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How to Succeed On Kickstarter With Really Trying

Kickstarter is one of the best ways for new businesses that are making or creating something to raise start-up funds. That’s why it’s called “Kickstarter,” because it’s intended to help creative people do what they do: create and make.
kickstarter-logo-light

First off, Kickstarter is not designed to raise funds for general use. It won’t provide money to individuals and their living expenses, it won’t provide general charitable donations (and is not designed to fund “worthy causes” in general), and it isn’t designed to provide general start-up money for just any type of business.

There are also pitfalls to Kickstarter. If you have a successfully-funded project and have promised to deliver an item or premium to a backer, you need to follow through.

Warning: Don’t Make This Mistake on Kickstarter

Seth Quest thought up an accessory for the iPad called Hanfree. He more than made his Kickstarter goal, receiving $35,400 from 440 people. Nearly all of those people expected to receive a Hanfree iPad stand. The problem? Seth is now bankrupt, because he just had the idea and made a video and put it on Kickstarter. He had never manufactured anything before, and didn’t have a working prototype. He wasn’t ready to start a Kickstarter tech/manufacturing project. After several months, Seth had to pay back all the backers. That wasn’t what made him bankrupt. It was Seth’s luck to have one backer for $70 who was a . . .

wait for it . . .

Lawyer. That’s right. The guy didn’t get his product, apparently did get a refund at some point, but he sued Seth anyway. The suit was dropped, but Seth was required to file for bankruptcy because of it.

Best Case: Independent Game Designers Have Kickstarter Wired

On the other side of the spectrum, many different independent game designers and game studios have figured out how to launch their games using Kickstarter. One of the newest is Wildman from Gas Powered Games. This is an ambitious launch, with its initial goal of over $1 million. Most games that were very successful last year did raise well over $1 million, but the catch is: they didn’t set their initial goals at that level. The majority slipped in under the initial $1 million goal mark.

Kickstarter provides the opportunity for creative businesses and individuals of all types to set up defined campaigns to raise funds to “kickstart” creative projects. It’s project-based.

History and Background of Kickstarter

Kickstarter began in April, 2009, and its founders, Perry Chen, Yancey Strickler, and Charles Adler, are still with the company. The NY Times, in initial coverage, called it “the people’s NEA” (National Endowment for the Arts). This is an almost classic meeting of old-school thought and journalism with the new economy and classic misinterpretation of what Kickstarter is. If you haven’t heard it already, Google the term “Maker Economy.”

Kickstarter is anything but “the People’s NEA.” People used to, and continue to, create work to serve the government customer known as the NEA. Projects succeed on Kickstarter because they are serving real customers in the real world. If this is “the people,” I guess the name is technically true. But every category, type and level of Kickstarter project has its own path to success, although there are many things in common. A small, regional music series that wants to raise $5,000 has some common elements of success (or failure) with the biggest, most sophisticated game design launch, that raises millions of dollars. The small Kickstarter campaign and project has some things in common with last year’s most successful Kickstarter project, the Pebble Watch, which raised well over $10 million (with over 64,000 backers – so at least 64,000 watches were pre-sold).

A big frustration currently is that Kickstarter began in the U.S. for U.S.-based projects and artists. It just expanded to the UK in December. Many other countries are waiting to become part of Kickstarter, not the least of them, Canada. Whenever you see an international (primarily Canadian) project, it’s because the project has a U.S.-based team member, at the least.

Kickstarter is so different from “old school” financing that business school research is limited to a single, really great analysis by Ethan Mollick from the Wharton School. This paper is a great way to get familiar with the dynamics of Kickstarter. It was written right about the same time as Kickstarter began showing its overall statistics on its site.

What are the odds of having a successfully funded Kickstarter?

In 2011/2012, there were more than 46,900 projects launched on Kickstarter, with total funds pledged of $198 million. Almost 49% were successful. So, a little more than half failed. That’s an almost 1 in 2 chance of success — where else are you going to get odds like that? In calendar year 2012, over 2.2 million people pledged almost $320 million. 18,109 projects were successfully funded.

Now, what are the characteristics of the happy ones that made or exceeded their goals, and what characteristics are the hallmarks of Kickstarter failures?

  • Featured on Kickstarter’s Front Page: 30% of projects that were not featured were successful. A whopping 89% of those that were featured made their goals.
  • Strength of Social Networks: This varies by type of project and category, but in the Kickstarter film category, number of social network contacts really counts.
      1. Film Project Founders with 10 Facebook friends had a 9% chance of success (i.e. almost guaranteed failure).
      2. Founders with 100 Facebook friends had a 20% chance of success – one in five.
      3. Founders with 1,000 Facebook friends had a 40% chance of success – two in five.
  • Video or No Video: Projects with no videos had only a 15% chance of success. Those with videos automatically improved their odds to a 35% chance of success.
  • Location: Kickstarter Projects on the East Coast did better than those on the West Coast. Here is a chart that shows the distribution:
Kickstarter Geographic Analysis of success vs. failure.

Kickstarter Geographic Analysis of success vs. failure.

The lighter color of green is the “failure” color. The darker color means “success.” The size of the pie charts correlates to size of urban area. For example, the big one on the upper right is the New York City metro area. The whopper on the lower left is Los Angeles. You can see how much better New York projects did, with almost 2/3rds successful, than Los Angeles, which performed slightly worse than the overall average of 47.9% projects funded successfully. Portland, Chicago, Seattle and the Bay area all had more than 50% successful projects. I think Orange County fits in the Los Angeles Metro area, and the sad little failure circle at the lower right of the big Los Angeles circle is San Diego. You can do better, San Diego! Go Chargers!

OK . . . back to the facts.

So far, setting a goal over $1 million actually doesn’t translate to greater success. It’s been more beneficial for larger projects (primarily games and tech projects) to go under $1 million. Then if the project does go way over goal, it just looks good for them.

There are a lot of other factors that go into successful/unsuccessful Kickstarter projects. I hope you’ve learned a little more by reading this article.

I’m thinking about adding a new business category called “Firestarter.” It sounds kind of destructive, doesn’t it? But nobody ever wants to be “kicked,” do they? Everybody could use a creative spark. Contact us if you are in the U.S. and want to do a Kickstarter and make it work. When Canada opens up I will be the first to let you know.

Why Choose Pacific Human Capital?

According to a competitor, “Most so-called ‘business plan consultants’ simply take what you say and put it on paper.” Pacific Human Capital does not and will not do that. We will help you identify your strengths, including some we are certain you never knew you had, and help you understand the business environment in which you will succeed. We will work with you to create the most viable strategy for success, which we then communicate in a peerless business plan. You will be able to use the plan to guide your business, secure meetings with investors, and raise capital or sell your company for a nice profit.

  • Get it Right the First Time: When you are asking for money, you only have one shot at making the best impression.
  • Save Time: Save hundreds of hours. Your time is better spent building your company, developing your products and services, and building your customer base. You hire an attorney and an accountant because you are neither one of them. You should hire a business plan consultant for the same reason.
  • Save Money: You could pay more, or less. But some businesses pay for their plan several times over when it proves ineffective because the consultant “didn’t get it” and neither did funders. Why not get it right the first time and save money?
  • Work with Experts: You will be working with a top-level fundraiser who has obtained over $300 million in government and private funding for many different projects and businesses in Canada and the United States, or a hand-picked, trained, equally qualified consultant with equally strong funding results. We also have experts in market research, financial planning, government regulations, and individual manufacturing/regulatory industries in cross-border environments.
  • One Consultant: Some firms assign a “team” of consultants to your business. That means you’re paying to get multiple consultants up to speed. This approach is costly and inefficient, and makes it difficult to ensure that all materials have the same “voice” and consistency. You will work with one person at all times.
  • Fully Customized: Some firms charge low fees because they have an assembly-line, cookie-cutter approach to crank out business plans. Your business plan will be written exclusively for you.
  • Ongoing Support: We don’t stop when the business plan is done. We will continue to assist you to help you implement it as well.
  • Speaks Your Language: Being a Harvard, Wharton or Yale MBA doesn’t necessarily translate into the “real world” and real people. We “get you,” and know how to translate your business know-how, talents and skills into the language that funders will understand.
  • Modern Plan Approach: Some business plans offered for samples on the internet, or through planning software, are two to three times the length any funder will read. They have the “ask” buried in the middle, and contain lots of unnecessary information. Sometimes the terminology is decades out of date.The shorter the plan, the better, no matter how complex or in-depth your business is.*
  • Appearance Counts: We look good. So will your plan.
  • We understand:  We have successful experience helping Women, Minorities, Immigrant (Visa), Under-served, Non-traditional, Young, and Encore Entrepreneurs. We have worked with Rural, Green, LOHAS (Lifestyles of Health and Sustainability), Hybrid, Destination and Urban Core businesses.

*A writer we recently worked with wrote a 3,000 word article. He needed a 500 word article for his task. We advised him on specific steps to cut the article down to 500 words. He was unable to follow any of the steps. So, even when he had detailed, step by step instructions, it was too difficult. He was not an experienced writer! This does not mean he was not a good writer, and did not have worthwhile information to convey. He simply lacked the experience to undertake all the steps.

Also . . .

Yes, it’s personal: Your business is “your baby.” Chances are, you are too close to your ideas and business to see the exact right presentation you should make. Have you struggled to write an “Executive Summary”? How about “History of the Business”? Your own biography?

Red Devil Firecrackers

We’ve been there. We can help pick the things that the people who will give you money will respond to, and want to see.

Yes, that’s just a random picture of some favorite fireworks. Let’s get something started!

 

Spark Your Creativity by Changing One Simple Thing

You can change your life. You can make things happen and energize your creativity.

How do I know? Because I’m the biggest procrastinator on the planet! I’ve thought about my own business for the past ten years.

Here are a few of the things that held me back:

  • Inability to find a satisfactory logo
  • Inability to come up with a name
  • Inability to get website going
  • Inability to complete a business plan for my self

As they say, necessity is the mother of all invention. That famous quote originated with the Greek philosopher Plato, so it has been around for a while.

electric spark

Electric spark

So, what changed?

Here is the story, and how I realized that anybody can jumpstart their creativity and spring into action by changing one simple thing.

After writing numerous business plans for other people and working with them to achieve their goals and make their dreams become reality, I became increasingly frustrated.

Every time I tried to really move forward, I found myself frustrated by dozens of small barriers.

I’d already come up with a name – that hurdle was covered. I had a basic idea of what I wanted to do. But I hadn’t done any of the other needed steps, except reserving a domain name.

As we used to say back in third grade at Mentone School, “Whoop-de-doo.”

I tortured myself. This was worse than writing a book, worse than finishing a story, worse than any writing work that I procrastinated about. It was even worse than grading papers. Sure, I could have gone back to all those steps and little tricks I’d learned to force myself to get work done in the right amount of time.

Somehow, because this was for me, I kept coming up with excuses, I kept hitting brick walls, and I never got the things done that I knew had to be done in order to start my own business.

What is the one single, simple thing I did that jump-started my creativity and got my business off the ground? The one single thing that got me to complete the logo, complete the business plan, and start everything?

After another frustrating early morning session trying to get a few things done, and another fruitless logo search because, although I’ve done hundreds of logos for other people and other businesses, I could not possibly do one for myself, nor was I pleased with letting someone else do it for me, I did it.

I opened a file for myself on my computer, just like I was a client.

That’s right. I put myself to work – for myself.

In the words of Emeril Lagasse, “Bam!” Suddenly, the work got done. On time, too. Because now I had a client. I could see the client right there in front of me. This client needed to get things done. I knew what those things were, too. After all, I’d done those things over a hundred times — for other people. Now it was my turn. I was working for myself. I had better do at least as good a job for myself as I always do for other people.

That’s what I mean about “Just change one small thing.” Nobody’s going to start a business overnight, and there aren’t very many overnight millionaires. I think just those people who win PowerBall and this type of thing.

For me, the one small thing was to physically open a file on my computer. This gave my mind access to all the resources, work and knowledge I had built up working for other people’s benefit.

Don’t ask me why I am that stubborn, or find it that difficult to do these simple things for my self. I honestly don’t know. I just know that everything changed after I did that one simple thing.

What’s your one simple thing? Is it a phone call? A post-it note? Ordering business cards? Doing a business plan? Or is it simply opening your own file for your own self on the computer, making yourself your own client?

How To Hire Someone to Write Your Business Plan

Tim Berry, founder of Palo Alto Software, has made many videos of advice for aspiring and current business owners. Mr. Berry advises that business owners use business planning software, and his Portland, OR-based company makes Business Plan Pro and many other software packages for nearly every business sector, including even government and non-profit organizations. Business Plan Pro is $159.95 for a desktop computer version, and Live Plan, which is online software, is $19.95 a month.

Here are a few impressions about this brief video starring Mr. Berry. Like the title and intro music. Pine trees in window: awesome!

Mr. Berry is 100% correct when he says “You can’t just hire someone to write your business plan.” You have to understand all aspects of your business in order to be successful. One way to look at the process is, there’s no such thing as “Business in a Box.” Successful entrepreneurs invest thousands of hours in getting their businesses off the ground.

Mr. Berry recommends using the resources of the Small Business Administration (SBA) and SCORE, the society of retired business executives that used to be an all-volunteer, no-cost organization in the U.S. years ago. These organizations offer all of the basic, necessary information, especially government regulations and “best practices” that are needed to obtain SBA loans or similar government-backed financing. If you can locate a SCORE volunteer or program that is in your exact business or industry, I too, highly recommend it. In Canada, each province has similar business development resources, and major urban areas like the GTA also have a number of business incubators, as well as industry-specific incubators and grant/loan programs. ABC (Aboriginal Business Canada) also offers business loans and support for qualified First Nations entrepreneurs.

It turns out that a friend of mine who is a talented decorative painter, writer and book publisher, thinks along similar lines to me when it comes to these matters. He tried out a new software system for writers called Scrivener. I haven’t yet tried this software, because I know that a competitive product for film scripts, Final Draft Pro, doesn’t write top-grossing film scripts on its own. It’s just another form of software to learn, while the skills it takes to write a great film script have nothing to do with learning, updating, and dealing with the cumbersome Final Draft software system. The best thing Final Draft does is produce an ideally formatted script for any type of script use, from films to plays and comic books/graphic novels, and it will even submit it for Writers Guild registration after it’s finished.

If the SBA and SCORE were truly able to get businesses off the ground with high success rates and a high level of efficiency, we would have a lot more successful businesses coming out of their system. Instead, the SBA has a disturbingly high failure rate (despite news articles you may read to the contrary). What is of more importance to the new business owner, however, is that the SBA disburses only .05% of the total commercial lending in the US. If they knew what they were doing, they’d have a much larger, better-performing portfolio. It isn’t the businesses that receive SBA loans and later encounter problems which are of concern to you, the small business owner and/or aspiring entrepreneur, it’s the businesses that never get through the process or get the loan in the first place.

Everyone’s time is valuable. As an entrepreneur, your time is best-spent building your business. You have to invest the right amount of time in discovering who your customers are and meeting their needs. You have to understand your business finances, and must be able to accurately identify your own strengths and weaknesses.

You do not need to spend time trying to fit your ideas and your business into a “one size fits all” system like the SBA/SCORE process, or like the type of systems set up by Palo Alto Software.

Palo Alto Software was founded in 1988 by President Tim Berry. Originally California-based (“Palo Alto”), the business is now located in Eugene, Oregon. According to Crunchbase, Palo Alto Software has 50 employees; however Crunchbase’s profile is three years out of date. The company is privately-held, with an estimated $8 million in annual revenue in 2010. That works out to 40 to 50,000 copies of the software packages and/or the online applications sold. It’s simply impossible that the software can be so up to date that it will fit every new business, or produce a truly solid business plan. The business climate and circumstances are changing so rapidly that it’s almost impossible that software could be updated frequently enough to make it truly responsive or appropriate for every business.

For example, who is giving money to whom, and for what? According to a complete report prepared by the Small Business Administration on all US commercial lending, the top five lenders in 2010 were American Express Company (first in 2009), Capital One Financial Corporation (third in 2009), Ally Financial Inc.(fifth in 2009), GE Money Bank (41st in 2009), and JPMorgan Chase and Company (fourth in 2009). You can guess as well as I can that these amounts aren’t actual small business loans. They represent commercial lines of credit or credit cards, not actual loans.

You can see the change in the numbers of loans (and amounts) from this report from the SBA. Loan numbers and quantities have not improved since mid-2010, when this report ends.

Loans under $100,000 are called “micro loans” in the SBA terminology.

But how many businesses are starting up?

About 550,000 new businesses start every month in the U.S. The growing trend is for these businesses to be sole proprietorships/self-employed individuals. According to the Kauffman Foundation for Entrepreneurship, which keeps very detailed statistics on business start-ups and activities, Latino/a business owners have grown tremendously over the past 15 years, new immigrant entrepreneurs have been on the rise, and encore business owners and entrepreneurs have also grown as a group.

These are all new and emerging business owners and leaders who are different from the leaders of the past. Men continue to start new businesses at a higher rate than women, according to the Kauffman Foundation; ironically, women-owned small businesses are responsible for most of the job growth in the past five years, a fact reported by nearly all business publications.

This is the type of information I need to gather and understand, in order to help entrepreneurs start and grow their businesses. That’s because you, the entrepreneur, are my customer.

Once again, the answer is: you, the entrepreneur, need to understand your customers, know your competition, and have mastery over all the key aspects of starting and growing your business.

You don’t need to learn how to use cumbersome software or sit through endless cookie-cutter or “one size fits all” seminars. You may well get excellent information from reading business publications or participating in networking events.

Mr. Berry is right. You don’t need to hire someone to write your business plan who is not a business person. That person may be forced to “create a plan” for you, or even worse, use a cookie-cutter or “sample” plan that has nothing to do with your real business or how it will really work. You need a business coach who will help you to maximize your strengths and improve on your weaknesses.

Contact us to see how our coaching and support can help you.