Tabletop creators are trapped in a boom and bust crowdfunding cycle

Even before the COVID-19 pandemic hit, Wyrmwood Gaming’s YouTube series, called Wyrm Lyfe, provided the internet with an inside look at how the woodworking company operates. When the company launched its record-breaking 2020 campaign to sell a low-cost modular gaming table, fans were invited along. They were also there for the growing company’s labor issues, internal conflicts, and disagreements on how it should grow. But over the last several months a bigger issue has been made clear: that Wyrmwood, like so many other tabletop creators, feels trapped by the very tool that helped to bring it to life — crowdfunding.

Wyrmwood’s latest Kickstarter campaign for a modular standing desk ended in disaster in October. To be fully funded the project required $3 million in backers. However, some customers were not happy with its terms. Initial buy-in cost $3,000 and was nearly double the price of the lowest priced desk. The goal was to stabilize the company’s production pipeline by limiting demand to well-heeled consumers only, a population that had shown up in droves for its past products. It could keep 200 U.S. workers at work while encouraging Kickstarter backers to make additional purchases.

Image: Wyrmwood

But while the big spenders fell in line quickly, pushing the campaign over the $2.5 million mark in just a matter of days, consumers without deep pockets (and international customers) simply weren’t able to participate. The ticker began to slide backwards just a few days after the campaign started. On October 27, the project was canceled, just $800,000.

You can see how the team responded to the situation on YouTube. They had to make a phone call during which tension built up and then they started drinking in front of a boardroom. In another scene you could see Kickstarter’s newly anointed head of games, who had been flown in to oversee his company’s support of the high-profile campaign, casting about for something to do. A case of champagne sat on a conference room table unopened, while the company’s leadership licked its wounds over pizza. Wyrmwood probably lost significant amounts just from developing and photographing their samples. For months, layoffs had been in the offing.

It doesn’t make sense that it has to work like this. Wyrmwood has been in business since 2015, but every time it released a new product it always came back to the well — to Kickstarter, at least four times every year — just like so many other companies in the board gaming and role-playing game industries. On a call with Wyrmwood’s marketing director Bobby Downey just a few days before the campaign went live, he told me why: The company felt like it simply had nowhere else to go. The company needed to raise capital with the same favorable terms as crowdfunding in order to continue its growth.

Illustration by James Bareham/Polygon

“Kickstarter is great,” Downey said, “But, you know, instead of getting these bursts of cash, what we want to do is put our more expensive stuff online — like our dice vaults, like our dice, like our rolling trays — and hopefully we will be less chaotic and a little bit more functioning like a normal company.

“We call it ‘the Kickstarter crack,’” Downey offered. “That’s how we stay up, right? [It’s] necessary, but we can’t stay there forever.”

William Michael Cunningham founder of Creative Investment Research, and author Crowdfunding for Startups and Small Businesses: The JOBS Act, notes that crowdfunding — while still relatively new on the global stage — has earned its place in the marketplace. It was not intended to become an addiction like it is for tabletop companies. The bottom line is that the United States’ economic policies over the last 30 years have failed small businesses. Banks have also failed.

“Remember back in the ’50s and ’60s, banks used to be the place that you’d go to for some semblance of startup funding,” Cunningham, a University of Chicago-trained economist, told Polygon in a recent interview. “A restaurant. A barber shop. Whatever. [Now] they are completely out of that business, especially the big banks.”

Banks have been condensed, with fewer overall banks. This includes savings and loan institutions and community banks. These banks are larger, have greater reserves and more fish to fry.

“By 2040, if trends continue in a linear way, there’ll only be two banks in the country,” Cunningham said. “That’s a failure of banking policy. Everybody got caught up in that 1980s ‘Greed is good. Investment banks, good.’ The Goldman Sachs, Lehman Brothers-type of thing — all without realizing the social benefits that little tiny mom and pop banks provided to the community and to the innovation economy.”

Cunningham believes a bank should ride in on Wyrmwood’s white horse to rescue Wyrmwood. Today, but they’re too busy looking for the next opportunity to float Elon Musk the better part of the $44 billion he needs to buy Twitter.

“If they had any sense whatsoever — which they do not — they would step in and be the saviors here,” Cunningham said. “Come to the rescue for a local small business and plaster it all over their advertising. They won’t do it, because they’re selfish and greedy, and focused on just short-term money. But they should.”

The credit union is another traditional source for local capital. It’s a source of investment that provides reinvestment opportunities to tight-knit communities. However, their numbers have declined over the past 20 years with many credit unions closing down or being taken over by larger banks.

“Every single sector has been driven by this unreasonable profit maximization theory,” Cunningham said, “which leads them to not be able to provide the support to institutions like Wyrmwood Gaming, that they — I think we can both agree — […] assuming that they’re even reasonably managed, this is the kind of organization that should be able to get financial support.”

But they can’t, and the situation is unlikely to change any time soon. Wyrmwood’s next option? Venture capital. You can watch Wyrmwood co-founder Doug Costello float the idea — where else? — in a video on YouTube. Cunningham says that his co-owners seem terrified.

“The venture capital model does not work [at this scale],” Cunningham said, “because it is over-focused on generating profit. These guys want 100% return and all this crazy stuff.”

It’s either that, Cunningham said, or Shark Tank. Ironically that’s one of the last places that Geek Chic, the iconic manufacturer of nerdy furniture that went bankrupt in 2017, turned to when it was facing financial woes.

How can creators overcome their addiction to crowdfunding

“What you need to focus on is establishing solid products,” Cunningham said, “with high quality. Because here’s the other thing about crowdfunding: Crowdfunding only works if you’re offering something that can’t be obtained anywhere else, for any price.”

Once those products get brought to life, the business becomes selling them year after year — and connecting with your biggest fans in direct and authentic ways — not exploiting the hype cycle for the next big influx of ready cash. Wyrmwood, which is a rapidly growing company, may require less than 200 employees to accomplish this.

Crowdfunding can be a powerful tool to bring life and purpose into your unique project. That’s why Kickstarter has spawned so many capable competitors, like Gamefound and Backerkit — two platforms that originally grew around delivering crowdfunded products to backers. These niches have been especially suited for tabletop and console games. Since 2009, Kickstarter has raised over $1 billion. In the aftermath of the recent pandemics, browsing the latest tabletop and board games feels almost like walking on a treadmill. The campaigns that urge you to spend your hard-earned money before this opportunity is gone eventually stop… but are quickly picked up by long-running preorders on other platforms. It’s a multi-platform ouroboros of hype, constantly feeding on — and exhausting — consumers’ good will.

Turns out it’s a terrible way to run a business as well.