BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

This IoT Product Crowdfunded $600K And Is Now Worth Millions: Here's How

This article is more than 7 years old.

IoT is rapidly changing how consumers interact with their homes and home security systems, but with those rapid changes has come difficulties finding funding. In such an impacted space, how can a great product stand out from the crowd?

SkyBell, founded in 2013, had a great product in their Wifi-enabled doorbell that allows consumers to see who is at their door from their smartphone. When the doorbell is pressed, users pick up their phone to see, talk to, and even snap photos of who is at their door. The trouble was, no VCs would fund them.

Andrew Thomas, co-founder and Chief Revenue Officer of SkyBell, boldly sidestepped all traditional funding and decided to launch their funding campaign on Indiegogo. They’ve since become one of the largest crowdfunded companies of all time, with tens of thousands of users and millions in revenue, partnered with some of the biggest Fortune 500 companies in the home security space. Andrew is now one of the top entrepreneurs to follow in Internet of Things, crowdfunding and revenue growth.

I spoke with Thomas about how crowdfunding changed the outlook of their company, and to get his take on why startups should and can use crowdfunding to their benefit.

How did your company come into being?

We had an idea for a video doorbell that sends live video of someone’s front door to their smartphone, so that they can see, hear, and speak to the person at their door no matter where they are. We loved the idea, but investors did not; we had a hard time raising the money we needed to launch the product.

Instead of quitting or taking no for an answer, we decided to look at crowdfunding as a way to get money. We launch an Indiegogo campaign and ended up raising just under $600K over 30 days. It was a truly incredible time, to see our idea result in such a success. On the third day of our campaign we were covered by TechCrunch, and later Fast Company called us “an Indiegogo sensation.”

How important in crowdfunding in today’s startup space?

Crowdfunding is incredibly important because you can raise the money you need without giving up any equity in the company, unlike if you were to raise a seed round of investment from an outside investor. Even at the seed stage, an investment of $150K can be a big dilution event. But crowdfunding is more than just funding. We didn’t know that going into it, but what we realized after our successful Indiegogo campaign was that there are benefits to crowdfunding that goes far beyond than the money.

The first benefit is brand recognition. We were covered on multiple big outlets and got thousands in free PR from TechCrunch, Fast Company and more.

The second benefit is customers. 4,250 people backed our campaign by prepaying for one of our SkyBell video doorbells, which is fantastic because normally you don’t have a lot of customers when you start out.

The third benefit is the customer feedback on your idea; product validation and product feedback. Over our 30-day campaign, I received over 1,000 emails, comments and messages from customers telling me what they wanted in our product and what they did not want from our product. We used that customer data to build our product the way customers wanted it the first time.

Another great perk of crowdfunding is customer validation. One of the big challenges you have to overcome as an entrepreneur is proving to investors that people want your idea. Well, in the 30 days of our campaign, 4,250 people backed our project which proved that people wanted our idea.

Crowdfunding is both a funding vehicle and a go-to-market. The ability to do both of those things makes it a very powerful option for any founder.

How did you use the popularity of your crowdfunding campaign?

We used the success of our crowdfunding campaign to launch our business. Soon thereafter, we closed retail deals with Best Buy and Amazon, and used the funds from Indiegogo to build our product. SkyBell was a great hit; customers loved the product and loved the idea. We used that momentum to have even more success. Over the next two years, we formed partnerships with Honeywell, Alarm.com, Amazon, Nest and more.

What can founders do to run a more successful crowdfunding campaign?

If you want to start a crowdfunding campaign, make sure that they have a great video that clearly explains why a user should buy your product. Establish trust with those customers so that they feel comfortable supporting your campaign -- do what you say you will. Also, treat it like a full-time job. You will be overwhelmed by the amount of activity and additional demands that a successful campaign has on your time.

What advice would you give to other founders who are creating IoT products?

The most important thing about developing an IoT product is that you must have very clear benefit for your customers. Our customers understand that SkyBell provides them with home security around their front door by allowing them to always to see who is at their door, even when they are away from the house. Some of the other companies in our space didn’t focus on a core value, and did not have as much success. You must have a very clear user benefit and a very easy user experience.

It’s also very important to focus on your growth. We looked beyond traditional business-to-consumer marketing. We formed partnerships with big home security companies and made it so that our video doorbell worked on their home security platforms. Partnership was very important because we can benefit from their distribution and they can benefit from adding our video doorbell - providing their customers with a full and rich home security solution. Our success has resulted from our business-to-business partnerships.

You can’t just rely on Facebook ads to grow your business -- you must find other creative ways to reach your customers and create sales and revenue through different channels.

 

Follow me on Twitter or LinkedInCheck out my website