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Journal of Information Technology Teaching Cases (2016) 6, 75–83ª 2016 Association for Information Technology Trust
www.palgrave.com/journals
Teaching Case
Cinetics: fueling entrepreneurial
innovations through crowdfunding
Zhuoxin Li1, Sirkka L. Jarvenpaa2, Nisha Pattan2
1
Carroll School of Management, Boston College, Chestnut Hill, MA 02467, USA;
2
McCombs School of Business, University of Texas at Austin, B6500, Austin, TX 78712, USA
Correspondence:
SL Jarvenpaa, McCombs School of Business, University of Texas at Austin, B6500, Austin, TX 78712, USA.
Tel: +1512 471 1751;
E-mail: sirkka.jarvenpaa@mccombs.utexas.edu
Abstract
The case examines how the founder of a startup company came up with the
entrepreneurial idea and used Kickstarter as a platform to establish and grow his
company. The case describes in detail the history of the company and charts out the
crowdfunding campaigns that provided the company the initial funding. The case
concludes at the point at which the founder is considering different funding options to
scale the company even further. The case can be used in a variety of classes including
digital business, open innovation, strategic IT management, digital innovation and
entrepreneurship, and digital marketing.
Journal of Information Technology Teaching Cases (2016) 6, 75–83. doi:10.1057/s41266-016-0005-z;
published online 11 November 2016
Keywords: crowdfunding; open innovation; entrepreneurship; digital innovation; Kickstarter
Introduction
igital camera technology had improved dramatically continue to rely on launching products with Kickstarter’s
D since Justin Jensen’s undergraduate engineering stu-
dent days at the University of Texas at Austin. Yet,
capturing cinematic quality footage with ordinary equipment
rewards-based crowdfunding? Should we embrace other
channels for funding and product launches?’’
continued to be difficult and expensive. In early 2011, while
pursuing his MBA degree at the Sloan School of Management Starting Cinetics in 2011
at MIT, Jensen worked on a film project for a sports Jensen’s first product, CineSkates (Figure 1), gave amateur
conference. The camera equipment he wanted to use to videographers the capability to create captivating cinematic
capture the actions and movements on the ground was out of footage of the same or even higher quality videos than they
his budget. Hand-held video shooting produced wobbly and could achieve with the far more expensive professional
poor-quality film. Jensen developed a simple technique to equipment. Potential buyers included amateur photographers,
secure a moving camera: a configurable tripod with wheels wedding videographers, small music video producers, and
that enabled him to shoot smooth panning shots. Sliding and documentary film producers. CineSkates was designed with
rolling the tripod allowed much more stable footage than future expandability in mind. Justin envisioned later versions
could be captured with a standard hand-held camera. With of the product being capable of handling heavier cameras and
the support of his family, friends, and colleagues, he eventually being remotely controlled through motors.
developed a prototype of CineStakes. With the first product, While designing the product, Jensen had clarity on the
Cinetics was born. product and its target market. He was far less certain how to
By the middle of 2014, Jensen’s company had successfully finance the product launch and get the target market to take
launched three products, CineSkates, CineMoco, and notice. Traditional funding mechanisms offered a steady
Axis360, and raised more than $1 million on Kickstarter stream of capital, but they also required a proven record of
crowdfunding platform.1 The company now had seven full- performance, as well as a willingness to both forfeit a share of
time employees besides the founder and CEO of Cinetics. In the new venture and cede some control over the future of the
early 2015, Jensen had some breathing room to think about company. Jensen felt that many traditional investors (in-
his long-term plan for growing his company: ‘‘Should we cluding early-stage investors) would not be familiar with the
, Cinetics: fueling entrepreneurial innovations Z Li et al
76
Launching Cinetics’ first Kickstarter campaign3
A successful crowdfunding campaign was built on three key
capabilities: (1) storytelling, (2) an engaging reward struc-
ture, and (3) social network reach. The first step in launching
a Kickstarter campaign was for Jensen to develop a 3-min
project description video to capture audiences’ attention and
entice them to contribute to the project. The description
video for CineSkates highlighted both the product and
Jensen’s passion. Prototypes of the product and drafts of the
promotional video went through countless iterations and
modifications with feedback from mentors that included
professors Jensen had studied with. A mentor advised Jensen
to show shots made with and without CineSkates. The
Figure 1 Cinetics’ first major product – CineSkates. differences, vividly apparent in the video, exemplified how to
convert a message about a complex technical product into
intricacies of photography and videography. Jensen consulted simple ‘‘language’’ and bring to life the potential applications
with a friend who had launched a successful crowdfunding that would appeal to backers.
campaign. Setting the funding goal and a menu of rewards to
compensate backers’ contributions was also a challenge.
According to Jensen, ‘‘If you don’t hit your goal, you get
Crowdfunding as a new mode of financing nothing, so you don’t want to set it too high. If you set it too
Crowdfunding was a funding form outside of traditional low, you may lose backers that want to help get the product
financial systems that provided quick access to capital for to the funding goal. On the other hand, more backers draw
commercialization of products and services. Crowdfunding the attention of additional backers. The goal needs to be both
allowed a project creator, the entrepreneur, to raise small attainable and surpassable.’’ If the funding target was reached,
monetary contributions from a large number of individuals or Kickstarter charged 5 % of the amount raised as a loyalty fee
the so-called backers to launch a business and proceed with and Amazon charged an additional 3–5 % transaction fee for
production. The crowdfunding process involved three actors: collecting the money from funders.
(1) a project creator who developed the project idea and Reward levels determined the pricing of the product.
proposed the project to be funded, (2) backers who supported Unsure about how much people might be willing to pay for
the idea, and (3) the crowdfunding platform that allowed the CineSkates, the Cinetics team conducted a marketing survey,
project creators and backers to come together and interact. which produced surprising results: People were willing to pay
Crowdfunding platforms such as Kickstarter screened the a lot more than anticipated. The survey also helped identify
projects before they were available for public funding. For product features that customers found valuable. The Cinetics
Jensen to post a project on Kickstarter, a prototype of the team also researched competing product offerings, striving
product and a manufacturing plan had to be in place. For to ensure that CineSkates was unique and desirable.
rewards-based crowdfunding, backers were not allowed to Before the Kickstarter campaign went live, Jensen clarified
invest in the creators’ projects for financial gains or for a stake his strategy to his team. ‘‘Our priorities are threefold,’’ he
in the company. Backers invested money in return for tangible said. ‘‘First, focus on the core business; second, build
rewards, such as the first version of the product. What was credibility around product and company; and third, develop
particularly important for Justin was that Kickstarter allowed a network of core backers that help expand the business. Our
Cinetics to retain 100% ownership of the company. Figure 2 focus is on the long term – building a business, not just
describes the typical crowdfunding process. building a Kickstarter campaign.’’
The hype of crowdfunding had produced a clutter of On the first day of the Kickstarter campaign, Jensen was
platforms. Justin narrowed down on Kickstarter.com that anxious. The first couple of backers were friends; this only made
had gained a reputation for being a leading rewards-based him more nervous. Then, just a few minutes into the campaign,
crowdfunding platform for creative and artistic products. A a journalist at TechCrunch.com wrote an article about the
friend he consulted advised him: ‘‘this is really a cool way to product and the campaign.4 The article generated a sudden
essentially get debt financing. It’s a natural fit.’’ spike of interest, which continued to snowball during the
Besides access to funds, crowdfunding allowed a company funding cycle. Cinetics reached its funding target of $20,000 on
to capitalize on the wisdom of the crowds – to assess the Day One. By the end of the funding cycle, the campaign had
market for its products. Crowdfunding helped to understand attracted 2019 backers and raised a total of $486,518 (see
potential customer profiles and incorporate user feedback into Table 1). ‘‘Once we flew past the Kickstarter goal on the first
product offerings. Jensen launched the first campaign on day, things progressed incredibly quickly,’’ recalled Allison
Kickstarter to build customer relationships, obtain feedback Jensen, Cinetics’ Communications Director (and Jensen’s wife).
and ideas for product improvements, and assess the potential ‘‘It was amazing to see so much interest, both from beginning
of an idea before undertaking major production. Jensen could filmmakers and professional cinematographers.’’ To gain fur-
target potential customers who shared similar interests.2 The ther attention, Jensen sought out local media coverage.5
opportunity to engage with these customers through blogs, Cinetics’ success did not go unnoticed by more established
Twitter, Facebook, or other social media provided means to competitors. Another firm that developed tools for filmmak-
build a community around the crowdfunding project. ers and photographers subsequently built a product that was
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