The failure rate for crowdfunding campaigns is a scary statistic that gets thrown around often, and not necessarily without good reason. Success is hard to come by on a number of metrics. As of May 2017, roughly 64% of Kickstarter campaigns failed to meet their funding goals. And by the company’s own estimates, an average of 9% of their successfully funded projects fail to ever deliver. This says nothing of the projects that are funded and then find themselves faced with production delays, shipping issues, and increasingly frustrated customers.
An increase in personal charitable crowdfunding sites, often used to raise money for medical expenses or other personal tragedies, have also contributed to the perception that crowdfunding carries more risk than reward - buyer beware. All of that combines to create an environment in which it’s harder than ever to run a successful crowdfunding campaign, much less convert it into a growing company. But success doesn’t have to be accidental, and stable companies have been incubated through Kickstarter.
StandDesk is one of those companies whose roots started in crowdfunding, and whose success has carried far past the end of the campaign. On its surface, StandDesk’s line of affordable, automated sit-to-stand desks had all the hallmarks of a classic Kickstarter campaign: a clever one-off product that offered a solution to a problem people didn’t realize they all shared. And the inaugural 2014 StandDesk campaign indeed resonated, hitting its $50,000 fundraising goal in just 38 minutes, and raising almost $650,000 by the end of the Kickstarter campaign. Since then, the company has grown to become a team of more than twenty people across multiple continents, with distribution centers in Southern California, and its sales have grown year over year.
Yet no one knows better than StandDesk founder Steven Yu that crowdfunding success doesn’t have to be accidental. Even now, in a fundraising marketplace that’s become extremely crowded, creating a successful company from a Kickstarter campaign doesn’t require a complicated formula of luck and virality. It does require planning, agility, and a boatload of forward-thinking, even if it feels far too early to dream ahead.
StandDesk hit its funding goal of $50,000 in the first 38 minutes of their campaign
Use Crowdfunding to Test Market Fit
When Yu was workshopping the idea for the StandDesk, the feedback from friends and family was unanimous: a simple standing desk solution was something that was immensely popular. Similar desks on the market were either unaffordable or perched at a fixed height, and by building an automated sit-to-stand desk, Yu, a back pain sufferer himself, had offered a solution for both pain sufferers and the sedentary. Yet the first group of investors Yu spoke with didn’t have the same reaction - despite some interest, none seemed overly interested.
“The importance of [using] Kickstarter wasn’t just about raising money,” explains Yu. “For me, it wasn’t even about the money, it was about product market fit. Money just proves a concept, and you can always get money somewhere else.”
After sorting through the crowdfunding landscape in late 2013, Yu and his small team selected Kickstarter as the platform for their launch. After a marketing campaign that included hours upon hours of preparation, pitching and securing media outlets on the StandDesk story in the weeks leading up to the campaign, StandDesk’s Kickstarter campaign launched on April 2, 2014. It only took the company 38 minutes to reach their goal of $50,000.
“Kickstarter was really the focus, because it allowed us to ask questions like ‘Will this model work? Are people interested in this? Is there product market fit?’” says Yu. He says that the success of the campaign also gave the team a sense of confirmation that had become destabilized when early investor reactions had gained little traction. By blowing past funding goals to raise just under $650,000 by the end of the campaign, Yu felt that backers weren’t just expressing a fleeting interest in a clickable campaign, but legitimately putting their money where their mouths were.
“The Kickstarter was really a way of doing market research. Yes it was about money, but it was also an easier way of [doing research] than taking a full analytical market research campaign,” says Yu. “What’s most important is product market fit. In any business you need to find that. And if you can find that, that’s one of the many challenges you face, but at least you’ve accomplished the first milestone.”
The StandDesk Kickstarter campaign organically rose to number one on Hacker News after its launch
Have a Long-Term Plan in Place Before Day One
When using crowdfunding, it’s easy to want to curb expectations in advance about funding. With funding success hovering only around 30%, and production often being the largest hurdle to timely fulfillment, planning even as far as sending out the first batch of product can feel herculean. Yu - a perfectionist by nature - ultimately agreed with StandDesk advisors that sticking to a tight production schedule was of tantamount importance, even if certain features, like a cable management tray, hadn’t been perfected yet. But Yu, an alumnus of USC’s Marshall School of Business, knew that his campaign had to think much further than cable trays and Kickstarter to succeed.
“We prepared more than most Kickstarter campaigns. Most inventors don’t really think through all the steps that need to be taken and how to launch steps in sequence in order to have a company,” says Yu. “My business background allowed me to really plan things out. I knew we needed to have a fulfillment center. I knew we needed to have a website, and customer support; all the things that round out your business. After we got our orders, I was on the first flight back to the factory [where we built our desks], and we just started going after it to build product. But in tandem, I knew I needed people to also be focusing on questions like ‘Where’s the warehouse going to be? Do we want to headquarter in California?’”
Delayed production timelines have become so problematic that just this month, Kickstarter launched a program, following in the footsteps of IndieGogo, that helps product creators learn more about the production process. The efforts grew out of complaints that too many campaigns on the various crowdfunding platforms weren’t able to see their production through, making investing risky across the entire ecosystem. Early on, StandDesk seemed poised to face those same hurdles. Shortly after launch, Tesla got in touch with the company, and requested a few thousand units. Procter & Gamble followed in suit, inquiring about how shortly they could receive a thousand units at their offices. Virgin Airlines and other Fortune 500 corporations weren’t far behind. Falling behind on production was not an option - but for Yu, neither was falling behind on planning ahead.
While Yu stationed himself in China to oversee production of the desks, a team of four StandDesk employees in the states focused on the other operational hurdles the company was facing: how many distribution centers to set up, how to lower the shipping costs of a bulky product, and finding workarounds for production bottlenecks. Ultimately, StandDesk fulfilled 95% of their orders - a metric of success that’s significant amongst Kickstarter campaigns focused on hardware. Says Yu, “For a product as large as ours, being able to build an operational company - a necessity in e-commerce - was extremely important.”
It took months of testing, iterating, and fine tuning to ramp up production on the first batch of StandDesks
Perfection is a Good Goal, Until it Isn’t
Yu describes himself as a Type A perfectionist, who became near obsessive in trying to find exactly the right suppliers and manufacturer for the first run of StandDesks - exactly the type of behavior that can derail production timelines for new entrepreneurs, and has crowdfunding platforms wary. On top of that, he began tinkering with the accessories he felt StandDesk customers would be bullish about having: cable trays, keyboard racks, and the like. That strategy is how Yu found himself visiting every manufacturer in Asia who had any experience with standing desks, as well as a handful of European companies, before settling on the right set of suppliers for the components of his desk.
“I wanted to make sure the desk was very high quality; something that consumers could enjoy and that wouldn’t break, and that would outlast any other product on the market. If you do that, then you can scale,” says Yu. “That’s a platform you can start building on top of, so I made a conscious decision to continually work with the best partners and build the highest quality of high value standing desks on the market.”
Yet for all that tinkering, Yu quickly learned that perfection was a goal that would have to come in stages. Advisor Mike Zhang suggested to the team that sticking to a tight production timeline, rather than getting bogged down in accessories, was far more important than shipping a fully loaded first batch behind schedule. The cable management tray was customizable with the first production batch, and extra accessories, including power solutions, drawers, and casters, would be developed shortly thereafter, available to original purchasers as a discount add-on, and as a customizable option for an increasingly hungry future customer base. By eschewing ultimate perfection in the short term, StandDesk hit its fulfillment goals at a 95% success rate, which gave the company word of mouth buzz and leverage not only to build out the product line, but to monetize and scale quickly.
“We already knew that [the original price tag] was just an entry point for us,” says Yu. “That was not something that was going to be sustainable forever. We never wanted to build a business in that direction because it’s just a race to the bottom.”
Ultimately, Yu’s goal is to make the everyday work environment happier and healthier
Meet a Bigger Need
It might seem like StandDesk is a one-trick pony. Since its 2014 launch, the company has sold, well, desks. It’s created a few iterations of its original desk, including an automatic desk riser for those who aren’t parting with their original desks, and a slew of anti-fatigue and ergonomic office accessories have been developed for StandDesk users and non-users alike. But for the most part, the company has seemingly hewed to its original concept of standing desk-related merchandise. But building a strong presence in the workplace wellness space isn’t about a desk. For Yu, it was about solving a bigger problem he and many friends faced in the workplace; that day-to-day back and body pain was killing their creativity and productivity. By asking more friends and family if they felt similarly, Yu quickly realized he’d stumbled onto a problem many people face in one way or another: their working lifestyles were precluding them from working.
“StandDesk is going to be one of those products that sits under [the umbrella] of ergonomics, but the bigger vision in the near future is to transform the way that people work,” says Yu. “Back in our parents’ era and still even in our era now, the office is a place where you literally are sacrificing your health for productivity. Everyone kind of knows [and accepts] this. We think that this is the sacrifice we need to give in order to provide and to make a living. But I think we can do a much better job than that. How can we transform the workplace into a place where you are coming to make a living and be productive, but also one where you can boost your health? Ergonomics is just one element of that.”
Using that idea - what would make people happier and healthier at work? - has been a guiding principle since then. Even the customizable options that the company is developing for their core product are intended to fit a need; U-shaped desks and platforms that are horizontally adjustable are on the horizon not just as an easy upgrade, but because as Yu quickly realized, “Everyone has their own idiosyncrasies and things that they actually like when they work at their desk.”
Yu has been focused on other ways that the body can be kept healthy as StandDesk expands as well. Studies linking lighting quality to diminished health in the workplace led the company to begin to create a line of ergonomic lighting solutions. The company plans to expand further into ergonomic solutions to fitness and health in the workplace, as well as productivity. And though the company’s reach may grow past ergonomics, into areas including workplace nutrition, it all ties back to the original goal Yu envisioned for StandDesk, years before the launch of his kickstarter campaign.