Start-up Stories with Rosemary Francis
8th November 2021
What we get asked the most…
24th January 2022
Simon Ellington is Co-founder of the crowdfunding website Ko-fi, a platform allowing a fast and free way for content creators, artists and influencers to fund their passions online. Simon, our most recent Start-up Stories guest, shares some personal lessons on when it's best to pivot or persevere, growing a team and why he left a secure 9 to 5 job. Enjoy!
ONE
Tell us about the Ko-fi platform and how it works?
Ko-fi helps creators who do something online make an income from it, without necessarily having to sell a product or sell a service. It started because the original founder, Nigel Pickles, wanted to reward somebody for doing them a good deed. He was helped by somebody who found a piece of code on Stack Overflow which helped him with a freelance project - and found that all he could do to thank this person was to give them an upvote or a like. But if somebody was to help you out offline, you might buy them a drink or a coffee - a tangible show of thanks. His idea was to bring that to the online world. So Ko-fi came out of that idea of being shown a bit of generosity to somebody who's done a good deed or someone whose content you like.
You create a page not too dissimilar to a social media page or a crowdfunding page, and then you promote it wherever you're creating your content online. So let’s say if you’re creating a blog post, you might put at the end, “if you like what I do, you can support my work by buying me a coffee on my Ko-fi page”. If you're on Twitch and you're streaming, you can have Ko-fi is an overlay on your stream and people can donate to you - it will come up on stream saying you’ve received a donation with a little message, it’s those sorts of things.
I think some of the things that let me down or some of the learning points from Brand Unify, was that I didn't take a minute to take a step back.
TWO
I guess it's only relatively recently that online creators would have even been a market. Was there a lot of competition at the time?
The original founder, Nigel, started this as a side project in 2012. The whole idea of the creator economy wasn't a thing. And it was originally taken up organically by some illustrators and visual creative artists, but there wasn't much competition. Patreon started about a year after Nigel started Ko-fi, and towards the end of 2017, Nigel asked me to be a co-founder. It was growing organically from just word of mouth.
It’s a very friction free, easy to use tool which can be set up in just a minute, and you can start asking for donations in a fun and friendly kind of way.
THREE
When you first started out, were there a number of ways that creators could earn on the site right from the start? Or is that something that you brought in later on? And who uses the site?
Yes, we started with the hardest thing, which was donations. It's a strange concept to say, okay, if you like what I did, just give me some money and I'll keep doing it. But you get nothing in return. And that was really what we're kind of known for from the start. But in 2018 we introduced recurring donations, and then we introduced commissions or services.
If you want to hire that creator to do something, we allow them to list services, which we call commissions. We then added a shop for people to sell digital or physical products. And then the most recent thing is membership, which is a way of supporting someone every month and also unlocks benefits for higher tier fans. We now have six or seven ways a creator can make money.
It’s for anyone who's doing something online - so that might be artists, podcasters, writers, streamers, people who make videos on YouTube, bloggers etc. Our most successful creator last year was a guy who did a code tracker site and won a Webby Award for it. You can just put a little donation link up in the top corner and earn £300K from it. Anything that's getting traffic, getting used, and people are finding valuable.
There's over two million creators with an account. In any single month, there's usually between 100 000 and 250 000 creators that either received a payment or did something on the platform. It is a very casual thing to set up and like any consumer tech type thing, quite a few people will use it passively or will have it as a utility and not be using it all the time. Our core audience isn’t doing this as their day job. They're not going on Ko-fi every morning and doing content for their followers. It's one of their revenue sources. Some of them are doing it full time, but plenty of them are doing it on the train into work. There's a really successful guy on Twitter who's doing meme pictures on his phone on his way into work, and it’s a way for him to say, “if you like what I’m doing, buy me a pizza”.
FOUR
If we can jump back to 2005 when you started at ROI360. Can you tell us a bit about that business and your role during that time?
It was really good place for learning - it was quite an entrepreneurial company. When I started they sold hardware and software to the print industry and I was recruited as a designer. I shouldn't have got the job at all. I was one year into a two-year College course. I did a bunch of these ads that really impressed them for whatever reason. And they took me on. It was a very random start, but they allowed me to jump into the software side of the business and I recognised that no one was really using the software. I suggested we should have a services team that help people use it. So I recruited a couple of people I went to college with to come and help me build professional services and competencies within the business. I continued to grow that side of the business and ended up becoming an equity shareholder in the group.
So after a year or so I went from a creative design role and to selling software for a living. But yes, I had lots of roles, lots of freedom to try and grow this business from effectively nothing, to around 1.2 million – not huge but just the right size for me to learn a lot of stuff at quite a senior level.
Starting that first business, Brand Unify, was a lonely old time, and what I found with ideaSpace was a really supportive community
FIVE
So you worked your way up, as you said, in a relatively small company. And then you left. What was the motivation for leaving - what made you leave the security of a nine to five job?
There were a few external and internal facts. I did my Exec MBA while still working, and it was quite difficult to do both at the same time. It was quite a demanding role at work as well. During that time, we sold the hardware business – which meant there was then three owners of a now smaller business. I guess it became a bit crowded at the top and I could see that three was probably going to end up being two. I also had a real itch to do something different.
I'd been doing it for ten years and lost a bit of the passion, I guess. I’d rather part on my own terms than it get a bit negative, so it kind of worked out. There were a few personal things happening then as well, and it was the point where I thought - I've got nothing to lose now, I'm just going to go out on my own and start my own thing. Without much of a plan, I have to say! But I was exiting that business, so I had a little bit of cash to keep the wolf from the door.
However, I never felt like I would do it ‘cold turkey’ and not do anything else to earn money. I had an agreement with my previous company to remain a contractor and work a couple of days a week for them. So, I guess I gave myself some runway to start my own thing.
SIX
That was Brand Unify? Was it in a similar area to the company you left?
Yes - and I think that was probably my mistake. Ten years of working in the same company - and then I go and start basically the same thing! In a way, it's a good idea because you know where your strengths lie and you've got a lot of domain knowledge. But I think some of the things that let me down or some of the learning points from Brand Unify, was that I didn't take a minute to take a step back.
I finished my ten years with ROI360 and the next day I registered the domain name - it was like, all right, let’s crack on with this new version of this thing. It took a while for me to realise what I was passionate about for this next chapter. Also, building a start-up, certainly a B2B SaaS start-up, which Brand Unify was, is really hard. Although I had a network and I had a few ways of getting going, you really do need to be deeply intrinsically motivated to do the outreach.
I remember that getting from zero to five customers was my goal. I spent a long while getting to three customers, and it was a real slog and really hard work, before really realising that if I did get to five, would I be prepared to go and build a proper product? I had an MVP I'd sold to three clients at this point, but did I have the will to keep putting in the time, effort and energy while doing it alone? Another learning point - I wouldn't do it alone again.
I had no accountability to a co-founder or investor. It was a very lonely place building a start-up from scratch on your own.
SEVEN
Did you know quite early on that Brand Unify was something that you might not continue with, or were you just head down and persevering on without question?
It took a year. I was super optimistic to begin with, and anyone who works with me knows that I’m high energy, fairly positive, glass half full type of person. But I think when it came to it, winning client number three didn't feel like the win it should have done. It was more of this ominous, ‘what if I do get to five?’. What if I do need to hire people and raise money and build the proper version of this thing that was currently held together by sellotape. I should have been excited about that and I wasn't.
It was a little bit of a pivot or persevere moment, right? Should I stay doing this thing? In the end, I was sort of tearing myself up a little bit about it and I thought I'm just going to take a breath. I'm not going to beat myself up and keep trying to aggressively go and grow this thing. I'm just going to just take a minute and keep doing a bit of consulting and see what happens. I ended up happier doing the consulting work than working on my own business - which is the wrong way round. So I decided on a new trajectory, to be happy working six to eight hour days for a while, for money - not for free!
My thinking was that if an opportunity comes along, then I'll be open to it and actively pursue it.
I think we do a good job of listening to our audience. We have type forms on our products that give us feedback every day about every core feature - and it comes straight into Slack.
EIGHT
So that opportunity obviously did come along. Ko-fi became more of an entity and you decide to move it on together with Nigel. Did you have a business plan from the start?
No, and I think we had something better than that, which was traction. What Nigel had gifted us was a site that was getting regular growing users that liked it, a positive sentiment throughout, and he was one half of the story. He's a product guy and it's a product led business, but he had a gap - in the fact that it didn't have a revenue stream at all. It was costing him money to run it and it was getting significant.
He was getting more and more users but he had gaps in terms of operational stuff and actually forming a business - which were gaps I could fill. The site got cloned and he rang me and said, ”I'm going to lose this thing if I don't do it properly”. I was lying on a beach in Borneo at the time - I think I was on holiday number seven that year.
I had proper downed tools! But I said – ok, when I get back, let's have a chat. There were three options – I could do some consulting at mate’s rates, but he couldn’t really pay me because he wasn’t earning anything from it. I could give some advice in the background, or I could put some money in and become Co-founder and start it as a company.
His response was that he needed someone to come on board and build this thing into what it could be. And that's when we formed the proper company, Ko-fi Labs Limited, which was at the end of 2017. And it was from that moment that we properly leaned into it.
NINE
Did you dish out roles at that point? Or how did you work out who did what?
We saw it as major/minor. So major was product and that was Nigel. Minor, which was everything else – that was me. It was as simple as that. He led the product, and the product decisions. He knew the community far better than I did. So he took the lead on anything to do with how the product was evolving with me as a sounding board. When it came to setting up the company, deciding how we were going to make money, looking for investment to begin with, all of that, well that was obviously going to be me!
It always sounds quite dodgy to an investor when it's like, “oh, I'm a founder, but I'm in Bangkok”. So we needed somebody here. We actually ended up only raising a tiny bit of angel funding – and that was after we actually needed it. When I was trying to raise money, nobody wanted to know. When we didn't need it, then everybody wanted to invest. It was one of those painful chicken and egg problems.
Why did that happen? And how did you go about initially looking for that investment?
I think because the creator economy wasn't a thing back in 2018 so nobody really knew what it was. And we're in the UK, not in San Francisco, where people take more of a chance on consumer tech than they did in 2018 over here. We also felt like we needed to do it if we were going to compete with Patreon, who's now on their Series E at 4 billion valuation. But we were already streaking ahead. We felt if we were going to compete, we needed to raise money. We did the pitch deck and sent that around a few people at ideaSpace. They were really helpful in validating both what looks daft and what makes sense to an investor. And then we just started throwing it out there.
There are a few lists online of active VCs in different sectors. We spoke to our legal counsel, Taylor Vinters who were connected to VCs on LinkedIn. We asked for introductions and that kind of thing. We ended up with an offer which had horrendous terms. We turned it down because at the same time we had been building Ko fi Gold and we were starting to prove some financial traction.
TEN
You mentioned ideaSpace – how has being a member of ideaSpace been helpful?
Starting that first business, Brand Unify was a lonely old time, and what I found with ideaSpace was a really supportive community. There were plenty of other founders who were working things out and trying to build companies. While I was there they introduced mix and mingles, which are casual get togethers a couple of times a week where you share a coffee or a beer and just chat with the other people in the office. That really helped. There are loads of other events you can get involved with like the Founders’ Breakfasts and The Entrepreneurship Clinic as well as their B3 events which introduce you to services that can help start-ups.
When it came to Ko-fi and going for funding, it was another ideaSpace founder (Matthew Cleevely) who gave me some great advice and helped improve the deck loads. You can really disappear into a vacuum especially if you're working alone so ideaspace was a fantastic, supportive environment to work things out and be among other people doing the same.
ELEVEN
In terms of early hires, have you got any advice about putting a small team together? Also, how do you keep your team motivated?
It was just me and Nigel for the first year or so. And then we took on Thanon, who walked into a coffee shop in Bangkok and asked Nigel what he was working on – he turned out to be an amazing UX front end developer and best first hire you could ever make. People that have worked out and stayed the course have usually been an introduction, somebody who's come along via the network rather than advertising.
We're a team of ten now. Everyone is super passionate, super committed, and we work really well together. Hiring slightly slower, but well, is something that's really worked for us. Our team is our strongest asset by a country mile.
In terms of keeping the team motivated - I think transparency is key. The structure of Ko-fi is completely flat. Nigel and I both have active roles and we try and be as transparent as possible about what's happening in the business and what people's role are in it. I'm pretty religious about doing one to ones and asking teams to tell me how they're feeling about their role, where they fit into the strategy, what can I do better to help them. It’s that sort of stuff.
And I guess hiring well is important so that it shouldn't feel super hard to motivate people when you're a mission driven organisation. I love the Netflix mantra of freedom and responsibility, i.e. you've got the freedom to work how you want to work, but the responsibility to deliver on the objectives of your role.
Everyone who works at Ko-fi is a smart person who does a better job in their area than I would do. So why not give them the freedom to do it the way they want to do it? The response is always really positive. The way we work is also really motivating for the development team. I can literally make something live tomorrow and next month there'll be 4 million hits on the page that sits on. And you probably wouldn't get that if you joined a big company, you'd be working on a tiny cog.
TWELVE
Tell us more about how to build an online presence and being seen and found in amongst all the noise of other sites and platforms.
So, Ko-fi and Brand Unify couldn't be more different. If I was doing a B2B SaaS type product again, I'd be doing it with my eyes open with the knowledge that you have to really hustle for meetings and direct feedback and not worry about marketing to get your first five clients. It's about who do I know who could take a call from me to give me feedback on my products in that world?
I had access to the Alumni network at Cranfield School of Management where I did my MBA. I literally went through the list of Alumni and downloaded it to a spreadsheet and just shamelessly emailed all of them saying I did my MBA at the same place too - even though there was a ten years gap! You never met me, but would you be willing to give me some feedback on something I'm working on? And people are generally receptive if there's any form of connection or reason to ask for an opinion. So I did loads of that. I went to events and I did a lot of outbound messaging to people in the network, people who are also in Cambridge. Sometimes I’d give them a £20 voucher for Jamie’s Italian as a thank you for meeting with me. For every person you meet for a coffee, and it costs you £25 to get a meeting, 20 others don't even reply.
We also tried to tap into the current events. For example, Nigel found a gaming company in San Francisco that had just gone bust out of the blue leaving a bunch of game designers without a salary. So he put a message out to say Ko-fi is going to support you. Open your page and we'll give you free Ko-fi Gold accounts. They all basically earnt their salary back from using our products, and then spread the word about Ko-fi in that community.
We also decided to take a stance against our biggest customer, Patreon. So a few months after I joined, Patreon implemented a crazy fee structure which had a huge backlash, and we felt like we needed to showcase ourselves as an alternative to that. With Ko-fi you get paid directly with no fees from us.
Be passionate - and have a bit of fun while you're doing it. .
THIRTEEN
You mentioned the creative economy specifically. What are your personal views on where that is going and how that's changing?
The big giants are waking up to it. Facebook and Twitter announced super follows and tipping on the platform so that sort of thing is becoming much more mainstream. I see it as a rising tide and there being an ongoing shift towards the every man or woman being a creator and earning a bit of money online. I think it's becoming more normal to do this sort of thing. If you think back ten years, everyone followed celebrities, but there’s a diffusion of that now. Well, that's what I hope happens! That's what our business is built on.
And in the creator economy, everyone who's a meaningful creator knows that they're only renting their audience from a YouTube or a Facebook. They don't get to download the list of people that have paid them. That's Facebook's data, not yours. Whereas on Ko-fi, it's an independent platform and you do have more direct ownership and control of your audience. If you don't like Ko-fi in a year's time, you can download your supporter list and go elsewhere - and we want you to be able to do that.
The big platforms piling in with billions of dollars into this space will accelerate the macro trend. Hopefully more people will be thinking they can do this kind of creator piece, and hopefully we'll continue to shine through as a good option for a certain type of creator.
FOURTEEN
So tell us about the next phase for the business?
This year we had one major monetization method to add, which was memberships. So we wanted to finish V 1.1 of all the ways that creators are able to make money on Ko-fi. We've taken this tact of being a broad platform of simple to use tools, rather than one deep platform that only lets you make money in a certain way. So we had to build out memberships.
We've got the shop tool, commissions and donations – all these ways of making money. So next year is really going to be about tying these money-making methods together. One of the things we introduced last month was discount codes on shopping commissions, but discount codes as of next month, we be automatically applied to people who are a member of your Ko-fi page. It's tying together the various tools to make your Ko-fi page a bit of an ecosystem for your supporters and to level up the tools.
I think we do a good job of listening to our audience. We have type forms on our products that give us feedback every day about every core feature - and it comes straight into Slack. So you can find out why people have rated our shop feature as 4/10 as opposed to 10/10 for example. We now know exactly what most people want. Of course there's a long tail of a million random requests, but most people want similar things.
FIFTEEN
What does the word success mean to you?
I guess happiness all round. Family is very important to me. My son is 2 and a half years old and it changes your map of the world. So success isn't selling the business for a gazillion billion dollars in the future. It's progressing, iteratively, and having a meaningful impact on these creators’ lives. These things keep us motivated along with anecdotal points from both the team and the creators - which makes me feel like we're doing a good job. But with the balance of a happy home life. And I manage that by finishing at 5pm almost every day to do bath and bedtime with the little man. But Monday and Wednesday, I work till midnight or 1am. I sign back in and do a bunch of work at night and that works for me from a family perspective - I don't miss any of the time with my son. And it means I get an uninterrupted three or four hours which, for me, is a good time to work on something.
And one final piece of advice for us?
Be passionate - and have a bit of fun while you're doing it.
Thanks Simon for sharing your Start-up Story with us.
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