Winning at crowdfunding: Fundraising for product development
Bringing your product to market: what works and what doesn’t (things hardware)
Crowdfunding is great. For inventors, it is a fast track to making that elusive product idea a reality – and, thanks to pre-orders, with reduced risk at that. Admittedly, the market is growing increasingly competitive with countless projects fighting for still limited backer money. In this environment, getting your crowdfunding campaign right from the ground up is more important than ever. For new creators, the crowdfunding game may seem puzzling, and winning at it – daunting. But we say there are just three P’s to keep in mind: people, product, and promotion. Although each individually packs a wallop, succeeding at them is doubly possible even with the more modest of budgets (given the right mix of creativity and luck).
Pull makers and sellers together The goal in assembling a team is to get that right mix of raw tech and business acumen talent. In an ideal world, the creator will boast both the skills. Most of the time, however, a creative techie guy (or more likely, a few of them specialising in different fields) needs to be paired up with somebody who can take care of sales and operations. Since you need to show backers at least a basic product prototype (more on this later), think of people required to build one. Outsourcing expertise is an economical move if you are on a tight budget. Contemporaneously or alternatively, asking for professional advice from mentors, potential partners and other contacts is always encouraged and doesn’t cost anything. Picking a co-founder is your most important decision. It’s more important than your product, market, and investors. The ideal founding team is two individuals, with a history of working together, of similar age and financial standing, with mutual respect. One is good at building products and the other is good at selling them. Naval Ravikant, Co-Founder, AngelList Naval thinks two is the ideal number of co-founders. Makey Makey fills the bill: it was started by two, Jay Silver and Eric Rosenbaum, as a student project. Although at the time already proficient inventors themselves, they relied on the existing body of research at MIT Media Lab and partnered with a major electronics retailer to come up with the final product design. Two years into the project, they launched a crowdfunding campaign gathering more than half a million dollars. Today, Makey Makey the company is run by a team of six made up by a healthy mix of engineers and salespeople. Rein in innovation ambitions Once you have assembled your ‘lean’ dream team, you can begin working on converting that bare idea that started it all to a prototype. We feel having one is absolutely essential to showcase how exactly the product is to solve the given problem. Prototypes come in various forms, depending on how complex or easy the concept is: a simple visual prototype sometimes does it; a fully functional one may be needed to sway potential supporters at other times. Whatever the form, to save time and money, it is wise to keep the prototype unpretentious, Minimum Viable Product style. When designing a product, choose your innovation strategy wisely. Innovation in hardware means coming up with a good that is new or significantly improved. For campaign purposes, we advise most teams to stick with the latter option that is safer albeit potentially less rewarding in the long-term. This is because the fear of not delivering the promised output post-campaign is real and often challenges many a creator. Thinking of a niche need may help you stay focused and design a product the right ‘human centred’ way. As GE’s Beth Comstock aptly puts it, "Know thyself. Know the customer. Innovate." Human-centered designers are unlike other problem solvers — we tinker and test, we fail early and often, and we spend a surprising amount of time not knowing the answer to the challenge at hand. And yet, we forge ahead. We’re optimists and makers, experimenters and learners, we empathize and iterate, and we look for inspiration in unexpected places. We believe that a solution is out there and that by keeping focused on the people we’re designing for and asking the right questions, we’ll get there together. We dream up lots of ideas, some that work and some that don’t. We make our ideas tangible so that we can test them, and then we refine them. In the end, our approach amounts to wild creativity, to a ceaseless push to innovate, and a confidence that leads us to solutions we’d never dreamed of when we started. The Field Guide to Human-Centered Design, IDEO Research forms an important part of the early product development process. Spotting past trends and reviewing competitor performance can help you identify viable entry points to market. Conducting research of primary kind (think surveys, interviews and their deliverables) is also helpful; and in a way, launching a crowdfunding campaign is in itself one way of getting out there quickly and cheaply and receiving real customer feedback for validation or iteration or both. To see how creators fare in terms of innovativeness, look at Kickstarter. You’ll notice that there are actually just several main clusters of tech innovation (cameras, 3D printers, smart home widgets, coffee machines, drones, and few others). What is surprising is that each such cluster houses a big number of lookalike campaigns that do amazingly well. So for example, ALTO is a Canadian company that recently came up with their own concept for wireless earbuds – the subject matter of close to fifty successfully funded campaigns on the platform. The technology is nothing new if you ask us but their campaign effectively emphasises the new ‘utility’ the cordless product offers – which, again, is no friend to ‘transformational’ innovation: simply a better fitting design. In the end, despite a fairly modest output innovation wise, the team has easily hit their fundraising target owing to right product positioning. Sell it with a story Now that you have something tangible (and hopefully convincing) in hand to show potential backers, you need to promote it although the task is notoriously irksome to the hard-core inventor crowd. (This is where the value of a diversified team comes in handy.) When you think about marketing, think about your backstory. Copywriting legend Joseph Sugarman once said, “Never sell a product or service. Always sell a concept.” And he was absolutely spot on. Tell people about your motivations, what inspired you, instead of putting out the dry data full of figures and features. Employing the best word wizardry, help backers relate and buy into the problem you are trying to solve through your product. The truth isn't the truth until people believe you, and they can't believe you if they don't know what you're saying, and they can't know what you're saying if they don't listen to you, and they won't listen to you if you're not interesting, and you won't be interesting unless you say things imaginatively, originally, freshly. William Bernbach, Co-Founder, Doyle Dane Bernbach Naturally, the way of presenting information has be visually appealing. This refers to the quality of media and graphic collaterals as well as their originality. Thankfully, today there is a good number of resources that allow even non-experts create decent designs. (But do hire professional services if you can afford them.) One detail to stress while marketing is your comprehensive plan (which you should have) to deliver results upon the successful completion of the campaign. Reassuring buyers in this way and then actually delivering on the promise contributes significantly toward building a trustworthy brand around your product. A case in point. Peak Design is a talented crew that makes original photography gear and has first-hand experience of successful crowdfunding. Since 2011, they have completed five, and each carried a carefully crafted message that resonated with the target market. Their latest launch, The Everyday Messenger, is a smart rendition of your ordinary camera bag. (Again, no radical innovation here; just clever design arrangement.) The campaign description comes back to photographers’ carry needs and pain-points over and over again, in an attempt to connect to potential backers. As expected from creators who do photography, the visual story is beyond comprehensive, featuring tons of still and animated images promoting product ownership. In sum, completeness of textual description and quality of promotional materials make this campaign an absolute winner from marketing perspective. “The simple thing is the right thing” This brief guide is undeniably oversimplified. Hugely. But it should still benefit those inventors who aren’t yet creators in the crowdfunding realm. We have distilled expert knowledge and our own experience into basic procedures in three areas that are key to campaign success. When choosing team members, strive to balance out technical expertise with business intelligence. During the product design stage, aim to launch with a minimum viable prototype regardless of how ambitious your idea is. Finally, market yourself with your backers in mind, with their needs and wants at the forefront. More importantly, believe in your idea, share your passion for it with the world, and have fun while you do.