That's true. But they would come over a lot more credible (at least to me, that may be different for others). I you've misjudged your initial funding requirement by more than 10:1 you are already showing that you've done something wrong, so since they've received what they said they needed the logical next step would be to put up some proof they can deliver.
Like that expectations stay within the realm of the feasible.
On another note, this funding round is feeding off the facebook name recognition, not on the track record of these people.
But Jacques, they haven't misjudged their original funding requirement - at worst, they've underestimated potential early investor/market interest in the product they are proposing to create.
I do see two problems here.
1. Diaspora is now awash in money - which might go to their heads or not, but which in any case creates new, non-code responsibilities for them. $100k is not chump change, and you can't just stick it into a petty cash box. As soon as Kickstarter transfers it to a bank account, being greater than $10k it will trigger an automatic report from the bank to the IRS. So before they write any more code, the Diaspora team need to hire a lawyer and create a trust or some other appropriate legal vehicle...might I suggest our own grellas?
2. For Kickstarter, this raises questions of how funding is managed. Now, most things on there offer a straight trade - send me $1 and I'll send you an mp3 of my new song after I've bought the guitar I need, or whatever. It's a sales contract, basically. However, it's not obvious what the terms of this contract are - for example, their FAQ doesn't address the question of what happens if the project owner doesn't buy the guitar but flees to Lichtenstein instead. I'm guessing recourse and other issues are governed by the terms of the Amazon payments agreement (https://payments.amazon.com/sdui/sdui/about?nodeId=6019), but Kickstarter need to address this upfront to avoid potential heartache, especially given that they allow projects to solicit commitments of up to $10k. Sooner or later some project will fail in such a way that a donor feels victimized and there will be blowback for Kickstarter. Given the large amount of money involved here, it would be a good idea for them to clarify the legal context in which donations take place. I find it surprising that they don't have any stated policy about donations exceeding the requested amount - though given the usual difficulty faced by artists begging for money, they probably haven't had to confront it seriously before. Most projects that overshoot their target do so by a fraction, not multiples.
Incidentally, Kickstarter's own rules do not allow a project creator to halt the project early, so even if Diaspora want to shut off the flow of donations, they can't.
as to 1) Yes, agreed fully, a trust is the way to go. Grellas would be awesome.
2) Kickstarter will likely learn as much from this particular event as anybody (including the diaspora team), they have seen their model validated in a way that you can only dream of when you run a service like that with a ton of free publicity to boot. If diaspora is only marginally successful that would be enough, but they should be careful to show their independence from the project.
I'm going to watch this very closely in the next couple of months, it is imo the biggest story in the year to date with respect to start-up financing.
I sincerely wish those kids the best of luck, they'll need it. Their biggest problems will be that they will be sitting on a significant sum of money and that alone will attract all kinds of sharks, which is not good when you're a goldfish.
I've suggested they apply to YC, that's one of the ways in which they could get the expertise they need in order to at least make it to a launch of sorts. They'll be in dire need of people they can trust.
It seems to me that their FAQ tries to get around the question of what happens if a project isn't completed. Specifically, it says the project manager is "expected" to cancel funding. Otherwise, it might lead to "damage to your reputation" or even "legal action on behalf of your backers."
However, I bet that "canceling funding" may not even be possible. Most founders will transfer the money from Amazon to their bank account. Even then, a project's viability may not even be obvious for another year so I doubt chargebacks could occur.
Yes, absolutely. They initially asked for $10K. They now have 10 times as much.
To pause the contribution round now and to show they can deliver would help them in avoiding the enormous risk of as someone else here already mentioned of becoming 'the next cuil'.
Hype is a double-edged sword, it's great when you have it but you only get one shot at delivering and in an overhyped situation that is much harder than in one where expectations are still realistic. The more money they pull in the more this will be overhyped, the bigger the chance of a public disappointment when they launch.
By your logic, a person winning the lottery should cap at 100K and say no thanks, I rather not piss of my friends family and colleges.
Most likely the public interest in this project will die out within 1-3 months. Hopefully they will not ruin their future lives endlessly trying to reproduce this incredibly lucky strike.
But while their at it, they should get as MUCH as they possibly can and totally and shamelessly go for it, hacking, hiring other people to work with them, getting drunk in parties at the other side of the globe, whatever...
Giving that money back saying they are afraid to disappoint some anonymous crowd would be totally nuts.
If they're smart they put the money in a foundation that can only be used for the project in a constructive way.
If they go getting drunk at parties on the other side of the globe there is a chance they'll kill kickstarter as collateral damage besides their own project.
Taking in funding - even if it is 'throw-away' cash - comes with a responsibility, this is not a 'lottery', and the crowd is not anonymous.
It's not about personal morality, but legal responsibility. For example, just what are their tax and commercial obligations right now? You can't just hand the IRS a copy of the GPL; a large sum of money like this will require them to spend some time and $ just to document and report it correctly so it doesn't get treated like a scam.
Like that expectations stay within the realm of the feasible.
On another note, this funding round is feeding off the facebook name recognition, not on the track record of these people.
Everybody loves an underdog.