Are you ready to CRUSH kickstarter? If you’re like me, you probably think of crowdfunding as a way to launch your product, using it to raise the money needed to fund the startup. Well, we might be all wrong. Peak Design did it differently, and they are killing it on Kickstarter, having raised more than $16 million across seven projects in as many years. So, what is founder Peter Dering’s secret? Getting the product ready to ship before launching the campaign, then use the campaign to build buzz and sales. Counterintuitive? Yes, and that’s only the beginning. We discuss his crazy early bird pricing concept that drives massive sales, plus margins, shipping, logistics, customer service, how to make a great video, and so much more. If you’re considering using Kickstarter, IndieGoGo or any other crowdfunding system to launch your product, you absolutely MUST listen to this episode. Please welcome, Peter Dering!
This episode is brought to you by HealthIQ, be sure to check out the note at the bottom of this post and see why, as an entrepreneur, that matters for you!
01:40 – Kicking off with $16 million in total kickstart raises. Interested?
03:00 – First, a little bit about the company, its products, and how they started
08:40 – Pivoting from retail to crowdfunding for their first product
11:40 – Why raise money before getting your crowd funding?
16:15 – Outsourcing for logistics, global shipping and customer service.
20:00 – Why Kickstarter? What’s the magic behind creating buzz?
25:50 – Kickstarter now versus then, and what you need to do to succeed
31:22 – More Kickstarter best practices, tips and tactics
33:35 – How to be profitable on Kickstarter…and business in general
35:00 – The importance of video versus descriptions
39:58 – Where they source their music and tips for better video
43:20 – What mistakes have they made?
49:20 – Direct to consumer, selling through retailers & margins
53:54 – Tips for first time crowdfunders
59:28 – Maintaining sales momentum after the campaign ends
1:02:50 – What keeps him up at night?
One of the most counterintuitive ideas Peter has is to get production up and running before your campaign is even over. This means you need capital before you actually get your crowdfunding, but the benefits are multiple. First, you’re able to deliver on time. Any time you’re manufacturing something, relying on external production partners, industrial designers, etc., things will take longer than you expect.
The other benefit is that it lets you deliver early, sometimes even while your campaign is still live. Which creates more buzz and instills confidence in anyone sitting on the fence. This is far more effective than making promises, but at a minimum you should have your R&D done, show proof of concept, and have your manufacturing partners lined up and ready to start. Delivering on past campaigns also helps ensure quick funding for future campaigns.
But what if you’re prepping your first campaign? Peter says be transparent with your process, where you are in that process, and what people can expect.
Other best practices he mentions:
- Be production ready.
- Don’t use Kickstarter as a proving ground. Make sure there’s a market for your product first.
- Make sure your product is profitable, even on early bird deals. Know what your expenses are and make sure those are covered, along with margins. That’s a huge issue with first timers that don’t understand how distribute and retail margins work once they’ve moved past direct to consumer sales.
- Use your personality in the video and show off how the product works and the problem it solves, all while showing who you are as a person. And keep it short; Peter recommends under 3 minutes, which makes it more sharable on social media.
- Use good music.
- Average around a 21% discount off eventual retail.
- Learn how to use early bird deals…see below for a crazy tactic that works!
Peter doesn’t really talk about using the marketing firms that will produce your entire crowdfunding campaigns for you, but those are an option if you can afford them. If nothing else, it might be worth consulting with one or two to see what the costs are, what they think about the viability of your project. It’s another set of eyeballs that could save you a lot of time and money in the long run, especially if a) they plant the seed of doubt and you reconsider launching, or b) if video filming, production, copywriting and photography are not your strong suit.
The flip side of that is what Peak Design does, which is produce everything in house. Much like my conversation with Mike Cotty of The Col Collective, keeping tight control over the filming and editing really lets you push your vision and story through to the end viewer. That said, there are also a lot of good marketing firms that can help pull that narrative out of you and shape it into a great sales pitch. Know your strengths, and your limitations (time, talent, equipment, etc.) and do what’s most likely to bring you success.
Regarding the video itself, they try to do something different than what else is out there. Get creative, add humor and humility, and make it authentic.
Why Kickstarter’s Early Bird Deals Don’t Work
Perhaps the biggest surprise and takeaway from this episode is Peter’s experience using early bird deals. When those deals ran out, sales dropped off a cliff. It’s that scarcity mindset among consumers, which works, but once that urgency is gone, so is the customers’ impetus to buy. So what’s the solution? Get rid of early bird deals? No. Just keep adding more. Peak Design has limited deals and options on their campaigns, and they tell people that when they hit a certain number of early bird orders, they’ll open up more. Despite logic telling everyone that there’s no longer any actual scarcity, it still works.
They average a 21% discount off retail for their early bird deal pricing, which to reiterate, is the only deal they offer.
As they’ve grown, they’ve had to outsource the order processing, packing and shipping to places where the cost of living isn’t so high (like in their home base of San Francisco, CA). I like that they found a company that had the capabilities (Shipwire) and then convinced them they could do more.
When it started, Kickstarter as a marketing vehicle worked really well because it was novel and new. Now, there are a million projects on there and the media has become less interested unless your project is really cool. Which means you need to either have an insanely awesome product, or plan on marketing it well. The former increases the likelihood that crowdfunding platform will be featured both on that platform and in the media. The latter will reinforce those efforts or give you the exposure you need.
Three things you need to know before launching
Peter sums up his best advice into three key points:
- Know how to make the thing you’re selling. He mentions the Coolest Cooler as an example of what not to do.
- Have good margins so that you’re profitable even at the lowest deal pricing you’re going to offer.
- Be authentic, be honest and be yourself.
To which we’d add, keep the lines of communication open. Let your backers and customers know what’s going on throughout the campaign and afterward. Peter mentions customer service, saying you should be prepared to handle customer questions, returns, etc.
Why should you use Kickstarter?
Peter mentions the following as the key reasons he continues to launch new products on the crowdfunding platform:
- Cash flow – you get paid before you ship your product, sometimes even before it’s made.
- Marketing value – it could be newsworthy and get you media attention.
- Sales generation – Peter says 25% of their sales come organically from the platform, meaning new customers found them there.
- Sales tool – it gives them a platform that’s easy to show off your product in an engaging way that you control.
- Better conversion – people are more likely to buy there then on their own website.
- Better engagement – people are more invested in your brand because they’ve invested money in something before they even have it.
Keeping sales momentum going after the campaign
Peak Design uses video to show off their products and features, which lives on long after the campaign. Ongoing video creation ends up on YouTube and their website to help tell their story and showcase features, which become sales tools, too. Getting the product into peoples’ hands does a ton for word of mouth, too, which is why it’s so important to deliver on time and get the product right. Happy customers will show and tell their friends, which could then become new customers for you.
Managing a growing and remote workforce
Peter’s current dilemma is that his workforce is being priced out of their Bay Area (California) home base. And some employees just want to be elsewhere. This is becoming the new normal, and Peter’s idea of having a smaller home base where everyone gathers for short but intense bursts of socializing, networking, brainstorming and meeting, then dispersing back to their homes and quiet places to put their nose to the grindstone and get the hard work done makes sense. We all need these cycles in our work routine to stay fresh. The focused work needs to be broken up by free flowing collaboration and downtime to keep the mind happy and healthy.
Peter’s parting advice? Just go for it. Even if it doesn’t work out, the experience is invaluable and makes for great stories. As in, the kinds of experience and stories that help you get hired if you do ever have to go back to the real world.
Links & Resources
- They use Slack and Zoom for team communication
- Peak Design’s Kickstarter 101 Launch Guide blog post series
- mindStart is their Austin, Texas based customer service center
- ShipWire handles packing and shipping, with warehouses around the world
- RMI in Chicago for warranties, returns and refurbishments
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