Hemlis Messenger: A Crowdfunding Debacle
Ideas are awesome – especially if they are bold and useful. Hemlis Messenger, an independently crowdfunded project by Pirate Bay founder Peter Sunde, was born as such a very ambitious idea to make messaging more secure and thus give us back the freedom of private communication on the Internet. Yet, it also continues a long line of prominent crowdfunding failures. The origins of Hemlis’ failure are deeply rooted in the broader crowdfunding culture.
Conceived under the impression of the terrifying revelations by Edward Snowden on government surveillance, Hemlis Messenger app, a mobile application to exchange highly encrypted and anonymous messages between its users, seemed like the perfect idea at the right time. Many people, including myself, were happy to invest in something that promised more freedom from governments spying on our private lives. Consequently, Hemlis’ crowdfunding goal of $100,000 was surpassed within 36 hours and the crowdfunding campaign was the talk of the town called World Wide Web. Some two years later, all the crowdfunded money is gone and the project is no more. As announced on the project’s blog, Hemlis is dead. From another blog post Peter Sunde wrote explaining the failure of his project, we can gather that the team ran into a good amount of challenges and had some really bad luck. But let’s face it: All projects do. We have to dig a little deeper to find the true causes of its failure.
The principle behind crowdfundinding is that if you can convince many people to invest smaller amounts of money in your idea, you might be able to realize it. In a world where resources are very unevenly distributed, this is a powerful and idealistic concept. It draws on all the good things about society and the connected world we live in today. Yet, crowdfunding falls short to deliver on its promise in many cases like the one of Hemlis. Why? Because crowdfunding culture values ideas too much and execution too little. Peter himself hints at the actual problems in his aforementioned blog post. Hemlis didn’t fail because of bad luck. It failed because of a severe lack of execution, organization and communication. A few examples:
The necessary budget to create the app was severely underestimated
The necessary budget to build and maintain a global server infrastructure that supports hundreds of thousands of users was astronomically underestimated
The team consisted of friends who had no institutionalized way of working together, so they failed to control their budget or hire more people for such essential tasks
Competing messenger apps were almost completely ignored, so the project’s risk was underestimated
Apparently, there was no release plan or feature list which could have indicated delays early on and allowed for adjustments in the scope of the project
Apart from a few blog posts, there was almost no interaction with the investors or the potential user base throughout the project
This was bad execution all over the place. The problem is that these topics are the opposite of bold and sexy. No one wants to waste time in their project’s video pitch to talk about their great controlling skills, how well they handle spreadsheets or the many ways they know to build and motivate teams. Sadly so. Because, in the end, this is what makes great ideas soar. And, as Science has known for centuries (“Genius is 1% inspiration and 99% transpiration”) it is often the hard part of making great ideas come to life.
So, who is to blame here? Everyone. We investors, who only want to see flashy renderings and cinematic videos explaining world-changing ideas, as well as those behind the crowdfunding campaigns making bold claims while ignoring many of the challenges in realizing their idea. Sadly, the problem is baked into the system. Those crowdfunding campaigns which make the wildest promises get the most attention and, consequently, the most money by investors. This, in turn, motivates other projects to make the same mistake again and again. I am not sure what the best solution to this problem is. As for me, as bold and useful the next crowdfunding pitch I see seems, until I don’t see some big fancy spreadsheet proudly featured somewhere, I will think twice about clicking the “Back This Project” button.