As crowdfunding platforms continue to grow, an entire industry is emerging around them. We've written in the past about companies that are helping entrepreneurs bring their crowdfunded projects to consumers. Today, we feature a conversation with Lucas McNelly – a crowdfunding campaign consultant. As a filmmaker himself, McNelly helps directors, producers and actors raise the money they need to turn their film ideas into reality. We find out how he got into crowdfunding coaching, get a behind-the-scenes look at the campaign he is currently helping to run (4 of a Kind), and ask for some advice on how to convert fans into donors. 

Anton Root, Crowdsourcing.org: How did you get into consulting crowdfunding campaigns?

Lucas McNelly, filmmaker and crowdfunding campaign consultant: I realized the other day that I’ve been crowdfunding longer than Kickstarter has been around. Before we even called it crowdfunding, I’ve been doing it. I’ve had a couple successful campaigns, and when you have a couple successful campaigns, people ask you lots of questions about their campaigns, and it kind of snowballs from there. Then you just get to the point when you go, ‘I can’t answer all your questions, I can’t help everybody, I have other stuff to do.’ And then someone says, ‘Well, I’ll pay you to help me.’ And then, you go, ‘Oh, well, alright, I like money.’ (laughs)

How many campaigns have you done?

15 or so, 15-20. I started helping people actively in the past eight or nine months. I only recently started keeping track of how many I’ve done. If someone just sends you some questions and you email them some suggestions, you don’t quite notch that on your belt anywhere.

What are some of the most important lessons you’ve learned since you started doing this?

I think the biggest thing I learned is just how much work it is. When you first do it, you think, ‘Oh, I’ll do this, everyone will instantly see how great this is, and people will just flock to my project.’ They never do, but every time you do it, you for some reason assume that it’s going to happen. A lot of filmmakers, when they get into it, they think, ‘Okay, I’ll put it up there, and people will find it, and then it will get funded.’ But it just doesn’t work that way. There aren’t people scrolling through Kickstarter, looking for projects to throw thousands of dollars at. Maybe there are a couple of them, but not enough.

One of the things you learn really quickly is that you have work your existing audience. When someone comes to me and tries to figure out how much they have to raise, I ask, ‘Well, where is your audience?’ I’ll ask them how many people are on their mailing list, how many followers they have on Twitter, how many friends on Facebook. Put them all together and try to ballpark how much actual existing audience there is already. From there, you see what a practical goal is. If you have 20 followers on Twitter, there is no point in trying to raise $75,000 for your film. It’s just not going to work.

What’s the most work-intensive part? The outreach and staying connected?

Outreach, staying connected, thanking people, just keeping the ball rolling, you know? If your goal is a simple one compared to the size of your audience, then it’s not a lot of work, because you just need to convert a small percentage of your existing audience. But if it’s a really ambitious goal, like 4 of a Kind, that’s a ton of work. You’ve got to find all of these people, and turn them into fans. Then you have to turn them into fans who give you money, which is a lot harder than it sounds. You have to start a couple of months ahead of that, structuring, figuring out your strategy, and then emailing people and trying to get media outlets and trying to get on this blog or this website, etc. It’s a lot of thinking, ‘What haven’t we tried, what makes sense for this campaign that we can try?’ You don’t want to go at it with a bludgeon approach, you want to try to come a scalpel, come up with ideas that are more organic to the campaign than just blitzing the same things that everyone else does.

Do you think people are starting to realize that crowdfunding is not just easy money?

They are and they aren’t. I think the mentality is changing, but whenever Seth Godin runs a campaign, everyone goes, ‘Whoa, that’s amazing!’ Then you realize that he’s Seth Godin, and you’re not. The thing I always ask people is, if Radiohead did a campaign, how much money do you think they’d raise in the first ten minutes? Literally, they’d raise a million dollars in an hour. And every time that happens, people go, ‘Oh, gosh, that’s so amazing!’ You have to keep reminding them, that’s an outlier, it doesn’t really count. Everyone you tell that to, they say, ‘Oh, okay, great, a lot of work.’ Invariably, on day ten, you get a text message from them saying, ‘Oh, God, you were so right, I can’t believe how much work this is.’

How early would you say you typically start working on a project before you even put it on Kickstarter?

If it’s a complicated one, about three months. We’ve been working on 4 of a Kind for three to four months. Anything elaborate at all, I wouldn’t do without a month of preparation. And that’s if you’re going at it full time, for that whole stretch. People ask, ‘I want to launch next Thursday, can you help me?’ I pretty much invariably say no, because unless you’ve gotten a lot of stuff already set up, or there’s a good reason for why you have to launch next Thursday, it’s probably a bad idea.

What’s your relationship like with the people who are raising the money?

I kind of equate it to being a football coach or basketball coach. I can’t shoot the free throws for you, and I can’t throw the touchdown pass for you, but I can help you design the play. I can’t turn you into Peyton Manning, but I can make you better than you are. It’s a matter of degree, and a lot of it is how willing you are to be coached and to listen. Some people are very coachable and when you tell them something, they get it. With other people, you say, ‘I need you to run 15 yards and do a button hook.’ They say okay and run a fly pattern. That’s where a lot of the frustration comes in, because there is only so much you can do.

The filmmakers in these situations have to be front and center, because ultimately, that’s who people are backing. A lot of the campaigns and films look the same, so ultimately, you’re getting behind a person. It doesn’t do the filmmakers any good to just go away for thirty days and come back to a funded project. Long-term, it should be more like teaching someone how to fish instead of giving them a bunch of fish.

What do you think about the all-or-nothing model? There are obviously a lot of crowdfunding platforms that do that, but others like IndieGoGo let you keep the money that you raise in certain cases. Have you ever worked on an IndieGoGo campaign?

Yeah, I’ve done some IndieGoGo campaigns. The all or nothing model is really, really vital for a crowdfunding campaign to really work, but there are projects that don’t fit that, you know? David and Karen from FilmCourage are doing a project where they set a million dollar goal. It’s on IndieGoGo, so they’ll keep whatever they raise. The million dollar goal is mostly not a real goal. No one expects them to actually do it. In that situation, I think IndieGoGo makes sense. Obviously if you’re overseas, you can’t use Kickstarter, so IndieGoGo makes sense.

But ultimately, I think that the threat of losing the money is one of the biggest drivers in getting more money. That’s a big, big part of what makes it work, so I try to steer people towards that whenever possible. It’s a little more risky, but at the same time, I look at it this way – say you tell people that you need $10,000 to make your film, and you end up raising $500. Would you still owe those people a $10,000 movie? It’s not like their $500 is any less important because you didn’t raise the whole amount. It’s better in that situation to not have any money and restructure and figure out a way to do it differently than to have to film it. It’s not fair to anybody and it kind of puts you in a really sketchy ethical situation. For me, as a filmmaker, I’d rather just not have the money and try to make something different.

Looking in the other direction, when people raise more money than they expect, what do you suggest to people in terms of using that money?

I always tell people to put it on screen. The new thing seems to be people coming up with stretch goals, and they’ll have those stretch goals set up ahead of time, like, ‘If we raise this much more than our goal, we’ll shoot on the Alexa as opposed to shooting it on the Red or the 7D.’ So I always like to see people putting the money either on screen, or towards distribution. Very few people just take it and go to St. Thomas for a week on that money.

Also, almost always people running the campaign underestimate how much money things are going to cost them. It’s always good to have that money as a buffer in case you go over. And if you go over, then you probably got more backers [than you expected], so your perks are going to scale with that. So the amount of money you’re going to spend on perks is going to go up to. Even when you’re Amanda Palmer and you end up with a million dollars. I think she did an article on how little of that actually turned into profit on the million dollars because there was just more stuff that she had to do. But I’d say, put the extra money into the movie some way.

Do you think the stretch goals bring up some of the same problems that you mentioned with IndieGoGo?

I think you can easily run into that if you’re not careful, it’s definitely something to keep an eye on. But at the same time, the stretch goal is going to work in the same way that the normal goal does. You say, ‘We’re going to raise $50,000, but then at $75,000, we’re going to shoot on the Alexa.’ If you don’t get to $75,000, you just go, ‘Okay, well, great, we’ll shoot on the 7D like we were planning, and it will be awesome, and we’ll have a little bit of money from that, so maybe we won’t have to eat Ramen noodles every day of the shoot. We can eat bologna one day.’

Do you think consulting for crowdfunding projects is going to become a bigger profession? You take a percentage of the money raised, but I’ve spoken with others who think that this field is not going to grow because people will charge a flat fee, say $10,000, and scare off a lot of the potential customers. What are your thoughts on that?

I think if you’re charging flat money for that, you better be really good. There’s got to be some level of guarantee. My thing behind taking a percentage is, most filmmakers don’t have money, so it doesn’t do them any good to owe people money. And if you can’t get them to their goal, then I don’t know how valuable your work is. Unless you’ve got an insanely good track record, people who just charge money up front – I don’t know, it just seems sketchy to me, and just very ethically suspect. I’ve looked at the campaigns they’ve worked on. With those campaigns, you can usually see pretty quickly why they worked, and very rarely did they work because the campaign was well run, let’s say that. There’s a guy who is selling a book, and if look at his campaign, it’s terrible, the one campaign he ran. It was successful, and now he decides to write a book, and the campaign is awful. I wouldn’t hire this guy to run a campaign.

You talk to anyone who’s done more than one of these things, and they say, ‘I thought I learned a lot on the first one, and on the second one, I realized how little I knew.’ It’s one of those things – the more you know, the more you realize how much you don’t know. A lot of these people who are charging flat money, they’ve done very little in the field, so they just don’t understand how little value their services have. Unless they happen to know a lot of very important people who can get the word out very quickly, that’s valuable.

Are you thinking about running campaigns for things besides films and videos in the future?

I’m always open to it. People sometimes ask me to help with a comic book campaign, and I don’t really know anything about comic books. I can help you build it, based on what I know about comic books, and I can ask some questions, and the campaign will probably be better than if I didn’t help you. But for those projects, I’d probably either refer them to someone else who knows more about the topic, or I would do it for much, much less, because I don’t feel comfortable with how wonderful my advice would be. But, I think what you’re going to see a lot of is people working together. A friend of mine who also does this, she sent me an email, saying, ‘I’m working with this person on this, it’s going to be a clothing line that they’re crowdfunding, can you do this for me, and I’ll give you a cut of my cut?’ Just try to marshal as many resources as possible.

You said you worked on around 15 campaigns, how many of those have been successful?

Of the campaigns I’ve worked on, only one was unsuccessful. I was really surprised that it didn’t work. It was one of those things that when I heard about it, I thought, ‘Oh, this will be really easy.’ It had a $6,000 goal, and it got to $4,200, which is really high to fail. I think we misjudged the audience and how involved they were, and it was one of the first ones I did, so I think we screwed up a couple of things. Hopefully, it’s the only one that doesn’t work. Each time you run a campaign, you learn things about what you did right and what you did wrong. That one didn’t work, but, what are you going to do? Hopefully 4 of a Kind will work. It ends at the end of the day on Friday, and I’m seriously considering not sleeping for the last 60 hours of the campaign. It’s at that point where we’re just thinking, ‘What can we possibly do to get the word out more?’

The situation here is, the director is going blind. It’s an interesting campaign because he has no audience. So, he started with like 300 Twitter followers, and you’d be crazy to go for $100,000 for that. I tried to talk him down to around $75,000, at least. The question was, the fact that he’s going blind – can we create an audience from scratch because of that? Is that strong enough? We all felt that it was. We figured we’d be able to get him pretty easily on the local news, and get him to work with blind charities. In pre-production, it looked like it was going to happen pretty easily, and it just didn’t. What we’ve come to figure out is what is probably going to happen is that the local news and charities are not going to touch it until it’s successful, and then they’ll be all over it. We thought we’d be able to build an audience out of that. That didn’t really work. We figured, if caught a break early and got it on a Chicago NBC affiliate, maybe Good Morning America would pick it up. We were seriously thinking, either it’d be a dogfight the whole way, or we’d get funded in two days, and then spend the rest of the time drinking scotch and champagne and telling people how wonderfully easy it was. (laughs)

But Oprah didn’t show up to tell everybody about it, so now we’re in a dogfight. One thing we’ve been able to do is get a lot of independent filmmakers and artists to rally behind it, so we’ve sort of been able to cobble an audience together. I kind of anticipated that it may come to that, so I started on that before the campaign, lining up people who I knew would get behind something like this, to sort of vouch for it. So we have like 20-30 people who have been really actively promoting the campaign from day one, which has gotten it a lot more attention on Twitter, Facebook, everything, than it normally would have. So, we have a base that we can push from, at least, for this final push, and that’s the question – can we get enough people to line up behind the campaign?

You mentioned you thought that 4 of a Kind would be a doable project, despite the high goal. What sorts of things do you look for in a project when someone approaches you?

I kind of think of it like a producer. I look at the campaign and ask, ‘Is there an easy narrative here?’ The director going blind is an easy narrative. When I first looked at the campaign, he told me, ‘This is my film, it’s about this, and there are guns, and there is Chicago, and the mob,’ and at the end, he said, ‘And by the way, I have this eye disease.’ And I thought, ‘Let’s go with the eye disease.’

Because you build the campaign for short attention spans, the filmmaker going blind catches a short attention span. That’s a story I know I can tell quickly, in a lot of different ways, over 30 days. If Terrence Malick said, ‘I need to crowdfund Tree of Life,’ I’d say, ‘Okay, I don’t know how to say what this movie is.’ Then you have to sell it on who is in the movie, or on who is making the movie, which is how they ended up promoting the movie. You kind of look at it like that. And if you look at those pieces and you think, ‘I don’t know how to promote this,’ or if the audience numbers just aren’t there, that’s usually when you start passing on projects.

Do you think there is a stigma that crowdfunded movies are not as good as traditionally funded films?

Maybe, but I think the stigma is just a budget stigma that’s been there already. I don’t think it’s any different than the stigma five years ago, when you told someone you had a $50,000 movie. I think what is going to happen is that someone is going to fund a $5 million movie on Kickstarter, something that the studios have passed on for whatever reason, and they’re just going to go straight to Kickstarter and fund it, and things are just going to blow up from that. Even Amanda Palmer – however many backers she had – that’s so few people, in the great scheme of things. There are so many people who you talk to, who don’t even know what crowdfunding is. I don’t think there is necessarily a stigma, I don’t think we’ve branched outside of our very insular world and gotten the word out to people. I don’t think enough people know about crowdfunding for there to be a stigma.