This transcript was generated from the episode audio and may contain minor errors.
Today I'm going to bring you a case study in crowdfunding, where an energy scientist turns to Kickstarter to bring his indoor gardening system to life. This system is unbelievable, and by carefully planning his campaign, he's able to generate more than $200,000 in pledges. Back in episode 803, we looked at a plant seller who specializes in plants, for those of us born without green thumbs. A group I would include myself in, this is all about a different plant-loving market. The market of people who want their own vegetable garden, but live in an apartment or otherwise don't have access to outdoor spaces.
So it's a really interesting project here, definitely had some challenges in bringing it to life because it's not a cheap system. But by planning carefully, we're going to look at all the steps he took, he was able to have that really big success. I think his goal was to raise $20,000 or something, and again he ended up raising more than $200,000. So that story is coming up, also I am live in Seattle, Washington today. Always great to be back in the Pacific Northwest, I lived in Seattle for two years, more than a decade ago, so I have good memories of the area and it's fun to be back.
Hopefully I'll see some listeners and readers tonight at the event. Next week I will be in New York City, Boston, and San Francisco. I'll tell you more about that as I go along. For now, here's a message from our sponsor, I really appreciate them allowing the episodes to be free, and then I'll tell you all about that indoor garden system. Stay tuned.
Around Valentine's Day of 2017, David Stevens was looking for the perfect gift for his girlfriend Kirsty. A few months before, she had mentioned how much she missed having a garden. Living in a California city with little room outside meant that it was really hard to grow plants. David did some research and came across something called an indoor or hydroponic growing system. Like the name suggests, it allows people to grow plants inside.
He thought it would be the perfect fix, but he soon realized that it too came up short. Most of the options he discovered could only hold a few small herbs, but Kirsty wanted to be able to grow fruits and vegetables. David kept searching and eventually found that some people were making bigger growing systems out of PVC pipes, but they weren't very attractive and most people kept them in their basements. David wanted a product that could be part of the house, to bring some greenery into a living room or bedroom. He never found the perfect indoor gardening system, but he did find something else.
An idea. He knew that Kirsty couldn't be the only person who was searching for a product like this. More and more people were living in urban areas, all facing the same issues. Not only that, but many of these city dwellers were becoming more health conscious and concerned about where their food came from. They also wanted to know if it had been treated with pesticides.
After seeing people online making their own large scale indoor growing systems, David knew there was a significant untapped market for a better one. He had always wanted to start a business of his own, and this seemed like an opportunity too good to pass up. He soon began using his spare time to work on an initial design. He finished it a few months later. And that's when David realized just how much it would cost to bring his product to life.
Sadly, this wasn't a $100 startup. For a while he was discouraged, but fortunately he wasn't ready to give up just yet. He had spent too long pouring his heart and soul into a design that he knew there was a market for. So David began looking for entrepreneurial groups in Southern California. He stumbled across one called the Founder Institute.
It offered a three month program, and at first he wasn't sure how much it would help him, but he took a leaf of faith and decided to apply. Sure enough, he was accepted. He started the program and learned all about how to create a brand, what the market looked like for hydroponic gardens, and got valuable advice. He began to pitch his idea to as many people who would listen, but potential investors turned him away because of his product's steep price. To be sustainable, it would need to cost well over $500 a unit.
Then one of his advisors from the Founder Institute introduced him to a group who specialized in helping people launch Kickstarter campaigns. They had already raised thousands of dollars for other hydroponic products. For David, the lack of money was the one thing that kept his business from blooming. By launching a crowdfunding campaign, he might be able to get enough cash to really get planted. They hired a model and professional photographer to document the product, which was now called IG Works after Indoor Garden Works.
From there, they made Facebook ads to announce the upcoming campaign. The ads had a few options to gauge the interest of viewers. There was one option for the people who clicked on the ad, then there was another for the people who clicked and entered their email address to get updates on the campaign. Finally, if they really believed they were going to purchase the product later, there was an option to pay just $1 for a special discount when the product was released. By doing this, David could see how much people were really interested in the system.
While the clicks and the email addresses were decent indicators, the best by far was when people were actually willing to take out their wallets and pay that $1. More than 50 people made pledges in a short testing period, and with that, he was sure he had future customers who would be invested in the outcome of his campaign. As they prepared for the campaign itself, David learned how vital it was to build up an audience before launching. He knew that 20-30% of the total funding typically comes from the very first day, so email reminders and press releases are vital to the success of the overall campaign. Not only that, but it was important that they create the right incentives for donors.
In this case, David promised to sell his products for a reduced price. Rather than the normal $850 for a unit, backers could get it anywhere from 18-47% off, depending on how much they donated. This spring, David officially launched his Kickstarter with a goal of $20,000. On May 17, the final day of the fundraiser, he had brought in $226,542 from 409 backers. Because he was strategic about how to launch the campaign, he was able to make enough money to grow his idea into the blossoming business he had first imagined two years earlier.
Why is a pre-launch so important for crowdfunding? You heard that statistic about how 20-30% of the total funding that comes through a lot of these popular campaigns happens on the very first day. Why is the pre-launch so important? I think there are three reasons. One is social proof, number two is a sense of ownership, and number three is just momentum.
Social proof, nobody wants to donate to a crowdfunding campaign that's been up for ten days and it's got three backers for $20. We want to support campaigns that are going to be successful. It's kind of like how, with some exceptions, the most popular sports teams are the ones that win more often than not. People like to back a winner, but then you get into this chicken and egg situation and you're like, "Well, if I launch the campaign but I don't have backers, how do I get backers so that more backers will want to support me?" That's the whole point of a pre-launch. That's the whole point of lining up support in advance so that all your friends, all your supporters, anybody who owes you a favor, basically anything you can do to kind of bang the drum to get people to make a pledge, even if it's a small pledge because then that just increases the number of backers, doing that early on is key.
That is also connected to the sense of ownership because just like we want to back a winner, we want to be part of making something happen. We want to be part of saying, "Oh, this is a really cool idea. This guy's got a great idea, but he's turning down outside investors," or he's not able to get outside investors in this case, but the point is he's doing it on his own. We can be part of that. We can be part of saying, "This is a really cool system.
I'm going to be able to support it now. I'm going to get it at a discount," and I can also say, "I was part of the initial group of backers." Both of those factors are connected to the very simple but powerful factor of momentum. When a campaign is doing well, it tends to do better. It gets featured on Kickstarter's homepage, which leads to it getting some press. If you get some press, you tend to get more press.
That's why the catalyst moment is so important, being able to debut well, which comes from having a pre-launch. It's not so much about the work that you do on that single day of launch. It's about all the work that you do in the pre-launch leading up to that day, so that on that day, you can just send some emails, write to people, put out your press release, etc. And all those people, or at least a lot of them, knew in advance that this was coming. So congratulations to David.
I love the whole concept of the indoor garden system, hydroponic system, learned a new word as well. And listeners, inspiration is good, but inspiration combined with action is so much better. Today's show notes, including links to everything I mentioned, are at sidehustleschool.com/888. Triple eight today, 888. Thanks so much, my friends.
I'm on the road for book tour, but an episode continues to arrive each day. I hope you'll join me again tomorrow. My name is Chris Guillebeau. This is Side Hustle School. From The Onward Project.
