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Crowdfund Secrets From An Expert Who Raised $1.5M In 6 Consecutive Campaigns

This article is more than 9 years old.

“There is no failure; only learning.”  - Jeff Hays, film producer and crowdfund expert extraordinaire

Recently I became acquainted with a film producer in Salt Lake City, Jeff Hays (Jeff Hays Films), who develops documentary films. At age 56 he’s a serial entrepreneur.  His LinkedIn profile lists no fewer than 13 companies and projects, some highly successful and others he acknowledges as spectacular failures. In all, he has emerged with his learning (and his sense of humor) intact.

Then came crowdfunding. Not equity crowdfunding, which is currently the topic of headline news, but donor crowdfunding, which Hays discovered in 2012 as a way to fund production of his documentary films. The concept has turned his world on its end. Since the fateful discovery, Hays has embarked on six successful crowdfund campaigns that have raised more than $1.5 million (with some outcomes also doubled by traditional investors who were willing to put up matching funds).

He’s also advised on countless other campaigns as a means of supporting fellow entrepreneurs. Many of his ideas are undocumented (literally off-program secrets) he has developed, but in the spirit of advancing the entrepreneurial community he has been willing to share his ideas freely with others. In a phone interview this week he offered his top 14 ideas to me to share with Forbes Entrepreneurs.

Unlike many aspects of entrepreneurship, Hays maintains that crowdfunding is something “everybody can do, and most people should do.” “Equity crowdfunding is getting all the news,” he remarks, “But in the meantime donor crowdfunding has brought in billions of dollars and has been responsible for bringing about the discovery of a number of entrepreneurial hits.”

For example, he points out, Oculus Rift was funded on Kickstarter for $2.5 million just two years ago, and as most Forbes readers know was recently acquired by Facebook for $2 billion. For Hays, his crowdfunding journey began as he watched his 30-year-old son blogging that he’d bought a Pebble watch. Curious, Hays looked it up on Kickstarter. Eureka. Here was the opportunity to fund his next documentary film.

It seemed like a good idea, but crowdfunding a movie? People laughed. When he told his director about the project, he almost quit the film. His investor mocked him. Undeterred, off he went, using the 500 business cards he’d gathered at a trade show for chiropractors and his personal list of 450 Facebook friends. He proceeded to raise $240,000 within the next 30 days to produce the film “Medical, Inc.” (Later he renamed it “Doctored.”). The project is (still, today) the sixth most success film project on Kickstarter, funded from scratch using the trailer for a movie that he hadn’t yet shot.

“Yes, it is frightening,” he said. “Throwing your baby out to the world and finding out whether people like it or not. But you might as well find out sooner than later, and then you can adjust.”

Even with the track record that has made him a bona fide expert, Hays admits that each new project still leaves him scared. But in all, he sees crowdfunding as one of the world’s greatest boons for start-up entrepreneurs. “It’s pre-selling,” he says. “Want to write a book, make a movie, launch a business? Sell it before you start and fund the creation.”

So on that note, here are Jeff’s Top 14 Real World Secrets for succeeding at a donor crowdfund campaign, as follows:

1. Search for successes and failures in your category. Crowdfund campaigns stay online, succeed or fail, providing a treasure trove of data for future entrepreneurs. “Indigogo, Fundly, RocketHub, Kickstarter--all of these sites have the successes and failures out there,” he says. “You have to search for the failures, but the roadmap to failure and the route to success is laid out in plain view. So find the successes, and analyze what those projects did well and what caused the losing propositions to fail." Speaking of which, the “elevator straight to the bottom” is to make your headline one of the following:

2. The Epic Mission or “I want it” headline vs “Help me ----!” This is Marking 101. People will be compelled by what the project will do for them, not what it will accomplish for you. To act, they need to have a clear “why.” They are not compelled by “Help me get on American Idol,” or “I want to be an entrepreneur,” but by why the project matters to them, makes them feel great, or gives them a cool new product they are dying to have. A successful request communicates a message of “Join me and together we’ll do something spectacular we couldn’t do individually.” For example the Arkyd Telescope, on Kickstarter, requests help to send a telescope to space, and the 10 billionaires behind the project will make it available to schools that allow the students to drive the telescope. Wow! The chance to join Elon Musk and Richard Branson as entrepreneurs in putting a telescope into space is a terrific epic mission request.

Of course the billionaires could have funded the project on their own. The costs of raising money from the public puts the cost of launching the telescope that much higher, but it is how the executives build the audience for their adventure, Hays says. “They are creating something magnificent. It’s not the government sending things into space; not Russia, the U.S., China; it’s individuals. It gives everybody the chance to join in on something epic and cool.”

As an alternative, you can create a product that people really want, Hays said. “There's nothing epic about a cool product, it’s just a thing people really want, like a multifaceted charger.”

But ideally, if you bring the concept of a profound mission, a strong “why,” a coolness factor and the creation of a product that people want all together, the result forms a diamond, and you have the inherent makings for a potential crowdfund home run.

3. When to use Public Relations, and How. This is the piece of the strategy puzzle that surprised me particularly and will likely surprise you as well. PR, for crowdfunding, is a practical matter that you engage not at the outset, but later within a campaign. In fact, the lowest outcome Hays received in his six crowdfund projects ($38,000) was for the one and only campaign in which he engaged outside PR. (Ouch! Can you feel me wincing?)

Actually, Hays concedes, the PR consultant he hired was a tremendous resource to his project and he regarded her highly, and he considers the largest fault for PR's failure to influence his funding goal was his own. “I got out of the driver’s seat and disengaged, thinking the PR efforts would take over the helm. It didn’t work out.”

Furthermore, he recommends that PR not start before or at the start of a campaign but should begin in the middle. “Launch your campaign with your friends and their friends to see how they’re responding, and let PR kick in at the halfway point where the press (and their readers) can peer in and see the project is succeeding. If you send the stories and the readers in at the beginning, they see an unknown possibility, and you are sowing the seeds of your own demise.” (Let alone the fact that TechCrunch, enGadget, etc., are unlikely to take the news or the project seriously enough to cover it at all until they’ve seen the trend to success, I  would add.)

“Pebble got no press until they were over $1 million raised and at $2 million their story was in the Wall Street Journal, and then it was everywhere. But the success was the story. Not the watch.”

What about Bandwagon Marketing, I ask? The process of priming the pump with orchestrated efforts from friends?  “We’ve never resorted to that,” Hays says. “Instead, you need to figure out how to access the audience that is really going to care about this project and enlist their help in getting others to care. In my case, I do niche films about political and controversial topics. So that’s where we target our efforts. The more direct the message to the specific audience you’re after the better, as opposed to a general campaign for PR.

For tech products that have a more general appeal you should look towards engaging Gawker and TechCrunch, but don’t bring them in too soon don’t expect them to be doing the job of creating your list of advocates and investors for you. And don’t expect your PR agency to carry the ball.

4. Learn the Obama Strategy. Get People in. Change Strategy Halfway Through and Add New Rewards. Your crowdfund page is a living, dynamic website, Hays says. Consider the strategy of the first and second Obama presidency campaigns. As the first step, the campaign was pitching the whole world to contribute $5 apiece. “We need to get this goal accomplished, can you contribute $5?” Their internal goal was to get as many people as possible to contribute $5 apiece at the start, and over the next months guide as many of them as possible to maximum contributions of $2,250-2,500.

In a crowdfund campaign people think “okay, I’ve donated" and the decision is finished, but in fact they are now on a track. In the beginning, go after a $10 contribution and the contributor’s name will go on site. Set the bar as low as possible, and design the rewards toward the goal of gathering as big a crowd as you can. Then, halfway through the campaign, you add new rewards for the $10 donors designed to move them up in commitment, Hays suggests. At this point you can also begin a referral campaign. "If you refer two people we’ll give you a t-shirt," for example, because they are contacts who've already raised their hands. So you add new incentives to increase the commitments and gather additional referral leads on the way.

5. Consider Reset Days and Optimal lengths of Campaigns. The most successful campaigns are 21-32 days in range. While you can run a campaign for up to 60 days, that length of time doesn’t put enough pressure on people to contribute right now. The best campaigns are 30-32 days long.  Also—as an undocumented “secret”—it’s not acknowledged anywhere on Indigogo site, but the rules have now changed to allow you during the process to extend your campaign. "So in our cases, we’ll set our campaign for 30 days, let the process run down to one day remaining, and then ask Indigogo to extend the project for 30 more days." According to Hays, Indigogo is the only platform he’s aware of that currently allows for this option, and they don’t publicize the possibility, but it is often an advantageous thing to pursue.

“The first time we did this, Indigogo had called us and said, “You have so much momentum do you want to extend for 17 more days?” And they later made it a standard but little known policy that this was possible for you to do.

Another Indigogo advantage to consider is that you can have access to the incoming funds that come in through PayPal right away. For example, Hays’ campaigns tend to receive approximately 20% of their donations through PayPal and for one of his friends, the sum is approximately 40%. In either case, the PayPal money can fund the Facebook advertising campaign that helps you to go the rest of the way to your goal. “When my close friend started his campaign he didn’t have the money to fund a Facebook campaign, but the PayPal feature in Indigogo allowed him to make his campaign self funding—a huge plus.”

6. Create a Forwarding Domain to use for Speaking and Radio, and to Create Bonus Campaigns to Catch Trailing Donors. Here’s a way to create a bonus campaign to catch trailing donors: “I always create a domain with a name like “JoinXXXMovement.com,” or, when I did my movie for chiropractors, I got “SupportChiroMovie.com.” Be sure to choose a phrase that is easy to remember and forward the domain to the link for your current campaign. The easy-to-remember domain can have a second purpose as well, Hays explains:  “We had momentum at the end of our Kickstarter campaign from people were just finding finding out about the project. They may have read the blog just that week. So we set up a mirror campaign at RocketHub so that when the Kickstarter campaign ended at midnight, the RocketHub campaign began. I re-forwarded the domain sentence to the new campaign and we raised another $30,000, which is additional funding we’d have otherwise lost.”

7. Matching Investment Funds Can Bring in Money Both Ways. A couple of campaigns ago Hays was in talks with a prospective investor who was sitting on the fence about putting money into two of his films. He had the potential to invest $150,000 but was deliberating about whether or not to jump in. “So we asked if he would put in matching funds for the sum we were able to raise.”  For the investors, the deal became much more attractive because they were doubling their equity for each dollar committed without dilution. For contributors the deal was more attractive as well, because every dollar contributed would bring a total of $2 towards the goal.  “Everybody likes to be a part of a deal that has leverage, and this arrangement provides for leverage both ways.”

8. Build a List Within the Campaign, and Use the List To Campaign. Now that you have every contributor’s address, print and send a postcard to thank them, which increases their bond to your program, and also announce your plans to run a second campaign and that you look forward to getting their help as you prepare for Campaign 2, Hays said. "In my case, from little list of 500 chiropractors and 450 Facebook friends we’ve developed an active list of 11-12,000 people who’ve now contributed to our campaigns. Remember to take great care of these people over time. And also remember that your list is uniquely valuable on its own."

9. Create a Referral Campaign. Get your Facebook “likes” working for you and amplifying the reach of your ads. “Our current campaign is the first time we’ve run Facebook ads,” Hays says. “Facebook ads are great because of their ability to closely target our customer. But along with the likes, we also encourage our viewers to share. An ad that we pay for to distribute to 400-500-600 people may end up being viewed by more than 1,000 people thanks to the additional visibility that comes from the 'likes' and the 'shares'."  Hays has used Facebook ads to support his current campaign—his fourth—for SupportBoughtMovie.com.

"I don’t know anyone else yet who’s done four campaigns for one movie," he says. "Who knew it could be so successful? Our initial goal was to raise $40,000. Now we’ve raised $300,00 so far. With a $40,000 goal on the current campaign we’re at $65,432--$25,000 over goal—and have added 1,031 new funders with 24 more days to go. I predict this campaign will end at more than $100,000.”

10. Ride the Wave; Don't Cry Wolf. Understand that the cycles of donation will move up and down, Hays says. “When we communicate to our list, activity spikes and then it dies down. We find that weekends are the slowest, and contributions tend to drop off. But don’t be flogging your list every day. You will have lulls in activity and then you stimulate the list again, but you can’t be crying wolf to your list every day.

11. Opt for Personal Updates, Through Plain Old Email vs. Fancy Messages in HTML. “I send messages to contributors through plain text emails where I tell a story about something that’s occurred in the process of this project. We’ve discovered time and again that a heartfelt one-to-one email outweighs anything else we could do.”

12. For Video and Copy, The Same Formulas Apply. Include the claim, the story, the credibility, and the call to action. Include the information about what you'll do with the money, your stretch goals, answer objections, repeat the call to action, and include FAQ's (Frequently Asked Questions). The FAQs must include 1) What happens if we don't hit goal? and 2) What happens if we go over? Create a great video and great copy. If you make a big claim in your headline, be sure to explain the claim in your story. For the Arkyd Telescope, for example, it is clearly a big claim to promise you’re going to send a rocket to space, but then the story in the copy explains that these guys are rocket scientists. They are credible in making this claim. Be sure to tell people how you’re going to use the money and what you’re going to do with the extra money if the program is able to reach its stretch goals, Hays maintains. People want to have this information before they contribute to a campaign.

13. Plan Rewards With Care. “Fifty percent of my money always comes from the incentive of the biggest rewards,” Hays says. “Assemble the rewards that your contributors want, not what you would want.”  Hays notes that he may only have 10 of the biggest donors, but they will invariably put in more money than 1,000 smaller donors. Remember that 5 people contributing $10,000 puts you at $50,000. So be sure to include a broad range of awards to create compelling alternatives at all price points. Hays also notes that contributions tend to follow an 80/20 trend. “If you have 1,000 people who will pay $25, you generally have 200 of those who will pay $250 and out of those, 4 that will pay $2,500. Make the awards epic and desirable.

14. When it Comes to Reward Alternatives, Less is More. While you want to cover all price points, too many alternatives confuse the reader and reduces donations. Eight or nine options is a better option than 12, Hays maintains. It shortens the conversation and gets the reader more quickly to goal.

In Hays’ opinion, donor crowdfunding is one of the most revolutionary trends to emerge in support of entrepreneurs, noting that the model is absolutely unique in its ability to allow people to pre-sell products—funding projects as they go, receiving continual market reaction and feedback, and co-opting customers directly into the delivery goal, creating alternatives no one has considered before.

Now called upon to contribute to the strategy of other crowdfunders he recounts the story of a talented executive from Maui with a double masters degree who teaches a highly popular leadership course. He has a deal with a major publisher to develop his leadership course and enjoys a high degree of market demand.

“So what’s holding you back?” Hays asked him. Well, the fellow is an engineer for Plantronics and has a wife, a two-year-old and a 14-month-old baby. He has no time available to progress on the project.  So Hays posed the question, “How much it would it cost to buy a year of your life so you could finish your book?” The fellow thought about it and it turned out it wasn’t a large sum of money. As an option, he could crowdfund the book, provide rewards from the products he’s creating, and buy his freedom to fulfill an impossible dream.

In another case, Hays is counseling the two women who are the co-founders of “Bra-Ket” (www.thebra-ket.com) Their product is an insulated bra-pocket for cellphones that lets women tuck their cellphone under a bra strap without the worry of exposure to harmful RFID rays. Initially, the women told him they needed $3-5 million to proceed. He drilled into their plans to assess what they really needed to move the project forward and determined that the real money needed was just $50,000—now within the perfect range for an achievable crowdfund campaign. “There’s no doubt in my mind they’ll knock it out of the park," he says.

For himself, Hays is increasingly entreated to develop his crowdfund methods into a donor crowdfunding course. Perhaps he can support the project with – what else?--a creative crowdfund campaign. If you have questions for Jeff, or additions to his list for consideration, you can add them below or can reach out to him directly at www.jeffhaysfilms.com.

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