If you’ve seen a nifty product designed in Bend, chances are good it was financed at least in part through crowdfunding.
DrinkTanks, maker of the vacuum-insulated growler, and Hydaway collapsible water bottles both raised six-figure sums on the crowdfunding platform Kickstarter. Smaller projects, including July Nine tote bags and Fireside Audiobox, have seen success there, too.
But success is not guaranteed, and Bend’s growing community of product designers offers first-hand experience with the pitfalls.
Eric Dubs, owner of the earphone company Bedphones, ran a Kickstarter campaign in December to produce a wireless version of the product, which is designed for sleeping, as well as a new product, Versafit, which is an earphone thin enough to fit under helmets while allowing users to stay aware of their environments.
The campaign exceeded its stated goal of $35,000, but Dubs said he’d hoped to raise six figures. After paying out of company funds to complete the production run with a Chinese manufacturer and giving a crowdfunding marketing firm its 35 percent cut, Dubs said he’s not even sure he broke even on the Kickstarter campaign.
“It’s put a strain on our business,” he said.
There are several sources of crowdfunding, but local entrepreneurs see Kickstarter as the go-to site for gadgets and other consumer products. Dubs, who launched Bedphones six years ago without crowdfunding, said he learned Kickstarter does not come with a ready-made audience looking to back new and innovative products.
“It’s all on you to send people to the platform and market the product yourself,” he said.
Kickstarter openly states that the success rate of campaigns it hosts is only around 36 percent. “We don’t think every project should be successful,” spokesman Justin Kazmark said.
Projects that don’t hit their stated goal don’t get to keep the money that’s pledged. The all-or-nothing proposition means the creator isn’t on the hook to complete a project at half its budget, Kazmark said, and Kickstarter provides a way to test the market. “So it’s useful information a lot of the time.”
But Kickstarter, which began in 2009, does try to assist creators, Kazmark said. The New York company a year ago launched Campus, a forum where creators can discuss best practices for successful campaigns, he said.
In the meantime, he said, would-be creators should find a project to back and follow it. “Get a sense of what the good projects are. Research and explore the ecosystem. It’s not just about getting the funding,” he said.
And entrepreneurs learn from their mistakes. Hydaway’s first campaign in 2014 failed, but founder Niki Singlaub came back the next year and raised more than $260,000.
Rick Lee, co-owner of outdoorsy product company Wildish, said he’s learning from both Dubs and Singlaub as he prepares to launch a campaign for M.C. Hammie, a nylon blanket that converts to a hammock. Most campaigns don’t go the way of DrinkTanks, in which co-founder Nicholas Hill posted a product, went to lunch and came back to find thousands of dollars pledged, he said.
By the time the M.C. Hammie campaign launches, Lee and his partner, Adam Allen, will have spent at least 2½ months and $1,000 on various marketing tactics and building an audience for the campaign launch announcement. “It’s very important to get a lot of traction in the first 48 hours,” Lee said.
Beyond the expensive marketing consultants, a whole ecosystem of Kickstarter-related sites will help drive traffic to the campaign in exchange for an up-front fee or a small percentage of money raised. That’s on top of the 5 percent Kickstarter keeps from campaigns that meet their goal.
Lee said he plans to use Gadget Flow, which curates interesting new products for its followers, and Kickbooster, which drives traffic to the campaign. Fireside Audiobox creator Tyrone Hazen ran his first Kickstarter campaign several years ago for another product, which he didn’t build because the campaign flopped. At the time he didn’t realize how much legwork was required.
Hazen raised about $38,000 for Fireside Audiobox, which is a desktop Rubens’ tube. (Also known as a flame tube, a Rubens’ tube is used to demonstrate sound waves.)
Then Hazen converted the campaign to Indiegogo InDemand, which allows campaigns to continue running after they’ve met their initial goal. He hopes to order production for the first 100 Fireside Audioboxes, which will be made in China, this month and then continue working with potential retail-chain customers.
“It’s market research, essentially,” Hazen said. “It’s not going to guarantee your success, but if you don’t do that, you can almost guarantee you will not be successful.”
Wildish is planning a relatively small campaign with a goal of $10,000 or $15,000, Lee said. At what point does it stop making sense to spend time and money preparing for such a small campaign? Lee said he’s asked himself the same thing.
While he’s trying to hold Kickstarter-related expenses down, he’s also looking into the future of the company, which is as much about branding as the products. The M.C. Hammie is innovative, Lee said, but it’s probably not patentable. That means it could draw copycats, and Wildish will need to rely on brand loyalists, such as Kickstarter backers.
Even big, established companies have realized the value of launching a product on Kickstarter, Lee said: “It’s a good way to build a cult following.”
— Reporter: 541-617-7860, firstname.lastname@example.org