There have been a lot of column inches dedicated to the Facebook acquisition of Oculus VR. The initial reaction has largely been negative because Facebook are involved, as I’ve said before, Facebook only have themselves to blame for this, their actions have spoken much louder than their words and they fully deserve the reputation they’ve got. However this doesn’t mean everything they do is inherently evil or anything they touch should be written off.
Steven Poole in The Guardian believes the backlash tells us that Facebook Just Isn’t Cool. I believe it’s because Facebook just don’t have a good reputation.
Amongst the comments and debate on the acquisition I’ve seen quite a lot of comments regarding the Kickstarter backers. A lot of people have called them naive, others say they seem to be self entitled. I really am not a fan of this term, largely because it gets thrown around whenever anyone has a different view. I’ve seen this term thrown around a lot in debates about the forthcoming Elder Scrolls Online subscription only model, when people suggest a free to play model may be better, others accuse them of being self entitled, when in all reality, they are just pointing out where the MMO market is heading in terms of business models and I say this as someone who pays a subscription to World Of Warcraft. However WoW is a different kettle of fish, but I’ll leave this for another post.
What a lot of people seem to be missing is that in business terms, the Kickstarter backers are active stakeholders in the project, albeit external stakeholders, but they are stakeholders none the less.
Stakeholders are an important ingredient of any business, so treating them with respect and dignity is important. There are different levels of stakeholder and some are obviously more important than others, however in an ideal world, you want to keep as many of your stakeholders happy as possible.
Where Oculus have gone very wrong in this regard is in not recognising that a lot of those Kickstarter backers would be miffed at the Facebook takeover and therefore, they made no contingency plans for it. Oculus really should have considered refunding them in the light of the Facebook deal.
The argument against this goes that the Kickstarter backers got what they paid for, the rest is tough titty. In The Guardian article I linked to earlier, Steven Poole wrote :
Meanwhile, there seems to be an obvious question of economic justice here. The original Kickstarter backers of Oculus Rift might not have been explicitly granted shares in the company, but the company wouldn’t exist without their initial contribution. About 10,000 people gave Oculus $2.5m between them. I for one am struggling to think of a good reason why each of them shouldn’t get a proportional share of that $2bn sale.
In the comments we see :
Perhaps the fact that paying for a T-shirt, thank you note or dev-kit on kickstarter doesn’t make you an investor in a company?
You dont invest with kickstarter, you pledge a donation.
Because that wasn’t a condition of their pledge. They weren’t making an investment, and the terms of what they were paying were clearly laid out. By buying a band’s t-shirts you are contributing money to their cause, but you don’t expect to get a share in their album sales.
I agree with the comments and disagree with Steven Poole, but only because the comments are technically correct, however a happy medium should have been found.
The idea that the Kickstarter backers who received whatever perks their pledge reached should receive a proportional share of the Facebook acquisition is ludicrous. However, with such a windfall, it’s also quite ludicrous that Oculus couldn’t see the PR opportunity of keeping those backers sweet.
A gesture, however small, would have gone some way to mitigating the backlash and generating good will. They could quite clearly have agreed to pay everyone back. They could have said we’ll send you all a discount on future hardware, they could have decided to refund a percentage of donations, they could have gone to Kickstarter, posted a message and said thank you. They could have offered them all a free coffee.
In Second Life a lot of sims and ventures only exist because of tips and donations. Without those tips and donations, those ventures would be heading for the exit. Nobody is obligated to make a tip or donation, but some people feel it’s the right thing to do.
I’ve worked at places where in my Christmas card I’ve recvied a gift voucher, the company were under absolutely no obligation to do this, I was not entitled to this, but they felt that it was the right thing to do to thank staff for their hard work. Other businesses pay out bonuses if they have a good year, others offer discounts and deals for long standing customers. I recently signed up to a mobile phone deal with my broadband provider who gave me an extra discount for three months because I’m an existing customer, this was not advertised, I was very grateful for this, it created a good impression.
Oculus have had a good week in terms of finances, as long as the deal goes through without a hitch, they absolutely should be in a position to say a big thank you to those Kickstarter backers and in doing so, they have the potential to generate one hell of a lot of good will and once again generate a lot of column inches, but if done right, in an extremely positive manner that is probably worth more in terms of advertising than their current strategy or future paid advertising would be worth.
Opportunity knocks here for Oculus to do something, will they grasp that opportunity?
“Stakeholders” is what people with no binding commitment, nor mandatory association with an organisation call themselves when they want something for nothing – a little like SL users. “Shareholders” who own the organisation only care about stakeholders if they think they are likely to get some future benefit from them. Facebook have shown any number of times that they have little regard for the feeling of their own customers, much less general public opinion. And it is NOT Oculus that has an opportunity; Oculus no longer exists except as a puppet of Facebook.
Pep (thinks Facebook cares as much for Kickstarter “investors” as an elephant does about an ants nest.)
Yes it’s up to the business how they treat their stakeholders and which ones have more value, shareholders will carry far more weight in that area.
Facebook have largely got away with it, where’s Scooby Doo when you need him.
I totally agree that Oculus should do a goodwill gesture to placate early backers. But these backers should have known from the start that it is a reward based campaign and no returns will arise from it except for the rewards promised. This is why equity crowdfunding is much better. The Oculus case is a perfect example. Check out why this swedish crowdfunding site, FundedByMe (www.fundedbyme.com) has pivoted towards equity crowdfunding here – http://blog.fundedbyme.com/why-did-we-pivot-into-equity-crowdfunding/
Absolutely right, they are not owed anything more than those agreed in the goals of the Kickstarter and as far as I’m aware, that has been honoured.
Thanks for the link, there are different methods, there are also different laws and tax issues when it comes to these funding methods, worth looking at other forms of doing this.