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Kickstarter CEO Yancey Strickler on Restaurants and Crowd-Sourced Funding

Photo: Kickstarter

Back in September 2010, the first restaurant project funded on Kickstarter was an Oakland-based mac-and-cheese restaurant named Homeroom. In the years that followed, more would-be restaurateurs have turned to the community-based pledge site for help in starting up their businesses. In fact, some speculate whether this might be the future of restaurant financing, particularly given the huge hauls that funded Travail in Minnesota (ultimately netting $255,669) and Superior Motors in Pennsylvania (with a record-breaking $310,225). Kickstarter use seems to be swelling beyond restaurants, too, breaking $1 billion in pledges for all project categories as of this week. There's money to be had out there.

In the following interview, Kickstarter CEO Yancey Strickler talks about the rise in restaurant projects over the years, how he plans to embrace restaurants even more in the future, and what restaurateurs can do to better guarantee success in Kickstarter's all-or-nothing fundraising system. While addressing the potential for backlash against project creators accused of asking for handouts, Strickler also explains that the dream of Kickstarter "has always been to occupy that space where doing well through our system would be a public validation that your work matters." Here's the interview:

How have you seen restaurant use of Kickstarter evolve since you guys started up?
I think the very first restaurant project was in 2010. It was a mac and cheese shop in Oakland, and I think it's still open and it's still doing well. In the earlier years, we were seeing a lot of food trucks, not as many restaurants. I think part of that was some confusion about our guidelines, which stressed a finiteness of the project so there were a lot of questions of, "Is opening a restaurant a project or not?"

We think restaurants are phenomenal projects.

We actually think they are phenomenal projects. It started with just a handful; I think now we're up to over 500 restaurant projects that have happened on the site. I really think of them as being the perfect project because they are, obviously, so community based, largely by physical location, but not always. There was a big restaurant project recently, the Superior Motors in Braddock, Pennsylvania. I backed that, and I've never been to Braddock. I don't know if I will but I like the idea. Anyway, they're great ways for communities to get together and to really have a closer relationship with a place that can be a pretty central hub to that neighborhood or town.

Can you explain a little more about the confusion as to whether restaurants counted as projects?
Yeah, we designed this whole Kickstarter system from the ground up. I mean every part of it we made up. My partner, Perry Chen, had the initial idea for Kickstarter. Most of the rules that govern the site came from me and a few others here. Basically, we created this system that was a very blank canvas for the world to use however it wanted to. Then, over time, we tried to create a few simple rules just to sort of shape it toward what we thought the right outcome was.

We've always been focused on the idea of a project, the idea of a discrete thing that at some point you can check a box and say, "All right, this is done." I think, practically speaking, our lives are lived in segments of the projects. A project is like the core atomic unit of an idea, and we're trying to get people focused on a thing that they could accomplish and then they move on. From that perspective, something like a restaurant, it's harder to imagine because a restaurant needs constant maintenance and upkeep to exist.

We're going to embrace restaurants even more in the future.

We were thinking about it more in terms of films and albums. That's the more traditional Kickstarter project. We added food to the category very early on because we certainly saw and thought of food as a core creative art. Restaurants were something that started to come our way. We hadn't really thought about Kickstarter being used in that way, but very quickly got on board and we're going to embrace them even more in the future. I think they've been some of our absolute best projects. They're ones I'm always eager to support.

How are you going to embrace them more in the future?
I think pretty soon within the food category we'll make an explicit restaurant sub-category. That's something we're talking about now, and it should happen in the not-too-distant future.

superior-motors-kickstarter-screenshot.jpg
[Screenshot: Kickstarter]

That'd be great. You said that it started with a lot of food trucks. Are you seeing a change at all in terms of what kinds of restaurants are using Kickstarter? I feel like I've seen a lot of really high goals lately.
Yeah, we definitely see a lot of emerging trends from a ground level to this. Maybe two years ago was peak food trucks. I don't really know. It seemed certainly like we saw a lot of food truck projects the first few years. Now I feel like we see more restaurants. That could just be the audiences that are discovering Kickstarter at this moment. I think that the trends that we see in terms of restaurants are sort of fairly typical positive ones that we're all rooting for, which is local, organic, communal-based places. [We've] certainly seen a number of restaurants that are about to bring in cuisine that didn't previously exist in a certain area; I think those are often really cool.

Right now, the Superior Motors project, the Travail project, those are both restaurant projects at a different scale than we've seen before. I'm sure what's happened is the chefs and restaurateurs are studying what each other is doing. Each one validates the next person and they're all learning from each other. I think there's a very organic evolution that's happening here and I'm sure we're going to see many more of those in the months to come.

What was that like for you in terms of watching Superior Motors raise these totally insane numbers? I know that Kevin Sousa said he was expecting to fail, so I'm curious if you guys were watching that.
Yeah, it's the first Braddock project to succeed. I backed most of the Braddock projects, I'm a big supporter. I was happy to see a project with that sort of motivation reach that scale. It hit so many people. It was a big thing on the internet and it's pretty amazing to think about a single restaurant in a single rustbelt town in America becoming a thing that the internet-at-large could be aware of. It was a great achievement.

Now even the sourcing of restaurants is something people are interested in.

In general, what I like about this stuff, it's just fostering a greater appreciation of where these things come from. Certainly sourcing of food has become a growing part of culture. Now even the sourcing of restaurants is something people are interested in. I like these things that expose a little bit of the magic of how things exist and showcase what it actually takes to open and run a restaurant. There's a broader societal and cultural benefit to all of us understanding that these things aren't magical. This is sweat. This is effort. This is work. This is trial and error. So when I go into Littleneck Clam Shack in Gowanus, here in Brooklyn, I know that they slept in that restaurant as they were building it. I know how they made this huge marble countertop. I feel all the more appreciative whenever I go there.

What do you think is the best strategy for a restaurateur in terms of setting a goal? It seems that there are drawbacks to both setting it too high and too low.
You want to start with just a very practical thing of, "What are you trying to achieve?" If you're trying to renovate your kitchen or start the whole thing from scratch, there's probably an actual act of what you practically need to achieve. I would start doing that. There's some math that you can do. For example, the average pledge now on Kickstarter is $71. If you think about the amount of money you need, divide that by 71 and that would net out how many backers you might be looking for. I find that thinking about these things from the perspective of how many people can you get on board versus how much money can you generate is maybe an easier way to understand it and think it through. Maybe think about the size of your community.

The other thing that is so important with every project — restaurant projects in particular — is offering people rewards that they're going to be interested in. You can be creative about this, it doesn't have to be that you're giving everyone a free meal or whatever. It doesn't have to even be things that you have to pay an actual cost to produce. There are really creative things you can do [such as] letting people come in on a Friday afternoon and get cooking lessons from the staff or letting people go to the market with you and see how you source your produce.

These experiences, I think, are the things that people are ultimately seeking. What I would counsel the restaurant to do is to think about the things that make their place special, and what are the ways that you could share that with your peers and with people in your community? How do you want to treat them? How do you want to relate to each other? I think any way that you can engage personally and physically is going to be great, even if there wasn't money involved.

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Travail in Robbinsdale, MN, is one of many Kickstarter-funded restaurants. [Photo: Katie Cannon/Eater MPLS]

Do you guys monitor how restaurants honor their rewards?
No, it's up the backer and creator. We don't follow each project. It's up to the creator to report to the backers through the site or just through email what's going on. Generally if the creators aren't doing a good job, backers will let them know it. The track record has been very, very strong of people taking their obligations seriously. Especially when you're raising money not from some generic customer base but from your community, obviously you're strongly incentivized to be honest and forthright and to do everything you can because your reputation is on the line. If someone does do a poor job, they're going to struggle in the future for those reasons. I think people really understand that and that's been the biggest reason why its track record has been so strong.

That makes sense. Someone mentioned to my colleague that you can't shut down your Kickstarter once it reaches its goal. Why is that?
Actually, you can. We usually let creators know this. They can choose to mark all the rewards as ... you can limit them to a certain number. If 500 people ordered the thing, and you're just like, "Well I can't even imagine doing more than that," you can instantly go in and just click "sold out" and it will just mark it to where no one else can back it. Very few projects do that, because of course at the time when you're having the huge success you're just like, "Well, whoa. This is nuts. Keep in coming!" Who wouldn't do that? Then, of course, there is the technicality of, "Oh wait, now you're having to make 10,000 more of these than you anticipated." That is certainly both the opportunity and the challenge of being on the scale of Kickstarter.

There are these totally unexpected things that just go nuts. It literally happens every day.

It happens really frequently. Like the Omnivore Salt project. Did you see that one? That's a guy in San Francisco who makes his own salt. He had a project video that was made and narrated by Werner Herzog, and it's three minutes of Herzog and his amazing accent talking about salt. I forget what the goal was; he ended up raising $108,000 for salt which felt like a real crowning achievement for us. Something like that can happen. That's what's great. There are these totally unexpected things that just go nuts. It just clicks with the Internet, people get excited and suddenly this person's life is changed. It literally happens every day. It's totally wild.

Well, on the other side of the coin there's some projects where their goal is incredibly high and they raise a ton of money, but ultimately fall short. It seems pretty tragic, almost, when you raise that much money. What kind of recourse do people have in that kind of situation?
Well, you can always relaunch with a lower goal if you want. What's most important is that what you're saying to your backers is, "Hey if I get this much money, I can do these things I'm saying I'm going to do." The all-or-nothing system is really to the benefit of both backers and creators. For backers, there's the safety in numbers, "Hey, I'm only on the hook if everyone else thinks it's a good idea, too." That actually makes people significantly more likely to pledge. For creators the real benefit is, "Hey you're only obligated to do this thing if you get the money you said you needed." So if someone looks to raise $100,000 and they raise $10,000 and they keep that money, how are they supposed to do that thing that they needed $100,000 to do when all they got is $10,000? It actually puts them, I think, in a significantly worse position.

What's interesting is that, as a system, 44% of projects have been successfully funded, but 85% of the money has gone to successful projects. It's something like 15% of projects have never gotten a pledge, period. So the public is discerning. They are saying what projects they're interested in and which they're not. Projects that raise at least 20% of their goal have something like a 90% success rate. Essentially what it nets out to is, hey, if there's a community of people that think this thing is cool, you're going to be great. If not, people aren't going support it. That feels honest to me. We feel really confident in the all-or-nothing system and it's really core to how Kickstarter works. Ultimately, it's up to you and the public which way it's going to go.

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Thirty Acres in Jersey City, New Jersey, also got some funding via Kickstarter. [Photo: Daniel Krieger]

[Pittsburgh chef] Kevin Sousa mentioned, too, that just having all those Kickstarter backers on the record is going to help him essentially go to banks and be like ...
Yeah it totally legitimizes you. This was always the dream. I was a music journalist before, and I ran a little tiny record label. These bands would do well and then record labels would come calling and want to sign them. They would sign even though they would have less control over their work and they're splitting their money with somebody else. It's fine because labels brought stability but, most importantly, it brought third-party validation. They could call mom and dad, and they could point to a piece of paper that says, "Look, this thing I've been doing matters. This is worth it, I'm real, this is legitimate." Especially when you're doing anything creative or anything that comes from the soul in that way, that's the big anxiety. Am I wasting my life on this? Does anyone give a shit? It's such a basic core fear that we all have.

My dream for Kickstarter has always been to occupy that space where doing well through our system would be a public validation that your work matters. For myself and people I know who make things, that's really the first thing you're trying to satisfy. Fame and success and money, that's like wildest dream sort of stuff that, of course, some part of you wants, but it's kind of secondary to just being appreciated. To have another human being say, "Hey, I think that thing you do is cool," that's the kind of thing that gives you a high for days. I would love for the platform to be a way for all of us to be able to express that to each other. You don't need that gatekeeper or that boardroom to say that for you. A group of 80 people can have that same effect on someone's life, and I think that's just a tremendous thing.

Finally, I was reading a New York Times piece where they mention the backlash that can happen, some of these restaurants getting hate mail for asking for handouts. Is that something that's particular to restaurants for Kickstarter projects?
I don't that's particular or anything at all. I think that the internet is a very efficient outrage machine that is always willing to turn its ire toward anyone and anything. I hate seeing creators go through that because the act of standing up and saying you want to do something is an act that makes you vulnerable. The second that you're vulnerable, it allows others the chance to attack. Way too many people take advantage of that and, ultimately, it has a discouraging and a chilling effect on others to even question their own ideas. That's poisonous.

I will, until my dying breath, defend the right for people to share their ideas with the public.

The implications of that are broader than fucking Kickstarter; it's about what we as a culture and society do and whether people are allowed to try things and take risks and do things in the way that they think is right. I will, until my dying breath, defend the right for people to share their ideas with the public and invite other people to become a part of it. Anyone that wants to talk shit about someone doing that, shame on them.

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