I spend money on something every day. The particulars on how and/or why this happens are always different. For instance, my auto insurance is automatically withdrawn from my checking account on the first of every month (thanks, State Farm). And when I leave Pizza Hut I pull a dull 1988 quarter from my pocket, pop it into a ‘claw machine’, then after my fuzzy dice slip between its weak metal fingers, I proceed to swipe my Visa to pay for the mediocre meal I just subjected my family to and leave. Checks, change, cash, cards, computers all serve to exchange money for anything and everything under the sun. With all these things to buy and all these different ways to buy them, I looked deeper into the why behind our purchases. This search put website and fundraising juggernaut Kickstarter under my microscope as they continue to stuff bread (in some cases LOTS of bread) into the pockets of starving artists.

Quickly about Kickstarter – Kickstarter is a website that affords artists a platform to ask for donations to fund creative projects. Conversely, it gives the public a source to discover truly unique projects. “We’re a home for everything from films, games, and music to art, design, and technology. Kickstarter is full of projects, big and small, that are brought to life through the direct support of people like you.”

This concept isn’t revolutionary by any means. Similar sites exist – IndieGoGo and PledgeMusic are almost identical in functionality and actually launched around the same time. For some reason though, Kickstarter seems to have more buzz surrounding it. Comparatively, when Facebook became a verb, Kickstarter has become thee term used when anyone makes reference to their next big idea.

To get to the why this works I sat in on a TED Talk (on my couch) and a spoke with a recently successful hometown Kickstarter from right here in Chicago.

Amanda Palmer gained international attention because of the overwhelming success of her Kickstarter campaign used to fund the most recent album from her band, The Dresden Dolls. So much attention, she was asked to give a TED Talk about it. In her 15 minute presentation she told the tale of being dropped from a major record label after the ‘colossal failure’ of only selling 25,000 albums. The story comes full circle when she shows a screenshot of her Kickstarter page displaying the 24,883 people who pledged a total of$1,192,793; an average of roughly $48 per album, much more than any major label middle man could ever expect from any band, ever.

Palmer credits the personal connection with her audience for the success of her campaign. As a street performer and a self-funded artist Palmer says, “We made an art out of asking people to help and join us.” She went on to say that when you connect with them they want to help you and in time, she became the hat that collected the money for her art. Kickstarter became an extension of her personal interactions with fans and was used in the same vein. If her fans weren’t able to physically connect with her and say, draw on her naked body in Germany but still wanted to be a part of bringing her art to life, they could give her money from their recliner in Cincinnati and feel just as involved (well, maybe not just as involved).

Furthering Palmer’s explanation of why Kickstarter works is a local success story from Chicago’s own, Stock Mfg. Co. – Quality Clothing. Affordable Prices. Exciting Collaborations. Made in America. Tim Tierney, a founding member of Stock Mfg. Co., stresses the importance of story when it comes to Kickstarter success. “Create a compelling story that draws people in; for us, it is the revival of the dying garment manufacturing industry in Chicago.  People are more willing to participate in something they believe in and the better job you do of articulating your cause, the more people want to support.” Stock Mfg. Co., had 275 backers donate $24,652, approximately $90 per backer. A compelling cause and an equally compelling video articulating it is undeniably a major reason Stock’s campaign was so successful.

So, these are two great success stories, but…

Why Does Kickstarter Work?

1. Empathy

Kickstarter is a virtual community of creative people with similar reasons for frequenting the site – have a project funded or find a project to fund. This like-mindedness breeds empathy among users and fosters a more giving environment than other mediums. When people spend money on Kickstarter they don’t ever feel like they’re getting ripped off by a salesperson or brainwashed by a giant corporation. Instead, they feel like they’re helping someone just like them achieve a dream. And more importantly, they’re thinking that there are millions of people out there, just like them, that would help them just the same.

2. Presentation

There are no elevator pitches or sales meetings with Kickstarter. Those attempting to raise funds have the luxury of getting their persuasive and explanatory video just how they like it before they unleash it on the online world.

3. The Tipping Point Potential

With almost anything on the internet these days there is the alluring (or terrifying) potential of a piece of content going viral. With no risk of losing money and potential of making a lot, Kickstarter has built an intangible piece of internet magic into their success model.

What Can We Learn From Kickstarter and Its Success Stories?

1. Little Details = Big Difference

Instead of looking far and wide for the next billion dollar breakthrough, adjust your scope and focus on the little things. Like I mentioned earlier, Kickstarter wasn’t the first crowd-sourcing website and they haven’t done anything drastically different than their competitors to be king of the mountain. But they have clearly focused their attention on the little things that are important to their audience – clean aesthetic, great back end analytics, simple navigation – and it’s made a big difference.

2. Use your tools

A tool is an extension of your business and new tools are being created every day. Stay informed on the latest ways to reach your audience wherever they may be. Like Palmer, use your tools in a way that is a natural extension of the genuine connection you strive for when you connect with your audience. It’s a world of difference using a website to reach fans compared to a milk crate in Time Square, but the sentiment is the same and the audience will be able to tell.

3.  Articulate

If you can’t tell people why they should join your cause or give money to your company, they won’t. Know what you do and explain it in a compelling, succinct manner. Your window to win people over is getting smaller by the minute it seems. Make the most of your time with a clear, powerful message.

A typical week for me is split between the big city of Chicago and the little town of Woodstock, IL. The contrast is welcomed by me as both offer so much. This week it wasn’t the differences in my locales that held my attention, but the similarities. On Monday I found myself in my Chicago office reading an article about the closing of Ohio House Coffee Shop, a diner described by ChicagoBusiness.com as, “a River North classic with more than 50 years of history.” Wednesday night I was in “downtown” Woodstock at Angelo’s Restaurant. I don’t know exactly how long Angelo’s has been in Woodstock, but I do know it’s much longer than I have. It was the first place my mother worked when we moved to Woodstock in 1994. I have memories of me and my younger brother riding our bikes to the restaurant to get free ice cream and most of her tips to spend at our next “downtown” stop: the card shop! Angelo’s is a Woodstock staple to say the least.

I wasn’t at Angelo’s Wednesday night as a patron however. Angelo’s, much like Ohio House Coffee Shop, is struggling to keep their doors open. But before they succumb to the pressures of financial debt they decided to try one last thing, a “Hail Mary” of sorts. They asked Robert Irvine and the Restaurant Impossible crew to come in and save their diner. He accepted. Wednesday night I was in Angelo’s as a member of the Restaurant Impossible crew trying to transform one of America’s numerous failing diners into a relevant, profitable business. This was exciting but it got me thinking about why it seems there isn’t a place for “Mom & Pop” shops in America anymore. Not just diners but bookstores, record shops, general stores and the like.

Greg Kot, Co-host of NPR’s Sound Opinions and entertainment columnist for the Chicago Tribune states that there were over 7,000 record shops in America in the early 90’s. Now there are fewer than 2,000. He goes on to say that vinyl record sales have steadily increased over the past decade and are up 200% in the past 2 years.

Another example – bookstores. In an interview with the Wall Street Journal, Mitchell Klipper, chief executive of Barnes & Noble’s retail group, said that, over the next decade, the chain will reduce its outlets by about twenty a year to reach a figure of about 450 to 500 consumer stores, down from a peak of 726 in 2008. Borders (remember those places?) closed their final brick & mortar stores on September 18^th, 2011.

At first glance one might see the end of an era and get a tear in their eye. The above examples stir up more emotion than most business conversations because they are woven into the American story. This is where we spend our afternoons and find our “me time.” With closer look these aren’t necessarily the final pages in a sad story or the final groove of a broken heart ballad. These are simply stories of transition and adaptation. As technologies change, purchasing trends change and markets shift from mass to niche and back again to niche. It’s a cyclical inevitability and Mom & Pops are along for the ride. If you’re in the front seat of this 7-loop rollercoaster, here are a couple tips to ensure you enjoy the ride instead of losing your cookies.

Be Smart and Be Honest

When you wrote your business plan you had to take an objective look at your market and assess whether or not it was viable for you to start your business when and where you did. That same objectivity needs to remain as you continue to run your business. If you become complacent in your offerings because of what you think and feel instead of the reality in the market surrounding you, you’ll find yourself unable to connect with customers. Stay in tune with your industry and stay honest with yourself.

Location Location Location  Adapt Adapt Adapt!

It’s easy to fall back on the excuses afforded by a harsh economy and many people do. But those who embrace the challenge of finding new ways to thrive in a constantly morphing economic climate are the ones with their doors still open ushering in new customers. Barnes & Noble is finding a new balance between brick & mortar stores and digital technologies. Record stores are selling most of their merchandise online through eBay and online stores while keeping the musty bins available for lifers. There are countless other examples of businesses taking curve-balls and hitting them out of the park as well.

Find Good Help

Good help doesn’t have to come in the form of a celebrity fronted business rescue mission. It can be as simple as hiring part time help to assist you in areas of your business affected by changes in the latest trends. Have a bright student run your social media or a recent college graduate weigh in on buying habits of their generation. Be able to accept advice and help in areas that aren’t your strong suit. With a little help from your friends, you’ll get by.