By the time you read this, a hardware project we incubated here at Made by Many will be landing with its 2,300 Kickstarter backers. Hackaball is a connected device and throwable computer all in one – an object kids can play and learn the principles of coding with all at the same time. We couldn’t have made it without Kickstarter, and here I’ll share some of what we learned along the way.
At S×SW in March this year I attended a talk about hardware startups called Hardware Is Still Freakin’ Hard. The speaker said that Kickstarter in 2016 is something of a lottery – with only around 36% of projects successfully meeting their funding targets, it’s absurdly difficult to get things right. However, whether the campaign is a failure or a success, it’s a massive learning experience (and we feel very lucky that it’s worked out well for us).
…only around 36% of projects successfully meeting their funding targets
Creative and design companies have real advantages when it comes to running a Kickstarter: you need know-how to produce a slick one, and to make the all-important video. People spend astonishing amounts of money on their videos in an attempt to make them go viral, yet we managed to do ours on a shoestring.
There’s also an art to running a successful campaign at the same time as managing risk: it’s wise to set your funding target lower than needed because the momentum gained from smashing it means you’ll raise more overall. Yet that means it’s also possible to top your target and not actually make enough cash to deliver. Meanwhile, timing can also be a challenge – we launched our campaign on the same day and at the same hour Pebble launched their Smartstrap wearable. Kickstarter actually went down in the first hours of our campaign under the weight of Pebble traffic!
In business terms a campaign provides a brilliant focus – activity is full-on for a month and you have to put a lot in. We hired a full-time expert to run the campaign with us, but dedicated lots of other resource too. It’s a uniquely ‘for-real’ opportunity for team and individual growth, and a lot of fun too. Personally I’ve never been so addicted to a totalizer: during the campaign I was getting up at night to check the score, which had gone up every time I looked. At the end of 30 days, life without the totalizer felt empty. I’m also glad that we went to see Kickstarter in person to demo the ball – they loved it, and getting into their newsletter towards the end of our campaign made a critical difference.
Perhaps the biggest secret about Kickstarter is that the community you get can be as valuable as the money you raise. They can validate the product and they need to be supported forever after, including during the inevitable production delays.
…the community you get can be as valuable as the money you raise.
Hardware is still freakin’ hard – but worth it, and Kickstarter and other crowdfunding platforms put projects like these within reach. As much as anything else we’ve done, Hackaball and Kickstarter have helped Made by Many grow as a business and learn as a team, and since side-products are the new marketing, it also got us covered in Creative Review, Wired, Fast Company and a range of other media.
Tim Malbon is one of our Creative Leaders 50
What we learned
If you get to 30% funded in the first week, you have a 90% chance of reaching your funding goal, so preparation is key. Kickstarter is not a discovery platform, so spend time seeding your campaign with backers, engaging advocates on social media, and warming up press contacts before you launch your project.
Make it easy for backers to express support through a $1 pledge and share that as social proof. If enough people like what you’re doing they’ll happily support you at minimum cost, and help spread the message about your campaign.
Plan stretch goals carefully and don’t announce them before you hit your target. Stretch goals with fixed overhead costs (think software features) work best, as each stretch goal that adds to your per-unit costs reduces your buffer for when things go wrong. Be prepared for some backers to withdraw support if you don’t reach all of your stretch goals.
Plan your rewards carefully. Early-bird and volume discounts can eliminate gross margin and leave you struggling if costs increase over the course of the project (and they will). Ensure that ‘only just’ hitting your target gives you enough money to deliver all the promised rewards with cash to spare. It’s definitely okay to make a profit on Kickstarter pledges.
Be conservative with delivery dates. It’s tempting to over-promise to drive pledges, but there’s increasing fatigue amongst backers with projects that delay because of unrealistic schedules. More than 80% of Kickstarter projects deliver late, and backers are increasingly sceptical of optimistic scheduling.
Budget time and resources to managing your community. Backers expect updates at least every two weeks. Updates take time to research, write, and illustrate. Plan for a 5% contact rate after every update you post. With 1,000 backers you might expect 50 questions and comments, which means writing posts and replying to customers might take someone a day or two every two weeks.
It’s possible to be too successful. Chances are your prototype involves some manual processes, which are unlikely to scale well. Creating additional tooling to handle larger production volumes might add tens of thousands in overhead costs. Make sure you plan for 2, 5 and 10 success.
Be honest. Don’t try to hide uncertainty from backers, and be clear about the risks upfront. In the event that anything goes wrong (and it will for a hardware project) this will save enormous frustration on the part of your backers. Building and earning trust translates into support that you’ll need when things don’t go as expected.
Set up to be able to take pre-orders after your successful campaign closes. Keeping momentum from your campaign is a great way to motivate your team, build a media profile, and show proof of customer demand to potential investors.
Once you’re funded, organise fulfilment early. BackerKit and similar specialist sites will help manage your backers and collect shipping details in return for a percentage cut of your funding.