The Big Opportunity In Crowdfunding and Amazon with Khierstyn Ross

You're listening to Freedom Fast lane, presented by capitalism.com this is the show about building businesses and investing the profits so that you can live life on your terms. And now, your host, the future owner of the Cleveland Indians, Ryan Daniel Moran.

Hey, fastlaners, welcome to Freedom Fastlane. If you've been listening to the show for any length of time at all, you know that I believe in going straight for the result. And I look for the fastest way to get me the result that I want. This is kind of a principle that I learned from my mentor, Travis Seiko. I've got a goal. I want the fastest way to get to that goal. Let's cut out all the noise in between. And I believe the fastest way to build a million dollar business is to build up an audience, launch to that audience, and then release new products over time, as many products as we can comfortably handle. We've helped build over $100 million businesses using that type of a strategy. So today we're gonna have a follow up with Kirsten Ross. Kirsten was on the podcast earlier talking about crowdfunding and physical products. Today she talks specifically about combining Kickstarter and Amazon because it is a great fast lane for doing exactly what I just outlined, which is launching to an audience. The audience is on Kickstarter and then you duplicate that process when you sell on Amazon. There was an article that came out recently about an Amazon seller who looked at a Kickstarter and said, I can beat their timeline. So he looked at the successful Kickstarter campaign. He released the same product on Amazon and made hundreds of thousands of dollars. It was like a 22 year old kid who made hundreds of thousands of dollars doing exactly that. Kirsten took a physical product and had a $600,000 launch on Kickstarter. So for those of you who have physical products, it is a fantastic platform to get your seed capital, buy that inventory, then take it over to Amazon and do all the things that we talk about here and have a really successful business. This is something that we teach inside of our brand builder Bootcamp, which you can find over@freedomfastlane.com boot camp. And inside, you'll go from having no ideas to launching a product within 90 days. And we have some bonus content specifically about Kickstarter. But this podcast episode is going to really let you see how big the opportunity is to take a physical product, launch it to an audience specifically on Kickstarter in this example, and then duplicate that process over on Amazon. So enjoy this chat with Kirsten Ross.

Hey, Freedom Fast Laners. This is Kirsten Ross, and I am so excited to talk to you guys about crowdfunding. You're going to be hearing me doing these mini episodes quarterly, and I thought that since this is the kickoff episode, I wanted to give you guys a little bit of a background on myself, but also go into really what crowdfunding is.

Crowdfunding and Amazon are such a great combination because Amazon is a platform for E commerce and taking your products and getting them out to the world. But what I discovered with crowdfunding and specifically, I mean, Kickstarter and Indiegogo launches, is that if before you decide to launch on Amazon, what if you could use a platform like Kickstarter or Indiegogo to actually build your brand, validate your idea, and build your audience? This is exactly the power that I found when I was on a few campaigns. So I actually got started where I partnered up with a local guy here in Toronto. When he brought this idea to me. At the time, it's thin ice, weight loss, and it's really like a cool idea. At the time, I didn't like it too much, but then as I got to learn the science and stuff behind it, it was actually a really cool concept. And the founder asked to partner up with me on it because at the time, I had a little bit of experience online with sales, and he didn't. He was a visionary behind it. And I thought, you know what? Let's sure, why don't I try Kickstarter? I have no idea what I'm doing. I don't really know what it is, but let's do it. Famous last words, right? So that first campaign we ended up launching, it was a absolute disaster. We had a goal of raising $50,000, ended up doing only 17,000. So in crowdfunding terms, we absolutely failed. And it wasn't until we decided to relaunch the campaign because we needed funds for manufacturing. We decided to relaunch it because we saw an opportunity. Like, we really didn't believe that the product wasn't the problem. We thought, maybe it's a few other factors. So after doing some research and figuring out exactly where we went wrong, we decided to relaunch three months later. And what happened with that was anything like, not what we expected. We ended up launching, and in 42 days, we raised $600,000 from this one product. And at the time, we were just like, what happened? It was chaotic. But from that one campaign, I started working on other projects. And so to this date, I've been on six different campaigns that I've fully advised and managed and helped creators raise more than $1.5 million. And one thing that keeps coming up over and over and over again is that at the end of a successful crowdfunding campaign, you are left with hundreds of new customers or even thousands. Like in the case of Pavlok, we had 3,000 new customers, or thin Ice, we had like close to 5,000 new customers. You walk away from campaigns like this with an email list that you own. You have your own audience, you have your own brand, and it really puts you on the map in no other way that I've seen. It's a shortcut for the right products. And then I like to look at crowdfunding as a way, it's really a long term play. Because the way I see it in my mind is if you have the right product and right execution and you get successfully funded, what you can actually do from that is you start with Kickstarter, you fulfill your product, and then what you do is you can use the audience that you've created to launch strong on Shopify, Amazon or whichever other route to market you want, which is great.

What I've actually seen certain companies doing is they actually will continue to use Kickstarter for subsequent product launches. Great example is Pavlok, the wearable that helps you break bad habits. That was created from a crowdfunding campaign on Indiegogo back in 2014. After raising $350,000, they ended up launching wearable number two, which is shock Clock by Pavlok, which is the campaign that I helped them with. They launched that in 2016, raised another 300 and some odd thousand. And it's a company like that that was created from Indiegogo. We have Purple Pillow that started with the purple mattress. One campaign does $170,000. Second campaign for purple pillow does 2.6 million. We have forever spin that. Three campaigns later, they've raised more than $2 million online. Rockwell razors, like I can keep going on for the brands that Kickstarter and Indiegogo have actually allowed a platform to be created on. And I guess it's like why I'm so freaking excited to be in this space because it's, there's just so much possibility behind it. And so a lot of the time, like when I'm, when I'm interviewing clients to bring them into my business and see if it's a launch that we want to cooperate or to like to work on together, I really need to know what their long term goal is with this because I Find that there's a big misconception in the crowdfunding industry with what exactly crowdfunding is like. After I go through the spiel of how much goes into a crowdfunding campaign, like the months of preparation, the your startup investment that you're putting into this, some people are like, why would I go through all of this just to barely make a profit on that first campaign? And the reason is that you need to look at a crowdfunding campaign for your physical product as a go to market strategy. It's a startup investment and it's also as risky as as a startup and I find that a lot of expectations are not properly set. So really if you are considering crowdfunding for your product, it is amazing.

I haven't seen anything more powerful in terms of funding and validation to be able to amplify your business really quickly. However, without reward or without risk, there are no rewards. So crowdfund, if you see it as long term vision, that's my vision with the clients that I do get involved with. So speaking of expectation setting, I know something, a question that I personally get asked a lot is, okay, well crowdfunding seems so powerful that it seems like it can print money, which is wrong, but it can print money for the right combination of talent and product. But what exactly can be crowdfunded? Kickstarter and Indiegogo are the kind of crowdfunding we like to call rewards based crowdfunding. So in this I don't specialize in equity based crowdfunding, which is where you are raising investment for your product. This is more consumer driven. So when you go to Kickstarter, Indiegogo, if you want to support a campaign that you're actually pre ordering the product when people help you get funded. So that's how that works. So what works really well, physical products obviously are lethal on crowdfunding. They do so well assuming right market fit, any events or any cause based initiatives do fairly well. So by event I mean like if you are raising money for a concert, a conference, or you have a film that you want to take to production and you need a bit of money to do that. The common denominator with crowdfunding campaigns is it's just not a free for all funding campaign. It's set up so that you will have between 30 and 60 days to raise money for your cause. But each campaign is set up around a goal. So you have a goal of raising $25,000 to do X. And with me, because I deal with physical products, the $25,000 would be to raise your first round of manufacturing or tooling or prototype development or something like that. So it's always tied to an initiative so that if on the odd chance you do not get funded, which only 37% of campaigns do get successfully funded, but if on the odd chance you're not successful, then you don't shoot yourself in the foot by not having enough to develop the money. And so that's exactly what we're looking at there.

So we looked at what is good with crowdfunding, but what isn't good.

If you're a service provider. Like, just say I'm an accountant and I see crowdfunding as a way for me to get new customers. So I want to create a campaign where I'm selling free consults at 30% off. Thing is that that doesn't really work because you're not trying to raise money for a specific initiative.

Service providers don't tend to do well because they don't structure the campaign properly. However, if you're someone like John Lee Dumas, who is one of the most popular podcasters out there with Entrepreneur on Fire, if you're a John Lee Dumas, he as a podcaster may not do a Kickstarter, but he took his customer feedback and actually created the Freedom Journal that went on to raise close to $600,000 on Kickstarter. And so what he did was he was able to leverage his audience and his name online to create a physical product and then push that out to raise $600,000. So just be careful with what you raise. But I'm not like the.

My opinion isn't gold. I'm always faced with campaigns every week where I frankly don't know how well they do. And so what I do, and I'll encourage you guys to do this too, if you, if what you're attempting, you've never seen it done before, I guarantee it has been done. Kickstarter and Indiegogo projects do not get deleted from the Internet. So go to Google, type it in, see if anyone has done it before and see how well they did and just do a quick analysis to see if they did so well. What do you think it was about that campaign that did so well? But if you're faced with three to four similar campaigns to yours that all failed, it doesn't make mean that yours won't get funded. But analyze what they did, maybe even reach out to the founders to see what they wish they did differently, to see how you can do it better and make sure that you're the one that gets funded, should you choose to be the one to pursue this venue as well. This brings me to my last point for today. When should you crowdfund? And no, I don't mean which month or around Christmas or time. What I mean is what stage in product development should you be crowdfunding? And reason I want to go through this is because a lot of people think that because crowdfunding is so good to validate your product that maybe all you have to do is put up the idea for your product online. So maybe, for example, you have an idea of creating a prototype for something, but you want to prove that it's there, so you put up an entire marketing campaign to raise money to develop your prototype.

The problem with this is that you should not be crowdfunding for just an idea. You want to be crowdfunding when you actually have a prototype that's ready to be sent to manufacturing or it's in the later stages of development. Let me explain. If you're a first time entrepreneur, it's one thing to figure out how to sell, which is having a successful campaign. But what you don't realize is how the difficult part of a campaign is actually fulfilling, which means getting a finished product, a good finished product into your customer's hands that isn't delayed by three years. Which call me crazy, but that's what happens to crowdfunding. A lot of creators get into crowdfunding when they're too early stage. And just so just say you raise a bunch of money for an idea, the next step is you take that money, you burn through that money to develop your idea, you work with a prototyping firm to develop it and that goes three times over budget. And then all of a sudden you need to bring the prototype to the manufacturer and then that's going to cost something. And then you need to pay for tooling. And then all of a sudden all these expenses that you never really thought to look into ahead of time and really figure out the supply chain cost you a lot of money. So much that you may end up burning through whatever you raised on crowdfunding very quickly and having to look for external investment with hardware, this is generally inevitable, but you're actually making your fulfillment life a lot more difficult if you don't have the logistics and your budgeting and have a good sense of your costs of development and fulfillment before you go into the campaign. So I do suggest that you have a little skin in the game. You have a prototype that's proven to work and you're at the point now where you're able to just take the funds raised from the campaign and send this to manufacturing right away. If you don't do this you are probably going to go bankrupt later or at least be 12 to 18 months delayed on delivering your product and inevitably have to go for more financing. So be as prepared as possible on and educate yourself on the second half of your.

Campaign which is actually fulfilling and just make sure you know what you're getting into. Because trust me, selling is the easy part. And yes, I know having a successfully funded campaign seems like so hard, but actually delivering is really difficult. So.

Yeah, that's it. I just don't want to see you guys get into this with poor expectations or not having done your research. The most seamless campaigns I've worked with have been when we've partnered with a design firm and we actually have contacts and manufacturing because then we can properly price shipping, we can properly price development and cost of the campaign and know what realistically we have to raise to make this worthwhile. And if we fall short somewhere, at least we know ahead of time so we can go bridge that gap with the outside funding and whatever. So this is my rent for now. I guess you're going to hear from me every quarter on Freedom Fast Lane. This has been really fun. In terms of how you can contact me, go to crowdfundinguncut.com I do have a free physical product launch check so if you are looking at getting a little more.

Behind the scenes look of what it takes to run a successful campaign. It's a system that I've created which will help you on a six month launch timeline and exactly what to do and I have failed and I've succeeded in the space and there's a lot to offer there. So again that's crowdfunding uncut.com what you can expect in future episodes is I'll be going through campaign specific case studies going through exactly what may be working or may not be working with the campaign that I'm currently working with. And apart from that, if you have any questions about your own campaign you can reach me@krowdfundinguncut.com thank you.

There is a reason that I hate the term Amazon business because if your business is all Amazon then you are limited to both their platform and you are limited to that level of thinking. Something magical happens when you stop thinking about building an Amazon business and you think about building a brand. Because a brand is perfectly viable on Kickstarter. It is perfectly viable to run Facebook ads. It is perfectly viable to launch a podcast to promote your physical products. That is the beauty of having a brand. It's bigger than just one platform. That makes it more sellable, it makes it more profitable, and it increases the return rate of your customers, meaning they come back to buy from you again and again and again. That's why our students have been so insanely successful, because we focus on building something bigger than just one platform. So if you've been hearing us talk about this or you got value out of this episode, we have a bootcamp that'll take you from having no ideas to launching and having sales within 90 days. And then we can help you run the rest of the of the million dollar process. So that is the brand builder Bootcamp. It is over@freedomfastlane.com Bootcamp and in that 90 days, you're going to pick products, you're going to start building your brand, you're going to have an audience. You will be taking sales regularly. You'll be ranking for keywords. You might have launched a Kickstarter, you will be taking regular sales. You will be on the path towards building that million dollar business. So if you've been listening to this and you're like, okay, I'm frickin ready for this, head over to freedomfastlane.combootcamp to start that business and take that first piece, that first step of building the million dollar plan. The cool thing about adding Kickstarter to the process and we have a bonus module all about Kickstarter and crowdfunding inside of the bootcamp. But the cool thing here is it's a way for you to fund the build out of the rest of the business. Plus it gives you the audience that wants to buy more from you. So it's a can't lose situation here. And for those of you who are really just getting started, this is a perfect way for you to get that capital to be able to build out the rest of the process and to have an audience that you can launch more products to. It's like an extra fast lane towards building that million dollar business. So you can get more from Kirsten and more about Kickstarter inside of the bootcamp@freedomfastlane.com Boot Camp, you'll join the rest of our millionaire students who have gone through our processes. So I hope to see inside there. If you found value out of this episode, Please subscribe@freedomfastlane.com iTunes or on your podcasting app and share this with an entrepreneur who you know needs to hear it. Thanks so much for listening. Your support means the world to me. And I'll see you guys on the next show.

Sam.