Crowdfunding as Market Validation

Sam Byford, writing on The Verge:

Amazon is launching the next line of products for its Build It crowdfunding platform. The company has collaborated with fashion designer Diane von Furstenberg on a range of Echo Dot smart speakers that’ll only go on sale if enough people pre-order them within 30 days.

Two thoughts. First, I wasn’t aware that Amazon had launched its own crowdfunding platform. Here’s more about Build It, “a new Amazon program [that] lets you weigh in on which devices we build next”:

Second, it seems inappropriate to call this “crowdfunding.” Amazon doesn’t need funds from the crowd. This is about validating ideas by having people put their money where their mouth is. It’s brilliant.

I’m not suggesting it’s a new approach. Other well-known (and well-funded) brands run crowdfunding campaigns in sites such as Kickstarter. But Amazon is especially well-suited to do this. For one thing, people have been pre-ordering goods (books, etc.) from Amazon for a long time. We trust the brand, so we’re more willing to suspend our disbelief.

For another, the company’s culture encourages trying new things. Jeff Bezos said, “Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.” Some experiments, such as the Echo and Kindle, have succeeded. So, Amazon has a track record of making things people love. This gives Build It products credibility.

Other experiments, such as the Fire Phone, have failed. Better to have them fail quickly in the market, so teams can move onto other things. But better still to have them fail before they make it to market. That’s what Build It is about: late-stage validation. A powerful complement to the product design process.

Amazon is crowdfunding these Diane von Furstenberg Echo Dots – The Verge