Case Study: E2 Kickstarter AA II .+ Introduction e2 is a small BYOB restaurant located on Bryant Street in the Highland Park neighborhood of Pittsburgh, PA. Its chef and owner are Kate Romans and the restaurant serves \"rustic Mediterranean tare\" using local produce and locally produced goods (including produce grown on Churchview Farm tor e2). This is Kate Romane's first restaurant. The space is divided into two areas: the upstairs dining room (10 tables, 28 seats) and the downstairs \"party dungeon\" basement (for events; can accommodate up to 85 people). Representative menu items include Chet Romane's much-loved meatballs and red sauce (with a top-secret recipel), wild mushroom risotto, spaghetti aglio e olio (a Roman classic perfectly reproduced!), and pumpkin mascarpone ravioli with prosciutto and sage cream. Chef Romane took over the space in early 2010 and turned it into what is now e2. They started out serving soup during the intamous \"Snowmageddon\" blizzard in February 2010 and expanded the menu and opening hours over time to what they are today. Chef and her team had never been happy with the restaurant's basement. By early 2012 they had hosted a number of events (e.g., wedding receptions, rehearsal dinners, birthday parties) in the space but, as Chef said, the space \"really needs some love.\" For instance, it had 1980 s decor, unfortunate lighting, and some water damage. Despite these problems, the basement had proved to be valuable as an event space and Chef had decided it was time to make it better. It was decided that the basement \"party dungeon\" space needed to be completely renovated. Chef and her team developed a plan and set a relatively modest budget of $17,000 for the project. The plan involved transforming and updating the basement so it was a flexible event space with communal tables, a new bar and cabinets, and, of course, fresh paint! Being a small community-focused business, however, these funds were not simply lying around. Instead, Chef, along with restaurant manager Jason Thomas, former sous-chef Lauren Urbschat (Katz MBA) and Eli Park-Yanovitch (also a Katz MBA), decided to turn to the community for help using the popular crowdfunding platform Kickstarter. Crowdfunding and Kickstarter Crowdfunding is a form of capital raising whereby individuals (typically \"regular\" people) each contribute relatively small amounts of money that are pooled together. Kickstarter.com is one of the major online platforms for crowdfunding and focuses on creative projects. It was launched on April 28, 2009, and between then and late-2012 almost $400 million in funds across 34,000 successful projects (fundraising campaigns) have been raised by entrepreneurs. Each Kickstarter project has its own webpage that describes the project, the amount of money sought, how it will be spent, how long the fundraising campaign will last, and what rewards are offered. Unlike other crowdfunding platforms such as indiegogo.com, Kickstarter campaigns have an \"all or nothing\" featureif the amount of money sought (i.e., the goal) is reached or exceeded within the limited-time campaign (i.e., by the deadline) the entrepreneur gets the money raised; however, if the funds pledged fall short of the goal once the deadline is reached the entrepreneur receives nothing. As a result of this feature, Kickstarter campaigns need to be heavily marketed in order to be successful. It also helps if the \"backers"the people who pledge moneyare motivated to help make the campaign a success. The e2 Party Dungeon Transformation Kickstarter Proiect Chef Romane, Lauren, Eli, Jason, and the rest of the e2 team started planning their Kickstarter project in the first few months of 2012, aiming to launch the campaign in late April of that year. The plan was to set a 30- day deadline to reach their funding goal of $17,000. The team set up their Kickstarter webpage( http://bit.ly/e2kickstarter) and got to work planning their month-long marketing blitz. As incentives to their backers, they offered a number of rewards based on how much money a backer pledged: - $5 or more name on a wall in the \"Hall of Heroes\" - $25 or more name on a wall in the \"Hall of Heroes\" and a recipe card - $50 or more name on a wall in the \"Hall of Heroes," a recipe card, and a t-shirt or apron - $100 or more name on a wall in the "Hall of Heroes,\" a recipe card, and an invitation to the celebration party in the newly renovated space - $150 or more dinner in your home for two, t-shirt or apron, and a recipe book from Chet Kate Romane - $200 or more dinner for two at 92, t-shirt or apron, and recipes - $250 or more dinner for four at e2 - $500 or more Chef's tasting dinner for six - $750 or more cooking class in your home with Chef Kate Romans for 6-10 people or in-home dinner cooked by Chef for 6-10 people - $1,000 or more Chef's tasting dinner for 12 - $2,000 or more private party for 20 - $2,500 or more farm-to-table dinner for 10 at Churchview Farm cooked by Chet - $5,000 or more private party for 50 - $7,500 or more super secret meatball recipe and ride on Chef Kate Romane's motorcycle A key part of their marketing campaign was a video that talked about the restaurant, Chef Kate Romane's philosophy, and what they wanted to do with the $17,000 they were seeking to raise (see the video at http://bitJy/e2video). There were also a number of other videos that featured short interviews with 92 customers and staft that were used throughout the campaign (see these videos at http://bit.ly/e2interviews). The e2 Party Dungeon Transformation Kickstarter project launched on April 5, 2012 and the deadline was May 7, 2012. Social Media and the Campaign The e2 team relied heavily on a grassroots approach to getting the campaign off the ground. The initial challenge was to make as many people as possible aware of what e2 was trying to do as quickly as possible. This started before the launch date and relied mainly on word of mouth. Chef Romans and her team also hosted some special dinners in the old party dungeon basement space to which they invited \"influential" people from the local community, bloggers, and regular customers. The idea was that these people would become the \"seeds" of a viral marketing campaign and who help spread the word about the Kickstarter project from day 1. In terms of online social media, the main channel used to promote the Kickstarter project and to encourage people to get involved as backers was Facebook, through the e2 page (http:l/www.tacebook.com/e2pgh). At the beginning of the campaign, the Facebook page had been liked by 540 people. Twitter was also used to disseminate information about this Kickstarter project (http:l/twitter.com/e2pgh). Week One: April 5 to 11 There was a flurry of activity in the first week of the campaign. The team started the week by contacting local press and following up with them and live-tweeted from the Kickstarter kick-off party that was held on April 6. On April 7 the team posted updates on Facebook and Twitter and checked in with the \"seeds\" to keep them excited and to remind them to spread the word. As the week progressed, emails were sent out to friends and family on April 9 to engage them and seek their help, more updates were posted on Facebook, and some of the customer/staff videos started to be posted. They also started to reach out beyond their initial group of influential seeds by engaging (through Twitter, predominantly) some local bloggers and media organizations who had shown an interest in the Kickstarter project. They also tried to tap the local chef/bar/food industry by sending tweets to well known Pittsburgh restaurants such as Legume and Pittsburgh's very own whiskey distiller, Wigle Whiskey. They had some success with local bloggers (e.g., BurghGourmand), who retweeted some of e2's tweets about the project. Fundraising Performance Week one went quite well in terms of fundraising. By end of day on April 11, a total of 98 people had backed the project and had pledged $7,618. This meant that, by the end of week one, the team was about 45% of the way to reaching their goal with still three weeks left! Table 1: Fundraising Results for Week One Table 1: Fundraising Results for Week One Date Apr 5 Apr 6 Apr 7 Apr 8 Apr 9 Apr 10 Apr 11 Backers 0 46 17 5 10 10 10 Total Backers 0 46 63 68 78 88 98 Pledges $0.00 $2,726.00 $1,552.00 $1, 185.00 $760.00 $540.00 $855.00 Total Pledges $0.00 $2,726.00 $4,278.00 $5,463.00 $6,223.00 $6,763.00 $7,618.00 Percent Goal Reached 0.00 16.04 25.16 32.14 36.61 39.78 44.81 Average Pledge $0.00 $59.26 $91.29 $237.00 $76.00 $54.00 $85.50Facebook Performance Throughout week one the team was posting to the e2 Facebook page on a regular basis, with eight posts made during the week (on every day except for April 11). Their direct Facebook audience (number of Facebook users who like the 92 page) started at 540 the day before the launch (April 4) and was 558 on the last day of week one (April 11). This gain was not large. The Facebook metric \"People talking about this\" did, however, show a more promising trend: it increased from a daily average of 5 (calculated over the seven days before the launch) to a daily average of 16 (calculated over the seven days of week one). This general metric counts the number of Facebook users sharing \"stories\" about the e2 page and includes new likes of the page, likes of posts, posts made to the wall, comments, sharing, and mentions of the page. A similar trend was observed with other Facebook metrics. For example, the average daily number of engaged page users (people who clicked on the page or created a story related to the page) went from 10 in the week before the launch to 51 in week one. In terms of people reached through Facebook, things seemed to be moving in the right direction. The average daily total reach (number of people on Facebook who saw any e2-related content) went from 375 to 949. Reach can be broken down into \"organic\" (people who saw the 92 page or saw content from the e2 page in their newsfeeds) and \"viral" (people who saw e2-related content because of a friend's activity with the e2 page or posts by e2 in their newsfeed). Average daily reach for organic went from 138 to 213 (+54%), and average daily reach for viral went from 254 to 787 (+210%). Interestingly, most of the gains in daily reach were due to viral activityi.e., Facebook-style word of mouth. Table 2: Selected Facebook Metrics for Week Before Launch and Week One Week Before Launch Date 3/29/12 3/30/12 3/31/12 4/1/12 4/2/12 4/3/12 4/4/12 Number of Posts Made By Page Owner to e2 Page 1 0 0 0 2 0 Daily People Talking About (Unique Users) 8 2 2 2 1 18 6 Daily Page Engaged Users (Unique Users) 14 2 2 8 3 30 14 Daily Total Reach (Unique Users) 374 121 91 267 131 1169 469 Daily Organic Reach (Unique Users) 235 16 6 196 42 301 173 Daily Viral Reach (Unique Users) 148 106 85 78 97 953 310What Should Be Done Next? After the initial success in week one, the team went into week two with mixed feelings. On the positive side, things did seem to be going reasonably well. However, on the negative side, they were worried about the initial \"spike\" of activity at the beginning of week one that had, by the end of the week, dropped off considerably. By the end of week one, they were consistently getting only 10 backers per day and daily cumulative pledges had dropped below $1,000. It fundraising continued at that rate they would still be able to achieve their $17,000 goal (by the middle of week three). However, everyone knew that it was possible that the best days of fundraising were behind them. They were worried that maybe all the people who were willing to help e2 had already done so and that they had saturated their market. They were also worried by the Facebook metrics, which suggested that interest in the campaign was slowing down or, at best, holding steady. By the end of week one, the daily number of people talking about e2 on Facebook had decreased, as had page engagement and reach. The team was worried about organic reach in particular since they figured that Facebook users who were organically reached were most likely to be people who already liked e2 and were interested in e2. In other words, these were the people who were most likely to pledge funds to the Kickstarter broiect. E2 Kickstarter Campaign Question: For the E2 Kickstarter Campaign, is there a relationship between fundraising results and Facebook posting? How effective is the Facebook posting by E2's team in driving fundraising performance? Is there room for improvement