What’s a little fraud between friends?
The latest controversy to hit the crowd funding scene is all about the GoBe by Healbe, a wearable device that promises to take the all of the nitty-gritty detail work of self-tracking calorie intake and exercise by measuring glucose levels through a wrist-watch like bracelet. The problem? It appears to be completely bogus. And it has already taken Indiegogo members for nearly a million dollars.
The controversies surrounding the science of the GoBe have been covered on other sites with greater detail and specificity than I care to delve into (lest I suffer an outbreak of foot-in-mouth disease). So for my purposes, it should suffice to say that the product simply can’t work in the way it’s described, which seems to be pretty magical, in light of, you know, how bodies work and stuff. What I’m actually interested in is Indiegogo’s obligation to vet projects before letting them go live.
Indiegogo has a review process that Healbe, and any other would-be project creator must go through in order to launch a project. Therefore, Healbe must have passed the sniff test.
However, since launch, it’s become apparent that the Healbe team has either misrepresented themselves (claiming to have a Silicon Valley presence, when they seem to be entirely Russian) or simply have no virtual identities preceding the launch of the project—both somewhat suggestive of an attempt to deceive if not defraud.
So my first question is, to what extent should Indiegogo—or any other crowdfunding site—vet creators’ identity claims? My realistic answer is “minimally so.” That is, yes, they should perhaps investigate a company’s web presence. But should they necessarily investigate each team member with some appeal to data forensics? I’d say no—it’s time consuming, and it falls into the category of ‘stuff backers should do by way of due diligence.’ In other words, do not back whom you do not trust. For Indiegogo’s purposes, verifying that the company has a website, a back account, and a coherent project page should be enough.
The identity question, however, is small potatoes in the face of the big question that this whole situation raises, and that is: what obligation do crowd funding sites have to evaluate the concept, or the scientific claims made by creators? Certainly, most of the vocal outrage around this project stems from the claims that the science behind the GoBe is dubious or non-existent. And it is. But who are Indiegogo to evaluate that? Let’s imagine that there is a breakthrough scientific principle behind the GoBe (there isn’t—it’s really pretty scammy), who in the context of the crowdfunding platform is qualified to make the determination that it is or is not viable? I’m thinking, well, no one.
Imagine if the Indiegogo existed circa 1900 and that two guys named Orville and Wilbur wanted to run their idea for a funky little flying machine up the crowdfunding flagpole and see who stood at attention. Would such a preposterous notion—that, like, dudes can fly, man–be seen as so unlikely by the masses, that Ye Olden Tyme Indiegogo would have no choice but to kill the project at the dissenters’ request? Who’s to say? But I’d like to think that it falls to the would-be backers to evaluate the feasibility and merits of every project, and not the platform provider.
In my mind, all of the controversy: the experts, the bloggers, and the backers who are raising a collective stink, are exactly the right kind of response to a project that seems to good to be true. The system is working.
By the way, I wouldn’t back the GoBe if I were you. It looks like junk science to me, and those guys seem pretty shady…
Caffeineforge 
As much as I detest Indiegogo and their “Flexible Funding” that seems tailor-made to aid fraud, I don’t find them at fault here. If GoBe COULD be real, then they pretty much have to assume they ARE real, or the whole thing falls apart. They’d have to start setting minimum believability requirements, which fraudsters would just meet and move on.
In this case, apart from HealBe themselves, I blame the 2700+ backers who couldn’t wait to throw money at the snake oil salesman. I mean, it’s bad enough that the science isn’t there, but backers might not have known that at the time. And yet, these people just blindly threw a couple hundred bucks (or more) away for a chance to have some company they’d never heard of give them a product that might not even work. And since it IS a flexible funding campaign, that money is in HealBe’s accounts now. If it didn’t mean rewarding the scammer, I’d say these people SHOULD lose their money.
Crowdfunding backers are too trusting, and then they get mad at crowdfunding as a concept when it goes wrong. But a little due diligence can make all the difference, even if it doesn’t necessarily make all the risk go away. This is why I don’t back technology on Kickstarter, and am wary of video games for the most part. There’s too much risk for too little reward. Just ask all those happy Ouya backers, if you can find any. And that was a real product.
I completely agree, Brian. The institution requires that backers be as critical as they need to be in order to weigh whether or not they want to invest their hard earned money in someone else’s dream (or folly). I, too, detest flexible funding, and have more or less stopped putting any money into Indiegogo, both in protest of flexible funding, and for the proliferation of projects that don’t seem to pass the sniff test. Indiegogo has basically become the Craigslist of crowdfunding, so let that crap live there.
I’m not sure the crowdfunding platform has any (or at least “much”) responsibility in determining the viability of a given project. The whole point of sites like Kickstarter and IndieGoGo is to give creators a platform on which to attempt to “sell” their ideas. Much like when someone backs a product in a more traditional form of investing, the risk is part of the process and the backer is responsible for determining an acceptable level of risk.
That said, I agree with Brian McDonald that IndieGoGo’s design is kind of “fraud-friendly”, and the fact that IGG is considered the more “non-US friendly” crowdfunding site (compared to KS) makes that even worse. I have not backed any projects on IGG; for whatever risk there is for KS projects, it seems much worse on IGG (in my opinion).
Hopefully, as crowdfunding matures we’ll see less and less of these “dead on arrival” projects and backers being a little more critical before throwing their money behind a project.
You’re spot on Magnus. It’s clear to me that Kickstarter has a clear “cultural standard,” and both backers and creators reinforce a set of rules that overlap and run parallel to Kickstarter’s own guidelines. The result is that I feel much more comfortable putting my dollars there, than practically any other channel–because I believe that the social accountability that Kickstarter espouses is real.