Jan Sapper's Blog

How to refund 300k USD to 1000 Indiegogo contributors

In March 2016 we launched our crowdfunding campaign for ZOE, the private home automation hub on Indiegogo. With more than 1000 contributors and 300k$, the campaign went really well, as we tripled our initial goal.

ZOE was of such complexity that it was clear, that we needed partnerships to deliver in the quality and timeline we communicated in the campaign. For months we negotiated with a crucial technology partner, as they had to delay their cooperation with us. Regretfully we then had to postpone our cooperation so far into the future, that it was only right and fair to do a full refund.

When that became clear I took over the task of managing the refund. The first step was to ask Indiegogo for their help. You would imagine they have a way to refund 100% of the funds… Their tip was “…use PayPal for that…”. After the uninspired recommendation I based the following criteria for defining a refunding channel:

• The process had to be as efficient as possible. Ideal case: Automated refund batches.
  
• The refund channel had to be as cheap as possible, ideally free for our contributors.
  
• The communication had to be transparent to our contributors to keep their trust.
  

I then exported all contributor data from Indiegogo, and went through the available data: country, delivery address, email and some metadata such as date & time of the contribution.

Looking at the distribution of our contributors it was clear we had 3 main contributor groups:

Collecting refund information

The available information was not enough for sending funds to individuals right away. We could have transferred the funds via PayPal to their emails, but PayPal has transfer costs of up to 5% of a transfer, and many people use a different email account on Indiegogo and PayPal. On top of that PayPal gets even more expensive, when transferring to recipients without USD accounts. This is why we had to look for an alternative to PayPal. We then found, to my surprise, that the most direct and cheap way was with old school bank transfers. As we’ve got bank accounts in Germany (EU) and the USA, it was the perfect option.

Now we had to find out how to collect the account information from our contributors. We had been using SurveyMonkey for customer feedback for some time already, so it was clear that we could use this for sending out our refund request survey. With SurveyMonkey you can send surveys via email, and track the open & filling rates. This was a perfect fit, because we could clearly see who had filled out the refund request survey and who hadn’t. You can also automatically send reminders to those who haven’t filled out the survey. For simplicity-sake we created three refund-request surveys. One for each region we had a local bank account in (USA & EU) and one for the rest of the world (RW).

We then built three refund request surveys. One for each contributor group: EU, US and RW. It was also important for us that each contributor could choose between getting the refund to his bank account or via PayPal transfer. We also recognised, that our contributors from the rest of the world might also have bank accounts in the US or EU. It might sound complicated, but the paid “Skip Logic” feature of SurveyMonkey made it easy to manage. Have a look at the refund request survey we made for the RW (Rest of the World) group.

Breaking the news – Publish the refund announcement

After deciding on the refund process and tools, it comes to the public communication. In the public announcement of the refund we focused on explaining what happened, and most importantly for all contributors: “What will happen with the money?” We then published the refund-announcement on Indiegogo and concurrently sent out the refund-request-surveys to all contributors. Within 1 day we got a 80% response rate from our contributors and a lot of supportive comments and e-mails. Subsequently we sent out reminder mails to anyone who hadn’t completed the refund request. By the time we closed the refund request surveys we had a response rate of 96%!

Interestingly enough Europeans were more willing to fill out their bank account details compared to the contributors from the US. Below you see the final distribution of chosen payment methods.

Executing the refunds


Comdirect (EU) batch SEPA transfer

Batch refunding in the EU was a breeze. With our bank, the Comdirect, we could send a CSV file, which triggered automated batch transfers.

Chase (USA) batch wire transfer
Batch refunds in the US with Chase were a mess. Yes, we could upload the list of recipients, but we had to type in each amount and initiate each transfer manually. You can imagine… manual work means typos. And that happened, as expected. With patience we got it all done within a couple of weeks.

PayPal batch refunds
The mass payment feature is only available after having an account activity of at least $5000,-. PayPal won’t help you out in activating it just like that. We fixed that by transferring $5000 to the account. That said, we were also let down by the mass payment feature. The first batch of 200 refunds took around 15 tries to complete. One third of the transactions within every mass payment did not go through. PayPal support could also not tell me what was happening, so again with patience we made it through.

The aftermath

All in all the refund process took a bit longer than we all hoped it would, but we managed to do it efficiently. We were also surprised of the small amount of typos in the bank account details. Contributors typed in a total of 38000 characters and there were only a handful of bank account details with typos. 

Two months after announcing the refund, we had initiated all refund requests and everyone apart from a handful of contributors (with typos in their account information) got their funds. The final 4% who didn’t fill out the refund request survey would have to get in touch with us directly, so we can send them PayPal refunds. Regrettably our company went insolvent before we got to resolve these refunds, and at the time of this writing we don’t know what the next steps will be for these contributors.

Gained insights

This concludes with my overview of how we managed the refund of more than 300,000 USD to more than 1000 people worldwide. It wasn’t such a terrible process, but it’s worth to know that this would have taken just a couple of clicks on Kickstarter. My tip in general: use Kickstarter for crowd funding of products, and use Indiegogo as a second phase to continue collecting pre-orders. If you’re planning a campaign also consider the case: What do you do if you have to refund after the campaign has finished?

We always look at how to make something great but it’s equally important to close something the right way if it didn’t work out. I hope I could show you some useful tips on how to close a crowdfunding campaign. If you have further questions, feel free to drop me a mail, I’d be happy to help out. 

P.S. Like in any project, there are many things we learned in the refund process. I’ve collected them below, so maybe you can avoid some pitfalls and time-wasters.


General tips

• Make sure the email-domain you’re using has a good spam score, so you can reach your backers best. We were using a “.info” domain, which regrettably has a bad spam score in general. It’s annoying when someone you’ve been trying to contact over email complains on the campaign wall that you’re not responding his or her questions.
  
• My personal opinion: If you can choose, use Kickstarter as the crowdfunding platform. You can always put your product on Indiegogo after it has been successful on Kickstarter. ;-)
  
• Transferwise, an online platform for international cross-currency transfers with very low transaction fees, didn’t have a mass payment feature when we planned and executed the refunds. By the time of this writing they have launched it and it may be worth giving it a try: https://transferwise.com/business/mass-pay I’ve used this service privately for transferring money internationally and can say I’m very happy with it. You can ask me for my referral link, and get the first transfer for free.

Communication

• Answer comments and questions as soon as you can, your currency now is good will from the community. You want them on board for when you get to re-launch your campaign, or when you mess up in the refunding process.

• It’s your chance to leave a good impression for the future, be patient and transparent to the contributors.
• Have patience, not everyone reads your campaign updates / email content. Also Keep them short and concise. Bonus: You may think people are trolling you with questions such as “I just received the funds, so what’s the delivery date for my order?” Patience, many contributors are not digital natives.

• Prepare FAQs and copy & paste the hell out of them. ( I use TextExpander for this. https://smilesoftware.com/textexpander)

SurveyMonkey

• If you’re asking for US-Bank account details make sure to add a condition of minimum 9 digits in the routing number field
  
• Send out reminders weekly, to contributors with unresponded surveys. This got us a 96% response rate after 4 weeks!



ACH (wire transfers) with Chase


• The bank account information you upload must be in ALL CAPS! If not, the system won’t take the docs and give you 5 potential problem sources.
  
• US routing numbers MUST have 9 digits. Many times the entered routing numbers had leading zeros (number sequences starting with 0), and Excel got rid of these. To export a CSV from excel with leading zeros you need right click, format the field, choose custom and fill the “Type” with 9 zeros. Have a look at the screenshot below.
  

Growing out of a co-working space into an open office

A couple of weeks ago I got in contact with a writer from a well known website who was interested in our open office plan in Protonet. I wrote to him a pretty long email explaining our experience with our open office plan which includes a Caffe which is open to the public. Somehow his article never “reached the press” and wasn’t published on their website.

Anyhow I think it’s a nice story that shouldn’t fall into my email’s endless archive to be for ever forgotten. I took the most relevant parts of the email and added a bit of context as the original email was a dry condensation of facts.

Protonet is a Hamburg based startup which builds plug & play personal-cloud servers. The founders started working on the concept in their free time while they were still working in Xing, the German LinkedIn in 2009. In 2010 they started officially working full-time on Protonet in a co-working space in Schanze, the hipster-area of Hamburg, called betahaus. in Januart 2013, while still based in the co-working space they launched a crowd-funding campaign which reached its minimum goal of €50k in 6 minutes and its maximum goal of €200k in 48 minutes, that was a european record at that time. It’s a pretty awesome thing to hear how they managed to do that and they say that they wouldn’t have been able to get so far if they hadn’t had the contact and support from the other startups in the co-working space.

It didn’t take long until the Protonet team started becoming too loud and big for the betahaus and they started looking for an office. One day they found a nice space which had a café area in the front and a wide office space in the second floor. That’s when Ali (our CEO) told his wife “You’ve always talked about wanting to have your own café, now’s the time!” and she went with it. That’s when they moved Protonet to its new location and the Maker Hub was born.

While all that was happening, I was entrenched at home first in London then in Hamburg trying to get my own company on its feet. It was a one man show and I completely underestimated the difficulty of building a hardware product by myself. After a failed Kickstarter campaign and a near fall into burnout I moved for two months to California to find a co-founder who would like to work with me on my product. In Silicon Valley I realized the harsh reality that my product wasn’t worth making a company out of it. But while I was there I went to all the Hardware meetings and visited all the co-working spaces I could get to and learned a lot about what’s worth doing and especially the importance of the “why”. After one months of intense co-founder searching I gave up my baby, got a second place in a B2B startup weekend and started working full time in the new venture from that competition.

When I finally got back to Hamburg I had realized the huuuuge mistake I had done by getting entrenched at home so I decided to go to work from a co-working space. In the betahaus I learned of Protonet and its Maker Hub where I ended up going to a couple of times to work on my new venture. After a couple of weeks I realized that the new venture wasn’t going anywhere and I had found in Protonet an awesome place I’d love to work in. And the rest is history. I got the job and it’s been seven Months since then.

Since Protonet moved out of the betahaus, the owners realized that it wasn’t feasible to have a co-working space where teams have to move out as soon as they reach 6+ members. Thus the betahaus has recently moved into a bigger location. If you’re a Hamburg-Based entrepreneur please do yourself a favor and go to the betahaus and find out if it works for you.

Back to the main question the writer asked me: “What is it like to have a true open office?” Here the learnings we’ve had through the Maker Hub - Protonet constellation:

The not so practical:

• In the beginning it was a completely open space. You’d walk into the café and walk up the stairs directly into the open office setting. This was one issue especially over the weekends when nobody was working. Due to insurance reasons we had to build a wall that separated the workspaces from the café which is learning #1. You need to have a way to separate these spaces when needed.
• Because we have our own café we have most of our important meetings in there. Most of the time we’re talking about stuff nobody around us would understand and if they did it would be irrelevant without the complete context. But sometimes we’d have important meetings which needed to be done in closed doors. We didn’t and still don’t have that. We resort to the stair-compartment behind the emergency exit. I think many important decisions have been taken in there. Learning #2 don’t underestimate the need of a closed-space.
• Sometimes people simply walk into our office space and pull us out of our activities without any warning or invitation. The walls have reduced this issue. But we still get people walking in without any given reason. Now that we’re working on the next generation of our server it is especially delicate because we can’t afford that our new hardware design gets leaked by a random guest. We’re now thinking of a way to let café-guests know that it isn’t totally cool to just walk in. Lesson #3 know when you need visual privacy, do something about it.

The awesome:

• Due to the MakerHub we also have an event-area where we can have events at any time without having to go somewhere. At the same time there are also other events such as the social media week which is partly hosted at the MakerHub
• We have a different world where we can go to and switch directly into a more friendly environment when we need a time off from our desks. This environment switch is also awesome when you don’t want distractions from your fellow-workers that want to know where they can find the latest design guidelines…
• Burger-Friday, where we get to eat the best burger in town. The beef is grilled in front of our eyes on our terrace.
• The girls from the MakerHub join us every time we have team building events, so it isn’t talking about work all the time.
• Here we agree that the positives by far outweigh the negatives in case it sounds differently on the text. ;-)

Well let’s see if the article ever comes out.

2 biggest lessons learned from my first startup

Today is the anniversary of the cancellation of my MacDock’s Kickstarter campaign. Managing this campaign was an extremely stressful, emotionally taxing and energy depleting experience. It was a very tough but eye-opening time. I learned where my limits were, what friends I could count on, what I could do better and what I had done plainly wrong.

The MacDock was my baby, by the time I cancelled the Kickstarter campaign I had been working on my startup for more than one and a half years. In the desperation to keep my company alive I started looking for “co-founders” in Silicon Valley, where I met many people who helped me realize the fact I was in a wild-goose-chase. Simply said “You did something nice but should be doing something awesome instead.” It took me some time to finally kill the project and start looking for something else, something awesome. But that’s a different story.

Below is an excerpt of the message that I wrote as the last update on my Kickstarter campaign. It took me a month to finish writing it and I have to thank Jaeger Tang for helping me set the tone for the message and introducing me to the essentials of writing.

Excerpt of The MacDock Adventure is Over on September 26th 2013

What a journey it’s been! And looking back I wish I could have shared more of my week to week challenges as the campaign progressed. It all started almost two years ago when I was finishing my masters degree that I had the idea of creating a beautiful product which addresses a day-to-day problem which hadn’t been solved. One year later, I launched the MacDock Kickstarter campaign which was one of the most exciting days in my life. I felt like I was coming into a test for which I was perfectly prepared for. As a naive eager young entrepreneur with boundless faith and optimism; little did I know about all the challenges that were looming. As I recently heard from an experienced entrepreneur: “If we really knew what we have to do in advance we’d never start a company in the first place.”

To keep it short: there were many challenges and I learned many lessons. I’d like to share 2 lessons that I’d tell my 2 year ago self with you: backers, supporters and young entrepreneurs.

Lesson 1: The importance of a Team

A challenge as big as the MacDock is impossible to tackle by yourself. Sorry Tim Ferris, but outsourcing isn’t applicable everywhere. At least it’s not applicable for a one-man startup expecting to outsource the technical design of a consumer electronics product. I had been working on the MacDock by myself and worked with contractors for all the activities I couldn’t tackle such as technical design, website, Kickstarter video, etc. I worked on all the other activities such as sourcing the parts, patents, getting quotes, preparing the Kickstarter campaign, social media, PR, etc. It was lots of work and when I finally got to launch the Kickstarter campaign I hit the wall and realized that working by yourself isn’t the best way to tackle a challenge this big. As a fact, any investor, hardware accelerator or experienced entrepreneur would say that the 3 most important factors for a startup are: Team, Product and Market. Team being the most important aspect of the formula. I sort of knew this before but I assumed that I could rely on contractors acting as proactively as a “teammate” would. Little did I know about the practical effects of the principal-agent problem, thanks business school. By realizing that contractors can’t be considered team members got me to recognize that I needed a full-time teammate to work on the post-Kickstarter stages of the MacDock.

Lesson 2: Always be Networking

Never underestimate the value of NETWORKING. At the time of the campaign I was working by myself from home in Hamburg, Germany and didn’t involve myself in an environment where I could start looking for a co-founder. After some back and forth trying to find a co-founder in Europe, I decided to move across the world to the mecca of tech entrepreneurship: Silicon Valley. Now, as I write this I’ve been in San Francisco for 2 months having at least 2 meetings or meetup events a day. And I can’t tell how much I’ve learned and the great people I’ve met. In Silicon Valley I had many conversations with entrepreneurs who’ve been there and done that. These conversations helped me understand what I could have done better and gave me a completely new air of energy and perspective. Which got me to accept that it doesn’t seem to be the right time for me to devote all my energy to continue with a project with so much risk involved. I can now officially say I won’t be pursuing the MacDock any longer. It has been a painful decision to take, but it is necessary in order to open new exciting opportunities.

This was my first experience in doing my own thing and I learned more than I could have ever imagined.

I will share some more lessons learned such as insights in crowd-funding, managing international teams, home office and more in my next blogposts.

Basics of Mailbox App & Unroll.me

In my previous post I explained how the combination of the Mailbox App and Unroll.me make a weapon of mass email domination. This post here is a short intro to how to use each app, or at least how I use them.

Back to the main point, how do I actually use these apps? 

Mailbox:

After you’ve signed in to the Mailbox app, you’ll have done a nice and intuitive intro and cleaned up your email to your first inbox zero ever. As you might have noticed already, one awesome feature of Mailbox app is the usage of swiping for the main commands such as Delete, Archive, snooze (my hero) and Lists. It’s great because it’s more difficult now to fat-finger a command and f*ck up by deleting something by accident. 

The basics:

Delete: Swipe far to the right (and lift your finger) to delete a message. This will put the message in your email’s trash.
Archive: Swipe a little bit to the right (and lift your finger) to archive your message. Your message will land in your archive. You can imagine your archive as that place where you’re storing all your useless notes from university or maybe even some from school. It gives you the peace of mind of knowing you can still go and find your very valuable content even if that will realistically never happen.
Lists: Swipe far to the left (and li… I hope you got it by now) to add an email to a list. Lists is how Mailbox calls Folders. If you were used to sort your emails into folders (that you never looked into anyway), you’ll get the point for using them. The main reason for using the lists on Mailbox is for stuff you would like to keep for a moment when you’ve got time, for example when someone sent you an email with an article that in that moment looked very interesting but suddenly proved to be tl;dr.
Snooze: This is by far the most revolutionizing functionality of Mailbox. Simply swipe slightly to the left and choose when you’d like to have that email back in your inbox.

Practical insights from using Mailbox:

After I’ve snoozed a message 3 times I simply archive it and accept the fact that I’ll never answer it.

There is no “save draft” in Mailbox, so if you start writing an email, be sure you’ll send it!

Unroll.me

This app is more straightforward as there isn’t much you can do with it in the first place. In principle what it does is filter all your email, sort through it and put all your subscriptions into one condensed daily email. You can then choose when that email arrives to your inbox: morning, afternoon and evening.

Some things you should know about unroll.me

All the emails that end in your daily rollup first land for a second into your mailbox. You’ll still see the push notification, but the message will have disappeared from your inbox by the time you’ve opened mailbox and come back in the next rollup.

You can block people in the settings of Unroll.me. Useful when you’ve got that annoying company in Guatemala you can’t unsubscribe from or the occasional stalker who doesn’t stop sending you emails.

Warning: Don’t add time-critical things to your rollup. You don’t want to miss the last hours of your bid on eBay, for example.

How to finally take control of your email swamp in 5 Minutes with 2 free apps

* Edit: Mailbox has been deactivated! A very good alternative for power users is Airmail. Not Free, but well worth the price. 

Prerequisites: 

1. You have a gmail account (or host your email with Google) *Edit: You can also with iCloud emails.
2. Own an iOS Device be it iPhone, iPad or iPod
3. You trust apps managing your email (as if you had anything relevant in there in the first place)

So lets start with the theory: 

You might have heard of the “inbox-zero” principle, it pretty much is reaching an empty mailbox at least once a day. I actually like reaching inbox zero before I go to sleep especially because it gives me a sense of comfort knowing that all the pending emails have been prioritized and snoozed to when they’re relevant and there is nothing lurking in my inbox.

Now we’ll get our hands dirty:

First we need to clean up and get rid of the 30000 (mostly unread) Emails you’ve still got piled up like a hoarder in your inbox. To do this you ned to install the Mailbox app which will help you get to inbox zero. Simply tap on “Archive Everything" and voila! All your messages have been archived! Nope, they’re not gone and deleted, you can still find them in your archive. And yes, there’s a lot of trash still there stored forever in your archive but it’s your penalty for not having taken control over your mailbox earlier!

Now keep it clean!

Now that your mailbox is empty we need help you keep it this way! This is where unroll.me comes in handy. Unroll.me simply puts all your subscriptions you’re not willing to unsubscribe from (Facebook, LinkedIn, Meetup, and so on), into one daily overview and let’s you unsubscribe from all the other things you’ve been too lazy to free yourself from lately. This alone will reduce your daily email intake at least by half.

We’ve cleaned your inbox, reduced your daily supply of spam and given you a momentary taste of how it feels like to reach the mythical Inbox Zero. Awesome isn’t it? But don’t lay on your laurels yet! The challenge has just begun and now you’re prepared to at least stand a chance to take control of you email swamp. 

If this post helped you cope with life, reduced your email hassle or simply made you lose 3 minutes of your very exciting time hit me up on twitter and let me know if I should keep up with post like this one.

You want to know more about how to use Mailbox App and Unroll.me? Here my second post with more info!