Indiegogo's Open Platform: Democratization Versus Strategic Dominance - Episode Hero Image

Indiegogo's Open Platform: Democratization Versus Strategic Dominance

How I Built This with Guy Raz · · Listen to Original Episode →
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TL;DR

  • Indiegogo's initial strategy of focusing on film campaigns, mirroring Amazon's book-centric approach, was a deliberate choice to gain traction before expanding to a broader range of funding needs.
  • The 2008 financial crisis forced Indiegogo to bootstrap for three years, enduring 93 investor rejections before securing its first significant funding round.
  • Indiegogo's commitment to an open platform, allowing any project to be funded, was a core philosophical tenet, intentionally avoiding becoming a gatekeeper despite potential profitability concerns.
  • The company's pivot to accepting all types of campaigns, not just film, led to immediate "hockey stick growth" and demonstrated the market's demand for a truly democratized funding platform.
  • Founders' personal experiences with financial instability and loss shaped Indiegogo's mission to provide equitable access to capital, driving their resilience through numerous challenges.
  • Indiegogo's eventual acquisition by a gaming company for an undisclosed sum highlights a missed opportunity to consolidate various crowdfunding verticals under its brand.

Deep Dive

Indiegogo's origin story reveals a fundamental tension between democratizing access to capital and the practical realities of scaling a business, demonstrating how early ideals can be tested by market forces and internal conflict. The founders’ journey from personal frustration to a global platform highlights the power of conviction, but also the missed opportunities that arise from rigid adherence to initial principles when faced with growth and competition.

The genesis of Indiegogo was rooted in the founders' personal experiences with inequity and a desire to dismantle traditional gatekeeping in funding. Slava Rubin’s childhood loss and financial instability, coupled with Danae Ringelmann’s observations of her parents’ struggles and her own disillusionment with Wall Street, fueled a shared vision for a more accessible financial system. This vision solidified during business school when Slava’s suggestion to leverage the internet, inspired by platforms like YouTube, fundamentally shifted their approach from a democratic fund to an online crowdfunding platform. Initially, the founders bootstrapped the company with their own savings, a testament to their belief in the idea, and famously faced over 90 investor rejections before securing their first funding round in 2011, a significant delay exacerbated by the 2008 financial crisis.

The platform’s core ethos of an "open platform" where "the people decide what deserves to get funded" was a deliberate choice to avoid becoming the gatekeepers they sought to disrupt. This philosophy, while ideologically pure, created significant downstream challenges. Initially focusing on film campaigns with a "fully funded or no money" model, Indiegogo later expanded to all types of projects. This expansion, while driving rapid growth, presented challenges in managing quality and ensuring profitability, especially as the company lacked the capacity to vet every campaign. The founders’ commitment to openness meant they largely eschewed curating campaigns, even those that might have been more likely to succeed, prioritizing their mission over maximizing immediate revenue. This open approach, while appealing to a broad user base, also meant Indiegogo missed opportunities to dominate specific verticals as competitors like Kickstarter, with a more curated model, and GoFundMe, with a specific focus, gained traction. The founders’ eventual departures and the company’s acquisition by a gaming platform underscore the long-term consequences of prioritizing an open, broad platform over strategic consolidation and vertical dominance, suggesting that while Indiegogo democratized access, it ultimately diluted its potential to become a singular leader in the burgeoning crowdfunding space.

Action Items

  • Create a framework to evaluate the impact of "gatekeeper" decisions on outsider ideas, referencing Indiegogo's mission to democratize funding.
  • Audit the initial Indiegogo launch strategy (Sundance event, "go go bucks") to identify transferable tactics for new product launches.
  • Draft a runbook for managing co-founder conflict, incorporating lessons learned from Danae and Slava's differing communication styles.
  • Analyze the pivot from film-specific to open crowdfunding and identify 3-5 key decision points that enabled rapid growth.
  • Measure the impact of Indiegogo's "all or nothing" funding model versus an "any amount" model by comparing campaign success rates and user retention.

Related Episodes

Key Quotes

"We had this uh genius idea in q1 we were going to launch by q2 we were going to have momentum and then we were going to raise money in q3 2008 the market crash happened in 2008 and that idea went right out the window."

Slava Rubin explains that their initial plan for launching and raising funds in 2008 was immediately derailed by the global financial crisis. This highlights the precariousness of their early venture and the significant external economic factors that impacted their strategy.

"From what I gather while I know you went to college at at unc in chapel hill -- and and you went initially i guess you studied pre med and and and that didn't work out obviously because you're not a doctor you decided not to do that but i guess while you were in college your parents' business basically went belly up."

Guy Raz recounts Danae Ringelmann's early life experiences, including her initial pursuit of pre-med and her parents' business failure. This sets the stage for understanding how personal and familial financial struggles influenced her later entrepreneurial drive.

"And here i was sitting at my analyst desk and i think i almost started to cry this was a man in his 60s who had been working his whole life bringing small productions to life both movies and small theater productions yet he was begging me someone with no experience just the right name on the card for money right and that just felt so wrong."

Danae Ringelmann describes her emotional reaction to a struggling theater producer seeking financing from her, an inexperienced analyst. This moment reveals her deep-seated sense of inequity and her burgeoning desire to create a more accessible funding system.

"And i go into my okay here's what i want to do with with this idea to help basically bring more projects to life but with a more democratic twist and you said well i remember this slava you probably do too if you really want to democratize access to capital why aren't you using the internet."

Danae Ringelmann recalls a pivotal conversation with Slava Rubin at the Golden Gate Bridge, where Rubin challenged her initial idea for democratizing capital. Rubin's suggestion to leverage the internet marked a significant shift in their thinking towards building a crowdfunding platform.

"We had this uh genius idea which was we were going to in q1 we were going to launch by q2 of 2008 we were going to have momentum vcs are suckers for momentum and media so we were going to have media in q3 and then we're going to raise money in q3 2008 off of our momentum and our media the market crash happened in q3 2008 and that idea went right out the window."

Slava Rubin details their initial strategy to build momentum and media attention before seeking venture capital in Q3 2008. He explains how the market crash that same quarter completely invalidated this plan, forcing them to pivot and self-fund.

"Philosophically we couldn't become the gatekeeper otherwise what's the point of all of this fair enough we were trying to accomplish something in the world and the thing that we were trying to accomplish is to have an open platform where people can have the world decide what deserves to get funded not move you know who the decision maker like denay said."

Slava Rubin explains the founders' commitment to an open platform philosophy, even when faced with business challenges like the risk of unfunded campaigns. He emphasizes that their core mission was to empower the public to decide which projects deserved funding, rather than acting as gatekeepers themselves.

Resources

External Resources

Books

  • "Hollywood Meets Wall Street" - Mentioned as a networking event that exposed Danae Ringelmann to producers seeking financing.

Articles & Papers

  • "How I Built This with Guy Raz" (Podcast) - The source of the episode detailing the founding of Indiegogo.

People

  • Danae Ringelmann - Co-founder of Indiegogo, discussed her background and role in the company's founding and growth.
  • Guy Raz - Host of "How I Built This," interviewed the founders of Indiegogo.
  • Noah Wilson Rich - Founder of Best Bees, featured in a small business spotlight segment.
  • Slava Rubin - Co-founder of Indiegogo, discussed his background and role in the company's founding and growth.
  • Eric Schell - Co-founder of Indiegogo, introduced Danae and Slava and was instrumental in building the platform.

Organizations & Institutions

  • Airbnb - Mentioned as an example of a successful platform business and as a place where Guy Raz has stayed.
  • American Express - Sponsor of the "How I Built This" podcast and featured in a small business spotlight.
  • Audible - Sponsor of the "How I Built This" podcast, offering a free trial.
  • Berkeley - University where Danae Ringelmann and Eric Schell attended business school and developed the initial ideas for Indiegogo.
  • Best Bees - Company founded by Noah Wilson Rich, featured in a small business spotlight.
  • Claude - AI tool mentioned as a thinking partner for Guy Raz in his creative process.
  • Code.org - Organization that was funded by Indiegogo, mentioned as an example of its legacy.
  • Gamefound - Crowdfunding platform for board games that acquired Indiegogo.
  • How I Built This - The podcast series featuring the story of Indiegogo.
  • IBM - Company mentioned in relation to AI and business transformation.
  • Indiegogo - The primary subject of the episode, a crowdfunding platform.
  • International Myeloma Foundation (IMF) - Organization Slava Rubin partnered with to raise money for myeloma research.
  • JPMorgan - Company where Danae Ringelmann worked in finance.
  • New York - City where Slava Rubin lived and worked before co-founding Indiegogo.
  • Ravensburger - European gaming company that backed Gamefound, which acquired Indiegogo.
  • Stripe - Company mentioned for its role in processing global GDP and its infrastructure for businesses.
  • Sundance - Film festival where Indiegogo launched its platform.
  • Vanta - Company providing AI and automation for security and compliance, mentioned as a sponsor.
  • Wondery - App and platform where "How I Built This" can be heard early and ad-free.

Websites & Online Resources

  • Airbnb.com/host - Website mentioned for learning how to host on Airbnb.
  • Audible.com/built - Website mentioned for a free 30-day Audible trial.
  • Claude.ai/hibt - Website mentioned for experiencing Claude as a thinking partner.
  • Go Amex.com/bplat - Website mentioned for learning more about the American Express Business Platinum card.
  • Stripe.com/startups - Website mentioned for learning how Stripe can help businesses grow.
  • Vanta.com/built - Website mentioned for a discount on Vanta.
  • Wonderry.com/survey - Website mentioned for filling out a survey.
  • guyraz.com - Website mentioned for signing up for Guy Raz's newsletter.
  • guyraz.substack.com - Substack newsletter for Guy Raz.

Other Resources

  • Crowdfunding - The concept and practice of raising money from a large number of people, central to Indiegogo's business.
  • Equity Crowdfunding - A type of crowdfunding where investors receive equity in the company.
  • Perks - Rewards offered to contributors on crowdfunding platforms, used by Indiegogo as an incentive.
  • Web Three and Crypto - Emerging technologies mentioned as areas ripe for innovation in crowdfunding.

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