The Crowdfunding Formula

I Make $4M/Year Helping People Run Successful Crowdfunding Campaigns

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Narek Vardanyan

Founder, The Crowdfunding Formula

$300K

revenue/mo

Founders

Employees

The Crowdfunding ...

thecrowdfundingformula.com

from Newark, DE, USA

started March 2015

$300,000

revenue/mo

Founders

Employees

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Want more updates on The Crowdfunding Formula? Check out these stories:

Hello! Who are you and what business did you start?🔗

My name is Narek Vardanyan, and I am the co-founder and CEO of The Crowdfunding Formula (also known as TCF).

We started as a crowdfunding marketing agency and quickly became one of the top agencies in the world, raising millions of dollars for creators in extremely short launch windows. As a boutique agency, we only work with the best clients and have managed to maintain an average raise per launch of over $1.2M.

Since then, we’ve expanded TCF into an ecosystem of companies and products that support consumer hardware innovation and help creators at various stages. Among them, Prelaunch.com helps innovators validate whether there’s a demand for their products, Creator Club is a creator-focused education and learning platform and community, CrossProm helps creators match and cross-promote each other, and TechIWant is a leading tech media for discovering innovations.

Our annual revenue is around $4M/year. This is predominantly generated by the marketing agency arm of TCF, as our software products are fairly new and we’re still optimizing them for usage metrics rather than revenue.

At the end of the day, we are on a mission to build an ecosystem that will help “ordinary people” overcome all barriers to entry and become creators, inventors, and entrepreneurs, compete with the global sharks and thrive — by offering them all the necessary financial, marketing, and learning solutions.

i-make-4m-year-helping-people-run-successful-crowdfunding-campaigns

What's your backstory and how did you come up with the idea?🔗

I was born in Soviet Armenia and was pretty young when the Soviet Union collapsed. Even though I couldn’t fully comprehend what was happening as an 8-year-old, I could see its effects. War broke out. There was no electricity or gas for months on end. Industries shut down. All banks collapsed.

And my family — like everyone else’s — lost most of its assets. I would wait in line for hours on the street in the cold — as a child! — to fill some old discolored bottles with our drinking water for the day.

I went to university — because that’s what you have to do to get a job — and started working at a local tech company. And soon, I was the Head of Marketing at one of Armenia's hottest startups!

And then the itch started… Could I build my own company?

I quit my high-paid job and started a project with a friend. We needed financing so somebody advised us to try Kickstarter. But our expectations were shattered when instead of raising millions, after the first day the funding was $0 and it ended up raising $15 overall.

I didn’t want to give up, so to learn, I started to conduct interviews with successful creators on running successful campaigns. The information was so valuable that I decided to publish a book, 57 Secrets of Crowdfunding, purely based on the advice I got from these 35 interviews.

I put the book on Amazon and very soon it became the #1 bestseller in the crowdfunding category — and I hadn’t even run a successful campaign at that point!

This led to consultations with campaigners, and eventually a video course with over 300 paying members at launch. But I was unhappy with the way people were failing to properly implement my teachings. So I gathered a team and started fully managing crowdfunding campaigns.

We started our first campaign with a dedicated team of 20 people—small dedicated teams for advertising, SMM, influencer marketing, PR, sales, copy, and visual content — and our first fully managed campaign, the Volterman Smart Wallet, ended up raising $2.9M and becoming historically the most funded wallet in crowdfunding’s history!

We grew quickly and soon became the biggest agency on the market with a team of over 100 people and an average raise of $1.2M per campaign.

Take us through the process of designing, prototyping, and manufacturing your first product.🔗

We noticed that other agencies only relied on FB advertising. No agency truly customized their marketing activities to each campaign or diversified their traffic sources to ensure that campaigners achieved their maximum potential. And this is where we saw a market opportunity.

I realized the #1 thing campaigners needed was traffic and awareness. So, I opened a blog.

We realized all the traffic sources we were already using, and all the ones we weren’t and knew that we could add lots of value to our partners’ campaigns. We also made a conscious decision not to take on lots of campaigns—most other agencies would hedge their bets by taking on dozens or even hundreds of campaigns at a time—and instead focus on a few campaigns, working for months on them with dedicated teams of 12-15 members.

We also didn’t have fixed fees, opting instead for a much fairer model. Every partnership we made had skin in the game on both ends, as we only charged 25% of the raised amount. This also motivates our team to aim for the greatest success every time and treat all campaigns as if they were their own.

This was important because for many campaigners this is their first product. And it has a critical life-changing value for them. A bad launch for a good product could stop them from ever creating—and we believe the larger return value of that creator developing a series of amazing products is much more important than a quick win.

Over time, we also saw a lot of problems that were holding creators back from reaching their full potential. So we started developing our ecosystem of products for internal use and started rolling them out for public use.

Among them are:

Prelaunch — validates ideas and lets people know if they’re worth developing or not
Perkfection — a market automation tool designed to save time by automating repetitive manual tasks
Tech I Want — a fast-growing media company covering innovations, with 100k+ newsletter subscribers and YouTube followers
CrossProm — a platform where complementary businesses match and cross-promote each other
Creator Club — a community and learning platform designed to help creators succeed
Viral Mango — a specialized tool to find nano-influencers and promote your products

The ecosystem we built is designed to support creators along all stages of their product creation; from idea validation to promotion, learning to network.

Describe the process of launching the business.🔗

When I started, I would approach campaigners with a cold email pitch asking for a 30-min call with them. I wanted to learn what they were doing that worked in crowdfunding. But nobody responded. And the reason was pretty simple. It was all about me and what I needed.

So I changed the pitch and made it about them, thinking hard about how I could offer these successful people something of value—even though I was just starting! And I realized the #1 thing campaigners needed was traffic and awareness. So, I opened a blog, The Crowdfunding Formula, and approached them with a new pitch:

“I’m a blogger specialized in crowdfunding, and I want to feature them on my increasingly popular blog.”

Even though I’d just set up the blog a month ago — it worked! And many eagerly jumped on a call to have an interview with me and openly shared all the secrets they knew.

And here’s the lesson: if you want to be successful, figure out what benefits you can give to your potential customers. It’s never about you — nobody cares what you want. If you can figure out what they want you can change your perspective and get what you want easier.

We optimized everything for learning during the first 3 years, until we started to understand how things worked in crowdfunding and started to generate revenue that covered our costs.

It took over a year to prepare for our first fully-managed campaign. Yes, a year! We wanted it to be extremely successful. So, we were both learning to crowdfund, and providing feedback to the product owner on how to change the product to make it more appealing. Before the launch, we managed to generate a lot of buzzes and gathered 20k email subscribers who wanted to get the product at launch.

We created a simple landing page that created a lot of curiosity. Inspired by carmakers, we didn’t reveal the design of the wallet fully, just mentioned the main functionality and started a referral campaign, creating incentives for subscribers to bring their friends for additional perks. I share the full strategy of the campaign in this article.

And thanks to this, in the first 24h we raised about $30k and confirmed that we had a successful launch.

There are many metrics that founders pay attention to the number of visitors, average session duration, conversion rate, retention rate, churn.

However, one of the most important metrics when launching a new business are the metrics that show you how much you have learned. For any platform that we launch, the ‘number of calls’ with customers is the #1 metric I pay attention to in the first year. Only after understanding what to improve, do we start optimizing for everything else.

Since launch, what has worked to attract and retain customers?🔗

SEO has always been one of our main channels to find new partners. We have a good rank in our niche and constantly publish articles to win for the organic relevant keywords.

We spent almost 6 months gathering all our best actionable advice into this 150 Tips for Kickstarter article, and it paid off. We use that, my original “57 Secrets of Crowdfunding” book and lots of in-depth articles to gather newsletter subscribers. I email them once a week with the latest entrepreneurial and marketing strategies and hacks. And over time, many of our partners have come through our newsletter.

One strategy that we use is to target relevant traffic with ads on LinkedIn and then retarget the same traffic on Facebook and other social media. This is the best of both worlds, as LinkedIn has good targeting for C-level executives and decision-makers, and Facebook is more affordable when retargeting. So, when they land on our website, we retain them with our Facebook pixel and we chase them on Facebook (and other social media), where ads are cheaper.

Cross promotions with companies who have access to our customer base also work great. We cross-promote our services with distributors, manufacturers, and platforms that have access to our customers. We liked cross promotions so much that we built a separate platform for it. Finding who has access to the target market you are trying to reach and finding incentives to offer for cross-promotions is a great marketing strategy.

Once we’ve engaged them, the next stage in the funnel is usually a compelling and dynamic sales page, which our sales experts send to potential customers.

We always try to be top of mind for our previous customers and regularly send them presents for their birthdays. It might be a small gesture, but it’s highly appreciated.

How are you doing today and what does the future look like?🔗

We are creating a comprehensive infrastructure with companies and projects that will solve various problems in the innovative hardware vertical.

In ten years from now, our vision is to make it easier for anybody to have a creative product idea, validate it, find the necessary resources and knowledge, and have the marketing tools and platforms to succeed and build a global brand.

If you are creative and can create meaningful products that can change peoples’ lives, you should have all the opportunities to succeed despite your network or financial well-being.

If you set your goals based on your current knowledge, skills, or resources, you’re thinking too small.

We are profitable with a profit margin of 44%. In our expenses, about 58% is the payroll and the rest is divided among marketing, legal, rent, and other expenses.

Through starting the business, have you learned anything particularly helpful or advantageous?🔗

Creating a culture of honest and transparent feedback is one of the most important drivers for sharing knowledge, keeping everybody accountable, and setting ambitious benchmarks.

If people you hire are not culturally fit you need to fire them immediately, even if they are great experts and produce really good results. You might need those results at the moment, but holding a toxic person in your environment will create a culture of dissatisfaction and create risks for the company in the long run.

In my early days as a CEO, I didn’t focus much on refining the vision and culture and didn’t talk about it at all. Later on, I understood that this is probably my most important and probably the main job.

Stress and failure are going to be regular things. You are never going to get rid of problems and stressful situations. In the startup world, you need to learn how to get comfortable with stress and don’t react to problems emotionally.

For learning, in the first year of your product launch, the number of calls you have with your customers is your #1 metric. Later on, all new features should have their success metrics and be thoroughly analyzed. And before building any feature/service you need to know how you’ll be measuring its success.

If you set your goals based on your current knowledge, skills, or resources, you’re thinking too small. Your resources should depend on your goals. Once set, you can plan what resources you’ll need to achieve them. So don’t be afraid — set goals that are at least 3x more than what you expect of yourself.

And always remember that the market you are working in is one of your most important decisions. If you have chosen a small market that doesn’t grow, even if you become the industry leader, your results will be limited. Try to analyze what markets are growing and what the trends are, and spend your time and energy wisely. In contrast, we spent a lot of resources building a tool that rapidly became #1 in its niche… but as the market’s small, it didn’t grow much past that!

And personally, one of the most helpful habits that I acquired in the past year is note-taking. Our memory is not designed for holding terabytes of information and when you can save everything digitally, you gain a superpower. My go-to tool is Roam Research.

What platform/tools do you use for your business?🔗

Slack for internal communication — and recently even for client communication! It’s just so easy, especially with the current global situation, to work together as a large team across multiple channels, remotely or in-house. The paid version maintains a complete history, which is useful to find old threads, files, and ideas.

Notion and Roam Research for knowledge management. The notion works great for the whole team, building big databases of knowledge and easily turning them into articles. But while Notion is a great long-term team knowledge center, Roam works better for personal daily note-taking tasks, and linking disparate ideas together.

Assessteam for internal evaluation and development plans. Setting and following up on development plans is crucial to growth, and Assessteam makes this much easier than a mess of Google Docs and Sheets.

Mailshake, Pipedrive, and Getresponse for outreach, sales, and email marketing respectively. Because they’re just the most complete and feature-rich platforms in their niches. Getresponse allows us to handle audiences of 100,000s as easily as small launches of under 1,000 people, with complex flows segmenting them depending on what stage the leads are at.

Ahrefs to constantly monitor and improve our search ranking.

Clickup for managing tasks, projects, OKRs, and a lot more.

What have been the most influential books, podcasts, or other resources?🔗

Podcasts I recommend:

My First Million, The Tim Ferris Show — helped me get virtual mentors whom I am constantly following and learning from. I am not active on Twitter, but MailBrew helps me get a daily digest of tweets of people whom I am following.

Books I recommend:

High Output Management — This is the first book every manager should read to get an understanding of what management is about.
Only Paranoids Survive — Helps founders be in a healthy “paranoid mode” even when everything seems to be right to see a bigger picture of markets.
Hard Things about Hard Things — Is a must-read for CEOs and first-time founders to understand what they are going to face. Being a CEO is not only about success and celebration. It’s an everyday hard job and not everybody is ready for it.
Loonshots — Helped me understand the importance of phase separation in the company and the importance of the knowledge transfer.
Principles: Life and Work: Helped me analyze and write down the principles I use in most important decisions. Made me a much more systematic thinker.
What You Do is Who You Are — Helped me evaluate once more the importance of culture and its role in building a long-lasting company.

Advice for other entrepreneurs who want to get started or are just starting out?🔗

Your success, in the long run, is defined by your team, vision, and culture.

If any of these elements is missing or not well developed, spend as much of your time as needed to refine and make sure you are well set.

In my early days as a CEO, I didn’t focus much on refining the vision and culture and didn’t talk about it at all. Later on, I understood that this is probably my most important and probably the main job.