Interview With Jay Lee of Smallknot
As a crowdfunding expert I try to stay objective, but I really think that Smallknot has a mission that transcends other crowdfunding sites in supporting small local businesses.
How It All Started
Jay was a human rights activist before becoming a securities lawyer on Wall Street. While working on Wall Street he, along with his co-founder, saw billions of dollars moved across the world with one click, but realized there was no way to invest $50 in small businesses 50 yards away that were struggling, with many having to close their doors permanently because they didn’t have a way to raise capital to launch, sustain and grow their businesses. They really saw Wall Street versus Main Street in action!
Not content with the status quo, Jay listened to his intuitive voice that said there are people like him (and his friend and Smallknot co-founder) who want to support small businesses in their neighborhoods. Their altruistic mission was to create a channel to make it possible.
How It Works…
Smallknot is all about keeping money local, whereas larger sites like Kickstarter or Indiegogo feature passion projects. Small businesses that need to upgrade or purchase something and don’t want to take out a loan can start a campaign up to $15,000. Campaigns are set up as a barter-type exchange where business owners promise to pay back the donations in the form of products or services.
It’s a win-win for the consumers and the businesses because the consumers are getting something of greater value than they put in, and the businesses don’t have to pay interest on a loan. There are three types of campaigns including:
- An all or nothing campaign where you must reach your goal to receive funds.
- A campaign that allows businesses to receive any funds pledged as long as they pay back the rewards as pledged.
- A social underwriting hybrid campaign—still in experimentation phase—that allows businesses to crowdfund for collateral to secure a traditional bank loan.
What You Need To Know
In order to maximize funding for small businesses, Jay and his team have been able to keep the fees in check, at three percent. Jay’s advice to entrepreneurs who are considering a crowdfunding project is to do their homework and get customers, vendors, non-profits and other people in your network—business or personal—to spread the word to friends and media for a successful crowdfunding campaign. Like any success, crowdfunding takes strategizing, prioritizing, and preparing. But the results can be magical!
I recently spoke to Amanda Barbara, creator of Pubslush, about the niche crowdfunding site for authors and publishers. The future of crowdfunding is in these niche platforms that create a vibrant ecosystem.
As a voracious reader, Amanda saw great talents pushed into a slush pile of manuscripts. Books such as Harry Potter and The Help were rejected multiple times before their discovery and massive success.
Amanda’s mission was to reduce the slush pile by allowing authors to put their manuscript or excerpt online and make the process “more democratic”. She compares it to American Idol in that the readers get invested in the authors so when they do publish, they already have an audience.
How It Works
Like many new-generation crowdfunding platforms, Pubslush does more than offer a way to raise money for a project. Amanda and her team strive to promote social good, something that she defines as “people donating to a cause, or someone or thing they believe in.” Pubslush provides support and advice to authors to create a following, and provides resources and advice for getting an editor or literary agent.
Campaigns offer a preorder tool for authors to gain momentum and allow them to start marketing the book before getting a publishing deal, and to start getting reviews to create buzz. It also allows them to provide samples to readers to get them hooked on a story and want to read more.
The Pubslush team also provides moral support for authors whose campaigns are slow. One campaign for a children’s picture book was 30 days in and hadn’t raised any funds. The team reached out to the creator and found that he hadn’t told anyone about his crowdfunding campaign because he felt like he was asking for charity. They gave him “out of the box” ideas for rewards, and within 10 hours of changing his mindset and offering rewards, he went from $0 to $1000. That story really illustrates that you can’t give in to fear. People want to support you and stand behind you.
Pubslush has attracted the attention of companies in the publishing industry that love their mission. The company is launching community pages that allow publishers and industry leaders to create customized pages to provide crowdfunding for their authors, and showcase other authors from similar genres that expose readers to new authors. By keeping it fresh, readers continually come back to see great new books.
The site really stands out for its niche community and support for each other. Rather than authors competing for support, the team believes that support for each other leads to good crowdfunding karma. “Readers are always going to keep reading”, says Amanda. So any readers that an author attracts to the site are exposed to other authors in similar genres and that’s what Pubslush tries to do…create social good and promote reading.
To listen to the entire interview click here.
I recently spoke to former IBM executives Brenda Bazan and Nancy Hayes, who co-founded Moola-Hoop, a crowdfunding site for women entrepreneurs.
How Moola-Hoop Started
Brenda and Nancy knew each other from their days at IBM. Both women had moved into spaces where they worked with women entrepreneurs and collectively saw the struggle that women entrepreneurs had in getting funding to start a business, and grow it. They studied the statistics and found that 30 percent of new business start-ups are led by women, yet women get only five percent of venture capital and only 12 percent of institutional funding.
They pinpointed an advantage that women do have in business—in being great networkers—so they decided to nurture that in efforts to close the gender gap.
How Moola-Hoop Works
The crowdfunding site is built for women-owned businesses, primarily those with consumer-facing products. Before creating a campaign, Moola-Hoop provides tips to help women create a successful crowdfunding plan by encouraging them to present business idea with photos, videos, and select rewards to funders, including deals on their products or services, or unique experiences at each level of contribution.
One belief that Brenda and Nancy emphasized is that crowdfunding isn’t only about raising money. It’s also great product/market validation and provides women with valuable feedback from customers and builds support for your product before it hits the marketplace.
Rather than an all or nothing goal like many crowdfunding platforms, Moola-Hoop allows women to articulate milestones, such as what will be accomplished with the first $10,000, and the next $15,000. Once a campaign reaches a milestone, the campaign is funded up to that amount to allow access to funding. While some platforms provide either fixed or flexible funding with variable fees, Moola-Hoop’s milestone funding campaign fee is the same percentage as a fixed campaign.
Brenda and Nancy have plans to expand past crowdfunding by providing greater access to tips, resources, solutions, attorneys, social media experts, community connections and mentors. They see it as a Match.com-type way to connect women who need to fill a specific need. For example, a young woman might be looking for a mentor, while a more experienced woman may be looking for a partner or someone who provides complimentary services. A retail business owner may connect with a location for a pop-up shop.
To listen to the entire interview click here.
I’ll confess, I’ve always had a soft spot for Indiegogo because it was the platform I used for my campaign for a conference that taught stay-at-home moms how to launch their own home-based businesses. I recently had the pleasure of talking to Adam Chapnik, a principal of the company, whose business card title is actually “Evangelist”.
Adam joined the original three founders in 2010, (Slava Rubin, Danae Ringelmann, and Eric Schell) and merged his company Distribber. At the time Indiegogo was a niche crowdfunding platform for film.
The company was formed in 2008 as a way to fund film projects. In the past six years, the platform’s scope has widened to, as Adam said “anything you can imagine”. In their San Francisco headquarters, there is a giant word made of light bulbs that simply says “Empower”. To the Indiegogo team, empowering means letting people create whatever they want and not curating or creating strict guidelines for campaigns.
Adam said his team is open to everything from charitable missions to provide water to a village in Africa to an artist who wants to make a new kind of album with a glockenspiel and a bongo. He told me that he literally cries at least once a week—tears of joy—because of the incredible impact that Indiegogo has had on individuals’ lives.
What Sets Indiegogo Apart
From the beginning, their mission was not just for people to use the site, but also to make them feel happy. So they named their customer support as the “customer happiness” department. They have a 97 percent 24-hour response rate to customers.
Because Indiegogo is an inclusive platform for a variety of projects, it serves as a portal for people to be exposed to new products or ideas. If you look for a film on the site, you may also discover a new gadget, or a cause. Adam pointed out that seeing diverse projects co-exist creates a cross-pollination of things that makes each day exciting and fun for him.
The team is constantly following campaigns to see what’s working for some, what’s not working for other campaigns, and shares those insights and new ideas to campaigners through their blog. They also provide advice on vertical campaigns that each campaigner can learn from one another.
The Future Of Crowdfunding
Adam predicts that in the next year and a half, “the most famous bands on earth are going to directly distribute all of their music through crowdfunding.” But, he believes that will go beyond music. We have a similar vision of what the future holds in crowdfunding. It will become a go-to marketing tool for many companies, from start-ups to large brands.
The company sees crowdfunding as much more than just a fundraising tool. They look at it as a tool to formulate a great business plan, market your brand, connect with future customers, and do market research. I couldn’t agree more. Think about it, you can connect with customers, get their reactions, and fine-tune your product before it hits the marketplace!
When more companies use crowdfunding as a marketing tool, they’re going to realize that not only are they getting an invaluable platform for market research, they’re also making money off of the campaign, essentially paying for the marketing plan and development of a product. That’s going to revolutionize the way companies succeed and allow entrepreneurs to grow beyond their wildest expectations.
To listen to the entire interview click here.
Last week I fell in love with the campaign Newlywed and Broke. Last week I had the pleasure of interviewing Reko Moreno and Kathryn Castaneda the two people responsible for this campaign and I couldn’t wait to share all the juicy advice they offer crowdfunder-to-be!
Reko and Kat epitomize exactly what I love about crowdfunding – it has leveled the playing field for the good guys. If you care about what you do and you are good people you can succeed at crowdfunding.
I had originally planned to air the interview during a tele-event I’m holding in the fall to showcase amazing campaigns and the crowdfunders behind them. Reko and Kat will be part of that series, but it didn’t seem fair to keep all the great advice they shared all to myself. So, here are my top favorite tips they offered:
1. Invest in your pitch video – both with time and money. A good video can transform the trajectory of not only your campaign but your project. (Listen to the full interview to see what tv star signed on to be a part of their pilot!)
2. Do a mental download of everyone you know and continue to follow with anyone who has committed to funding you.
3. Get creative with your perks – No one wants a t-shirt. People want an experience – give them an experience.
Want more? Listen to the full interview here: http://attendthisevent.com/?eventid=44822388. It is chock full of useful information for you, a crowdfunder-to-be!
And be sure to check out their campaign on Indiegogo here: http://www.newlywedandbroke.com. Notice how their video hits hard on the TLC factor, their perks immediately draw you in and they are just plain likeable.
And if you are planning your own campaign you will absolutely want to contribute to Kat and Reko and leave them a note in the comments section cheering them on. They told me they will personally support anyone who supports them. (Crowdfunding Karma rocks!)
What is the best tip you’ve ever heard about crowdfunding? Tell us in the comments below!
A few weeks ago James Franco launched a crowdfunding campaign to fund the film production of three stories from his book “Palo Alto.”
At its heart the story of WHY Mr. Franco is doing this has all the makings of a great campaign. Sadly, the campaign is not succeeding.
His Oz co-star, Zach Braff launched a campaign for similar reasons back in May and it received over $3 million in funding.
They both share notoriety, adoring fans, a good idea, a compelling “WHY” so how could they have such drastically different results? In this case the answer lies in the pitch video.
Great pitch videos have T.L.C.:
T – Make people Think and Touch their Heart
L – Make them Laugh
C – Make people Care and if you can make them Cry
Rather than breaking down for you what worked and what didn’t work in these videos I’m going to let you decide for yourself.
Watch each video here and here and take notes on what made you think, laugh or care. Also note when your attention drifts or you get bored (Ahem Mr. Franco!) and why.
Once you’re done I’d love for you to stop back here and leave a comment on what impressed you the most about either video. (And always feel free to mention your upcoming crowdfunding campaign!)
We learn from each other!
Help People Get to Like You
Prior to launching, I looked for wildly successful campaigns and studied them carefully. In almost every case the Campaign Host was adored by some or many (and the size of that adoration directly related to the size of their funding).
One of my favorite campaigns was run by the creator of The Oatmeal, Matthew Inman. He raised $1.73 million. His site gets 5 million unique visitors per month. He is well liked and he shared his saucy theory on how to be well liked here.
Being likable isn’t something you can fake. Help others. Give them information or support. Do it over time. When you need it they’ll be there for you.
Become Part of the Crowdfunding EcoSystem
Spend time on crowdfunding sites like Indiegogo and Kickstarter. Get a feel for the energy of each site. Prior to launching my own campaign, I spent hours on these two sites. Soon I started to understand there was a rhythm, a pulse to successful campaigns. You can absorb wonderful information by emerging yourself in this sub-culture.
Create Good Crowdfunding Karma
I firmly believe what you put out in the world comes back to you and then some. While spending time amidst the crowdfunding ecosystem, begin to leave comments for the inhabitants. Crowdfunding can be a lonely space even for the most successful funder. If you’ve set your campaign up well you’ve likely made yourself vulnerable in the process.
Help a crowdfunder out by letting her know she’s been seen. Or throwing a few dollars at a campaign you like. If you don’t believe in Karma, consider it your good deed for the day.
But if you do believe in Karma…. Holy moly will YOU be setting yourself up for success!
Less than two weeks ago I kicked off my first crowdfunding campaign. It has been a wild ride! Crowdfunding has become a popular financing option among entreprneneurs and artists alike.
Despite its popularity the crowdfunding space is still a bit like the wild, wild west. Traditional rules don’t always apply. The campaign is not over but statistically speaking we are doing well. It is day 12 and we were at 80% funded.
I’ve been getting plenty of questions about how to do this crowdfunding thing the right way. I’m not sure there is a “right way.” There is no “right way” but I thought I’d share what I’ve learned so far on the journey:
1. Do Your Research:
There is a tremendous amount of information available on the internet from people who have successfully launched campaigns, as well as, those that haven’t. No need to recreate the wheel. Read what they have to say. I don’t think I found a single article or blog that didn’t improve my campaign in some way.
2. Choose Your Crowdfunding Platform Wisely
There are many options in crowdfunding platforms from Indiegogo to Kickstarter and beyond. Spend some time at each one. Get a clear understanding of the platform’s focus, any limitations and decide on the platform that works for you. Early on we had planned to use Kickstarter without doing any research, simply because it was the name we heard the most. I almost said the name of “kickstarter” in my video! When I started to actually do my research I came to find that Kickstarter didn’t have any space for campaigns that funded events like ours. Turns out Indiegogo was the perfect platform for us. Do your research!
3. Build a Solid Team
I interviewed as many crowdfunders as I could get my hands on. Inevitably they fell into two camps: Exhausted and Elated. The people in camp Elated had a strong team helping them every step of the way. Team Exhausted tried to do it alone. Please don’t try to do this alone. Whether you pay your team or not, enlist people who care about what you are doing and will be there for you every step of the way.
4. Make an emotionally compelling video
Campaigns with videos raise 114% more than those without. Although it is tempting to tell people all about your project its unnecessary. Videos of successful campaigns don’t focus on what the project is about, they focus on why the project matters. When crafting your video appeal to the why not the what.
5. Have a project plan
If you are the type of person that likes to fly by the seat of your pants the world of crowdfunding is probably attracting you like a moth to the flame. For the love of all that is good in the world do not follow your instinct to just “jump right in.”
Take the time to write out what needs to get done every step of the way. Know when tasks need to be completed and who will be completing each task.
Project management is a discipline. Unless you are an uber control freak it is probably not on your top 10 list of things you like to do but do it anyway. There are technology platforms to help you create a plan. We used Basecamp to build our project and have been thrilled with how smoothly everything has run.
My team has also appreciated it. I am by nature a “fly by the seat of my pants” kind of gal so I know how fun that can be but I’ve also run multi-million projects in corporate America and I can tell you a project plan is the way to go. For the sake of your team. For the sake of your sanity.
If you are interested in checking out a few campaigns that I have found personally fascinating in their scope and success you can see them here and here and here.
As the campaign winds down I’ll be back to share more tips, tricks and insights I picked up along the way!