Know Why You're Starting a Company - Danae Ringelmann of Indiegogo

Know your why. What I mean by this is, why are you starting this company? What problem are you trying to solve? And why do you care so much? If your reason for being is not authentic to your core, chances of you failing will actually go way up.

The reason why is that, for me, my why was I wanted to democratize access to capital. I was aware of this problem; it affected my parents. It was now affecting me because I couldn't help the people I wanted to help. So, my why became: I want to democratize access to capital.

The reason it was so important, and the reason why it was so helpful, is actually that my why found me my co-founders. It's a hard journey to figure out who you should partner with, but when you're clear about why you're doing this, and you share it with the world, the people who care about that too join you. Because I was sharing it over and over again, I was actually able to find my co-founders in business school.

The second thing is that your why gets you out of your way. My original idea was a complete offline fund with a democratic twist— not at all what Indiegogo is today. When I met my co-founders and they were asking me what my real goals were, that was to democratize access to capital. One of my co-founders turned to me and said, “Well, if you really want to do that, why aren't you using the internet?” I said, “That is an amazing point! It is the most democratic tool out there.”

But that actually led us to come up with a perks-based model, innovating and pivoting. Because of that, we were able to launch Indiegogo. I say that because if I had been more obsessed with the solution of my original idea of the product I had in mind, I would have been stuck on that. But because I was more obsessed with my why and actually solving a bigger problem, I didn't care how I solved it; I just wanted to solve it. That allowed me to see a better way to solve it.

Another reason to focus on your why is it gets you through those dark periods, which there will be. I like to show this graph. On top was our plan: we'd launch in January 2008, raise our first venture round in the fall of 2008, and then be off to the races. We all know what happened in the fall of 2008; things did not go according to plan. Fast forward three and a half years, we finally raised that first round of capital.

So that was three years longer than we actually anticipated. I had planned to not take a salary for one year; I ended up having to survive for four. It's just the reality. If your why is not totally powerful and meaningful to you, you won't stick it out. Entrepreneurship is just too hard.

Our first employee, Erica, turned to us when we hired her in 2011, after we raised our first round of capital. She looked at our numbers and saw that we were always growing, but we didn't really have that hockey-stick growth until the prior couple of months before we raised our round. She looked at her numbers and said, “Wow, you guys really did stick it out. Why?” My co-founder Eric said, “Well, we were passionate about what we were doing despite reason.” That just sums it up: you have to be passionate about what you're doing despite reason.

Your why also informs your whole strategy, so it's actually a very practical thing. It gives you bumper lanes for how you're going to execute. We're an open platform because we want to empower the world and allow everybody to find what matters to them. To actually empower the world, we can't be a gatekeeper ourselves; we can't have an application system.

That's why we've been an open system since the very beginning, and that's continuing to be the reason why people use this every day. It also made us global from the get-go, which is another reason people use us every day. If we want to truly empower the world, we have to be everywhere in the world. That forced us to do the hard work to create the backend infrastructure so that we could serve every customer in every country across the world.

It also informs your strategy. We realize that we were doing something completely new; we were reinventing a whole new industry called funding and a new way to actually raise money. Because of that, this was a new experience for most people in the world. That allowed us to focus on actual customer happiness as a key driver of our business and now a key differentiator. People use this every day because we help them the most.

Because oftentimes, when people raise money this way, it’s the first time they've ever done it. The why also continues to inform your strategy and how you actually build your product. We want to empower everybody to fund what matters to them, and everybody to raise money. That's what democratization of capital means to us.

With that, you need to have all kinds of funding options. You can't just do it one way and say it's our way or the highway; you have to give people options so they can maximize their experience and optimize it for their specific needs. So, we have fixed funding, flex funding, forever funding— all kinds of different funding structures, so that people can be successful.

One day, we will actually be able to offer equity crowdfunding when the laws change, which we actually helped change as well. The coolest thing about having a really good why is that it attracts amazing people. The best talent out there can go anywhere; they're not looking for jobs. They're happy where they are, but what will make them change their situation is if there's a company that actually allows them to do what they believe is right and do what's important to them.

Because of that, we've had an amazing experience attracting the most amazing people. Their skills aren't just out of control good, but their hearts are as well. They're so motivated by this mission of democratizing access to capital that they continue to innovate every single day to help us achieve our mission.

Lastly, and this is the coolest part, your why actually attracts your customers— amazing customers. We've had customers like, you know, young engineers out of Idaho, not connected to any university or anything, but they're just passionate about saving the world by creating solar-powered streets and roads across the globe. They use Indiegogo and ended up raising over $2 million to bring their idea to life.

Then this is one of my favorite ones. This is an awesome team of folks who are crowdsourcing your genome— or, excuse me, your biome. They got started because they were able to validate their market and gauge interest on Indiegogo by raising $350,000. They then got into Y Combinator, and now, because of all of this traction and success, they just closed their $4.5 million Series Seed.

What's happening is we're giving all kinds of cool opportunities to all kinds of ideas— ideas that maybe the world would have passed over had they not had a chance to actually see them bubble up and thrive. So the question is, how do you guys get clarity on your why? Well, not to be meta here, but there's a very simple exercise I learned in business school, which is the 5 why exercise.

Start with the statement: why are you doing the company that you want to start? Explain that to yourself, and then ask yourself, like a 2-year-old would, “Why?” again, and “Why?” again. Keep going until you get to a place where you're totally irrational— where you're just explaining the reason you're doing this because of a belief. When you get to that kind of irrational place, that means you have something really real there.

For us, my why was that I wanted to democratize funding. Well, why do I care about that? Well, it's because finance is broken and inefficient, and it's due to this reliance on gatekeepers. Well, why is the reliance on gatekeepers not good? Well, because it doesn't allow for equal opportunity. So why is equal opportunity important? Because I feel like life should be fair.

So why should life be fair? I just believe it. It's just what I believe. It's irrational; it's just what I believe. That was so core to me that that was the reason why I knew I was onto something and that I needed to stick with it.