PieShell Shuts Piehole – A Teachable Moment for Crowdfunding Platforms
With my tenure at CrowdFund Buzz approaching six years I’ve seen crowdfunding platforms come and go. Scrolling through this blog year by year you’ll be sifting through a cemetery of dead platforms. All of them launched with lofty goals and new visions for crowdfunding and all of them died. The cause of death was identical in every case; not enough deal flow. Not enough dollars coming in. Not enough cash flow. That explains why PieShell Shuts Piehole is a headline.
Confession time: When I first discovered the news that PieShell shutdown a few days ago I couldn’t help but gloat. That’s because Cheryl Clements reached out to me when PieShell launched back in 2016. Or was it 2017? We had a very short conversation that didn’t go well. For her. Not to “speak ill of the dead” but as Ms. Clements exchanged emails with me, I cultivated an impression that left me feeling as though Cheryl was a little too snooty, a little too snobby and way too sure of herself. It isn’t often that someone approaches me for help promoting them and talks down to me as if I were a coffee-fetching summer intern and not the head of the world’s #1 Crowdfunding PR firm. So, yeah, I take some joy in the fact that PieShell shuts piehole. Sorry about that.
The operative term here is “some”. As I read article after article about the demise of PieShell my feelings towards Cheryl softened. My primal sense of vindication went down a few notches as genuine empathy for her grew. The quotes of hers in the recent articles show a new Cheryl. Or at least a side to her I never saw. Among the articles covering the shuttering, the one in The Spoon really grabbed me because the open letter the PieShell founder published really impressed me. The Cheryl Clements that wrote that letter was humble and honest. She took full responsibility and ownership of her ship sinking. As a fellow businessperson I could empathize with every word she wrote. She looked in the mirror and was honest with what she saw. Her honesty is to her immense credit because there is so much to be learned from this travesty, a good deal of which she made possible by way of her letter.
Let’s turn to the autopsy portion of this article to determine what killed PieShell with scientific certainty.
Cheryl nailed it right on the head. The entire cause of death is summarized in three words; not enough revenue.
Why? Not enough deal flow. Not enough dollars raised from those deals. I know I sound like a broken record here considering an article I posted to this blog a few short days before publishing this article about Indiegogo exiting equity crowdfunding.
Case in point; Pieshell lists a total of 27 successful campaigns in under three years. Not drilling too deep into the details let’s go with what we know; PieShell raised $500,000 for their projects and collected a total of 6% in platform fees of which 1% went to a charity. Just to keep the math easy let’s say that PieShell generated a total of $25,000 in gross revenue in about three years.
As Mr. Wonderful might say — PieShell wasn’t a business; it was a hobby.
An expensive one as PieShell raised $390,000 via equity crowdfunding back in 2017.
Let’s put two important numbers on the chalkboard — $390,000 in raised capital and $25,000 in gross income over a period of three years. A college kid working at McDonald’s part time might’ve made made more money in the same time period.
Would PieShell be around today if Cheryl and I had made a deal back in 2016 to benefit from our crowdfunding public relations services? Maybe. What is certain is that PieShell did very little in the way of crowdfunding promotion at all. To the best of my recollection I never saw a Google or Facebook ad. Never read a press release. The only media coverage I ever noticed of any magnitude was an excellent piece in Forbes back in 2017.
PieShell was desperately looking for a second round of investment funding and came up empty. That’s completely understandable. No investor in their right mind would pour money into a money-losing proposition with numbers this bad.
So what is the cause of death of PieShell? Revenue starvation.
Rather than change direction and steer away from activities that clearly weren’t working in generating cash flow, they stuck to their guns and sank.
If PieShell had a single mission in life to onboard new crowdfunding campaigns and draw huge numbers of foodies inviting them to back those campaigns they might still be around today.
PieShell shuts piehole is a fact and it is one I take very little joy in, all things considered.
There is another crowdfunding platform on my radar who is right now suffrring as they face a very similar fate. I am withholding their name to protect the innocent but they know who they are. At their present course and speed they’re on a collision course with failure too.[ historical footnote – this is the first time since this blog started in 2013 that there were two posts in one day. ]