The Magical Couch of Truth Bombs - Episode 6 - IndieGoGo

Have you thought about using crowdfunding for your app, product or business idea? This week on ‘The Magical Couch of Truth Bombs’ Kim & Adrian discuss IndieGoGo’s new marketplace and how startups should utilize the crowdfunding model. 💰💰💰

- So, you know the platform IndieGoGo?

- Yeah

- The crowd funding thing. So they've just released this thing that they have brought out a market place, they're starting to try and own more of the value chain. Once the entrepreneur used the platform for the crowdfunding, then once they launch, they've got the marketplace now, to be the seller. So, they're trying to take market share, really from like Shopify, things like that, I would say, like e-commerce sellers, stores. What's interesting though, is that they take really aggressive commission, for it. It's like 10-15%, which are roughly around that point. What are your thoughts on these platforms, and also that move from theirs, which probably wasn't that expected.

- I think the commissions, I don't really mind. Like, 10-15% for someone to help you sell stuff, or sell your shit, imagine what a normal, campaign would cost, in terms of customer acquisition. You've got 10-15% of your product revenue, going towards marketing, that's actually not a bad percentage. But how many crowdfunding campaigns actually, spend the next six to twelve months, figuring out to how produce their first run of product?

- Too many.

- Too many.

- Way too many, nearly all, which is common.

- And then, as we've heard people, in China, just literally, a paid, full-time jobs, just sit there and scour the IndieGoGos, and Kickstarters, and Pozibles of the world, to see what's trending, and build something in China and ship it before you've even gotten your first thing out.

- Agreed.

- Which is crazy. 'Cause I think that's a big challenge in the crowdfunding space. And I'm not sure tacking on a marketplace is really gonna-

- It doesn't solve that problem.

- No.

- If it's an app, or a software, you can't be crowdfunding. As the amount of entrepreneurs we meet, that, have an app idea, and they want to crowd fund it. The whole concept is, people are pre-buying, like it's a pre-sale, they're pre-buying your product. First thing is, how do you fulfil all your product, should have that in place, you should have a prototype, should've figured out your manufacturing, should've figured out to how scale manufacturing, and then crowdfunding can be, in some cases, definitely not all cases, but it can be a great go-to market, marketing PR stunt.

- Yeah, I think, use that as a launch campaign, but try not to use it as a we'll just do this, and we think we're gonna sell it for $90, and we think we can make it for $40, and we think that's gonna be enough, buffered enough margin, that cost always blows up.

- The second big thing I'd bring up is, this marketplace tool, does take a fairly high commission, so it's fair that, so it's fair that it is a really cool concept of like an online gadget store, that's all these cool things that are actually ready to be shipped, is kind of a cool value proposition to the consumers, I like that, but, innovators shouldn't be relying on that channel. The entrepreneurs who choose that path are using it as a marketplace, should see it purely as a distribution channel. If you're a consumer product, you have to build a direct relationship with your customer, and so they should be looking at other platforms, like Shopifly, that takes very, you can plug in your own gateway, you sorta control, you could be looking at 3% or less.

- And putting your product, on IndieGoGo, actually takes away from creating sustainable business, that is a brand in itself. 'Cause you're now just a gadget.

- We've seen some sellers like this, where they put all their attention to the crowdfund. They get a lot of traction, but then they haven't learned how to get the harder customers, like real customers. 'Cause trendsettings have no sustainability, whatever. They're who you have to find, to get, those pioneers, to get something off the ground, but you have to sorta learn, then to get, early adopters and early mass market customers. You have to get those harder acquisitions, so that's a track in itself. It's false positive.

- It's a false positive.

- Huge false positive. "Oh my god, everyone loves that thing." No, these fucking crazy people, that love new shit, love your thing. But that is a tiny percentage of total consumers, so, once you put your thing out to the big bad world, that's when you start copying reviews, bad reviews.

- Yup.

- So you sort of have to have that sustainability in mind.