The San Francisco native was inspired by her small-business-owner parents to create the Indiegogo crowdfunding platform. Little did she know her big idea would spawn a new industry.
Danae Ringelmann: Having watched my parents struggle so much to grow their business cause they never could actually get a loan to do it, I really did wanna understand money and why it was so hard to get money and help figure that out.
Colleen DeBaise: Welcome to The Story Exchange, featuring the stories and strategies of entrepreneurial women around the world. I’m Colleen DeBaise, an editor at The Story Exchange, and we’ll be joined later by our co-founder, Sue Williams.
Colleen DeBaise: Crowdfunding. Unless you’ve been living in a basement (and no judgment here if you have) - you’ve probably heard the term before. It’s now a popular way to raise money. You go to a site like Kickstarter, or Indiegogo, or GoFundme -- you create a campaign and then you share it with everyone you know, usually on social media.
Today, we are going to tell you the story of Danae Ringelmann, the woman who is the brains behind Indiegogo, which was the very first crowdfunding site to launch, back in 2008.
If you’re an entrepreneur yourself, you probably know how difficult it can be to get a great idea off the ground. Whether you’re opening a coffee shop or a new accounting practice, it can be tough to win customers. Now, imagine trying to sell someone on a concept that -- well -- is so new that there are no terms to even describe it. That’s a way bigger challenge -- and that’s exactly what Danae faced, back when she started Indiegogo seven years ago.
Danae Ringelmann: When we launched, the word “crowdfunding” didn’t exist. We were creating a whole new way to raise money…We were essentially inventing an industry. Probably didn’t realize it at the time.
Colleen DeBaise: We’ll take a look at how Danae came up with the idea in the first place, how she got people to try it out, and how she’s built Indiegogo into a venture-funded company that is practically a household name. We headed to San Francisco, where Indiegogo is based, to interview Danae -- you can watch our video (which tells her complete story) on our website, TheStoryExchange.org. Today, we are going share to snippets from that conversation, so you can get a sense of how Danae did it. It wasn’t easy nor was it an overnight success…if you’re in need of a little inspiration right now, this is a story you should listen to.
Colleen DeBaise: Our story begins 30-something years ago, when Danae was growing up in the Bay area. Her parents owned a moving company…that fact made a huge impact on her life.
Danae Ringelmann: My parents...actually ran a business because they wanted to have control over their lives so that family could be first. They were always at our basketball games. They were always at our piano recitals.
Colleen DeBaise: And every night, Danae, her two siblings and her parents had dinner together.
Danae Ringelmann: When stuff was going at the business, stressful times, my parents would talk about it in front of us—“How do we make payroll this week? You know, what are we gonna do ‘cause we lost that big job and we need that job to close the month.” It was a very real and authentic place.
Colleen DeBaise: You could say Danae -- from a very young age -- was exposed to the rewards and the HUGE challenges of entrepreneurship.
Danae Ringelmann: I just remember watching my parents struggle so much to grow their business ‘cause they never could actually get a loan to do it...not without personally guaranteeing everything. And even if they got at that conversation, they got rejected so many times they just said, “Forget it.”
Colleen DeBaise: That inspired Danae to learn more about the fundamentals of money. She always loved math, and she knew she wanted to be her own boss one day, just like her parents. So, she studied humanities with a minor in business at the University of North Carolina.
Danae Ringelmann: So I was fortunate to get a scholarship to college, which was important for a couple reasons -- one, my parents’ business was going through a bankruptcy and so financially very stressful time for the whole family; and two, it opened up an entire world of interesting opportunities for me.
Colleen DeBaise: One was an internship at Goldman Sachs in London, working in equity research, which was Danae’s first experience in finance. That eventually led to a job after graduation at J.P. Morgan in New York.
Danae Ringelmann: That was a learning experience around…how money moves and who decides when things get funded and when things don’t get funded. And I realized that the way money moved isn’t as…efficient and therefore isn’t as fair as it should be. And so that’s what actually ended up leading me to go start Indiegogo.
Colleen DeBaise: So that’s the first part of Danae’s story, and we’ll continue in just a bit with how she built Indiegogo, which now has raised over $50 million dollars in venture capital. Not to mention that more than 300,000 people have launched campaigns on the site.
But first, let’s take a step back, because there’s one more reason why Danae was inspired to start Indiegogo. At The Story Exchange, we like to zero in on the nitty gritty that inspires one to become an entrepreneur -- if you’ve never checked out our site, please do so, it’s TheStoryExchange.org - we’re a nonprofit media company and we do articles and videos about women business owners. I’m being joined now by Sue Williams, co-founder of The Story Exchange who spent a day with Danae in San Francisco and produced our video profile of her...Welcome, Sue.
Sue Williams: Hi Colleen.
Colleen DeBaise: So Sue, we’ve been talking about how Danae watched her parents struggle, and how she went to work on Wall Street, where she realized that access to capital just isn’t so equitable sometimes.
Sue Williams: Yes. It’s nice to know that at least one person on Wall Street realized that.
Colleen DeBaise: So - Danae actually got involved with struggling artists when she was working at J.P. Morgan…tell me more about that.
Sue Williams: Yes. Danae worked in the media and entertainment group at the time, so she was invited to an event called “Where Hollywood Meets Wall Street.” She was only 21, so she went to find out a little bit more about how films are financed. And she expected it to be an event where you had all these Hollywood producers talking to Wall Street powerbrokers. But that’s not what she encountered. Let’s listen.
Danae Ringelmann: It was a sea of emerging artists all hoping to meet their next angel. And because I was one of a few people from the bank, I clearly was a popular person to talk to. So, I just remember all these people trying to give me their cards, and I was like, “You don’t understand. I run spreadsheets. I crunch numbers. I don’t have any power here. I, I can’t give you any money.”
Sue Williams: But, she wanted to help, so she gave out a lot of business cards that night. A few days later, one elderly filmmaker sent her a script. He paid $15 to FedEx it to her...$15 he probably didn’t have.
Danae Ringelmann: And it had a note that said, “It was wonderful to meet you, Danae. I look forward to you financing my next film.” And that’s when it, I think that’s when my heart broke, honestly 'cause I started to cry. And I called my mom and I just remember talking to her about, you know, America’s not a land of all possibility. It’s the land of all possibility if you know the right person, you know.” And at the very end of the conversation she said, “Well, if you’re that pissed off about it go do something about it.”
Sue Williams: So Danae did — completely on her own time — she decided to put together an event, working with a theatre director she had met…
Danae Ringelmann: Arthur Miller had given him permission to stage a concert reading, which is a one-night event where you take a theater, you pack it with an audience, you get actors to volunteer their time to read the play in front of that audience, and then you get investors there to witness the whole night.
Sue Williams: And the event was a big success…well, theatrically at least.
Danae Ringelmann: And I got investors there. And the whole night went perfect. And then I looked at the investors and I said, “What do you think?” And they said, “That was amazing. We’re not investing. Good luck.” They showed me that finance was broken.
Colleen DeBaise: Wow, well, she is clearly a sensitive person.
Sue Williams: She really is. The whole experience ultimately led her to quit banking and move back to San Francisco, where she enrolled in business school at UC Berkeley.
Danae Ringelmann: I had to leave finance to change finance and go start a company that would literally shift the power, put ‘em back into the hands of the people to decide what matters.
Sue Williams: Her original idea was to create a regular old-fashioned offline fund where investors in the fund had the power to choose which projects should get funded. But her professors and classmates at Berkeley questioned this concept. A fellow student there, Eric Schell, and his friend, Slava Rubin, convinced her that using the Internet would be a better approach. They became her co-founders, and they launched IndieGogo in 2008, the year that Danae graduated.
Colleen DeBaise: It’s a really interesting back story. What’s Indiegogo like?
Sue Williams: Indiegogo has that kind of Silicon Valley start-up feel to it – it fills several floors in an old loft-like office building in downtown San Francisco – you know, it’s got ping pong tables and a huge kitchen with healthy snacks and great coffee and micro-brewed beers.
Colleen DeBaise: Yeah that sounds like a Silicon Valley start-up. So, what’s Danae like, Sue?
Sue Williams: Well, Danae is obviously incredibly focused and hard working – you can’t get to be where she is today if you are not. She is surrounded by assistants and PR people and her schedule is completely jammed. But she really comes across as quite unassuming, quite soft-spoken even when there are a dozen things going on. Her desk is in a row of standing workspaces in the middle of a large office with lots of other people – no privacy.
Colleen DeBaise: She practices what she practices in terms of democracy for all..
Sue Williams: Yes, she really does. And one other less important but striking thing: Literally attached to her at all times, is her little dog Monk who she keeps on a leash clipped to her belt and who runs down the hallways ahead of her.
Colleen DeBaise: Great. Love the visual. Well, thanks for joining us, Sue.
Sue Williams: Oh, that’s a pleasure.
Danae Ringelmann: It sounds like a super cheesy story, but it’s totally true…We got out at the lookout point above the Golden Gate Bridge in Marin looking back at San Francisco, which is beautiful….
Colleen DeBaise: So that’s Danae recounting the day in 2007 that she and Berkeley classmate Eric first met up with Slava, who at the time was a strategy consultant, and they had their “a-ha” moment.
Danae Ringelmann: It was in this conversation Eric, Slava and I...where I think it was Slava that said, ‘Well, if you really want to democratize, you know, funding, what aren’t you using the Internet?’ And that’s when I said, ‘Well, I think that’s a brilliant idea.’”
Colleen DeBaise: Now, remember, this is 2007…which in social media years, is like a century ago. This was before everyone (like your mother, your friends from kindergarten, your ex-boyfriend) were on Facebook. Before everyone was on Twitter. Instagram and Pinterest — they weren’t even invented yet. And while people were shopping online, and Paypal existed, not too many people really trusted the Internet yet to transfer money. And nobody thought that people would part with their cash to fund a perfect stranger’s project.
Danae Ringelmann: I went back to my professor, and I had about two weeks left in the semester. Here I had been working for months if not years thinking about this offline idea yet in the course of one conversation there was a whole new direction using the Internet, which I knew very little about. And I asked my professor, “What, what should I do? And he said, “Well, go with your gut. Go with your heart.”
Colleen DeBaise: Danae had to give a final presentation to venture capitalists -- she scrapped her original idea and pitched Indiegogo as an Internet-based platform.
Danae Ringelmann: And when I pitched it and presented it, you know, all the VCs in the room had a lot of questions and they poked a lot of holes. But in the end they said, “You’re on to something so stick with this.”
Colleen DeBaise: So the next step was figuring out how to get people to actually use Indiegogo. Danae and her co-founders came up with the idea of incentives. So, say you’re an aspiring coffee shop owner. You launch a campaign on Indiegogo to raise money to open a store. So, how do you get people to contribute? You promise them a free cup of coffee, or a bag of coffee beans, or maybe a travel-sized coffee mug….whatever you think will entice people.
Danae Ringelmann: One late night in my kitchen we came up with this concept of perks, and we said, “Let’s give it a go.” Now that’s become the pillar of the industry.
Colleen DeBaise: One reason why they focused on perks is because Danae knew, from her finance days, that businesses who use Indiegogo could not offer equity stakes to the general public -- in other words, they couldn’t say “Invest in my coffee shop, and you’ll become a part owner.” At the time, that was prohibited by the Securities and Exchange Commission. The ban was lifted in 2012, although the rules still haven’t been worked out yet.
So -- Danae and her co-founders decided to go forward with this idea of perks. A year later, a company by the name of Kickstarter, which you may have heard of, came on the scene -- and it does a very similar thing.
Meanwhile, the next challenge was getting the word out. The Indiegogo team was smart enough to introduce the site at the Sundance Film Festival, where it got some attention.
Danae Ringelmann: When we launched the site we said, “Let’s just start with one industry. Let’s launch a platform that serves just filmmakers. And then once we figure that out we’ll expand to everything else.” The launch plan was, “Launch to film in January of 2008. Turn on music in March. Turn on books in April. And turn on,” I don’t know, the next thing, “in May.” And all of that went out the window when we launched because when you’re creating something new all of your marketing has to go into education. So we spent the first year and a half educating, educating, educating.
Colleen DeBaise: Still, everything happened a lot slower than Danae and her co-founders expected.
Danae Ringelmann: And we worked our butts off to get our first customer success, and then second customer success, and third customer success. And every time we had a success we’d take that story and tell it to inspire other people that it’s possible.
Colleen DeBaise: None of them had planned for the financial crisis, which happened right around the same time…
Danae Ringelmann: And that kinda became a period of I would call the dark period, where we just had to keep growing on our own, bootstrapping, keep getting more case studies, wait for the economy to come back.
Colleen DeBaise: She had saved up enough to money to go one year without a salary....she should have planned on three years.
Danae Ringelmann: We were rejected by 90 investors before we raised any money. So clearly a lot of people didn't believe that what we were doing had legs.
Colleen DeBaise: And on a personal note, Danae lost one of her biggest mentors and believers when her dad passed away, the very same year Indiegogo launched.
Danae Ringelmann: He was always encouraging. He was always saying, “It’s never been better to be a woman. You can do anything.”
Colleen DeBaise: We’ve been talking with Danae Ringelmann, who came up with a great idea for a new company…but had to devote a lot of blood, sweat and tears to seeing it through. At one point, she even moved back home and borrowed money from her mother. You could say it took several years before Indiegogo was an overnight success. But in 2011, three years after the company launched…things finally started to happen. In March of that year, Indiegogo won its first $1.5 million dollar round of financing. And then suddenly.campaigns on Indiegogo started to go viral. And global. People were talking about them.
First, there was an African humanitarian named Pastor Marrion who needed a kidney transplant -- his supporters used Indiegogo to raise almost $50,000 dollars for the surgery…he’s known as the Schindler of the Congo...here’s a clip from the video used on Indiegogo...“Yes, people are suffering you know, life is really difficult here, and poverty is too high”
Then there was the bus monitor, Karen Huff of upstate New York, who was bullied by students, and it was all caught on video -- we’d play a clip, but there’s too many profanities in it. Anyhow, perfect strangers donated over $700,000 for Mrs. Huff. Then a Florida couple called the Haleys who were having trouble conceiving raised about $8,000 for fertility treatments.
Danae Ringelmann: And so they had the procedure, they actually got pregnant and they had a baby nine months later. So that individual, that baby, wouldn't exist today without Indiegogo and without our open philosophy about everybody deserving a right to raise money.
Colleen DeBaise: These days, Indiegogo is doing very well. The company, which makes money by taking a cut of the campaigns, doesn’t disclose revenue…but it’s raised $56.5 million dollars in venture capital. A few months ago, it launched Indiegogo Life, which lets people raise money for personal causes -- medical expenses or emergencies -- free of charge.
The early days weren’t easy, but for Danae, the journey has been worth it.
Danae Ringelmann: What we're trying to do is enable everybody, whoever you are, wherever you are, to fund whatever matters to you.
Colleen DeBaise: Remember when we told you, at the beginning, that the term crowdfunding didn’t even exist when Danae first started? Well, Danae told me she’s not sure who coined it...she just woke up one morning, and people started calling it that. That’s fine with her. She’s happy to see the concept take off.
Danae Ringelmann: We've always had to rely on other people making the decisions of what things get made. Now we all can participate in that decision making process 'cause we can fund whatever we want. And when we think about the world that way, you know, who knows how much is possible?
Colleen DeBaise: Join us next time to hear more stories about innovative and inspirational women doing the things you’d never dream of. Or...maybe you would. This has been The Story Exchange. If you like what you’ve heard, visit our website at TheStoryExchange.org, where you’ll find news, videos and tips for women entrepreneurs. I’m Colleen DeBaise. Editing helped provided by Nusha Balyan. Production coordinator is Michelle Ciotta. Interview recorded by Sam Shinn. Executive producers are Sue Williams and Victoria Wang.