When a Kickstarter flop isn't actually a flop

By Erin Griffith , written on September 17, 2013

From The News Desk

Lively was a promising hardware startup with a great idea. The company had developed affordable monitoring units to help baby boomers care for their aging parents. Its use of a cellular hub with sensors is an elegant (and, at $149, cheap) way to avoid sending loved ones to a nursing home.

So, like most promising hardware startups, the company took to Kickstarter in April. The unusual thing, though, was that Lively didn't exactly need crowdfunding. The company had already raised $2.5 million in Series A funding from Seattle VC firm Maveron.

VC-backed startups are increasingly turning to crowdfunding sites when they don't need the capital. The press, marketing, and demand forecasting is too tempting to pass up. Lively's founders explained that it was crowdfunding for the crowd, not the funds. I wrote at the time:

The company is using Kickstarter as a way to experiment with reaching its audience and raising awareness. “That’s why the target is low,” [CEO Iggy Fanlo] adds. It’s about getting an audience interested and invested, both emotionally and monetarily. Help with forecasting demand is nice, too.
Raising that $2.5 million in venture funding was apparently the easy part. Lively's Kickstarter campaign sought to raise just $100,000, a mere fraction of its existing funding, and it belly flopped. The campaign only brought in $15,177 in commitments by its deadline.

If Kickstarter is good for forecasting demand, shouldn't the failure to get just $100,000 in commitments mean Lively is a dud?

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Not so, say the company's founders. Call it a "learning moment." Lively knew going in that its audience of "sandwich parents," who are caring for aging family members as well as their own children are not the typical backer of a Kickstarter campaign.

"We had a lot of folks who called us thinking they got shares," COO David Glickman says. "Some of our angel investors called asking if they were getting diluted. It's still a new thing, and for this demographic, it's a completely new thing. I would have loved to have gotten a few million in orders, that would have been great." The shortcoming wasn't for a lack of interest. Lively handled plenty of calls from interested purchasers who were new to crowdfunding and confused about how it worked.

"People said we'll buy it, just tell us when it's ready to ship," he adds.

Even though the Kickstarter campaign didn't gain traction, Lively's co-founders say it was worth it for the valuable marketing lessons they learned. "Seeing what we needed to do was invaluable," Glickman says.

For starters, the company simplified everything about its offering. While it's great that various quantified self apps can show us elaborate graphs and charts of our behaviors, that's TMI here. "This is about keeping it simple. We have smiley faces -- green, yellow, and red -- that show if grandma is on track with her daily patterns," Fanlo says. Only in rare cases did Lively have to add features. Most elderly people have multiple pillboxes, so Lively added multiple sensors there, for example.

The company also changed its messaging. Lively was over-explaining itself, especially when the primary purchaser of the product -- the 50-year-old "sandwich parent" -- easily understands and likes the product once it's clearly explained.

The problem, then, was explaining it to their elderly parents.

So Lively came up with a really clear and direct way to explain its value proposition to the elderly. "They need to know it's not too intrusive, and it's not about knowing every step of their lives, but more about giving family the peace of mind and safety about their own well-being," Glickman says. "Our messaging since then has completely changed and is far more resonant with folks," he adds.

The site's main copy now reads, "No one wants to compromise their independent life. With Lively, no one has to."

Perhaps most importantly, the press that Lively got around the campaign earned it the attention of a number of potential international distributors. Lively is currently in store placement and licensing discussions with a number of them, Glickman says.

It also got Lively attention from more investors. The company has closed its previously reported Series A round of funding at $4.8 million, led by Cambia Health Solutions with participation from Maveron.

[Image via Thinkstock]