Crowd Funding – The Internet Is Ruining A Great Tool

Equity-crowdfunding-pool-of-capital

This is a subject that I have written about in the past (in several entries). And this post is not going to contain all that much differing material then those posts did. However, its easier to share many tidbits from many posts by condensing all into one place. Hence the creation of this piece.

Though I acknowledge the purpose that crowd funding sites provide for some people (a place to raise otherwise unattainable capital for various endeavorers), there is a lot of questionable usage of these services. This even occurs within the confines of the various TOS agreements, since most of the time the funds are raised with the best of intentions.

Obvious scams and get rich quick schemes do not seem to be tolerated by these sites. But even so, you need to watch for other ways in which you may be duped. After all, not all malicious fund raisers operate against TOS agreements and the law.

One thing to consider is if the person or group really needs the money (or the asked amount). Though some people may not have the capital to fund a given dream of theirs, others may see crowd funding as a way to eliminate financial risk of a new venture to themselves. Rather then shell out a quite large amount and possibly lose it, why not utilize a crowd funded amount with a stipulation that amounts to “at your own risk”. If the venture fails, then the recipient is financially unaffected.

Then there are pie in the sky, physically unfeasible projects that just happen to have hopeful promoters. A great example of this is solar roadways, though its certainly not the only one.
In this area, one can give the average layman some benefit of the doubt. The simpler innovations should be easy for anyone to decipher (if it has real potential), but other complex innovations (such as Solar Roadways and the $10,000 Hover Board) involve more a scientific oriented background. None the less, ignorance is still not an excuse. People with the expertise to test many of these innovations for their effectiveness are out there, should you seek them.

But here again, we run into a problem. With scientific media.

I am very critical of people that only consider information on a project from sources affiliated with the projects promoter. At best you both (potential donor and project promoter) may both be overlooking flaws in the innovation that a trained eye would see. At worst, you may be willfully buying into material that is not much better then propaganda.

However, something else that makes things difficult for EVERYONE in these cases, is when many members of the media also display the same disdain for facts as the easily manipulated social media folk. I don’t expect much of the “alternative” media in this regard, but when even the more technologically based outlets and reporters swoon over project creator specs and a “cool” demo, I tend to get annoyed.
Maybe I am a dinosaur of journalism with no career ahead of me in this day and age, but this seems to fly in the face of both journalistic ethics AND the scientific method.

Since most journalism today is merely regurgitation of material tailored to a set demographic, outlets using fluff pieces like this as simple consumable click bait does not surprise me. But it is disappointing, since my idea of a good journalist is someone that does their best to tell you ALL the facts of a story or situation. That involves more research then a flashy promoters demo.
As for the scientific method, any invention is testable. Even of one is unable to themselves preform the necessary tests, often times there are other more qualified or equiped people that can (or have).
The fact that many outlets not only take the project creator speks at face value, but also don’t bother doing any prier research before putting out a story, is disheartening to say the least.

No one is asking that every journalist or pseudo-journalist on every online news portal be forced into training in the field of science (though that would be handy for scientific journalism).  However, the least we can expect is some prier research and outside data.

As for both journalists and layman alike, scientific ignorance (nor ignorance of the specifics of almost any area) is not necessarily a bad thing.
One is not an idiot for looking to (or asking advice of) someone more qualified then themselves in matters regarding a given area of focus. However, they become idiots when they take the word (and technical details) of “inventors” uncriticized.
Even if something is branded as “Cool” or “Green” (ecologically friendly), its still as useless as using a Commodore 64 to submit this post if it under-preform’s  compared to expectation.

And then there are the charity cases.

These normally start with a viral story that grabs your attention and engages you emotionally. Be it a case of personal hardship, persecution or another situation, the story leaves you feeling something. And usually not long after such a story starts to “trend”, someone somewhere makes a crowd funding page to benefit the person or people in question.
I would hope that these page creators have the best of intentions in mind (are not out to scam you by keeping the cash). But none the less, both the acts of receiving donations for AND making donations towards (usually) a single person in duress is not all that helpful in the long run.

Take a case from last August (here is the piece I wrote about it at the time). A young man finds himself disowned (and presumably on the street) on account to opening up to his parents and family about being gay. I and the rest of the world found out though the video that the guy recorded of the incident.

I watched a part of the video though a TYT segment, and it did bother me. Its a family turning on one of  their own due to an uncontrollable personal trait. Of course it bothered me.

But that said, as is written in the entry posted at the time, I found out about a crowd funding account in the kids name, and was not exactly agreeable. Again, I applaud the generosity shown to someone in need. But like the trajectory of so many of these cases , the amount became overkill while the overarching cause and its problems remained unchanged.
The kid may have alienated his parents for life. That is a sad and unfortunate reality that no one should have to deal with. But at the same time, the crowd funded account had over $10,000 in donations. So whatever happens, he is fine for at least the short to mid term (assuming he spends the cash responsibly).

But even though he is fine and off to a good start thanks to the generosity of the Internet, other gay teens and young adults in similar situations see no benefit. The donation “helped” one person, but in the grand scheme of things, is that really a good investment?

Spend what you want, where you want. But the next time that viral story grabs hold of your emotions and makes you want to give generously, I recommend finding charities that specialize in whatever the highlighted problem in the viral story is. You can feel good about knowing that you REALLY helped a cause you care about, and be confident that a donation to such a charity is a better investment.

I have always had a quite cynical view of crowd funding, pretty much from the 1st time I had heard of the concept. To be clear, the concept is a great idea when utilized correctly. For example, I have a close friend with a potential future business idea for which crowd funding could be a good place to seek some capital to get things rolling. Its a great place for up and coming entrepreneurs to seek funding when it might not otherwise be available to them.

However, like all tools, crowd funding must be utilized with care. This goes for both those seeking funding from it, and those giving funding into it. People need to not misuse these services by using them to collect funds for possibly questionable causes or reasons. And people need to be more skeptical and investigative before they part with their dollars on fund raisers that just LOOK legitimate. As explored in a previous post some time ago, even the most ingenious idea is a non-starter if it has no practical use in the market.

Many people like to hate on people like Kevin O’Leary for their brand of honesty (Chef Ramsay in Kitchen Nightmares comes to mind as well). This is unsurprising, since the purveyor of truth often comes across as a douche bag to those that don’t want to accept it (a roll that I have become happy to accept in many contexts of life). But as unwelcome as these dissenting and abrasive voices often are, they are important.

Chef Ramsay has helped many restaurateurs to succeed by forcing them to confront their delusions head on, and then giving them a leg up to start fresh. Kevin O’Leary does more or less the same thing by being brutally honest in his assessment of a given product or service. Its a requirement when it comes to investing with your own money.

If the concept of crowd funding is going to remain the trustworthy and useful tool that it is today, then participation in the concept must be taken with the same seriousness as any other business transaction.

But that is not happening. People are more often then not interacting with these crowd funding programs in the same way they interact with everything else online. They are jumping onto bandwagons and supporting this cause or that, at times based on little more then a youtube video.

All of this is only exaggerated by the fact that everyone seems to consider themselves an “expert” on many things nowadays (and not just those that tout the trio of Logic, Reason and Rationality. Though they tend to be the worst). This often continues when scientifically researched figures from REAL scientists (experts) are mentioned.

The video said this, so all you dissenters are just haters!

And then there is the selective hearing of this generation. It seems that the norm now is not listening to ANY criticism from anyone. This is most noticeable in places like college campuses and typically on a hot button set of topics, but it also is visible elsewhere. The majority of the commentary towards Solar Roadway’s criticism is an excellent example.

People that speak uncomfortable truths and facts in some contexts get labeled falsely as bigots, racists, sexist’s and other terms. And people that take on popular junk science get called “haters”.
Whether its Thunderf00t speaking about Solar Roadways or people like me speaking about quacks like Dr Oz, critics are “haters”.

We have to be more careful with how we utilize crowd funding services. Funding huge projects that end up going nowhere is not helpful to anyone. Starting funds for people that have hateful beliefs, to give a person a boost or to fund your vacation (I seen actually one like this recently!) are also not helpful.

Being charitable is a good trait that the world needs more of. But do not be stupid about it. Some crowd funded projects are a good investment into the future. But do not forget about the typical traditional charities.

In this time of silly and stupid giving patterns on crowd funding platforms, I fear that they are the most adversely affected by this uncritically examined behavior.

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