Lockitron’s Crowdsourced Launch a Tremendous Success

Monday - October 8th, 2012

Written by: Tristan Pelligrino

Lockitron’s Crowdsourced Launch a Tremendous Success

Apigy has just unveiled its second generation Lockitron keyless entry device. The device is mounted on a lock and interfaced with an application on a smartphone. The door with the device can now be unlocked by the smartphone. Apigy needed to raise funds in order to bring this second generation device into production. They opted for a highly innovative crowdfunding approach. Their campaign was incredibly successful resulting in 9000 orders for the device in 48 hours. Apigy’s initial goal was a modest 1000 orders for Lockitron. Their innovative approach exceeded their expectations in its power to garner support for the project.

The launch of the second generation Lockitron device was accomplished through crowdsourcing. Crowdsourcing is an innovative way of distributing work over the Internet. Instead of having an inhouse team do the work, the project is presented to the public. A reward is offered for a solution. Word spreads via the internet and people try to solve the problem. The individual with the best solution gets a reward and the company gets a fresh approach to its project. Crowdfunding is a variation of this model for financing projects. Instead of traditional sources of funds, the company asks individuals via the Internet to support the project. There are many platforms available that support various kinds of projects. Usually the entrepreneur posts a video describing his or her project. Interested individuals support the project with pledges. If the funding goal is reached, the project receives the money and the funding platform takes a cut as well.

Apigy did not use one of the common platforms for crowdfunding. Instead, Apigy simply employed its own website and cut the crowdfunding platforms out of the process. They went directly to their customers and supporters with their message by transforming their website into a crowdfunding platform complete with a video describing their project (embedded below). The people responded. In 48 hours over 9000 Lockitrons were ordered generating $1.5 million dollars to fund the production of the product.

This bold move also comes with risk. Apigy must now deliver on its promise to produce the devices in time for the promised March 2013 delivery date. If it does, then the crowdfunding landscape may be changed forever. People may decide they do not need crowdfunding platforms and start to do their own crowdfunding.

What were some contributing factors to the success of this campaign? First, this is the launch of a second generation product. There is a first generation product already on the market so people know that this company can deliver a product of value. It is not certain that a brand new company with a new product would see the same success. Second, this is an attractive product that does something really useful. Third, the product takes advantage of the growth in the mobile phone industry by providing a new capability for these devices. There is a convergence of factors that have contributed to the phenomenal success of this campaign.

Will this kind of crowdfunding become the new model to obtain backers for large projects? Will entrepreneurs be able to bypass both traditional sources of capital and the new crowdfunding platforms to take their message directly to consumers? It is hard to say. If there is a convergence of positive factors as there was in the case of Lockitron, maybe so. But smaller projects will most likely have to pursue more traditional sources of funds and use crowdfunding platforms to attract backers for their product.

Further Reading:
Noe, R. (2012, Oct 3)
Varias, L. (2012, Oct 3)

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