Learn From Oculus VR Crowdfunding Success

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Learn From Oculus VR Crowdfunding Success
November 21, 2016

The attraction of crowdfunding is that anyone can do it -- the Oculus Rift can launch a campaign at the same time as your neighbor Janet who wants money for cat food. And because anyone can do it, anyone (in theory) can raise loads of money. In 2014, two years after launching their Kickstarter, Oculus Rift was bought by Facebook for $2 billion.

You've got an idea, and you think it's good. But there are many good ideas. What if nobody likes yours? What if your campaign gets lost in the crowd?

Crowdfunding successfully doesn't mean asking for money at random. It means building your campaign as if you're building a business, and taking the power of the crowd into your own hands.

 

1. Figure out why people should care

 

Entrepreneurs get so deep in the weeds building their product that they often become totally incapable of describing why it actually matters.

You have to be able to sell your product clearly and succinctly to be able to convince people to fund your idea. That doesn't just mean summing up its features and functions; it means saying something that will allow outsiders to care.

People should care about the Oculus Rift because it's bringing a new level of immersion to gaming. Oculus' tagline "step into the game" tells us very little about how the headset actually works but it shows us exactly why we should care.

Boil down your story until you have a "minimum viable identity." What's the least you can say about your product while still transmitting the essence of it to a buyer? Think iPod's tagline "puts 1000 songs in your pocket." It's a value proposition, showing off all the iPod's important features at once. Mobile, light, convenient.

And if your product name is good enough, you don't even need a tagline. Exploding Kittens for example.

 

2. Find an actual human who'll use it

 

Many crowd funders think they have a great product but they don't know a single person who would use it.

Oculus was a success because its creators already knew they had a great product -- it had already caused a buzz on VR forum Meant to be Seen, and had received recognitionfrom popular programmer John Carmack.

But you don't need celebrity endorsement to validate. The most effective way to find out if people will use your product is to ask them.

Netflix's founders Reed Hastings and Marc Randolph started by manually mailing DVDsto friends who wanted to see movies. They asked real humans and delivered straight away. The trick is not just to ask but to give. "Would you like one of these new cupcakes?" -- "How much would you like to pay for it?" -- "Okay, give me those two bucks in your pocket and here it is. What do you think?"

Make sure people actually like your product before you launch your campaign; if nobody wants to use it when they're offered directly, it's not funding you need.

 

3. Ask for the right amount of money

 

Many Kickstarters fail because their founders simply don't understand how to ask for money. Ask for too much and however amazing the product is, it won't get funded. Ask for too little and the project seems like a joke.

How much money do you actually need (for materials, for marketing, for research) to mobilize the next steps of your plan? This should be your campaign goal. Oculus' $250,000 goal was practical, considering the mammoth task of turning an "early developer kit" into a consumer-ready VR product. Consequently, Oculus received 100 percent of that goal in less than 4 hours.

Bolster your chances of succeeding by playing to human psychology. Studies show that people are more likely to donate if the request either appeals to their sense of egoism or altruism. But not both. Requests with mixed messages alert the recipient to the act of persuasion.

And keep in mind that it's better to actually get funded by a crowd rather than one impressed donor, so allow people to donate small.

 

4. Make rewards that don't suck

 

Your backers have bought into your idea, and now you "reward" them by offering them some generic token that has nothing to do with your brand?

Campaign rewards are your opportunity to turn ideas into a list of objects and experiences that you can, and will, deliver to your future customer.

So use rewards to turn backers into early brand ambassadors. This Andean farm offered backers the chance to name a chicken. Filmmaker Matt Porterfield rewarded top backers by tattooing their names on his arm. For backers of Potato Salad by Zack Danger Brown, the experience of donating far surpassed the value of the product itself (a bowl of potato salad), with crazy stretch rewards like "I will rent out a party hall and invite the whole internet to the potato salad party."

Go further and turn backers into team members; evolve your product with their help. Oculus launched a developer kit so that developers would be enticed to adapt their games for the Oculus headset; Oculus got funding while at the same time evolving their product. And to encourage whole teams to get involved, the penultimate reward was a "studio kit," a set of ten developer kits along with support from the creators.

 

5. Get over your fear and tell people

 

Many entrepreneurs don't even tell their families about their idea. They're scared of being "one of the bad ones." This becomes a self-fulfilling prophecy; the less you talk about your campaign, the fewer people will see it, and your chances of getting funded shrink to nothing.

If you're scared of failing, you can't judge how good your idea is. There's a reason whyFailCon is so popular. Uber CEO Travis Kalanick is a regular there; he used to fail so muchit's as if he was doing it deliberately. Now there's a direct correlation between his failure and his success. Sharing his ideas, and finding out they were failures, taught him how to make better products.

You can create positive buzz about your product just by talking about it. According to theMere Exposure Effect, developed by Robert Zajonc, the more someone sees something, the friendlier they feel towards it. This is the power of social media marketing: crowds of people learn to like a product simply because it becomes familiar to them.

Leverage your personal networks. Then find your toughest crowd and tell them, too. Andrew Jiang posted about his Kickstarter, the Superbook, on discussion threads like ther/Android subreddit. He used this tough crowd of hardcore Android fans to generate microlevel discussion that helped him adapt the Superbook to precisely suit their needs.

 

6. Get ready for more money

 

The worst mistake you can make is to prepare for a successful Kickstarter and then leave it at that. Prepare for the next funding step now or your idea will struggle to be more than a crowdfunding campaign.

From an impressive early prototype, Oculus carefully rode their momentum into a Kickstarter backed by 9,522 people, and then into a seed round that gathered $2.55 million (interestingly a very similar figure to the one they earned on Kickstarter), and so on, until they were bought by Facebook for $2 billion.

Other successful products choose to forgo traditional venture capital. Organic chocolate brand sweetriot started with a $50,000 campaign on Indiegogo. Then, as a more experienced and established idea, they joined CircleUp, a selective fundraising platform that connects emerging consumer brands with experienced investors. Here, entrepreneurs have to submit an application and investors have to be accredited, eliminating the slush pile effect.

 

What if you succeed?

 

If your campaign succeeds, you won't just have money -- you'll have the first iteration of your business, including a group of customers who are already rooting for you. Prepare yourself now, because once those customers are watching, there's no going back.

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