IndieGoGo | Interview with its co-founder & CDO – Danae Ringelmann
We meet Danae Ringelmann, chief development officer of Indiegogo, in Berlin.
She shares her story of how she started her company and what drove her decision to become an entrepreneur. Then Danae talks about the business model of Indiegogo and what you need to consider to create a well performing Indiegogo campaign (hint: the gogofactor has something to do with it). Lastly, she gives some applicable advice for entrepreneurs to become more efficient and grow their companies.
The transcript of the interview is below.
Martin: Hi, today we are in Berlin with Indiegogo. Danae, who are you and what do you do?
Danae: Hi. I’m Danae, I’m one of the founders and Chief Development Officer at Indiegogo. And we are now the largest, global, open funding platform in the world.
Martin: Great! When did you start Indiegogo and why did you start it?
Danae: I started thinking about it and working on an idea in 2001. I quit finance to go start it in 2006, met my co-founders then and we launched in January 2008.
And the reason I started it was because I pretty much grew up my entire life around a problem and had to witness a problem actually, became part of the problem. And that was the problem of access to capital, inefficient access to capital.
So, I watched my parents struggle for 30 years to grow their business because they never could access an outside loan. I went into finance and started working with filmmakers and theater producers on the side. Failing it, helping them raise money and realize that the finance was broken, because what was happening is that ideas were only getting born if they were lucky enough to find a gatekeeper to roll the dice and bet on them. And that, the way to fix finance was not rely on gatekeepers but actually put the power back in the hands of the people to decide which ideas came to live. By letting people fund the ideas that matter to them. So I quit finance in 2006 and started Indiegogo to do that.
INDIEGOGO BUSINESS MODEL
Martin: Danae, how is the current business model working for Indiegogo?
Danae: So the way Indiegogo works, is that anybody anywhere in the world can create a campaign on their side by the create button. You can be an entrepreneur raising money to start a business, you can be an artist raising money for your next album or film that you want to make, you can be an activist or community citizen trying to raise money for a local charity or a local community effort.
All you need to do is literally create a campaign and get going and share it with your friends, family and supporters and funders and customers and empower them to help you fund. Indiegogo adds a lot of amplification on top of that. So we integrate with social media, we do a lot around helping elevate the exposure so you can actually raise the most money possible using our site than anywhere else.
And what people do is that people fund in exchange for what we call perks, which is like a token of thanks. So a great example is here in Germany, a campaign for the Panono was launched and raised $1.2 million. It was a new startup with a product which is basically a ball that you throw in the air and it takes a 3D picture. It’s very cool. Well, they use Indiegogo as a way to get the startup funding so they could launch to the market.
And we have a campaign like the TinkerBots which is a really cool robotic Lego set for kids. It teaches kids about robotics. They’d actually raised €1 million in venture funding but then they still used Indiegogo as a way to raise another $300 thousand to really validate their market, refine their product market fit, really understand what their funders and customers wanted, so when they did the full launch, they knew who their customers are, or where they were, what they’re willing to pay, what features they wanted, all that stuff.
Martin: And they adjust their pricing or business model during the campaign?
Danae: Well, what they did is they learnt a lot about what people’s willingness to pay. So when you know a lot of, the old way of doing things before you launched a product is you’d have a focus group, which is gathering a bunch of strangers and ask them would you pay for this. And they might say yes, they might no, but still it’s hypothetical. Indiegogo says, well if you pay for it, why don’t you do it right now. Let’s put your…
Martin: Money where their worth is.
Danae: Money where their mouth is. Yes. And so, it’s a great indication of whether there is a market there or not. And so that’s why we’re seeing, Indiegogo has become a place not just to raise money if you can’t access the traditional capital like bank loans or venture investment, or even government funding. But now Indiegogo has become a place for that as well as for ideas that maybe you can access traditional funding, but still want to use Indiegogo as a platform to really proof that market and proof that product market fit so that when they launched fully, they’re as bottom up as possible.
Martin: Today Indiegogo is quite big. So, from a user or entrepreneur perspective it totally make sense to use them because you have tons, millions of users on it who could potentially purchase perks at your company.
Danae: Fun perks. It’s not a store, it’s not a purchase.
Martin: When you started in 2008, why should an entrepreneur put his business on your company when you didn’t have a lot of distribution?
Danae: That’s a great question. I always like to say, the hardest part about starting a market place business which I consider us as a market place business. We don’t have buyers and sellers, but we have you know, funders and raisers. The hardest part about starting a market place business is starting. It’s the chicken and the egg issue.
And so, in the early days, what we focused on, was just proofing that this was a way to raise money efficiently. Maybe more efficiently than offline. When Indiegogo started, the word crowdfunding didn’t exist, we were the first platform. This concept is very novel and there’s a lot of skepticism. And so what we just did is, we focused on campaign first and we did whatever it took to help them raise money. And in the process of helping them, we learnt what the needs were, what the pain points were and then we build product around that to help address those pain points in need.
So, very early it became clear that the whole point of using Indiegogo is to raise more money than you ever could have a loan. So we ask the question, well you know, yes, we’re removing a pain point. So if someone want to raise money online, they could just put up a website, put up a PayPal link for something and raise that way.
So in early days, we remove that pain because we allow them not to have to go through their own website and their own PayPal, etc. But that quickly, that functionality became sophisticated and so then the point of Indiegogo became the ability to reach more people. And so with that, we’re able to add functionality around social media integration, where people fund Indiegogo and they’re automatically prompted to share it and post it on Facebook and Twitter. We like to say that, when Indiegogo started, I think Twitter had just launched, Facebook was still college only and YouTube was big but MySpace was a big social network then.
We’re still in very early days, but we realized the whole point is amplification. Indiegogo’s reason for being is to help ideas amplify themselves. So now with a platform known as the platform that will help you raise the most money possible because we focus on this, and we’re continuing to focus on this. We’re still rolling out product features and enhancements to help with amplification.
BEST CAMPAIGNS & GOGOFACTOR
Martin: What type of business ideas run very well on Indiegogo, in terms of which type of business model can raise a lot of money?
Danae: It’s interesting, a lot of people say what industries do the best. What really, what a successful campaign comes down to is not what industry it’s in, it’s what work and effort you’re willing to put in it, and how much you audience actually cares. So, we see all kinds of campaigns from businesses launch to food trucks or gadgets get launched, but then we also see filmmakers and professional musicians like leaving their labels and using Indiegogo to raise money. Like We the Kings or Protest the Hero, they’ve each raised hundred and thousands of dollars to make an album and go direct to their fans.
So, one thing that a lot of people think that Indiegogo is about is a larger campaign is better, we don’t believe that. At Indiegogo, everyone has the right to raise money, and every idea, large and small, is equal in our minds. And so, if your goal is to just open up a coffee shop in your neighborhood and you just need €20 thousand, then go for a campaign to raise €20 thousand. Just because you’re not raising 2 million, doesn’t mean you’re not as important.
But then we also have the platform, so that if you do need that 2 million, we have the infrastructure to support that as well. And so the end goal with Indiegogo is a world where everyone is funding what matters to them, whether it’s a really cool gadget because you love gadgets or it’s your local coffee shop because you love coffee. They’re both equally important in your eyes and Indiegogo wants to be the place where you can fund whatever matters to you.
Martin: Are there any business model that you are trying to promote on your first page so when people are coming to your website and they see them and what would be the algorithm behind choosing this kind of business?
Danae: So Indiegogo at our core, our core believe is that everyone deserve the right to raise money. And so because of that, Indiegogo pioneered an open approach to online funding. So at Indiegogo we don’t pick and choose projects, it’s totally open, no application, no judgment. But we also believe in meritocracy. So the ideas that rise to the top that end up on our homepage, for example, or in our newsletters, are ones that earn their way there. And they earn it by doing all the things to engage a community. It’s not just a funding popularity contest but it’s the engaging, it’s having the audience that’s engaged, it’s really having a community and a conversation with them, and really kind of bringing everybody together that matters the most.
The way we’ve done this is we created what we call a gogofactor, which is a merit base algorithm similar to Google’s PageRank algorithm that determined the placement and the promotions. So the higher your gogofactor, the higher the chances you’ll show up on the homepage. And I like to say, I love going to the homepage in the morning to see what’s there because I don’t even know.
ADVICE TO ENTREPRENEURS FROM DANAE RINGELMANN
Martin: Danae, we always try to share some insights or advice to first time entrepreneur so they make less errors. What advice could you share?
Danae: Fail fast, don’t worry, don’t wait for perfect, really. That was probably my biggest lesson I learnt, I thought about, work through what became Indiegogo for years, and finally when I just quit and took an action and went for it, that’s when. It’s within months I found my co-founders, within a month after that we have started working on it, within a year we launched the product. So, I think I was trying to get perfect in my head about what the exact thing is, and you can’t underestimate the value of getting your idea out in the world and getting that quick feedback. So don’t wait for perfect.
In a way, Indiegogo is a great way to fail fast because a lot of people put their idea up on Indiegogo, try to raise awareness, try to get engagement, invite people in, and if no one’s funding you, that means you probably don’t have something that has legs yet and you need to go back and try again.
And so a lot of people use us as a testing platform of checking the street because you can then iterate, fail fast, iterate, come back, and when you are successful raising money you know you’re really on to something.
I would also, my advice to entrepreneurs is, second piece of advice is really be clear with your “why”, your reason for being. So, what problem are you solving and why do you care so much about it? A lot of, I live out in San Francisco and there’s always a word, like, “Ooo… entrepreneurs are sexy.” I only became an entrepreneur because I wanted to solve a problem and finance wasn’t solving it. And so I had to go start a company to solve a problem, which is make access to capital efficient and fair.
And I think it ultimately was one of the reasons that has kept me so motivated for so long and help persevere is because I’m obsessed with this problem. A lot of entrepreneurs that you know, want to start a company because it’s sexy or cool or make a lot of money. I think their chance of failure is higher because there isn’t something deeply rooted that is calling them to the work you need to put in everyday for years to make it happen. Because most, very rarely are there companies that like, start and pop the next the day. It’s going to take, it’s a journey and you have to be in it, you have to be really have meaningfully motivated to solve a problem to actually be successful.
Martin: Thank you very much, Danae.