CrowdFunding: Inbound Marketing Meet Capital Raising

Crowdfunding IS Inbound Marketing!

posted May 17, 2014, 4:14 PM by David Khorram   [ updated May 17, 2014, 4:14 PM ]

Inbound Marketing attracts qualified prospects to your business and keeps them coming back to marketing they love. Exactly what a great Crowdfunding campaign does!

Inbound Marketing is about creating and sharing content with the world.

What does Inbound Marketing consist of? Blogs, podcasts, video, eBooks, enewsletters, whitepapers, SEO, social media marketing, and other forms of content marketing all of which serve to bring customers in closer to the brand.

“Advertising is the tax you pay for being unremarkable.” unknown

Inbound Marketing

For businesses with finite money and time, Inbound Marketing has two key benefits that are critical when a company realizes that the cheapest form of capital is a product order.

What do you gain when practicing Inbound Marketing with Crowdfunding?
It Costs Less – Outbound marketing is accomplished be spending money – by buying ads, buying email lists or renting booths at trade shows. Inbound Marketing means creating content and talking about it.
Better Targeting – Techniques like cold-calling and blast email campaigns are notoriously poorly targeted. You’re reaching out to individuals because of one or two attributes in a database. When you do Inbound Marketing, you only approach people who self-qualify themselves. With crowdfunding, that is honed even more as only those who want to work with the company sign up. Targeting benefits all parties — it saves hasseling unwilling customers with offers they are not interested.

Inbound Marketing help you develop customers who become your advocates. Crowdfunding is all about collective effort. Think about the power the one individual who has become your advocate — and then multiply it by hundreds, thousands, even millions! When a lot of people get together and pool their resources, networks, and ideas, it can have a huge benefit for any organizations.

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CrowdFunding Inbounding VS Outbounding

posted May 4, 2014, 1:26 PM by David Khorram   [ updated May 4, 2014, 1:39 PM ]

Inbound Marketing Tactics

But first, lets talk about the tactics. All the tactics considered part of Inbound Marketing (these are still hotly debated), help marketers earn attention organically., a new social blog created by Hubspot and Moz, lists the general categories of tactics as:

SEO (Search Engine Optimization) – making web pages accessible, conducting keyword research and optimizing web content to better appear in major search engines such as Google, Bing, Baidu and Yandex. Note, that some people would also include Paid Search as part of Inbound Marketing – arguing that the contextual related searches gives implicit permission to market and carefully crafted ads earn attention.

Social Media Marketing – participating and contributing to networks such as Facebook, Twitter, LinkedIn, Google+, YouTube and the long tail of social sites, blog communities and discussion forums on the web in such a way that earns the attention of a relevant audience. Social ads that interrupt the news feed are not generally considered part of Inbound Marketing.

Content Marketing – creating and promoting web content in any form (blogs, videos, presentations, infographics, photography, etc) to earn awareness, traffic, branding and mindshare.
CRO (Conversion Rate Optimization) – the practice of iterative improvements and tests to build a better marketing funnel promoting use of your ideas, products or services.

However, I would add to that the general categories of;

Public Relations/Media Relations – working with media for the purpose of presenting an organization to the public in a positive, consistent and credible manner. The goal is to maximize positive coverage in the media without paying for it directly through advertising.

Engagement Marketing – also known as Event Marketing, this is the practice of directly engaging prospective clients through live participation in events such as conferences, public speaking, networking, and seminars (webinars).

From $2M to $2B in 18 Months: What Entrepreneurs Can Learn From Promotion and Advertising

posted May 4, 2014, 12:33 PM by David Khorram   [ updated May 4, 2014, 12:34 PM ]

This is a huge deal... and here's why:

Brief Company Timeline:
August 2012 -- Oculus Rift raises $2.5M on Kickstarter
June 2013 -- Oculus Rift raises $16M in venture capital
December 2013 -- Oculus Rift raises another $75M, led by Marc Andreessen
March 2014 -- Facebook buys Oculus VR for $2B.

The CEO of Oculus went from:

*"I've got an idea" -- to --
"I run a $2 Billion company" under 18 months. Ouch!*A few more impressive numbers:
The CEO (Palmer Luckey) is a 20-year-old college dropout.
The company had only 50 employees at the time of its $2B exit.

This is one of the more striking examples of exponential growth as of late, and hits on many of the lessons we're learning about at the Abundance 360 Summit.

Let's break down why this is so incredible.

Crowdfunding -- As we've discussed, crowdfunding can help you secure your seed investment (which for Oculus was $2.5M) by validating your market and fit. Then, with the momentum you build, you can raise venture capital. In this case, that meant $95M... This deal substantiates the claim that the value of crowdfunding is so much more than just the money raised during the campaign. Oculus VR received incredible market validation and curated a massive network of passionate developers to push the technology (and business) forward.

The User Interface Moment -- As we discussed at Abundance 360 this year, the key to monitoring exponential technologies is looking for User Interface moments, which herald something big. Very big... (If you are unfamiliar with the term "User interface moment," think back to the Mosaic Web Browser created by Marc Andreessen. It was the moment when "the web" became useful to the world).

Breakthroughs Coming from a Novice -- There have been MANY attempts to bring virtual reality headsets to mainstream audiences, and hundreds of millions have been spent in the process. This breakthrough didn't come from an expert (who normally can tell you what can't be done) but from a passionate novice who didn't know what couldn't be done. So, it would only make sense that Marc Andreessen was the lead investor in Oculus VR - a veteran in spotting the true "user interface moment" and capitalizing on timing.

Exponential Organizations -- The story of Oculus VR is another incredible validation of the power of Exponential Organizations. Like the examples of Exponential Organizations before it, Instagram, AirBnB and WhatsApp, this story has all the pieces of the exponential organization puzzle: A Massively Transformative Purpose (MTP), a small team, use of exponential technologies, use of the Crowd & Community, etc.

Passion Trumps All -- How can a 20-year-old USC dropout succeed where experts of the past have failed? Passion. This story should inspire everyone to pursue his or her passions. Palmer Luckey, the founder and creator of Oculus VR, had but one goal: make video games even better than they already were. Once Palmer realized he could use virtual reality to fulfill his dream, he did everything in his power to make it come true. Luckey's approach to this was simple: "Use virtual reality to make me love something more than I already do." You need to build things with a purpose. Pursue things with a fiery passion that gets you out of bed in the morning. Don't just go build something for the sake of building something.

I hope you find this useful. I wanted to bring to life some of the critical lessons we studied together at Abundance 360 so you can remind yourself how to apply them in your own startup or business.

At the next Abundance 360 Summit, I plan on diving even further into virtual reality and the huge boom it could create across all industries. The potential impact it will have on the cost of business, travel, real estate, etc. is enormous. I hope to see you there.

My MTP is: "To empower entrepreneurs to create extraordinary wealth while creating a world of Abundance." (What's yours?)

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The Crowdfunding Conundrum- CrowdFunding Marketing , promotion and advertising

posted May 4, 2014, 12:27 PM by David Khorram   [ updated May 4, 2014, 12:28 PM ]

There is widespread consensus that crowdfunding is a boon, an egalitarian means for bringing great products and services to market without relying on banks, venture capitalists, or established financial angels. Myriad platforms now allow people with stunning epiphanies and folks with a little (or a lot) of cash to get together without the red tape and angst that so often accompanies the soliciting and procuring of start-up funds.

But that doesn't mean crowdfunding is a panacea. In fact, observes Scott Miller, the CEO and co-founder of Dragon Innovation, Inc., it has revealed an alarming Achilles heel: an inability to deliver hardware.

"Over the past year or 18 months, we've seen a pretty disturbing trend in crowdfunding," Miller says. "A lot of campaigns meet their thresholds, but they ultimately don't deliver the goods. That's usually not due to fraud - it's largely because many of the people who launch these nascent companies don't understand hardware. They may want to drive people to their campaign by posting a low threshold, or they may not understand the expense involved in getting a prototype to high-volume production, but in either event they wind up with insufficient capital. So when the time comes to actually manufacture their product, they don't have enough money, and they can't recover. Hundreds of millions of dollars have been lost as a result."

Peer-reviewed research seems to back Miller up. In a recent article in the Journal of Business Venturing, Ethan Mollick, an assistant professor at the Wharton School of the University of Pennsylvania, observed that of 247 crowdfunded "product" projects he researched, "...The majority of projects were delayed, some substantially, and may, ultimately, never be delivered...."

Miller is deeply appreciative of visionary ideas - after all, as an ocean engineering graduate student at MIT, he helped design a robotic tuna fish to research the mechanics of swimming. But he also understands the nitty-gritty of making stuff and selling it. He worked on life-size robotic dinosaurs for Disney Imagineering and robotic baby dolls for Hasbro. He also led the team that took iRobot's Roomba, the now near-ubiquitous robotic vacuum cleaner, from prototype to high-volume production.

"I lived in China for four years overseeing that project," says Miller. "We set up production facilities in the Pearl River Delta and India, and by the end of it I had learned a lot about manufacturing. And one thing that I learned is that it isn't easy. If you're naïve, or careless, or you simply don't think it through, it can spell the end of your company."

Identifying a need, Miller and factory operations guru Herman Pang set up Dragon to aid hardware crowdfunders grok the unforgiving realities of manufacturing.

"We consider ourselves an API for manufacturing," says Miller. "We help people with functional prototypes configure their crowdfunding campaigns so they accommodate the reality of producing products at high volume."

The good news, continues Miller, "is that this really is a great time to design and market advanced products. The costs for robotic technology are much lower than even a couple of years ago, and entrepreneurs with even a little bit of money can build functional prototypes. But manufacturing remains the big stumbling block."

Things can get particularly sticky when software people launch hardware projects, observes Miller.

"I don't know if it's because the products they're used to dealing with are essentially virtual, but they often have a kind of over-riding optimism that can be fatal," he says. "Hardware engineers tend to have a more gimlet-eyed perspective. They understand that things can and will break down in the real world, that you have to fit a lot of components together before you get a functional production line."

Miller has some advice for hardware crowdfunders. Above all: Be methodical. Don't crowdfund first and ask questions later. Beyond that, he cites three basic issues that should (amend that to must) be addressed before launching a campaign. The first is cost: What are the true costs of the product in terms of materials, labor, and ancillary production expenses?

"You can't begin to set realistic margins until you have that completely nailed down," he says.

The second is quality. That doesn't necessarily mean reaching for the highest possible standard, with all other considerations secondary. That's the path to bankruptcy, avers Miller.

"You have to match customer expectations and product costs to your quality benchmark," he says. "You need the right balance. If the quality is too low relative to your price point, you'll either never get off the ground or your customers will ebb away. If the quality is too high per the price, you can lose so much money you go out of business."

Finally, there is scheduling: You have to deliver products when they're expected.
"Most electronics are sold during the Christmas season," says Miller. "If you miss that delivery, your volume falls off a cliff. So you have to know your production can meet your schedules. It's absolutely critical."

Those are the broad strokes, of course, aimed at helping bootstrappers get a general idea of the amount of money they'll need for a successful launch. For Dragon clients, Miller and his team go deeper. They have a list of 197 milestones that address everything from local labor to tooling to mark-up.

"Not all are relevant to every project," he says. "We apply those that are appropriate, and it varies from project to project. But the point is to drill down as far as we can, so we can mathematically calculate the threshold that needs to be raised. The big problem about crowdfunding hardware projects is that so many people simply guess about their thresholds. And as we're seeing, that can be disastrous. Crowdfunding is like a power tool. Used properly, it's great, it allows you to build remarkable things. Use it improperly, though, and you cut your leg off."

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7 Strategies For Launching A Successful Crowdfunding Campaign

posted May 4, 2014, 12:22 PM by David Khorram   [ updated May 4, 2014, 12:23 PM ]

Crowdfunding can be an effective tool for accomplishing your startup goals. Whether you’re looking to jumpstart your marketing efforts, expand your customer base, or reach out to friends and family for funding, crowdfunding provides a platform to rally support around you and your company. Having worked with hundreds of entrepreneurs who have conducted successful fundraisers, we have distilled seven key strategies for launching a successful crowdfund:

Tell your story. As the old adage goes: facts tell, stories sell. When it comes to eliciting customer engagement, a campaign with a good story is an unparalleled strategy. Did you experience some kind of obstacle on your path to entrepreneurship? Did a major life event influence your career choice or business decisions? Tell your story in your crowdfunding pitch to make a connection with backers and encourage engagement.If you don’t have a personal story to share with your audience, share facts and highlights about your startup, product or vision instead. Describe the problem (and severity of the problem) your product will solve, or discuss the vision for your startup. Keep your tone and messaging personal to make backers feel closely connected to you and your project.
Provide value for value. Crowdfunding campaigns hinge on reciprocity. If your startup offers fantastic products, rewards or opportunities, you’ve created a huge incentive for backers to pledge to your campaign. When choosing your reward tiers, reflect on whether the incentives would appeal to you if you were the consumer; ask friends, family members and business acquaintances for their honest opinions as well.
Introduce scarcity. A basic law of economics dictates that scarce supply inherently creates greater demand. Create greater demand for your startup by limiting one or more of the higher level rewards to just a few — this will inflate demand for those rewards and result in higher pledge amounts for your crowdfunding campaign!
Create a marketing event. People love to feel like they are part of something bigger than themselves. Try to build a feeling of excitement and rally others around your crowdfunding campaign by tying the launch to a large, well known event. You can connect your product to a holiday, sporting event, or season to increase the momentum surrounding your launch. You can leverage the emotional connection surrounding these events to get people excited about your product and engage them in discussions.This is especially useful for connecting with backers through social channels, capitalizing on trending topics and popular hashtags to get more eyes on your fundraise!
Highlight examples of social proof. Going back to the human desire to feel like a part of something bigger than themselves, most people don’t want to be the first or only supporter of a crowdfunding campaign — they want to see other influential advocates joining in. Do you have someone notable as an adviser, backer or endorser of your startup? Share your list of partners and patrons to give confidence to new backers and let them know that they won’t be the only one at your party.
Build credibility and legitimacy. Many backers will believe it when they see it. In other words, they require some kind of evidence that your startup is legitimate and picking up steam before deciding to back your crowdfunding campaign. Show your backers what they’ll be supporting in detail — how it works, how you came up with the idea, and even pictures or videos if you have a prototype. Remember that you will likely never meet your backers, so the more proof you can provide that your startup is legitimate the better.
Interact with your supporters. Don’t leave your backers in the dark for weeks after they’ve supported your project. Interact with your audience through frequent updates, thank-you emails or social media outreach, and responses to their questions and feedback.You can build anticipation and increase engagement in many ways. Post updates counting down to a big surprise regarding your project, conduct a product giveaway, or even host a contest involving your crowdfunding campaign. The opportunities here are endless and can be tailored for your specific startup.When interacting with your backers, always encourage an open dialogue and engagement. In general, people would rather talk than listen. Treat your updates and outreach as a conversation rather than a one sided message.

Eric Corl is the Co-Founder and President of the crowdfunding site Eric has been on the founding team of three successful startups including Fundable, IdeaBuyer and Startups.Co, all of which have focused on getting early-stage startups to market quickly and effectively. He is also a partner at Virtucon Ventures, an early stage incubator that brings new ideas to market.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

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