I recently shared what I learned from one failed and one successful crowdfunding on IndieGoGo at the recent Crowdfunding Roundtable Cologne.
Here are the slides I used.
OneSec:
Check out my previous posts that the presentation was based on for more depth:
On failing: Crowdfunding an iPhone app
Crowd Funding Troll is Crowdfunding Troll
Crowdfunding as MVP
At the end of 2010, I posted a list of the stuff I had been reading (or mostly listening to as audio books) in that year. People seemed to appreciate that kind of content, so I thought I’d share what I’ve read since.
As Black Friday is upon us and another merry season coming up, you might find some excuses on the list to stock up on brain food for yourself or gifts for family, friends and colleagues.
This is the list of the books I read in 2011 and 2012 thus far. I can recommend all, except where otherwise noted…
Continue to the list of books (it’s a long list with videos to boot, so give it time to load)
Today I read an insightful post by Paul Graham on how to come up with startup ideas, roughly summarized as “don’t think of startup ideas – start solving your own problems” and alternately as he puts it “live in the future and build what seems interesting”. It inspired me to share with you why I co-founded Gauss – The People Magnet.
tl;dr – I’m living in the future, building something interesting, solving my own problem.
My entrepreneurial buddy Francis and I tried to crowd fund a startup. It was an iPhone app. More specifically, an Instagram for one second videos. We failed. Unspectacularly.
But don’t let that discourage you from trying. Here are some of the lessons we learned.
Update: For validation of our concept, see now twitter owned Vine and Cesar Kuriyama’s 1 Second Every Day that emerged over six months later.
Boot screen
Recap for new readers: In the summer of 2012, 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 and without potentially involving our main brands.
In short, we were trying to crowdfund an app to shoot and share videos composed of one second shots – six months before Vine and One Second Everyday. (I still remember people laughing at the idea back then…)
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 needed to be a US citizen to use Kickstarter at the time – 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 in fees – and the potential of a 3rd party effectively being able to hold your money hostage if 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:
The tl;dr answers:
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.
Mike Butcher moderating panel on Crowd Funding at Campus Party EU in Berlin (OneSec color theme match accidental, not edited in post)
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:
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:
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?
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 perhaps 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.
OneSec app screenshot
[I’ve removed an embedded presentation on SlideShare here as SlideShare decided to “forget” its contents – MSFT has really killed that platform with neglect. #sadface]
Update: We were approached by a major investor in [insert name of massively successful camera product brand here] after we had decided that the experiment had run its course and shortly before the Vine app hit the street. Of course there is no telling if that conversation could have gone anywhere interesting – or not – had we decided to revive it and press on. However, perhaps the last lesson learned was that these things take more time than you think. To create and manage – but also for your message to reach out to interesting new places. And just as you are about to lose faith and passion, your luck just might turn if you stick to it. However, we had already decided to kill it as we had run out of personal interest and passion. With the release of Vine immediately after, that decision was reconfirmed for us and I don’t think we regret killing it.
Recently I was invited to speak and share some of my experiences as an entrepreneur at Betahaus Cologne‘s Startup Supper event.
Startup Supper is an informal evening dinner event where invited startup entrepreneurs share selected stories from their experience and answer questions from the audience.
The subject of my little chat was “going from nothing to something”, about how I got from just an idea to building an actual team and shipping an actual product beta with our startup Gauss – The People Magnet.
Here’s the main points:
In summary, it took about six months of searching and dating to attract and recruit the right people. From there on it took a month to build a prototype (MVP) and another four months to reach a public beta stage and another three months before we launched on the Apple AppStore.
Images by Thomas Riedel (@boydroid)
If you’re interested in me speaking at your event, why don’t you shoot me a mail and let’s talk.