Will Kickstarter Without a Founder at the Helm Go the Way of Etsy?
The CEO of the crowdfunding giant this week announced that he’s looking for a replacement.
PHOTO CREDIT: Getty Images
When Yancey Strickler launched Kickstarter in 2009, along with co-founders Perry Chen and Charles Adler, it was unclear that the business would ever turn a profit--let alone incubate new startups. Yet to date, the company has funded more than 128,000 projects, raising $3 billion in pledges from more than 13 million backers; in the process, it has reportedly taken more than $40 million in revenues, and launched high-profile businesses such as Yeti Coolers and the now-defunct Pebble smartwatch.
So it's perhaps surprising, then, that Strickler on Wednesday announced that he would be stepping down as CEO, just three years after taking over the role from Chen. In a blog post entitled "Our Next Great Leap," the co-founder insisted that the company has never been in better health, but explained that it was time to bring in new blood: "2017 will be our eighth straight profitable year," he writes. "Great stuff is cooking in the oven. Being the CEO of Kickstarter is an unreal opportunity for someone with a deep connection to creative projects, someone who doesn't believe in putting profit above all, and someone who's excited by the challenge of building on a successful business that's oriented to the long term."
Strickler, who could not immediately be reached for comment, also hinted that he's looking to start a new company.
Some analysts see the timing as suspicious. "If he was stepping down purely because he wanted to go do something else, he would have waited until there was a successor in place," suggests J.P. Eggers, an associate professor of management at NYU's Stern School of Business. "The timing seems a little odd," he added. Meanwhile, it's worth pointing out that Kickstarter saw its first-ever decline last year, when just 39,521 projects were successfully funded, compared with more than 54,000 in 2015, according to research firm ICO Partners. The business generates sales by taking a 5 percent cut of successfully funded projects.
Others point out that for Kickstarter, success is measured in terms other than growth in its bottom line. Under Strickler's tenure, the company re-incorporated as a Public Benefit Corporation, meaning that it must serve the community, its employees and the environment ahead of shareholders, or risk being sued. To that end, in its first-ever PBC statement, Kickstarter revealed this year that the company pays a higher-than-average tax rate of 25 percent. (Federal tax rates vary between 15 percent and 35 percent, depending on the amount of corporate income subject to federal taxes.)The company says it also employs an equal number of women and men, and it pays executives less than fives times what an average employee earns.
Some might wonder, though, whether a Kickstarter risks losing some of its verve without a founder at the helm. (Chen remains a chair of the company; it's unclear whether Strickler will serve on the board going forward.) It's an inexact comparison, but when craft marketplace Etsy went public in 2015, it struggled to keep up with investor demands. Recently, the New York City company revealed that it lost nearly half a million dollars in the first quarter of 2017, cut 8 percent of its workforce, and said that it would be replacing longtime chair and CEO Chad Dickerson.
Charlie O'Donnell, a New York venture capitalist and founder of the firm Brooklyn Bridge Ventures, says he isn't concerned for Kickstarter. "They're in a very different spot than Etsy," O'Donnell tells Inc. "They have nobody to answer to but themselves and their community. When you take on a few hundred million dollars in financing, like Etsy did, it's harder to do that," he adds. To his point, Kickstarter has raised only $10 million in venture capital over the course of its nearly nine-year history, from investors including Jack Dorsey and Chris Sacca.