Key Moments
Know Why You're Starting a Company - Danae Ringelmann of Indiegogo
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Key Moments
Indiegogo's founder discovered a powerful 'why' for her company's mission, democratizing capital access, which helped attract co-founders, navigate a 3.5-year funding delay, and build a global platform.
Key Insights
An authentic 'why' for starting a company is crucial, as it increases the chances of success by aligning with core values and attracting like-minded co-founders.
Danae Ringelmann's 'why' to democratize access to capital was so strong it led to a pivot from an offline fund to the online model of Indiegogo, embracing the internet as the most democratic tool.
The original plan for Indiegogo was to raise their first venture round in Fall 2008, but due to the financial crisis, they actually secured funding three and a half years later, highlighting the need for a powerful 'why' to persevere.
Indiegogo's mission to empower the world led to its strategy of being an open platform and global from day one, requiring significant backend infrastructure development to serve customers worldwide.
Customer happiness became a key differentiator for Indiegogo because they recognized that for many, raising money through their platform was a new and potentially challenging experience.
The '5 Whys' exercise revealed Danae’s core belief that life should be fair as the irrational, yet powerful, 'why' behind democratizing funding.
Discovering an authentic mission as the foundation for success
Danae Ringelmann, co-founder of Indiegogo, emphasizes that understanding the 'why' behind starting a company—the problem you're solving and why you deeply care about it—is paramount. If this core reason isn't authentic, the likelihood of failure significantly increases. Ringelmann's personal 'why' was to democratize access to capital, a problem that personally affected her and her family. This clear mission became a guiding principle, not only providing personal conviction but also acting as a magnet for finding co-founders who shared the same passion and vision.
Pivoting from the solution to the core mission
A clear 'why' can also liberate entrepreneurs from being overly attached to their initial ideas or solutions. Ringelmann shares that her original concept for Indiegogo was an offline fund with a democratic twist. However, when she connected with her co-founders and clarified her deeper goal of democratizing capital access, they challenged her to leverage the internet, the ultimate democratic tool. This realization, driven by her commitment to the 'why' rather than the specific 'how,' led to the innovation of a perks-based model and the eventual launch of Indiegogo as we know it. Had she been more focused on her initial product idea, she might have missed a more effective path to solving the core problem.
Persevering through unforeseen challenges with a powerful mission
Entrepreneurship is inherently difficult, marked by inevitable dark periods. Ringelmann illustrates this with Indiegogo's own experience: their plan was to launch in early 2008 and raise their first venture round by Fall 2008. However, the financial crisis drastically altered this trajectory, delaying their first capital raise by three and a half years. Ringelmann personally had to survive on the minimum required, a situation extended far beyond her initial one-year plan. She stresses that without a deeply meaningful and powerful 'why,' sticking through such prolonged hardships would not be possible. The passion for their mission, despite the dire circumstances, is what enabled them to endure.
Strategic decisions informed by the core mission
The 'why' is not just an emotional compass; it's a practical tool that informs an entire business strategy. Indiegogo's mission to empower the world by democratizing access to capital directly led to their decision to be an open platform without a gatekeeper application system. This open approach contrasts with traditional funding models and is a core reason users continue to engage with the platform. Furthermore, this mission necessitated a global perspective from the outset, pushing the company to build robust backend infrastructure capable of serving customers in every country worldwide. This fundamental belief shaped their operational and market strategies.
Building a differentiated business around customer success
Recognizing that they were creating an entirely new industry—funding—and offering a novel way to raise money meant that most users would be new to the process. Indiegogo's 'why,' to empower everyone to fund what matters to them, translated into prioritizing customer happiness as a key driver and differentiator. They understood that supporting users through their first fundraising experience was crucial to their success and, by extension, Indiegogo's success. This customer-centric approach became a vital aspect of their business model.
Product development driven by diverse needs and flexibility
The commitment to democratizing capital means providing a wide array of funding options to cater to diverse user needs. Indiegogo doesn't impose a single method; instead, they offer various structures like fixed funding, flex funding, and 'forever funding.' This flexibility allows users to maximize their fundraising experience and optimize it for their specific goals. The company also actively participates in legislative changes, such as the Jobs Act, to enable future options like equity crowdfunding once laws permit, further expanding access to capital.
Attracting exceptional talent and dedicated customers
A strong 'why' has a remarkable effect on attracting both talent and customers. The best and brightest individuals are motivated by more than just a salary; they seek opportunities to contribute to meaningful causes they believe in. Indiegogo's mission has drawn highly skilled individuals whose hearts are as invested as their minds, fostering continuous innovation to achieve the company's goals. Similarly, this mission attracts passionate customers, like engineers creating solar-powered streets or teams crowdsourcing genome data, who leverage Indiegogo to bring world-changing ideas to life, often achieving significant funding and subsequent success, such as Series Seed rounds.
The '5 Whys' technique for uncovering core beliefs
To help entrepreneurs gain clarity on their 'why,' Ringelmann recommends the '5 Whys' exercise, a simple yet profound technique. This involves starting with the reason for starting the company and repeatedly asking 'why' (like a curious two-year-old) until one reaches a point of irrational belief. This foundational, deeply held conviction, even if difficult to logically explain, represents a truly genuine and powerful 'why.' For Ringelmann, this process led back to the core belief that 'life should be fair,' which fueled her rationalization for democratizing funding, revealing the deep, albeit irrational, source of her entrepreneurial drive and commitment.
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Starting Your Company: The Power of 'Why'
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Danae Ringelmann emphasizes understanding the core problem you aim to solve and your personal motivation behind starting a company. An authentic 'why' is crucial for resilience and attracting the right people.
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