Crowd Computing: DIY Inventors Make Their Own Funding Stream

This article originally ran in AVN magazine. To find out more about crowdfunding, attendees at the AVN Novelty Expo and the AVN Adult Entertainment Expo can go to seminars on Jan. 21 at 4pm and January 22 at 1 p.m. in the Paradise Tower of Hard Rock Hotel & Casino. One of the hottest trends in the world of pleasure products is not related to technology or materials, but rather to money. Men’s sex toys, women’s sex toys, figurines, webisodes and books have all sought backers on the crowdfunding scene—some with great success, others … not so much. Established manufacturers, newcomers to the industry and everyone in between have mounted campaigns of all shapes and sizes, and some have managed to exceed their initial funding requests to make their final projects even bigger and better. Among the adult entertainment personnel to try their hand at crowdfunding have been Tanya Tate (for a line of vinyl figures), director Red Ezra (a photo book), fetish performer/director Julie Simone (T-shirts, a book), and the Center for Sex and Culture (an Erotic Reading Circle anthology). But it’s in the field of pleasure products that crowdfunding has really taken off. One early success story was Crave, a company launched in 2011, which Fortune magazine credits with the first crowdfunded sex toy, the Duet. Many others have dipped into the pool as well, with products that include Minna Life’s Limon, the Glov, Teddy Love and the Handie (which is in the funding phase right now). What is the appeal of these attempts? Are there some crowdfunding sites better than others? And can the probable pitfalls be avoided, or are they inevitable? Brian Sloan, creator of the Autoblow 2, relied on backers at Indiegogo.com to try and make his hands-free men’s sex toy a real powerhouse. “I chose Indiegogo because it is the only serious platform that permits funding of adult hardware projects,” Sloan told AVN. “Kickstarter does not permit adult projects and GoFundMe is more for personal or charity funding. Indiegogo is a name consumers can trust in the crowdfunding space, and it is the only major competitor of Kickstarter.” Several others have chosen Indiegogo.com for the same reason, as evidenced by Minna Life’s two campaigns, OhMiBod’s recent foray into crowdfunding and Orgasmatronics’ successful funding request. “We also considered Offbeatr, but they seemed to serve a very specific niche that we didn’t think we fit well enough,” noted Alexandra Ars of Orgasmatronics, makers of the Ambrosia Vibe. The strapless strap-on earned more than 150 percent of its initial funding request on Indiegogo.com earlier this year. Indiegogo.com is an international crowdfunding site headquartered in San Francisco. Launched in 2008, it was one of the first sites to offer crowdfunding, and it allows people to solicit funds for a charity, idea or start-up business. The site runs on a rewards-based system, whereby backers of a campaign receive a small gift for their donation. Typically, the larger the donation, the better the incentive gift. The site has also helped to revolutionized the sex toy industry in the sense that people who believe they have the Next Great Sex Toy no longer have to shop their idea to existing industry manufacturers, but can literally ask friends, family and complete strangers to donate to make it a reality. Additionally, given the recent stand by financial institutions to shy away from anyone and anything related to “adult” or “porn” or “sex,” crowdfunding sites have become a relief to designers and creators. “Bank loans are not available to anyone in the adult space—even for physical products like toys,” said Sloan. “I contacted Bank of America, and even though I’ve been a business customer for the past seven years, paying them thousands of dollars a year in fees, they told me not to bother filling out a small business loan application because of the nature of my products.” Another company that used Indiegogo is Revel Body. CEO Robin Elenga said, “It is a great platform to launch a new company or product. The format allows you tell your story, to validate your marketing approach and generate revenue.  The story of the team can be as important as the product. I regularly run into consumers who saw our campaign, which finished up over a year ago; the story sticks, so get it right.” (Click here for more information on Revel Body.) Brian and Suki Dunham, the husband-and-wife team behind the recognized OhMiBod brand, were already a force in the pleasure products industry, with several established and successful lines of vibrators and more under their collective belts. But the duo didn’t shy away from using Indiegogo.com to fund their OhMiBod Remote App. “Crowdfunding is more interesting from a customer touch point perspective and also because its a fun marketing tool,” Brian Dunham told AVN. “Crowdfunding for us is more about raising awareness than raising money. It also helps the team focus in on the product message and get immediate feedback from potential customers.   “For example, after you hit the primary goal you can set stretch goals and this is a great way to gauge customer interesting for certain product enhancements,” Dunham continued. “In our case, with the app and WiFi-controlled blueMotion panty vibe, the technology and concept was a fairly new concept and using crowdfunding helped us determine consumer interest.”  For Sloan, avoiding banks and small business incubators had another advantage: a worldwide marketing platform for 60 days and money he didn’t need to ever pay back.  “Since there was a lot of interest in our project, Indiegogo featured it both on the homepage and in the top of the technology category, giving us additional exposure to a worldwide audience,” Sloan said. “Plus, crowdfunding is not investment—it’s pre-selling. So I raised $283,000 and just needed to supply our backers with discounted products after I used their money to do the manufacturing. Had I raised the same amount from a private investor, he/she could have fairly asked for 10 percent or more ownership of the entire business. Plus, I would need to repay the investor the original investment.” But it’s not as simple of coming up with an idea, getting together a few gifts and putting a request on a crowdfunding site. In most successful cases, it took months of prep work, which is more time than the crowdfunding appeal lasts. The four people behind Orgasmatronics “spent about two months preparing to launch our crowdfunding campaign,” team member Ars said. “We looked for and hired a PR team with a specialty in crowdfunding. We hired an adult industry consultant. Two members of our team spent time researching what other sex toy companies had done in their successful crowdfunding campaigns. We contacted and chatted with a couple of those companies. We hired two videographers: One created a 3D model video to show what our new product would look like when manufactured, and one created the main campaign video. We hired a photographer to take pictures of our product prototype. Our staff social media expert worked hard to increase our Twitter followers and posted progress updates to generate lots of excitement. The remaining bulk of the work went to creating graphics and text for our crowdfunding page, deciding on perk levels, compiling a long list of press contacts, writing and editing press releases and a media kit, and then sending our PR and kit to all the press on our list and communicating with those who responded. All of that happened before launch.” And then there are the incentives. In some cases, it’s easy to decide what to offer: Buttons, T-shirts, bumper stickers, all the way up to the product itself. But other times, said Dunham, “It’s more of a gut feel for what a good deal might be for the customer.” “We looked carefully at what perks other successful campaigns had used,” added Ars. “We calculated how much money we needed to make on each Ambrosia Vibe product in order to be able to fill the orders post-campaign. We reached out to other adult industry leaders like Courtney Trouble, Buck Angel, CrashPad Series and Erika Moen to ask if they’d be interested in donating items for our perks. They told us the value of their donations, and we added their items to perk levels accordingly. We decided we would start with a few limited, deeply discounted perks to spark excitement at the very beginning of the campaign, creating early momentum. With each perk, we thought about what customers might get excited about owning.” It’s not always easy judging what fans of your products might be interested in owning in addition to the product, noted Sloan.  “Obviously, people who wanted to help fund the creation of a blowjob machine would also want to own one,” he said. “So about 98 percent of our funding came from the pre-purchasing of the machine. We offered T-shirts at first but only had about 10 people buy them. I guess it’s kind of weird to wear around a T-shirt advertising a blowjob machine.” And while Orgasmatronics, OhMiBod and Autoblow 2 all led successful crowdfunding campaigns, they all had ideas about what to do if they launched another campaign. “It was lots of work to lead a crowdfunding project, and I couldn’t have done it without the whole team. I would certainly do it again because it was inspiring to be in such close communication with contributors,” Ars said. “Indiegogo allows potential contributors to message the team running a campaign, and we were able to tailor our stretch goals to meet the requests of early campaign contributors. Next time, I know it will be a little easier because now we have good connections with press, we know what to expect, we know which professionals to hire.” For OhMiBod, Dunham noted, “It would really have to be a new concept in order to gain any sort of traction with press and consumers. Just launching a new product doesn’t necessarily qualify it for a crowdfunding launch strategy.” “Overall, I had a very positive experience on Indiegogo and will probably look there again to fund the creation of our next product, which is in development,” Sloan said. “We got the worldwide exposure we were looking for, the platform helped generate media interest in our campaign, and we raised almost $300,000. “If I had to change anything, I would make our delivery dates more flexible, or at least try to explain to the backers during the campaign that delivery dates for a product that does not exist yet are subject to some degree of change,” Sloan continued. “We delivered about a month late, which for crowdfunding is considered fairly good, as it was the first manufacturing round of a new product. Next time, I will probably put a big note in the campaign asking backers to be a bit more flexible with the delivery date.” Revel Body’s Elenga echoed those sentiments. “The intent of the platform is for people to help fund an idea with the probability of getting a reward or product, but many people on Indiegogo really look at it as a way to buy products at a discount and demand exceptional customer service. People should be prepared to ship to a schedule or fairly quickly after closing the funding round. Tracking shipments to ensure everyone gets the rewards they ordered can be pretty complicated. We had a lot of people order multiple rewards, pay with multiple methods and use multiple email address (think about a MS Access database to track everything). Regular communication is also important.  Missing any dates or expectations will result in a lot of customer service issues and will tarnish your image from the beginning. Like many things it is about exceeding expectations.” Those looking to start an Indiegogo.com campaign of their own would do well to contact the site before they launch, Ars said. Indiegogo.com will work with campaigns in advance to make sure they meet the site’s standards, she said, which reduces the risk your campaign being shut down. And understand, Sloan said, that not every campaign gets fully funded. “I would tell other adult manufacturers that if they are not successfully funded, to heed the advice of the crowd,” he said. “It’s probably not the crowd with the problem, it’s you or your product. I’d stress that crowdfunding should only be used AFTER a product has been developed, prototyped and tested. Funding only an idea or a partially developed product is a recipe for disaster.”