Kickstarter: Perry Chen (2018)

In the early 2000s, Perry Chen was trying to put on a concert in New Orleans when he thought, what if fans could fund this in advance? His idea didn't work at the time, but he and his co-founders spent the next eight years refining the concept of crowdfunding creative projects. Today Kickstarter has funded over 155,000 projects worldwide. PLUS for our postscript "How You Built That," we check back in with Dustin Hogard who co-designed a survival belt that's full of tiny gadgets and thin enough to wear every day. (Original Broadcast Date: July 31, 2017.) See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

  Hey, Happy New Year, everyone. If you're listening to this podcast on December 31st, it is the last day of the annual Public Radio fundraiser, so please pitch in right now. When you give to your local public radio station, you are showing your support for our show. So go to donate.npr.org/built to get your contribution counted for 2018. And thanks. OK, now, on to today's show. If you happen to be planning a brand-new project or launching a new idea in the new year, we thought you might get some inspiration from my interview with Perry Chen. He launched Kickstarter in 2009, and a year later, Time named it "one of the best inventions of the year." This episode first ran in July of last year,

• 0:45Guy Raz?

  and I hope you enjoy.

• 0:49Guy Raz?

  Weren't you getting stressed out that somebody else is going to beat you to the punch and do the same thing?

• 0:55Speaker 01

  I think that certainly comes to mind. But I think there's also, like, we couldn't have tried to go any faster. There was just-- not that much was in our control.

• 1:03Guy Raz?

  Hmm.

• 1:04Speaker 01

  We didn't have a lot of money. We didn't have a lot of influence. We didn't have a lot of connections. So we're moving as fast as we could, and that's kind of as-- that's as much as you can do.

• 1:18Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 1:32Guy Raz?

  I'm Guy Raz, and on today's show, how Perry Chen built Kickstarter, and with it, a culture of crowdfunding ideas that might have never gotten off the ground.

• 1:48Guy Raz?

  You know, there's a kind of mythical narrative around startups, especially if we're talking about tech startups. And it goes something like this. Founder has an idea. Then founder recruits some friends. Then friends sit in a room and start writing code. And then they try to get the app or the website out to the world as fast as possible. And then-- Then it just explodes. It blows up. Millions of customers sign up and investors start beating down the door. But today, we have a somewhat different story. This is the story of Kickstarter, and it did, of course, start with an idea. But it took eight years before that idea became a reality.

• 2:31Guy Raz?

  The three co-founders did build a website, but none of them knew how to code. And they spent years refining the concept before anything even went live. And they were working with a very small amount of money.

• 2:43Speaker 01

  It's a path less traveled. It is much less likely to succeed. It's not how I would recommend anybody attempt to do this.

• 2:51Guy Raz?

  This is Perry Chen, one of the co-founders of Kickstarter. Perry grew up in New York City, but he went to college in New Orleans, where he was really into the local music and art scene. And after he graduated, he came back home to New York. And like a lot of college graduates, he really didn't know what he wanted to do. But he knew one thing: he needed to find work.

• 3:13Speaker 01

  I came back to New York, and at the time, I'd been DJing a bunch in New Orleans, and I had started to work on my own music. I applied to some record labels, like, you know, send my resume, to whatever the worst job they have is where you're like, you're just stacking CDs on a shelf. Like, you're opening boxes and you're stacking CDs. And, you know, of course, I never heard back. And so that just didn't happen. I don't think I had any idea. And then I heard from somebody that they said that a guy we knew at school was looking for warm bodies.

• 3:42Guy Raz?

  To do what?

• 3:43Speaker 01

  To, of all things, day trade.

• 3:47Guy Raz?

  Did you know anything about the stock market?

• 3:49Speaker 01

  Nothing.

• 3:50Guy Raz?

  Nothing? He just needed people to, what, to show up and to, like, click buttons?

• 3:55Speaker 01

  Yeah, you know, I think at this time, in early 99, it was kind of wild times in the stock market. And so I went down. I talked to him for 10 minutes.

• 4:07Guy Raz?

  He had like an office in Manhattan?

• 4:09Speaker 01

  It was like a large room. You know, it was like an open floor. People were dressed in jeans and t-shirts. Mostly guys, mostly under 40. And, you know, he talked to me, and he's like, OK, fine. You know, he's like, you come in, you know, we'll train you for five days.

• 4:27Speaker 01

  Then you just go trade. We'll put a small amount of money in your account. You just trade. You know, there's no clients. You're not selling anybody anything. It's just this guy's money.

• 4:34Guy Raz?

  Wow.

• 4:34Speaker 01

  He's like, if you do well, you know, you'll get some of it. And if you don't, just don't worry about it. And then, you know, that's it.

• 4:41Guy Raz?

  Yeah.

• 4:42Speaker 01

  You know, they were like, you'll get, it was something quite modest, like $2,500 a month, you know? I mean, listen, it was, you know, beggars can't be choosers. I was like, sure.

• 4:51Guy Raz?

  And what? What happens?

• 4:53Speaker 01

  Well, literally, you just get sat down in front of a computer and you're just sitting there by yourself and you can just buy or sell stuff.

• 5:00Guy Raz?

  And you were basing your decisions on like, what? On reading the Wall Street Journal?

• 5:04Speaker 01

  No, not at all. I mean, it's, you're buying and selling something in a minute or

• 5:08Guy Raz?

  Oh, wow.

• 5:08Speaker 01

  or five minutes, you're holding it. You don't, you might not necessarily know the name of the company. It was like a combination of Mario Brothers and surfing, which I've never done. But you're kind of looking out in the ocean, I assume, and I see a wave coming. So you're like, OK. It's simple. It's a little instinctual. And I did it for maybe a little less than two years or so.

• 5:32Guy Raz?

  And did you walk away from it with some, with some cash?

• 5:35Speaker 01

  Yeah, with a little bit. I mean, nothing crazy, but definitely decent for somebody in their twenties. But, you know, after a while, I mean, I was kind of like, what am I doing? You know, I'm not doing anything. I'm not helping anything. I mean, at best, what I'm doing is neutral. I mean, I'm not selling somebody on anything. So the traders like to think that they're providing liquidity, like it's some great service. But, you know, it's, you're doing nothing. You're shuffling some numbers from one computer to another. So, yeah, I decided to go back to New Orleans. It's much cheaper than New York. My intent was to just kind of really focus on working on music, to get better as a producer, as a composer, and kind of pick up jobs here and there if I needed it.

• 6:16Guy Raz?

  Did the idea of Kickstarter come to you at that time?

• 6:21Speaker 01

  I think so. I think it was, I always say late 2001, early 2002, because to be honest, you know, I can't, I can't fully remember. But, you know, in New Orleans, there's Jazz Festival. It's kind of one of the two big moments of the year that, you know, other than Mardi Gras. So I wanted to throw a show where I was going to bring in these, these two electronic artists from Austria, Kruter and Dorfmeister.

• 6:43Guy Raz?

  So you thought you'd fly them from Vienna to New Orleans and have them do a gig?

• 6:47Speaker 01

  Sure. I mean, you know, the hope is that, though, they would just happen to be in Mississippi. But, uh, yes, I mean, I was not an event promoter, so this is all just kind of on the fly. But it didn't happen, and, um, it just kind of bothered me. You know, why is it that I would need to come up with the money and make this decision that this thing would have enough people come? I, I thought, what if the people that would want to come to the show could have a say in that? And if enough people could do that before a certain point, then the show could happen. And if not, then it doesn't. So that, that was it. That was the beginning.

• 7:28Speaker 01

  And, uh, what I remember most is that, like, I would get ideas all the time and, and, you know, but within a little thinking, you, you kind of find the fatal flaw.

• 7:36Guy Raz?

  Yeah, right.

• 7:37Speaker 01

  And, uh, so what struck me most about it was like that I couldn't find that.

• 7:41Guy Raz?

  Hmm.

• 7:42Speaker 01

  So, and it's, so it stuck with me. And so I kind of had this feeling, I was like, this is, this may be something. Now, after that feeling, I was like, okay, cool, and back to regular life. Music and being in New Orleans and, you know, riding my bike and, you know, it's a good life.

• 8:00Guy Raz?

  Did you ever, like, see your friends from high school or, or college, uh, you know, go off and, and start, like, careers and, like, whatever, like law or finance and think, yeah, you know, maybe I should, I should go into a career?

• 8:13Speaker 01

  No, I mean, you know, what I felt was, I'm living in New Orleans, I'm working on music. This is why people work for 35 years and retire, so they can move to New Orleans and work on music. So, am I jealous of my friend who works 70 hours a week? No.

• 8:34Guy Raz?

  All right, so you are, so you're in New Orleans, you're doing different things, you had this idea that sort of comes and goes, and I guess around 2005, you move back to New York, right?

• 8:46Speaker 01

  Yes, exactly, in May of 2005.

• 8:48Guy Raz?

  What was the reason why you moved back?

• 8:49Speaker 01

  I think it was a lot of things. I mean, I think that partially because I was moving away from music a little bit, I was kind of fighting with it. You know, I, I think a lot of times when you have an idea, right, and you kind of put it on the shelf of your brain, somebody will say something at certain points and it'll remind you.

• 9:06Guy Raz?

  Yeah.

• 9:07Speaker 01

  So I think that's kind of what happened. As I was getting close to, probably in the final year of New Orleans, as I was getting close to coming back to New York, maybe even a year and a half, I think it kind of came back in a more practical way. I knew that I was going to pursue Kickstarter.

• 9:19Guy Raz?

  You knew that you were going to pursue this idea, that it had come back to you?

• 9:23Speaker 01

  Yeah. Part of the reason being, too, is that in New Orleans, it would have been pointless at the time. You know, I don't know of any tech community that was there in the early 2000s. It might have been, but certainly I wasn't connected to any of it. So, yeah, it was my Plan A when I went back to New York.

• 9:40Guy Raz?

  How did you meet the guy who would eventually become one of your co-founders, Yancey Strickler?

• 9:45Speaker 01

  Well, I got a job working at a restaurant in Brooklyn that I actually used to love.

• 9:51Guy Raz?

  You were a waiter there?

• 9:52Speaker 01

  I was a waiter there, yeah. And, you know, I met Yancey after I'd been at the restaurant for a little bit. He was working at E-Music at the time. He would come in, we chatted a bit, and we were like, talked about music and baseball, and then we just hung out a few times. And probably, pretty early on, when we hung out, maybe the second time or the third time, I kind of shared with him that I was working on this idea.

• 10:15Guy Raz?

  What was his reaction when he told him? Did he say, "This is a brilliant idea"?

• 10:18Speaker 01

  Well, it's funny that that was not the reaction. I mean, it wasn't the extreme opposite, but he was, you know, he's like, "I'm not sure." So, I don't know if my thought at the time was that we would be working together, but I thought it would be worthwhile to talk to him. And, you know, as we started talking more and more about it and simultaneously becoming better and better friends, I think we, it just kind of naturally came together and decided to work together.

• 10:47Guy Raz?

  Did either of you guys know anything about coding, or about how to build a website, or anything like that?

• 10:53Speaker 01

  Well, I certainly didn't from any technical sense. I cannot code, and I couldn't code. But I think I had a sense of what it should feel like. I know what I like, I know what I think feels good when I'm on a site. But from the deep technical stuff, no, that was not my background at all. Yancey probably had been closer, but he's not a coder at all either.

• 11:18Guy Raz?

  So what did you start to do at that point? I mean, you dove in headfirst into this idea and... And what were you doing during the day?

• 11:27Speaker 01

  Yeah, it was headfirst. I mean, I was reading blogs on the Internet by people who had started Internet companies. I was reading about it and maybe finding a friend or a friend of a friend and, you know, playing a game of telephone to talk to somebody. And I did a ton of that. And it was slow going, but, you know, you can learn a lot by just kind of Googling stuff.

• 11:50Guy Raz?

  How did you get connected to-- you have a third co-founder, Charles Adler.

• 11:53Speaker 01

  Charles Adler, yeah, our other co-founder. We need somebody who's a designer, user experience person, to help kind of mock up the site. And an old college roommate of mine from my freshman year, he was like, "Oh, my friend Charles moved to New York and he's doing freelance work." Put us in touch. Charles and I emailed. He came over to my house in Bed-Stuy the next day. And we worked together kind of like almost every day or every weekday for a couple of months.

• 12:22Guy Raz?

  You were hand-drawing, like what the site would look like?

• 12:25Speaker 01

  Yeah, there was some hand-drawing, or Charles would go into Photoshop or Illustrator and kind of like, you know, do some rough mock-ups of stuff. And we're getting into detail, like, here's a button, here's a video, here's-- this is what happens when you click this. So, you know, real in-depth, I think at the end we produced a document over 100 pages about how the site would function, with zero code written, mind you.

• 12:46Guy Raz?

  And what was it, what were you doing, who were you making this for? Were you making this for potential investors, or were you just, it was just something that you guys would have?

• 12:53Speaker 01

  This was to make it. This was not for investors.

• 12:55Guy Raz?

  Yeah.

• 12:56Speaker 01

  This was just, you know, what we would use when we had the money to hire developers to build it. But this is critical, you know, you got to know what, you know, this is the blueprint.

• 13:07Guy Raz?

  So when did you guys get investors for money?

• 13:11Speaker 01

  It was in 2006. I had a friend of mine, and her cousin is David Cross, the comedian from Arrested Development and many other, Mr. Show and great stuff. And so she connected us. And we went and had a drink at a bar, and I talked to him about the idea. And a few months later, he invested a little bit of money. And that was our first investor. And, you know, it was only-- Two and a half more years before you have to launch the website.

• 13:38Guy Raz?

  And how much money did you have, like, from him and from your other early investors in 2006?

• 13:44Speaker 01

  It took us a year and a half. So from that point, probably from there to early 2008, we raised maybe $120,000 in a year and a half.

• 13:53Guy Raz?

  So that was all of the money you had to basically pay for server space or whatever you needed to do to find a developer, a coder, all these people?

• 14:04Speaker 01

  That was it.

• 14:08Guy Raz?

  Was it already called Kickstarter at that point?

• 14:10Speaker 01

  I think, you know, at first, like, the working title for years in my mind was critical mass. Because it was very much of the mechanism of like, you know, when you reach a critical mass of support, then the thing could happen.

• 14:23Guy Raz?

  Yeah.

• 14:24Speaker 01

  But, you know, I think, obviously, there's critical masses used in a lot of things. There's the Bicycle Organization and just, it's really mechanical in a way. So I think, you know, spent that grueling process, which is trying to see what domain you can get. And yeah, and came out with this and was able to get the domain for pretty cheap.

• 14:44Guy Raz?

  So tell me what the business model was from the outset.

• 14:48Speaker 01

  The idea was exactly as you see it today, which is to charge a small fee if and only if the project was funded. So, you know, if projects didn't get funded, you know, there's no listing fee, so we would get nothing.

• 15:00Guy Raz?

  So you would have this platform, people would put their projects up. If it's funded, you guys get a cut. What's the percentage cut?

• 15:07Speaker 01

  5%.

• 15:08Guy Raz?

  So Kickstarter would get 5%. If it's not funded, you would get nothing?

• 15:12Speaker 01

  We would get nothing, yeah.

• 15:14Guy Raz?

  So what's interesting about your story, which is very different from a lot of other tech companies, is you didn't just, like, get to a minimally viable product, like, in six months and have it up and running. Like, this was like at least three years.

• 15:31Speaker 01

  Yeah, I mean, yeah, two and a half, three years. But very different from more classical stories where it's like a couple of friends who've worked in the industry who may have connections or they can build it themselves. I don't think any of us had a sense of where the end of the road was or where the goal was.

• 15:48Guy Raz?

  But when the three of you, like when Yancey and Charles and you would sort of talk to other people and they say, oh, what's going on in your life? And you would say, I'm working on this and I'm trying to do this website. And then you would see them again six months later and they say, oh, how's the website going? And you'd be like, yeah, it's coming along. Do you think people were skeptical or were they?

• 16:04Speaker 01

  Yeah, you learn what it feels like to be a documentary filmmaker, basically. Or a writer, you know? It's like, you still working on the book? I'm sure people thought that. And I wouldn't blame them. I mean, it was long in the tooth for us, certainly too.

• 16:20Guy Raz?

  Weren't you getting stressed out that somebody else is going to beat you to the punch and do the same thing?

• 16:26Speaker 01

  I think that certainly comes to mind. But I think there's also like, we couldn't have tried to go any faster. There was just, not that much was in our control. We didn't have a lot of money. We didn't have a lot of influence. We didn't have a lot of connections. So we're moving as fast as we could and that's kind of as, that's as much as you can do.

• 16:44Guy Raz?

  So, I mean, why do you think you guys stuck with it? Because I think, you know, people would normally lose patience, right? So was it just the connection between the three of you? You guys liked each other? Was it the idea? Or was it just luck that you just stuck it out?

• 16:59Speaker 01

  I think it was the idea. You know, so many things don't have access to funds. There aren't industries or investors or whatever set up around to fund things because the market may not be sizable enough. And then even the things where the market might be sizable enough that the deal you have to make to do that, you might have to contort your idea into something that starts to not feel like your idea anymore.

• 17:19Guy Raz?

  Yeah.

• 17:19Speaker 01

  Or you just happen to have money. Like, those can't be the only way that ideas can get off the ground. I think we saw it. You know, sometimes you just see it. I guess you're not always right, but just seeing it is really critical. And so, and the web was changing over these years. These were huge years for the web, talking about 2005, 2006, 2007, 2008. It only made us see that what we're building made more sense, not less sense, that it was more needed, not less, that people would engage with it more easily with the rise of social media, with the rise of YouTube, not less. And so, and of course, there's luck involved, that that was rising as we were taking our

• 18:03Speaker 01

  sweet time, getting it going.

• 18:08Guy Raz?

  When we come back, the opportunities Kickstarter had to grow into a much bigger company, and why Perry Chen decided not to pursue any of them. I'm Guy Raz, and you're listening to How I Built This from NPR.

• 18:38Guy Raz?

  Hey, welcome back to How I Built This from NPR. I'm Guy Raz. So as Perry and his co-founders continued to make slow progress on Kickstarter, competitors began to appear. In fact, 18 months before Kickstarter went live, Indiegogo, another crowdfunding site, was launched.

• 19:00Guy Raz?

  I'm just wondering how you were able to withstand the uncertainty of it all. I mean, your recollection makes it sound like you were just sort of like, yeah, whatever. This is my thing. I don't have a plan B, and I want to do this. But I mean, most people, I think, wouldn't feel that way. They would feel anxiety about the uncertainty. I mean, do you think that you're just wired differently?

• 19:24Speaker 01

  I mean, I felt a tremendous amount of anxiety. But it wasn't that anxiety was driving me to give up.

• 19:31Speaker 01

  And I think it normalized a little bit over time. One of the things I noticed, not just as we're trying to launch, but after we had launched, is that those years were so trying that I kind of had to learn to adjust to kind of like stay in the middle. You know, not to get too high or too low, because I think that both happened. Like, somebody might invest a small amount of money and we'd be like, super psyched, you know? Or, hey, we found a developer who wants to work with us. Or whatever, these little things that get super excited and you're like, okay, it's all gonna happen, blah, blah, blah. And then something happens where that doesn't come.

• 20:03Guy Raz?

  It falls apart.

• 20:04Speaker 01

  And you're like, down. And I think that happened so many times, the ups and the downs, that I think it just kind of, I just, maybe my defense mechanisms kicked in and forced me to stay a bit more in the middle, either way, right? When something that seemed amazing happened, or when maybe something that seemed dire was about to occur.

• 20:23Guy Raz?

  So what was the thing? I mean, it was almost three years from the time that you formed the company to the time that the website actually launched. What was the, what was the turning point? What enabled you to actually make this thing go live and become a reality?

• 20:35Speaker 01

  Well, I think that, in some ways, we made every mistake in the book. So kind of, we did that, we did one lap that way. Classic stuff like, people with experience telling us, you know, you shouldn't do something this way. And us being like, well, we appreciate that, but like, you know, it'll be different for us. And then, of course, it's like, exactly what they said happened, and we're like, duh. And so I think we got a little experience after a few years. But then there was just the people, you know? We found amazing people. One of the people we met was Andy Baio, who really helped us kind of figure out what kind of technology we should be using, and helped us interview the developers that we would hire. And he eventually became our first CTO.

• 21:17Speaker 01

  That was tremendously helpful, because none of us could review the code that we were, that developers were on the right track. So that was, that was really critical. Those things kind of coming together.

• 21:28Guy Raz?

  Yeah. So, when you launched, the day you launched, how did you get the word out? How did people even find out about Kickstarter?

• 21:37Speaker 01

  Well, I think, you know, leading up to when we actually knew we were gonna launch, or believed, we had been talking to people about it. Telling people, you know, trying to, honestly, we had to try to build up projects to launch on the site as well. So there was that outreach, leading up to the launch, to try to get people to fund their album, to fund their, whatever their projects were. And I think we launched with, you know, maybe five or 10 projects that first week.

• 22:01Guy Raz?

  Huh. Do you remember what any of those projects were?

• 22:04Speaker 01

  Well, I think the first one might have been drawing for dollars, which maybe raised 10 or 15 dollars.

• 22:11Guy Raz?

  You would just contribute to that Kickstarter campaign and that person would just draw whatever?

• 22:16Speaker 01

  You know, I can't recall whether it was that they were making a specific drawing, but as part of a reward, maybe if you gave five or 10 dollars, they would also make one for you. But it was great. I mean, it's amazing to see anything. I backed that project. And me and Yancy launched one with our friend Claudia that first day as well, which was called New York Makes a Book, which was trying to get people to give 30 dollars. And everybody who did would get a book and a page in the book to submit whatever material they wanted printed on their page.

• 22:42Guy Raz?

  And did Kickstarter make money right away, like with the fees from these projects?

• 22:48Speaker 01

  For the first six months, I think, it was free. You know, people don't even know what this is, you know, how much can you ask them to pay money for it?

• 22:54Guy Raz?

  Well, was it, did people notice it right away? Did you guys right away realize that it was successful? Or was it still kind of underground and in the shadows at the beginning?

• 23:05Speaker 01

  It was a very, slow is probably the wrong word, steady. And I say that in the sense of that with things on the internet, I think we sometimes have this feeling of, oh, my God, one day, just 10 million people started using it. It wasn't like that, you know? It was like the first week, there was 10 projects, and the second week, there was 20, and the third week, there was 30. You know, it wasn't this exponential thing, but it was really nice and steady, and people got it. We didn't have to go through a long period where like, nobody gets this. We have to like, change a whole bunch of things. But it wasn't also like, oh, my God, we have to hire 20 people tomorrow. I think we're very fortunate in that, you know, we were able to hire like, one person a month, maybe,

• 23:49Speaker 01

  maybe even less than that, so we could kind of build a culture, because it's not one day you come in and the company's triple the size.

• 23:56Guy Raz?

  Yeah.

• 23:57Speaker 01

  Which is, it's hard, it's hard to maintain something in those cases.

• 24:00Guy Raz?

  So as you guys, in that first year, as you started to kind of open up and allow anybody to, to raise, you know, money for their projects, what, what kind of projects were you getting?

• 24:10Speaker 01

  I mean, it's amazing depth of the human imagination, like tattooing as well. You know, anything you could think of. Films, school plays, albums, concerts, people wanting to fund their residencies, books, a lot of people doing projects who probably weren't doing projects, but had ideas and this was an outlet for them, like a format for them. A lot of really whimsical stuff. Podcasts, you know, all kinds of things. So it was amazing to see. It was really heartwarming. I just loved it. I loved it in every way.

• 24:45Guy Raz?

  You guys, I guess, after the launch, went out and sought money from some big names in the venture capital world, like Chris Sacca and others. How did you? What were the terms that you gave them? Was there any? I mean, because once you do that, you start to lose control. And those investors, they want, you know, they want an exit strategy. They want to know how quickly they're going to make money off this thing. So how were you able to attract investors and avoid that trap?

• 25:14Speaker 01

  I think going into it, we knew that we weren't building this to sell this and we weren't trying to create a public company. And when we went out for investment, this was, you know, one of the first things we discussed with people. And first of all, with Chris Sacca, it was angel money. It was their personal money.

• 25:31Guy Raz?

  Right.

• 25:31Speaker 01

  And that was kind of very purposeful. You know, I think that they can say, hey, cool, you guys want to do your thing and you're not going to try to eat the world. And we're down with that. And it's our own money and it's not that much. So it's very different, I think, than a lot of venture funding. We did have one actual venture capital investor. Again, not that much money.

• 25:53Guy Raz?

  You needed to raise money to presumably to hire people and to expand Kickstarter, right?

• 25:59Speaker 01

  Yeah, and to, you know, actually get a salary. Even a modest, even a tiny modest one.

• 26:05Guy Raz?

  Up until that point, you were not getting a salary at all?

• 26:09Speaker 01

  No, I think that there was, you know, some sort of irregular, you know, 30,000 bucks a month here or there from me and maybe me or Charles. But. You know, again, we weren't even charging money at this point. So there was no guarantee of that continuing for very long.

• 26:26Guy Raz?

  In your first year after launch, what was your salary?

• 26:30Speaker 01

  It was either 60 or 65.

• 26:33Guy Raz?

  $1,000.

• 26:34Speaker 01

  Yeah.

• 26:36Guy Raz?

  So at what point did Kickstarter become profitable?

• 26:39Speaker 01

  I think, you know, the first six months, not at all, no revenue. I think within a year after that, so probably within the first 18 months, we got in the black.

• 26:49Guy Raz?

  Wow, and you were the CEO?

• 26:51Speaker 01

  I was the CEO.

• 26:52Guy Raz?

  And how did you, I mean, I guess, you know, as Kickstarter became more and more popular, a lot of companies that were making sort of gadgets and tech things were using Kickstarter as a way to kind of prototype their thing that was out there. Some companies raised millions of dollars. I guess that at a certain point, you guys just said, enough, we're not doing this anymore. And you, I think the quote that I read that you gave was, we're not a store. You kind of stopped allowing Kickstarter to be used as a platform for these kinds of things, right?

• 27:27Speaker 01

  Well, it's not entirely accurate. I mean, basically, what happened was that we created kind of additional process for product design projects. And they had more of a review process and other projects, maybe in more classical creative areas, like an album, didn't. And that was really because, you know, we saw that there was a danger of people kind of approaching Kickstarter and things that were being put up there like a new product as, I'm buying this, like I'm buying something on Amazon, like, oh, it's going to come exactly in the date that they're saying. And we felt that that needed to be understood, that Kickstarter is not a store.

• 28:08Speaker 01

  Listen, if you support a short film, you don't expect this short film to be the best short film you ever saw.

• 28:14Guy Raz?

  Right.

• 28:14Speaker 01

  But when people buy like a gadget, people can have more of a consumer expectation. So we said, hey, you need to show where your prototype is at. You need to add the risks and challenges of this project as you see them. In the checkout process, we had Kickstarter is not a store, and we linked to some of our policies to let people know, what did a product need to do to get here, what we might know and what we might not know. And we want to let people be able to then make the judgment on their own, but with a little bit of context from us.

• 28:47Guy Raz?

  Let's say a company came to Kickstarter and said, hey, you know, we've got this cool new product, like headphones or something. And we want to partner with Kickstarter to raise money. Kickstarter will do some promotion for us, feature the headphones on the homepage, drive traffic to it. And then in exchange, you know, we'll give Kickstarter a bigger cut, like 10%. Could you imagine doing something like that?

• 29:12Speaker 01

  Yeah, it just, no, I don't think so. And I've probably had requests like that in the past. It's, listen, the site is open. You log on, you create a password, you post your project. I think a lot of times, big companies, they want to do a partnership, they want to sign a contract. We're like, listen, if you want to go do it, go log on the site. But if you want like some special stuff from us, or whatever, I mean, that's just not what we do. It's a relatively open door, but you're not any better than some young creator who's working on their first idea. This platform is built to do what you say you want to do, so, you know, go for it.

• 29:52Guy Raz?

  How much money has, in total, do you think Kickstarter projects raised?

• 29:57Speaker 01

  Recently, we passed the $3 billion pledge mark.

• 30:01Guy Raz?

  Wow.

• 30:02Speaker 01

  So, yeah, it's a huge milestone. Yeah, and again, I'm most excited about the money that's gone to projects that really had very little funding sources, or really constrained funding sources, or funding sources that would really force the creator to contort their project in a way that they might not recognize it anymore, and force them to kind of make compromises that a lot of creative people have to do, but that are really hard. That's definitely what I'm most proud of and continue to be excited about.

• 30:30Guy Raz?

  I've seen Kickstarter describe us like the People's National Endowment for the Arts. Some people have even described it as like the modern day House of Medici, which is pretty complimentary. I mean, that's a pretty incredible thing to say about the site that you created. Do you identify with those descriptions?

• 30:49Speaker 01

  Not really. I mean, I, listen, I'm proud. But, you know, the Medici's were giving out large amounts of money, and it was a small group. In a way, we're trying to provide a clear alternative to that. We know that Whitman had funded some first editions by having subscribers that he wrote their names in the first edition, who gave smaller amounts. And Mozart had funded a concerto in the same way. The Statue of Liberty, the base was funded. They actually, they would sell miniatures for a dollar, or larger ones for five dollars of the statue. And that funded the base. So, a lot of stuff that you see on the web is, has maybe existed in another form.

• 31:29Guy Raz?

  Nothing new under the sun.

• 31:31Speaker 01

  Pretty much. You know, with Kickstarter, I think if I was telling a friend that I was working on an album, and it was gonna cost me some money to go into a studio to mix it down, they're not gonna hand me five dollars, right, in a coffee shop. But if I put it up on Kickstarter, and I'm trying to raise two grand to go do my mix down for my album, that same friend may give me five dollars. There was just this friction, there was this social friction before that existed, and the model has been able to eliminate that, or even put it in a way that's socially positive. So, it's the sentiment that people have. People want to help each other, bring good and interesting ideas to life. We have nothing to do with that. We are enabling that, what we think is a good way to do that.

• 32:16Guy Raz?

  The idea, the model of Kickstarter is just, seems like a no-brainer now, right? We think about companies like Uber, or Airbnb, or, you know, companies that connect people with other people. And in some ways Kickstarter does the same thing. And you guys only take 5%, which is a pretty small amount of money. I mean, you could take lots more money. Did you ever think about going down that path?

• 32:43Speaker 01

  I mean, if you're gonna try to make a lot of money, you know, that's almost changing the fee, it's probably not where people would talk about. They would talk about raising hundreds of millions of dollars in venture capital, quadrupling the size of the company, and the international footprint, doing major marketing campaigns, or selling the company and making a ton of money in one shot. But I think there's also like, there's gotta be a way, that it doesn't have to become this kind of vehicle only for maximizing profit.

• 33:16Speaker 01

  You know, there was a quote, I wish I could find the attribution, but it was basically that if a corporation was a person, it would be a sociopath. And when you create something, you know, you want it to share your values. That's kind of why, ever since the beginning, we wanted to make sure to hold on to control so that outside forces couldn't drive it that way. And then, two years ago, we became a public benefit corporation, which is still a for-profit company, but it means that the obligations of the board and the executives in the company is to balance the shareholder interest with greater stakeholders, including the environment

• 34:00Speaker 01

  and your various communities. And that's it. That makes it, again, something more a representation of people. But really, if underneath the mandate is, at the end of the day, make the most money for shareholders, it's a really, it's not really a good fit for humans. And I don't think it's, it portends very well for society if this is what we accept as the only way to do it.

• 34:26Guy Raz?

  You are no longer the CEO, right?

• 34:30Speaker 01

  No, now I'm chair.

• 34:32Guy Raz?

  And what was the story behind that? Did you just feel like, okay, you know, it's gotten to a place where I don't kind of need to run it on a day-to-day basis anymore?

• 34:38Speaker 01

  Yeah, I mean, I think that, once we were out there and things were working, I started to see that, especially since we don't want to sell, where does this go? If things continue to succeed, then it just continues. That's what we wanted. We wanted to just continue. But does that mean I do this till I can't do this? And, or I do this for 30 years and then I write a book on leadership and like, hit the speaking circuit? It's like, you know, so I was like, and I also didn't have time to work on other ideas I had, in the arts, not new companies. And so, I think we reached a certain point, I just started to see a window. I started to see, hey, you know, a gust of wind isn't going to blow us down, we've

• 35:23Speaker 01

  got a great team here, and so, this might be a good moment.

• 35:30Guy Raz?

  Did you ever get to see Kudrow and Dorfmeister after all?

• 35:33Speaker 01

  No, I've never, I have not. I've never seen those guys. And I haven't heard much. I'm sure they're still out there making music, but I haven't, I haven't, I haven't caught up on much, right?

• 35:42Guy Raz?

  Well, now you could do it. Now you could kickstart that show.

• 35:44Speaker 01

  Now I could kickstart that show.

• 35:46Guy Raz?

  Yeah.

• 35:47Speaker 01

  It's true.

• 35:49Guy Raz?

  Perry Chen, he's the co-founder of Kickstarter. When we interviewed Perry back in May of 2017, he was spending most of his time at a studio in Brooklyn, working on his own projects. But later that year, after his fellow co-founder and then CEO Yancey Strickler announced he was stepping down, Perry actually returned to Kickstarter, where today, he is once again running the company as CEO. By the way, if you've listened to the segment at the end of our show, "How You Built That", you've probably noticed that more than a few of those companies got off the ground with money raised on Kickstarter.

• 36:39Guy Raz?

  Hey, thanks so much for sticking around because it's time now for "How You Built That", and today, we're updating a story we ran about a year ago.

• 36:47Speaker 02

  My name is Dustin Hogard. We live here in Seabrook, Texas. It's southeast Houston, Texas.

• 36:53Guy Raz?

  Dustin grew up on a ranch, and so he spent a lot of time outdoors. And around the age of 10 or 11, his parents started to let him hike in the woods by himself.

• 37:03Speaker 02

  And since I was a little kid, I was obsessed with survival kits. When I would go to any store anywhere, I would always go immediately to the survival kit section.

• 37:12Guy Raz?

  And as he got older, he started to design some of his own survival gear. And eventually, he got a job with the Texas State Guard.

• 37:19Speaker 02

  And the story that you hear all the time when you do these case studies of people who are in survival or emergency accidents is that they were never expecting to get into it. So you need some tools on you just in case something happens, whether it be a natural disaster or an emergency that happens while you're out doing an outdoor activity. You need to have those things on you at all times.

• 37:39Guy Raz?

  But most people just don't have those things on them at all times. I mean, most people do not want to carry a bulky survival kit around on a daily basis.

• 37:48Speaker 02

  They don't, in the morning, go, when they're going to work, put on their survival kit. It's awkward, it's weird, and people don't like to think about that.

• 37:55Guy Raz?

  So Dustin started to design a survival belt that you could wear every day, whether you were heading into the woods or, you know, just going out to walk the dog.

• 38:05Speaker 02

  So when you think about a belt, you think it has to be comfortable, and it has to still be fashionably appealing. So the number one goal is to make sure that everything fits comfortably and does not weigh too much or doesn't look weird.

• 38:18Guy Raz?

  So as Dustin started to research how to make this belt, he found out that someone else was working on virtually the same thing, and that person lived about 15 minutes away. So Dustin contacted him, and he said, hey, you know, let's work together. And it turns out that other guy was a former engineer at NASA. So they decided to partner up. They called a bunch of mills. They found a military-grade webbing for the belt. And then they had to figure out how to make survival tools small enough to fit into it.

• 38:48Speaker 02

  We had to invent every single small part, almost. So the foil is a custom foil. The duct tape is a custom duct tape. The water container is a custom water container. All of the parts and pieces required us to go out and test the heck out of it.

• 39:03Guy Raz?

  Dustin and his partner worked with almost 30 manufacturers to custom-design every miniature gadget that goes into the belt.

• 39:11Speaker 02

  We also have a ceramic knife, a high-quality button compass, purification tablets.

• 39:16Guy Raz?

  And even with all of this gear on the belt, it doesn't weigh a ton.

• 39:21Speaker 02

  It's really hard to believe, but if you put it on, you wouldn't know you're wearing a bunch of survival stuff.

• 39:27Guy Raz?

  When we last heard from Dustin, he and his partner were trying to fulfill orders from a Kickstarter campaign that had raised over a quarter of a million dollars. And that turned out to be kind of a nightmare. They hit one problem after another in the manufacturing process and had to answer to thousands of angry customers who thought they were getting scammed. But finally, this past May, they managed to get all the pre-orders filled. And Dustin says he feels relieved when people who had to wait 17 months for a survival belt leave a review that says, "Worth the wait." If you want to learn more about Dustin and his company, Wazoo Survival Gear, or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course, if

• 40:11Guy Raz?

  you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at [email protected]. And if you want to send a tweet, it's at howibuiltthis. Our show was produced this week by Casey Herman, with music composed by Ramtin Arablouei. Thanks also to J.C. Howard, Noor Kutsi, Neva Grant, Sanaz Meshkhanpour, and Jeff Rogers. Our intern is Mia Venkat. I'm Guy Raz, and you've been listening to How I Built This from NPR.