Kickstarter for “Coolest” shows growth of crowdfunding

Ryan Grepper invented many a dud before he made more than $12 million on a souped-up cooler — a cooler that, on Friday evening, became the most successful project in crowdfunding giant Kickstarter's five-year history.

There was the “shotslinger,” a Jello shot catapult intended to circumvent laws against public consumption on the San Diego boardwalk. (“It got me invited to the Playboy mansion,” the 39-year-old Grepper says, “so I consider it a success.”)

There was “EZ-Mark,” a picture-hanging device that Grepper could never find a buyer for. (“I still think it's a good idea, but the market has spoken,” he explains.)

And just last fall, there was, the #8220;Coolest#8221; itself, which Grepper initially posted to Kickstarter with a funding goal of $125,000. Kickstarter, the first and foremost in a wave of crowdfunding sites, allows inventors such as Grepper, as well as artists, video-game designers and other creative types to seek all-or-nothing micro-investments directly from fans. Investors donate to projects in return for goodies or special access #8212; in the case of the #8220;Coolest,#8221; the rewards include a cooler, a T-shirt and a reusable Solo cup #8212; but no actual percentage of future profits.Despite Grepper's conviction that the Coolest, which includes a blender, a Bluetooth speaker, and a built-in USB charger, was #8220;a really cool idea,#8221; it closed out its initial funding period with only $100,000. (Under Kickstarter's funding rules, inventors must meet their goal to get the money #8212; so Grepper got nothing.)Grepper put his head down. He returned to his workshop, determined to tune up his pitch. This time he built a prototype and included even more bells and whistles. Eight months later, a revamped and relaunched Coolest #8212; with an actual sample product for people to view #8212; had earned nearly $13 million in donations from more than 61,000 people.#8220;It wasn't so glamorous,#8221; Grepper laughed on the phone from Portland, Oregon, where he lives with his wife and two young children. #8220;There are many, many failures before that first invention. One of my mentors told me once, if you can't handle disappointment and rejection, pack up your toolbox and find a new career.#8221;#8220;Career#8221; is an odd descriptor for what Grepper does: He's more of a serial entrepreneur than a career man, in the traditional sense. While his success is a testament to the power of perseverance, it's also evidence of the arrival of a new piecemeal, DIY economy #8212; one dependent on the direct investment of consumers and carried out in living rooms, coffee shops and co-working spaces. Anywhere, Grepper says, with some caffeine and Wi-Fi.The inventor never imagined that possibility when he quit his full-time job in medical sales 14 years ago to strike out on his own. Only a couple years out of college, and already bored with the 9-to-5, Grepper moved from Tucson, Arizona to San Diego and took a part-time sales job at Sears. In his spare time, he welded ornate metal fences for a hodgepodge of clients and sketched out his solutions to life's odd little problems: A dog bowl that folds up into a credit card-sized pouch, for instance. Or a luggage-scale to help travelers avoid airline fees.As Grepper was becoming more confident as an inventor, a parallel change was taking place for invention as a field: Kickstarter, with its promise to change #8220;how millions of people around the world connect with art,#8221; opened shop in Brooklyn, New York in 2009, funding more than 10,000 projects its first two years. Co-working spaces, with their emphasis on entrepreneurialism and creative camaraderie, began cropping up everywhere from San Francisco to Wichita, Kansas. Just this past year, companies such as MakerBot and 3DSystems introduced consumer 3-D printers to the mainstream market #8212; and with them, the promise of making prototypes and models, more easily, in your own home.#8220;We're at a peak time in the creative economy,#8221; Grepper said. #8220;There are so many things that allow people to translate their ideas into actual, physical products. Things that weren't available even five years ago.#8221;Of course, it's no coincidence that the peak of the creative economy has coincided with a stagnant period in the real economy. Since Kickstarter's founding in April 2009 #8212; at the height of the financial crisis #8212; economists, politicians and entrepreneurs have cited the crowdfunding model as an alternative to traditional structures that faltered during the crisis: banks, investors and wary venture capitalists.Kickstarter has funded more projects, and more ambitious projects, every year: In 2013, site donors pledged an average of $1.3 million per day. As of last quarter, Kickstarter funded an average of three projects each hour, including a dozen projects that made $1 million or more. Before Grepper's cooler, the most-funded project was Pebble's well-reviewed #8220;smartwatch for regular people,#8221; with $10.2 million from Kickstarter pledges.The funding numbers keep growing, and yet trust is still at the root of the Kickstarter model: there is no official accountability, other than the public pledge to create a project, so creators technically could take the money and run.The site has evolved into such a wealth of startup revenue, in fact, that predicting which projects will succeed has become a subject of academic study; in January, researchers at Georgia Tech University concluded that the language of Kickstarter campaigns #8212; including how authoritative and accessible the project sounded, as well as the kind of rewards it promised to backers #8212; accounted for nearly 60 percent of the variance around success. Meanwhile, at the University of North Carolina, researchers have determined that the success of super-viral projects has less to do with the product, and more to do with herd behavior and social buzz.#8220;It's very similar to what you see in film or other industries,#8221; said Venkat Kuppuswamy, an assistant professor of strategy and entrepreneurship at the University of North Carolina. #8220;People will go see blockbusters not because they're the greatest movies out there, but because they want that shared social experience. They want to be able to talk about it with their friends.#8221;That means the #8220;Coolest#8221; cooler probably won't hold its Kickstarter record for long. But with the funding period having ended 6 p.m. Friday, and only five months before the first coolers are scheduled to ship, Grepper has far greater worries #8212; like flying out to Ohio to meet with his new industrial design team and spending hours on the phone debating component suppliers.#8220;It's a very, very aggressive deadline,#8221; Grepper sighs. #8220;There's a production deadline every single day.#8221;Eventually though, he'll be able to relax and celebrate the infusion of capital #8212; with a perfectly chilled beverage.