Intelligence And Cookies

(Note: This is entry number 2 in a three part series on some of the things I have learned about intelligence support to entrepreneurs from running a number of crowdfunding campaigns. For Part 1, click here.)

Ah!  Cookies!  Who can resist a good cookie?  Fresh out of the oven, homemade, imprinted with pictures of horses and bunnies and dinosaurs...

What?  

That is the good idea of Lisa Van Riper, the creator of the Tiny Hands On A Roll Kickstarter (closing in a little more than 24 hours). Little kids like to "help" when it comes to baking but kitchen implements are often too large, too unsafe or too uninteresting for little kids to use.  How can you keep them engaged without them getting frustrated?

Lisa hand makes laser engraved, bakery quality rolling pins that are exactly the right size for small children.  They work just like a good rolling pin ought to work but are sized for tiny hands and completed with customizable laser-engraved images that make the rolling fun.

Check out her project page (just click on the image above).  Her images are beautiful, her products demonstrate an over-abundance of quality and care in manufacturing.  Something like this ought to just kill it on Kickstarter, right?

Yep.  Except for one small detail (and my second lesson learned);  Timing.

Every crowdfunding project creator worries about timing.  What is the best day to launch? What is the best time of day to launch?  How long should the campaign be?  When is the best time of month to launch?  When is the best day to end?  What days should I avoid?  

These are all good questions but it is easy to be hyper-focused on these tactical issues and miss the strategic (or, at least, seasonal) trends.

Take a look at the chart below.  It is taken from Google Trends and shows the US search trend for the term "rolling pin" over the last ten years or so.  Talk about strong patterns!  Every peak is in December and every trough is in...ahem...April.  

Hindsight being 20/20, it is obvious why this is so.  Rolling pins are strongly associated with the scratch baking frenzy that begins shortly before the end of October and only ends around the time people are waking up late and cursing the winter sunlight of January 2nd.  In terms of searches for the term "rolling pin" at least, that frenzy is almost three times as strong in the fall as it is in the spring of every year since 2005.

We figured this out before we launched, of course.  Lisa wants to expand her business and she wanted to get this product line out there now and not wait till the fall.  She has already explored other ways to sell the product after the Kickstarter campaign is over and she will almost certainly do well in the fall with these products (when not only baking season but also toy season kicks in).  Our solution was to adjust her expectations - and her goal - accordingly.  

Not every product has this strong of a trend associated with it.  That said, if you have to swim upstream, you at least want to know about it beforehand.

Next:  Intelligence And Vigilantes

Intelligence And Coffee

It has been said (at least by me) that coffee is to intel as air is to life.  In fact, the Food and Drug Administration has reportedly recognized coffee, along with sugar and alcohol, as part of the three basic food groups of intelligence professionals everywhere (note I said "recognized" not "approved of"...)

So, it is no real surprise that I am beginning what I hope will be a three part series on the intelligence lessons I have learned running various crowdfunding campaigns with Roast Assured, a project that is not just about coffee but about the perfect cup of coffee.

Roast Assured is a client of our Quickstarter Project here at Mercyhurst.  Quickstarter allows us to match aspiring, energetic college students and their skills with entrepreneurs who need those skills to help get their crowdfunding projects off the ground.

I received a $10,000 grant from the good people at Ben Franklin Technology Partners last year to help local entrepreneurs run some campaigns (and recently received a much larger grant to run lots more campaigns over the next three years).  Since then, I have run five campaigns (three of which are live right now) and have spoken to nearly 30 other potential creators.

What have I learned?

Lesson #1:  Entrepreneurs need lots of intelligence support.  In fact, I would go so far as to say that the number one requirement of an entrepreneur is reliable intelligence about the environment in which they are operating.  Most entrepreneurs know their idea inside and out.  They know all about their current operational capabilities and limitations. Everything else is almost always enshrouded in varying degrees of fog.

To a certain extent this should be expected.  Clearly there are levels of expertise when it comes to entrepreneurship.  Most of the people who come to me are raw and untested. Some of the people I do see come to me better informed than others but I don't see many serial entrepreneurs or experienced business people.  The fundamental truth seems to remain, though, entrepreneurs love their ideas and know them quite well.  The rest ... well ... not so much.

Much of this intelligence needs to be tactical, real time support, however.  I call it "just-in-time" intelligence.  Intel support at this level is all about being able to fill in the gaps immediately and with just enough info to keep things moving.  To put it in terms most national security intelligence professionals will understand, with entrepreneurs, all of the alligators are at your ankles and all of the targets are 50 meter ones.

Roast Assured is a good example of this.  Jack Barton, an expert coffee roaster and the creator of Roast Assured, has a great idea.  He wants to work with people to help them get their perfect cup of coffee.  He knows how different roasts and different grinds and even different flavorings and spices work together (or against one another) to change the taste of a cup of coffee.

What he really likes to do, though, is to put that knowledge to work for people - to help them craft their perfect brew.  He also wants to take it a couple of steps further.  First, he wants his customers to be able to name their coffee.  It can have personal significance, it could be the regular coffee in a small town diner or even the official coffee of some internet start-up. He even wants to work with you and his artists to craft a logo for your brand of coffee!


The bottomline is that it is your coffee with your chosen name on it.  Once you and Jack figure out the perfect blend, your named coffee goes into his database and you can go online and order another pound of Spy Roast (or whatever) anytime you want.

Beyond this, it gets tricky.  Who wants to buy this?  Where can we find him or her? How should we price this?  What's our value proposition?  Who will finance us?  Where can we get this made?  Who are our competitors? And on and on and on!

Virtually all the important questions entrepreneurs have are, at their core, questions about things critical to the success or failure of the project that are largely or completely outside the entrepreneur's control - in short, intelligence questions.  

One problem, of course, is that these raw, untested entrepreneurs don't typically have the money to pay for this kind of intel support.  This problem is unlikely to go away.  A second problem is that most of the entrepreneurial literature and many of the entrepreneurship training programs don't expose creators to the kind of intel tools and skills that could be so helpful in getting their projects off the ground. 

Next:  Intelligence And Cookies

Combatting the Mid-Campaign Slump

(I have been writing about what I call "Entrepreneurial Intelligence" (or ENTINT for those who like acronyms...) on and off for a couple of years now.  Part of what I am coming to realize is that everything I do in support of entrepreneurial crowdfunding efforts through Mercyhurst's Quickstarter Project is really just intel.  The "best practices" report below, put together by my Research Assistant, McKenzie Rowland, and focused on dealing with the dreaded mid-campaign slump, is a good example)

When running a crowdfunding campaign, it is common to notice a dip in the activity in the middle of the campaign.  It is so common, in fact, that it has  a name - 'the mid-campaign slump".  

Fortunately, there are a number of tactics that you can apply to overcome this slump and keep your campaign running at a more even pace.  The table below is a ranking of what techniques the majority of crowdfunding advice-givers have found to be the most instrumental in campaign success (It's a big table so be sure to scroll right to see all the columns!).

Overall, the most common approaches are ones designed to make backers feel valued throughout the campaign.  By sending personal messages or emails and keeping them frequently updated with photos and posts, you’re showing them that you value their contribution and that their donation matters.  

Incentives also appear to be a common way to bring in more contributors and funds, and can boost donations when campaign activity is low.  This may encourage current backers to bring in others to the campaign, so it is likely important to tailor your incentives to the core value proposition of the project in order to bring in the most donors possible.  

These efforts can be time-consuming, however, and may result in greater costs to the campaign so it is important to make some estimate, in advance, of the cost (in terms of both time and money) to benefit ratio before pursuing any of them.

Want To Invest In People Instead Of Companies? Now You Can! (Entrepreneurial Intelligence)

Crowdfunding is a busy place these days.  While the largest and most popular site, Kickstarter, continues to fund a variety of creative projects (last year Kickstarter funded more creative projects than the National Endowment for the Arts...), specialty crowdfunding platforms are now available for everything from education to issues in the developing world to scientific research to, of course, porn.

For me, understanding crowdfunding is becoming an increasingly important part of what I call "entrepreneurial intelligence" - or, stuff that is outside entrepreneurs' control but is still critical to their success or failure.  Crowdfunding is rapidly filling a space left untouched by bootstrapping, angel investors and venture capitalists and understanding the strengths and weaknesses of various crowdfunding platforms would seem to me to be a critical intelligence requirement for entrepreneurs.

One of the most interesting of the new crowdfunding platforms is Upstart.  Upstart allows you to invest directly in a person.  In other words, you give them some money now to pay off a loan or to learn to code or to expand a business, and they promise to pay you a small percentage of their income over the next 5-10 years.  Repayments are capped (typically at 3 to 5 times the amount invested) so people can pay off their backers early if they make a lot of money.

 

Like a venture capitalist or angel investor, you could lose all of your money if the person you backed doesn't make enough.  Upstart uses statistical models to predict how much the "upstart" will earn over the next ten years based on degree, school attended, test scores, number of job offers, work experience, etc.  The amount the upstart can ask from backers is based on this model but as Upstart notes:  "Any estimate of returns is highly speculative, subject to a high degree of variability, and not based on historical experience. The pricing engine is novel and untested and relies on broad-based statistical data that may not be representative of any individual’s actual future income."

This is, however, a pretty good deal for investors if everything works out as planned.  A $300 return on a $100 investment over 5 years represents a nearly 25% annual rate of return.  Sure beats the 2 bucks your average money market fund will likely yield over the same period...