The fine line between copying and stealing in crowdfunding

Several years ago, I had a sports injury that left me with recurring lower back pain. The pain was worse after a long day sitting in front of my computer or flying long distances.

One day, I was home visiting my parents and was telling them about the pain, and my father enthusiastically said, “NadaChair!”

[aditude-amp id="flyingcarpet" targeting='{"env":"staging","page_type":"article","post_id":1732443,"post_type":"guest","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

“Huh,” I replied?

He went into his office and came back with an odd looking contraption. He sat down in his chair, unfolded a square black 8” x 8” piece of fabric, put it behind his back, took two straps around his waist, put them around his knees, and pulled the cords. All of a  sudden he sat straight up. He explained the NadaChair supports your lower spine, takes the stress off the disks, and relieves the pain. I immediately asked to try it, put it on, and voila my pressure and pain subsided!

Not only did I buy two of them (one for home and one for travel), but I became a brand evangelist and marketing agent for the company. I would wear it everywhere (including outdoor movie night) and constantly talked about it.

I always wondered why the company didn’t do more with the product. Their website left a lot to be desired. And the sales channels were limited. But I have a day job, and brainstorming about ways this company could increase sales, generate a following, have brand evangelists, etc. was beyond my duties. Needless to say, I always thought a crowdfunding campaign would be a great branding/marketing/sales tool for them.

Then the other day, my business partner, Jason Best, sent me a link to a Kickstarter campaign and said, “Isn’t this the back device that you use?” I clicked on the link and was shocked to see that someone (Katherine Krug) had essentially taken the product, rebranded it, and started pre-selling it as her own (see image at top of page). With less than 10 hours left, she has over 16,000 backers and have raised over $1,160,000! (Her goal was $12,500).

So did she just steal the NadaChair concept and raise over $1 million, proving market validation so that a larger distributor can pick up on her product much like Best Buy did with the Misfit watch? I wouldn’t be surprised if that’s the end result.

To Katherine Krug’s defense, she has the following to say about the difference between her product and NadaChair:

[aditude-amp id="medium1" targeting='{"env":"staging","page_type":"article","post_id":1732443,"post_type":"guest","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

This is an interesting argument. She points out that she’s doing what many others have done with wallets. While wallets are ubiquitous, you can’t really say the same thing about this device. Nor can she claim her device operates differently from NadaChair. That might be the main sticking point. You can’t really replace a “pad” and claim a new product.

Nonetheless, she’s done a great job of managing the pretty critical feedback from the crowd of NadaChair supporters who are slamming her on her campaign. She’s not shying away from the criticism and that takes guts.

This morning I received the following email from the NadaChair folks:

Friends and NadaChair Supporters,

As Katherine Krug’s BetterBack KickStarter campaign winds down, I wish her nothing but success.  It’s great to see the concept I created evolve and its audience widen. For that, I say kudos.

Many of you have been with me since I started NadaChair in 1986. Without your endorsements and support, I would not be where I am today. You have helped tremendously. For that, I am grateful.

Today, I am asking you to pledge $1.00 to Katherine Krug’s Kickstarter campaign https://www.kickstarter.com/projects/1123408990/betterback-perfect-posture-effortlessly/video_share. Why? This will allow you to comment on her page before the campaign closes tomorrow. Congratulate her and wish her well from all of us who have owned and benefited from this invention for years or decades. We would like this to be our moment of warm congratulations to all the backers of this project who we hope will finally find Love-at-First-Sit.

If I am the “King of Slings,” I think I might have met the “Queen of Midwives” in Katherine Krug. She leaves no doubt that the cord is cut. So now the time is finally right to raise a toast.

Here’s to a bright future.
Chairs!
Victor Toso
NadaChair Founder

PS: For those who may feel the need to defend NadaChair, there is no need for any further defense. Thank you for your support.”

That was very nice of Victor. Perhaps Katherine reached out to him or perhaps Katherine saw the blurry lines of her business model and they struck a deal? Whatever it is, there are a few morals here:

[aditude-amp id="medium2" targeting='{"env":"staging","page_type":"article","post_id":1732443,"post_type":"guest","post_chan":"none","tags":null,"ai":false,"category":"none","all_categories":"business,entrepreneur,","session":"C"}']

• If you have a product that needs protection (patent, copyright, IP, etc.), take the time and incur the costs to protect it.
• Don’t steal an idea and expect to use the Internet/crowdfunding to market/promote it because the crowd will figure it out and tear you apart.
• If you are promoting a campaign and you find yourself in this predicament, you need to vigorously communicate with your backers and address their concerns. The most important thing here is to be transparent about your position.
• If you have a good idea that solves a big problem and have a slick campaign, you too can raise over $1 million! It seems as if Victor saw the power of crowdfunding because he’s just launched his own campaign … (P.S., Victor, you need to slicken up your campaign).

Sherwood Neiss is a partner at Crowdfund Capital Advisors. Neiss helped lead the U.S. fight to legalize debt and equity based crowdfunding, coauthored Crowdfund Investing for Dummies, and cofounded Crowdfund Capital Advisors, where he provides strategy and technology services to those seeking to benefit from crowdfund investing. Sherwood Neiss and Jason Best are credited as the fathers of Title III of the JOBS Act. After attending the bill signing ceremony at the White House, they formed Crowdfund Capital Advisors to study what is happening in crowdfunding, analyze results, report trends, and follow opportunities. They are active investors in the crowd finance space.