience, while we are also an effective local utility, and so appeal to a local audience too. Getting the balance right between generic concept/appeal and local utility is a challenge. #justsaying

  2. Bryan says:

    David, you make a good point: those who have the network already are able to do things the old fashioned way. This is true for raising money, communicating to sponsors, and organizing folks, all things that various crowdfunding sites help with. When I asked one of the employees of Kickstarter what they thought made the difference between someone using their platform and the community doing it through other means, one of the suggestions was that it can be difficult to process lots of small payments. Out of curiosity, how did you handle that? Did people stop by the stop to give, or was it done online as well?

    I’m also curious how you raised funds before the People’s Supermarket existed? I ask because the Kahneman book I’m reading at the moment would suggest that, in general, everyday citizens (i.e. those who are not seasoned investors) are more likely to put up money for a known purpose than an unknown one. Helping to paying off a debt is a discrete thing that’s known, predictable, and has a trusted purpose (depending on your politics, I suppose). Investing in a super market or a pool before it exists is a different animal. It involves far more unknowns and with risks that can be harder to assess.

    I suspect that the difference between these two is part of the motivation behind Kickstarter, Spacehive, and other sites taking on an ‘all or nothing’ funding model. It’s helps give ‘investors’ or funders a bit of assurance that their money is at least going to an activity that has a fair chance of making it. Or as fair as it can be in a system where there’s not a strong due diligence process.

    Balance is the trick, as you point out. Thanks for the insightful comment.

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