Q&A: James Beshara, co-founder of Crowdtilt and Crowdhoster, on helping us all raise money

The next stage of the Internet's evolution will help us collaborate on how we spend our money, says Beshara.

Indiegogo and Kickstarter have forever changed how people raise money for creative projects. Launched in 2008 and 2009, respectively, millions of people have used the sites to realize their creative dreams. But what about the people who want to crowdfund for, say, a beer pong tournament? Or a night on a party bus? These poor fun-loving souls have, until recently, been left off the crowdfunding train, so to speak. 

Enter Crowdtilt. Co-founded by James Beshara in 2012, Crowdtilt helps people pool money together for anything from pool parties to political campaigns – things Kickstarter and Indiegogo don't allow their platforms to be used for. Crowdtilt takes a 2.5% cut, which is lower than average, in hopes not to deter people from financing every scale of event (think a Friday night out on the town to a down payment on a house). 

Inspired by their rapid success, the Crowdtilt team launched Crowdhoster in August 2013. It's the first free, customizable crowdfunding platform which allows users total control of their brand, funding goals, URL hosting, and communications. This means users don't need to use predetermined metrics or graphics. They can design the site to their needs and keep all of the profits. 

As a true supporter of open source technology, Beshara says, "Almost by definition, we can’t know all the ways Crowdhoster will be used. We’re just as interested as everyone else to find out." 

The fact is, we've barely taken baby steps when it comes to crowdfunding. While beer pong tournaments might sound inconsequential, how groups spend their money is anything but. 

Only a year-and-a-half-old, Crowdtilt has already been asked to revamp fundraising platforms for organizations as established as the Federal Emergency Management Agency (FEMA). And Beshara is making some exciting announcements soon about partnerships with household brands. It could just be that pooling funds on the Internet will become more common than writing a check far sooner than most predicted. 

Tell me about how the idea for Crowdtilt came to you.

My background is actually in development economics, which is very different than the startup realm.

I did a research fellowship in Rwanda, Uganda, and South Africa and while I was working in poverty alleviation I saw a really cool opportunity to allow people to invest in group loans to organizations working in microfinancing. This was before crowdfunding went mainstream – I didn’t even know what it was. 

I built the site Dvelo.org [now defunct]. People could lend money to a microfinance organization and earn a return, but more importantly get their friends and family involved and group their funds together.

When I moved back from South Africa in 2011, I got the idea for Crowdtilt. Crowdtilt allows people to pool money for anything – it’s not specific to poverty alleviation or creative projects.

The concept for Crowdtilt harkened to this quote I heard from Evan Williams, the founder of Twitter.  When asked about what Twitter’s revenue model would be he said, “I don’t know. All I can say is the reason we’re building this is that we think if a million people like long-form blogging, than maybe 20 or 30 times that will like this bite-size blogging called Twitter.”

That stuck with me. I thought, “If a million people like long-form $40,000 documentaries on Kickstarter, then maybe 20 or 30 times that will like bite size crowdfunding – $400 for a fantasy football league, $1,400 for a party bus to Napa, $40,000 for a really awesome group vacation."

Even back then in 2008 it felt like the next layer of the web was going to allow collective action at levels we’d never seen before. Obviously around communication, but that was already happening. The next layer was going to allow us to collaborate on how we spend our money.

Let’s talk about open source philosophy. Looking at the rapid popularity of Crowdtilt and Crowdhoster, it’s shocking this hasn’t happened earlier.

As a developer and product designer, you become dependent on the open source community. So you always look for ways to give back.

More relevant to Crowdtilt, we feel crowdfunding is where blogging was 10 years ago. There is going to be a huge need for the Wordpress of crowdfunding – an enterprise grade tool that allows you to customize, brand, and host your own crowdfunding campaign.

There are three areas that crowdfunding has left relatively untouched: One, civic crowdfunding. Projects you care about in your city from a toll road on the private side to a park project on the public side. Two, political crowdfunding. If Hillary Clinton wanted to raise money for her presidential run, crowdfunding would be a natural fit. But what tool would she use? Kickstarter restricts politics. But more than that, she would likely not use Crowdtilt.com, she would use her own brand.

Lastly, the area that I think will take to crowdfunding the most over the next two or three years will be commercial crowdfunding.

What does commercial crowdfunding look like?

If you think about Nike wanting to bring back the Jordan 1, what kind of tool would they use? They could do it by telling everyone, “We’re launching the Jordan 1 next month, go to your local Foot Locker,” or they could make use of a digital tool like Crowdhoster, do it online, and allow people to participate in the creation process of bringing this iconic shoe back into production. This would also mitigate their risk. They get the efficiency of knowing exactly what the demand is to the pair. That type of information is invaluable to a maker of any kind.

The mechanics of crowdfunding are too damn powerful for it to remain in the hands of independents and amateurs. Crowdfunding is seen as a toy like blogging was 10 years ago. But what we’ve seen with blogging is that it didn’t stay with independents – these tools are now powering CNN.com and The New York Times.

Tools like Crowdhoster are arguably the next iteration of raising money through online crowdfunding. Did you use a crowdfunding model to introduce Crowdhoster?

We didn’t. It started as a blog post. Crowdtilt wrote about the idea for an open source, customizable, free tool that could power crowdfunding locally and internationally. We received a ton of interest – including an email from Soylent , a nutritional drink company that was an Internet craze at the time.

Soylent had been rejected from Kickstarter and they didn’t want to build their own crowdfunding software. They asked if our tool could be ready for them by the following week. We worked through the night, three nights in a row.

That was our first Crowdhoster project. As of last week they’ve surpassed $2 million dollars in orders and it’s one of the top crowdfunding campaigns of 2013. It’s larger than any Indiegogo campaign to date. Indiegogo is five years old. Crowdhoster is five months old.

Kickstarter and Indiegogo have clear delineations around who can use their services. You’ve left this wide open. Have you ever denied a user based on a political or ideological difference? Do you predict this kind of problem coming up in the future and if so, how would you deal with it?

We haven’t denied anyone. Right now you go to Crowdhoster.com and let us know what you want to build. We get in touch with you and help you launch it. But in about two weeks it will be even easier. You’ll be able to just fill out a couple of fields and click “launch.” 

I foresee it as being open and remaining open, true to open source philosophy. There will also always be a free version of Crowdhoster. Certain products don’t align with our credit card processing service provider – like firearms and pornography. They might even be legal but they won’t be processed. But the software allows you to plug in your own credit card processing and you’re up and running.

We will not restrict campaigns thematically. That goes against the purpose of building this.

Do you secretly lie awake at night hoping a major porn boss is not going to use Crowdhoster?

So much goes into running a company and building these types of tools. My co-founder and I specifically set out to benefit the people around us. There are so many things that could go wrong. There are many sleepless nights just making sure what we’re building is really good.

Crowdtilt was in the news about three months ago in a pretty big way. Residents in Oakland were Crowdtilting extra security. Salon, Gawker, Slate, and Financial Times in England wrote about it. The Salon article talked about the implications for citizens if this trend continues. If crowdfunding spills into our daily lives, will the wealthy crowdfund services that the poor can’t? That’s a valid argument.

We were getting bombarded with people asking, “Is this good for society?” It’s something we’re constantly thinking about. If groups can collaborate around producing anything with their wallets, then where will certain groups take this technology?

Our belief and hope is that crowdfunding will end up being a source for good – a tool that groups do amazing things with as opposed to use for nefarious purposes.

What’s next for Crowtilt and Crowdhoster? Any exciting news?

We can finally announce that we’re collaborating with FEMA to power their disaster-relief fundraising efforts. It floored us when we got the inbound request from them. For a year-and-a-half-old product, I still pinch myself that we’re building this tool. It’s a great example of where we feel this is going. FEMA wants to focus on the logistics of disaster relief. They don’t need to focus on building the world's most refined and easy-to-use fundraising portal.

Photo: Will Graham

This post was originally published on Smartplanet.com