Incentives
I've been assigned to read "Drive" by Daniel Pink as homework for work. I've made it through Chapter 1 so far (go me). But, it has reminded me of a couple problems with incentives that I have encountered recently.
I backed my first project on Kickstarter, Lex Laser Saves the Galaxy, Again. I think Kickstarter is a cool way to use the internet to make projects happen. I backed this particular project almost entirely because the author is my friend. I think it's a sound project and it's articulated well on the site. But, that's not why I gave him my money.
This started me thinking more generically about Kickstarter projects. I haven't looked at a ton of them, but most of the projects I have looked at follow a similar model. For low levels of money, you can basically pre-order a product that you think you'll like. For higher levels of money, you can become an extra exuberant customer - getting in on beta testing, getting your name on things inside, and stuff like that. It seems like a good advertising campaign can bring in a lot of people at this level. And maybe that's the plan in most cases. That all makes sense to me.
But, I don't feel that this model scales well to higher levels of cash. Once I'm paying 50X the nominal value of the product, I'm no longer a customer. I've turned into something else. Maybe I'm a donor. That's a fine model for some projects. But, unless you're doing something extra good for society, it's hard to see strangers giving away large sums of cash. I feel like if I come in with 10% of the cash you're looking to raise, I ought to get some payback other than a bunch of widgets for that.
The other site I've checked out, but haven't backed, is kiva.org/. This site lets you loan small amounts of money to people in developing nations. Initially, I was very psyched to participate. It seemed like kind of a fun way to gamble and help people at the same time. I could play business man and identify projects I thought would pay me back and people in far off places would be able to improve their lives. But, as I started looking into it, I lost interest (hah!). It turns out that while the borrower has to pay a very high interest rate, all of the interest goes to run the business. The only thing I get back is the principle. So, I'm torn. As a game, it's really lame. All I can do is lose. As a charity, it's really lame. If I want to help people in developing countries, why don't I just give them the money? Why am I subjecting poor people to all this hassle over money I don't really need?
I backed my first project on Kickstarter, Lex Laser Saves the Galaxy, Again. I think Kickstarter is a cool way to use the internet to make projects happen. I backed this particular project almost entirely because the author is my friend. I think it's a sound project and it's articulated well on the site. But, that's not why I gave him my money.
This started me thinking more generically about Kickstarter projects. I haven't looked at a ton of them, but most of the projects I have looked at follow a similar model. For low levels of money, you can basically pre-order a product that you think you'll like. For higher levels of money, you can become an extra exuberant customer - getting in on beta testing, getting your name on things inside, and stuff like that. It seems like a good advertising campaign can bring in a lot of people at this level. And maybe that's the plan in most cases. That all makes sense to me.
But, I don't feel that this model scales well to higher levels of cash. Once I'm paying 50X the nominal value of the product, I'm no longer a customer. I've turned into something else. Maybe I'm a donor. That's a fine model for some projects. But, unless you're doing something extra good for society, it's hard to see strangers giving away large sums of cash. I feel like if I come in with 10% of the cash you're looking to raise, I ought to get some payback other than a bunch of widgets for that.
The other site I've checked out, but haven't backed, is kiva.org/. This site lets you loan small amounts of money to people in developing nations. Initially, I was very psyched to participate. It seemed like kind of a fun way to gamble and help people at the same time. I could play business man and identify projects I thought would pay me back and people in far off places would be able to improve their lives. But, as I started looking into it, I lost interest (hah!). It turns out that while the borrower has to pay a very high interest rate, all of the interest goes to run the business. The only thing I get back is the principle. So, I'm torn. As a game, it's really lame. All I can do is lose. As a charity, it's really lame. If I want to help people in developing countries, why don't I just give them the money? Why am I subjecting poor people to all this hassle over money I don't really need?