Crowdfunding has an Achilles heel, and a 24-year-old entrepreneur has made $350,000 exploiting it in a matter of weeks. The young man, whom CNBC is calling "Jack," has identified wildly successful campaigns on sites like Kickstarter and pounced on manufacturing bottlenecks, working with manufacturers in China to put the pieces together faster and for less and then sell the knockoffs before the original idea hits the shelf. His first product, an inflatable chair, was based on one that took off on Indiegogo. Jack sold a strikingly similar Cozy Bag, and revenue approached $100,000 before rival products like Dumbo Lounge and Chillbo Baggins forced his ad costs up.
Then, in August, Google Trends alerted Jack to the Fidget Cube on Kickstarter. The tiny, six-sided toy designed to occupy the hands of fidgeters raised $15,000 its first day and more than $6 million in all, but manufacturing problems delayed the first deliveries. Jack quickly got a new Stress Cube company off the ground with $5,000 in a few days, within a week was selling 100 a day, and ultimately risked almost everything he'd earned when he wired $70,000 to a woman he'd only met on Skype in China to send a huge shipment. The gamble paid off, and he grossed about $350,000 in two months. Fidget Cube calls knockoffs the "nature of the beast," though patent fights could force Jack to move on to other endeavours. Click for the full piece. Or read about whether knockoffs corrupt us.)
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