Helping The Crowd Put Their Money To Work

The power of fundraising is in your hands

Randy J. Hunt interviews John Pratt from Fundable via telephone on May 18th, 2007

"Your number showed up as 12345."
"I'm calling from Skype," I replied. How appropriate, crowdsourced bandwidth for a VOIP call.

Brisk and to the point, John Pratt evinced a convincing enthusiasm about the tool he's created to help groups of people use their money in powerful ways. John co-founded Fundable.org with Louis Helm in 2005. Exactly where the idea came from, he says he's not sure. He had been studying political science and social theories around the time he and Louis decided to build the site.

Randy Hunt: Q: What does fundable do for groups of people, "the crowd," if you will?

John Pratt: Fundable helps people coordinate group purchases and fundraisers.

For example, we had a guy who organized a surplus buy of microphones. The minimum order from the company was $10,000 and each microphone cost $250.00. Now, for most people, $10,000 is a lot of money. This guy takes on a lot of risk if people fail to follow through. He might get stuck with a bunch of microphones he doesn't
need. So, on our site he set a goal of $10,000 in pledges and told everyone, "If we collect $10,000 for microphones, I'll buy from this company and we'll each get what we want a lot cheaper than we could have otherwise. If we don't meet our goal, no one pays anything."

Q: It seems like that's one of the most exciting things about tapping into these groups of people: tackling things that otherwise wouldn't be possible. Do people give up or fail to pursue similar actions without something to facilitate it?

A: It's hard to imagine organizing an effort like that microphone group purchase without doing it online, or at least with a tool like we have. That's the kind of project Fundable was designed for. And it works. That's the cool part about it - that people understand something so theoretical and experimental. There's no way to know
that something like Fundable will work until you actually build it and observe how people use it.

Some projects we've seen you wouldn't even try without our service. Isn't that what the Internet is intended for - to do things you couldn't otherwise do? The reason why you use the Internet is that you can't fly to Chicago from L.A. in an hour - you do video conferencing instead. Those are the sort of applications that interest me.

Obviously people can fundraise in person. Obviously they can organize group efforts in person. But I think it would be really difficult to organize something like a group purchase in person.

Q: How do people react when you tell them about Fundable? How do you explain the project?

A: When I tell people about Fundable I pretty much explain it from the diagram on the front page. One person creates a page for a group collection and sets a goal. Each person pledges to pay with their credit card or PayPal, but doesn't actually pay. Once all the pledges add up to the goal, Fundable turns the pledges into real payments. If the goal isn't reached, no one pays. Once all funds have been collected, Fundable sends the money to the group leader, who makes sure that everyone gets what they've paid for.

Q: Is there a technology barrier with the site? Can the non-savvy reap the benefits?

A: Even people who aren't technically savvy understand this. That's encouraging. Most of the projects on our site are not done by techy people. They're done by regular people. Sometimes we get technical questions and it's obvious the person is a new user. So regular people get it. Not just GPL fans are going understand it [laughs] because it deals with a fundamental problem we've all experienced. We've all been in groups and thought, "C'mon, let's do this." Well, everyone kind of wants to do it, but they aren't sure if the other person wants to do it. That's the problem right there.

Q: Have you come across negative reactions at some point or some sort of resistance? Has is always been enthusiastic?

A: At the beginning people were curious. "Oh, I haven't heard of anything like that." That's fine with me. No one is scared or intimidated by it.

Q: Can you speak to some of the lingering criticism concerning crowdsourcing? Does any of the negative attention--inaccurate entries in Wikipedia for example--rub off on your project. Does trust become harder to come by on a collaborative funding website.?

A Well, Fundable and Wikipedia are structured differently if you examine them closely. Wikipedia is fundamentally different in that each page is something that many people are editing and there's no one director of the project. With Fundable, there is a group leader. There's someone responsible for the money. There's someone who has taken the initiative to create the project and oversee it.

There's group participation in both models, that's true. But Wikipedia is doing something fundamentally different. They're trying to be an authority for information, and that's a whole different issue than people taking action together with money.

Fundable is about action. Wikipedia is about information. This is about people taking action with their money, whereas Wikipedia is more about people sorting out information.

Q: How many of the group actions that are started are completed?

A: The majority that complete start out with at least two pledges. That's because it's a sign that there's some commitment behind the project. Anyone can put down a pledge for $10 and say, "Give me money." But if two or three other people pledge in addition to the original group leader, it's an indicator that there's support elsewhere.

Q: Other funders help establish the necessary trust?

A: When you have 2 or 3 other people, it usually means there are other people interested in seeing it happen.

Q: What surprised you most about the project?

A: I think it's exciting that something so experimental works. It works at an intuitive level when you think, "Hey! that would work." And now it works at a practical level. You say, "Awesome! It does
work."

We went into the project thinking it would work, of course. That's why we built the site. But also, when you think about it, it's kind of remarkable that people get it. I'm just happy they do get it, that people use it.

It's not like other sites, like MySpace, Flickr, Facebook. These sites have a much lower, - very, very low - participation barriers because they're completely free. All you have to do is sign up if you have an email address and you're ready to go. So, there's no barrier at all.

Fundable, on the other hand, we're dealing with money. So, in order for us to get people to participate, they have to trust us, they have to trust the model, they have to be willing to part with their money. The fact that we've communicated that these pledges are not really payments, that you're not going to pay it unless everyone else does, and that people believe it - that's inspiring.

Q: Are there any users who have successfully built a business model on top of your business model?

A: I'm not aware of that. I don't think there are any people using it as a source of income yet.
But also keep in mind, Fundable is at an early stage and is very small. Just because it hasn't happened doesn't mean it won't.

Q: Where do you think it will go next? Where do you see it going?

A: We have some new plans. I definitely want to see more people using it.

Q: Do you know of similar projects of other projects that are tapping into groups for information or related to financial things.

A: There's Kiva, which does Third World lending, and there's Prosper.com, that also does that. Those sites are related to Fundable, but we do something different.

Fundable is more about group power, enabling the group to do something that it couldn't do otherwise. We're not concerned as much about a hive of bees building a Wikipedia page. But that aspect is also there. People are coming together and Fundable pushes down a barrier so people can cross a kind of bridge to doing what they want. They can do what they wanted to do anyway.

Full disclosure: Randy J. Hunt used Fundable to raise money for a town that suffered attacks during the Israeli/Lebanese conflict in 2006.

(Edited by Amanda Michel)