Difference between revisions of "The Slow Funds Movement"

Latest revision as of 13:56, 23 July 2012

Participants

Rick DeVos

Rick runs a number of projects focused on Grand Rapids, MI: ArtRise, Momemtum, and most recently Start Garden, which has eclipsed the first two. All three of these projects are local and focused on investing in the community.

Jay Lee

Jay runs a startup called Smallknot that does hyperlocal crowdfunding to support local businesses. Small businesses put up pages on Smallknot, use the platform to raise funds in their local community, and then pay their supporters back (in full plus interest) in goods and services.

Stephanie Pereira

Stephanie is the Director of Art at Kickstarter. Her focus is on reaching out to artists and helping them develop successful Kickstarter campaigns, and she shares a number of examples of projects that have a done a good job engaging funders in meaningful and innovative ways.

Panel Discussion

Scalability

The Slow Food movement gets critiqued for being too boutique, which hurts scalability. Is this a danger for slow funding?
A big part of crowfunding is getting funders involved beyond just giving money. Is there a point where we'll be oversaturated with these personal beyond-economic transactions? For example, sometimes it's too tiring to deal with Couchsurfing, and you just want Airbnb or a hotel.

It's easier to scale slow funding because there aren't the same material and logistics costs with funding, and there are a lot of layers of involvement available. Projects really work on a human scale. Sometimes the demand for funder involvement can be overwhelming, but you have the choice to be more or less involved, and decide whether or not to fund something.

Elitism and the Digital Divide

Another problem the slow food movement has encountered is elitism and silos that lock other people out, with the digital divide what demographics do you see missing from your platform and what is your plan to engage people?

Startgarden and Smallknot have both had great success reaching a broad range of people, especially Smallknot because it leverages the existing customers of a business (and it's the responsibility of the business to reach out). Stephanie points out that Kickstarter's most active cities are the usual suspects (major metropolitan areas), but that there is also a lot of excitement in places like Missoula, Montana that people wouldn't predict.

Slow Funding

Can you tell us about the slow money movement? (directed at Jay)

The slow money movement is tied to the slow food movement, and came out of trying to finance local food. It's been around about 3 years, and Woody Tash from Investors Circle wrote a book (Inquiries into the Nature of Slow Money).

Audience Q&A

Failure

I'd love to hear about your failure rates. Especially Kickstarter, we always hear about success rates, how many fail, what happens to them?
What about accountability - is the failure rate of Kickstarter so high because people aren't held accountable by face-to-face interactions?

Successful crowdfunding is really about getting people involved - people who take responsibility for reaching out and getting people engaged have very high success rates. For example, on Kickstarter once you get a single donor your probability of success goes from 44% to over 50% - it meas you are telling people and getting them engaged. Smallknot projects have 100% success rate for businesses that are actually reaching out to their networks and maintaining relationships. Rick adds that we don't need to plan for everything or mitigate the 5-year failure rate, we just want to get things started.

As far as accountability, social capital plays a huge part in all three areas. There is a social contract between projects and their funders, and it really is effective. People care about providing value to the people supporting them.

Replication

Scale vs. replication - do you want to grow nationally or have clones and things happening?
How do you feel about others copying or replicating your projects somewhere else? Where do you draw the line?

Replication and replicability are real goals for Smallknot, because solutions need to be tailored to communities, not one-size-fits-all. Start Garden isn't focused on anything outside of Grand Rapids, but is open to being replicated elsewhere. Kickstarter is not offended by clones - the goal is to make the world more exciting. It doesn't take away from anyone to have more services trying to do good.

Value Exchange

One of the things I worry most about is long-term planning and sustainability. Are there ways to translate these ideas about crowdfunding into a long-term sustainability model?
Rick does investment, Jay and Stephanie do barter. What about donation?

Engagement is the key to sustainability, and the process of running a campaign helps a lot with building the long-term sustainability model. Amanda Palmer is a great example of this, she goes to her fans over and over again to create something with them and continuously engages them and thinks about what they want. People have funded sequels on Kickstarter, which shows that if you manage a project well you are getting fans, not just money. If you provide value to people, they will keep funding you; it's not about asking them to give money, it's a value exchange.

The Digital Divide

Do people who are not online have an opportunity to get involved in things like small business development? Is there an option for people who don't have access or who are blocked by the digital divide?

Smallknot, for example, is a technology company at heart. It's difficult to monitor and track funds that don't go through their system, and building an offline platform that's scalable to small businesses is really difficult to do. There are also ways to engage people offline - Smallknot businesses advertise in their stores, people do offline Kickstarter activites where they hold parties and events with an admission price. Crowdfunding doesn't have to be digital.

Curation

The role of curation in the context of funding: you still have to be approved to have a Kickstarter campaign, there is vetting. How much gatekeeping, if any, should platforms be doing to be a democratic funding model?

There are lower barriers to entry than people think - ArtRise is extremely open, Smallknot only requires that you be a business, and Kickstarter accepts more than 80% of ideas. Projects that aren't accepted tend to be pitching an idea, not an actual project, and are usually accepted when they come back with more direction. It's about putting good energy into your project.

Project specifics

Where did the money for Start Garden come from?

Startgarden was funded by private investors.

Startgarden has chosen $5000 amounts, I'm curious about what's typical for the other 2 platforms, what is the scale?

Close to half of projects on Kickstarter are in the $1,000-5,000 range and 2/3 are under $10,000, and $10,000 is about the highest that Smallknot has seen. Within the Awesome Foundation, many international chapters ask how to handle exchange rates and the rule of thumb is "enough to get something done but not enough to fight over".

@@ Line 1: / Line 1: @@
 {{TOC right}}
+For liveblogged transcripts of this talk, see the [http://civic.mit.edu/blog/rahulb/awesome-summit-2012-slow-funds MIT Center for Civic Media blog].
 == Participants ==
-=== Rick Devos ===
+=== Rick DeVos ===
-* Grand Rapids, MI
+Rick runs a number of projects focused on Grand Rapids, MI: [http://www.artrise.com/ ArtRise], [http://momentum-mi.com/ Momemtum], and most recently [http://startgarden.com/ Start Garden], which has eclipsed the first two. All three of these projects are local and focused on investing in the community.
+=== Jay Lee ===
+Jay runs a startup called [http://smallknot.com/ Smallknot] that does hyperlocal crowdfunding to support local businesses. Small businesses put up pages on Smallknot, use the platform to raise funds in their local community, and then pay their supporters back (in full plus interest) in goods and services.
+=== Stephanie Pereira ===
+Stephanie is the Director of Art at [http://www.kickstarter.com/ Kickstarter]. Her focus is on reaching out to artists and helping them develop successful Kickstarter campaigns, and she shares a number of examples of projects that have a done a good job engaging funders in meaningful and innovative ways.
-==== ArtPrize =====
+== Panel Discussion ==
-* giving away prizes to artists - have to be over 18, have to show art somewhere within a 3 sq. mi. area, public votes to allocate the prizes
-==== Momentum ====
+=== Scalability ===
-* YCombinator-like accelerator
+* The Slow Food movement gets critiqued for being too boutique, which hurts scalability. Is this a danger for slow funding?
-* started a prototype called 5 by 5 night, team selects 5 ideas, each gets 5 slides + 5 minutes, a panel of judges selects how to allocate $5000 between those groups
+* A big part of crowfunding is getting funders involved beyond just giving money. Is there a point where we'll be oversaturated with these personal beyond-economic transactions? For example, sometimes it's too tiring to deal with Couchsurfing, and you just want Airbnb or a hotel.
-==== StartGarden ====
+It's easier to scale slow funding because there aren't the same material and logistics costs with funding, and there are a lot of layers of involvement available. Projects really work on a human scale. Sometimes the demand for funder involvement can be overwhelming, but you have the choice to be more or less involved, and decide whether or not to fund something.
-* Building on previous ideas, put ArtPrize and Momentum on ice
-* For-profit
-* Start with $5000
-=== Jay Lee ===
+=== Elitism and the Digital Divide ===
-==== Smallknot ====
+* Another problem the slow food movement has encountered is elitism and silos that lock other people out, with the digital divide what demographics do you see missing from your platform and what is your plan to engage people?
-* just graduated out of TechStars New York, team of 5
-* want to change small business financing through community
-* Operating in NYC and Greenville, SC
-* Want to spur small business growth in a grassroots, decentralized way
-* Empower communities
-* Smallknot works as a hyper-local crowdfunding platform
+Startgarden and Smallknot have both had great success reaching a broad range of people, especially Smallknot because it leverages the existing customers of a business (and it's the responsibility of the business to reach out). Stephanie points out that Kickstarter's most active cities are the usual suspects (major metropolitan areas), but that there is also a lot of excitement in places like Missoula, Montana that people wouldn't predict.
-** Business puts up a page on Smallknot
-** people donate
-** Business takes the money and repays it in kind - with goods and services to the community
-* win-win-win
-** businesses repay in kind, for much cheaper ($0.30 or $0.40 on the dollar), investors get disproportionate repayment
-** strengthens the community
-* Small businesses are important, we need to support those
-** We can send money across the globe
-** But it's really hard to get it from you to someone down the street through traditional means (like bank loans)
-** There's no way to build the community you want
-* Reclaiming our neighborhoods, reclaiming our community
-* Cash mobs: like flash mobs, but instead of dancing people give money to local businesses to show support
-** Ex: show up at a local business and everyone spends $20 on something
-=== Stephanie Pereira ===
+=== Slow Funding ===
-Director of Art Program at Kickstarter
+* Can you tell us about the slow money movement? (directed at Jay)
-===== Kickstarter =====
+The slow money movement is tied to the slow food movement, and came out of trying to finance local food. It's been around about 3 years, and Woody Tash from Investors Circle wrote a book ([http://www.slowmoney.org/book Inquiries into the Nature of Slow Money]).
-* 13 categories
-* "the cool thing about the internet is that it's redefining local"
-* Kickstarter is a place to test ideas
-* sharing some stories of Kickstarter projects
-** international reach
-** directly engaging with the people who care about what you're making
-** connecting people over a topic area across the internet
-** helping communities push and grow creative ideas
-== Question and Answer ==
+== Audience Q&A ==
-* Slow food movement gets critiqued for being too boutique - is that also true for your projects? (scalability)
-** Jay: Demand is what drives scale, and once more people get engaged costs go down, and transport and prep issues don't apply to finance
-** Rick: There are different levels of involvement, there are layers of involvement
-** Jay: You can even argue now that the financial system doesn't scale
-** Stephanie: What we're seeing is that everyone has an idea, small or big, which makes it very human-scale
-* Do you think there is a point where we'll be saturated with these personal beyond-economic transactions? Ex: couchsurfing vs. air bnb, sometimes it's too tiring to deal with couchsurfing, sometimes people want a less entangled transaction
+=== Failure ===
-** Stephanie: Sometimes you want air bnb, sometimes you want the hotel. Sometimes you look at projects and you will just wait and see, sometimes you're really excited. It's about helping people connect on those many levels.
+* I'd love to hear about your failure rates. Especially Kickstarter, we always hear about success rates, how many fail, what happens to them?
-** Christina: So it's about offering that spectrum of choices
+* What about accountability - is the failure rate of Kickstarter so high because people aren't held accountable by face-to-face interactions?
-** Rick: Our desire for stories is bottomless
-** Jay: If it happens, it's a good problem to have, if everyone is too engaged we're in a good place
-* Another problem the slow food movement has encountered is elitism and silos that lock other people out, with the digital divide what demographics do you see missing from your platform and what is your plan to engage people?
+Successful crowdfunding is really about getting people involved - people who take responsibility for reaching out and getting people engaged have very high success rates. For example, on Kickstarter once you get a single donor your probability of success goes from 44% to over 50% - it meas you are telling people and getting them engaged. Smallknot projects have 100% success rate for businesses that are actually reaching out to their networks and maintaining relationships. Rick adds that we don't need to plan for everything or mitigate the 5-year failure rate, we just want to get things started.
-** Rick: Startgarden just launched in April, we've been seeing a broader age range than we expected
-** Jay: We see people recruited through businesses networks, so the demographics shift by project and they're driven by the offline world so we don't see that divide
-** Stephanie: It's happening organically. the slow food movement analogy totally holds
-* Jay, can you tell us about the slow money movement?
+As far as accountability, social capital plays a huge part in all three areas. There is a social contract between projects and their funders, and it really is effective. People care about providing value to the people supporting them.
-** Jay: It's tied to the slow food movement, setting up financing opportunities for slow food businesses. It's been around about 3 years, book by founder: Reflections on the Nature of Slow Money.
-* I'd love to hear about your failure rates? Esp. Kickstarter, we always hear about success rates, how many fail, what happens to them?
+=== Replication ===
-** Stephanie: Comes up a lot, stats are published live. Average site-wide is ~44%, it varies from category to category. Some learn from it and go via another avenue, some immediately re-try (with pretty high success rate).
+* Scale vs. replication - do you want to grow nationally or have clones and things happening?
-** Jay: From our part, we see people viewing crowd funding as magic. We have a high dependence on local networks, people who have put effort into building networks and doing outreach have a 100% success rate, those who expect it to just come to them have a harder time.
+* How do you feel about others copying or replicating your projects somewhere else? Where do you draw the line?
-** Stephanie: What we do know from our stats is that if someone gets even 1 pledge they have over a 50% success rate, goes up even more if they get to 30%.
-* Where did the money for Startgarden come from?
+Replication and replicability are real goals for Smallknot, because solutions need to be tailored to communities, not one-size-fits-all. Start Garden isn't focused on anything outside of Grand Rapids, but is open to being replicated elsewhere. Kickstarter is not offended by clones - the goal is to make the world more exciting. It doesn't take away from anyone to have more services trying to do good.
-** Private investors
-* Christina: Advice Joi Ito - always think about how much work it takes to say no. Sometimes it's easier to give a blanket yes.
+=== Value Exchange ===
-** We don't need to plan for everything or mitigate the 5-year failure rate, let's just get things started.
+* One of the things I worry most about is long-term planning and sustainability. Are there ways to translate these ideas about crowdfunding into a long-term sustainability model?
+* Rick does investment, Jay and Stephanie do barter. What about donation?
-* Scale vs. replication - do you want to grow nationally or have clones and things happening?
+Engagement is the key to sustainability, and the process of running a campaign helps a lot with building the long-term sustainability model. Amanda Palmer is a great example of this, she goes to her fans over and over again to create something with them and continuously engages them and thinks about what they want. People have funded sequels on Kickstarter, which shows that if you manage a project well you are getting fans, not just money. If you provide value to people, they will keep funding you; it's not about asking them to give money, it's a value exchange.
-** Jay: Our real goal is replication, replicability. Initially aimed at large cities, but doing more research into hyperlocal, it's smaller cities where people are the most engaged in their community. We're trying to find ways to let the model replicate, not build a one-size-fits-all. Goal is to build self-sustaining communities.
-** Rick: We're specifically about Grand Rapids, but we're open to hearing about ideas from other places. But we want it to benefit West Michigan.
-* How would you feel about someone replicating Startgarden somewhere else?
+=== The Digital Divide ===
-** That would be great. We hear about people replicating artprize through Google alerts, it's great.
+* Do people who are not online have an opportunity to get involved in things like small business development? Is there an option for people who don't have access or who are blocked by the digital divide?
-* Stephanie, what is your take? There are lots of Kickstarter-like services now.
+Smallknot, for example, is a technology company at heart. It's difficult to monitor and track funds that don't go through their system, and building an offline platform that's scalable to small businesses is really difficult to do. There are also ways to engage people offline - Smallknot businesses advertise in their stores, people do offline Kickstarter activites where they hold parties and events with an admission price. Crowdfunding doesn't have to be digital.
-** Stephanie: We're really focused on what we're doing, we're excited to see people making things in the world. Our attitude is that it's about enabling more opportunities for people, so if other services are trying to do the same thing as us all the better. I don't think it takes away from us.
-* You can plead the 5th, but where would Kickstarter would draw the line?
+=== Curation ===
-** Stephanie: I think you'd have to ask our lawyer.
+* The role of curation in the context of funding: you still have to be approved to have a Kickstarter campaign, there is vetting. How much gatekeeping, if any, should platforms be doing to be a democratic funding model?
-* One of the things I worry most about is long-term planning and sustainability. Are there ways to translate these ideas about crowdfunding into a long-term sustainability model?
+There are lower barriers to entry than people think - ArtRise is extremely open, Smallknot only requires that you be a business, and Kickstarter accepts more than 80% of ideas. Projects that aren't accepted tend to be pitching an idea, not an actual project, and are usually accepted when they come back with more direction. It's about putting good energy into your project.
-** Stephanie: You're almost answering your own question. The process of running a campaign helps a lot with building the long-term sustainability model. Amanda Palmer is a great example of this, she goes to her fans over and over again to create something with them and continuously engages them and thinks about what they want. People have funded sequels on Kickstarter, if you manage a project well you are getting fans, not just money, and can keep engaging them.
-** Jay: Engagement is the key. If you provide value to them, they will keep funding you. We require that people provide value, not just $100 t-shirt. There's no sense of a donation involved, it's a fair transaction. It's not about asking them to give money, it's a value exchange.
-* You (Rick) do investment, and you do barter. What about donation?
+=== Project specifics ===
-** Stephanie: Getting something of value is important, we really want people to getting a return on their investment. It's like going to the movies - you pay $12 every time, you don't go "oh I already gave that movie theater money".
+* Where did the money for Start Garden come from?
-** Rick: We thought from our perspective, culturally it would make more sense to be a business investing in businesses. We didn't just want to give a whole bunch of grants at once.
-* How are people held accountable to doing their projects?
+Startgarden was funded by private investors.
-** Stephanie: The thing that has impact on what people deliver is how invested everyone is in the project. If you talk with people and engage them along the way, they will support you with money and social capital.
-** Rick: We were thinking about social collateral when we put together the 5 by 5 night. Soft agreement that people needed to come back with an update in a few months. Similar concept with Startgarden, contract includes making people come to an update night to check in.
-** Stephanie: I really want to underscore that social contract thing. Comes up a lot at Kickstarter, especially when projects are overfunded. People are invested in the investment of their backers, they get excited about the enthusiasm of their backers.
 * Startgarden has chosen $5000 amounts, I'm curious about what's typical for the other 2 platforms, what is the scale?
-** Stephanie: Close to half of projcets on Kickstarter are in the $1000-5000 range. 2/3 under $10k.
-** Christina: A lot of international chapters ask how to translate currency and we say enough to get something done but not enough to fight over.
-* Do people who are not online have an opportunity to get involved in things like small business development? Is there an option for people who don't have access or who are blocked by the digital divide?
-** Jay: It's sort of a difficult question. At heart, we are a technology company. It's difficult for us to monitor and track funds that don't go through our system, building an offline platform that's scalable to small businesses is really difficult to do.
-** Christina: Do stores advertise that they are running Smallknot campaigns in their stores?
-** Jay: Yes
-** Stephanie: There are ways to engage people offline, people throw parties and have donations for example. (examples of traditional fundraisers)
-** Rick, Jay: We do see a lot of offline activity. It's a great side effect, collateral.
-* Role of curation in the context of funding: you still have to be approved to have a Kickstarter campaign, there is vetting. How much gatekeeping, if any, should platforms be doing to be a democratic funding model?
+Close to half of projects on Kickstarter are in the $1,000-5,000 range and 2/3 are under $10,000, and $10,000 is about the highest that Smallknot has seen. Within the Awesome Foundation, many international chapters ask how to handle exchange rates and the rule of thumb is "enough to get something done but not enough to fight over".
-** Rick: Our tolerance is pretty high. For Artprize there is a huge range, international art exhibits vs. chainsaw bear carving, there is a spectrum. Getting comfortable with that is important. We really have two channels: public vote and our team. Public vote has picked things that our team would never have chosen, and sometimes they see things we don't. If you're opening up to the point where you're a little bit scared, that's a good thing.
-** Jay: The real point comes down to the idea of accountability. We let the crowd source the ideas as well as fund the ideas. The guidelines we set is between a business and not a business, we let a lot of the vetting process happen on the ground.
-** Stephanie: People don't really realize how permissive Kickstarter is, ~80% acceptance rate. A lot of that 20% is people who have a vague idea, not an actual creative project. It's about the idea and doing something, not the content but whether or not it's resonating with people. We don't think of ourselves as a donation platform, so exchange of value. Community value. And if those things are happening we're happy to recommend it. It's about putting good energy into your project.
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