This interview is all about crowdfunding. Kate Drane, our guest, is the senior director of outreach for tech and hardware at Indiegogo. Kate is awesome. She just loves her job and telling innovators how crowdfunding could help them. Kate walks us through best practices to set up and launch a campaign on Indiegogo.
We also talk about the different side benefits to setting up a campaign. It’s interesting.
Here are some other questions Kate answers:
What about business to business tech companies? Should they post on Indiegogo? Why?
What if you have a product that will cost a lot of money? What rewards/gifts could you hand out?
Do corporations fund campaigns? Do corporations form their own campaigns?
What’s one of your favorite places to drink beer in Chicago?
Dave Kruse: Hey Everyone, welcome to another episode of Flyover Labs with Dave Kruse from Madison, Wisconsin, I am Dave of course, and today we have Kate Drane with us, and Kate is the Senior Director of Outreach for Tech and Hardware Indiegogo. So, most of you probably know what Indiegogo is, which is a crowd funding platform for many different types of projects, some of which we’ll talk about today. Kate is also embedded in the entrepreneurial community down in Chicago and she has her own company, which is pretty cool. So, she definitely stays busy and I am excited to learn more about Indiegogo and Kate. So, Kate thanks for joining us today.
Kate Drane: Yeah, thanks for having me. I am excited to be here.
Dave Kruse: Just to let everyone know, Kate deserves lots of accolades, because we actually did this interview before this week and somehow it never recorded. So, it’s the first one ever, but Kate has been really nice and she said oh ! we’ll just do it again, and I’m like oh alright, so this is the second time thrill, so hopefully I am a little wiser, but it could also mean, maybe I am not, so …
Kate Drane: I hope we’re going to have a good conversation.
Dave Kruse: Yes, the last one, just to let everyone know, Kate had a delivery to her office and so she had to take care of that in the middle, so I’m hoping that happens again, but anyways…
Kate Drane: You can hear the dog.
Dave Kruse: Yes, exactly, I can hear the dog. So, first let’s jump into your background Kate, and tell us a little bit more about, you know, where you came from, and then the company that you started, The Can Van.
Kate Drane: Definitely, so I grew up here in Midwest, I grew up in Rock Falls, Illinois, and went to Butler University in Indianapolis, and moved to Chicago after I graduated and was there for a few years before getting laid off in 2009, like so many people did, which then opened up the window and the door for me to move to San Francisco and go to grad school. So, I got my MBA in Sustainable Management from Presidio Graduate School in San Francisco and when I was there I met my four Co-Founders for The Can Van, which is the world’s first mobile beer canning service. So, what we came up with in grad school was the idea, where we noticed that small to mid size breweries where often times not having the opportunity to package or have consumer base in packaging, because of space, labor, and time constraints as well as money constraints, and so we saw there was this opportunity for them to, what if we had one canning line and it served a lot of different breweries and we came up with The Can Van and so like many small businesses, it’s very hard to raise money to start a business and also to get your name out there, and we have had just heard about this thing called Indiegogo, the service called Indiegogo, back in 2011, and we launched the Indiegogo campaign and we were asking for $10,000 and we ended up receiving $4,000 for a $10,000 goal, which was huge for us as entrepreneurs and we also got featured in Fast Company four months before we are operational as well as our largest investor found us and she only invests in alcohol businesses owned by women, and we fit that very unique niche and so we were able to start canning a few months later, and since then, we’ve been up and canning for, I think, now almost four years and have canned over 5 million cans, so that was how I got introduced to Indiegogo. When I was looking for a job in the spring of 2012, I met with somebody from the Indiegogo team who I knew through our campaign and I asked her if she knew of any opportunities and she was like actually, you sound perfect for a job with Indiegogo. So, I started with them, I have been with Indiegogo for almost four years. Indiegogo is the world’s largest crowd funding platform that empowers entrepreneurs to take their ideas to market. I was first in San Francisco, I moved back to Chicago about a year ago, I pitched the idea to Indiegogo that there was an opportunity for us to better serve the middle of the country and Midwest entrepreneurs and they made it possible, so I am really happy to be here. I am really happy to talk with you guys and hopefully give them good knowledge during this talk today.
Dave Kruse: Thanks Kate that was a nice intro and I’m curious about The Can Van, so that’s approximately about 60 million ounces that you’ve probably filled, that’s a lot.
Kate Drane: It’s a lot of ounces, and it’s a lot of great cans, just to think that often most of those products wouldn’t be able to get to a consumer and it just opens up a lot of opportunities, which is cool.
Dave Kruse: What’s the average size run that you do?
Kate Drane: So, typically, it’s about 100 cases. I think that’s about a day’s work.
Dave Kruse: Okay. I use to run a small beverage company, so I was curious how you source the cans, because usually it’s large run, are they wrapped or…?
Kate Drane: Yeah, that’s an interesting question and that is one of the reasons why we actually went into business, so for people who don’t know, we work with all and we get the minimum order, which is 10,000 cans and that is well more than any small brewery would need in a small amount of time, so you have to be able to store those 10,000 cans and so we have a facility where we store all of those cans, but that’s another constraint for small brewers where they don’t need that many cans, we can’t store them, especially again we are in the Bay area, so it’s interesting, because you are solving these problems and helping make these small businesses be able to flourish, which is great.
Dave Kruse: Interestingly, yeah, that’s a good business model. So let’s talk about Indiegogo and for everyone on whose listening, I really wanted to learn more about Indiegogo; I’ve heard lots about the crowd funding platforms, but I want to, kind of, have Kate walk us through it on how it works and what are the best ways to use it and hear some more success stories, so it’s definitely the future for fund raising for products and technologies and music and art, which we’ll talk about. So first, Kate, you are the Senior Director of Tech Outreach, so what exactly is your role at Indiegogo, and top of that, could you kind of describe Indiegogo for everyone out there?
Kate Drane: Definitely, so, Indiegogo, is the world largest crowd funding platform that empower entrepreneur to take their ideas to market and so what that means is that; so if you have an idea, you have a product, you have a film, you have music that you would like to bring to the world and you’re able to, through telling a story like by posting your video and having a pitch that describes who you are or what you are doing, why it’s important, and what people can expect, and often times offering something in exchange for a contribution, then people will contribute money, so not only contribute money to help you build and create whatever you are seeking to create, but then they also become your community, they also become your evangelists and it opens you up to this wonderful engineered serendipity where you’re telling your story in this authentic way and you are connecting with the people who care and these wonderful things happen like it did for The Can Van, where again we are featured in a major publication and it helped get the visibility of an investor in this space, where those are things that we, on our own, it would have been very, very difficult and would have taken a much longer time, so that is the core of Indiegogo and for me what my role is as a Senior Director of Outreach is, I see my role as educating and inspiring people to best use our platform, and so every day is different but every day is the same, I do a lot of public speaking, so it’s a evangelism where I do a lot of public speaking. I do interviews like this, I also focus on education , so I do a lot of guest lecturing and teach workshops and I also empower by working one-on-one with people who are launching product based campaigns, so every day is pretty interesting, because I get to meet tons of people who are making amazing things happen.
Dave Kruse: Nice, and so walk us through this; if somebody has a great idea for technology, let’s say they have a microwave and it’s going to be like the next generation of microwaves, really smart.
Kate Krane: Wow.
Dave Kruse: I think that’s actually a pretty good idea,
Kate Drane: Yeah.
Dave Kruse: Yeah somebody should be working.
Kate Drane: Yes somebody should be thinking of it.
Dave Kruse: And what would you suggest as the steps to like start getting on Indiegogo and what should they do before they even launch their campaign and at what stage of proactive element should they be at?
Kate Drane: So, with Indiegogo you can get started at any point whether it’s an idea or if you’ve already have a prototype or it’s in production, and what I would recommend is, one; setting expectations and also be honest about where you are on the product development and its expected pipeline. So if you were to come to Indiegogo and you just have an idea; being honest to say that this is just an idea and that people are helping you to fund your first prototype and just expect that it will likely raise lower amounts of money then if you do already have a working prototype or if it’s more developed. I often times encourage entrepreneurs to come to Indiegogo after they do have a working prototype, because it’s what you are doing or through Indiegogo what you are setting out to do is encourage people to believe in you and to help you to make something happen and it’s by the virtue of them hearing your story and seeing your product, that then they are funding you and voting with their dollars and say if they want to see whatever you are making in the world, so the more that you can do to make them feel secure and taking that small risk than the better, and also because when you have a working prototype that often times, you can get it in people’s hands, they can experience it, and something magical happens when somebody is able to hold the product in their hand, and they are able to imagine the possibilities with it. Also, press typically covers only after you have a working prototype, because they want to make sure that they’re doing justice to their readers, so as you are doing your campaign, keeping that in mind as well, where you want, again to inspire trust and inspire people’s belief in you and your abilities, so everything that you can do to do that including having great social media present and building that before you launch having a great e-mail list and building that before you launch. We see that campaigns have e-mail as the highest conversion out of any media that you have, so the better e-mail list that you have will really set you up for success. In Indiegogo, we actually have a tool called the “Coming Soon” functionality, so before you launch, you can announce to the world that your product will be Coming Soon, you can start collecting e-mails through that mechanism and what that allows you to do is again build that list so you launch its momentum and we see that campaigns that raise 50% of their goal within the first 48 hours raise an average 47% more money, so the more that you can do to launch with momentum the better.
Dave Kruse: And how should people kind of build their e-mail list, it sounds like you have a tool, but does it make sense to reach out the media or how else could they get people to sign up?
Kate Drane: So, there are a few ways, and what some people do is to have Facebook adds, or do digital advertising, they also have, if they were to sign up for an event, to demo at an event, then they would have an e-mail sign up on the website or an e-mail capture, so if you are actually building a website, ensure that you have an e-mail capture on it. For me what I really like is that one-on-one interaction, so I really like when people demo beforehand, I really like… or sending a notice out to your network to say that this is coming and they should sign up to have the latest and greatest and that goes really far, that’s also why having a team is so important to your success that having more people who are working on what you are building then that helps to create a network effect where your reach is so much farther that it’s just you alone.
Dave Kruse: That makes sense.
Kate Drane: Building a team is important.
Dave Kruse: Yeah, and can you give a feel for some of the more successful campaigns just so people understand the potential, you know, the dollar value that you can raise, that has been raised, of course, this isn’t true for everyone, but at least the potential.
Kate Drane: Yeah, it has been amazing because to watch people raise multi-million dollars through Indiegogo, so our most funded product or our most funded campaign on Indiegogo is called Low Hives and it allows anybody to become a beekeeper in a simple way where you can just tap the honey and it raised over $ 12 million and that was a team out of Australia and they had this worldwide reach, because you get a worldwide reach with Indiegogo and we’re able to make an impact also on the bee population, which was something that a lot of people are concerned about. So, we’re helping people to take action was really great for them. Another really highly funded campaign that I really liked was called code.org. So code.org raised over $5 million and wanted to bring coding to more parts of the world and had high visibility backers including Mark Zuckerberg and Bill Gates who actually contributed to the campaign to help it raise over $5 million. So, people raise a lot of money for a lot of different things.
Dave Kruse: That is a lot of money and do you know what ‘s more of an average amount that the company has raised or is it highly variable?
Kate Drane: It really varies, so what we see is campaigns that raise just a few thousand dollars, and then, I would say that we see a lot of campaigns that are at about $25,000 range.
Dave Kruse: Okay.
Kate Drane: Like $25,000 to $50,000 range and what’s most important while you’re launching a campaign, is something that we’ve talked about on Monday is that every great campaign gets boiled down to three core penance that make it a great campaign. So, the first is building an engaging pitch. So, if you look at any Indiegogo campaign or any crowd funding campaign, it gets broken down to same components where you have to have a great video, and you have a pitch text that has images that tells a story and communicates who you are and what you’re setting out to do and what the problem is and why you’re the team to solve it. Also, you set your goal amount, so how much do you need to raise. Setting a reasonable goal amount is highly keyed, because again you want to raise that goal as quickly as possible, so then it helps people to believe in what you are building and also use to feather your perks. So, first is building and engaging pitch. The second is connect with an audience that cares. So, knowing who those people are, who are the most passion about what you’re building; whether it be e-mail -or LinkedIn group, or reddit who’d be most interested in what you are building and knowing how to reach them. The third is corrective communication; so this happens before the campaign and then throughout. We recommend for anybody who is launching a campaign to take around 6 to 8 weeks to plan it. So knowing what is their press outreach plan, what’s their social media plan, what’s their update plan, because the more of that you can plan before you go live, the more than just during campaign, you can react to the amazing opportunities that comes to you.
Dave Kruse: So, what if company comes in to Indiegogo and they know they need to raise $500,000 to take their prototype and put it into production and maybe even more, but they are like well, to put down $ 500,000 dollars as a goal, is a lot of money…, but what if they put down…, do companies…would they put down $ 50,000 hoping to raise more, but knowing that they’d probably won’t raise $ 500,000, how do the customers look at that, I mean like well we might raise the full amount of money on Indiegogo, but they still need to raise a lot more money. How does that play out?
Kate Drane: That’s definitely a balance that entrepreneurs have to face, especially making products, because they are really expensive, so what I recommend to entrepreneurs, especially those that are making complicated products are knowing where…, doing some scenario planning outright, like what if doing the financial modeling if you raise less than your goal on Indiegogo what happens, if you raise your goal on Indiegogo what happens, if it super exceeds your goals what happens, so having those contingency plans in place beforehand where, you know, that you are going to need to speak outside investment or how is that going to affect you if you don’t, and then that can help you as you’re coming up you’re your strategies, so you can best know how to pivot, and how to move forward, because, at the end of the day, you’ve gotten thousands of people all really excited about what you are building and they have a certain expectation, because they have taken a risk on you, they voted with their dollars and that they want to see this happen, and that you’ve taken that money so, there is a responsibility there and it’s important to treat it as a responsibility and that anything that you say you can fulfill that you do fulfill. So having those plans in place beforehand is really important to know if you reach your goal or if you don’t reach your goal, or if you really need $500,000, how you going to get there in order to make your product happen, because at the end of the day, you do have a community of people who is really excited about what you created, so you want to keep those customers happy.
Dave Kruse: Right, and they trust you.
Kate Drane: Exactly.
Dave Kruse: Of course we’ve heard about some cases were, may be the companies didn’t fulfill their obligations and that’s a sad thing, I mean that’s life, but that’s good advice.
Kate Drane: There is one campaign, speaking of…, I can’t remember what the actual campaign name is, so they created a stress bracelet where it can help you better manage stress and I love the way that they handle this; they weren’t able raise the money to ultimately create that product, but they recognized their obligation and their responsibility, and so they wrote an e-mail to all their backers giving them three options; that either they could get, like a comfortable product from another manufacturer that they are in a relationship with or they could get a refund or they could just give the money to the company so then they could continue to try to make new products.
Dave Kruse: That’s cool.
Kate Drane: I love that, I love that was how they treated it, were they were very upfront about where they were, they were very upfront about what the snags that they had were, and they honored their customers and have a solution for everyone where they would be happy.
Dave Kruse: Interesting, yeah, that’s a good example. Do you know how it turned out for them or what type or responses they got.
Kate Drane: They got a really great response and, I mean, I was one of the backers of their campaigns, it was great, because you felt honored.
Dave Kruse: Yeah, and respected, yeah.
Kate Drane: Exactly, the worst thing to do in the case where someone is not able to propel is to go silent, because that just creates a bad situation.
Dave Kruse: That’s always a problem.
Kate Drane: Exactly. So be communicative, don’t hide, be honest and respectful, and recognize that this is a visible way of raising money and is a visible way of building community, and to be respectful of that, and it will take you much farther.
Dave Kruse: And what if, with my microwave idea, what if it is going to cost, initially a couple thousand dollars, because it’s a really nice microwave; it’ll detect lots of stuff and so, most people aren’t going to probably necessarily contribute $2,000. How people with big tech items, how should they structure kind of the of the reward systems or what are some ideas they can use for small rewards; something that I could just contribute $25 dollars or $100.
Kate Drane: Definitely, so one thing to do is maybe, because people will likely, they want to see that microwave technology in the world and maybe they don’t want one in their own kitchen, because they like __27:09__ microwave, but I do want that technology in the world so giving people a lower price perk like an entry level perk, where it is like $25 and that gives them access to webinar or that gives them stickers or something else where they can feel that pride, so people contribute to Indiegogo campaigns and crowd funding campaigns for one of three reasons; First, is the person or the organization behind it, so maybe they really like you, Dave, and they really like Flyover Labs, they love being to your show, and so they want to support you, and they love that they have this opportunity to support you. Second is the perks, the thing that they are getting in exchange for a contribution, maybe they really want the microwave, maybe they really want the dinner for two with you, and that you’ll cook in the microwave, etc. and the third is the passion in participating and the pride in participating and so maybe they really want to see a new microwave in the world and they have been looking, they have been waiting for someone to come up with a new technology and they are so excited that there wasn’t a big company that’s doing it, but they can support an independent entrepreneur, so they want to support it, and so because people contribute for one of three reasons, you want one or more of those three reasons, you want to give them opportunities to contribute at their level, so again maybe the entry level like $25, which is the most popular perk, having something like stickers, and then so $100 dollars is the second most popular perk, so maybe there is something you offer at that point. What we’ve also seen for a higher price perk for campaigns that are centered on higher price perks is offering a half; pay-half now, pay-half on delivery model, so we saw a campaign Scully Systems one which created a heads up display motorcycle helmet that is safer for motorcyclist as well as gives them more visibility into what’s going on behind them, so their price point was over $500, so they gave people the opportunity to contribute half during the campaign and then half later, and that opened them up to a whole new market of people because, what’ve seen is, I think it’s $249 is the price point where people then have a hesitation or where you had to check with the spouse often times etc., etc., etc., So having a price point that is lower than $249 or $249 or lower, is a good thing, because then people feel like it’s more acceptable. So giving people an option where they can contribute a lower amount will make it a much easier pill for them to swallow.
Dave Kruse: Yeah, those price points are helpful, I didn’t know that about the $249 and the $25, that’s helpful, it make sense.
Krate Drane: Yeah, and when a campaigner like did a research about what the.., is like, oh why should we set a price point for a product, $249 is I think it was like a Harvard study, of what’s the last impulse of the high price when it’s $249.
Dave Kruse: Interesting, okay, and what about, you know, lot of the big successful campaigns have been more business to consumer, what about business to business, like The Can Van, was business to business, what would you suggest for people of more of business to business product, does it make sense, what should their expectations be versus more of the B To C folks.
Kate Drane: So, it’s easier for a consumer to understand what they are getting from the campaign when it’s B To C and by having a B To B campaign, I would just encourage people and this also goes for software where setting lower expectations, those campaigns physically do raise, they don’t have the raises of millions of dollars, they’re typically around the $25,000 or less range and so as you are running those campaigns having that as your expectation will be much better and you seeing it more as a piece of marketing collateral where you are getting your name out similar to how you expect the campaign where getting your name out and making sure that the right people are talking about you, making sure the right people know about you, and that you’re telling your story in a way that is easily digestible and understandable, that would be a good approach for those types of businesses.
Dave Kruse: Okay, It’s a network affect too because you’ve pulled together lots of different people from around the world and so like I know, innovation people of different companies are always scanning the Indiegogo and looking for a potential people to partner with or ideas and so, investors too could be a funding source, partnering source, yeah even just beyond the cash.
Kate Drane: Yeah, interesting enough, so there is this makers space called Techshop and so Techshop launched a campaign a few years ago and they were setting us to raise $250,000 dollars to get more free membership to that trends and to get more services for that trend and they, like you said, there is a lot of people, so Indiegogo has 15 million __32:50__ a month from all over the world and there is a lot of people who do look at Indiegogo as a source of innovation and inspiration, so they found that there is an executive from Intel that saw the campaign on Indiegogo and they made a significant contribution towards the Techshop campaign as the result of being on the platform. So, there are so many people who were working and again it’s an engineered serendipity where you are giving visibility to the people who are naturally going to be talking about you.
Dave Kruse: Interesting, that’s a good story, and we are coming close to the end here, but not quite. You guys recently, I don’t know how recently but you launched the Indiegogo Enterprise, can you tell us a little bit about that.
Kate Drane: Definitely, so we launched this year, which was a consumer electronic show in January.
Dave Kruse: Okay
Kate Drane: And we are seeing that there is, again, like you mentioned, there are just a ton of large companies looking to a better support startups and entrepreneurs and looking to connect with them and since Indiegogo is such a natural place for innovation, there are more and more large Fortune 100 companies that are looking to tap into that community. So, the latest example is Triscuit who is looking to support food and beverage entrepreneurs and so they had a flash funding day a few weeks ago, where they had $250,000 and then they contributed, they made a significant like $5000 or more contributions to 55 different campaigns and it’s just incredible, people were writing all day to ask us, is this a fluke, things like this something happening and we got to tell them, no you were swept in by Triscuit, so that’s one example of an enterprise campaign.
Dave Kruse: That’s awesome.
Kate Drane: Exactly it was like, our whole team was exchanging emails all day about the great emails that our customer support happiness team was receiving, and it just reminds us of the good that we are making happen in the world, so for example, because products, you are having this, almost the new type of focus group is on Indiegogo, so GE launched a campaign called, the first build campaign called Opal Ice Maker, so was making nugget ice and it’s a product that may not be made by GE as a nugget ice maker but seems like it would not be a natural product that people would think they would want and they raised over $2 million on Indiegogo, so they were able to see that there was a market for nugget ice and I loved that as a sustainability person, somebody who cares about the environment and making products that people want, that people can again vote with their dollars, and say that this is the type of product that they want, this is the type of price they want to see in the world and hopefully that results in less waste, less products that go into landfills or just ends up on a shelf and never go anywhere.
Dave Kruse: That’s right, as you said last time, the ultimate market research which is, the people get to vote with their dollars and it’s just the focus groups, so it’s definitely the future of new products and technologies and I’m very curious to see how it turns out, you know, over the next 5 years or 10 years, it should grow even more and more. So, we are almost near the end, but two more personal questions; since you canned a lot of beer, what’s your favorite place to drink beer in Chicago?
Kate Drane: Right now, Begyle Brewery is right around the corner from where I live and so it is an amazing brewery that is locally owned here in Chicago and serves fantastic beer and is very community focused and family friendly and dog friendly, and you can bring in food and hang out there and play games. So you can find me and my boyfriend and our dog Buckley there probably once a week, because it’s such a nice place to hang out and relax and they have skeeball too.
Dave Kruse: Wow and is that called the Dial Brewery?
Kate Drane: Begyle, so B-E-G-Y-L-E
Dave Kruse: Oh Begyle, gotcha, cool, alright, that makes more sense.
Dave Kruse: And then the last question is what’s been one of your favorite Indiegogo campaigns?
Kate Drane: So, one of my favorite Indiegogo campaign is, it’s called walking Christopher Walken Rex and it was one of the first campaigns that launched when I started Indiegogo. So it was a man in New York who wanted to erect a giant statue, that had a T-Rex body with the face of Christopher Walken on it.
Dave Kruse: Why not.
Kate Drane: Exaclty, and it was successfully funded. He created Christopher Walken Rex and one the perks, which is the perks that I contributed to was to have him draw a T-Rex with your face on it, you know, it’s an amazing perk.
Dave kruse: That’s a perfect way to end. I mean, what you guys are doing is just really interesting for the entrepreneurial community, the artist community, and the foody community, you know, you’ve touched so many different aspects of people lives, so that’s cool what you’re doing and you’re quite a good spokesperson, so we appreciate you coming on the show and telling us little bit more about what you do in Indiegogo and hopefully some listeners will launch some big products on Indiegogo in the future.
Kate Drane: I hope so and get out and make something
Dave Kruse: That’s right. Alright, well, thanks Kate and thanks everyone for coming on the show.
Kate Drane: Thank you.
Dave Kruse: Bye everyone.