Why Kickstarter didn't work for us September 07 2013
This past spring, a fashion related, made in the USA product raised a million dollars. Flint and Tinder, which had a very successful first kickstarter a few years ago for made in America underwear went back to the crowdfunding platform to drum up interest and pre-orders for a durable sweatshirt. It caught on, got good press, and became the largest fashion kickstarter of all time. Not bad.
But there was a problem under the surface of success for the Flint and Tindr team. They had to give up almost ten percent to kickstarter and Amazon web payment services, and ended up spending a considerable amount of money on banner ads. In the end, they made money, but definitely not as much as if they had sold from their own website.
In early April, while brewing our idea for another Kickstarter, we watched with admiration as the 10 year hoodie caught on and went viral. As we brainstormed ideas, we were excited to present to the kickstarter audience some similar themes that we thought resonated with the community. We were a made in USA product- taking t-shirts that were made in the developing world, and turning them into fair wage jobs in the USA, and we were helping kickstart a new business and introducing new upcycled products exclusively on kickstarter. We made a video, wrote a description that included making it easy for people to understand how it worked, and clicked the ‘launch’ button.
To garner early support, we went to our email list that we had developed over the past year, and told them the same story as above, and Ross and I both emailed some friends and family. Since both of us have gone to our friends and family many times over the past few years for different projects that we were working on, we got some support, but you can only ask your network for so much before they get donor fatigue. There’s also nothing more humiliating as an entrepreneur to ask friends for support, who you have helped along the way, and not getting the equal amount of support back that you think you deserve (the best entrepreneurs can take these small slights and have them roll of their shoulder easily, but I’m not there yet. ) After 24 hours, we were able to get past 1K, but this was not newsworthy considering the first 24 hours of the 10 year hoodie, and other fashion related projects like Ministry of Supply and Sword and Plough.
Our plan was to show a big first day, and then solicit the press, and show them the customer validation, in addition to our ‘supply chain with a mission story.” Without an impressive first day, it made it more difficult to show traction. During this same time we had done almost 3K of sales on our website (where we were giving up only a 2.5% of each transaction), but this did not count towards our goal, or show up on the kickstarter funding board.
Another reason our kickstarter was not as successful as we would have liked was the makeup of the kickstarter audience. Our product was much more popular to women age 25-50, while the kickstarter demographic is more male dominant. We thought that introducing new products like ties and computer cases would make it more popular to men, but it didn’t catch on the way we would have liked. While we got some orders for other products, it was not enough to change our entire production process, or create a system to fulfill other products, so in the end, it took us a lot more time and effort to produce a few dozen non-t-shirt blanket items. Our whole system on projectrepat.com is based on people sending us their t-shirts and us sending it back as a blanket. With the help of Klaviyo we have built an entire order management system for this process, but it doesn’t work for other products like tote bags or ties. Our thought process was that if the other products really took off we would build a new system, but with under 100 purchases, it wasn’t enough to change our whole system. We put the other items on projectrepatx.com with a link from projectrepat.com, but during the summer while we had the site up, only a few people bought the other products, so it became more of a pain to fulfill, and we barely broke even on those production costs.
After working our contacts and sending out a lot of random emails, we were able to get an article on Huffington Post and Boston Magazine towards the end of the campaign, which is always great for building your brand and gaining recognition, but it didn’t drive that much traffic to our site, and only led to a few purchases. We had also hoped that Planet Money would pick up our story, but we could not get their attention. The month before our kickstarter launched, they had a kickstarter selling a t-shirt that would tell the story about how shirts were made, that raised over a half a million. Also, after the Bangladesh building collapse Adam Davidson wrote a story about the t-shirt economy which fit really well into what we were doing, but we couldn’t get their attention. If Planet Money had featured our story early on, we may have built momentum earlier in the campaign, but we were not able to execute as we had anticipated.
In the end, after 30 days, we raised 20K on Kickstarter and acquired some new customers, but we had tapped out our network, while we did 40K of revenue during that same time on our website. The blanket orders were easy for us to fulfill but all the other products became a problem, because we had to sample some, and it was not enough to build a full factory operation for them.
I recently had a conversation with an entrepreneur considering a kickstarter to get pre-orders for a first run at a factory. Most places need a minimum of 100 to 200 orders to make the product, and the traditional advantage of a crowdfunding tool is to use the marketplace to get the money up front that can be used to make the initial order. This is an alternative from the older traditional version of getting a loan, and then paying it back once it goes to market.
My advice was to build a basic site on Shopify- they make it very easy to sell products, and ask your network to buy from this site. This way you are giving up a much smaller transaction fee and you can be more precise with tracking on who is coming from websites and use a system to collect more emails. You can also write a blog post sharing your idea and why this product is important instead of putting in the time and money for a video. Once you can get some initial validation, you can think of creating a kickstarter to acquire some customers that come from the kickstarter network. But to start, there are many things you can do to test out your product before putting in the energy of a crowdfunding campaign. It’s no small task. There’s this perception that may have been true a year or two ago (and we fell victim to this too) that more press would care about a kickstarter campaign than just selling product on your website. If you can tell a really compelling story and use the right contacts to get press, then it works, but for most campaigns they are never able to get big press and then the campaign doesn’t get enough attention to get funded. The problem with Kickstarter versus Indiegogo is that you only get the money if the project is funded, and then for example you have asked your network to support you, got 75% of the money, but then get nothing at the end. There was a recent kickstarter for a fashion project that raised 80% of their goal, didn’t get the money, and then tried to recoup all that money through a indiegogo campaign but only received a fraction of what they had originally raised. It’s tough to get people to enter their credit card info for the same purchase twice!
Of course this is just one example of why not to do a crowdfunding campaign, but hope this can act as a cautionary tale to those thinking about doing a campaign. If the stars aligned, you can win the jackpot and raise a lot of money, but for many like us, it becomes more work, than a launchpad to long-term success.