Wednesday, March 4, 2015

Kickstarter Secrets, One Year Later

Kickstarter secrets from a master videographer (standing).
Kickstarter is the premier crowdfunding platform for products and over the past year I have coordinated the San Diego Kickstarter Meetup. The lessons I've learned from others who have succeeded and failed are priceless. Our Kickstarter meetup has been so successful that an inventors' club has been spun-off from it. The two communities meet at 3RDSPACE in University Heights; the Kickstarter group convenes monthly in a panel format while the inventors' club will begin meeting weekly in a workshop environment. The two separate, but overlapping communities are the brainchild of Peter McConnell who's the founder and owner of the 3RDSPACE coworking offices.

How successful have our members and presenters been? Last year, I listened to Patrick Lehoux speak about his successful Kickstarter campaigns which have turned into a million dollar business. Pat works a couple hours a day, with one full time employee and one part-time employee. I've also seen two notable campaigns pass through our meetup, Billetus and The Undress, which launched this past fall and both raised serious money.

Kickstarter Secrets

1. Money. How much should you raise? This is the mother of all Kickstarter questions. For starters, keep in mind that Kickstarter is all or nothing. If you don't reach your goal then you don't get any money. Compare that to Indiegogo where you have the option of getting whatever you raise. This can be good or bad. If you figure you need $30,000 to hire software engineers then only raising, say $15,000 could be disastrous if you get the money and can't deliver the goods. On the other hand, you might choose the Indiegogo platform if you're raising funds for a play or musical where any amount will do.

Make sure you're raising enough money, too. I've seen people hit their $15,000 goal only to put another $15,000 of their own money into delivering their product. The key, when figuring out your expenses, is to calculate how much it would cost someone to do all the work that needs to be done. Sure, you may be willing to ship orders, yourself, for free. But, what if your campaign goes viral, did you calculate how much it would cost to pay employees to do the work that you were willing to do for free?

Also, don't forget that Kickstarter will take a total of 8% – 10% for its own fee and its payment processor's fee. And, don't forget about your shipping costs. Think long and hard about shipping internationally since you can only choose a single international shipping price to charge your customers. It's best to figure out what's the most expensive country to ship to and use that figure.

Last, but not least, don't forget about taxes. How will you account for the money you get through Kickstarter? Will it be part of your personal (sole proprietor) income or your company's revenue?

2. Rules. Before you get too serious about Kickstarter, be sure to read the rules. We're talking about three basic rules spelled out in less than 200 words. The key things to know is that your campaign must create something to share with others. Think: products, both physical or virtual; not services. Kickstarter is designed to take a prototype to market. They don't want photorealistic mockups. They also don't want you to raise marketing funds for a product that's already in production. Additionally, raising funds for charities or investments is a no-no. Be sure to check their list of prohibited items, too.

A local college student once reached out to me for feedback on his Kickstarter video. His team was selling a fashionable product and they had a decent video. My only warning was, since their video mentioned a portion of the funds would be used for charity, that it would violate the Kickstarter rules. His reply, when they went live, was that Kickstarter had accepted their project. Great, right? No! They raised nearly $16K of a $20K goal only to be shutdown before the campaign ended because the charity aspect was a violation of the Kickstarter rules. Of course they were "in shock" when their "dream was being taken away from" them. Know the rules. But, that doesn't mean the rules won't change, which they do, from time to time.

3. Video. This is where the rubber meets the road. Our meetup group has studied many Kickstarter videos and we've learned the best practices. Your video should be about three minutes long. It should state the problem you're solving followed by your solution and a personal story. It needs to look professional. The video is your key marketing tool to close the sale. But, you don't want it to look too professional. In other words, you don't want to seem like a big corporation, but, rather, a passionate mom and pop shop with a track record for success.

Also, it's a good idea not to sprinkle the word Kickstarter throughout your video. You may end up paying $500 – $5,000 to have your video made. What if Kickstarter doesn't accept your campaign? If you want the word Kickstarter in your video, then add it at the very end where it can be easily edited out if you need to switch to another crowdsourcing platform.

4. Duration. How long should your campaign be? Your choice; up to 60 days. There is no right answer. Shorter campaigns create a sense of urgency. But, longer campaigns give you more opportunities to generate buzz, press, and PR. In my experience, I've heard very few people say they wished they had run a shorter campaign.

5. Marketing. If you build it, they will come (but only if you do lots and lots of marketing). The key is for your Kickstarter campaign to kickoff with a lot of momentum. You'll need to prime your e-mail marketing list, create a website with pre-launch info that directs people to your Kickstarter campaign, and learn the ins and outs of Facebook marketing. Facebook, more so than Google Adwords, will give you great marketing and demographic analytics. You don't need to know it all, but you will need to learn how it works along the way. You should follow bloggers in your market leading up to your launch. Then, when you launch your campaign, reach out to bloggers and reporters, with a nearly polished piece that they can publish.

6. Rewards. Keep your rewards as simple as possible. A large graphic with the price of each reward will go a long way. And don't offer t-shirts as rewards unless it directly supports your campaign. If your campaign is supporting most anything other than clothes or the performing arts then t-shirts are probably a bad idea. You don't want to be in the t-shirt designing, printing, and shipping business.

7. Goal. You've reached your goal? Great! When your fundraising campaign officially ends your Kickstarter campaign webpage will be frozen in time. The keen Kickstarter campaigner will already have an e-commerce website launched and operators standing by to take orders. Of course, orders taken on your website will be more expensive and ship later than your campaign contributors who believed in you before you reached your goal. A few minutes before your campaign ends, the super-savvy Kickstarter campaigner will update their Kickstarter page with info on where customers can now order the product. See the "About this project" section of this campaign. Even though this campaign ended 18 months ago, it's still an active sales channel.

8. Expectations. The hallmark of good customer service is managing customer expectations. You may even consider briefly educating your customers as to how Kickstarter works since more people don't know about Kickstarter than do. The first-time Kickstarter backer may think it's just another e-commerce site where they pay and then the item ships.

Kickstarter projects are notorious for shipping products late. The key is to communicate with your customers. Don't tell them the earliest possible ship date, rather tell them the latest. This goes in line with under-promise and over-deliver. I recently had an unpleasant experience from a company shipping their second product. Their first product was a successful Kickstarter project that validated them as a viable company. This allowed them to iterate on their MVP. From there, they were able to market and sell their second product directly to consumers. The problem is they were late with their second product. For 60 days, after they charged my credit card, they kept underestimating when my order would ship and sometimes they simply didn't respond to me. In the end, their product met my expectations, but it was a lousy customer experience as I nearly asked my credit card company to run a charge back.

The Future

If you're looking for investors then consider launching your MVP on Kickstarter. Even if you're not, it's a great way to mitigate risk regardless if you're trying to build a corporation backed by VCs or simply a life style company. The bottom line is don't be afraid to try, learn, and try again. I've seen entrepreneurs fall short of their Kickstarter goal, only to come back and succeed.

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