Crowdfunding: A Case Study In Success

shutterstock_188940020.jpg

By starting a crowdfunding campaign using the right strategies, not only can you maximize your chances of financial success, but you can also improve your customer development. By Sarah Allen (Founder, Mightyverse)

Late last year, we decided to use crowdfunding to validate the next big leap for our startup. At Mightyverse, we’re creating a global language community, enabling people all over the world to help each other learn through crowdsourced videos of recorded phrases.

Over the past several years, we have used “lean startup” techniques to understand our business. Through several website iterations, we created a site structure where traffic would grow as we added content (via organic search). We experimented with native iOS applications, as well as incrementally improving the web site, but we have not yet built the full service that we envision.

The Next Generation

I pitched my partners the concept: We would design our next generation app and then if enough people funded the project, I would devote my full time effort to building it.

My hypothesis was that we needed a specific set of features that worked well together – a new mobile app that would let people interact without the delay of our current “concierge approach,” adding recorded video phrases to the website.

We wanted to scale up our efforts to interact with language learners in advance of developing our next generation app. We decided to let the crowd decide if they wanted this app, validating our design and honing our outreach skills.

Drivers of Crowdfunding Success

In parallel with designing the app, I read everything I could about successful crowdfunding campaigns and found four things that make a huge difference in success:

  1. Make a video Campaigns that use a pitch video raise 115 percent more money than campaigns that use a pitch image. Videos with faces and voices of founders work best.
  2. Have multiple founders Campaigns run by two or more team members raise 94 percent more money than campaigns run by single individuals.
  3. Ask forless than $10,000 Campaigns that hit their goals exceed them by 42 percent.
  4. Rely on past experience running a successful crowdfunding campaign

We have multiple founders and the yet-to-be-filmed video content was easy enough to adjust. However, $10,000 wasn’t really enough to get us where we needed to be with the software and there was really nothing to be done about lack of experience running a crowdfunding campaign… or so I thought at first.

Focus on Customer Interaction

In the final stages of our app design, we started paper prototyping game-like interaction. We realized that one of our prototypes worked well as a stand-alone, real-world card game.

It only required one speaker of the language that everyone else was learning, which is exactly the makeup of a language class or parent who wants to teach their kids their own native language. We decided to gain experience running a crowdfunding campaign and engaging our target audience with this deceptively simple card game.

This was not an easy decision. Our vision for the company is to be a global language community. We were not pivoting to become a card game company. Was this tactic a distraction? Would it undermine our credibility with our investors who were excited about our vision for the mobile app?

Our key insight was that this mini-crowdfunding campaign for the card game was a customer development tactic. It would not be a distraction as long as we kept focus on our goal, which we defined as finding a group of engaged and motivated language learners, professional teachers, and polyglots. We would validate motivation by their willingness to contribute funds to the campaign.

Indiegogo vs. Kickstarter

We chose to launch our campaign on Indiegogo, where their mission to democratize fundraising fit well with our goals. Unlike Kickstarter, campaigns need not be approved. There is no gatekeeper to potentially slow-down our learning process. Also Indiegogo is a global platform running in over 200 countries and regions. We could potentially replicate the campaign in other languages to seed our growing community with native speakers of languages where we see the most demand.

Creating the Campaign

We knew that we needed to use our social networks for crowdfunding success, but we wanted to focus on people truly interested in our product, both the card game and future software products.

We designed our perks so that they would appeal to language learners and language teachers, and avoided the typical mugs and t-shirts that might appeal to a sympathy contributor.

Additionally, we separated philanthropic perks (saving endangered languages) from language learner perks (self-improvement audience). We were testing who we could reach, as well as who is most motivated to actually pay money for us to do this work.

We recorded videos of Paul, Glen and me talking about what we were building and why, continuing to hone our language around presenting the “value proposition” and all the while getting in better alignment with each other. We also filmed a couple of “play tests” where we got people to play the game. Then Paul, Glen and team spliced these together into a coherent story.

We wrote up the text of the campaign page in Google docs, group editing in twos or tag-teaming sections till we had something that we all felt explained both the card game and spoke to the bigger vision of the company.

We launched before we were ready.

What we learned during the campaign made us more effective individually and as a team, and helped us to prioritize tactics that worked. Everything we did during the campaign were things that I had wanted to do to promote our company and develop the product. As it turned out, we just did it better and with more urgency than when customer development was simply part of the design process.

What lessons did this experience teach us?

1. Fast Design Iteration, Quick Feedback Loops

When we launched the campaign, I thought the card game was “almost done.” Every time we played it, people had fun and learned a lot. And until the last two weeks, every time a new group played the game, I would learn that the instructions were too long, and I would see something or hear something that would cause me to change the game play or change the phrase cards. Designing something simple is hard.

As a paper prototype, the card game allowed for amazingly fast iteration – we wrote on cards with marker, modified a Google doc, and “Voila!” We had the next game iteration! Following best practices in crowdfunding encouraged us to evolve the story for our contributors and keep everyone updated.

2. We Already Know a lot of People in our Target Market

The vast majority of our campaign contributions came from people we already knew, but most were not people we had identified as language learners. Also, as time passed, contributors were more often people who were fairly distant in our social networks. However, these were almost all real members of our target audience.

I found that in every group of five or 10 people, there are a couple of people interested in learning Spanish and maybe even a fluent or native speaker. The campaign helped spark conversations, building momentum for the campaign, and accelerating our learning about our audience.

3. Brief and Frequent Communication Counts

Over the course of our campaign, we quickly loosened up. We stopped having everyone review everything. Each of us realized that it was better to send that update right now, than to make it perfect. We could always send another one tomorrow.

Twitter

Conversations make a huge difference. When we started finding polyglots and bloggers on twitter and talking to them directly via @mention, we increased followers and built more relationships faster.

Facebook

People loved photos of us making the game, and of course, everyone likes photos of themselves. We used Buffer to post to Twitter and Facebook.

Bloggers

Connect with people where they are. Many bloggers will have a page where they tell you how they like to be contacted. Guest posts, like this one, take a a lot of time to write, but are well worth it to extend your audience and build relationships in your community.

Video

Iterating on the video mixing prior and new footage helped us refine our message quickly. One video shoot could be used to generate many short videos as well as being part of a longer format piece.

4. Product Validation is Key

Our most significant learning was about our product – the card game fulfilled its mission as an effective paper prototype that led to refining our model of learning language by immersion in the language itself. By watching people play the game and interacting with new people, volunteers found on Twitter and YouTube comments, who helped with phrase translations, we’ve revised key parts of the mobile app design. We’ve also increased our validation of our core value proposition.

When we launched the campaign, we had this idea about using QR codes to integrate video phrases into the game. Instead of long debates about what to do, or waiting till the game was “finished,” we launched. Every week, we got a group together for at least one "play test.” The game improved dramatically and quickly, so by the time we had recorded phrases and were ready to test the video integration, we already had a game that worked well, in terms of the game rules, instructions, and also the selection of phrases that were selected at each level.

Integrating video into the game with an optional mobile app and QR code scanner reduced the “fear factor” leading to more engagement and more fun! Sometimes people ask us “Why video?” and we have lots of research to back up that choice, but there is no better validation than real people from your target audience being delighted with your product.

In Conclusion

The ultimate lesson that we’ve learned with our campaign is one that allowed us to start Mightyverse in the first place: There’s incredible power and benefit in just diving in once you have an idea.

We may think we have a full picture of either our target community member or customer, but we’ll ultimately never know without truly engaging with them. We may also think, “we’ll figure out that social thing when we get there”. By diving in around something specific that related to our mission, we’ve evolved our conversation with our community in profound ways.

Our campaign has been built around a card game that helps people learn Spanish or Japanese. Through it, our team has become more fluent in the language of social, the language of community… and we have good news. By the last day of our Indiegogo campaign, we had reached $7,301, when our initial goal was just $5,500. Onwards and upwards!

What advice can you offer to entrepreneurs launching crowdfunding campaigns?


About the guest blogger: Sarah Allen is a serial innovator with a history of developing leading-edge products, such as After Effects, Shockwave, Flash video, OpenLaszlo and Laszlo Webtop. She has a habit of recognizing great and timely ideas, finding herself amidst a talented team, and creating compelling software. She is now an independent consultant who is excited to figure out what happens next.