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Crowdfunding 201: How to (Not) Fail - Crowdfunding Planning

posted May 29, 2013, 4:41 PM by   [ updated Jun 5, 2013, 9:07 AM ]
We’re going to scale things back a little bit on this edition of “Crowdfunding 201″ and do kind of a remedial refresher course on how not to run a crowdfunding campaign, or how to avoid basic issues on your crowdfunding campaign.

Do The Work - Crowdfunding is a lot of work.

Silicon Valley Crowdfund 2013 Conference

It’s more work than you think. Anyone who tells you otherwise is lying to you. Put together a team. Make sure everyone is on the same page. And get ready to put in a lot of hours.

How many hours is a lot? Well, how many do you have? That’s not enough. Now figure out how to increase that number.

Bad Expectations

How many people are in your team? How many Twitter followers do you have? Now how many real Twitter followers do you have? How many Facebook friends? How many YouTube subscribers? How big is your email list? What’s your Klout score? What’s your Kred score? Have you signed up for SocialBro yet?

How engaged are all those people? What percentage can you realistically convert into fans of the campaign? And what percentage of those people can you convert into backers? And how much do you think each backer will average?

How much will your project cost? How much will it really cost? What’s the minimum number you can make it for?

How much will your perks cost? How many backers can you expect to get at the $10 level? How many at the $25 level? At the $250 level? A good campaign will run multiple scenarios to give themselves a range of expected costs.

A red flag for film campaigns is when they over-promise perks and cut their margins too close. Veronica Mars doesn’t have $5.7M to make their movie. Why? Well, first they have to pay Kickstarter (~$285K) and Amazon (~$171K). They’ll have a bunch of backer pledges that won’t go through. Then they have to print and ship 73,914 t-shirts for people who pledged $25 or more.

Do you know how much that’ll cost? Neither do I. So I asked my friend Adam Woods, who runs Camden Printworks. He makes awesome t-shirts. His back-of-the-envelope guess for 75,000 shirts? $200,000. That’s $2.67 a shirt. But then you have to ship them all over the place. Figure a little over $2 a shirt. That should run your total up over $350,000, if you’re lucky.

They’re also sending a sheet of stickers to everyone who gives more than $10. That’s 82,337 people. You can get stickers pretty cheap, for simplicity let’s assume 10 cents each. A US Postage stamp is 46 cents. That’s an extra $46,108 on stickers. That’s $850K so far.

And then they have to make DVDs and Blu-Rays and Posters (shipping posters is expensive) and Headshots and bloody hell that adds up fast, doesn’t it? We’re conservatively looking at over $1.5M in perk fulfillment, and that’s not even counting the man-hours in actually doing it. Plus, a campaign of this size likely hired a publicist or a consultant or both. Maybe a whole team of people working behind the scenes. Yes, they have the help of WB, but you don’t.

We know they looked at all of that before they launched.

Have you answered all (and I mean ALL) of those questions for your upcoming campaign? Then you aren’t even remotely ready to launch.

Probably once a week someone emails me with this project that wants to raise something like $100K, only when I run the numbers on their digital footprint it is clear they can raise something like $5K. That extra 95%? It ain’t happening.

Re-work the project. Or maybe make something else first.

Bad Timing

Launch on a Monday. End on a Friday. Seriously, Monday to Friday. Break out a calendar and figure out all the dates. Look for conflicts. The biggest, most obvious conflict is Christmas. You don’t want to be running a campaign during Christmas (or Thanksgiving) for one very simple reason: people aren’t home. They aren’t online. A lot of your audience will be traveling and spending time with their families. They won’t be paying attention to you. Plus, their disposable income? Guess where that’s going. You’ll be shouting into the wind.

But it’s not just major holidays. If your audience is heavy into comics, maybe avoid Comic Con. If you’re making an indie film, maybe avoid Sundance. Avoid Election Day. You get the idea. These events are scheduled pretty far in advance.

Sometimes you’re going to run into some bad luck. A big news story will suck all of the air out of the room and if it’s in the same vertical as your campaign, then chances are no one’s going to be listening to you. Maybe even for a couple of days. That you can’t avoid. But you can avoid Christmas.

As for Monday and Friday, it’s really pretty simple. Campaigns tends to do better on weekdays than on weekends. So maximize your weekdays. You may need to rally down the stretch. You aren’t going to want that momentum interrupted by a weekend.

And You Are?

Let’s imagine my cousin–who’s never made a movie before–somehow gets a meeting at a studio with the greatest idea in the history of cinema. Really, it’s a fantastic idea. Of course, knowing him it’s probably about drinking Bud Light in the woods. Only he wants to write the script and direct it himself. And he wants to cast his buddy who’s never acted before in the lead. And he wants $100M. What do you think his chances are? Zero? 0.000000000000001%? Lower?

Same thing on Kickstarter. It helps to have a track record. A previous feature film. Or some shorts. Or, hell, even some really nice Instagram photos. Something that shows you’re competent. The better the track record, the more you can raise. Be realistic.

There’s no shame in doing a smaller campaign, just like there’s no shame in making a short before a feature and growing. Do you think Chris Nolan started with Batman? Of course not. He made Following first

If you’re going for an ambitious number, you’re going to want to have some backers lined up ahead of time. You should know your audience well enough that you can name a handful of people who you know will back the campaign. Talk to them before-hand. Get their feedback. And ideally, get an idea of how much they’ll put in. That’ll give you a pretty good idea of what your support level could be.

And then, you schedule those backers.

So if you know how much you’re going for, then you should have a pretty good idea of your daily goals. You can run some advanced numbers, or you can do something as simple as dividing your goal by the number of days. Ideally, you can schedule enough backers to get you over your Day 1 goal almost immediately. The sooner you hit your Day 1 goal, the better.

Crowdfunding thrives on momentum. But you can manufacture momentum. Put some in the beginning, some in the middle, and hold some in reserve. I know, I know, you don’t have the ability to do that. But you have more than you think.

Opaque & Oblique

There’s competing ideas on just how transparent you should be, but everyone agrees that you should be transparent. People want to look behind the curtain. They want to see how the machinery works. But I’m not so sure they want to know everything. Then again, every backer is different. Some don’t care at all. Some want to know how many c-stands you’ve budgeted for. Of course, neither of those opinions represent the fat portion of the bell curve.

So give them options. People want to see your budget? You don’t need to show all the line items, but some broad strokes can certainly help answer some potential questions. Let people read the script. Or, let them read the first 10 pages. Keep them updated on casting. On location scouting. Anything you can make interesting is probably worth sharing. You want people getting involved. You want them to feel like this is, in some small way, their project.

And who knows? Maybe one of your backers can help you get your budget down. They might have a bunch of c-stands you can borrow. It’s been known to happen. There’s even a crowdfunding platform built around that idea.

And Then?

So let’s say you do all that and–Hooray!–you hit your goal. You even went a little bit over. Time to make your movie.

Now what?

Is your script done? (For the love of God, I hope your script is done.) Are you ready to go? What’s your distribution plan? But what if you don’t get into Sundance? What about taxes? Seriously, you should talk to someone who knows a lot about taxes, and not just the guy at your local H&R Block who just files returns for a couple months a year.

You’ve assembled an army who gave you money so you could go do something. They’re ready and waiting to be mobilized. USE THEM. These are your champions. They believe in you.

Those $1 backers will pester their friends to see your movie when it’s done. They’ll talk people into going to your Tugg screening. These critics who think crowdfunding is just begging for money on the internet don’t understand that you’re building an audience. The money is secondary. These are the people who, properly engaged, will follow you to the end of this project and into the next one and the next one and the one after that. Your True Fans.

Are you ready to engage them? Do you have a plan to retain them?

Why not?

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