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Crowding Funding Secrets: How raising $28M through crowdfunding inspired Dan Shapiro, CEO of Glowforge, to build the ultimate ecommerce experience.

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Crowdfunding has been around for centuries — all the way back to the 1700s when Alexander Pope was looking for resources to publish his book. So what did he do? He turned to the people! In return for their funding, his supporters were promised a shout out in the manuscript and would receive a printed copy.  Thanks to the internet, crowdfunding has been taken to another level. With easy access to billions of people — and their wallets — young companies, inventors, and entrepreneurs have used sites like GoFundMe, Kickstarter, and others to get some wind in their sails. Dan Shapiro was one of them. Dan is now the Founder and CEO of Glowforge, but before that, he had a massively successful crowdfunding campaign for a board game he had invented for his kids. Through that experience, Dan realized that there were certain elements of crowdfunding that he described as “magic” and that he thought could translate to the world of ecommerce. For his next venture, he wanted to take the high-intent visitors to a crowdfunding site on his website and get them to start converting reliably on the brand’s landing page. He wanted to build a community, and to build excitement that would turn into a flywheel of referrals and inbound leads. Oh, and he wanted to build an inclusive, mission-driven internal culture at the same time.

Well guess what. He did just that with his next crowdfunding campaign. With $100K campaign goal that ended up being blown out of the water, hitting $27M in pre-orders, he launched his next endeavor. And we dove through all the details on this episode of Up Next in Commerce!

Main Takeaways:

  • Beyond Crowdfunding: The conversion rate of a visitor to Kickstarter is exponentially higher than that of a traditional ecommerce site visitor. So how can you take the elements of a crowdfunding site and bring it over to a traditional online marketplace? There are certain strategies and tactics that transcend crowdfunding and harnessing that energy, excitement, and engagement can be a differentiator for a brand.
  • Bring A Friend: Referral programs are nothing new, but when done right, they can be a game changer for a new brand. Look at your customer base and the products they are buying from your company. If you are selling to naturally extroverted people — any kind of creator — and your product is helping them create something that they’ll want to share, tap into that natural tendency and give them incentives to share what they’re doing and how your company helped. This could lead to a flywheel of inbound customers without having to spend big on marketing.
  • Come Back When You Want: Repeat customers are the lifeblood of many companies. And while getting customers to return is important, how and why they do so is even more critical. You want people to come back to your company because they were delighted by the product or the experience, not because they need to replace a part that wore out or broke. Those experiences leave a bad taste in the consumers’ mouth, and you should be striving for the opposite, especially if you are trying to build a community of advocates.  

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

Key Quotes:

 

“This ultimately feels like my life’s work, because with that engineering degree, I learned to make stuff and it changed the course of my life in the world. And getting to take that up, literally put it in a box and give it to other people, that ability to create things is so powerful. When I’m talking to somebody at Glowforge like a candidate who’s a supply chain manager or a mechanical engineer, I explain to them that you actually get to take your skills and package them up and give them to our customers.They are buying our skills and capabilities so that they don’t need their own supply chain manager, they don’t need their own mechanical engineer. That creativity, those capabilities are all in there, so they just have to push the button. It’s only one button, they just push it.”

“There’s some things about [crowdfunding] that are magical, and understanding them have repercussions that go far beyond crowdfunding. And, in fact, they inform the way we do business and the way we build our website and the way we communicate with customers.”

“I looked at the conversion rate of a typical ecommerce page, and it was something like 1%, and I got to see the conversion rate of our Kickstarter page. So of the people who landed on a Kickstarter page, how many of them transacted? And it was over 10%. So think about that for a minute. A webpage where people are more than 10 times as likely to buy your product, that’s magical.”

“People don’t go to Kickstarter to sniff around, they don’t go there to shop, they go there because they’re interested in something and it’s a self-reinforcing experience they go there to convert. They go there to back something. And so as a consequence, there’s so much more likely to do it. So then we started talking, how do you take the best of that and recreate that in an e-commerce experience that goes outside of the world of crowdfunding?”

“The process of making things is inherently extroverted. People don’t print something and then keep it to themselves, they gift it, they share it, they show it, they sell it. And so, working with our owners to go harness that energy and create a positive flywheel where they’re sharing and they’re excited and we get to celebrate them and we get to show the amazing stuff they’re doing and then they love that and in turn are willing to share what they’ve created has been incredibly positive.”

“We have an internal philosophy, we’d rather give a dollar to our customers than to an ad network… So given the choice between buying a Google ad with a dollar and sending a dollar to a Glowforge owner, we’d rather do the latter. And that’s why the first major marketing campaign that we created, it was really the first marketing campaign we created, was our referral program…  And a lot of those programs don’t really catch hold. What was so powerful about ours was that people were looking for an excuse to talk about it anyway.They’re so proud of what they created, they wanted to have that conversation. And so [we’re] giving them a framework where they could say, ‘Oh gosh, and if you want one of these, actually, I can give you the best price that exists in the world.’”

“At the end of the day, like the Kardashians are not our path to success, it’s people who really fall in love with the product and can authentically talk about what it’s done for them and what it means for them. And frankly, for me, that’s so much more gratifying than the pay to play world of influencers who hold it up, smile, say something nice and then move on.”

“One of the more unpleasant moments was we had a massive delay where we had to move delivery dates out because of our problem with the supplier in China, this is pre-pandemic. And so I hopped on a plane with a couple of members of the team to fly out to China, sent an email from my, really my email to every one of our tens of thousands of backers announcing this about 12 hours before I got on the plane. I got on the plane, synced my email, and I had almost 1,000 messages from people who were angry at me and at us. And I got on a plane to China and spent the entire flight replying to each and every one personally. Got off, find a Wi-Fi connection, sent out 1,000 emails from my plane trip, and then got to go and fix the problem. And that easily could have been the end of our company because just as those people are passionate and connected and advocates and they put themselves and their reputations on the line for us, just as easy for that to turn. And people are a lot more enthusiastic about being mad than they are about being happy.”

“We didn’t want to build a geeky robot for tech early adopters. That wasn’t what we were setting out to build. We looked at the opportunity here that turn the world economy upside down and create a world where it makes more sense to create things where they’re needed, when they’re needed, and by the people who need them than it does to make something half a world away and ship it across the ocean on a container, ship and put it in Amazon warehouses, stuffed the cardboard box full of plastic balloons and deliver it to you.”

“We didn’t want to be the company where you had to keep buying mirrors. We want to be the company where you were delighted, so you decided to buy more from us. And those things you bought from us bring joy, which is why when we thought about how do we connect with our customers post-purchase, we think about things like selling designs and selling beautiful materials, things where you love what you’re doing, so you buy more of it.”

“Here’s the thing, if you do have two senior software engineers, accountants, whatever, sitting next to each other, and one of them is amazing and one of them is just pretty good, then it doesn’t feel fair, then it doesn’t feel right. And so the way I talk to folks is, think about the people you’ve hired and think about the truly outstanding ones who you’d work with again, anytime, those are the ones who we want to hire. And the people who do really solid work and who are very good, those are the people we’re just not going to hire. And that makes it really hard because it means we’re always behind the ball, we’re always struggling to fill our roles because we’re looking for amazing folks. It means we have fewer folks to do a given job because they’re incredible people who take on a tremendous amount of work, but many aspects of the company revolve around this. And as long as we hold to it, it works well together. The day that we start just hiring to fill seats, it’s the day it all falls apart.”

Mentions:

Hot Seat: Startup CEO Guidebook

Weee!

Bio:

Dan Shapiro is the Founder/CEO of Glowforge. Dan sold his last company to Google. His last side project was Robot Turtles, the best-selling board game in Kickstarter history. He builds drones, authored Hot Seat: The Startup CEO Guidebook, and his seven year old twins regularly beat him at the game Werewolf.


Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce

Transcript:

Stephanie:

Hello, and welcome back to Up Next in Commerce. I’m your host, Stephanie Postles, CEO at Mission.org. Today on the show, we have Dan Shapiro who currently serves as the CEO and co-founder at Glowforge. Dan, welcome to the show.

Dan:

Thank you so much for having me, Stephanie. It’s great to be here.

Stephanie:

Yeah, I’m very excited to have you. Before we dive into Glowforge, I wanted to go through your background a bit because it’s very interesting. We both worked at Google, you did a bunch of amazing companies before this, one of which you sold to Google. So I would love for you to go through the timeline of events so people can learn more about you.

Dan:

Oh, sure. Well, I came out of school with an engineering degree and spent a while at Microsoft, working on Microsoft Windows. I went to a startup where we were making a Linux-based cell phone, which was basically the idea behind Android, but a couple of years before it was a good idea to do that. So I got my taste of startups and started a company, now called Photobucket and one called Sparkbuy, which I sold to Google. I spent a few years there, and then left to write a book about startups called Hot Seat: Startup CEO Guidebook, and to take this board game that I developed with my kids, a boy-girl twins, they’re four years old at the time.

Dan:

And basically, I wanted to get out of playing chutes and ladders, that was my goal for this game. So Robot Turtles teaches programming principles to kids as young as preschool, and I put it on Kickstarter just to see what would happen and it blew up, became the selling board game at the time in Kickstarter history. And it was while I was working on prototyping for that game that I discovered this backwater technology called CNC, laser cutting and engraving.

Dan:

One thing led to another, and I wound up with an industrial carbon dioxide cutting laser imported from a factory in China, installed in my garage-

Stephanie:

As one does.

Dan:

Yes, as one does, and started messing with it and making all this cool stuff. And I thought it was incredible. I brought a parade of entrepreneurs through the garage who I’d known through various things. And as luck would have it, a friend who I’d lost touch with, I reconnected and it turned out he had spent the last year since he sold his previous company in his garage building a laser cutter from scratch. We sat down together and we started talking about what it would mean if we could make factories personal the same way that we made computers personal a few decades ago in a way that transformed our lives, what would happen if we could seize the means of production from industry and bring it home the same way that we brought home data centers so many years ago? That’s when Glowforge was born.

Stephanie:

Wow. So what kind of things did you make in the early days that are memorable, where you’re like, “Wow, I didn’t even know you could make that,” and were like impressed with yourself?

Dan:

That was exactly it. I was like, “I can’t draw. I’m not a designer. I don’t have any of that,” but what I wound up doing was seeing architecture that I liked and I just traced the design and turned it into things. So there’s a lamp on the ceiling right here that replaced a lamp that was falling apart. And my wife, I surprised her with it and she looked at it and said, “Oh my gosh, you’ve made that?” I was feeling good about myself. And I made a rig to hold the video camera steady, like a Steadicam rig from some designs that I found online. And I’m like, “Oh my gosh, I just put the material in and pushed the button and something really useful came out the other side.”

Dan:

Actually, I ordered a wallet on Kickstarter and then it got delayed, because that’s how crowdfunding works, and I was looking at their updates and they were actually making the wallet on a laser cutter, and they had pictures of it. And I was like, “Oh, well, I’ll just make my own while waiting for it.” I went into the leather supply shop in Seattle, which I’d never been to before, and I said, “I want to make a wallet.” And the guy there’s said, “Don’t make a wallet. It’s terrible idea. You’ll never come back. That’s the wrong first project.” I’m like, “Nope, I’m going to make a wallet.”

Dan:

And so he sold me a half a cow, this giant, literally half a cow.

Stephanie:

You’re going to mess up a lot, take this, see you in a year.

Dan:

Good luck. And I came back the next day and he’s like, “You’re back?” And I said, “Yeah, I’m going to go do that journal, rapid journal and leather thing you suggested, I need the hardware for that.” He’s like, “I’m so glad you didn’t give up.” And I’m like, “Well, no, I just need something to do with the rest of the cow you sold me.” I showed him the leather. And this guy, I still remember, incredibly intimidating looking, had multiple face piercings, tattoos all over. And I remember he leaned in really close to me and said, “You don’t understand, you have a gift.”

Dan:

And I said, “You don’t understand, I have a laser.” I still have the wallet, it’s a great wallet. And that was this freeing moment like, “Oh my gosh, you can create things and the world feels different when you can make stuff.” The kids sat me down, there were six at the time, they said, “Daddy, why won’t you print us an iPad?” And I’m like, “These kids are growing up thinking that’s how stuff happens.”

Stephanie:

[crosstalk] that cow.

Dan:

Yeah, exactly. Amazon’s the backup when you can’t make it yourself, and more people should think of the world that way.

Stephanie:

Oh my God, that’s epic. How is your printer different than others? When I was looking at your website, one, I didn’t know there were 3D printers that you could literally put anything in like cardboard, wood, metal, chocolate, all the things, I don’t know if that’s standard with the industry, but I didn’t think that was how it was. So tell me a bit about, how are you all different?

Dan:

Yeah. This is an old factory technology that nobody has used in any sort of practical application outside of these industrial machines. It’s really different. Traditional 3D printing is additive, build things up layer by layer, 3D laser printing, proper name is CNC laser cutting engraving, we call it 3D laser printing. You put in the material and it’s subtractive. It uses the laser the width of a human hair to cut and engrave and sculpt the product that you’re trying to create. And so it’s actually much faster. A typical print takes 10 minutes, whereas 3D prints taken hours and you can work across all those beautiful materials.

Dan:

And so you can create things that really matter, whereas 3D printing is typically, especially home 3D printing, is all plastic.

Stephanie:

Okay. Got it. That’s awesome. After going through your website, I’m like, “I need one of these ASAP.” I have a lot of ideas now, I don’t know how it will turn out, but if that little kid on your website could make something great just by drawing something, I could do something cool, I just don’t know what it is yet

Dan:

Because I’m artistically incompetent and my kids when we designed the products were kindergartners, it was very much designed so anybody can be successful with it. And then like people who are actual designers, it’s unbelievable. They can take their ideas to mass production in days.

Stephanie:

Oh my gosh, I love that. It’s so many opportunities that it’s opening up for everyone, that’s why it’s so cool. I was just thinking of all these Etsy designers having really cool design on like what earrings and products, there’s so many opportunities that it gives other people to just start their own companies around it. That’s what made me so excited about it.

Dan:

And that’s a big part of why this ultimately feels like my life’s work, because with that engineering degree, I learned to make stuff and it changed the course of my life in the world. And getting to take that up, literally put it in a box and give it to other people, that ability to create things is so powerful. When I’m talking to somebody at Glowforge like a candidate who’s a supply chain manager or a mechanical engineer, I explain to them that you actually get to take your skills and package them up and give them to our customers.

Dan:

They are buying our skills and capabilities so that they don’t need their own supply chain manager, they don’t need their own mechanical engineer. That creativity, those capabilities are all in there, so they just have to push the button. It’s only one button, they just push it.

Stephanie:

There you go. That’s all I want, one button. What’s also really fun about this idea is, I was reading a really good book this weekend around storytelling and storyscaping, and they were talking about taking your customer and putting them in the position of the hero and the brand or company acting as the mentor, and the product is the gift. And like, thinking about how do you shape the narrative around your company so that your customer feels like the hero. And to me, your company is the perfect example. It’s like you make something, you’re the one being able to provide this gift, you’re the hero in the story. And you guys are the mentor, providing the behind the scenes capabilities to do so, which I love.

Dan:

We try to be in this position where we are supporting, but we’re there if you need us. We usually call our customers owners instead of customers, they’re Glowforge owners, because that’s the way they think of themselves. They think of themselves as, even if… About a third of our customers are buying it just for hobby use, about a third are buying it for business, and a third are aspirational entrepreneurs who are buying it and they’re going to do some personal stuff, and then they’re going to put it on Etsy, and then they’re going to try something new they haven’t done before.

Dan:

And that notion of ownership that they brought something into their lives that they can use to go create, that’s core to their experience. And so celebrating that is a big part of how we connect with Glowforge in the world, we connect with our owners and with people who are thinking about bringing Glowforge into their world.

Stephanie:

So I want to talk about the idea around crowdfunding, because you’ve done it more than once. Crowdfunding has felt like it’s gone through waves where it’s like very, very popular at one point, it seemed like no one was doing it, or there weren’t any big hits coming out of it, then it came back. And so I want to hear about the lessons of blowing up, not only once, but twice on there and how you think about applying those lessons to like traditional sales.

Dan:

Crowdfunding is amazing. I remember the first time a friend came to me and said, “Kickstarter’s great. You should check it out.” And I’m like, “So you give them the money and you don’t get stock, and they only have to give you a product if… They only have to try, they don’t actually have to deliver anything to you? And you’re probably going to pay more than anybody else, and you’re going to the first versions that are not very good.” I’m like, “What? This doesn’t make any sense.”

Dan:

And so in an effort to understand it, I backed a few things on Kickstarter and then I went and backed a bunch more for a dollar, which just puts you on their mailing list so I could learn how it worked in see how it went because I was just perplexed and curious. And what I realized is, there’s some things about it that are magical, and understanding them have repercussions that go far beyond crowdfunding. And in fact inform the way we do business and the way we build our website and the way we communicate with customers.

Dan:

One of the first things is… This is years and years and years ago, so I don’t know if this is true, but at the time, I looked at the conversion rate of a typical e-commerce page, and it was something like 1%, and I got to see the conversion rate of our Kickstarter page. So of the people who landed on a Kickstarter page, how many of them transacted? And it was over 10%. So think about that for a minute. A webpage where people are more than 10 times as likely to buy your product, that’s magical. Oh my gosh, what’s going on there?

Dan:

And they started deconstructing it and talking to… I got to know some of the folks at Kickstarter and looking at e-commerce best practice. There’s a few things going on some of which you can replicate, some of which you can’t. One of which is the time, the countdown, that’s really powerful, it’s really motivating. Another one was the social proof that was evidenced by this big number that keeps going up and up and up, the backing number. So you feel like you’re joining something, you’re becoming a part of something.

Dan:

Part of it was the connection to community. So when you went there, you suddenly felt like you were being invited into a movement, into a club, into an opportunity. And it felt very personal and compelling, much more so than just a thing that you could pop into a cart. But probably the biggest thing is there’s something about expectations. When you go to an e-commerce site, your expectation is, it’s an e-commerce site. You look around, maybe throw some stuff in the cart, maybe you’re going to buy it, maybe you’re not.

Dan:

People don’t go to Kickstarter to sniff around, they don’t go there to shop, they go there because they’re interested in something and it’s a self-reinforcing experience they go there to convert. They go there to back something. And so as a consequence, there’s so much more likely to do it. So then we started talking, how do you take the best of that and recreate that in an e-commerce experience that goes outside of the world of crowdfunding? Now, some of it, you can play around with like countdowns, that’s not uncommon.

Dan:

We discovered a couple of months ago a site called Weee! with three E’s in an exclamation point-

Stephanie:

Oh, that’s fun.

Dan:

… that’s an international grocery delivery, so we can get all sorts of unusual fruits and vegetables and all sorts of stuff and it makes cooking interesting. And so we’ve been ordering from them. And it’s interesting because it has a very different aesthetic for shopping, and one that I think is more popular in Asia than here. There’s popups all over the place with percentage discounts. And one of the things that’s all over the place is these countdowns, like, “You have four of four discount things left to do. There’s this much time left.” And that notion of time pressure, we’ve all seen it all over.

Dan:

In the case of this site, Weee! they make it fun. In the case of Kickstarter, they make it part of the story. However it works, there are ways there that you can, that you can pull that in. That’s not actually something that we integrated into our site, but it’s something we thought a lot about. Ultimately, we didn’t think it worked with the aesthetic, but on another side, the notion of a big number that’s counting upwards, that is something we hold into our site or about to. I know there’s actually just an update that we plan, I can’t remember if it’s live yet, where we showed the number of things people have created.

Stephanie:

Oh, that’s a good one.

Dan:

Because if we’re talking for an hour, thousands of new things are going to come into this world. People are printing millions of items a month. And so that explosive creativity, people converting Amazon boxes into furniture, people personalizing their iPhones or their chocolate bars, what have you, that explosive creativity is so powerful for what we’re doing. So it’s a piece of that, “Oh my gosh, I’m a part of something big and vibrant and alive.”

Stephanie:

Yup. And inspiration. I’m sure people want to submit what they’re making and be able to show others. That’s how, even going on your side, I’m like, “Ooh, I could do that.” And now I’m having other ideas because I’m seeing other people’s work who are much more creative than me. So there’s your sense of community all around that as well.

Dan:

It’s so true. The process of making things is inherently extroverted. People don’t print something and then keep it to themselves, they gift it, they share it, they show it, they sell it. And so, working with our owners to go harness that energy and create a positive flywheel where they’re sharing and they’re excited and we get to celebrate them and we get to show the amazing stuff they’re doing and then they love that and in turn are willing to share what they’ve created has been incredibly positive.

Dan:

There’s one other thing that we built out of this that was really important to us, we have an internal philosophy, we’d rather give a dollar to our customers than to an ad network.

Stephanie:

I love that.

Dan:

So given the choice between buying a Google ad with a dollar and sending a dollar to a Glowforge owner, we’d rather do the latter. And that’s why the first major marketing campaign that we created, it was really the first marketing campaign we created, was our referral program. It’s a bog standard referral program if you use the referral code, then the person who uses it gets a discount, and the person who gave the code gets either cash or Glowforge materials, their choice of either one.

Dan:

And folks have done this before, Dropbox famously did it. And a lot of those programs don’t really catch hold. What was so powerful about ours was that people were looking for an excuse to talk about it anyway. So proud of what they did, they’re so proud of what they created, they wanted to have that conversation. And so by giving them a framework where they could say, “Oh gosh, and if you want one of these, actually, I can give you the best price that exists in the world.” We have an unspoken, but we’ve never broken it, I think it’s unspoken, but we have a commitment internally that we’ll never price our product below that referral discount.

Dan:

So that referral discount is the best possible price. So if you go to glowforge.com/fod, which is Friend of Dan, you get my referral code and you get to see, there’s my picture there. So everybody can have their picture and you can see their landing page and see that the thing that person bought, that’s something that you want too, and get the best price that’s available on the internet. And it’s easy to incorporate that in conversation. See?

Stephanie:

Wow. Could you guys take any twists on the referral program or you added anything different or like maybe having people upload, “Here’s my referral code and then here’s a few things that I made,” just so you can have preference to it? Or how did you think about making it uniquely yours?

Dan:

We played around with it around the margins so far, and actually have talked about doing exactly that. Right now, you can’t, it has room for your picture, but not a personal page, while that’s very much on our work list. But we played around with things like we increased the referral payout from the initial code, we the referral code depend on which version you got so if people buy the more expensive one, there’s a richer reward, and played around a little bit with some elements to just make it a little more engaging and fun.

Dan:

There’s a thermometer that you fill up as you go and you get emails from our team as you cross certain thresholds, there’s a limit of 10, but if you get 10 referrals, what actually happens is one of our team members will reach out personally and say, “Oh my gosh, it’s amazing. What are you doing? How’s it working for you?” And then can go uncap that so you can keep earning. And we have folks who are earning tens, and in at least one case, I think we’ve got somebody who’s earned over $100,000 in a year.

Dan:

But not the way you’d think, it’s not by being a celebrity or by spamming the internet or anything else, the “secret of their success” is that they actually just make YouTube videos about what they’re doing and they hang out in the comments and they hang out in Facebook groups, and they answer people’s questions. We talk to customers regularly, and I was just watching a customer interview yesterday and somebody said, “Oh yeah, last year I probably made 150 videos for one person.” So somebody will ask a question and he will just flip on his camera record a like two minute answer, “Oh yeah. If your goal is to engrave glass spice jars, here’s how you do it.”

Dan:

And he’ll like, pull out the [inaudible] Glowforge, put the spice jar in, and show the set focus button, which is the three to three things you need to do. And then engrave a spice jar, he’ll take five minutes to do it, and then he’ll send that video to that person. And then if that person’s like, “Oh, I’m super stoked,” in many cases, they already own a Glowforge, but if not, they’re probably going to use his referral code in order to go buy one of their own. So we have our owners who become our ambassadors into the world on an ad hoc basis.

Dan:

And believe it or not, as a result of this, almost half of our sales are last-click attributed to a happy customer. And that means basically all of our customers are probably touching an existing owner at some point, but we can directly last-click attribute almost half of our sales.

Stephanie:

Wow. That’s impressive. It also just goes to show the power of micro influencers and how you see a lot of brands run for huge celebrities, but especially in like the DIY market, YouTube and the smaller channels and the smaller Instagrams probably could have much larger rewards. And also having those long-term keyword type of searches of how to engrave a glass jar or something, that could actually find a lot more attraction than going really big to the top the biggest celebrity you can find.

Dan:

Absolutely. I’m not going to be sad if a major celebrity wants to go use their Glowforge on air.

Stephanie:

Chip and Joanna, come on.

Dan:

But at the end of the day, like the Kardashians are not our path to success, it’s people who really fall in love with the product and can authentically talk about what it’s done for them and what it means for them. And frankly, for me, that’s so much more gratifying than the pay to play world of influencers who hold it up, smile, say something nice and then move on.

Stephanie:

Yep. So are there any other lessons from crowdfunding? You guys went, I think you had a goal of like 100,000, and didn’t you hit like 27 million in pre-orders? I want to hear anything else around that you’re taking away today and implementing in the company.

Dan:

Yeah. And I’ll tell you, we had a meeting at the start where we sent out, said, “Okay, well, how big could this really get?” And we said, “I’m pretty sure we can get it to a million, and three I think, would be success. And there’s no way we would do more than five, that is the absolute limit.” So 27.9 was a little bit of a shocker for all of us. But when I think about that, I think the last critical thing is the ability to let your customers who are passionate about what you’re doing form a community.

Dan:

And I say let, let is an important word. It isn’t shove them together, it’s not herd them into a space like cattle, and that expect everybody to be friends, but it’s making space for that. And honestly, the thing there that made the difference was, we had a community forum where people could come in and post questions and talk and everything else. And I was there every day. I spent one to two hours a day for years in the community forum.

Stephanie:

Was that on your website or Kickstarter, or?

Dan:

Yeah. So we were on glowforge.com. For my first crowd funding campaign, I used Kickstarter. For Glowforge, we actually ran the campaign off of glowforge.com, almost entirely because of that community because we did not want to mortgage our community to Kickstarter and then try and have to earn them back. We wanted to own that on our own tools and on our own site and on our own mailing lists and the like. It wascommunity.glowforge.com where we took off the shelf community software without much change and used that so that people could have a forum, a discussion forum.

Stephanie:

How do you reach awareness for that? Because I’m thinking like, a platform like Kickstarter is there to be able to discover more unknown products and seeing what’s growing quick, and a lot of it is around the FOMO, like, “Oh, it’s about to be filled, I want to be a part of that.” How did you get awareness for new customers to come to your website and be a part of that community and also chip in for the campaign?

Dan:

So the community was only open to Glowforge owners. Stepping back a couple of steps, how did we get people in the first place was profoundly challenging. Kickstarter’s ability to find customers is actually often overestimated. A typical Kickstarter campaign, you get metrics only about 30, 40% of people find the product on Kickstarter, and that’s only for big ones. For smaller campaigns, it’s much smaller. So Kickstarter is a multiplier on top of the traffic you bring, but at the end of the day, you still have to send the traffic, which is why we used our own site. If we’re going to send traffic somewhere, we’d rather it be to our own. But the way that we did that was with a referral campaign.

Dan:

So we started out and we said, “Here’s a discount on our forthcoming product and if you share this discount with somebody else, your discount gets bigger and they get a discount too.” And so we had this referral campaign to sign people up for our email list where folks would sign up, then they’d forward it to a friend, a friend would sign up, so they would get a discount at launch. And that’s how we wound up having… And by the way, we had, just to give you a sense of scale, it’d been about a year before we launched when we were working to go build that bill.mailinglist. And we had about 1500 people on the list.

Dan:

Then we launched the email referral program that had just told you about, and in a month and a half, we had over 10,000 people.

Stephanie:

Power of referrals. Yes.

Dan:

During that nine, 12 months where we only had 1,000 people, that included a New York Times article, included Wall Street Journal article, that included like all sorts of PR. Nothing, nothing compared to people who were excited about what we’re doing and sharing it with each other.

Stephanie:

Wow. I just read a whole article around how PR is not really working like it used to, and you really have to find more authentic ways to communicate and get your product out there and find your true fans and whatnot. And that perfectly showcases that point.

Dan:

Yeah. At the end of the day, nothing is more credible than somebody who’s passionate about what you’re doing standing up and putting their own reputation on the line to speak for you.

Stephanie:

Yep. When you were in this community, what were you doing to interact with people? Were you throwing questions out there, trying to get more people to talk with each other? Or how did you think about sparking fun conversations there?

Dan:

I actually wasn’t. And that was probably wrong because that is certainly a best practice, but what I was trying to do was a couple of things. One was to be a calming influence, because online communities can get a little wild.

Stephanie:

You were calming. That’s it.

Dan:

I think so. Showing up when people were upset, because especially when your community is focused on a product that people don’t have yet and because we had multiple delays that made things late, there was every opportunity for this to just be an incendiary disaster. And in fact, a lot of crowdfunding communities turn into that when people just get really upset and so showing up and saying things like, “I’m sorry.” Because one thing that would happen is people get really mad at us, and if I showed up in humanity and said, “Hey, I’m here and this is my fault, and I’m sorry,” it goes a long way.

Dan:

Another thing that would happen is somebody would show up and be mad at us, and then other members of the community would get mad at them, “Why are you in here yelling? Why are you upset?” And then I would show up and I would say, “It’s okay. I failed this person and I know that they’re here upset about something that happened three months ago and you’ve all gotten over it already, but you know what, they have every right to be upset, they have every right to come here and demand, accountability and apology, and I’m here for that.” So I’m going to make room for them to be mad at me with everybody else.

Dan:

And we actually divided out the forms. So there was, we didn’t call it this, but there’s, “I’m really mad at you and want to yell at you.” And there is, “I want to talk about the product.” And there’s, “Let’s socialize,” in different sections in the forums so that people could opt out. And if somebody got mad at us at the wrong place, I’d be like, “Here, let me move this over to the, ‘I’m mad at you and want to yell at you,'” part of the forum and I will apologize. But I’ll tell you very practically, I was just talking to somebody about this, one of the more unpleasant moments was we had a massive delay where we had to move delivery dates out because of our problem with the supplier in China, this is pre-pandemic.

Dan:

And so I hopped on a plane with a couple of members of the team to fly out to China, sent an email from my, really my email to every one of our tens of thousands of backers announcing this about 12 hours before I got on the plane. I got on the plane, synced my email, and I had almost 1,000 messages from people who were angry at me and at us. And I got on a plane to China and spent the entire flight replying to each and every one personally. Got off, find a Wi-Fi connection, sent out 1,000 emails from my plane trip, and then got to go and fix the problem.

Dan:

And that easily could have been the end of our company because just as those people are passionate and connected and advocates and they put themselves and their reputations on the line for us, just as easy for that to turn. And people are a lot more enthusiastic about being mad than they are about being happy. I think that was part of the reason that that didn’t because everybody knew I was there and I was taking accountability for what was going on, as well I should have because it was my fault. I needed to see though, it was all your fault.

Stephanie:

Yep. And I also just think there’s room for having more video into some of those responses because someone can’t be as mad at you when they see your face. It’s very easy to be mad at an online forum or even an email, but if someone personally connects with you and tells you the truth, then you can see that authenticity and empathy and all that. It seems like an interesting angle to resolve issues quicker and not let them spiral.

Dan:

Absolutely. We did live streams, we had open houses. I remember somebody drove eight hours to come to our open house. We had a 30-minute line of people outside our offices. We did whatever we could to make ourselves available because we knew there was such a meaningful investment of dollars and also time and emotion that we wanted to honor that and do right by people. Ultimately, by delivering a product that they wanted and asked for and being it better than they hoped and dreamed, but in the short term, by just being there.

Stephanie:

Yeah. That’s great. That’s a good segue into creating the company and the company values. I want to hear about how you approached that scaling so quickly, you’ve got a ton of orders. I’m sure you had a hire quick. How did you think about building out that company culture?

Dan:

One of the key things that my co-founder and I talked about at the very beginning was that we’re both full white men, and if we built a product for ourselves, we were not going to get very far. And in fact, most of the “maker world” was building products that were by engineers for engineers and specifically by white male engineers, and the decisions reflected those trade-offs. And we didn’t want to build a geeky robot for tech early adopters. That wasn’t what we were setting out to build.

Dan:

We looked at the opportunity here that turn the world economy upside down and create a world where it makes more sense to create things where they’re needed, when they’re needed, and by the people who need them than it does to make something half a world away and ship it across the ocean on a container, ship and put it in Amazon warehouses, stuffed the cardboard box full of plastic balloons and deliver it to you. Sorry, just to go off on a tangent for a moment, I needed a doorstop, and to buy doorstop on Amazon takes two days and costs $7, which is amazing when you think about everything that’s involved injection, molding that, the factory, talking it over to you.

Dan:

But I printed one myself and it cost 17 cents and it took two minutes. And we’re not going to succeed in transforming the world if we only appeal to a narrow slice of people. So one of the first things we recognized was that we needed to hire diverse and amazing people in order to make our company successful, in order to represent the opportunity and the owners that we hope to serve. So that was our first, we call them our cultural cornerstones. That was our first cultural cornerstone.

Dan:

The second one was take care of each other, because once you have people there who are passionate, who are committed, who are excited, you need to think about how you show up for everybody every day and you create the inclusive environment that works. The third one was delight our present and future customers. Our unofficial company motto quickly became, we have the best customers, WHTQ… Anyway, we have a little emoji that I always pull out in Slack and people-

Stephanie:

BC.

Dan:

Yeah. WHTBC. Anyway, we have the best customers, and people say it all the time. Not like as, “Oh, it’s our company motto thing.” People are just like, “Oh my gosh, we have the best customers. Look at this thing somebody send us, look at this thing that happened. We have the best customers.” So delight our customers present and future. And then the last one, because I hate company values and I hate the whole things you put on the wall that turn out nobody talks about them and nobody does them, and they’re like aspirational, not real and that they’re not really part of what you do.

Dan:

And I realized that the reason that happens, at least part of it is because there’s always a secret veto, which is a company may have these lofty aspirational values and then you ask, “Why are you making this decision?” And they’re like, “To make money.” Okay. So you either do your values or you run… How does that work? And I wanted to give the reality a seat at the table, which is why our fourth cornerstone is build value for ourselves and for our company, that these all are in balance. And when we have hard decisions, they come into balance between these.

Dan:

But if I look at those, had diverse, amazing people, take care of each other, delight our customers, build value for ourselves and our company, I set out early on to build a company that not just followed those, it’s not like those would box in what we were going to do and our company would do less and be less successful because of that, but actually a company that was built on top of those, which why we call them the cornerstone, a company that grew out of them, where the things we did were successful because of our cornerstones.

Dan:

I’ll give you an example. While we were designing the hardware, we had a decision to make. On the one hand we could take, the Glowforge has mirrors, and when you use mirrors to steer the laser beam. And this industrial technology, they’ve always had mirrors. The mirrors are always difficult to adjust and they get dirty and you replace them. And I remember talking to somebody who had worked on one of these industrial lasers and he said, “I don’t get it, why did you put the mirrors in a box? It’s really expensive, the boxes made out of metal, it must’ve been really difficult to design and it keeps them from getting dirty.”

Dan:

And I’m like, “Well, because it keeps them from getting dirty.” And he says, “But you don’t understand. We buy mirrors for five bucks each and we sell them for 75 bucks each. It’s a great business. Why didn’t you do that?” And I said, “Oh my gosh, you’re right,” because I wanted to explain this to him, “But the reason why was, because very early on we talked about this and we said, ‘We want to be the company where people are not mad because they have to keep paying to restore the thing they got like your razor and razorblades. It’s not like you love Schick because you have to buy new razorblades, they keep running out.'”

Dan:

We didn’t want to be the company where you had to keep buying mirrors. We want to be the company where you were delighted, so you decided to buy more from us. And those things you bought from us bring joy, which is why when we thought about how do we connect with our customers post-purchase, we think about things like selling designs and selling beautiful materials, things where you love what you’re doing, so you buy more of it. Like when you own a Nintendo Switch and you buy more games and you subscribe because you love what’s going on, not because it wears out like a razor blade or runs out of ink like a printer.

Stephanie:

That’s so good. That’s a good way to think about that.

Dan:

Yeah. The idea was designed the product itself around what’s our product where customer love is essential to our success? I actually, haven’t really talked about this, but I have a way to describe this, I call my evil Dan theory. I don’t have a better name for it. If you ever saw the old Star Trek, there’s an episode where they all get replaced by evil versions of themselves, there’s evil Kirk and evil Spock. And their evil clones are all incredibly selfish and don’t really care about anybody except themselves. And it turns out, you can imagine what happens is they run havoc and issue things.

Dan:

Because if you’ve got a worship, which is what Star Trek is about, there’s big ship and lots of weapons and then you put selfish people in charge, they just blow everything up and look out for themselves. The values are the only thing that keeps that worship under control. I wanted something different. I wanted a company where even if I was replaced overnight by my evil clone, who was just selfish, they’d run the company the same way because the company was purpose built to be successful by expressing its values.

Stephanie:

Got it. How do you go about setting that up? It sounds nice to be like, “No matter who takes over, they’ll know their values and the company will still run well even if they’re not the best person.” How do you actually set that up in a way that puts some bumpers on there and doesn’t let it go haywire?

Dan:

I’ll give you some examples. We created the company around this idea of hire diverse and amazing people and take care of each other. Out early on, we weren’t paying very well, we were paying an average for a startup. And we were incredibly committed to figuring out how we build this diverse and inclusive culture. Things are going pretty well. And I remember we had somebody call us up out of the blue, she interviewed amazing engineer and she worked for about a year at Microsoft and was interviewing with us. She joined the company and I sat down, I said, “So tell me, I know you took almost a 50% pay cut to come here, what was it about?”

Dan:

And she said, “Well, here’s the thing, you’re not a toxic hellhole.” And I said, “I never thought of not a toxic hellhole as a recruiting dart, but we were able to attract incredible talent way earlier than we had any right to, because we took care of each other, because we express these values, because we prioritize diversity and inclusion. So everybody who came to the company regardless of their background, was excited to come because of those values and was excited to take care of each other and be a part of building something amazing and creating a great company, great products, serving our customers, but doing it in the context of a team of people who enjoyed working together and was supportive of each other.

Dan:

And now if evil Dan shows up, they’re in trouble because if they start just saying, “Yeah, let’s cut benefits or let’s institute this cutthroat, everybody against everybody,” they’re going to lose all their talents. They’re going to find that recruiting suddenly got a lot harder and they will no longer have access to amazing people who come there for the values. So the values have become an asset to the company that actually helps our business and actually help us acquire better talent faster than if we didn’t have it there at all.

Stephanie:

Got it. I love that. It’s like a bottoms-up approach. It’s like all the SaaS models now in tech, getting into all the engineers to the bottom level, and all of a sudden the higher ups are looking, they’re like, “Whoa, we’re paying 1,000 different times for this one piece of tech, maybe now we should think about it because all the engineers and all the product managers are already using it and having individual licenses.” Same thing here, when people all are enforcing the culture and keeping it going, it all will bubble up if someone knew where to pop in and try and go cray.

Dan:

Exactly. And it’s shockingly unusual that we hire somebody who winds up ultimately being frustrated by the culture, but when it does, it happens really quickly. And obviously, and everybody around them is like, “Oh, you’re frustrated because you came expecting a place where you could compete with everybody else and beat them down in order to win? None of those tools are here.” For example, none of our compensation is based on individual performance.

Stephanie:

What are they based on?

Dan:

We have people with different jobs that are compensated differently, but it’s based on the job. So the approach we take is we hire amazing people and we pay them to do amazing work, not we pay them if they do amazing work. So we have a company bonus program, but it’s tied to our performance as a company. And so anybody who comes in going, “Well, the thing that really motivates me, isn’t being paid well, and it’s not competing for achievement, but it’s competing against my peers, like I feel best when I earn more than the person next to me,” those people get very frustrated very quickly.

Dan:

Because the person next to you is like, “We are working together to go deliver these things and then we all win.” And you’re like, “But I want to win at your expense, this doesn’t feel good.” And so very few times, and I can think of in the many hundreds of people we’ve hired, I can think of probably two or three, people showed up they’re like, “Oh, I thought that was what I wanted, but it’s actually not.”

Stephanie:

Bringing back memories from prior companies, you and I both have worked at of hearing your peers, getting certain bonuses, you being like, “Wait, we worked on the same project together, we did the equal amount of work.” Tell me a bit about how your past experience at a lot of companies has influenced how you’re designing your company now.

Dan:

If it’s important that you pay people differently for doing the same job, it’s important that your senior software engineers or accountants, or whatever, all competing with each other to see who gets paid the most, then you have to devote a tremendous amount of time and resources in order to do that. When I was at Google, it was days, each year, and in some cases, weeks devoted to trying and measure people against each other. If you come in and say, “Look, here’s the thing, everybody’s going to do, amazing work. If you’re not doing amazing work, we’re going to sit down and work with you to either get you to the point where you are or find something else that you’re going to be amazing at doing, but you can’t do this unless you’re doing amazing work.”

Dan:

If you start out with that baseline, then you don’t have to go through all the, who’s better, who’s best. Microsoft talk about the lifeboat exercise like, who’d you throw to the lifeboat first if the ship was sinking? You get to bypass that, which lets you build a culture where people can actually take care of each other, and we can hire diverse and amazing people and get the best performance from them because they feel supported. And like the bar is, am I working in supportive of everybody else? In support of our customers, in support of our cornerstones? Am I doing amazing work? Rather than, am I beating the person next to me?

Dan:

Because there’s this terrible unspoken secret at all of those companies, but sometimes it’s spoken, which is that you can only succeed at the extent of somebody else, but there’s curves that are enforced. And if you’re getting the 10, then somebody else must be getting the eight me.

Stephanie:

Only so many 10s can be given out, and only so many promotions. Well, we both know that pretty well.

Dan:

And you can’t build a culture where people truly are wired into care for each other, they have to care for each other despite the company not because of it, when you build that in from the ground up. It’s interesting, when I talk to folks, everybody’s like, “But surely, that won’t scale. Maybe that worked when you were a dozen people, but it won’t work when you’re 50. If you’re 50, won’t work when you’re 150.” We haven’t found the limits yet, maybe there’s some point where it won’t.

Stephanie:

How many employees are you at right now? And what level of scale you get that?

Dan:

About 160 right now.

Stephanie:

Wow. That’s great.

Dan:

We haven’t reached the end of it, but it really does require constant thoughtfulness about hiring amazing people. Because here’s the thing, if you do have two senior software engineers, accountants, whatever, sitting next to each other, and one of them is amazing and one of them is just pretty good, then it doesn’t feel fair, then it doesn’t feel right. And so the way I talk to folks is, think about the people you’ve hired and think about the truly outstanding ones who you’d work with again, anytime, those are the ones who we want to hire.

Dan:

And the people who do really solid work and who are very good, those are the people we’re just not going to hire. And that makes it really hard because it means we’re always behind the ball, we’re always struggling to fill our roles because we’re looking for amazing folks. It means we have fewer folks to do a given job because they’re incredible people who take on a tremendous amount of work, but many aspects of the company revolve around this. And as long as we hold to it, it works well together. The day that we start just hiring to fill seats, it’s the day it all falls apart.

Stephanie:

Yeah. Completely agree.

Stephanie:

All right. I want to do one last thing. We don’t have a ton of times, so I’m going to shorten the Lightning Round. Lightning Round is brought to you by Salesforce Commerce Cloud. This is where I get to ask you maybe one question based on our time constraints and you have 30 seconds or less to answer. Are you ready, Dan?

Dan:

Let’s do it.

Stephanie:

All right. First, coolest thing that you’ve ever seen 3D printed?

Dan:

Somebody made an escape patch for some Robin chicks that were caught in their window well, so they lasered up a ladder and then the chicks hopped up to escape because they were trapped in the window well. It’s adorable.

Stephanie:

Is there a video of this?

Dan:

There is, they posted on Twitter. It’s interesting, their day job was engraving paddles. And it wasn’t a work-safe Twitter account, so I didn’t really link to it. I’ll leave to the imagination what kind of paddles and what they were for, but yes, they made an emergency escape hatch for Robbins. It was adorable.

Stephanie:

That’s epic. I feel like that’s the only question I need to ask you today. Now, I want to think more about that. Dan, you’ve been an awesome guests. Thank you so much for joining the show today, and we’ll have to bring you back for round two in the future to hear how the company’s continuing to grow and scale.

Dan:

Thank you so much, Stephanie. It’s been a pleasure.

Episode 141