In early July, we set out to fund the production of our product, a device to help you be more productive and less distracted, using the crowdfunding platform Indiegogo. After publishing our entire strategy online before launch, we kicked off our campaign hoping to raise $100K in one month. Here’s what happened.
Our strategy summed up
You can read the details of our entire strategy here, but this is the gist of it:
- Build a large (15,000+) pre-launch email address list, in order to get to 30–40% of our funding goal within the first few days.
- Try to activate the press and other influencers to carry us forward from there.
- Use referrals and other incentive programs to drive additional traffic.
Part of this strategy was based on a strategic partnership we forged with Indiegogo. Originally we planned to begin our campaign by immediately activating our press contacts. Instead, our Indiegogo campaign manager recommended we get to 30–40% funded before involving the press. This is essential, they said, because people arriving to your page from an article are much more likely to buy your product (9% compared to 5%) when you’re already well on your way to your goal (nobody wants to back a loser).
If you think that’s a minor difference, then you have no idea how much work every single sale is (hint: it’s much harder than you think!). Converting double the amount of visitors from press mentions can make a huge difference in the final result.
What really happened
We were ultimately successful, but only in reaching a modified goal of $50,000 (down from $100k, more on that later). We made mistakes on all three of the above core pillars of our strategy. And then we made a whole bunch more. Let’s start from the beginning…
The human mind is as flawed as it is miraculous. While we had a crystal clear strategy of needing 15,000+ email addresses upon launch, we somehow convinced ourselves having close to 10,000 would also be ok (mistake #1). To make matters worse, a large part of those email addresses were not really “opt-in;” they were imported from our personal networks (LinkedIn contacts, address books, business cards) (#2). This drove down the conversion rate below what a “normal” (opt-in) list would see.
Why did we do this? Because I felt we needed to launch quickly to stay ahead of competition (#3).
While some sense of urgency is warranted and healthy in any entrepreneurial endeavor, I’ve come to believe this is a special bias founders suffer from: you were the one to originally spot the problem you want to solve in the world. It therefore seems so obvious to you, you expect everyone and their dog must be racing to solve it.
This rush led to several further mistakes:
- We launched before we had entirely finished testing the product and therefore didn’t have clear use cases (#4).
- We also didn’t yet realize the full potential of our product and hence its true (value) proposition (#5).
In addition, we had enlisted several people to work on marketing the campaign based on a percentage of revenue from the crowdfunding campaign. The longer we delayed the launch, the longer people operating under those agreements were putting in work without pay, which was unsustainable. This gave everyone a bias towards launching soon, as opposed to delaying (#6) and put further pressure on getting the campaign underway.
While that’s the why of launching early, that doesn’t explain the how. How did we convince ourselves launching with less than 10k addresses was ok, if it was crystal clear we needed 15k+? Well, we thought…
- …our personal contact lists would have a higher conversion rate than the 5% Indiegogo predicted (#7), but in reality they didn’t convert particularly well.
- …we could compensate the shortage of addresses with endorsements we had secured from several influencers (#8).
- …Indiegogo underestimated our good relationships with several larger media outlets. We assumed we would get better and higher converting write-ups than they were used to seeing in other campaigns (#9).
- …our strategic partnership with Indiegogo gave us a sense of overconfidence that we would be successful (#10).
A key component of convincing ourselves (and Indiegogo) to launch with fewer addresses had been Product Hunt. We enlisted one of the top 5 “Hunters” to post our product, which we believed would drive tons of traffic (nope, this wasn’t a mistake).
Unfortunately, in the 24 hours before launch, we found out that Product Hunt had recently begun clamping down on crowdfunding campaigns (too many failed products and broken promises). They now would only accept very successful campaigns, and a select group of products they liked that offered a special deal to their community.
Luckily for us, they liked Saent and offered us the latter. The only problem? We were ill-prepared to set up a special landing page for them, complete with Indiegogo payment integration. We could have figured this out sooner (#11), especially if we had gotten in touch with Product Hunt a few weeks in advance of our launch (#12), as they turned out to be very friendly and helpful.
Lastly, when it comes to our launch, we also stumbled a bit when it came to our domain names. We probably should have done a test (dry-run) of our launch or redirected the domains earlier (#13). Instead, we reconfigured them as the campaign went live and only found out 24 hours later getsaent.com wasn’t working properly.
The first week
Regardless of the previously described mistakes, our campaign seemed off to a good start. From the email addresses we did have, we raised over $5,000 in a matter of hours. That’s the moment I went to bed (it was 2:30 am in Beijing by then). When I got up the next morning, I expected we would be at well over $10k, maybe even a lot more…
When morning arrived in China the next day, we were at $6,500. With the words from Indiegogo still fresh on my mind (“you have the reach the 30–40% within a few days”), that was the first time it dawned on me we might not make the $100k. Nevertheless, we bravely marched on…
We thought we had more tricks up our sleeves; an owner of some LinkedIn Groups with almost 500,000 members posted a message about our campaign to all of them. We thought that would drive some sales (#14), but we got zero response. Some social media messages from influencers didn’t move the needle as much as we thought (#15) and so we started reaching out to our press contacts too early (#16).
The press outreach paradox
Well, that needs some nuance. While we knew we shouldn’t activate the press until we hit 30–40% of our goal for higher conversions, it didn’t seem we had much choice at this point. Our campaign was falling flat and we had exhausted most of our early-campaign options to drive traffic. So while this clearly went against our own strategy, we could also not sit around and wait to hope our funding would miraculously climb upwards by itself.
The 2-week slump
With some very good names (Mashable, Newsweek, MSN and others), the initial press articles were great for social proof. Unfortunately, they did less for sales than we had hoped (this is mistake #9 we already mentioned earlier), though they did push us upwards incrementally. Luckily there was an unexpected source that propelled us forward a lot more than we had anticipated: the Indiegogo newsletter.
On July 8th we got great news from Indiegogo: our campaign had been selected by their algorithm for one of their email updates. We had no idea what to expect, but it turned out their newsletter added an additional 6% to our contributions. They would repeat this again later in the campaign and their site also drove a lot more traffic than we had planned for; a staggering 28% of our entire funding came through Indiegogo itself!
While that’s great, it also implies a hypothetical mistake: we assumed we would mainly rely on our own ability to drive traffic, as opposed to traffic from the crowdfunding platform. This was one of the key factors in choosing Indiegogo over Kickstarter, since the latter does have a lot more organic traffic (it’s estimated to be two to three times as much than Indiegogo’s).
Since Indiegogo turned out to be a substantial source of our traffic, this implies Kickstarter might have been a better choice (#17). Of course many other factors are at play, and none of them can be tested and proved. But making the simple assumption Kickstarter’s crowd would have responded to our product with the same enthusiasm as Indiegogo’s and their traffic is indeed 2x to 3x more, we could have potentially raised $30k — $45k just from Kickstarter’s organic traffic and newsletter. That’s quite a difference.
Choices on proposition
There were other choices we made which proved questionable as we went along. One was about our 12-month Premium software subscription.
We are sure that at one point or another, we’re going to charge for some elements of our software. But as we went into the campaign, we weren’t yet sure exactly when, how and for which parts. Nevertheless, we did feel it was necessary (and fair) to mention the subscription right from the start, and hence include it in the campaign perks.
This ambiguity has probably cost us quite a bit of sales (#18). Based on anecdotal feedback we received via email during the campaign, some people are simply put off by any form of subscription. Others didn’t like the uncertainty around what the monthly commitment would entail after those 12 months of included Premium run out. More research prior to launch into possible subscription propositions could have provided us with a better converting package than what we currently had on offer.
Saent, The Brand
We could have also done better on the branding side. While we always envisioned Saent as a productivity solution for creators (programmers, designers, entrepreneurs, writers), we somehow ended up positioning the product as yet another tool for productivity geeks and freaks (#19).
This also had ramifications for our video: multiple backers and evaluators told us that a more professional voiceover would have made our company and product look more polished and trustworthy, while we chose to go “authentic;” I narrated the video in my Dutch-English accent myself (#20). Further, our video could also have been more creative and unique (#21), emphasizing the unique take we have on what productivity means and the target audience we’re after. Instead we went for a pretty straightforward structure and script.
Since our campaign ran on flexible funding, the goal we set didn’t really matter; we would have to deliver to our backers one way or the other. A target of $100k was therefore pretty stupid (there’s no reason to sugarcoat it). Let me explain…
While $100k might seem like a reasonable goal because most crowdfunding campaigns you hear about are very successful and bring in hundreds of thousands or even millions, nine out of ten campaigns actually end much, much lower than that. $100k is a tall feat and puts yourself at a disadvantage caused by perception:
- With a target of $100k, $40k raised equals 40% of your goal reached.
- With a target of $50k, $40k raised equals 80% of your goal reached.
The amount is the same, but the impression it gives is very different and perception is everything: if you’re closer to your goal, more people are willing to support your product and talk about it positively. Since we had to ship regardless of the outcome, picking a lower goal would have improved the perception (and hence conversion) people had of us early on in the campaign (#22).
Our perception of crowdfunding
Strange though it may sound, our own perception of the effects of crowdfunding were also wrong. While I only saw it as an opportunity to get early users and revenue (#23), it turned out to be an amazing marketing opportunity:
- We got endorsements from influential authors and professors.
- We now have a slate of media and social proof we can parade around.
- We got support and validation for our product from all corners of the globe.
So even if you don’t reach your goal, crowdfunding is a great mechanism to test your product’s proposition and appeal. Had we embraced this mindset from the start, we might have been better positioned to avoid some of the other mistakes we made (like setting our goal too high, launching too early and defaulting to “comfortable” product messaging).
Referrals and orders
We banked and then tanked on referral campaigns several times:
- A pre-launch referral campaign using Kickofflabs.
- A special, commission-based (invite-only) referral campaign using Indiegogo’s built-in referral mechanism.
- A referral campaign for backers during the campaign also using Indiegogo’s referral mechanism.
While we tried to model Harry’s strategy, our pre-launch referral campaign did very little for us. We miraculously hoped people would start referring, but the truth was that for each three emails we pushed out, we got one referral (#24). If you want your referral campaign to take off, it should be the other way around.
A commission-based scheme was a similar dud; I thought offering a select group of growth hackers and influencers ~$2.50 per sold product would be an interesting incentive (#25), but it got very little response and some people were even insulted (sorry!).
Not being the types to easily give up, we did try again towards the end of our campaign, with a referral campaign for our existing funders (#26). Having shown an interest in our product, we expected free upgrades and devices would compel people to action. Again though, not much happened.
There were several reasons why all these referral programs bombed:
- Great, recognizable incentives. Our own product was too new and uncategorizable to serve as a great referral driver (compare that to a razor blade from Harry’s campaign: even your grandmother knows what it is and half the male population needs them).
- Perfect messaging. For people to get it, be excited about the incentives and start sharing with their networks, you have just a couple of seconds of their attention while they leave their email on your signup page. This means you need to spend weeks or even months crafting, testing and revising until you get every step of the process perfectly right.
- Technical capabilities. Both Kickofflabs and the Indiegogo platform had severe limitations when it came to allowing you to perfect the process. For example, Kickofflabs (understandably) works with templates, but by the time you have everything how you want it, you might as well have built the page yourself anyway (giving you more freedom). Similarly, Indiegogo doesn’t allow you to provide easy incentives to your backers (e.g. a $5 discount for three referrals) and instead requires them to jump through all kinds of hoops and complicated steps (which of course nobody does).
Large volume orders
Did you notice our campaign perks of a thousand or more dollars? Well, we didn’t sell any of them. Turns out few people will turn up at a crowdfunding page and place an order for such an amount out of the blue (#27).
We found out the way these larger packages usually get sold is by securing pledges for them in advance. This is a great strategy, since a few of those orders can really push things forward, especially when they’re added immediately at the beginning of the campaign (and hence improving the perception of your campaign being off to a great start).
There’s more where that came from
Those were the biggies, here a few other small ones:
- We expected too much of Indiegogo’s A/B testing and analytics capabilities (#28).
- We hadn’t streamlined our email traffic (e.g., press requests might end up in my mailbox while I was sleeping) (#29).
- We still had too many perks and could have reduced choice further (#30).
- We underestimated the “seasonal effects” of summer vacation in Europe (#31).
- We used our own primary domain (@saent.com) to send out large volumes of emails to questionable email lists, reducing our primary domain to junk status (#32).
- We did not build up enough “karma” in specific Reddit Subreddits to be able to post there (#33), nor did we find a good way to use HackerNews (#34).
While this article focused on mistakes, our crowdfunding campaign was a tremendously positive experience for Saent. Sure, we had higher expectations initially and the result could have been better had we known all of the above in advance. But it was amazing to see people from all over the world engage with our product, and to receive tons of smart feedback and suggestions to make things even better.
The above is a lot to digest, we know, so here are the key takeaways from our crowdfunding experience:
- Determine if you’re pursuing a campaign just to validate an idea and gather feedback, or if you genuinely need the funds in order to build your product and sustain your company. In the former, being fast is ok (and maybe even preferred), in the latter erring on the side of caution as far as the amount of thought and preparation you put into your launch is best.
- Have one or more people (the types who are not afraid to tell you the truth) review your plans and specifically ask them to hunt for unproven assumptions you’re making. Listen and carefully examine the ones they uncover.
- Prepare for the worst, as it’s likely you’re not a unicorn crowdfunding campaign. What are you going to do when your pledges drop flat and dead after the first week? What if you raise a meager amount based on flexible funding? Can you still deliver? Actively planning for and working out worst-case scenarios is highly recommended.
- More email addresses upfront are always better, so are sales closed before the campaign even starts.
- While you live and breathe your campaign, for most people (including even your closest friends) your campaign only occupies a sliver of their attention span. Keep this in mind when you have to make difficult choices and how people might perceive them (e.g. barely anyone really noticed nor cared when we lowered our campaign goal to $50k, while we spent days debating the possible disastrous consequences).
Hopefully these learnings help and motivate you to launch a great crowdfunding campaign. It’s a thrilling experience and you’ll learn more in a month than you normally do in a year. Remember to enjoy the ride if you decide to take it, no matter the outcome!
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