I don't understand why the founders "need" funding. If they have such a great business model and already have an alpha, then can't they bootstrap? If the idea is so good, then people should be just dying to sign up and give their credit card numbers. I mean, aren't people just dying to pay these guys $50?
I don't know their real answer, but I thought of it as a psychological experiment; people are much more likely to join a social service if it already seems to have lots of users.
This experiment provides a huge number of people a way to say "well, if there were actually X people on the service then sure, I'd also become a dedicated user". If they hit their goal, all those people will have paid enough that they feel emotionally attached to justifying their decision via using the service.
It just might work. A service doesn't need to have EVERYONE, it just has to have enough people to be more interesting for all its participants than the alternative.
I think the more important note is that if they don't hit the goal, all those people won't have paid anything.
Whereas without this fundraising period, the first people in are going to say "I'm the first person in, if I pay $50 there's nobody else to talk to", and... then nobody becomes the first to pay it. (Well not nobody, but few people.)
