Crowdfunding has opened doors for millions of entrepreneurs who might have otherwise struggled to finance their ideas.
Crowdfunding is also big business. By 2025, the team at Fundly says, it will be a $300-billion-dollar industry.
But first-timers are often surprised when they learn how much work goes into that first Kickstarter or GoFundMe campaign. It takes weeks of prep work before the campaign itself launches. Then during the campaign — if you’re lucky — you can expect a month of nonstop emails, press request and updates for your backers.
To get an idea of what a successful crowdfunding campaign looks like, and the work needed to pull it off, we spoke with Jake Andersen at Hobo Hammocks, a Utah-based company that offers a charitable contribution to a homelessness organization for each hammock sold.
In 2015, Jake raised the initial funds to start Hobo Hammocks via Kickstarter. His campaign was successful; in fact, he raised three times his initial goal. His advice is worth heeding if you’re thinking of launching a business with capital raised in a crowdfunding round.
Extra Space Storage: You had a super-successful Kickstarter campaign a couple of years ago. What are some things you learned from crowdfunding that you think would-be entrepreneurs should know?
Jake Andersen: There are a lot of amazing people out there. Find them. People care about your story as much as they care about your product. Share something that is a reflection of your personality and your values, and the backers will come.
I launched a product in a niche that has been around for many, many years. But people still backed me. Because I had a story. I started the company after living out of my hammock and learning a little more about the homeless. People love hearing that story, and they love contributing to a good cause. (Every hammock I sell provides a meal to the homeless.)
Don’t take stupid risks. When you launch a Kickstarter, you’re going to have about 1000 consultants tell you that they’ll guarantee you get funded. What they don’t tell you is that they’ll also be taking 99 percent of your actual profits from the Kickstarter campaign.
If something appears to be the “easy way,” it’s probably not going to get you anywhere. I made my Kickstarter video using my phone and iMovie. It didn’t cost a dime. I advertised by joining Facebook groups and sharing the Kickstarter with them. It didn’t cost a dime. There are free and cheap ways to do big things. You just can’t be lazy.
This leads into my third point: If you’re truly passionate about your idea, you should be willing to work for it. I invested 14 hour days for the majority of my 30 day Kickstarter campaign. This was on a short summer break between my first and second year of dental school. But I loved every second of it. I hated going to bed because I had more things I wanted to do to market my Kickstarter and to evolve my product. Passion leads to work.
EXR: What unexpected challenges have you faced by having a charitable mission baked into the foundation of your business?
Jake: Honestly none. I don’t understand how anybody who owns a business could possibly think that charitable donations are a bad idea:
- It’s helping people in a bad situation work their way toward a better place.
- No matter what industry you’re in, prudent charitable donations will increase your revenue more than your expenses. It’s healthy for every party involved.
EXR: What have you learned about yourself by pursuing entrepreneurship alongside having a regular job as a dentist?
Jake: The first word that came to my head is priorities and planning. You have to decide what you want to do, but you also have to decide exactly when you are going to do it. If you don’t know when you’re going to do something, then it’s not really a priority. If you have a big generic goal, it may be difficult to decide when you’re going to do it, but you can decide when you are going to do the things that will ultimately lead to that goal.
Take marriage for example. It would be very difficult and foolish for a person to decide when they’re going to get married. But they can easily decide that they will go out every Friday night where they will meet people and ultimately work toward that bigger goal.
I’ve learned I have more than one passion in life, and it’s OK to pursue them all. You have to sit down and figure out what you care about. If there aren’t enough hours to do it all in one day, that’s OK. Do one thing on Monday, and then do another on Tuesday.
I love business. It feels like a game to me. I’ve always been a strong believer in making changes in life. If you’re in a position where you aren’t happy, make changes until you are happy. Owning a business helps me remember this, as the same principles apply on a smaller scale.
I look at the business and I see literally endless possibilities of things I can tweak in my marketing, supply chain, distribution channels, etc. Every day I make choices to try and increase earnings. Some of them work great. Some of them don’t work at all. I take what works and leave the rest behind.
That’s something we can apply to life. Instead of expecting the world to come to us in a certain way, we should be changing the things we have control over every day of our lives. There’s no destination or end point here, because there’s always a way to make things better. Don’t expect outcomes from the world around you. Expect outcomes from yourself. If you fall short, figure out why you fell short, and then have another go at it. The opportunity to improve will always exist. It can’t go away.
You might think that dentistry and owning a hammock business have nothing in common. They are actually quite similar. It’s all about solving puzzles and finding a better way to do things. Dentistry is an interesting field because you can talk to 10 different dentists and get 11 different treatment recommendations, all of which are great options. There are multiple ways to make things better. I like finding better long-term solutions for my patients the same way I like finding better long-term solutions for my business. But again, it takes a lot of work. That’s a big buzzword with all of this. Work.
In summary, the words that come to mind in regards to what I’ve learned are: priorities, change and work.
EXR: Could you walk us through the life of Hobo Hammocks as a business? What were the speed bumps you faced figuring out things like business models and taxes early on? Since then, what have you found is most responsible for driving sales and overall business growth?
Jake: I was lucky enough to have a roommate who had started his own e-commerce business just two years before mine. He had many of those annoying small kinks with taxes and business models worked out, so I was able to copy cat his business model (in a completely different niche, of course) and apply it to mine. Then, I made changes based on what was working and what wasn’t.
Considering driving forces behind my sales and growth, it’s a mix between my brand personality and work. I have a cause that I believe in, and it is reflected in all the marketing material I put out there. People love that, and they get behind it. They share it on social media and tell their friends about it. That’s a lot of free advertising.
For the work aspect, instead of dumping thousands of dollars a month into paid advertising campaigns, I reach out to large social media groups. I take the time to get to know people within the groups, find out their passions and goals and what they’re working toward. And then I share mine. And because I’ve listened to them and worked to build a relationship, they listen to me, too. They buy hammocks, and they share with their friends. Their friends buy hammocks, and share with their friends. And it just keeps going. But if I’m not putting the work into those relationships, it all dies.
It’s always inspiring to talk to entrepreneurs like Jake who have an infinite source of energy and ambition to draw from. To learn more about Jake’s experience with financing and crowdfunding his business, have a look at our Small Business Success Stories post.