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Tabletop makers are caught in a boom and bust crowdfunding cycle

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Even before the COVID-19 pandemic hit, Wyrmwood Gaming’s YouTube series called Wyrm Lyfe gave the internet a behind-the-scenes look at how the woodworking company operates. Fans were able to ride along when it launched a record campaign for an affordable modular gaming table in 2020. They were also there for the growing company’s labor issues, internal conflicts, and disagreements about how it should grow. But in recent months, a bigger problem has become apparent: that Wyrmwood, like so many other tabletop makers, feels trapped by the tool that helped bring it to life: crowdfunding.

Wyrmwood’s latest Kickstarter campaign for a modular standing desk ended in disaster in October. The project required $3 million from financiers to be fully funded, but the terms left some consumers in trouble. The initial buy-in was set at $3,000, nearly double the cost of the cheapest agency in the line. The goal was to stabilize the company’s production pipeline by limiting demand to only affluent consumers, a population that had turned out in droves for the products of the past. With a set number of desks to produce, it could easily keep 200 US-based employees employed while kickstarter backers are incentivized to upgrade their purchases at some point.

Image: Wyrmwood

But while the major publishers quickly caught on and the campaign passed the $2.5 million mark in just days, consumers without deep pockets (and international customers) simply couldn’t participate. Just a few days into the campaign, the ticker actually started rolling backwards. The project was eventually canceled on October 27, nearly $800,000 short of the goal.

On YouTube you could see the team reacting to the situation in real time. There was a tense cell phone conversation and some performative booze chugging as they got serious in a boardroom. In another scene, you could see Kickstarter’s newly appointed director of games on hand to oversee his company’s support for the high-profile campaign, while looking for something to do. A case of champagne stood unopened on a conference table as the company’s executives licked their wounds on pizza. Wyrmwood has probably lost a significant amount of money just developing and shooting its samples, and layoffs have been looming for months as a cost-cutting option. An option to buy the desk as a pre-order was later added to the website.

Why must it be? Wyrmwood has been in business since 2015, but every time it released a new product, it always came back to the source – to Kickstarter, at least four times a year – just like so many other companies in the board game and role-playing industry. On a phone call with Wyrmwood’s director of marketing, Bobby Downey, just days before the campaign went live, he told me why: The company felt like it just had nowhere else to go. It needed the capital on the favorable terms it got through crowdfunding to advance its business.

Graphical representation of the Kickstarter logo

Illustration: James Bareham/Polygon

“Kickstarter is great,” Downey said, “But you know, instead of getting these bursts of money, we want to put our more expensive stuff online — like our dice safes, like our dice, like our rolling trays — and hopefully we’ll get less being chaotic and functioning a bit more like a normal business.

“We call it ‘the Kickstarter crack,'” Downey said. “That’s how we stay awake, right? [It’s] necessary, but we cannot stay there forever.”

William Michael Cunningham, founder of Creative Investment Research and author of The JOBS Act: Crowdfunding Guide for Small Businesses and Startups, notes that crowdfunding — while still relatively new on the global scene — has earned its place in the marketplace. But it was never meant to be the kind of addiction it has become for table space companies. The bottom line is that the economic policies of the United States over the past 30 years have failed small businesses. And so do banks.

“Remember when banks in the ’50s and ’60s were where you went for some semblance of seed funding,” Cunningham, a University of Chicago-educated economist, told Polygon in a recent interview. “A restaurant. A barbershop. Anything. [Now] they are completely out of that trade, especially the big banks.

Consolidation has led to fewer banks in general, especially community banks and savings and loans. The banks that remain are bigger, with bigger reserves and bigger fish to fry.

“If trends continue in a linear fashion, there will be only two banks left in the country by 2040,” Cunningham said. “That is a failure of banking policy. Everyone got caught up in that ’80s Greed is good’ thing. Investment banks, good.’ The Goldman Sachs, Lehman Brothers type things – all without realizing the social benefits that small little mom and pop banks have provided to the community and the innovation economy.

Cunningham says a bank should run in a white stallion to save a successful manufacturer like Wyrmwood Todaybut they’re too busy looking for the next opportunity to sell Elon Musk most of the $44 billion he needs to buy Twitter.

“If they had any sense — which they don’t — they’d step in and be the saviors here,” Cunningham said. “Help a local small business and stick it on their ads. They won’t because they are selfish, greedy and only focused on short term money. But they should.’

Another traditional source of local capital is the credit union, a hyper-local source of reinvestment for close-knit communities. But their numbers have declined, especially in the last 20 years, with many closing their doors or being swallowed up by larger banks.

“Every industry has been driven by this unreasonable profit maximization theory,” said Cunningham, “which has left them unable to support institutions like Wyrmwood Gaming, that they – I think we can both agree – […] assuming they are even managed reasonably, this is the kind of organization that should be able to get financial support.

But they can’t, and the situation isn’t likely to change any time soon. Wyrmwood’s next option? venture capital. You can see Wyrmwood co-founder Doug Costello floating the idea – where else? – in a video on YouTube. His other co-owners sound terrified, and according to Cunningham, they absolutely should be.

“The venture capital model is not working [at this scale],” Cunningham said, “because it’s too focused on generating profit. These guys want 100% returns and all that crazy stuff.

It’s that, said Cunningham, or Shark cage. Ironically, that’s one of the last places Geek Chic, the iconic nerdy furniture manufacturer that went bankrupt in 2017, went as it struggled financially.

So how can creators shake off their addiction to crowdfunding?

“What you need to focus on is building solid products,” said Cunningham, “with high quality. Because the other thing about crowdfunding is, crowdfunding only works if you offer something that isn’t available anywhere else, at any price.”

Once those products come to life, the company sells them year after year — connecting with your biggest fans in direct and authentic ways — without exploiting the hype cycle for the next big influx of ready cash. And unfortunately, a fast-growing company like Wyrmwood might need less than 200 people to do that.

Crowdfunding is an exceptional tool for reviving unique projects. That’s why Kickstarter has spawned so many capable competitors like Gamefound and Backerkit – two platforms that originally grew around providing crowdfunded products to backers. Tabletop and video games, in particular, have found a home in this economic niche, with creators on Kickstarter alone raising more than $1 billion in the games category since 2009. or trinkets on the table feel like jumping on a treadmill. Campaigns urging you to put your money down before the opportunity is over eventually end… only to be picked up again almost immediately as long-running pre-orders on other platforms. It’s a multi-platform ouroboros of hype, constantly feeding – and draining – consumer goodwill.

Turns out it’s also a terrible way to run a business.


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