One Year Later — Launching the Fundraising Report Card!

Back in October of 2015 I wrote an article titled Notes From Creating a New Product. In that post I shared my excitement about beginning to work with Greg Warner, the CEO of MarketSmart on a new software. Today I’m even more excited to share an update on our progress.

If you’ve chatted with me in person, I’ve probably tried to explain to you what the Fundraising Report Card is. But, to be entirely honest, I most likely left you feeling confused — I struggle to describe what I’ve been working on for all these months. By writing it out here I hope that I’ll be a little more effective in sharing what exactly I’ve been up to.

What is it

The Fundraising Report Card is a business intelligence and data analysis tool. The Fundraising Report Card empowers nonprofits to make data-driven decisions.

Data-driven decision making is such a buzz phrase, so let’s breakdown what it really means. And, more importantly, what it implies in the context of fundraising at nonprofit organizations.

First though, I need to share a brief overview of how donations work.

When you donate $20 to Save the Children (or any nonprofit organization) 35% (sometimes more, sometimes less) of that money goes towards overhead expenses. Overhead expenses include paying for consultants, investing in infrastructure, and sending letters to you asking for more money. (Yes, it’s a tough reality, but your donations are part of what gets invested in the “fundraising budget”). In a perfect world all $20 of your donation would go straight to the children that need to be saved — but in reality there are operating costs that need to be paid.

Okay, with that in mind let me frame how important data-driven decision making really is.

Right now, in this very moment your favorite nonprofit is spending thousands and thousands of dollars on direct mail appeals to try and raise more funds from you. There is nothing wrong with that (although some people might argue otherwise), they need to raise money and they need to ask you (and others) to help. Fine.

Behind the scenes most nonprofits are relying on a consultant (or a consulting firm) to help them decide who to mail to and what to mail to them — should this letter with a picture of a starving kid go to this list of donors or that list? This makes sense, right?

Like any good business the nonprofit wants a sound strategy before taking any action. Spending an extra $5,000 or $10,000 on a consultant to try and make sure you get the highest return on investment (ROI) makes sense.

This is the current system — hire a consultant, send out a bunch of mail, wait for results. You experience it, I experience it, it’s kind of shitty from the donor perspective to be honest (you end up with a lot of letters in the recycle can). Of course there are different techniques for different segments of donors (major donors don’t get mailed letters, they get a fundraising officer at their doorstep), but the process is generally the same.

It should be apparent that there are a few obvious issues with the current fundraising paradigm.

The Fundraising Report Card disrupts this pattern.

A user of the Fundraising Report Card (usually a fundraiser or executive at the nonprofit, but also consultants) uploads anonymous donor data to the Report Card. With this data the Report Card calculates fundraising key performance metrics. Also known as, “really important statistics we should have been monitoring and analyzing for the past few years”.

Here’s an example, taken straight from the for-profit sector — customer retention broken down by engagement channel. Think about it for a moment, what do you think the odds are that Netflix keeps track of how many users they retain each month? High, right? They have shareholders to report to every quarter, and you better believe those shareholders want to know how many users Netflix has been retaining. (More on this here).

Internally, Netflix may break down that metric even further. They might segment the data by plan type and demographic information. What is our retention rate among users paying $20 or more a month on the east coast?

Answers to questions like these help inform strategy and are fundamental in setting realistic goals.

Yet, when it comes to the nonprofit sector a void exists. Sure, data abounds, but how can a fundraiser, executive director, or director of development really be asked “what channel provides your best ROI?”, most don’t have the tools to answer that question. And if they have the tools, they are not easy to use. They are inconvenient and clumsy… not to mention expensive. This is the void that the Fundraising Report Card fills.

By providing fundraisers, executive directors, consultants, and and even board members with access to easy to comprehend key metrics and interactive reports, we’ve created a platform that allows for data to be a vital part of decision making.

For example, we generate a retention analysis report, just like the one Netflix would use internally. And, one of the great things we do right off the bat is segment that data by giving level. Users can take it one step further and upload historical data based around specific appeals, and before they know it, they are taking a peek under the hood of their fundraising machine.

How is our donor retention among mid-level donors who have received our end of year appeal letter? With the Fundraising Report Card the nonprofit can answer that question, and depending on the answer they can adjust their strategy. Ultimately the nonprofit cuts costs and invests in fundraising efforts that prove to have the highest ROI. Cool, right?

You can learn more about the Fundraising Report Card here, and you can read a short case study from one of our early users here.

What I’ve been doing

Since August of 2015 I’ve been working with Greg to develop our strategy for the Fundraising Report Card. Beginning in January of this year, I was given the resources (money, time, people) and the responsibility (hit deadlines, set product demonstrations, build my network) to take this idea and make it into a reality.

On April 4th 2016 we launched the beta version of the Fundraising Report Card. Leading up to that event I spent most of my time focused on product development. I consider this my “product manager” phase. A lot of my time was spent on:

  • developing a product road map
  • determining which features would be included in which release
  • managing expectations of key stakeholders
  • learning about software as a service business models
  • reaching out to industry leaders who were interested in providing feedback and testing
  • designing the logo and front-end of the application
  • and writing a lot of Angular and JavaScript code (user interface stuff)

The objective early on was to get a minimal, functional, viable product in the hands of our potential users. We started working towards our April 4th release date at the end of February. We hit our deadline and we got plenty of engaged users to test it out. We found a lot of bugs, got a lot of great suggestions and learned a ton about the market we were trying to position ourselves in.

After the initial product was out in the wild I pivoted my focus towards getting people to use it. And, most importantly, getting those people to talk to me. This was, and still is part of the “collect feedback” phase. I’ve spent a lot of time…

  • reaching out to people on LinkedIn
  • setting up screen-share demonstrations
  • holding phone calls with existing users
  • hosting webinars with industry groups
  • configuring automated emails to nurture and engage users
  • and playing the role of “support agent” on our live-chat widget

Today my role has evolved even more. Elements from the product management, and collecting feedback stages are still part of my day-to-day, but now I have started the transition into “sales”.

This stage has involved a lot of…

  • researching pricing psychology
  • developing relationships with potential “partners” (consultants, consulting firms, data CRM companies)
  • organizing sales materials
  • building the foundation of a sales funnel (deal stages, workflows, etc.)
  • writing marketing and sales copy
  • talking with more and more users
  • and getting people (nonprofits) to give me their money

Sounds kind of fun, right?

Moving forward

Taking the Fundraising Report Card from idea to fruition has been an educational, challenging, and unbelievably fun process. Yet, the most exciting and compelling moment so far has been receiving supportive feedback from users.

For example, I recently I completed our first case study. The client, the Director of Philanthropy at a multinational relief organization with over $60 million in annual budget, used our beta tool and had a great, positive experience.

Creating that case study meant talking with the client and learning how they used our platform. Hearing their Director’s comments and learning how powerful our software was for them made me feel vindicated.

Receiving positive feedback is some sort of validation for all the work our team has put into this project. For me personally it has helped frame how important what we are working on really is.

Learn more

If you’re interested in learning more about the Fundraising Report Card please take a look at our website (press play on the video and you’ll even get to hear my voice!).

If you have any questions for me, like, “Zach, how the hell did you end up making some data analysis tool for nonprofits?” please don’t hesitate to reach out.

And finally, if you want to learn more about the nonprofit sector and how you can make an impact check out some of these resources…

Building a Great Team is Hard

At the core of any startup are the people. The founder(s) and whoever they bring on as employees are the lifeblood of that business. When a company is small, but growing, building a great team is a priority.

The challenge of building a great team confronts all startup companies. Small businesses must demand a high level of return on their investment (employees), whereas large corporate or bureaucratic organizations can afford to have a handful of employees who do close to nothing. At a small company though, this could potentially be deadly.

This is not to suggest that one employee should be so valuable that if they were to leave, the organization would collapse. (Think of the hit buy a bus theory). Rather, if one employee does not share the same passion and alignment with the company goals that others in the organization do, it could potentially cause negative effects.

Bringing together 5, 10, or even 15 people to operate, grow and expand a small company is no easy task. This is something I am learning first-hand at MarketSmart.

Sam Altman recently published his Startup Playbook. The second section of his guidelines for startup companies talks about building a great team. It is important.

I am learning first-hand at MarketSmart what it takes to build a great team. A so-so team will not build a great company. It takes a united group of people to create something special.

How to hire

Hiring must be treated as a numbers game, it simply must. Think of a sales funnel. At the top you have hundreds of prospects, at the bottom you have a five signed contracts. At every step of the funnel you refine your prospects, leaving you with your most promising sales leads.

Hiring at small companies should employ this same tactic. The consequences of not talking to enough candidates is deceivingly expensive and disruptive.

At MarketSmart I have worked closely with our CEO to develop our Careers micro-site. On the site there is a short 10 question survey for all interested applicants. Questions attempt to make the applicant think, a noble cause in a world of “click-to-submit” job postings.

This survey serves a dual purpose for MarketSmart and the candidate. One, it weeds out candidates who obviously are not interested in MarketSmart. Two it allows us (the company) to spend more time talking to people who genuinely are interested in us.

For the candidates it has the same effect. Candidates will “opt out” and simply not apply if they are intimidated by the survey, or vice versa, candidates will relish at the opportunity to express themselves and share their interest.

The more I interview, phone screen, and watch the hiring process play out, the more I think of it as dating. Dating is not easy, hiring is not easy.

Be honest and transparent

If you are trying to build a great team you should probably be honest with your employees. That extends to potential employees as well.

When interviewing candidates I like to ask them about their most recent previous work experience. What did they like? What did they dislike? Why did they leave or get relieved? Etc.

I am young and naive, but I find it interesting the number of people that mention being lied to by their previous employer.

I doubt these organizations flat-out lied to these people – I simply can’t imagine that. What I suspect is that these companies “misspoke” during the hiring process. They needed you (the candidate), and were willing to tell you what you wanted to hear to make sure you took the job. Then, three months down the line when you were unhappy you went back on the job hunt and ultimately left.

That is my suspicion, and from talking with candidates that is the story I have heard.

So, when building a great team how can you avoid this? How can you avoid “misspeaking” during the interview process? At a small company one employee may very well wear many hats which makes outlining a specific positions roles and responsibilities difficult.

One surefire way to avoid lying to candidates is to create a timeline. At MarketSmart we explain that the roles and responsibilities you are taking on can vary day to day, month to month. What I do during an interview is layout a twelve month timeline to help the candidate understand what role they would be filling now, and what role they could potentially be in then.

I am honest, candid and forthright. Some people I talk to find this refreshing, others are intimidated by the lack rigidity in the plan.

By being honest, open and transparent with potential candidates I am helping MarketSmart find the best fit. Building a great team is difficult, but being honest helps.

Look for character

Sam Altman wrote in his Startup Playbook:

Good founders have a number of seemingly contradictory traits. One important example is rigidity and flexibility. You want to have strong beliefs about the core of the company and its mission, but still be very flexible and willing to learn new things when it comes to almost everything else.

The same idea that he touches on applies to all employees of the organization. Good employees have strong character and contradictory traits.

Traits are differentiated from skills. Skills can be learned, traits are more innate.

At a startup company candidates who are willing to learn and of high character will be of more long term value than a similar candidate who has high technical ability but a limited desire to grow in the organization. When a team is small, 15 people are less, you need a core group of individuals who have traits that align with the company’s mission.

As the company does space will open up for other individuals who are simply “looking for a job”.

Building a great team is hard. It is necessary. And, it is fun.

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Notes From Creating a New Product

When I interviewed for an open position at MarketSmart I made it very clear to the CEO that I was passionate for entrepreneurship. I was hired as a web developer, and since then I have spent most of my time writing code. But, I have on occasion sat in on sales calls, made cold calls to potential clients, and received lessons from Greg, the CEO in startup financing.

At MarketSmart I have been given the opportunity to learn how nearly all aspects of the business function. I leave work every evening with the same feeling I used to get when I would walk out of a calculus class. I take in a lot of important information throughout the day.

About a month ago Greg approached me with an idea for a new product. For the past thirty days I have been working side by side with him to develop our plan of attack. I have learned a lot, actually more than a lot.

I am in an extremely fortunate position to be working with an experienced entrepreneur in a real world setting. I am playing a major role in a project that could generate millions of dollars of revenue and be extremely beneficial for nonprofits.

I have a rare opportunity to “build” a meaningful business with no financial risk. This is the type of experience that will pay off dividends when I found a company five or ten years from now.

Having started up a “company” when I was a freshman in college I thought I had experience in developing a business. As I have learned over the past month, that experience is not nearly as practical as I thought.

At MarketSmart we are developing this new product while also growing a multi-million dollar business.

Here is what I have learned so far. These notes are for my own reference in a few years when I attempt to found something of my own.

Ideas are worthless. Execution is priceless.

This mantra has become overwhelmingly clear to me. An idea is awesome, it can be cool, it can even be great. But an idea is exactly that, it is in a idea. A business, a real revenue generating machine needs to be more than just an idea.

To build a business you need a plan. Keep in mind this does not mean you need to write a standard business plan, rather I’m suggesting that you need to have every thought laid out before you begin spending money.

Working with Greg on this new product has required hours of note taking, organizing and editing. We have taken the original idea, spun it around in every possible direction and then spent hours writing down every thought that came up in discussion.

Next we (I) took these notes and developed a scope document. In this case it is simply a power-point with 30 slides that outline every single far-reaching idea we touched on in our discussions.

The scope document is our plan. It serves as the blueprint for the products foundation.

Don’t build an MVP, build a MFFP.

Like many people I have read Eric Reis’ The Lean Startup. Reis preaches to the reader that they should develop a Minimum Viable Product before investing heavily in building their business.

Greg brought this up in one of our earliest meetings. He agrees with Reis that the concept of an MVP is powerful and important but counters with his own acronym. He suggests building a Minimum Functional Flexible Product.

The distinction between viable and functional is moot, but the idea of flexibility has been ingrained in my mind.

The goal of a MFFP is to spend the necessary money (not the least, not the most) to develop a product that provides the the base functionality to the end user while also having the capacity to easily be extended upon.

For example, the software that MarketSmart currently sells to some of the largest nonprofits in the world was developed so that a developer like myself (one that is not an expert) could come in and develop meaningful upgrades. I could not have created the MarketSmart software, but I sure as hell can build on top of it.

That is the idea. Build a product that provides the must have functionalities while also keeping in mind that the product needs to be flexible enough to support the “nice to have” features down the road.

Get other stakeholders involved.

So far I have not played much of a role in this area of the products development. I have recognized though that it is very important to develop strategic relationships with people who hold power in the marketplace.

I need to learn more about this.

Identify influential people who will help market what it is you are selling.

The previous note piggy-backs into this one. This is more of a coming to market strategy, but it is something I have identified as important thus far.

You don’t want everybody to have access to your product at once. Greg has devised a really simple plan to get influential fundraisers excited about our new product before we even build it.

He did the work here, but the principle will need to replicated in any future situation. When developing a new product you need to align with people who have influence over the market.

More to come

I will be adding to this list in future blog posts. I want to create a repository that I can reference a few years from now. Stay tuned.

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Notes From My Failed Startup

I am 20 years old. When I was 18 and a freshman at Pitt I co-founded a company with two friends.

We founded GymBro. GymBro sold protein powder and other nutritional supplements on a subscription basis. It was really, really fun, plus it gave me an excuse not to pay as much attention to my academic studies.

Now, almost a year after we abandoned the idea I am ready to reflect. My time spent working on GymBro was an invaluable learning experience. It is interesting to think about what we did at the time, and how I would approach similar situations now. There is no better way to retain what you have learned than to write it down.

That is the goal here.

Have a Plan

“Business plans are old school and a waste of time”, that was the general sentiment I found in my research before launching GymBro. My co-founders and I took this to heart.

We had no plan, no guide, no road-map. We were three college guys with an idea and that was about it. Looking back on it now, this is where we failed most.

It may be cool to start up a company with only an idea. But if that is the case then there is no company. Without a plan an idea is just that, an idea.

GymBro was doomed from the start. We never took the time to formulate how we wanted the business to run, how it would execute day to day, and most importantly how it would grow.

We didn’t need a 30 page business plan, we simply needed a plan.

Build a Foundation

Without a foundation (technical, organizational, legal, etc.) any idea, minimum viable product, or business is screwed. This was the second fatal flaw (of many) that we encountered at GymBro.

We had no building blocks in place to support or grow our business.

Technologically we had no advantage over our competitors. We barely even had a functioning website. We rushed through the process of building our online store and that hurt us in the long run.

Organizationally we never assigned roles to one another. No one knew what there responsibility was. Frequently the three of us were unsure what we could be doing to help the company grow.

The three of us thought we could sprint past the basics and end up at the finish line. Ultimately, the opposite happened – every time the business took one step forward we would end up moving two steps back.

Without the proper foundation in place we were doomed from the start.

Provide Real Value

It is surprisingly easy to get people to give you money. It is surprisingly difficult to get them to do it again.

GymBro aimed to generate monthly, recurring revenue from customers.

This never happened.

Customers did not want their supplements delivered to them on a monthly schedule. Some preferred bi-monthly, tri-monthly, or even quarterly. At GymBro we had no way to letting customers choose their subscription frequency.

Instead, we provided the one option that we could program into our website – a monthly subscription. After half a year of stagnant business we all realized that we were doing something wrong.

We were not providing the customer with what they wanted. We were not giving them any real value.

We could convince people to order from us once, but after that they were gone. We did not give them a reason to come back – we did not provide more value then our competitors.

In order to retain customers you need to provide extreme value.

Peter Thiel writes about this in detail in Zero to One.

Act on Feedback

At GymBro users frequently communicated to us the importance of quick shipping. We listened, sort of.

In retrospect, we were extremely fortunate to have such vocal and open customers. We had an amazing opportunity to learn exactly what our customers wanted. Sadly we did not execute on this.

We listened when customers talked. We took a genuine interest in hearing what they had to say. Ultimately though, we did not act upon the information they provided.

When the people who give you money give you feedback you should do something. I wish we had put more time, money and effort into taking action on our customers feedback.

Making progress is difficult. You are only shooting yourself in the foot if you do not listen to the people who generate your revenue.

More on GymBro

Even though we went out of business we still had fun doing it! Here is more information about GymBro, including our application to a startup accelerator in Pittsburgh, a progress report, and a newspaper article.

YC Fellowship Application – Future Employee Benefits

Y Combinator announced the YC fellowship program earlier this week.

YC Fellows will receive a $12,000 grant and advice from the YC community for 8 weeks (from mid-September to mid-November) to go from an idea to a startup. Fellows need an idea or a prototype and the ability to work on this full-time for 8 weeks.

If you are unfamiliar, Y Combinator is a seed investment firm targeting startup companies. The combined market capitalization of all the firms YC has invested in is over $30B.

I have replicated the YC fellowship application questions here on my blog. (Keep in mind there are 120 word limits on every question.) Below are my answers where I outline a company called Assure.

What is your company going to make?

This company provides benefits to employees of the sharing economy.

Independent contractors miss out of the benefits that come with full-time employment. Assure changes this.

Assure bridges the gap between full-time employee and independent contractor. Assure provides retirement contributions, medical insurance, and general liability insurance to members of the sharing economy.

In two sentences, say the most impressive thing about this team / startup.

I want to do something important. I want to create something of value.

Please tell us in one or two sentences about the most impressive thing that each founder has built or achieved.

I dropped out of college when my mom was diagnosed with lung cancer. A month later I was hired full-time as a web developer with skills I taught myself.

Why did you pick this idea to work on? Do you have domain expertise in this area? How do you know people need what you’re making?

A lot of my peers are oblivious to the benefits that come from being a full-time employee. (Something I have learned only recently after being hired full-time). Retirement contributions (401k), medical/dental insurance, and general liability insurance are the three areas I have a touch of experience in.

The sharing economy is expanding. A large number of jobs are tied to this industry. That number will continue rising.

Assure provides the safety and security employees need to maintain the growth of the peer to peer sector.

What’s new about what you’re making? What substitutes do people resort to because it doesn’t exist yet (or they don’t know about it)?

Providing benefits to employees who are independent contractors is not new.

Currently a contractor at Uber has scattered benefits. They have an IRA for retirement savings. Then, general liability insurance to protect their interests while working. And finally medical and dental insurance from their parents.

Assure brings these three interests together. Contractors wish to legitimize their employment. They will turn to Assure when they want their retirement contributions matched. When they want more protective liability insurance. Or when they turn 27 and no longer qualify for their parents medical coverage.

Who are your competitors, and what do you understand about your business that other companies in it just don’t get?

Companies that hire full-time employees are competitors. As are insurance companies that cover individuals.

Companies that hire full-time employees limit potential customers. While Insurance companies provide similar coverage to what we offer.

Our competitors are too slow to adapt to the sharing economy. Assure is agile enough to adapt as the peer to peer employment market grows.

How will you get users? How do or will you make money? How does this become a giant company?

Assure must educate people to turn them into users. Assure must provide information that allows millennials to see the value of working in a sharing economy while also receiving traditional full-time benefits. There is a knowledge gap.

Assure collects monthly premiums from members. Premiums are aggregated and invested. Profit is made from investment income, not premiums.

Assure is a component of the sharing economy. Employment opportunities are changing. Workers in this new economy will want benefits, Assure makes sure that happens.

Applications for the YC Fellowship are due by Monday, July 27th, two days from the time this post was published.

If you have feedback, please share it. I would appreciate hearing it before I press the submit button on Monday!

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