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Q&A: Danae Ringelmann - Co-Founder, Indiegogo
November 21st, 2012
This is the latest in a series of posts detailing responses to a Q&A we've conducted with members of the Sustainable Brands community on a variety of issues at hand. Today, we speak with Danae Ringelmann, co-founder of Indiegogo.
Q: The UK and European countries have been leaders in many ways in recognizing and responding to impending environmental and social crises. What are you most proud of about how the US has responded, and where do you feel things have fallen short?
Danae Ringelmann: The economic downturn of the last few years has been a challenge for many countries, including the US. However, I think everyone from individuals to government leaders have responded positively by questioning the status quo. A great example of this is crowdfunding. Five years ago, when Indiegogo (the global crowdfunding platform I co-founded with Slava Rubin and Eric Schell) was born, the word "crowdfunding" didn't exist. The idea of raising money through social networking and social media was just that — an idea. But it was the few, then dozens, then hundreds and now thousands of people successfully raising money for their businesses, creative projects and causes that have proven crowdfunding works. It's not just an idea.
Samantha was a young entrepreneur who had just started her gluten-free bakery business on a $10,000 business loan. When offered the opportunity to distribute her product in a regional grocery store chain, she went back to the bank for extra capital, and was denied because her business was too young. Determined to take advantage of the growth opportunity, she took a shot at crowdfunding, having never done it before. Three weeks later she had the $15,000 needed to get her product into the grocery store chain. So I'm proud of our customers like Samantha. They've helped trailblaze a whole new way of funding that will benefit millions more in the years to come.
I'm also proud of the US government for taking notice of its trailblaziers, and listening to their recommendations to change laws that would amplify the benefits and impact of crowdfunding even further.
Two years ago, a concerned citizen blogger Paul Spinrad noticed the unintentional inequities and the inefficiencies that resulted from the 1933/1934 Securities Acts. While they were put in place to protect unsophisticated investors from unknowlingly making high-risk investments, the unintended by-product was exclusion of Main Street American investors and businesses from investing in and raising money as efficiently as Wall Street investors and corporations. Main Street was stuck with old school, inefficient systems. With the advent of the Internet, maturation of online payments, the democratization of communication via social media, and the rise of social fundraising via crowdfunding, protecting unsophisticated investors from high-risk investments could finally be achieved through technology, rather than prohibition. So Paul decided to write a petition to the SEC to change crowdfunding law. Coincidentally, he didn't have the funds to pay a lawyer to write the petition, so he crowdfunded the lawyer payment on Indiegogo.
Less than two years later, a committed effort by many entrepreneurs, investors, businesses like Indiegogo customers, Senators of both parties, President Obama and Paul resulted in the overturning of laws that had been in place for over 80 years. The JOBS Act was passed, enabling Main Street investors and businesses to invest and raise money online without registering. Limits were included as the way to protect the unsophisticated investor, the tracking of which is now possible because of technology.
So while America will never be done innovating, the drastic steps taken by individuals and our government proved that progress is not only possible but it can happen quickly too. There is no one better to illustrate that than Samantha, who stood up on the podium at the White House when President Obama signed the JOBS Act. It was less than a year before the signing that she had run her crowdfunding campaign to expand into a regional grocery store chain. So it was only fitting that her business had since expanded into 40 states across the US as well.
Q: As a leading executive who is creating new business value, what triggered your realization that sustainability could become the core driver of innovation, revenue growth and brand value for your business? How did you start seeing ways that your company might take advantage of this opportunity?
DR: I believe any problem-solving process or model that is more efficient and more deeply supports the fulfillment of human ideals is inherently more sustainable. Why? Because customers — aka human beings — don't have to make a trade-off between convenience (short-term needs) and hope (long-term goals). Too often, business solutions solve one, but not the other, which leaves the customer only partially satisfied. We all know the internal conflict when we buy a cup of coffee in a plastic cup because we forgot to bring our washable travel mug. We're happy to get the caffeine, but feel guilty for dumping more plastic into the landfill. We also know the frustration when purchasing a scarf directly from the man or woman who weaved it — whether it's in Peru or cross town at the monthly farmer's market. We feel great about supporting the artisan's business, but frustrated that it'll likely be a one-off exchange, as the effort to repeatedly buy direct clearly takes more work than a few clicks on a retail website. So when a business meets both a customer's short-term needs and supports their long-term ideals, that's not only sustainable, it's also a huge competitive advantage, and thus a cornerstone for growth.
I recognized this almost 10 years ago when I co-produced a concert reading of an off-Broadway play in New York City. The one-time event involved a suite of actors volunteering their time to read the play on stage in front of a packed audience and a few potential investors. The goal of the event was to put on a good show and elicit a positive audience response, thereby prompting the investors to fund a larger off-Broadway production. Everything went perfect until it was time for the investors to cut the check. They loved the play, but not the risk/return profile. All the pieces had fallen into place, except one — the funding. So we had, for lack of a better term, failed. But it was in that moment that I realized the people who wanted to make the play happen the most — the actors and audience — had no ability to put that funding piece in place themselves in order to make the play happen. Essentially, the actors and audience had no efficient mechanism to act on their ideals or dream to support a local theater director in bringing this beautiful and relavent play to life.
So, a few years later, Indiegogo was born. My co-founders and I joined forces out of the mutual frustration around the inefficiency and thus unsustainability of fundraising. Today, Indiegogo is the world's largest global crowdfunding platform where ideas are funded based on the heart and hussle of the ideators and their communities/audiences. We've enabled entrepreneurs, artists and non-profits to take financing into their own hands and easily connect and engage with their fans. We've also reduced the barrier to supporting a business, artistic endeavor or cause to a few clicks of the button and the price of a cup of coffee. Thus, we've made raising money for your dreams and funding your ideals and passions efficient. Today Indiegogo is in virtually every country and we're distributing millions of dollars every week. Our growth is a testament to the marriage of efficiency and supporting ideals ... i.e. sustainability.
Lastly, there's also a side benefit of seeking sustainability in your business model by striving to solve both customers’ near-term needs and long-term goals. You wake up in the morning without any internal conflict yourself, and you find recruiting and retaining talent easier than others running companies that don't marry the two. The work you and your team do is helping people solve their problems while also making the world a healthier place. So yes, getting your cake and eating it too is possible. How? Start a sustainable business. If that's not an incentive to promote sustainability, I don't know what is. We only live once! Let's make it yummy.