Facebook buying Oculus Rift could change Kickstarter as we know it: Peter Nowak

Man wearing an Oculus Rift headset display

A development version of the Oculus Rift headset display. (Sergey Galyonkin/CC-BY-SA)

When I was a teenager, the worst thing one of my favourite bands could do was “sell out.” In retrospect, it was a pretty ridiculous and largely arbitrary proclamation for a young person to make – amongst my group of friends, it was usually reserved for whenever a heavy metal band we liked went soft and recorded a ballad that was clearly designed to appeal to mainstream record buyers. It was especially naive, given the fact that every musician had to sell out to some extent in order to get their creation out to the public in the first place.

These days, you don’t hear too much about bands selling out, largely because just about any musician would be happy to sell just about anything given the state of actual music sales. Indeed, the “sellout” label is now increasingly being used in the technology world, where promising young inventors are giving their amazing ideas to giant companies in exchange for boatloads of cash (which can also be used to buy boats themselves). Such is the case with Oculus Rift, the virtual reality headset invented by 21-year-old Palmer Luckey, which was bought by Facebook for $2 billion on Tuesday. In this case, Facebook – perhaps the most hated company on the Internet – is the loathsome record label while Luckey is the quintessential Metallica or Def Leppard. And boy are the fans ever angry.

Oculus Rift came to life on Kickstarter back in 2012. By listing his impressive demo of the virtual reality headset on the crowd-funding site, Luckey captured the imagination of more than 9,500 people who collectively pledged $2.4 million – 10 times what he was asking for – to help make the Rift a reality. Luckey doesn’t yet have a working product, but Facebook founder Mark Zuckerberg was impressed enough by the prototype to open his coffers. Both individuals explained and defended the deal as necessary for taking virtual reality to the next level.

Many people who gave to the cause, and who are active on Kickstarter in general, are aware of the fact that their financial backing of ideas is more akin to charity than it is to investment, but they were shocked and outraged in this instance nevertheless simply because they felt like they had been used as bait to lure venture capital investors, who in turn orchestrated the sellout to Facebook. Did Luckey ever have the intention of making the Rift an actual product that he could then sell and perhaps build a company around? Perhaps, but that’s not how many of the backers – some of whom used very colourful language to convey their displeasure – are seeing it.

Perhaps the most telling of the angry comments came from backer Sergey Chubukov, who called the sellout a disgrace. “It damages not only your reputation, but the whole of crowd-funding. I cannot put into words how betrayed I feel by this,” he wrote on the Oculus Kickstarter page.

Indeed, the deal does damage crowd-funding – or at the very least, it will likely change it. As Joel Johnson – who gave $300 to the project – wrote over on Valleywag, the acquisition doesn’t injure him, but it does insult him plenty. “I won’t be backing any more Kickstarter or crowd-funded projects. It’s not that the risk is too great; it’s that the potential reward is too little.”

Many creators are now going to have to spell out their long-term intentions if they want to continue to generate donations through such mechanisms. Potential donors are likely to look at those burned in this deal and want guarantees that the same won’t happen to them. Charity is one thing, but inadvertently giving money to a hated entity is another entirely.

It’s going to be fun to watch what form these guarantees take going forward, and it’ll be doubly fun to watch some creator squirm under the backlash when he or she inevitably breaks it when the boatload of cash ultimately arrives.