Kendall_Almerico

Kendall Almerico is the CEO of ClickStartMe, a crowdfunding company, and is considered to be one of the top crowdfunding experts in today’s industry. He is also a regular columnist for Entrepreneur.com about the subject of crowdfunding and is a well sought after sports agent as well. He appears on the AIPIS show today to explain a little bit more about what crowdfunding is and how you can benefit from it.

Key Takeaways:

3:00 – What is crowdfunding? Kendall explains it’s like a church collection plate. Everybody chips in a dollar and by the end there’s a couple of hundred dollars in that plate.

10:30 – Crowdfunding is going to change in a big way in January. People will be able to invest in a company in exchange for a company’s equity and this big change is bringing up some concerns with venture capitalists.

15:10 – Will there be an upraise of fraud? Kendall says there are many safeguards and regulations to prevent this. He explains in this segment what some of those safeguards are to prevent fraud.

22:20 – Kendall talks a lot about some really cool and innovative campaigns that are on ClickStartMe right now.

27:00 – If you don’t promote your own product yourself, you will not be able to meet your budget goal.  It’s all about networking.

32:25 – Gawker was the first company to start a crowdfunding campaign to buy information for a news story. Kendall believes that there’s going to be more crowdfunded journalism pieces in the future.

36:40 – Be sure to do your homework, the more you prepare before launch, the easier it’ll be to reach your goal.

Tweetables

“Wall Street is the modern version of organized crime. I don’t have faith in WS, I think they defraud people on a regular basis.” Tweet this!

“The first step is someone has to incorporate or create an LLC where they can sell equity.” Tweet this!

“In order to raise up to half a million dollars, you’re going to have a review done by a public accountant of your financial records.” Tweet this!

Mentioned In This Episode:

www.clickstartme.com

Transcript

Jason Hartman:

It’s my pleasure to welcome Kendall Almerico to the show. He is the CEO of ClickStartMe. He’s a lawyer, sports agent, and published author, and serial entrepreneur coming to us today from Tampa, Florida. Kendall, how are you?

Kendall Almerico:

I’m doing great, Jason. Thank you for having me on.

Jason:

Good. Well, crowdfunding is one of the hottest topics going and I’m glad to have you here to tell us more about it today. As I mentioned before we started, we did one other show about crowdfunding as it applies to crowdfunding real estate deals, which I know we’re not quite there on that yet, but maybe you can address that a little bit. We have some shows where we have quite a big following of real estate investors.

You know, people are interested in this for all sorts of reasons. I recently started funding some deals myself on KickStarter, I just, more than anything else, wanted to see how it worked and see what the craze was about. I’m going to get some free goodies in the mail. Well, not free, I paid for them I guess. *Laughter*. Some goodies in the mail pretty soon and some credits for movies or documentaries I’ve helped fund and so forth.

Kendall:

*Laughter*. You’re going to be world famous.

Jason:

I will be world famous. Absolutely. First of all, let’s talk about the basics for those who may have heard of this in passing, what is crowdfunding? We’ll drill down on this, but let’s just start with the basics.

Kendall:

Really simply, pretty much everyone is familiar with the concept of walking into a church and someone passing around the collection plate or the hat and everyone in church puts a dollar or five dollars in and by the end of the time the hat is passed around or the plate is passed around, there’s a couple of thousand dollars. That is crowdfunding. That’s been around for as long as there’s been in any charities. That’s been around for as long as there’s been any churches. People understand that.

Crowdfunding today is doing that same thing, but doing it on the internet. Basically, having the opportunity for a large number of people to give a small amount of money to raise a large amount of money to do something, whether it’s to fund a movie, to create a product, to open a business. It could be done for anything. People crowdfund when they need an operation. It can literally be done for anything, but it’s all the same. It’s a large number of people giving a small amount of money to help somebody out.

Jason:

Fantastic. Well, the analogy of the church is a good one and that makes a lot of sense. Now, isn’t sort of odd that, well I guess it’s not, but with crowdfunding, people can crowdfund things, you know, I guess we call them donations, right?

Kendall:

Yes, I refer to them as donations.

Jason:

Yeah, but the project or the people that created the project being funded, can’t giveaway a piece of the action yet, right? They can’t have crowdfunders share in the profits, but that’s getting closer, isn’t it? Tell us about that part.

Kendall:

Yeah, that’s correct. Right now, if you go on any of the popular crowdfunding sites, whether it’s our site ClickStartMe or KickStarter, as you mentioned, all of the other sites that are out there. The people that are out there selling the product or creating a movie or whatever they’re doing are not allowed to give away apart of their profits or to sell equity, to sell stock in their business. That’s illegal right now. What they can do is they can give away rewards. Like you said, you can get some goodies in the mail, you can get credits in the movies, you can get thank you notes posted on Facebook, but you can’t actually donate money and buy a piece of the action.

Starting at some point in the next few months, you’re going to be able to do that other thing, which is go online and buy stock in a company through crowdfunding website. You’re going to be able to buy a piece of the action online through a crowdfunding portal in, what we call, an equity-based crowdfunding.

Right now what’s out there is what we call reward-base crowdfunding. You give away an award today in exchange for a donation, but in the next few months, we’re going to have..as soon as the Securities and Exchange Commission propagates the rules that we’re all waiting for. It will be legal probably January or February of next year to go online and buy a piece of the next hot tech company or the next hot product that’s coming out by making a donation through a crowdfunding portal.

Jason:

Okay, so what kind of rules the SEC will come out with regarding this or is it just a big secret right now? You know, we’re kind of waiting for that, what’s the big deal? What are they going to do?

Kendall:

Well, I have a lot of insight into this, because as a crowdfunding expert and obviously the owner of a site that creates crowdfunding projects. I’m one of the very few out there that’s going to do both the rewards-based crowdfunding and also do the equity crowdfunding one once it becomes legal. I’m very involved with the process, so I have a pretty good idea.

To simply educate everyone, in April 2012, there was a law passed called the JOBS ACT and the JOBS ACT was passed bipartisan congress. Everyone loves it. They basically said, you’re going to be allowed, legally as of April 2012, to go to a crowdfunding portal online, like what we have at ClickStartMe, and sell stock up to $1 million dollars in a brand new business venture.

Now, everyone went, “Yahoo!” This is going to revolutionize all these business. I mean, Jason, you and I both know, since 2008, you could have the greatest idea in the world and you go over to Bank of America and say, “I need to borrow $100,000.” They’re going to throw you out the door and probably charge you fees just for walking in the door to talk to them. *Laughter*.

You can’t burrow money to start a business, so everyone was very excited about this concept of equity-based crowdfunding being online. That the law said, even though it’s legal right now, it’s absolutely legal as of April 2012, the law said that the SEC, who governs the sale of stock, have to put out rules to tell people how they’re going to be allowed to do those. So, the law actually said they had to do that by January 1st of 2013. Well, I think today, we’re in June 2013 and those rules haven’t been put out yet by the SEC.

So everyone is waiting for these people to go into Washington everyday and complaining about how long it’s taking. No one is moving at the SEC to get them done and the reason that is, I think, the people at the SEC are afraid of what’s going to happen to the general community of fund raising for business when this becomes legally.

All of a sudden, you’re talking a lot of people out of the picture that have made a lot of money selling stock and selling equities and doing things to raise money for businesses starting and you’re saying, you know what, those people don’t have a lot of relevance any more. Now, that same stuff is going to be done on ClickStartMe or on a website.

Jason:

When you say that you’re talking about Wall Street in general or talking about some other component?

Kendall:

Absolutely. We’re talking about Wall Street. Again, this is only up to a million dollars, so the people that are starting the $100 million dollar businesses, this doesn’t apply to them.

Jason:

They’re not affected.

Kendall:

No, not at all, but this is the small business man in America. This is what America is made out of. This is what America’s made out of. This is the guy that wants to start a restaurant and needs $300,000 dollars. This is the guy who has the next great iPhone app and needs $200,000. He can’t raise that money otherwise. Now, he’s going to be able to go on there. So, who’s going to get hurt by that? Well, the venture capital world that would normally be the ones that would come in and take a huge chunk. Well, they’re going to get hurt by this. The big brokerage houses. There’s some affects there and I think that’s one of the things that shall develop.

Jason:

This is in a way that these people can deploy a lot of money. I mean, venture capitalists, you know, their average deal sizes probably $3-7 million dollars for a VC and an angel group might be a half million dollars give or take. So, the angel groups, yes. It competes with angel groups. By the way, angels are people who invest in very early stage startup business if listeners aren’t familiar with the term. Then they have, some of them like certain segments or industry types. Then there’s what they call pure angels, who do anything. They just, they don’t care what industry it’s in, they just wanna invest.

Kendall:

But Jason, let me take it a step further, because you hit the nail on the head. It doesn’t seem like this JOB ACT, this crowdfunding online through equity crowdfunding would affect your typical venture capital group, because your venture capital group isn’t doing one million dollar deals, but here’s how it affects them; when this $1 million dollar deal is done, you now have maybe 500, 1,000 people that have crowdfunded this new business. You now have 1,000 investors in a business.

Jason:

And, they’re not just investors. Wait, they’re supports.

Kendall:

They’re owners of that business. Now, you get to the next stage of that business, where you need to raise $20 million dollars to grow and you go to a venture capital group. Now, the venture capital, you already have a 1,000 investors in this business, we can’t delude their ownership in this business. It’s going to be very difficult for venture capitalist groups to get that next step done, because they’re so many initial shareholders in the business.

That’s been the biggest complaint of the brokerage houses and the venture capital people is that there’s no rules in place as to what’s going to happen once you get past this initial stage and it gets in the VC world or the public offering world or the other worlds where this regulation doesn’t really matter, which can potentially screw those people up a little bit.

Jason:

Well, let me make sure we understand that. So, what you’re saying, if I understand correctly, is that you got these 1,000 investors, in your example, that invested in a business and the business opened the doors, it was successful, it got to the next step where the thought is, “Hey, we should expand further. We should open more locations or franchises it.” You know, whatever. So then, they go to the next stage of funding, which might be a venture capitalist and they say, “Hey, we wanna raise more money. You’ve funded a lot of different businesses in our industry or whatever. Are you interested?” So then, the VCs now face a problem. How do we deal with the first stage investors that crowdfunded the project and you know, do we buy them out, do they stay in the deal, is that the issue?

Kendall:

Well, that’s the concern that I’ve heard over and over from the venture capital world. They don’t know how to deal with that, because they don’t know what rules are going to be propagated by the SEC and you know, think about a typical venture capital firm. They’re not dealing with the company that already has 500+. They’re typically dealing with a company that might have a handful of friends and family, an angel, or what have you, but they’re not usually dealing with that functioning on-going business with a bunch of people that invest $100 bucks. You understand what I’m getting at?

So, now they’re faced with, how do we meld back in the next step of this. There’s ways to do it. I’m not suggesting there’s a problem. All I’m saying is that’s where some of the resistance is come from the SEC putting rules out. They’re trying to make sure all these little steps in the way that have been around for 100 years don’t get throw out with the baby and the bathwater when the new rules come in and say, “Hey, you can get this first million dollars by crowdfunding.” That’s been the concern is addressing that kind of, super technical stuff that you and I or the guy on the street who wants to raise the money couldn’t care less about right now. They just want to get their business started.

Jason:

Right, so let’s just compare this and we’ve got a lot of other things I want to move on to here. Sort of interesting and entertaining, funny stories.

Kendall:

Sure.

Jason:

When you look at the issue of the SEC, one just has to think that this whole area of crowdfunding will just be fraud, with fraud and scams. I’m saying that, lettme just layout my thinking a little bit more on that before you answer, I think Wall Street, that is highly regulated in theory, *Laughter*. You know, it’s very expensive and very difficult to be a public company.

I think Wall Street is the modern version of organized crime. Okay? *Laughter*. I don’t have much faith in Wall Street at all and these big companies, I think they defraud people on a regular basis. They do it many times illegally the way Enron, World Com, Global Crossing, Bernie Madoff, etc.

You know, they also do it legally. I think it’s legalized fraud when Larry Ellison, the founder of Oracle, between 2000 to 2002 takes almost $1 billion dollars out of the company. His personal take out of Oracle and at the same time, his shareholders lost 61%. I mean, it’s crazy these exes get huge bonuses and the shareholders get either miger or negative returns during the same exact period when they’re paying these ridiculous fees. I mean, it’s obnoxious. I mean, you know, that’s legal! That’s not illegal.

Kendall:

Yeah. No, that goes on everyday. Don’t get me started talking about what the banks do to people. *Laughter*. It’s just, you’re absolutely right. To answer the concern. Absolutely there’s a concern about fraud being incorporated into the situation. I will say this, it’s kind of interesting just historically and other communities. It’s legal to sell equity through crowdfunding in several other countries already. It’s being done in Australia and England and there’s not many single reported instances of fraud, yet.

Now, that doesn’t mean it’s not going to happen. You and I both know this is the kind of thing somebody comes into and says, “Oh, wait? I can just put this up online and make money and they’re just going to send me the money and then I’ll just give them the stock and I’ll just run off with it.” Well, it’s not going to be quite that simple. In order to have a crowdfunding portal on ClickStartMe or any of the other websites that’s going to raise money for equity.

They’re still going to be registration requirements and things that have to be done with the SEC. They’re still going to be financial records that have to be produced in order to do this. It’s an abbreviated version of what you’d have to do if you went to a broker dealer and said, “I wanted to do a public, not a public offering, but private placement offering to raise money.”

It’s a very abbreviated version of it, but there’s still a number of safeguards that are actually written into the JOBS ACT. They’re already there. They say you’re going to have to do these things in order to raise a million dollars. Jason, the homeless guy isn’t going to be able to just walk into ClickStartMe, put up a video, and go, “I’m raising money,” and people start sending him a million dollars. It won’t happen that way. There’s going to be a number of steps to go..

Jason:

Well, tell us, can you give us an example of some of those safeguards? I’m curious as to what requirements will they have.

Kendall:

Well, first of all, in order to create, you have to be incorporated. You have to have a company in order to sell stock. So, the first step is someone has to incorporate or create an LLC or something where they can sell equity. Well, again, you and I both know that doesn’t mean there isn’t going to be fraud, but that’s the step someone has to take that requires some legal registration. It requires the assignment of a federal employee number, through the IRS bit, it’s just some work someone has to do just to get a company started.

The second step is, in order to raise up to half a million dollars under the law, under the JOBS ACT, you’re going to have a review done by an accountant, a public accountant of your financial records. So, you have to have, not an audit, which is very, very expensive, but just a review done and a letter from a CTA that says this is the legitimate review and these are the records, the publicly available now records of the business. So, that’s all out there as part of the crowdfunding project.

So Jason, you go onto ClickStartMe and there’s a guy on there who says I’ve got, I just invented the greatest automobile in the world and I wanna raise $250,000 to build the prototype and I’m taking donations at a $100 a piece to sell shares of stock. You’re going to be able see the letter from that CTA firm. You’re going to be able to look at the finances of that business before you invest.

It’s not just going to be lettme click on a button and give you money. Those are a couple of the examples that are built-in to the JOBS ACT that basically make it the same as what someone would do through a broker deal or today to raise money, but in a very, very abbreviated version where it can be done for less money, it could be done cheaper, can be done by pretty much anyone as long as they’re a corporation.

Jason:

Okay, so a corporation or an LLC, I suppose LLCs are probably okay, right?

Kendall:

Yeah, any type of corporation or LLC or even you know, any of the other business entities that exist in any state, I mean, every state have different ones, but whatever entity that exists that you’re allowed to sell ownership interest in within that state that you’re funding and that’s the way that’ll be done.

Jason:

Let’s shift gears for just a moment and then we’ll talk to a few more of these things, but you’re a sports agent and an author. Tell me about that?

Kendall:

*Laughter*. Okay. Well, first of all, I’m probably one of the oldest tech startup people in the world. I’m the grandfather of tech startups maybe, because I just turned 50. So, *Laughter*, I’ve been doing a lot of things for a lot of years. I was an attorney. Practiced law for a number of years, helped people start businesses for so long and help them market their businesses for so long that it was a natural fit for me. As part of my law practice, I was a sports agent, still am, represent some different people in some different sports right now.

I’m representing a driver who’s going to be the first Hispanic, not Hispanic, the first Caribbean driver in the NASCAR Sprint cup series coming up in about three weeks. I’ve represented baseball players and football players and I also wrote a little potty humor book called Whoogles. Sold very well for a couple of years and was in Barnes and Noble. Actually, they’ve been a couple of calenders that have been out since. So, I’ve always been involved in a lot of different things and helping start things and that’s why started ClickStartMe and running it is so much fun, because I get to dabble in a lot of different things that are fun and creative.

Jason:

Sure, yeah. You see a lot of different opportunities with all the projects coming your way. How old is ClickStartMe?

Kendall:

We actually launched in January of this year. So, we are pushing up on our 6-month birthday and that’s been a fun…

Jason:

Well, happy half year birthday.

Kendall:

*Laughter*.

Jason:

How many projects do you have on the website or have you had since the beginning, I guess I should say.

Kendall:

We probably average at any given time between 20 to 30 projects that are on the site. Ultimately, it’s a growing number. In fact, today, we launched a kind of a fun project that went on the site where a gentlemen is doing a..crowdfunding a..it’s kind of a crazy thing, I know we’re going to get a little off topic here, but it just shows how crowdfunding can be done for pretty much anything. This guy on the site, he just put up a project where he’s actually crowdfunding to buy a diamond-encrusted baby high-chair for Kim Kardashian and Kayne West’s baby that’s going to be born.

Jason:

Yeah, I heard about that. $12,000 or something?

Kendall:

Yeah, it’s actually getting a lot of publicity and it’s kind of a fun crazy thing now. In reality, I think it’s just, for a most part, a publicity stunt, but it’s also an interesting name, because he’s taking the money if he doesn’t raise the full…

Jason:

That’s Trent Silver, right? It’s funny. I had him on my show just two days ago. What a small world.

Kendall:

Oh yeah! *Laughter*. How funny. He’s actually, it’s a really interesting thing, he’s actually going to, you know, if he doesn’t raise the amount of money, he will give all of it to this children’s hospital that is the Kardashian’s choice of, you know, charity. It just shows you there’s a lot of different things. That’s going on right now, but just as that’s going on I have a band that’s funding their next cd that’s on there. We have a film that’s about gang warfare in South Carolina by an award-winning young filmmaker that’s being funded on the site.

We have a product, a couple of products that are being funded. They’re just about to go up on the site that are really interesting, new, cool inventions. It just shows the crowdfunding world is all over the place. There’s so many different things that people can do with it and that’s what so exciting about it. There’s really no limitations on what you can do at this point, because you’re not selling equity. You’re basically giving away something in exchange for a donation.

Jason:

So, did you wanna give number of projects, I’m just kinda curious. Those are interesting as can be. And you guys basically just take a percentage, right? That’s what KickStarter does, that’s what all the crowdfunding platforms do, right?

Kendall:

Everyone of the sites is pretty much the same. Everyone charges you one way or another for credit card processing. They might heat it up as part of their fee or they may cut it out separately, but all the donations that come through these sites come through credit cards. So, everyone’s going to charge for that fee that they have to pay for credit card processing.

Then everyone on top of that charges between 5-10% of whatever money is raised to run the site. So, you’ll typically see, whether you’re on KickStarter or ClickStartMe or anywhere else that the fees come out of every dollar that’s in or somewhere between 8 cents and 10 or 11 cents. Somewhere in that ball park. So, basically you’re getting 90 cents on the dollar pretty much on every donation.

Jason:

Alright. You know, can you differentiate some of the different platforms at all like when, if someone’s listening and they have a project they want to crowdfund. Why should they use your company versus one of the other platforms out there or are they..do certain platforms sort of specialize in certain areas of the market or you know, there must be differences, right?

Kendall:

Sure there are and absolutely. To answer the Question Jason, everyone should use ClickStartMe for everything. No! I’m just kidding. *Laughter*.

Jason:

*Laughter*.

Kendall:

I’m a realist and there are projects that probably make more sense to be on somebody else’s site. I mean, for example, when you have a site that has..KickStarter is famous for funding major Hollywood pictures, movies. If a major Hollywood person wanted to come on ClickStartMe and fund their movie, they would have probably the same level of success on ClickStartMe as they would on KickStarter for one reason. That is, these projects promote themselves.

You know, let’s say for example, George Lucas said, “I want to fund Star Wars 7 through crowdfunding.” George Lucas could put that on any crowdfunding site and raise whatever the millions of dollars that he wants to raise, because it’s George Lucas saying, “I wanna raise this money.” Now, independent filmmaker who’s never made a movie before, who doesn’t have an social network, who doesn’t have any context out in the film world, says, “I need to raise a half million dollars for a movie.” The odds are on a site like ClickStartMe that’s just started, it’s going to be a much harder sell than if they went on a site like KickStarter, where people have gone on there looking for films to fund.

I’m a realist about that. The fact though is, all crowdfunding is based on the project owners’ own promotional activities. If you aren’t out there promoting what you’re trying to raise money for. If you’re not out there pushing it. The chances of someone who’s just going to stumble upon this crowdfunding project, whether it’s on KickStarter or ClickStartMe is very small. 80% to 85% of the general public don’t even know what crowdfunding is still, so if you think that you could just say, “I’m going to create an independent film about how to make a couch. It’s the most interesting film in the world and I’m going to go raise a half million dollars and I’m going to put it on KickStarter and I’m gonna raise a half million dollars just by creating a project.” It will never happen. It won’t happen.

However, if you want to make the same film and you happen to have a 1,000 social media friends who are followers of yours, that like what you write about, that understand the couch that you’re going to do is really interesting, you can go on any site. If you’re pushing to those people and asking them to push it out to their friends and asking them to ask their friends to push it out, you can raise that money on any site and that’s been proven over and over.

To answer your question, all sites have different things. There are sites that are out there that are very niche orientated. They only do raising money medical expenses. They only do raising money for creating new music, but the fact is, they’re all based on the project owner being able to promote the project themselves. If you don’t have a project owner that’s out there promoting the project themselves with very limited circumstances like George Lucas or some product that captures the fancy of America, most of those projects are going to be the same on pretty much any site.

Jason:

I totally agree. I mean, anybody who wants to do anything, obviously having a networking of followers,  a tribe as Seth Godin puts it, will certainly help you, because you’ve got an instant audience there. The thought came to mind when you mentioned George Lucas, like if George Lucas did put a thing up there and you know, some of these people who have posted movie projects like the Veronica Mars one was pretty interesting a while back, I kinda think, hey George, why don’t you fund your own movie? What do you need for? I’ll pay $10 to go and see it or probably $15 because you’ll stick it in IMAX 3D. *Laughter*.

Kendall:

Right. *Laughter*.

Jason:

But, you know, it’s kind of ridiculous that he’s asking. That’s sort of my thought on one hand.

Kendall:

There is a big lash when Zach Braff came out with his KickStarter project to fund his movie that most people thought was a sequel to Garden State, which is a very popular smaller movie that did very well. There was a big back lash, but he still raised a couple of million dollars.

I’ve actually heard him at times and he makes some very good points, “First of all, I am putting in a million dollars of my own money in this film, but by having this additional funding from people, I am A) giving them the opportunity to have their name in the credits and I’m making..” In the case of his project, he was actually making a monthly video and online magazine that was just available to his donors where they could watch the movie being created behind the scenes. No one else would have access to this.

He was giving them something in return for their donations, so yeah, there’s a whole lot of people who criticize, you know, here’s a rich guy who’s trying to raise money, why doesn’t he do it himself? First of all, if I was a rich guy and I wanted  to raise money for something and people wanted to give me money, that’s America. You know? *Laughter*. That’s Donald Trump is out raising money all the time for various different things. That’s what businesses do.

Jason:

Yeah, but the idea of Trump raising money, he’s doing it through a private placement or something and he’s sharing the equity, which is coming to crowdfunding, but it’s not there yet.

Kendall:

You’re absolutely right, but you know, again, it depends what you’re doing I guess is what it comes down to, Jason. I agree with the criticism. It sounds kind of crazy to see, you know, if George Lucas were to do this, there would be a huge backlash. I think when you have someone with a huge fan base like Veronica Mars..I tell you, there’s been a couple of projects on KickStarter that failed miserably recently.

Melissa Joan Hart, who played Sabrina the Teenage Witch on television tried to fun a million dollars for a movie on KickStarter. She raised less than $30,000 and had to shut it down. These things fail just as often as the ones that we see that are popular and are in the news, because again, if people aren’t enamored with the concept, if they don’t think it’s something that’s worth giving to, they don’t give money. Sometimes the backlash works and sometimes it doesn’t.

Jason:

Yeah, very interesting. Well, tell us, just quickly, about the recently story about Gawker that was in the news. That’s kind of interesting. Here you have another example, you have a successful news media organization, Gawker.com. They crowdfunded, I guess there was no backlash against that. I mean, it seems like that Gawker would have some money, they should pay for their own stuff, but you know, what did they do?

Kendall:

*Laughter*. Well, Gawker. Basically what happened was, one of the writers, one of the people run Gawker saw a video that was being basically trying to be sold by several unsavory characters of, allegedly, the Toronto mayor, Rob Ford, smoking crack. These unsavory characters wanted to sell this video to Toronto Star, the legitimate newspaper in Toronto and to anybody who would pay for it, but they wanted $200,000 for the video. You and I both know, Jason, there is a tabloid media industry out there that pays for photographs and stories every day. This isn’t anything new, that there’s someone out there trying to sell us a story or sell photographs or sell a video. The National Enquirer, they pay for that stuff every day.

So, they go to Gawker, Gawker says, “$200,000? Well, let’s see if the public wants to see this.” They put a crowdfunding project up online, on a website, and they raised $200,000 to buy the video through crowdfunding, people giving $10 dollars here, $25 dollars there. They raise the money to buy the video. It’s been an extremely interesting..this all happened in the last couple of weeks. Extremely interesting used of crowdfunding, because now you’re talking about journalists going out, if you want to call Gawker journalist, you’re talking about journalists going out and saying, “Okay, this is the way we’re going to raise money to get a story.”

That’s something that’s never been done before, but Jason, if the National Enquirer paid $200,000 for this video because they thought it was worth it, they’re making that money from people somehow. They’re either raising advertising rates or subscription rates or whatever, the money is coming from the public to do that anyway.

So, there’s been no backlash against it, but I think it’s fascinating that they were the first people to use crowdfunding to do something that was really unique. I think the biggest backlash has been, people think that there’s $200,000 that they’re going to go to some unsavory characters like a drug dealer, who why should those people be getting that money to portray this major in such a bad light? That’s what’s so interesting about it to me, should you be paying people at all for this? Is this..

Jason:

Well, it’s legal to pay someone for a news story, right?

Kendall:

Absolutely, absolutely. Nothing illegal about that.

Jason:

No, no, it is. It’s a very interesting story. So, you’ll think we’ll be seeing a lot of crowdfunding in journalism, I assume then? Now that Gawker broke the ice.

Kendall:

Yeah. Not only that, you’re already starting to see people that are starting to crowdfund journalism in general, because you have newspapers shutting down and television stations are having their staff disappear. You’re actually seeing people that are putting up websites that are being crowdfunded, putting up newspapers or newsletters that are being crowdfunded that are news sources and saying, “Look, we need the money to create this so we can give you this niche piece of news or this niche piece of newsletter.” You’re actually starting to see that also, which is the way the journalism world is going, you’re going to see that more and more as time goes on.

Jason:

If someone’s listening to this or they’ve heard about crowdfunding, they’re excited about it. They want to do this, they want to use this in their business or start a new business with it or maybe they just want a nose job. *Laughter*.

Kendall:

*Laughter*.

Jason:

I mean, there’s all sorts of funny things that people can do. Right? You know, how do they learn how to do it right? Can they hire a crowdfunding coach? If they do their first project and they just don’t position it correctly or they try to raise too little or too much money or don’t get enough exposure. I mean, the project could just be a flop and it won’t work out. What do they do to do it right the first time?

Kendall:

Absolutely. You hit the nail on the head, Jason. That is the single biggest criticism that KickStarter has had from day one is that KickStarter provides this wonderful form and they’ve had some great success stories, but they don’t do anything to help you. They don’t teach you how to create your project. They don’t even tell you why they reject your project when it’s rejected for the most part. You’re kind of are on your own to copy what other people have done to try and figure it out. So, there’s a whole lot of criticism online and blogging about how they were kind of, people were sort of left out in the cold trying to figure this out.

One of the things we did when we created ClickStartMe was we said we will actually do hands-on for you. Not only do we have blogs and videos and tutorials to walk you through every step of the way to show you how to do it the right way, but we’ll actually get on the phone with you. One of our trained staff members will get on the phone with you and tell you, “This is something that needs to be done, this is something that needs to be fixed.”

We’ll re-write your project for you. We’ll actually write your Facebook posts and Tweets for you. You know, giving that kind of hands-on help is something that no other site does. Now, there are businesses that are out there that are starting to crop up that will do this for you, for a feee. Yeah, you pay them $1,500, they’ll do the whole thing for you. One of the things we decided at the beginning, this is something people want/need, we’re going to provide it to them if they ask for it and if they need it as a free service as part of what we do.

Jason:
What else would you like people to know in closing? We’ve gone a little longer than expected here and I don’t want to keep you too long, but the website is obviously ClickStartMe.com. You know, just anything else you’d like people to know?

Kendall:

No, I think the one thing that I’d tell people that are interested in ClickStartMe and any crowdfunding whether it’s through ClickStartMe, our site, or any other site is to do your homework and to figure out what you want to do the right way before you start. If you just go one and half hazardously do this, it may or may not work, but it’s destined to fail. There are a lot of resources out there, I have a lot of videos on YouTube.

You know, if you Google crowdfunding expert, I’m all over the place on the internet. All kinds of tutorials, all kinds of things. Learn about the process, because the more you know about it, the more you prepare before you launch, the better chance you have of actually raising the money. There’s more work goes into getting it ready to go than actually happens once it starts going and if you do that part right, you got a great chance to raise the money; whether it’s on ClickStartMe or any other site.

Jason:

Good stuff, well Kendall. Thank you so much for joining us today and shedding a little more light on this very hot new trend.

Kendall:

Thank you very much, Jason, for having me, I really appreciate it.