KG: My name is Kunal. I’m a software engineer by trade, but I also used to play in an experimental electronics band called Loud Objects at festivals and art spaces around the world. These cultural institutions supported my art in a way that made me really grateful. As a way of giving back, I got interested in setting up my own cultural institutions to support more artists like myself, so I created a music venue called Silent Barn in Bushwick, Brooklyn with my co-founder Joe and a gallery for video games as art called Babycastles Gallery in Manhattan.

To pull these spaces off, you have to get great at channeling the passion people feel when they are in your space into the nuts and bolts of running a business, like paying rent and staff. The right way do that hasn’t always been super clear. Withfriends is a way of sharing our most successful techniques and making it easily accessible as a service to all the people around the world running amazing cultural spaces.

JOSEPH AHEARN: I’m Joe, and I grew up in New York City raised by artists. I've been working for the last decade helping start and manage art spaces, music venues, and galleries, as well as present projects at community-based organizations as scrappy as DIY spaces like Silent Barn, Showpaper, and Death By Audio to spaces as well established as Pioneer Works, Knockdown Center, or Roulette. I worked for almost six years as Program Director for Clocktower, New York’s oldest alternative arts project. The founder, Alanna Heiss, is the same woman that started MoMA PS1 in Queens.

MARTHA HIPLEY: I’m Martha. I’ve been making work as an artist since I moved to New York 10 years ago. I’ve also led design and development on enterprise software with a specialization in transparent data platforms for companies like Varick Media Management and ASCAP. As an artist, I understand the financial tightrope of surviving in a changing city, and as a designer, I’ve seen how well-made tools can transform an organization from the inside out.

KG: While we co-founders came to this company via different paths, here’s an interesting story. When my gallery, Babycastles Gallery, lost its physical space in 2011, we were in a crisis. But we had a volunteer, Hillary Reeves, who had a degree in arts administration, and she saved us. She helped our team set up and sell memberships for the first time. And then we kept doing events for years without a space, but offered memberships to everyone coming in the door - and in that way eventually built tens of thousands a year in recurring income through memberships. With that amazing support, we founded our new gallery in Manhattan in 2014, which is still awesome and successful right now, on 14th street. Most art spaces aren’t as lucky to have this kind of guidance.

So Withfriends, we’re trying to bring that power to make spaces last for more art organizers around the world.

JA: Many art spaces are putting on events that are quite popular, so it's easier than ever to promote music programs, art programs, and gallery openings. Unfortunately, the spaces themselves don’t always have the structure, coordination, or even the capacity to sit someone at the door to try and sell memberships. They are often just too busy.

Instead, these spaces can use Withfriends through Facebook, or their newsletter, or their website, so that we can sit directly in the pathway of the customer checking out on a ticket sale or RSVPing for the event. We give them a very simple pitch with a video and a few easy-to-read sentences about what's exciting about the spaces’ mission and why now is the right time for them to get involved. We make it a simple click for them to sign up for accessible membership levels of anywhere from $1 to maybe $10 or $15 a month. The whole experience lasts only about 10 to 15 seconds for the ticket buyer. They’re doing what they have always wanted to do -- support their favorite venues and artists -- but there was never anybody there to ask them.

The core thing now is that the space gets the monthly recurring revenue. A lot of the businesses didn't have this because setting up a membership program is a little too hard to conceive of, but if you make it really easy to set up, they suddenly have a monthly, recurring revenue to support their programs.

Additionally, the event organizers now have access to this member's information. They're able to easily contact them at every level. The platform sends them all the information that they need about the event and makes it extremely easy for them to take a lower-tier membership and begin to become more and more deeply engaged emotionally and financially.

JA: We were very early Kickstarter users with a venue we founded called Silent Barn. We had an emergency that required money, and we then saw thousands of people become small donors for our space, which was eye-opening. We knew we had been building traction with every person who had come through our door, but never had a way to monetize it or understand it. 

KG: This mentality was applied to the success of the Babycastles membership program, which transformed that social capital from emergency support to sustainable support.

We began testing how this applied to a small handful of pilot users, and in 2017, we've collected enough data from our initial user base to show that close to 20% of all audiences are looking to support these organizations beyond the price of the ticket.

Parallel to our own research, Patreon has been growing in popularity, proving that there is a market for small-donor memberships as it applies to digital artists, journalists, YouTube creators, and other kinds of digital creatives. Supporters of these cultural movements clearly want to engage, and need a tool designed for the small businesses around them to do so.

JA: The fundraising infrastructure in all of the United States is set up to focus on the 1% of your audience that might be able to give you $1,000 or more dollars a month, and never really below that. In truth, there's an increasing number of people, as the rents go up in a neighborhood and as cities change, who have the capacity to support these spaces so they can flourish in increasingly difficult financial environments. They're already paying for the ticket and coming to the show, so this helps all those other supporters in the remaining 99%.  

JA: It’s people across the spectrum. The current accounts that we're running are primarily music venues, including a lot of large-scale music venues. Then there’s certainly art spaces, galleries, supper clubs, and other places and projects like that. Often it’s the spaces that operate as small businesses and the ones that are deeply cared for by the community around them that are most successful on the platform. Certainly, music and art are the backgrounds that we all share, but any of the spaces that are doing programming with a deeply engaged audience has Withfriends as a tool to financially connect with them more easily.

KG: Our mission is to preserve culture and help make cities beautiful, so we’re targeting our platform for music venues and art spaces. Our focus is to tell event organizers that have at least 1,000 people coming a month that we’re here and that we can convert 20% of that thousand into 200 monthly supporting members of their space, and that their memberships will be a painless and easy process that integrates neatly with their events.

With that in mind, our members are the 20% of existing audiences of these cultural spaces - the really enthusiastic folk that love and appreciate these spaces and have some money beyond the ticket price to give in order to be more connected and involved.

We plan to expand the term culture to include more kinds of small businesses, like fashion, book stores, record shops, barber shops, or any small business is a cultural experience when you compare it to large corporate retail.

When we get there, our membership population will be far more varied, and we’ll build cool services to help give them an inspiring membership experience for them to get them more meaningfully connected and in control of the places that they live.

JA: We take a fee for ticket sales, memberships, and fundraising revenue. For fundraising revenue and memberships, we take 5%. That’s 5% of each monthly payment. For tickets, we take $1 and 2.5%. Over the last three months, we've had a little over $1,200 in revenue per month.

We’ve had a few spikes, but the average has been $50 per account per month, so that's what we're targeting for our path forward: $50 a month for each small cultural space.

KG: We’ve also just added a new type of customer -- the large music venue. We're piloting the first three right now; House of Yes, Le Poisson Rouge, and Elsewhere, each of which we project could sign hundreds of new members up every month. We’ll find out more about that model as we build.

JA: We have 88 accounts that we've targeted and are in active discussions with. We plan to be qualifying each new account for at least the rest of the year and maybe indefinitely. Of those 88 accounts, 25 are actively selling tickets and bringing in memberships. There's another 25 in the setup process. These accounts have generated about 8,000 attendees overall, and 20% of those have turned into members, so we've got 1,672 reoccurring members that have pledged almost $80,000. The biggest stats that I share with people when I'm talking to them about signing onto this platform are that it equals almost $10 for every one of their attendees, because if 1 out of every 5 of those attendees signed up for even $1 a month, that's an estimated $12 dollars to their annual budget. Those are the primary stats that we're looking at right now, alongside secondary -- but critical -- stats like our membership cancellation rate (4%) and how long it takes accounts to set up and begin producing fees (1-2 months), as well as our conversation rates from site visitors to signups (close to 10%).

To maintain this growth, which historically has been about 15 new accounts into the system each month, we've built a network of what we've been referring to as “Jewellers.” This is essentially a commission-based team of salespeople. They are cultural influencers in New York and other cities around the country who are able to qualitatively approach these accounts and work with them to develop membership programs. We have one sales manager (our Top Jeweller) who's full-time now, and as we scale up the number of jewelers, we'll be scaling the number of sales managers to work with them to make sure they understand how to sell the product at a ratio of about 1 manager per 15 Jewellers. The reason that we use the term “Jeweller” is because we want to recognize all of these spaces as hidden gems in our community. We give them tools to polish the gems and make them shine in ways that people may not have understood before they started using this tool. We have an additional goal of adding one large venue a month, and by the end of February, we had three. For our small venue, $50 per month goals, we hope to get about 300 before the end of the summer, a little under 600 by the end of the year. A lot of this is happening through the Jewellers.

KG: We have a new product feature we can’t wait to release, which will make our ecosystem collaborative in a way we haven’t seen before in the fundraising landscape. Bookers, venues, and artists will be able to link up around memberships and honor each others’ benefits at an event they are partnering on.

What that means is that my band, Loud Objects, could have a dozen supporters at $20/month - and they’ll get into all of my shows for free. Similarly for bookers & promoters and their supporters. Right now, this kind of setup is so hard to do that it’s pretty much inconceivable. The behavior doesn’t exist -- even though this is standard practice for institutions on the museum-level -- so this new tool is going to be game-changing and that’s exciting. And moreover: bookers, venues, and artists essentially partner on every single event that ever happens, and all of them are excellent fits for our membership tool. Building our platform with their collaboration in mind from the get-go will make it infinitely faster to bring our fundraising services to the people who need them, so it makes sense as a business.

JA: And if that virality theory works, then that should boost our Jewellers’ capabilities. We have about 20 to 30 signups we pick from very carefully each month, but we should see that grow too. I can see us, by fall at the latest, moving from private beta to running this collaborative network publicly. We feel like we're at a place where they can intuitively do a good job, in which case we will allow people to get further in the setup process without approval from us and then see how fast we can run the machine. The product will also expand the Jeweller's capabilities, and we expect that to be out of private beta by fall.

MH: The closest competitors in this space are obviously Kickstarter, their new product Drip, and Patreon, but none of them are offering this space-related model. No one else is targeting event spaces that already have a strong network of guests. The closest thing that we've researched is Kickstarter's Drip. At best, Drip is suited to artists with a studio practice that can be translated into digital deliverables, and it isn’t designed to meet the needs of small businesses and organizations. It shows there's definitely a market space for similar things, but there's no one who's really focusing on the needs of spaces with existing in-person communities.

The territory for making membership programs easy to set up for small businesses is open. You can try to use Patreon for it, but it won't have any integration with the tools you need to manage events. It's very expensive to do that so it doesn't happen very often. And then Drip is this newcomer where we don't know what they're doing. They might decide to follow us or be interested in our space, but they've not shown signs of that so far. Their brand is aimed at creators and the development of individual creator campaigns has been slow. We want to beat them to the market if they decide to pivot into our market.

Other cities have shown a real thirst for this product, and a variety of spaces are trying to do this on their own. We see examples of haphazard, home-grown attempts to create the kind of infrastructure that becomes effortless with our product. Somebody has their Google sheet where they're keeping track of memberships and they hand out a printout -- there's this need, but there are no tools for small businesses. Art spaces are our wheelhouse, but we see the same haphazard attempts at membership programs happening in restaurants, breweries, cafés, and more. Any small business that knows they have a loyal network will want to leverage that value.

JA: We know these spaces intimately, which means we know the way they need to operate in terms of setting up and what those ticket buyers are going to be influenced by. We all have 10 years of experience being on either side of that equation. We understand how stressful it is. We understand how desperately they need the solution that we're putting out. It’s not just about knowing the product, but also having the network strategy that is integral to how these spaces survive and flourish through touring musicians, through the promotion of events and programs that they're putting on. Those are the same strategies that we're employing when releasing this product into the world, and we think that it is going to be extremely effective.

KG: We’re already seeing that some of our core hypotheses might be true. One is that this is going to be a big year for small dollar memberships. And the other is that it’s a critical idea to make it radically easy to set up a great memberships program - which means that it’s strategic to focus on integrations. By integrating with Eventbrite, we’re proud now to already be working with Elsewhere, Le Poisson Rouge, and House of Yes -- some of the most legendary spaces in New York -- which demonstrates that our team has the insight to make good fundamental assumptions about the right approach.

With investment directly from our friends, family, and community, we can reproduce the success so far at a fast pace while retaining the personal values that inspired us to start this business in the first place, and hopefully inspire you to invest in us.

KG: While we’ve all founded and led small to medium businesses, we’ve led nothing at this scale.

Today, we’re at just upwards of 8,000 ticket-buyers. But we’re about to launch with some major venues, which - every month -  will triple our entire history to date.

That’s scary! How do we technically serve that many customers with a fast, great experience on our platform? How can we manage the impact of bugs? How do we make sure we’re saying the right thing to the right person at the right time, times 100,000?

At a small scale, making a mistake for 1% of your customers is nothing - it’s 10 people a month, we let it go.  But when 1% of your customers encountering a problem is 300 people a month, that’s no good.

We’re committed to getting this right, but there’s a lot of decisions in that matrix and the juggle isn’t easy - it’s an area we can use mentorship.

Regardless, we believe that the moment is now, and it’s only a matter of time before somebody else has a different idea of how to answer the same problems, so it’s important that we keep moving as fast as possible.

JA: We're running this race, which we've talked about a couple of different times. The most important components of this race are our sales team and branding. We need to nail those as fast as possible and as broadly as possible. This opportunity is available in 2018, and 2018 is when the fate of this particular new form of supporting art spaces is going to be defined. We plan to be the ones who are recognized as the platform to go to and the ones solving this issue. We spent all of last year nailing these projections and we're no longer guessing about how many people will convert, or whether people will convert, or whether this is something that works. We know that it works, and now we just need to get it out there to as many quality art spaces as we can. 

We went with a crowd-equity platform because of how we’ve lived our lives before starting this company. The reasons why we started the company in the first place are all based on how we can make supporting the projects that we care about as accessible as possible. We've learned a lot about how the investment structures work for a company of our scale, and we're very excited about what crowdfunding offers communities beyond your typical investor. We want the platform that we’re building to not only support and create value for the venues, but we would love to make the entire investment structure accessible to not just the 1% of our audience that might be able to help us close our round on their own, but the whole 20% of that community that really cares about what we're doing and believes in it.

KG: Inequality is one of the biggest problems of our time right now. We need to close the wealth gap. We have a track record of working extremely hard to deliver on promises to previous investors in other projects, and we're relentless about succeeding. If we can move at least some of the profit of that investment to the community that supports these spaces, that's much better for our personal identities and motivation to work hard than another form of funding. It would be awesome if crowdfunding can scale up forever, but at least we want to start here.