How crowdfunding took over the world
The crowdfunding craze is creating opportunities for big companies and individuals alike. Craig Grannell talks to creators about their highs and lows – and how to harness the power of people
This new way of doing business is more popular than ever. We speak to creators about its successes… and failures.
Realizing a dream project once required you save up a pile of money or find someone with deep pockets. Even then, there were risks. Crowdfunding on sites such as Kickstarter, Indiegogo, and Patreon now offers a viable alternative, where interest and payment can go hand in hand.
Elan Lee masterminded card game Exploding Kittens ( explodingkittens.com) – the most successful Kickstarter to date. He thinks the model does two really helpful things: “You connect directly to your audience, so you can get feedback and understand who they are, to make your product as good as possible. And you can gauge interest, without putting massive amounts of investment on the line.”
This is particularly useful for hardware. It’s one thing to make, say, a small videogame that fails to set the App Store charts alight, but you really don’t want warehouses full of unwanted equipment. “Market fit was a question mark for us, so we tested it out on Indiegogo,” says Mikko Kesti of his team’s Adobe Lightroom editing console Loupedeck ( loupedeck.
com). Demand was such that the campaign rapidly flew past its target. Kesti adds that without the campaign, convincing investors would have been harder: “After all, people can say they love a product, but the ultimate test is when they place an order.”
Tiny computer Kano ( kano.me) had a similar start on Kickstarter. Six-year-old Micah challenged founders Alex Klein and Yonatan Raz-Fridman to create a self-built computer as simple and as fun as LEGO. A few prototypes later, crowdfunding was the obvious next step – to amass capital, but more importantly to receive public validation that there was interest in a $99 computer anyone could make and code with.
Head of communications David Ortiz reasons Kano wouldn’t be what it was without Kickstarter: “Our second campaign was the most crowdfunded educational project to date. Both campaigns provided exposure to a public hungry for physical devices to build and code with, moving away from the current world of sealed, one-size-fits-all products.”
The notion of working in the margins of what’s popular is common in crowdfunding. Chris
Abbott, who has crowdfunded audio projects based on 8-bit videogame music ( c64audio.com), notes “Some things in crowdfunding defy gravity – such as people still buying CD boxsets.” And you can’t exactly imagine record labels clamoring to buy into a project that asks: what if 1980s videogame soundtracks were reimagined in the style of Jean-Michel Jarre or Vangelis? Yet several Abbott-run Kickstarters have been successful.
In similar territory, Sam Dyer of Bitmap Books ( bitmapbooks.co.
uk) has funded a small library of visual compendiums celebrating classic technology hardware, which he thinks wouldn’t exist at all without Kickstarter: “I had no customer base. I had no idea if anyone would want that first book. Kickstarter let me gauge interest so I didn’t invest in something only for it to fail. It removed the risk.”
This idea of niche products is close to the heart of TV writer Paul Rose, who ran a popular magazine at the very early forefront of digital publishing. “For me, part of the appeal of crowdfunding is being able to support things outside of the mainstream – that don’t fit into an obvious box. It allows for more tailored projects, and I honestly think it presents a genuine alternative – possibly even a threat – to existing funding models.”
Rose himself has successfully crowdfunded two projects: a web take on his games magazine Digitiser ( digitiser2000.com), and Mr Biffo’s Found Footage (a comedy series comprising fake VCR footage) – and thinks neither would otherwise exist. He reasons Digitiser2000 “awkwardly straddles blog and games site” and is too “wilfully strange, obtuse, and at other times shamelessly personal and heartfelt” for traditional funding. And Found
“Kickstarter let me gauge interest so I didn’t invest in something only for it to fail.” Sam dyer
Footage is “as out there as anything I’ve ever done” to the point it wouldn’t make it on to standard television “without a lot of compromise to make it more palatable,” he believes.
However, not every story is a success. Abbott notes some projects can have issues in trying to get the average pledge high enough to withstand only getting a small number of backers. “There’s still a big disparity between what people regard as good value, the number of people interested in something, and the development and production costs,” he says.
Developer Marco Arment has first-hand experience of “how difficult it is to get the mass market to pay for intangible digital goods such as apps and media, regardless of their quality, in an environment of overabundance.” He tried running his acclaimed podcast app Overcast ( overcast.fm) using a patron financial model, where people donated a recurring fee.
Arment reasons this kind of funding can be beneficial: “Your project can be free, opening the doors to everyone to accelerate growth and sharing, and you can theoretically make enough money from ‘superfans’ to fund it. It’s also simpler to implement and support than other monetization schemes.”
Whether it works for you, he says, is another story. With Overcast, figuring out how to encourage and reward patronage was tricky. Without perks, the patronage rate was unsustainably low. On the flipside, when he made features patron-only, other users got angry.
Arment eventually switched to a more typical ad-funded model, adding a “premium” tier to remove ads, which he says “drives more subscription sales than patronage did – and I’m also making money from the userbase that doesn’t pay.”
As ever, there are exceptions. For example, Rose’s Digitiser2000 is funded via Patreon, where fans pledge support in a subscription-style manner, in return for promised rewards (which are usually just that the creator will keep making things).
“Patreon works for Digitiser2000 because it’s ongoing, and I find people who support it very generously give far in excess of what
they might spend on a magazine every month,” reveals Rose. “I don’t earn as much as I would writing the same volume of content freelance – but the freedom it affords me makes up for that.”
Rose also discovered regular, direct engagement with his loyal, dedicated following boosted his projects’ chances: “The bulk of my backers came from my Twitter followers, and Found Footage was bolstered when I started to offer unique, personalized retro-style pictures to everyone who pledged [at a certain tier]. This drove tons of backers, and also meant I could upload the images to Twitter, which doubled up as a marketing tool. It nearly killed me doing over 300 of the things, though – I had eyestrain by the end of the campaign!”
Even with less off-the-wall crowdfunding campaigns, there’s an understanding about the power of the community. Masa Pavokovic, communications coordinator behind the MAG-LEV levitating turntable campaign, says that although crowdfunding’s “quick income of funds is crucial for establishing production,” the community can play a big role.
“As a creator, you try to think of every possibility that makes your product better, but with so much going on, you sometimes miss a thing or two. The community can provide insight, and share your passion for the product, thereby being the most powerful marketing tool around.”
Robin Rath, co-founder of kid-friendly game creation tool Bloxels ( bloxelsbuilder.com), says much of the key to community involvement in the project is “really understanding what the story is, making sure it’s easy to tell, and ensuring it’s great for the specific audience you are trying to reach, so that it really resonates with them.”
Dyer adds that for multiple campaigns to be successful, lines of communication must stay open for the duration, rather than just during the early days. In his case, regular updates about in-progress books are sent to backers, who may then be more likely to support subsequent volumes: “People really appreciate the openness, and I try to make backers feel like they are in an exclusive club – the first to know and see things.”
As noted, Exploding Kittens was the most successful campaign in Kickstarter history, so it should come as no surprise that its team worked hard to define its story and engage the community. Elan Lee recounts that the team initially shared a preview of the campaign page with friends, who thought it was a bit “infomercial.”
“They said it shows we’d built a product, liked it, and that people could buy it. That would have made for a mediocre, middle-of-the-road
“The community can provide insight, and share your passion for the product . ” Masa Pavokovic
campaign, and it was a revelation. We realized we had to explain why we were on Kickstarter, and the only reason is to work with the community and the crowd.”
The reworked page started with this premise in mind, the team realizing it was there to work with its backers, in order to make the game the best version of itself. When the company raced past its $10,000 goal – set because that was the minimum order requirement from the printer – Elan said the team “had no more interest in funds.” Everything thereafter was designed to “raise a crowd, to throw the biggest party the internet has ever seen – all around this silly, interesting, fun product.”
Instead of tying stretch goals (upgrades) to raising money, Exploding Kittens found itself with an achievement system. “One of our characters is a taco cat, so we said we wanted 25 pictures of real taco cats. We even had people write haikus,” says Lee. And it worked. The community got involved, and word continued to spread. By the end, Exploding Kittens had 219,000 backers and had raised almost $9 million – both Kickstarter records.
“The first of those is what we’re most proud of,” says Lee. “We have more people who wanted to play this silly game with us than use any other product on Kickstarter. That was truly glorious.
“And we had so much fun talking to those people, letting them test the game early, playing games with them, sharing pictures, singing songs, and creating more content for them, because they wanted to join our family and help us make this thing as good as it could possibly be,” he adds.
Another interesting aspect of Exploding Kittens was its razorsharp focus in terms of what it offered. Although Abbott notes Kickstarter campaigns “look stupid” when they offer “ridiculous upperlevel expensive pledges like $1,000 for lunch with the development team,” he says it’s important to offer price levels for all backers. In
some cases this can bump up the average pledge, while still making the lower tiers accessible to all.
With Exploding Kittens, though, and similarly successful follow-up Bears vs Babies, you had just two options: buy the game, or buy the game with the “NSFW” expansion deck. “We had no posters, no T-shirts, and no pins,” says Lee, who argues such extras are a distraction; not only for the buyer, who has to figure out what option to pick from sometimes confusing alternatives, but also – and most importantly – for the creators.
“Making T-shirts is really hard. Stocking posters and figuring out mailing lists for postcards… Those are all full-time jobs, and detract from the experience of building a community around a new product that everyone can get excited about,” continues Lee. “Besides, we found all of those things can come into existence afterwards, either from us or from our vibrant community. But they don’t need to be created at the beginning because they put your product at risk – and there’s no-one on the planet who would appreciate that.”
Regardless of approach, there is one thing everyone immersed in crowdfunding can agree on: along with being a potentially great way to fund a project while building a community, it is often a really exciting time for the creators.
“Done right, you’re on this rollercoaster journey with your backers, who happen to get a souvenir at the end,” thinks Abbott. “There’s nothing quite like those last two or three days of a Kickstarter for tension.”
Lee reasons that, if anything, things can get a bit too much, not least when the numbers were zooming upwards, as with Exploding Kittens: “That was the most exciting and the most terrifying part. Every time we saw the numbers go up, some of our team would celebrate because we were getting more successful.
“But I’d see another box to manufacture, fulfill and ship. It got so bad I put sticky notes over my monitor, so I could view the campaign page without having to watch the numbers rise, because that gave me too much stress!”
For some creators, crowdfunding can be truly life-changing. “I’ve a large family and a demanding job, but through crowdfunding, I can justify working on projects without squeezing them in around everything else,” says Rose.
“In fact, it potentially offers a real alternative to my day job – and though I’ve been lucky in that I’m a pretty successful kids’ TV writer, there’s always the threat of shows being canceled, or work drying up. For the first time in a long time, crowdfunding has made me consider that I might be able to go on doing things I love for a long time yet.”
“Done right, you’re on this rollercoaster journey with your backers.” elan lee