chapter 20

Interview with Canary

Canary Home Security is the most-funded hardware project on Indiegogo. 7461 funders contributed nearly $2 million to the project to provide a home security device controlled by your smartphone. With press coverage from Mashable, Fast Company, and Engadget, it’s one of the best-known crowdfunded products. You can find Canary’s campaign page here and its homepage here.

Shopify conducted an email interview with Adam Sager, CEO.

Why crowdfund instead of more traditional means of funding?

At Canary, we did both. We raised some money before crowdfunding and closed a $10M Series A in March – about 6 months after our crowdfunding campaign ended.

We raised money prior because we decided early on that we wanted to have the manufacturer, design, pricing, timeline, industrial design, and other large pieces of the project done before crowdfunding. We knew who we wanted to be as a company, and the impact we wanted to have on the world. This goal meant we needed to hire people before crowdfunding, which meant we needed a seed round of funding to get things going.

Once we finished our crowdfunding round, the Series A set us up to grow Canary into a company. Specifically, the funding allowed us to hire the best people and push development of the hardware and software forward faster, including our unique machine-learning layer that will help reduce false alarms dramatically.

In between the seed and the Series A, crowdfunding helped us in three ways:

First, it established a product-market fit.  We knew by the reaction that the need we were solving really resonated with people.

Second, it established the size of the market. Not only were there people out there who wanted this thing, there were a lot of people out there who wanted it. We had orders from 78 different countries. These first two points allowed us to not just say, but show venture capitalists why we would be successful.

Lastly, crowdfunding allowed us to finance the first order of products.

How did you settle on Indiegogo instead of another platform? Did you communicate much with Indiegogo, and did they offer special assistance?

We chose to use Indiegogo because they had a customizable platform where we could tell the story in our own way. There was a lot of flexibility around that, which we liked. Additionally, Indiegogo allows project creators the option to sell multiple units of their product while some of the other major crowdfunding platforms don’t allow “multiple item” perks.

We communicated regularly with Indiegogo throughout the campaign and are still in touch.

Why did you shoot for $100,000?

We set a goal of $100,000 because that was the minimum amount we needed to cover tooling and manufacturing costs. The pricing of our perks was based on estimated costs of materials, manufacturing fees, and market research. Our goal was to create a high quality product at a price point that was accessible to most people.

Could you describe a bit of the strategy behind selecting your rewards, the highest of which is quite a bit of money?

When selecting your rewards it’s important to include other perk levels besides the minimum amount required for a backer to receive the product. There should be a tier for backers who simply want to contribute a small amount to the campaign but don’t necessarily want to receive anything in return. Similarly, other backers will want to contribute a smaller amount in order to receive an entry level perk, like a t-shirt. Finally, there may be backers for whom money is no object, so you should consider creating an exclusive perk that gives them special access to the team or a unique experience.

The idea behind our top reward tier— Collector’s Edition — was to offer a one-of-a-kind experience for a backer who was especially excited about the product and wanted to make a more significant contribution to the development of Canary. The backer who chose that perk will receive the first Canary off the production line, signed by the team, and was flown to NYC to spend a day with our team.

Describe your strategy for engaging with your supporters. What was the frequency of updates? Did you do anything special to engage social interest?

When you crowdfund a product, engaging with your supporters is the most important and most enjoyable part of the process. It was humbling for us to hear from people all around the world who were as excited about Canary as we were. Our strategy for engagement focused on four things:

1. Listening

We received thousands of comments, tweets, emails, and Facebook messages from backers offering suggestions, asking questions, and telling us about their lives. We worked hard to answer every question and thoroughly considered all the feedback we received, some of which lead to product changes (for example, we added in an Ethernet port after we learned that Wi-Fi wasn’t as reliable in some countries).

2. Showing gratitude

We wouldn’t be where we are now without the generous support of our backers, and we’ve continually made it a point to show them how grateful we are. For instance, we sent handwritten thank-you notes to many of our early backers and held contests where backers could win t-shirts and free Canary devices.

3. Building trust

Whether we’re answering questions from potential customers or sending updates to our backers, we always strive to be trustworthy and transparent. Trust isn’t built instantly but rather it’s a continual process of being honest, communicating with backers regularly, and making decisions that are in your backers’ best interest.

4. Maintaining engagement

Crowdfunding is a journey and we want our backers to be involved throughout the entire process, not just at the beginning and the end. Through social media, blog posts, and monthly campaign updates, we continue to keep our supporters informed and engaged since the campaign has ended.

Your campaign page is fairly long. Were you afraid that your supporters would not want to read the whole thing? How did you think about the tradeoffs?

Over the course of our campaign the page grew as we expanded our FAQ based on messages we received from backers. A long page isn’t inherently bad, but it’s important to order the content strategically. The top portion of the page should give a reader a very clear understanding of what the product is, what problem it solves, how it compares to other products on the market, and why it’s important to them. Visitors should not have to read the entire campaign page to understand these things. The rest of the page can be dedicated to details and commonly asked questions for supporters who want more information.

At the end of the day there is no “right” length.  Some people will skim, others will devour – you need to have content for both.  Organizing your content properly is the best way to ensure it suits all audiences.

What are some specific tactics that helped your campaign and that you feel aren’t very widely known?

Crowdfunding isn’t easy. It takes a lot of hard work and planning. The success of our campaign wasn’t the result of any secret tactics, but there are a couple things we did that are more important than some people may realize.

Tell a story about what you can do for others. When it comes down to it, people care about themselves. This means that telling people about how amazing your product is won’t result in a wildly successful campaign, even if your product really is amazing. Instead, tell people how your product will fit into their lives in a meaningful way and solve problems they face. Make your campaign about people rather than tech specs and feature lists.

Spend money to make money. There are certain things that are critical to the success of your campaign, and if you’re not an expert in these areas it’s worth investing some money to have them done well. For example we hired an experienced director to film our video so we could better tell our story. Hiring professional PR assistance can also be a worthwhile investment depending on the scope of your project and the size of your team.

Where are products sourced? How did you go about finding a supplier? Describe the manufacturing process, in particular the unexpected obstacles.

We partnered with one of the top consumer electronics manufacturers in China to produce Canary. Finding a manufacturing partner was not a decision we took lightly. Before we launched our campaign, we took recommendations from friends, colleagues, and partners both here and in China and then visited a number of facilities in person before making our decision.

The manufacturing process can essentially be summed up as testing, iterating, testing and more testing. We would assemble a small batch of devices, conduct exhaustive tests on every component, refine the design, and then start the process over again. With hardware, unlike software, you need to make sure the product is perfect before you send it to backers. In most situations, iterating after you launch is extremely difficult if not impossible.

The biggest challenge we’ve faced is geographical, so for many months we have had Canary employees working out of our manufacturing facility in China. There’s really no replacement for actually having boots on the ground, so to speak.

How did you test the demand for your product? How did you know that there would be a community for you?

First we talked to everyone who would listen to us—our friends, family, strangers—and tried to understand how they solved the home security problem and what they thought about our idea. We found that a real need existed for a new kind of security product. Second, we conducted an online survey to get insight from a much larger group of people who didn’t know us personally. And third, we presented our idea at local meetups and received a lot of interest and positive feedback from other entrepreneurs and early adopters.

Describe the transition process from a campaign to a real business. What have you done for durability?

We never really had a mental transition since we knew from the beginning that we wanted Canary to be a company and not just a single product. Our crowdfunding campaign accelerated our growth as a company and the transition really lies in two things - building out our vision for Canary products, and building the team to get there.  A successful campaign wasn’t our end goal, but rather the first stage of our roadmap.

The money we raised through crowdfunding is being used to bring our first product to market. Based on the success of our campaign, we were able to easily show venture capitalists product-market fit, which is one of the first things they look for in an investment. The round of funding we raised from VC’s allowed us to build out an amazing team that’s quickly approaching 50 employees. Harnessing their expertise, we’ve been able to build a product roadmap and strategy with big ideas that will help ensure we’re around for years to come.

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21. Infographic

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