02: The Crowdfunding Success Formula
This episode presents the surprisingly-simple #1 formula for coming up with your next big product, and how you can analyze past crowdfunding campaigns to gauge how well your product will perform. And, remember, don’t wait until tomorrow—get Funded Today!
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1. Narrowing your potential market narrows your chances of crowdfunding success.
2. Crowdfunding backers like to support “cool” (often techy) innovations.
3. Honest positive poignant storytelling adds value to your crowdfunded product/service.
4. Learn from other campaigns’ backers, as well as your own backers, to give consumers what they actually want.
[01:14] Zach and Thomas introduce their crowdfunding formula, which is ubiquity + tech + compelling story = huge chance of success.
[02:21] Thomas explains the power of ubiquity.
[03:55] Zach explains the power of techiness.
[05:28] Zach and Thomas explain the power of storytelling.
[10:19] Zach and Thomas clarify that crowdfunded products/services don’t necessarily need to satisfy every factor in this formula in order to succeed.
[13:12] Zach and Thomas discuss how to browse past crowdfunding campaigns in order to learn from those campaigns what consumers actually want to buy, and then use this feedback to create innovative new products to validate through the crowdfunding process.
[22:30] Zach introduces the law of diffusion-of-innovations, observes that Kickstarter has captured the early-adopter market, and notes that this market loves to provide innovators with feedback to help their products/services to become as good as possible.
[24:39] Zach and Thomas present this episode’s Projects of the Week.
Thomas Alvord: (00:00) Welcome back to the Funded Today Podcast. On today’s episode we’re going to discuss the surprisingly simple number one formula for coming up with your next big product idea, and how you can analyze past Crowdfunding Campaigns to gauge how well your product will perform.
Announcer: (00:17) The Funded Today Podcast is hosted by World-Renowned Entrepreneurs and Business Experts Thomas Alvord and Zach Smith. To get help with your next big business idea or to take your business to the next level go to fundedtoday.com.
Zach Smith: (00:30) Hey, Funded Today Podcast listeners welcome back to the Funded Today Podcast, I’m Zach Smith.
Thomas Alvord: (00:35) And I’m Thomas Alvord.
Zach Smith: (00:36) Just in case you haven’t had a chance to listen to our podcast yet, be sure you catch the first episode where we talked a little about our history the $200 million and counting that we’ve raised over the last four years and a little bit more about how you can start raising money through Rewards-Based Crowdfunding. On today’s episode, we want to talk about a few very important things and quite honestly once you hear them I think you’re going to be able to immediately take action on these points. Today you’re going to learn how to become a Crowdfunding Research Expert and with that research within the next week or so you might have the next big idea.
Thomas Alvord: (01:14) The number one formula that we’ve come up with is analyzing and looking at campaigns, thousands and thousands of campaigns. We’ve worked on 2,000 plus campaigns but just seeing the campaigns day in day out on Kickstarter and what performs well. What are those campaigns that when they launch they just go through the roof and they raise ten times more than we would have expected or maybe they do two or three times more than we typically would have expected. And as we’ve looked at all of these campaigns, we’ve actually created a formula, an equation where you take these elements and this is what you really want to shoot for if you’re going to be launching a Crowdfunding Campaign. And that formula is pretty simple you want to show that Zach?
Zach Smith: (02:03) Yes. Very, very simple and we’re going to break it down for you after I share it just because there are a couple of big words and they are the –might not have heard before. The formula is “ubiquity, plus Tech, plus a Compelling I call it a chill factor story equals a huge chance for success”.
Thomas Alvord: (02:22) So ubiquity it means it’s everywhere right that’s the definition, but in the case of Crowdfunding what we’re looking at it’s a product that pretty much everybody could use. For example one of the most funded campaigns ever is the “Coolest Cooler”. Everyone pretty much has a Cooler right, so that is ubiquitous or a wallet, a wallet is ubiquitous or a watch, a watch is ubiquitous. It doesn’t mean everybody in the world has to use it but it’s something that a large majority of the population uses because that way your audience is much, much larger. Whereas like sometimes we’ll run underwear female or male underwear, obviously yes everyone uses them but female underwear I mean literally you are cut to like half of the population right or if you have a product for a cat not everyone has a cat so you’re immediately in a smaller niche or if you want to go even smaller you might have a product for people who are into long distance running, right? So now your market is even smaller those would not be ubiquitous products because the niche is so small.
Zach Smith: (03:30) The idea is to paint with as broad of a stroke as you possibly can and we absolutely believe in dialing-in and finding your specific niche or product category within that larger ubiquitous market, but the bigger you can go to start the more likely you’re going to be able to have a big enough marketplace or you can attract enough interest and raise a lot of money that’s ubiquity. Second point “Tech”, sometimes it’s just something that’s cool or unique that stands out.
Thomas Alvord: (03:59) …or innovative.
Zach Smith: (04:00) So let’s look at this again, probably the most ubiquitous techie product in the history of Kickstarter, “The Pebble Watch”. A watch is ubiquitous, anybody can wear a watch male, female and a lot of people do wear a watch but what do they do? Essentially Pebble created the world’s very first Smartwatch, they took all of the elements from a cell phone that were cool and they made it so that you could have them right on your wrist and of course the rest is history, 78,000 backers on their final Kickstarter Campaign their “Pebble 2” did over 67,000 backers – 66,000 backers their original Pebble E-Paper Watch right around that 70,000 mark was nearly 69,000 backers. This is the type of thing that you want to go for. The same thing with the Coolest Cooler what did they do with the Tech? They made a Cooler something everybody takes to the beach, takes with them to the park, takes with them on their campaign but then they made it so you could blend something, they integrated a Bluetooth speaker, they made the wheels extra wide and large so that they could roll well on sand or beaches. They added in all of these elements of innovation of techiness, that Cool factor. I mean Coolest Cooler is probably the best example of this one because they literally named their Cooler the Coolest because it’s cool. And these are the kinds of things you want to look for, for point number two of this Crowdfunding formula.
Thomas Alvord: (05:25) And the third point is the compelling story or the chill factor story which is basically you have a story with the creator, with the founder of this product that is inspiring or brings awe or that imbues additional trust into that product. As a side note, I really love this, they did some research and they took some wine, just some standard generic wine and they gave it to people in a generic bottle and they asked people “How it tasted?” and people said “Oh! It tastes awful, it’s horrible”. But then they took that exact same wine and to the exact same people who just tested the other wine and put it in another bottle saying “It was – I forgot how old it was and how refined and amazing it was in this fancy, fancy bottle” and they had people taste it and people said “This taste absolutely amazing”, and it was the exact same wine the only difference was the story behind that wine. So when you have a story behind the product it literally imbues the product with additional merit or value or worth outside of whatever is intrinsically there.
Zach Smith: (06:50) So powerful Thomas and I want to add one point to that too just as another caveat to what Thomas said, because I think it plays perfectly and this is recent research as well. In fact Thomas and I were just discussing this I think last week. There is a recent study that came out specific to rewards based Crowdfunding on Kickstarter and Indiegogo that says “That the positivity with which you convey how are you going to make this happen, how you’re telling the story of this product that you’re going to bring to life, actually lends credence to whether somebody is going to back your campaign or not.” The best example of that and Thomas and I – we came up with this as well, we said “Well who is the most out of all the thousands of creators we worked with, who is the person who most exemplifies this positivity” and Thomas who did we say?
Thomas Alvord: (07:33) We both said Katherine Krug independently.
Zach Smith: (07:35) Katherine Krug of BetterBack, like literally it was funny I wrote down my answer, Thomas wrote down his answer and then we revealed and we were like Katherine Krug. Out of all the campaigns we’ve ever worked with go and study the “BetterBack Campaign”, look at how she communicated with her backers, look at her updates, look at how she told her story, look at the pain problem that she had and the product that she invented to kind of solve that pain point and I think you’ll understand exactly how to convey that positivity in both of your video, your page and your messaging. One other point that is important with the story, we use to say “Tell a story” but “Tell” kind of seems like it’s made up, we want to be authentic and genuine with the products that we’re creating and bringing to life. So I changed that in a presentation that I gave in Canada, because I used to obviously tell a story but when I spoke at the Canadian Crowdfinance Summit I changed it to “Have a story”, don’t make up a story, be genuine, be real you should be creating products that solve real problems and there is your story and then just convey that positivity and you’re halfway there.
Thomas Alvord: (08:35) One of the most compelling stories we ever experienced was a watch that we worked with a few years back called “Luno Wear”, Luno Wear right Zach?
Zach Smith: (08:45) Oh! Yes absolutely. This was a Ryan Krantz and Boman Farrer if you want to check out their product pretty cool, it’s a wooden watch and it was one of the first wooden watches to hit the Crowdfunding scene on Kickstarter and Indiegogo. When you tell a story, probably the most important thing you can do is to be able to tell that story in as fewest words possible. One of my favorite quotes and I forgot who this was from but he said “I wrote so much because I had so little time, if I would have had more time I would have written less” and I think that’s the way that you can tell your story as well. So here was the pitch that we went with for this watch and I think this is going to resonate with everybody listening, 73 year old watchmaker passes on legacy of watch making to grandchildren that was one of the hooks that we used, and then there was a picture of these two grandchildren sitting next to their grandpa he could barely see the watch but that Ad, that copy had some of the highest Click-Through Rate that we have ever seen.
Thomas Alvord: (09:45) And the Kickstarter video worked perfectly because it immediately started and talked about four generations of watch making and here you have this 20 year old kid guy launching a watch carrying on this legacy with these wooden watches. What’s interesting about this campaign, some of the watches they actually got on Alibaba and had minor tweaks. So even though it was just a watch from Alibaba it was generating $40,000, $50,000 a day in pledges and it was converting like crazy again because of that story. So where you have ubiquity plus tech, plus compelling story you can have an amazing product, and with Luno Wear watches there wasn’t really much tech involved but I suppose the wooden watches is slightly innovative but not really it’s kind of already out there, so you don’t have to have every single element. But as you’re looking on creating a product you need to look and say “How could I create some innovation or tech into this or how could I create a unique or compelling story or what is my story”. Often your story might be the most compelling story, here is another product I recently came across just a few days ago and I thought it was absolutely amazing, it was super cool it’s called “Mini Museum” I don’t know if you’ve even seen this Zach.
Zach Smith: (11:10) I haven’t yet, no.
Thomas Alvord: (11:12) He is a guy who travels the world right and goes and discovers all these amazing places and he has created this Mini Museum so it’s like in this glass sheet of paper, not paper like this glass frame and it has different artifacts right, like water from the Amazon River, a piece of bone from a Saber-Toothed Tiger from 10 million years ago I forget the exact timeframes and everything right. But literally this guy goes around and he collects them and he puts it in this glass frame and so you get like 30 artifacts, ancient artifacts right, so compelling that you can then have in your house for like a few hundred dollars. So that is a compelling story, it’s not really techie but it is innovative right, how many other people have done this?
Zach Smith: (11:56) And remember cool is another way to say innovative it’s cool, who would like to have those items in your house I just recently got back from traveling to Mount Everest and one of the price possessions I picked up at Everest was a cow bell, well I guess it was a Yak bell from one of the Yak’s that made all the way up to basecamp and it’s something that I can have sitting on my mantle or one of book cases and I can show – I can share it and share it with people and it’s all rusted and worn out and you can see all the frame of the fabric that they used to wrap it around the Yak’s neck. So I love that Thomas I think that’s an amazing story that conveys all of those elements, while also allowing for storytelling forever with all the different elements from that Mini Museum. I think…
Thomas Alvord: (12:38) Well in the Mini Museum, his first few campaigns he raised over $1 million each time I think on this campaign he might be just shy of a $1 million it’s not over yet. But those are the things we’re looking for and again you don’t have to have this formula but if you have an existing idea, think how could I take this formula “ubiquity plus tech plus compelling story” and apply it to what I’m doing or if you don’t have an idea how could you take something like that and come up with a product. And again you don’t have to have this formula there is other things you can and should look at and consider and that’s where we want to talk about looking and browsing on Kickstarter and Indiegogo and browsing on Kickstarter is going to be a little easier and there is more campaigns there and to see the historical raises as well as the current raises for different category types.
Zach Smith: (13:30) Now you got the formula, you’ve got the number one formula to come and put the product. How can I take this formula and implement in real life, in theory that sounds great, awesome, wonderful. But what can I do, where can I take this formula and then get some ideas for products, I’m not an inventor, I have no clue what I need to invent, I can’t just come up with something out of thin air where can I find some inspiration?
Thomas Alvord: (11:54) The easiest thing to do is actually go to Kickstarter or Indiegogo and browse the campaigns on Kickstarter and Indiegogo and see how they’re performing, see how much they’ve raised and go back historically and see how many campaigns have raised “X” amount or to see are people still launching this type of category or did they start out for example, if you have an idea you could look at luggage. Two years ago Smart Luggage, every new luggage that launched was raising about $1 million, now you look and a Smart Luggage might raise between $50 to $200,000 I mean that’s still a lot of money but it’s not millions of dollars is what’s I’m saying.
Zach Smith: (14:34) Oh! Yes, four years ago wallets same thing you run a wallet on Kickstarter $50 to $100,000 was pretty much a standard. Thomas is so right Rewards-Based Crowdfunding particularly on Kickstarter is probably one of the best ways to get product inspiration that you could ever possibly imagine. All you do is go to kickstarter.com there is a little search button usually if you’re on mobile it’s right there in front of you, if you are on desktop just in the right hand corner you click search, from search you can do all kinds of dialed and things like Thomas was talking about. One of the easiest searches to do is to click on the more filters button and from the more filters button you can search for successful meaning they’re already over, let’s say you’re into product design which is what Funded Today focus a lot on. So you could do most successful projects in design by most funded and if you do that search from what I’m seeing on my screen right now, you’ve got the most Funded Product of all time, Pebble time, the second most funded product of all time “Coolest Cooler”, then another “Pebble Watch”, then another “Pebble Watch”, and then the world’s best travel jacket “BauBax” which is the campaign Funded Today ran and after that the “Everyday Backpack” which is another Campaign that Funded Today worked with, “DigiCube” and you’ve got Filippo Loreti which is a campaign Funded Today worked on. Then you’ve got “Everyday Messenger” and you can go all the way down this particular category and get some great ideas if you want to change your filter like Thomas said you could do projects that have finished in the last “X” number of months or weeks and get some ideas for what is trending right now and I don’t think there is any other thing like this in the entire world for coming up with product inspiration and Kickstarter just opens the entire come on for anybody looking to create a product and says “Here everything doing well, here’s how many people backed it and here’s how much money its raised and they rank them for you”.
And with just a few searches you can get some really good ideas for something that you might have thought off in the past that you can then pivot or tweak slightly but that raises the other question, and that is okay great Pebble raised a bunch of money, Coolest raised a bunch of money, the Baubax travel jacket invented a really cool travel jacket but those have already been invented, how am I supposed to know what to take, what am I supposed to invent. Again I don’t want to invent something out of thin air and this may have been Steve Jobs I think it was in Walter Isaacson’s biography of Steve Jobs and again I could be wrong but I am sure that he said this somewhere. And the quote is “Good artists copy, great artists steal” it doesn’t mean that they’re stealing necessarily but he means that you can look at what has been successful and then you can combine those elements of success that these particular products or these particular merchants had and then and steal them into your own new product, and I think that is the essence of what Steve Jobs did with Apple, and what we believe anybody can do on a Rewards-Based Crowdfunding site like Kickstarter. So one of my favorite strategies is to go to Kickstarter, find a search like we just described and then click in the comments. So let’s just click on the Baubax travel jacket, Baubax is B-A-U-B-A-X for those of you listening that might not know how to spell it, Baubax that’s how Hiral Sanghavi named his product. This product had 44,949 backers and it raised just over $9 million bucks.
And here is the gold, that’s cool that’s great, how does that matter to me, here’s how it matters to you. There are a 11,951 comments on that product right now. You could probably read those in three or four hours after you’ve read all of those comment you are going to have so many ideas from all of the customers and backers of Baubax about what they liked, what they didn’t like, what they wish they would have seen, what they would have liked to see better with sizing, delivery, situations how they would have liked shipping to be, different ideas for pockets, different ideas for other new things, different colors they wanted, literally by the time you read this if you just have a pen and paper out or if you’re typing up some notes you’re probably going to come up with four or five different ideas to play on this idea to create something that even more people are going to resonate with, and you could do this with every single one of the big projects on Kickstarter or if you don’t invent a jacket you could take these ideas and say “Well how could I take these ideas and move them horizontally into something else maybe it’s a travel wallet, maybe it’s travel socks, maybe it’s a travel belt”. Again I’m just thinking outside the box right now just like Thomas did with that museum example he shared, how can you take elements that were very successful in a campaign that raised millions upon millions of dollars and then listen to what the backers, get that customer feedback, how can you listen to what they were sharing and then imbue, I love that word that Thomas used earlier and then imbue those into a new product idea for your own self. I think that’s just powerful and I don’t think anybody else really knew this I mean this is something that we kind of have pioneered because of just how transparent and how open Kickstarter is and we think that by doing this you’re actually going help the Kickstarter community evolve because you’re going to be creating products that people want, and by creating products that people want more backers from Kickstarter are going to return and bag more products and it’s going to be great for everybody.
So we think it’s a win across the board for everybody who follows this type of a strategy. There are so many people – in fact just a couple of days ago I was talking with one of our clients and I asked him he had 20 backers on his campaign which isn’t good, if you have 20 backers on your campaign and you’re selling your product for 10 bucks or 20 bucks that’s not good maybe if you’re selling for 1,000 bucks that’s not bad but he had 20 backers, he’s like seven or eight days in and he’s not going to reach his funding goal and I asked him does he came to us when he’d already invented his idea and already brought his – and I said “Where did you come up with this idea” and I was just trying to be genuine and real, he said “Four years of R&D”, I said “In that four years of R&D did you ever ask anybody if they wanted this?” Crickets silence and we’ve been doing this for a long time and people are still coming to us with ideas that they basically thought people wanted and they never went to actually ask people to see if they want it. I mean it’s the most basic common thing in all of business, talk to people about whether or not you have a good idea and then once you talk to them say “Hey it’s going to be a 100 bucks can I write down your name and email and grab a credit card or a confirmation that you’re going to back my campaign when I launch on August 3rd, 2018? Yes or no”. And then you’ll get the real answer.
Thomas Alvord: (21:17) And I can’t stress how important that point is that Zach just made, you need to validate even before you launch we actually have a process to do this which we call the “Triple F”, in our next podcast we’re going to go over the Triple F. So before you even go create your product before you start spending all this money, you can even get feedback to see if people want it. I would add one caveat to the things we’ve discussed on this podcast about our formula, ubiquity plus tech plus compelling story, this formula works if you’re looking at launching a Kickstarter or Indiegogo campaign, because those backers that community are people who are interested in innovation, in what’s cutting edge. I imagine somebody could sell plastic straws on Amazon and make money, you’re not going to make money just taking generic plastic straws with nothing else, no story nothing and just putting it on Kickstarter it will completely die, right? So you got to understand the audience that you’re talking with. So Kickstarter it is going to be the Ubiquity plus tech plus compelling story, and the best way to gauge how well something has done is look at Kickstarter and Indiegogo and see what those similar campaigns have raised historically.
Zach Smith: (22:33) Yes that’s a great example and just some research to back up exactly what Thomas has just said it’s called the “Law of Diffusion of Innovation” and the reason why Kickstarter and Indiegogo we call these Rewards-Based Crowdfunding platforms the reason these are so successful for working with these types of new projects is because Kickstarter has found a way to attract these early adopters and even these innovators. Basically Kickstarter has captured that marketplace, and that marketplace loves to be first in line, they love to test out new ideas, they love to be the people that offer feedback to help make that idea great before that early majority, the late majority and the laggards jump in to back a product and bring it to life. So you might get the laggards buying the hammer on Amazon you’re never going to get that group of people backing the hammer on Kickstarter, it’s going to be the innovators and the early adopters and that’s what makes Kickstarter, Indiegogo Rewards-Based Crowdfunding platform so effective is that Law of Diffusion of Innovation.
And with that I think we’ve wrapped up today’s episode, hopefully you learned a lot. Hopefully you’ve had a chance to memorize that formula “ubiquity plus tech plus a compelling chill factor story” gives you a huge chance for success and most importantly I hope you are motivated now to go on to Kickstarter, to do your research, to put on your data hat, to become a little tech nerd for a few days and read thousands upon thousands of comments to think outside the box to ask yourself “Okay here’s what they’re talking about where can I pivot, where can I change, where can I take what these people are saying and put it somewhere else”. Ask yourself the questions that lead to inspiration and I think the inspiration is going to come from reading what actual customers are talking about, complaining about, offering feedback about, why because these are the early adopters, these are the innovators, these are the people that want to see change and you get to hear exactly what they’re saying, and it’s a beautiful, powerful thing that Kickstarter has created. So I hope this has inspired you, I hope this gets you revved up and ready to go to launch an amazing Crowdfunding Campaign.
All right as we always like to do on the Funded Today Podcast this is the Funded Today Podcast “Product of the Week” and my choice for Funded Today Crowdfunding product of the week is “The SnoofyBee 2.0”, we worked with them originally one of our great clients they have invented a mobile version again this is kind of cool because I think it fits really well with this episode they took what worked on their last campaign they said “How can we make this a little bit more mobile” and this is their excursion edition with their Chewy Buckle, it’s pretty cool ditch the clutter in the chaos with SnoofyBee’s newest changing pad and teether toy. Check it out it’s called the “SnoofyBee 2.0 Clean Hands Changing Pad” it’s basically a way for you to be able to change diapers on the go and if you’ve ever been a parent I haven’t, I really don’t know why I’m talking about it but Thomas going to test this is a wonderful product to use for changing dirty diapers on the go. SnoofyBee 2.0, check it out.
Thomas Alvord: (25:42) My campaign this week is when I mentioned in the podcast earlier which is the “Mini Museum” if you check it out it’s actually really, really cool I think there’s probably maybe five campaigns ever out of all the campaigns that I see and browse that I’ve backed or wanted to back and this is one of those so Mini Museum.
Zach Smith: (26:03) Love it, and remember “Don’t Wait until Tomorrow Get Funded Today”.
Announcer: (26:10) Funded Today is the worldwide leader in Rewards-Based Crowdfunding on Kickstarter and Indiegogo. Combined they have raised over $200 million and counting for thousands of new ideas and inventions worldwide, if you’ve got an idea for a new product or invention visit fundedtoday.com to speak with one of their experts.
Projects of the week
References and Resources
- Funded Today: Blog: “Marketing Is Marvelous (But It’s Not Magic) - The Power of Product”
- Funded Today: Blog: “What Kinds Of Projects Is Kickstarter Most Effective At Funding? Why?”
- Funded Today: Podcast: “Life After Crowdfunding: Amazon Intelligence”
- Funded Today: Podcast: “‘The Crowd Whisperer’ Evaluates Projects”
- Indiegogo: LunoWear
- Kickstarter: BAUBAX Travel Jackets
- Kickstarter: BetterBack
- Kickstarter: Coolest Cooler
- Kickstarter: Mini Museum
- Kickstarter: Pebble Time Smartwatches
- Wikipedia: Diffusion of Innovations
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