How we turned $ 140 thousand on Kickstarter into $ 40 thousand of debt, and then went to zero

Original author: John Teasdale
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This post is the third part of the article "Creating the game" The Contender "(" Rival "): the concept of completion. Here are links to part 1 (how we made the game) and part 2 (how we launched the project on Kickstarter) .

There is Two big questions that every Kickstarter developer must ask himself to succeed. We answered them incorrectly.

I'm John Tisdale. My friend and I created The Contender: a game about the presidential debate. On September 9, 2015, we raised $ 127,827.01 on Kickstarter. It would seem - a lot of money, but only this week, on November 22nd, 2016, we finally paid off our debts. It took 440 work days after creating the product and the Kickstarter campaign, before we received $ 1.

We did not expect this to happen.

Below are the very two big questions, our answers to them, made at that distant time, and what we learned in the end.

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Question 1. Where to produce?


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What should I do with all this money !?

In the gaming business, the United States and China have the greatest opportunities. Our list of advantages and disadvantages of both of these options was as follows:

USA

  • We get the opportunity to put the old, good, large inscription "Made in the USA."
  • Fast delivery, especially on holidays.
  • Clear and fast communication. We can even visit the factory.
  • Quick completion if the quality is not what we expected.

CHINA

  • Much cheaper. Almost 50% cheaper.
  • I printed games in China earlier and had a good relationship with the company we used.

After discussion, we decided to stop at the USA. We put on pink glasses and really wanted to launch the product on the market by Christmas. In October, all companies place large orders to prepare for the holiday. If you are late, then delays possible in the manufacture and delivery can disrupt the delivery time.

We chose a major manufacturer from the USA who printed cards for Uno, Settlers of Catan and Magic: The Gathering games. Relying on their experience, we hoped that the guys would be able to provide us with some “insurance” against bad production ideas.

Alas! Large companies work with other large companies and move at the speed of large companies. We thought that making test prints and making changes based on these prints would be a quick process, but it took weeks. This is not to say that the company is bad; it’s just that we would have to choose a manufacturer who understands the problems that a small company is facing.

The big lesson: work with companies with experience working with organizations like yours. (note editor: in terms of "size")

Our assumption of "insurance" was not justified. Here are three examples of problems that led to the loss of time, money and the benevolent attitude of investors:

1. We wanted to have such a place in a box in which expansion cards could fit. The printing house recommended a cheap cardboard insert. An empty cardboard insert led to the appearance of a warp zone, causing hundreds of games to be damaged.

2. We thought the company had experience delivering directly to Amazon order centers. In the end, I was forced to figure out how to do this, and learned only after several unsuccessful attempts.

3. Our Politically Incorrect (PI) extensions arrived at Amazon without any marking. Amazon had to delay our receipts for processing, and many PI boxes were then generally labeled incorrectly. We still get 3-4 refunds per month from customers who received a PI box instead of the base game.

All of these delays accumulated, threatening to disrupt our delivery by Christmas, despite the US seal. If you supported our Kickstarter, then you may remember our message, which was specifically about this. This, of course, did not please people. Even worse: after Amazon put the game into storage, some people might start receiving the game through Amazon Prime before the delivery from Kickstarter went.

Letters flowed to us. The problem that each of our supporters addressed to us in mid-December was one: “save Christmas.” We turned to everyone who planned to give the game. All who responded were transferred to free delivery within 2 days. About 1,000 games arrived on time for customers, but some were late. All this cost us about 10,000 US dollars.

Question 2. How much to order?


Here you need to decide how much you are willing to invest in yourself. When creating your project on Kickstarter, you need to have 2 goals in front of you. The public goal is how much money needs to be collected so that they are enough to release the product. A personal goal is how much money you need to raise in order to run a company capable of releasing this product. The last goal is much higher. Our estimate gave 150,000 US dollars. This meant, according to our calculation, the economies of scale would work, and the business would be able to support itself, making a profit.

We did not reach this mark, but we were very, very close to it. Being delighted with our own success, we lived the next few weeks ...

1. We sold 4,000 games in a month, and that was just the beginning of the election year. If we can keep at least 25% of our drive, then we will sell approximately 20,000 games by US election day.

2. However - if we order 20,000 games, then we will immediately have a debt of 40,000 dollars. In addition to the fact that we will be suspended with the extensions PI & 2016.

3. Consideration # 2. If we order 20,000 games and sell them, we get $ 150,000 each!

4. We: “We would like to order 20,000 games!”

5. Manufacturer: “Please! Make sure you pay us the rest of the money you owe us when you sell them! ”

6. Reality:

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7. We:

It turns out that Kickstarter is a land of magical fantasies where people are delighted with your offers in a way that does not translate into your small business. After talking with different people involved in this matter, it turned out that this is the norm. If you keep 8% of your Kickstarter momentum for a year, it means that you have succeeded. We had 4%. The CEO of a much more experienced gaming company told us that when he feels particularly aggressive, he orders 2-3 times as much pre-order volume. We impulsively ordered 5 times more. It is clear that we were over-optimistic.

How optimistic?

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Big lesson: if you plan to sell outside of Kickstarter, then order a maximum of twice as much already sold.

If we printed in China and printed only what we owe, then we would receive $ 23,000 each.

Baby now what?


The first problem we encountered was the storage of products. Amazon.com's initial maximum capacity was 5,000 products. I launched the famous “northern charm” and got a free extension to 8,000 units. This was great because we had just 7,500 units (base deck + PI extension) for immediate shipment. The failure to deliver this batch would lead to serious delays. Several hundred copies of the game are located along the walls of the Guts and Glory office. Where was the rest, I could not say for sure. Apparently, somewhere on the edge of space and time.

And that led us to the second problem. How do we sell all this? At first everything seemed so easy. What we tried to do is described below:

Attempt: sending free copies of the game to bloggers and community members.
Result: none. All that we received from this is people who turn to us. Larger packages were returned unopened to the sender.

Attempt : advertising through Facebook.
Result : ~ $ 1,000 invested in 30 different advertising casts, ~ 20 clicks received, 0 sales.

Attempt : Presented on YouTube channels with> 1,000,000 subscribers.
Result : 3-4 games were sold based on the results.

Attempt : Several comic commercials have been released where puppet presidents play the game.
Result : A LOT of time has been lost - complete disappointment. There is no noticeable gain in sales.

Attempt: We visited the caucus in Iowa and the primary election in New Hampshire, featured in local news, were described in detail on the Daily Dot.
Result : increased online sales by 75% while we were moving. But it barely paid off, as we spent money to stay on the wave. We attribute more active reinforcement to social networks.

Attempt : Writing articles positioning the courtesy of company headquarters in Iowa and New Hampshire.
Result : a lot of fun. There is not much money.

Attempt : laudatory advertisement in the Wall Street Journal (partly just fell into our hands)
Result : 100% increase in online sales in 3 days.

Attempt : rent a booth at Politicon.
Result: net profit ~ $ 1,000.

Attempt : getting a site near the annual GenCon gaming festival.
Result : it was cool for us. We were not in the premises of the festival, but we were close enough to receive a fair amount of visitors, and were also able to meet many people who knew much more than we did. We heard that other small gaming companies lost money by paying for participation in the hope of deals.

Attempt : Amazon sponsored products.
Result : it really works. We spent approximately $ 2.70 on advertising for each sale of the base game.

- UPDATE -

Attempt: Writing a series of revealing material about our business in the hope that someone will inflate this material on Hacker News / Reddit.
Result : hello everyone!

- END OF EDITING -

Attempt : make more extensions and tell about them to people who already liked our game.
Result : DAMN WHY WE DIDN'T DO IT ALL THE TIME!

We are trapped. We thought marketing means that we just need to go on the paths and paths that people walk on, and people will give us the money. It turns out that the game is just good, and people want to play it. When we began to focus on improving and expanding the game, we not only saw an increase in revenue due to new extensions, but the sale of our other games also increased. That is what pulled us out of debt.

Big lesson: use your energy to sell what you sell. Do not use it to advertise and promote those who sell what you sell.

What's next?


We have more than 10,000 games in stock, and we need to quickly free up the places where they are stored. Our estimate of the nearest Amazon long term storage fee is $ 6,500. This means that we must destroy thousands of games so as not to be in debt due to storage fees.

Fortunately, we do not have to destroy everything, and what we sell, moving forward, ultimately gives profit.

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