Gaining financing for projects like the Veronica Mars movie has never been easier.
The band Toad The Wet Sprocket does not currently have a label. They have made so much new music together that they wanted to release a new album. They decided to ask for $50,000 in pledges via Kickstarter with 2 months to do so. They have exceeded the amount in less that 48 hours.
James Franco Wants You to Fund His Indie Film Palo Alto Stories
James Franco may have earned a cool seven-figure salary for such blockbuster hits as Rise of the Planet of the Apes and Oz: The Great and Powerful.
But when it comes to geting his indie passion project made, the A-lister is taking a page from Zach Braff and the makers of Veronica Mars by calling on his fans to help out by chipping in with a little (or big) donation.
Franco has launched a crowdfunding campaign via Indiegogo to raise $500,000 to allow him to finance Palo Alto Stories, a triptych of films drawn from high school experiences he wrote about in his first book of short stories, Palo Alto.
Alas, for anyone thinking they'll be buying in on a chance to costar with the ever-busy multihyphenate, it's unclear whether he'll actually have a role in them.
In fact, the flicks?titled Memoria, Killing Animals and Yosemite?are to be adapted and directed by up-and-coming young filmmakers personally handpicked by Franco, who's putting his energies into producing the project.
"Generally, I see it as a book that's supposed to touch on universal things about being a teenager and coming of age and learning about the bigger world," said Franco in a video pitch. "We just need a little more help?I'm putting money into these projects because I believe in them, I believe in these filmmakers."
The 35-year-old actor added he believes crowdfunding is the "best way to make movies," plus all of the profits from the productions will go to the nonprofit charity Art of Elysium.
So far, Franco's plea has raised $29,000 with 29 days left to go in the campaign. However, unlike Kickstarter, Indiegogo allows users to keep whatever they've raised even if they don't reach their goal.
If Francophiles want to pony up, perks include such goodies as an audio recording of three Palo Alto stories read by James for $20; a personalized signed yearbook photo and postcard for $200; a cellphone voicemail by James for $450 on up to a set visit for $2,500; an original painting by Franco for $7,000 and an executive producer title and VIP dinner for $10,000.
Crowdfunding vs. seed funding: All money is not created equal
Crowdfunding has stormed the startup scene. Many entrepreneurs are turning to platforms like Kickstarter and Indiegogo to raise funds rather than seeking traditional seed capital. Success stories like gaming console Ouya and smartwatch Pebble have sent waves of excitement through a startup community that relies heavily on venture capital to keep its blood (and dollars) flowing.
Most entrepreneurs have faced rejection from investors at one point or another, and crowdfunding provides an alternative to going door-to-door to major VC firms looking for someone who believes in you and your idea. Along with the rise of crowdfunding comes criticism of the VC fundraising model and questions about the future of venture capital.
Is crowdfunding the new seed funding? And how does crowdfunding change the venture capital landscape?
?Friends-and-family funding on steroids?
Research firm Massolution recently published a report on the state of the crowdfunding industry. The report found that crowdfunding generated 1 million successful campaigns and $2.7 billion across the globe in 2012, which is an 81 percent increase from 2011. People from across the startup spectrum with a range of motivations are using these platforms to circumvent the usual seed-funding process and raise money directly from consumers.
?Companies in their early stages are faced with tougher entry barriers to the private equity markets than anyone else and thus are more likely to be attracted by the prospect of raising capital in a new and innovative way,? said Massolution research director Kevin Berg Kartaszewicz-Grell.
?Internal studies have shown that the success of a crowdfunding campaign is predominantly driven by the support of friends and family ? both financial support and support for ?spreading the word? about the campaign. Any company that is capable of leveraging social capital will be able to benefit from this form of financing. Crowdfunding is friends-and-family funding on steroids.??
Crowdfunding for a creative project is an entirely different proposition than trying to get a company off the ground. The term itself has come to encompass projects of all persuasions, including bands trying to finance upcoming albums, teams of experienced hardware engineers building a next-generation storage device, and civic projects that need an extra boost. It has become a complicated and nuanced system that works better for some types of companies than others.
This funding route, from project approval to tentative backers to a zero-sum end result, is not available or appropriate for all early-stage startups, but it?s well-suited to products that are capable of rallying support directly from users. Alon Goren is the CEO of InvestedIn, a company that powers crowdfunding platforms for other organizations. Goren said he was an early-comer to the crowdfunding space and has seen it evolve from a way to fund niche passion projects to a full-blown channel for seed-funding.
?A culture is developing around crowdfunding that is all about collaboration, community, and coming together to make thing happen,? he said.
?Ten years ago, startups wanted to seem as corporate and established as possible. But now people want the personal connection and the story and are excited about the do-it-yourself ethic and maker movement. At the end of the day, the money is the least important part, it?s about building community.?
The hardware revolution
Hardware was formerly an outcast segment of startup society, but the popularity of crowdfunding has helped usher in a hardware revolution. Hardware startups are especially suited to crowdfunding for a few reasons.
People are more likely to put money into projects where they get something tangible in return. The average (non-VC) person is more likely to fund a cool gadget that they want to own than enterprise software or social media marketing tools. Thus it is easier for a hardware startup to attract attention and dollars from mainstream consumers.
And hardware startups generally have higher overhead costs than software startups, which can run on Wi-Fi and Red Bull. Raising money on Kickstarter validates the market by proving there are people out there willing to buy the product before wasting time, money, and resources producing something no one wants. It also generates preorders and enough capital to take a prototype to market. At that point, traditional investors may begin to show interest.
Jimmy Buchheim is the CEO of SticknFind, a company that makes Bluetooth-powered mini-location stickers so you never lose your stuff. He previously worked for a studio that designed award-winning products for companies like Motorola, Audiobox, Sirius XM Radio, and Microsoft.
?We came up with products and visions behind the scenes and didn?t get any glory at all,? he said in an interview.
?When crowdfunding began to become popular, we saw our chance to get out of the closet and start making things for ourselves. Going the venture capital route is not as easy as it sounds, even if you have a great idea. We are a group of engineers in Florida. We have no contacts or network, and we aren?t marketing guys. We just want to make stuff. Crowdfunding allowed us to move forward as a company.?
StickNFind raised $931,000 on Indiegogo (the goal was $70,000), and Buchheim said he wants to crowdfund all of his company?s future products. As someone with extensive experience developing, manufacturing, and distributing hardware products, Buchheim said he?s confident the team can meet demand. The capability and expertise to execute on an idea is key here, since crowdfunding platforms are meant to jumpstart products rather than businesses.
But crowdfunding sites are not platforms for sales; and once a campaign closes, entrepreneurs are independently responsible for follow-through. Many struggle to carry out their promises.
Jim Clark is a designer and entrepreneur who launched a Kickstarter campaign for a line of GoPro cases and accessories. The campaign was successful, but the challenges that followed extended far beyond money. Underestimating the time and resources it takes to bring a product to market is one of the reasons why 75 percent of Kickstarter projects are shipped late. After his experience, Clark ?broke up? with Kickstarter.
?In order to manufacture and distribute your product, you end up beholden to suppliers, manufacturers, and everyone else along your supply chain, as well as investors,? Clark said.
?With Kickstarter, your funders aren?t given any information about how hard it really is to pull off the successful delivery of your product. They?re continually reminding you of what they want and need, and you?re scrambling to assuage their fears. Kickstarter doesn?t provide you with any resources beyond your initial funding. If you get into trouble later, you?re on your own.?
Enter the VCs.
Venture capital & ?smart money?
This is where venture capital can come in. VCs are about more than just money. Yes, the money helps, but so does a support network of mentors, industry experts, and people who have a financial stake in helping portfolio companies grow. Entrepreneurs are warned not to take just any money, but to hold out for ?smart money.? In exchange for equity, good venture capitalists are committed to giving entrepreneurs the tools they need to succeed.
?Crowdfunding can be great for for first-time entrepreneurs who may not be able to raise VC money, for products that may not be large market ?venture businesses,? ideas that are too raw for venture investors, or entrepreneurs who don?t want a more active partner,? said Byron Deeter, a partner at Bessemer Venture Partners.
?However, money is the commodity ? any good team or business can raise money. The best teams also often want a value-added partner who can help the business in other ways: strategy, hiring, partnering, financings, exits, et cetera; and this is where the best venture capital firms repeatedly differentiate themselves.?
VCs generally don?t make an investment until a company has validated the market, gained traction, and shown they can execute on their vision. The doors to VC firms are often closed to entrepreneurs just starting out unless they are extremely well connected or have already made a name for themselves. VCs (as they like to remind you) are very busy and receive a lot of inbound requests. Opening up to anyone with an idea and a bit of coding experience is not in their best interest.
Over the past few years, venture capital firms like Sequoia and Andreessen Horowitz have waged secret scouting programs to get in on promising early-stage deals, and institutional names frequently pop up in seed-round funding announcements. The scouting is still mainly focused in Silicon Valley and still applies to people already in that startup scene.
Furthermore, reports show venture capital is going through a contraction phrase right now, so many entrepreneurs are turning to crowdfunding ? at least until they can get enough momentum to catch the eye of a VC.
Pebble is the largest Kickstarter project in history. The smartwatch maker raised a whopping $10.26 million in five weeks. Pebble is a customizable watch that can access fitness, sports, and music apps and display alerts and notifications from your phone. Founder Eric Migicovsky started working on this project five years ago. He participated in Y Combinator in 2011 and raised a small angel round of funding. When iOS 5 came out, he wanted to build a version for the iPhone (before it only worked with Android or Blackberry), and he set out to raise venture capital in the beginning of 2012. After repeatedly facing rejection, he turned to Kickstarter to bring Pebble to market.
?At the time we hadn?t exhibited market draw, and there was a lot of uncertainty about hardware,? Migicovsky said. ?But we hit just the right point of the curve for wearable devices and Kickstarter campaigns and it really took off. We touched a nerve with people all over the world but realized after six to eight months of manufacturing that to build an ecosystem of devices and apps around Pebble, we needed more financing.?
In May 2013, Pebble announced raising $15 million led by Charles River Ventures. The $10 million from Kickstarter is not growth money; it?s dedicated to fulfilling the 69,000 orders (which have yet to ship). Pebble will use the financing from CRV to expand its engineering team, grow to meet demand, and foster its open development platform. Crowdfunding was a start, but to build a fast-growing startup, you need other forms of capital.
The JOBS Act
The JOBS Act passed in 2011 to open up investment opportunities for startups by allowing for the public offering and solicitation of shares and for nonaccredited investors to make equity and/or debt-investments. The SEC has yet to publish regulations, so the details are still up in the air. However, in the past year, a handful of companies have found innovative ways to put equity investing online and open opportunities up to a crowd.
FundersClub launched out of Y Combinator in July. It is a platform where accredited investors have access to an inventory of vetted, early-stage startups. Each featured company has a fundraising goal (like on Kickstarter), and when one achieves that goal, FundersClub bundles them together and represents all the investors as one entity, which shows up as FundersClub on the cap table.
?We see ourselves as online venture capital, rather than crowdfunding,? said founder and CEO Alex Mittal. ?Normal seed rounds for startups are typically funded by a group of people. You rarely see a single source of capital, and we do the online version of that. This expands access and evens the VC playing field, so accredited investors from anywhere can have access to quality startups. Its a democratization of traditional venture capital.?
One of the issues with equity crowdfunding is that people are not motivated to carry out a lengthy due diligence process for small investments. FundersClub addresses this issue by doing due diligence themselves and primarily featuring fellow Y Combinator startups that are already vetted by a trusted community. Since it requires less work on their part, investors can diversify their portfolios without much extra effort.
This approach is also appealing to startups that are raising money but want to cut down on the time, legwork, and connections necessary to close a round. Tinderbox was FundersClub?s first non-Silicon Valley investment. TinderBox is a startup based in Indiana that provides enterprise software solutions for managing, tracking, and automating business proposals, contracts, and collateral. One of Tinderbox?s current investors referred the company to FundersClub to finish out its round, without constantly traveling back-and-forth.
?Like most high-growth companies, our most valuable commodity is time,? said CEO Dustin Sapp. ?Raising financing requires a significant amount of time meeting with individual investors and managing multiple diligence timelines, all while attempting to maintain your young business?s momentum. Because the number of potential investors you?re able to meet with is limited, your chances of finding multiple investors with the ?right fit? are significantly reduced. FundersClub not only allowed us to save a considerable amount of time, but also increased our reach to make sure we could find investors that understand our space and can bring more than a check to the table.?
AngelList is a well-known online network of startups and investors. Startups post information about their companies, and 302,596 members of the investor community have profiles with their background, investments, followers, and such. AngelList is a place where they can connect and potentially strike a deal. In November, Angellist partnered with broker-dealer SecondMarket so that accredited investors could actually make investments in startups they found promising. Any startup that has a strong lead investor can open their round up to the crowd of accredited investors. In the last month alone, SecondMarket fostered 8,966 intros and $12,032,507 in funds raised.
?Crowdfunding is a partial solution,? said founder Naval Ravikant. ?The goal is make it easier for startups to raise capital. But someone always has to do due diligence, and it is important to have strong advocates on board, which traditionally are VCs. Generally companies that raise through these methods also raise through other methods. Investing in startups is risky and dangerous, it is not for the faint of heart, but in an era where the treasury pays nothing and interest rates are low, people are seeking out risk assets and like the idea of investing online with no hassle.?
A more equal ecosystem
Crowdfunding is not replacing angel investing or venture capital. Rather, it?s joining ranks with these methods as a viable way to raise money. Like traditional investments, it has advantages and disadvantages and the process is different for every startup. The biggest beneficiaries seem to be entrepreneurs in commonly overlooked verticals or from marginalized demographic groups who have an army of supporters behind them, but before crowdfunding had no platform to rally them. Ultimately, the rise of crowdfunding signals a shift in the startup ecosystem. We are moving towards an environment that is more open and accessible to entrepreneurs and investors alike. The real impact is that no matter who you are or where you are from, you have a greater opportunity to grow a business.
A New York startup is hoping to bring group spinning classes to the home, with a high-tech twist.
The company, Peloton, on Monday is launching a campaign to raise $250,0000 via crowd-funding website Kickstarter to build and sell custom-made stationary bicycles that connect to remote instructors via a computerized console and software that Peloton also built to its specifications.
The result is an indoor bicycle that shares more DNA with a Tour de France model than with the clunky exercise equipment in mom?s rec room. Peloton also is working to open an indoor cycle studio in New York City, where instructors will create the same type of high-energy spinning classes popularized by fitness chains such as SoulCycle and Flywheel Sports, but beamed digitally to the (sweaty dis-)comfort of your home.
Peloton?s executive team includes former executives at Barnes & Noble BKS +0.76%and IAC. The startup raised $4 million in financing from several dozen angel investors, many from Silicon Valley or Wall Street. (Peloton is the term for the throng of cyclists who ride together in a bike race.)
Peloton Founder and CEO John Foley, a former executive at Internet conglomerate IAC and the ex-president of e-commerce at Barnes & Noble, said he sees room for high-tech and group-activity spice to what he called the ?dull? exercise-at-home market. ?We?re going to be the coolest thing in indoor fitness,? Foley said.
Like the e-reader tablets from Amazon.com AMZN +0.05%or Barnes & Noble, Foley said Peloton hopes to sell the bikes at or below cost for a shot at making money from selling people the content ? in Peloton?s case, classes live or on-demand with instructors and fellow spinners all connected via digital video cameras.
The Peloton indoor bikes are starting out with a $1,500 price tag, but Mr. Foley said he hopes to eventually sell the bikes for $500 each, and make up the cost on subscriptions to classes. Peloton says it won?t charge more than $39 for a month of unlimited classes. At SoulCycle, the New York chain that helped make spinning popular among celebrities and financiers, classes can cost $30 to $40 each.
Foley said he sought traditional venture funding for Peloton, but didn?t find a warm reception for his company, which had relatively large startup costs because of ambitious plans to build a customized piece of fitness equipment combined with a high-tech computer monitor.
Foley said Kickstarter has been a place where new types of hardware ? including the Pebble smart watch and the videogame device Ouya ? have had a chance to prove their appeal.
Peloton isn?t the first company to meld cycling and tech. Just in the last month, a project called Helios raised more than $120,000 to build handlebars that incorporate into a bicycle some features from a car dashboard, including GPS tracking, headlights and turn signals and a Bluetooth connection to smartphones. Bicycle manufacturer Specialized also has been pitching in Silicon Valley a new type of electric bike called the Turbo eBike.
Known for his twisted dystopian works, Alan Moore is no stranger to the dark side. The creator of V for Vendetta and The Watchmen is now hard at work completing the final piece of Jimmy's End, a five-part series of short films showcasing Moore's uniquely sinister style.
As summer heat grips much of the nation, a budding entrepreneur is offering beer drinkers a new way to help keep their beer cold through the very last sip.
"I was at an outdoor barbecue and saw people dumping out the last few sips of beer and I thought to myself, how do I change this?" said Curt Peters, the creator of the Chill Puck.
Billed as "the next generation ice pack," the Chill Puck is a hockey-puck-like disc that is molded to fit the bottom of standard-sized beer cans. Consumers keep it the in the freezer and attach it when they are ready to use. The Chill Puck is designed to stay cold for more than an hour at room temperature.
Like many hopeful entrepreneurs, Peters turned to Kickstarter.com to fund his start up. The original goal was $7,500, but the project got off to a lukewarm start when it launched.
"We started with a modest goal and thought 'hey if people like it and want to get involved, cool,'" said Peters. "There wasn't much more than a $1,000 investment behind it at that point so there was really nothing to lose."
Things turned around quickly when a beer brand best known for its ice-cold advertising took an interest.
For nearly a decade, Coors Light, the MillerCoors-owned brand, which is the second best selling beer in the country behind Bud Light, has made an association with "cold" the heart of its marketing campaigns. In addition to billing itself as the "The World's Most Refreshing Beer," the company also has tweaked its packaging to include such innovations as "cold-activated" cans and bottles. The labels on the cold-activated products turn from white to blue when the beer is cold. Seeing an opportunity to inject itself into a conversation on cold beer, the company ponied up $10,000 to support the project.
"We saw the Chill Puck on Kickstarter, thought it was awesome and knew right away we wanted to help them out," said Amanda DeVore Moehr, a brand manager at Coors Light. "Ultimately, Chill Puck and Coors Light have the same mission: Coors Light is all about Rocky Mountain cold refreshment and Chill Puck is all about helping people enjoy the coldest beer possible. It's a natural fit."
Equally as important as the donation, the company put Chill Puck's Kickstarter campaign on the Coors Light Facebook page, exposing it to the brand's nearly 3 million Facebook fans.
"As soon as Coors Light put us on their Facebook page, it just started exploding," Peters continued. "It's been amazing."
Ultimately more than 1,000 backers contributed a total of $41,759 to Chill Puck's Kickstarter campaign.The investment allowed Peters to double his initial production order, which arrived shortly before the July 4th holiday. The company shipped 1,500 pre-orders in advance of the holiday weekend, Peters said.
"We pushed the launch to get these out by the Fourth of July so people can use them and show their friends," he said. "The summer is a great test to see if people will like it."
For now, Peters is selling the Chill Puck for $7.99 online at Chillpuck.com, but he hopes to someday to make it available at other retailers.
As for Coors Light, DeVore Moehr said the brand is not looking to invest in more startups, but it's not turning a cold shoulder to other marketing possibilities.
"We're always looking for opportunities in spaces that are relevant to fans of Coors Light and which help us convey our commitment to cold," she said.
Kickstarter is such an awesome program! It's great because a successful kickstarter means people out there ACTUALLY want to have your product/service. Takes some of the guess work out of the early stages of developing a business/product.
Toad The Wet Sprocket?s Favorite Curse Word Is ?Blast!? ? Which Is Why We Love Them
There?s one ?90s band that never seems to make it into the conversation about the era, or get the critical respect it rightly deserves. In ?97, the New York Times called them ?the standard-bearers of folk-rock mediocrity.? (Ouch.) We?re here to tell you otherwise. That the band in question is not only one of the greatest hit-machines of the ?alternative nation,? but well worth revisiting. The band? Toad the Wet Sprocket.
If you grew up in the 1990s, you?re lucky, because that era saw a highly eclectic group of musicians from all genres take over the airwaves and daily MTV video rotation ? Nirvana, Smashing Pumpkins, Counting Crows, Pixies, My Bloody Valentine. The list goes on and on. And likewise, it gave way to a lot of really questionable shit like Live, Marcy Playground, Creed, Smash Mouth and Sugar Ray. Toad was not of the latter ilk.
So what makes Toad different? Well, it?s simple: They always just were themselves. They never had a gimmick or a particularly over-the-top sound, which for the era basically meant being popular. Think about it: Where would Pearl Jam be without that ?Point Break? aesthetic, Eddie Vedder?s dangerously handsome looks and guttural howl ? and the video for ?Jeremy?? How about the Toadies, without that song about showing some chick ?my dark secrets ? behind the boathouse??
Toad was just four nice guys from Santa Barbara, California ? Glen Phillips (lead vocals/guitar), Todd Nichols (guitar/backing vocals), Dean Dinning (bass) and Randy Guss (drums). Lead singer Phillips didn?t shoot himself in the head, have a giant rat-tail down his back, or spend his off days chasing the dragon. Instead, he wrote or co-wrote a laundry list of hits from 1989-98 ? and memorable ones at that. Who can forget ?Walk On the Ocean,? ?Fall Down,? ?Something?s Always Wrong,? and ?Good Intentions??
Sure, they?re tailor-made for the soft-rock, wine-and-cheese radio format; but in the same sense, they?re just so damned listenable and enjoyable. (No naked people on wrecking balls needed.) Plus, the guys in the band just seemed so nice ? like guys you?d want to invite home for dinner and introduce to your parents. Hating Toad the Wet Sprocket is like hating puppies. It?s just not right.
So it?s 2013, the music industry is all digital and shit, and the ?90s are just a flash in the pan. But Toad the Wet Sprocket is back together, out on tour, and putting out a brand-new album, New Constellation, this week. This band ? one you may have overlooked 10-odd years ago ? is giving you ample opportunity to catch the rerun. So we advise, friends, that you take it.
MTV Hive talked to Phillips about some of his not-so-obvious influences, the new record and all those hit songs.
Toad the Wet Sprocket just seems like such a nice group of guys to me. Do you remember the last time you got really angry?
Oh, I get angry enough, but I prefer to be nice. I feel like it takes more energy and creates more trouble to be a dick, so I try to remain grateful. I haven?t met too many terrible people in my life.
In the spirit of Bravo?s ?Inside the Actors Studio,? what is your favorite curse word?
I think ?blast,? just because it?s so not a curse word. I was touring with Nickel Creek in the very beginning, and they still didn?t curse. There was a period where they played Elliott Smith and Aimee Mann songs, because those had curse words they could say, but they wouldn?t use them in conversation. And at that time, [fiddle player] Sara Watkins ? if she dropped something on her foot ? would say, ?BLAST!? I just thought that was the best thing ever.
I read that one time in 1994 you guys got banned by the city of Schaumburg, Illinois. Is that the only time the band?s ever gotten in trouble?
Probably. And that was for playing acoustically in-store at a BestBuy. Schaumburg is kind of a ?Dirty Dancing? town, and it was considered a public performance, and they hadn?t gone to the mayor?s office and picked up a permit, so they shut us down. We haven?t had a whole lot of trouble with the law.
Toad the Wet Sprocket has broken up once ? back in 1998. Bands that break up often are experiencing creative differences, monetary issues, personality clashes, etc. You guys are back together after a long hiatus. Are you still friends?
We?re not actually extremely close friends. [laughs] I?ve equated [being in the band] with that first Thanksgiving, where you get your whole family together, and nobody has an argument and it?s weird, but you?re actually really glad to be there, because everybody?s put the past away. So for me, Toad is kind of like that.
You grew up in Santa Barbara, California. Were you from a musical household?
My brother was a really good musician; he was a composition major. He works for Korg, actually, and makes synthesizers. He was a keyboardist, so I picked up guitar. I remember Rush blowing my mind. And then when I met Todd [Nichols], I was listening to a lot of Ozzy and Rush, and he turned me on to H?sker D? and the Replacements, Dumptruck, Dinosaur Jr. ? from there I got into punk music.
Your sound is so distinctive ? there are shades of college rock and folk-rock in there. Did that gel right away?
Todd, I think, has a distinctive tonal center that he writes around; and his taste and Dean [Dinning?s] taste are much more pop than mine are. My favorite new bands are Alt-J and James Blake. I am not really into mainstream pop music. It was frustrating back in the day. I was listening to Negativland, late Talk Talk ? those were my influences, and I wasn?t listening to the bands we were lumped into. They really, honestly, didn?t interest me. And we kind of always had a mellow sound, but we also had these sad, dramatic lyrics. I don?t think anybody else was doing that at the time. Lyrically, I was much more in league with Morrissey than I was with Hootie and the Blowfish.
Crosby, Stills, & Nash ? and Young, too, I think ? all wrote songs about having or being on yachts, because they were filthy rich and could afford them. ?Walk On the Ocean? is a water-based track that isn?t of that canon. What was the basis for the song?
In all honesty, that song was written in about 10 minutes, lyrically. We were making a demo, and we wanted to say something other than ?la-la-la,? and I whipped that thing out. It was loosely based on [a trip] my wife and I had gone on to Doe Bay, on Orcas Island in the San Juans outside of Seattle, to a hippie resort.
I notice that a lot of your hit songs are downhearted or sad in theme ? ?Something?s Always Wrong,? ?All I Want,? ?Fall Down.? Is songwriting where you get the angry, mean-spirited Glen Phillips out?
I don?t know if it?s the angry and mean me, but it?s where I work out the problems. I think it?s really hard to write songs about joy. I really wish I could do more of it. It?s easier for me to write about heavier things. But my favorite songs are the ones that actually lean toward something positive but don?t feel like they?re ignoring the darkness. I mean, that?s what ?All I Want? is.
I think there?s this assumption that bands with a string of hits in the ?90s are now living large ? fancy cars, diamond-studded watches, stuff like that. Do the residuals from your ?90s hits even pay your bills?
Oh, God no. That would be lovely, but absolutely not.
With that in mind, what is your goal, album-sales-wise, for the new Toad record? Do you expect to make any money off it?
I don?t know what my goal is. We?re determined to work as hard as we can on it, but I also understand how much the world has changed. It will take a lot of luck to get above the noise floor, because there?s so much out now. Everybody now has these great democratizing tools, which is a real gift; but on the other hand, everybody has the same ones, so the problems of having people know you actually have a record out there are the same as they?ve ever been. The one thing we may get this time around is some respect. We weren?t really cool the first time around and people weren?t writing about us because we weren?t edgy. People can describe us now as not just a guilty pleasure but something they care about.
What do Amanda Palmer, Delta Rae and Toad the Wet Sprocket have in common? They?ve all funded albums through Kickstarter. And in the case of the latter two, they?ve also performed live concert sets in the FORBES newsroom.
Toad the Wet Sprocket, our latest guest, stopped by to play a set that included 1990s alt-rock staple ?Walk on the Ocean? along with new songs ?California Wasted? and ?New Constellation? (see full performances below). The latter is the title track of the band?s latest album, its first in 16 years, launched with the help of $264,762 raised via Kickstarter.
?The industry has changed a lot,? says lead singer Glen Phillips. ?It used to be a household would buy the CD and the tape, so you were selling hopefully two copies to every fan. Now you?re selling one in twenty for people who actually listen to the music ? Kickstarter offered a really great opportunity to take a small group of people and serve them first.?
In other words, focus on super-serving the super-fans, and let the rest take care of itself. New Constellation debuted at No. 97 on the Billboard charts with first-week sales of just 4,000?less than the 6,304 who contributed to the Kickstarter campaign?but the economics of crowdfunding translate to a much more significant impact on the band?s bottom line than the raw numbers indicate.
Phillips estimates that, had they been on a major label, the members of Toad the Wet Sprocket would have had to split royalties of roughly $1 per album sold, and that?s only after earning back any advance given to them. Under their current arrangement, the band keeps nearly $7 for every $9.99 album sold on iTunes. That makes its opening week look more like 25,000 copies sold, which would have placed New Constellation in Billboard?s top 15.
?It?s a much better business model,? says Phillips with a laugh.
To be sure, some observers have criticized the Kickstarter model for a variety of reasons. The aforementioned Palmer earned her share of derision after raising over $1 million for her album?and then asking musicians who opened for her to play for free. Smaller bands have been scoffed at for Kickstarting tours that amounted to paid vacations.
That certainly doesn?t seem to be the case with Toad the Wet Sprocket, judging by the back-of-the-envelope accounting given by Phillips. Of the quarter-million dollars raised, he says the band shelled out $50,000 to record the album, $70,000 on printing and $30,000 on shipping. The rest went to the group?s creative team, management fees, web master and designers, with a bit left over for promotion.
?It?s mostly spent,? says Phillips. ?It?s not like there?s anything left in our pockets and we?re going ?We?re rich!??
Are there plans for another crowdfunded album? Perhaps. But the band may consider other sites, including PledgeMusic. Either way, Toad the Wet Sprocket?s Kickstarter experiment was well worth it. Says Phillips: ?It was a great experience.?
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