First Click: The wisdom of the crowd is lost on crowdfunding dummies

May 19th, 2015

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“The wisdom of the crowd” is a phrase that once expressed reverence for the collective judgment of the populace. But in the age of crowdfunding, the phrase has become a snide disparagement indicating lack of surprise for yet another failed Indiegogo project:

“No More Woof never shipped its pet translator!? The wisdom of the crowd, am I right?”

Aristotle — master of logic and reason — is said to have originally coined the phrase. At least that’s what Wikipedia says, an online encyclopedia edited by a crowd. Reddit’s a good example of a site shaped by the aggregated opinion of its devoted crowd, and it’s the wisdom of the crowd that elects the US president and other leaders of democratic states. To be truly wise, the crowd should be educated, hold diverse opinions, and be large enough to dampen the noise of those extreme elements on the fringe.

Crowdfunding sites exist to prey upon that fringe.

While Kickstarter claims over 8 million unique backers who’ve combined to pledge more than $1.7 billion to 231,431 projects, most projects are funded with the help of just a few hundred or a few thousand backers — a fraction of the total crowd. Pebble Time holds the record for the most money pledged ($20,338,986) with 78,471 backers. Exploding Kittens, the most-backed Kickstarter of all time had 291,382 backers representing just 3 percent of the total backers on Kickstarter or 0.09 percent of the US population. Not exactly collective wisdom, and its doubtful we’ll ever see a project with pledges from more than 50 percent of potential backers.

Kickstarter and Indiegogo achieved mainstream acceptance just as gadgets returned with a vengeance. Celebrities and established brands regularly use these sites as marketing tools, bringing global attention to projects with a high likelihood of success (thanks to their existing wealth, connections, and expertise). These high-profile successes create an elevated sense of trust that trickles down across all projects, no matter how ridiculous.

That’s how No More Woof could take $22,664 from 231 crowdfunding dummies. Another way to spin that is to say that 99.9999276 percent of Americans rejected it — a wise decision, indeed.

Correction: Kickstarter contacted us to note that the $1.7 billion was pledged to all 231,431 launched projects, not just the 85,128 projects successfully funded.

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