In a previous episode of Monetization Nation, I shared an interview with Mark Morris, a Harvard MBA and highly successful business management consultant. This episode is part 2 of my interview with Mark. In this episode, Mark shares stories and secrets about how entrepreneurs and CEOs can leverage crowdfunding platforms and video to raise necessary capital without having to give up any equity.
Monetization through Crowdfunding
Crowdfunding companies like Kickstarter and GoFundMe help entrepreneurs to raise money and keep more control of their businesses.
Mark tells the story of a crowdfunding solution that had been developed to take advantage of social networks to enable fundraising for the Mitt Romney presidential campaign. After Mitt’s campaign ended, there were calls to use this crowdfunding technology to facilitate other types of fundraising. To make the solution more robust, it was integrated with other social media platforms, such as Facebook and YouTube to allow a more visual message to be told and to better facilitate social sharing. That was what started a company named Fundly, one of the first solutions to empower social media fundraising. Mark said that with Fundly, the response rate was 10x higher and the donations were substantially higher.
Mark believes that Fundly illustrated the power of connecting with people who share one of our passions. It also illustrated the power of video to tell a story. When there is a fundraising campaign for a new business product, a family in crisis, or another social cause we care about, video helps capture the emotions and build strong connections that make us want to participate.
Mark feels that these crowdfunding platforms with videos are a tectonic shift in the ability of entrepreneurs to raise funds and test products as entrepreneurs.
Fundly was purchased by GoFundMe.
Crowdfunding Platforms Reduce Risk
Mark believes that crowdfunding platforms reduce the risk for investors and entrepreneurs. When investors look at a company that has gone through Kickstarter and has a lot of support, it is an entirely different value proposition because so much risk has been taken off the table in the deal. One of the biggest risks new ventures face is “Will people buy my product?” When entrepreneurs know there is a high demand for their product, this risk is already overcome. A successful crowdfunding campaign removes risk because it allows entrepreneurs and investors to know that customers are going to be interested in this product.
The Girls Scouts is a great example of this. The Girl Scouts pre-sell their cookies. Then, they know exactly how many cookies to make, and aren’t stuck with unsold inventory.
Crowdfunding Leverages Passionate People
Crowdfunding campaigns can build buzz and momentum for the product or cause, and create a bandwagon effect where people want to buy or donate because they see other people doing so. In some cases, it becomes a herd mentality.
One of the best parts of crowdfunding platforms is that they allow us to harness the power of people who are passionate about our cause, campaign or product, and help those passionate fans share that passion with their connections. This is important because most of our potential customers don’t trust us, and when we reach out to them directly, we are not credible. But, when our passionate fans reach out to their connections for us, it helps the credibility our passionate fans have with their friends and family to flow through to us.
The Power of Video in Crowdfunding
Mark told the story of a student who raised about $100,000 by selling wooden watches. Mark said that the student’s success was all about the video. The watches existed prior to this student. The student didn’t manufacture the watches. He bought and resold the watches, but he told a great story. It was the telling of the story, and the lifestyle portrayed by the video that made people interested in buying it.
Mark explains that most things are not brand new. They have usually existed before, but they are new to us. Mark said there is a difference between a customer saying to themselves “I’m aware that exists,” and “I need that in my life.” That type of awareness is often best achieved through video and not text.
The advantages of video vs. face-to-face sales pitches can include:
(1) allowing the message to scale and reach a much larger audience,
(2) the ability to re-film and get our message right,
(3) editing our pitch to a much more concise and effective message, and
(4) adding emotion-evoking music to our message.
Because of these reasons, I think Mark made a strong point that video is arguably better than face-to-face sales.
Mark talked about videos that go viral because they are funny or strike a chord. He uses the “United Breaks Guitars” video as an example of a video that went viral because it connected with video viewers. Mark believes stories that are funny, emotional, or connect to a common experience are easier to tell with video and song.
Connect with Mark
To connect with Mark and learn more about his consulting services, visit: https://www.linkedin.com/in/mark-morris-1b711b161/.
Thank you Mark for sharing your stories and insights about crowdfunding and video. Here are some of my top takeaways from today’s episode.
1. Crowdfunding platforms can be used effectively to help social causes and political campaigns monetize through donations.
2. Crowdfunding platforms can also be used by entrepreneurs to pre-sell products so they don’t have to give away equity in their businesses. These businesses sell products to get the money they need instead of selling stock.
3. Crowdfunding platforms can lower risks for investors and entrepreneurs.
4. Almost all of the successful crowdfunding campaigns have a video, which helps better capture emotion and build connections.
5. Crowdfunding can cause a bandwagon effect where people want to buy our products or support our cause because they see a lot of other people have already done so.
6. Crowdfunding platforms help bridge the credibility gap by helping our passionate fans share our products and campaigns with their trusted connections, which helps their credibility to flow through to us.
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