As you might now, my entrepreneurial buddy Francis (@francis_dierick) and I tried to crowd fund a startup this summer. It was an iPhone app. More specifically, an Instagram for one second videos. We failed. Spectacularly. But don’t let that discourage you from trying. Here are some of the lessons we learned.
Recap for new readers: This summer me and Francis decided to experiment with crowd funding. We’re both busy running a couple of other startups, but since we were both n00bs to this crowd funding thing we thought we’d better get some experience first hand without potentially tarnishing our main brands.
Roughly speaking there are two main types of crowd funding: 1) Funding against selling equity, percentages of shares that is, in your company 2) Funding against selling perks, products, merchandise, hot air and bridges in London – for no equity whatsoever. As we are both stingy bootstrappers, we liked the sound of the last option.
We decided go with IndieGoGo since you need to be a US citizen to use Kickstarter – or find someone with one willing to be use as a proxy, which would raise all sorts of other issues like liability, legality and added costs – and the potential of a 3rd party effectively being able to hold your money hostage if you’re successful.
Here’s what the last iteration of the video pitch on IndieGoGo looked like:
Starting out, we had some assumptions and there were a few things we wanted to test and (in-)validate:
- Is it possible (for us, right now) to crowd fund (without equity) the development of an iPhone app?
- Is there any interest in this product in the market?
- How efficient is spamming, mailing, tweeting, posting and otherwise contacting friends, fools, families, bloggers and journos?
- What is the conversion rate from blogs and news sites when and if we get published?
The tl;dr answers:
- Disastrous (extrapolated)
Read on for the more longwinded answers and conclusion.
As luck would have it, during our campaign I also got the chance to ask IndieGoGo co-founder Danae Ringelmann (@GoGoDanae) in person at a panel on Crowd Funding of startups in Europe moderated by Mike Butcher (@mikebutcher) at the Campus Party EU in Berlin.
Danae was kind enough to sit down with me after the panel and give me more advice on our crowd funding campaign. Here’s what we learned from her:
- For a very successful IndieGoGo campaign example, look at Satarii Star.
- Add as much as possible to the story of “what’s in it for me as a backer”, “only you make it happen”, “if you help this happen you will be able to do X and Y”, focus on the emotional appeal. Think Apple.
- If you can, show “what’s in it for me” in images to help emotionalize it.
- Ramp up the communication about what is going to happen if you fail to raise the target amount and make sure to communicate the consequences.
- Reach more than $ 1.000 before pushing to the press.
- Reach out to people who have already pledged for stories and testimonials, publish their stories about why they believe in you.
- You can extend the running time of a campaign. Get in touch with IndieGoGo support if you need to extend the time.
- Keep pushing press although they don’t react at first. Just keep it up and ping them back on any kind of updates.
BONUS (and this is from me, not from Danae): Pay or raise the plus $ 1.000 yourself with family and friends you will pay back if you can and if you’re going for a campaign that gets to keep the money regardless if you reach your goal and consider the PayPal fee marketing expenses. I’ve heard this trick is more the rule than the exception on IndieGoGo.
It’s evident to everybody by now that we were spectacularly unable to fund the development of the OneSec iPhone app. Was it because it’s the wrong product? We don’t think so based on the feedback we are still receiving. We still think there’s a great opportunity to be had here. We have not given up on it.
Could we have kept on going, extending the campaign, applying and executing on the knowledge that we gained on the way? Certainly, but we decided to call it quits and call it a #fail. We had learned a lot about doing a crowd funding campaign and it was time to move on.
In the course of the campaign we were tweeting, retweeting, blogging, mailing and Facebook posting night and day. Manually and automated. We spammed around 680+ journalists in an email blast. We posted tips to about 20 of the top tech trend agencies. We filled special interest forums. We instagrammed. We YouTubed.
Here’s the results:
- Made the frontpage for Technology campaigns on IndieGoGo
- Featured on the IndieGoGo blog
- Featured on DVICE (w00t!)
- Featured on TrendHunter
- Featured on BuzzPatrol
- Featured on Gadget-Explorer
- Pete Hates Music loves OneSec
- Featured on PEJ.CZ
- Featured on Mobile Device Russia
And how did this convert? The honest answer; We have no direct way of measuring it as IndieGoGo doesn’t offer standard referral analytics. You can track how many tweeted and posted your campaign to Facebook using the share buttons on the campaign page – but that’s it.
Having no referrer data is insane if you’re somewhat successful and want to identify where the traffic is coming from and what to focus on. Luckily for us, we were complete failures and measuring conversion of referrers when you have zero effects is pretty easy. We still would have loved to see which source drove the most traffic – if any, though. (See Francis’ posts on stats on publishing and conversion for more on this subject).
The lesson to us was pretty clear that spamming journalists and getting some publicity didn’t convert into any pledges.
We probably also launched our publicity efforts too soon, before we had reached $ 1.000. Next time we’ll consider paying this amount in ourselves and considering IndieGoGo’s cut as marketing expenses.
So what do we think were our biggest mistakes and lessons learned? What would we do differently next time?
- We failed to explain the product well enough
- We failed to make an emotional connect with potentially users and backers
- We failed to identify the target user segments and multiplier groups
- We failed with the tongue-in-cheek, no-budget style whereas more successful campaigns have had more of a serious and solid narrative with polished video content
In hindsight, it’s clear we failed to explain the product to people in the pitch video. Talking to people, the single most frequent first response is “I don’t get it”. Then we take the time to explain it and then they are like “Oh, I see. That’s cool”. We could have made a more detailed demo – especially detailing what we’ve planned for the super-easy editing and the social sharing aspects of it. Making an extensive demo would have taken considerable more time and effort than we already put it, but doing a campaign over again we’d probably start with explaining the product in more detail.
We failed to make an emotional connect with potential users and funders on two levels. On the one hand successfully conveying why we’re doing this, why we believe in this and what will happen if we don’t get funded. On the other we also failed to explain and “sell” the “what’s in it for me” the “how this makes my life better” to the potential backers. Doing it over, we would focus on how the product improves the user’s life like keeping more in touch and more up to date about your life, lives of friends and families, sharing more with others instead of your videos just gathering virtual dust on SD cards and hard disks, Apple-style with people showing real-life use-cases.
Starting out, we
spammed targeted our friends, families and fellow entrepreneurs and things looked good for a while. Then as the campaign progressed, growth quickly leveled out as we didn’t manage to identify and branch out to new potential groups of users that would love our product and to other communities who’d be interested in seeing us succeed. Next time, it would probably be smarter to to do some research, tests and cohort analysis to find those groups up front before launching the campaign, having an actual plan on who to market it to, where they are, how to best reach them and how to better enable them to engage with and share the campaign.
In conclusion if we could have invoiced all the work we put in as regular consulting hours with normal customers, we’d probably made more than our original target for the funding campaign. But don’t let that deter you from trying. Just avoid doing the same mistakes we did.
For further reading on lessons learned, make check out Francis’ “Tales of Creation” where other entrepreneurs share their experiences and insights.
Stay tuned for the next installment, in which we test and learn how to fund an iPhone app – an Instagram for one second videos – with private investors for equity.
Until then, I’d love to know what your experiences with crowd funding are. How did your campaign go? What did you learn? What do you think we did wrong? Share in the comments or join the conversation on Hacker News.