Mitch Gitelman was the speaker at the June 2012 NWEN
Breakfast Buzz. Mitch is the Studio
Manager and a partner at Harebrained Schemes Studios LLC. Jordan Weisman, CEO of Harebrained Schemes,
was also scheduled to speak, but was unable to attend.
Mitch spoke about the crowdsource funding of Shadowrun Returns, a 2D turn-based RPG (role playing game) for tablets and PCs. Jordan Weisman originally created Shadowrun as a pen and paper RPG in 1989. Shadowrun was a tremendously popular game. As CEO of Harebrained Schemes, Jordan decided he wanted to relaunch the Shadowrun franchise for the digital, Internet world.
Kickstarter is a crowdsource funding website for creative projects. Kickstarter allows creators to go directly to the people that will ultimately be their customers. The way Kickstarter works is that the funding seeker sets a fund raising goal and gets a certain amount of time to raise that money. The funding seeker makes a pitch on the Kickstarter website. Mitch and Jordan put a video on Kickstarter to help them make their pitch. People go to Kickstarter and pledge money to the projects pitched on the website. If the funding seeker raises the specified amount of money in the allotted time, there is an opportunity to raise even more money. If the funding seeker does not meet the time and/or money constraints, she doesn’t get anything. With Kickstarter, there is no promise on the part of the person making the pledge to deliver and there is no obligation on the funding seeker to deliver.
Crowdsource funding Shadowrun Returns is one of the most fun adventures Mitch has been on in his life. It took them 25 days to shoot the Kickstarter video. As they were in a crunch to get another game out the door at the same time, everyone at Harebrained Schemes was working 15 hour days. They loved it!
Mitch and Jordan had a fund raising goal of $400,000, but were able to raise $1.9 million through Kickstarter. Mitch shared what he learned from his Kickstarter crowdsourcing experience with us.
Vision, Clarity and Confidence
1. Inspire them with your vision. Mitch and Jordan knew their audience was the old school game crowd.
2. Illustrate that vision for them. Mitch and Jordan relied on nostalgia, memory and references to similar things.
3. Prove that you can realize that vision. Say how you are going to do it. Give a sense of security that you can deliver.
People will only invest in your idea after you have invested. People at Harebrained Schemes made a huge emotional investment in reviving the Shadowrun franchise.
Know What You Are Making
1. Research. Have you done this before? If not, study others who have. There were very few others for Mitch and Jordan to study. Those interested in crowdsource funding should study the Kickstarter website, specifically studying both winners and failures.
For Harebrained Scheme’s pitch on Kickstarter, Mitch had the idea of doing a documentary-type video about putting Shadowrun Returns together. Mitch sent Jordan an email about it. Usually Jordan responds to Mitch’s emails immediately, but didn’t respond to this email. Mitch knew then that they had to do that video. Mitch said that if it’s scary, run towards it.
2. Budget Development Carefully. With crowdsourcing, you have one chance to set the number. There is no going back to the well. In addition, your reputation is on the line. Another piece of wisdom Mitch shared is that you can weather any storm – it’s all about getting up in the morning.
3. Include the Costs of Fundraising. You have to offer some swag to incentivize people to pledge in the higher tiers and to make them feel like they are part of the event. You need to give people a sense of being in the journey with you and investing in your vision. All of that swag has costs associated with it, which must be properly calculated. For example, Kickstarter and Amazon have to take their cut.
4. Don’t Forget Marketing. There is marketing for the funding and marketing that occurs after that.
Research Funding Examples
1. Look at similar projects. What worked and what didn’t?
2. What funding ranges work?
3. What reward prices worked? Graph the revenue per price point. Mitch and Jordan had price tiers that went from students all the way up to $10,000. The $10,000 slots were limited to 3, as it included having someone from Harebrained Schemes fly to the contributor’s home and put on a role play. The 3 $10,000 slots were grabbed up immediately, making Mitch think they should have offered a few more.
4. What reward items and content worked? Mitch and Jordan had a couple of reward tiers that didn’t work.
5. What elements of the videos worked? It’s extremely important to listen to customers and backers and make adjustments based on their feedback. There were a number of different online forums following the Shadowrun Returns Kickstarter crowdsourcing project. Mitch and Jordan hired people to go to these various websites and track numbers on the types of comments made.
6. What elements of the text and graphics worked?
Work Out COGs
1. Digital distribution.
2. Design and management costs.
3. Cost of goods. Low volume = high costs. Choose swag that can be produced in enough quantity to make the price affordable.
4. The three horsemen of the funding apocalypse: picking, packing and shipping. Mitch and Jordan wanted to get people from the $100 price tier to the $250 price tier. They came up with the idea of a box set that included USB dog tags. For the USB dog tags, they set a price of $175, which they thought was fair.
1. Keep the video professional, but personal.
2. Keep it simple,
3. Hierarchy of information. Make important points first.
Market the Funding
1. Bring your audience to the funding site.
2. Use social media to spread the word. There are other social media sites than Facebook. “Like my page” sounds desperate and comes off as desperate.
3. Reach your audience where they live, both online and offline. Mitch and Jordan knew where Shadowrun fans hung out on the Internet. Try to figure out what kind of people are in your audience and go to those people.
Respond to Your Audience
1. Answer questions promptly. Determine what your approach will be, so that outgoing communications from your company are consistent.
2. Say “thank you” personally.
3. Constantly participate in the dialog.
4. Regularly publish new content. People would tell them stories about the meaning of Shadowrun in their lives. Mitch and Jordan put up a giant fan website to build community and keep the fan base engaged.
5. Sleep when it’s over.
6. Beware of stretch goals. Harebrained Schemes hit its initial goal in 28 hours, giving it the opportunity to raise more money in the time left. In the stretch, don’t over-commit on development. For example, Harebrained Schemes had to retract on the idea of a multi-player game. They were honest and direct in telling Shadowrun fans that they were sticking to the original vision of a single player game. The community respected Harebrained Schemes for this. Poorly-researched rewards can also be a problem in this phase.
The Costs of Crowdfunding
1. Websites’ share.
2. COGs and 3 horsemen.
3. Community management.
4. Accounting and taxes.
5. Early adopter audience has already bought. You can’t rely on the early adopters to contribute again, because they won’t.
1. The floodgates have opened and the novelty is over in crowdsourcing. It is now a crowded marketplace.
2. Potential for fraud.
3. It’s red-hot right now, but the forecast is chillier. Some big name is likely to fail at crowdsourcing by not delivering. This will likely lead to a big brouhaha, followed by the creation of greater consumer protections.
In response to audience questions, Mitch made the following points:
Mitch and Jordan did not feel constrained by rules in putting together their Kickstarter crowdsourcing project.
The Shadowrun game takes place in the city of Seattle. When Harebrained Schemes retracted its position on the multi-player game, they made up for it by committing to add a second city. The backers get to vote on what city will be added.
Ninetendo and Sega fans loved the music that went along with those games. Harebrained Schemes contacted these fans. Harebrained Schemes has also lined up the composers for the Nintendo and Sega versions to work on Shadowrun Returns.
Thanks, Mitch, for a thorough and entertaining presentation on crowdsource funding.