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. Fans were able to ride along when it launched a record-breaking campaign for an affordable modular gaming table in 2020. 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. The project needed $3 million from backers to become fully funded, but its terms troubled some consumers. The initial buy-in was set at $3,000, nearly twice the cost of the lowest-priced desk in the line. 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. With a set number of desks to produce, it could easily keep its 200 U.S.-based workers employed while incentivizing Kickstarter backers to upgrade their purchases at some point down the line.

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. Just a few days into the campaign, the ticker actually began to roll backward. The project was ultimately canceled on Oct. 27, nearly $800,000 short of its goal.

On YouTube, you could see the team reacting to the situation in real time. There was a tense cellphone call and some performative booze swilling as they got serious in 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 likely lost a significant sum just by developing and photographing its samples, and layoffs have been looming as a cost-cutting option for months.

Why does it have to be 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. It needed the capital on the kind of favorable terms it was afforded by crowdfunding to keep its company moving forward.

Illustration: 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 of The JOBS Act: Crowdfunding Guide to Small Businesses and Startups, notes that crowdfunding — while still relatively new on the global stage — has earned its place in the marketplace. But it was never intended to be the kind of addiction that it has become for companies in the tabletop space. The bottom line is that the United States’ economic policies over the last 30 years have failed small businesses. And so have banks.

“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.”

Consolidation has led to fewer banks overall, especially community banks and savings and loans. The banks that remain are bigger, with larger reserves and bigger 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 says a bank should be riding in on a white stallion to save a successful manufacturer like 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.”

Another traditional source of local capital is the credit union, a hyper-local source of reinvestment for tight-knit communities. But their numbers have flagged, especially in the last 20 years or so, with many closing their doors or being gobbled up 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. His other co-owners sound terrified, and, according to Cunningham, they absolutely should be.

“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.

So how do creators shake 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. And sadly, a fast-growing company like Wyrmwood may need fewer than 200 people in order to do that.

Crowdfunding is an exceptional tool for breathing life into unique projects. 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. Tabletop and video games in particular have found a home in this economic niche, with creators on Kickstarter alone raising more than $1 billion in the games category since 2009. But, especially in the last few years of the pandemic, perusing the latest new board games or tabletop trinkets feels like hopping on a treadmill. Campaigns urging you to put your money down before the opportunity passes by eventually end… only to get picked up again almost immediately as long-running pre-orders 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.