You’ve probably heard by now that Facebook has snatched up Oculus Rift, the Kickstarter-funded VR interface. Oculus Rift was a particularly noteworthy Kickstarter, a real breakthrough success story–it raised 2.4 million dollars, far more than its humble goal of 250,000. Naturally, there is outrage among the community of folks who supported its campaign, and also, of course, plenty of apologists.

The bulk of the contention seems to consist in animosity towards Facebook, well-earned in some cases. For instance, many game developers who targeted Facebook as a platform felt the sting as shifting policies and shenanigans made it difficult for them to stay competitive (or even viable). Gamers also resented that so many prominent game designers, including superstar John Romero, were wasting time and talent developing social games. There’s also fear that the technology will now stagnate (or be put to nefarious ends). For some, this news hit them like a kick to the groin.

However, as Alex Blenkush and others have pointed out on, er, my Facebook page, if you remove Facebook from the equation, it’s still not necessarily a rosy picture. His response is worth quoting at length:

[Oculus VR] may have gotten their seed money from kickstarter, but investment firms put up another $89MM to the company quickly after that. If anything, this is the investment strategy of those groups (Spark Capital, Matrix Partners, Founders Fund, and Andreessen Horowitz if you want names) playing out perfectly. They invested tens of millions in a company and are getting hundreds of millions back in less than two years. I think the only reason people are mad at Facebook is because it’s a name they recognize (I mean what’s Andreessen Horowitz anyways,right?), and the developers are actually losing control the development instead of “just” the money and intellectual property. TL, DR: Oculus VR was a bought out company a looooooooooong time before Facebook got involved.

The apologists are quick to point out that, technically, at least, Oculus VR did nothing wrong, made no promises they didn’t keep, people will still get their pledge rewards, etc. They also seem repulsed by the idea that just because you funded a Kickstarter, you should have some say in how The Company conducts its Business. “Just give us your money and shut up, ingrates.” Yeah, maybe they should make that clear in their Kickstarter pitch videos?

This whole situation really brings home to me the importance of knowing exactly what, who, and how you’re supporting folks when you pledge to their Kickstarter projects. In many cases, you’re wrong if you think you’re actually making an investment, as in, you’re going to get something in exchange for your money. It makes more sense in many cases to think of it instead as a gift or donation. The only expectation you have is that the money will, hopefully, help these folks achieve their vision.

The apologists’ argument is something along these lines: “Look, if you want X product, you should go pledge. Otherwise, you won’t have the option to buy X product later, because there won’t be an X product.” Imagine applying this logic elsewhere:

“If you want a new school in your neighborhood, you and your neighbors should pay a contractor several million. After you give him your money, he may decide at anytime to sell the building to someone else–perhaps Monsanto wants the building and will make a lot more money for the contractor than the school. But, hey, that building would have never been built otherwise, so why are you complaining?”

I’m actually on the side of the folks who think Oculus VR may have done something offensive, but nothing that you shouldn’t have seen coming. It really is a case of buyer–or pledge-maker–beware.

Investors invest in companies such as Oculus VR because, big shocker, they want to make money. They also have laws protecting them and their investments. Kickstarter folks invest in companies for very different reasons, with very little protection (if any). Unless they’re careful, they’ll end up playing the role of the ultimate sucker, with companies like Oculus VR laughing all the way to the bank.

That’s why I’ve decided not to pledge to any Kickstarter that appears more interested in making money than enriching the community. I’m not saying you can’t do both; it’s just a matter of balance and priority. The model I prefer is to calculate how much you need to achieve your vision, collect the funds, then give away the product at the end. If you think you’d miss out this way on thousands of lost sales, then raise your funding goal.

In other words, the funding goal should not just cover the amount of money you need to make the thing, but also the amount you’d expect to collect if you sold the copies. This way, you can give away the product at the end (or manufacture it at-cost) without missing out on the revenue. And please, don’t adjust for piracy. We all know how inflated those figures can become.

I’m thinking mostly of games, but it applies even more to hardware and patents. Whatever patents and assets that get built on the back of a community-funded project ought to belong to that community, not a private individual. At least, I’m not going to back anyone who seems to think he or she can take my money and not give anything back.

I’m not talking about an all-or-nothing deal here. Let’s say you’re making a new game; say, a new Wizardry. Let’s say that your funding goal is $2 million, which you figure is just enough to cover the costs of making the game and paying your salaries. Anything over that, of course, will be like the profits you make selling copies of the game. Meanwhile, you state upfront that the final game itself will be released under a Creative Commons license, one that lets people copy it and give it away for free, but not to sell it, nor to pretend they made it. You reserve those rights yourself, so if you want to make, say, a boxed copy, or version for a different platform (consoles, etc.), DLC, or whatever; go nuts. But, meanwhile, there’s that PC version with the CC license that anyone, whether they pledged nothing, $1, or $50,000, can play for free. That’s giving something back. Of course, I’d love to see you also make the code open source and release the assets under a CC, too, but obviously that’s not going to work for everyone or everything.

I think we’re missing out on the real potential of crowdfunding when we try to retrofit it into the Old Way of Doing Business. Don’t be blinded by your love of an old “property” into giving away your money just to fatten somebody else’s wallet. Hold that person accountable, not just to you, but to the community they’re supposedly supporting and part of. If they’re just taking, and not giving, keep your fingers off that “pledge button.” Be patient and make them listen. Eventually, we’ll all get what we want.