Startup Companies: Can We Trust What We’re Reading?

Websites like KickstarterGoFundMe, and Indiegogo have ushered in an era where a startup company with a unique, creative, revolutionary, or simply fun idea can raise money by the millions in a matter of days. The content on these websites, however, isn’t actually regulated very strictly. Last year, someone made a post called “Potato Salad” with the description “Basically I’m just making potato salad. I haven’t decided what kind yet.” It raised over $50,000.

potato salad picture

Said Kickstarter page; Image Source

One of the problems (or strengths depending how you look at it) with crowdfunding is that people make impulsive, emotion-driven decisions. If something seems exciting, people are likely to throw money at it. Startup companies know this, and therefore tend to glorify and exaggerate the capabilities and features of their products. With potato salad, its easy to see what is being sensationalized and what is not. But with something like “Solar Roadways“, it can be much more difficult to tell.

solar roadways

Solar Roadways; Image Source

A seven minute video describes the product’s features. The short version is that Solar Roadways are “Solar panels that you can drive, park and walk on. They melt snow & cut greenhouse gases by 75% ?!!!” Neither of these claims have been tested extensively or proven. While in theory an electric surface could melt snow, according to this video (and many other sources) it would take vastly greater amounts of energy than even the most efficient solar panels can produce to do so. The load bearing capacity, life span, and many other aspects of “Solar Roadways” hadn’t been tested at the beginning of the campaign either. As consumers we need to learn to see through deceiving marketing, and make our crowdfunding decisions logically, not emotionally.

1 thought on “Startup Companies: Can We Trust What We’re Reading?

  1. IreneKo

    Hey Karl! I enjoyed reading your blog post about start-up companies and wrote a blog response to it. You’ve made some interesting points about startup companies. I never really questioned crowdfunding sites because they always appeared trustworthy. However, I do feel that companies on crowdfunding sites may overvalue their products/services. It is difficult for investors to research on startup companies since there won’t be too much news on them. On the other hand, crowdfunding sites do provide a useful platform for new businesses to find a way to enter the market. Overall well written!

    Reply

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