WEBVTT - GoFundMe CEO Tim Cadogan on Giving Tuesday

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is Bloomberg business Week Inside from the reporters and

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<v Speaker 2>editors who bring you America's most trusted business magazine, plus

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<v Speaker 2>Gloomal Business, finance and tech news. The Bloomberg Business Week

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<v Speaker 2>Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.

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<v Speaker 3>Okay, so Carol, you we do a cool guest. I'm

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<v Speaker 3>gonna do the setup. Okay, take it away, because over

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<v Speaker 3>the last week I'm thinking, Okay, you got Thanksgiving. Yeah,

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<v Speaker 3>then you got Black Friday. Yeah, apparently of small business Saturday.

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<v Speaker 1>Yes, indeed, I.

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<v Speaker 3>Don't know what happens on Sunday, so skip that one.

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<v Speaker 3>Don't take a cyber Monday. Do nothing on Sunday, Giving

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<v Speaker 3>slash travel Tuesday. I know what's tomorrow? You're out of here.

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<v Speaker 3>You don't care Giving Wednesday. It's Giving Tuesday today.

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<v Speaker 1>Yeah, so is that your point?

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<v Speaker 3>What's tomorrow? Oh? Wednesday? Something I don't know. They need

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<v Speaker 3>to fit fgure out something for Wednesday.

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<v Speaker 1>You're confusing me, buddy.

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<v Speaker 3>All right, that's the idea. Last year in the US

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<v Speaker 3>people gave three point one billion dollars. This is according

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<v Speaker 3>to the Giving Tuesday data Commons. It works with various

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<v Speaker 3>data labs to source info around Giving Tuesday. For an

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<v Speaker 3>idea about how this year is shaping up, we turned

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<v Speaker 3>to Tim Cadugan. He is the CEO of the crowdfunding

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<v Speaker 3>platform GoFundMe, which raises more than fifty million dollars each week.

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<v Speaker 3>It's amazing he's back with us in the Bloomberg Interactive

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<v Speaker 3>Brokers studio. Good to see you. How are you any?

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<v Speaker 3>Very good?

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<v Speaker 4>Thank you for having me, especially today.

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<v Speaker 1>I got to ask you since we talked about Elon

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<v Speaker 1>Musk before, and you know, he didn't get the approval

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<v Speaker 1>second time. A judge rejected this massive pay package, and

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<v Speaker 1>we said, you know that we don't necessarily have to

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<v Speaker 1>do a GoFundMe page for him yet. Has anybody ever

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<v Speaker 1>done a crazy go fundme page for Elon? For Elon?

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<v Speaker 4>I haven't seen that, but I have seen some high

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<v Speaker 4>school students do it. Go fundme to get a tank

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<v Speaker 4>to take too high school graduations. Seriously, doth veda Outrighters?

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<v Speaker 3>Did it work? Did they raise the money up?

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<v Speaker 4>They raised? I think about twelve hundred bucks and it's

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<v Speaker 4>a hilarious video. I mean, that's just one of many

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<v Speaker 4>examples so yeah, all kinds of crazy stuff, but that's

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<v Speaker 4>not typically giving to you.

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<v Speaker 3>That's not typical. Well, so it's interesting that you're here

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<v Speaker 3>on Giving Tuesday, because I do feel like go Fundme

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<v Speaker 3>is year round. It's not necessarily the type of thing

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<v Speaker 3>that is seasonal like a lot of other charity And

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<v Speaker 3>I don't want to say you're not a charity, but

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<v Speaker 3>like in a lot of like a lot of charities

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<v Speaker 3>that are given to on Giving Tuesday, what do you

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<v Speaker 3>see on the platform around this time of year versus

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<v Speaker 3>other parst?

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<v Speaker 4>Sure? Well, I think the key thing to understand is

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<v Speaker 4>there's two parts of our business. There's go fund Me,

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<v Speaker 4>the consumer personal fundraising part, which nearly everyone knows, and

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<v Speaker 4>then there's Classy, which we acquired in twenty twenty two,

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<v Speaker 4>which is nonprofit fundraising, so it's software typically for mid

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<v Speaker 4>size and larger nonprofits. These are people like the Salvation

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<v Speaker 4>Army or Tunnel to Tows which is a great New

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<v Speaker 4>York based charity, or World Central Kitchen. And for those organizations,

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<v Speaker 4>you're exactly right, like this is the giving season. Really

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<v Speaker 4>Giving Tuesdays the kickoff for that. The three biggest days

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<v Speaker 4>of the year are Giving Tuesday, thirtieth of December and

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<v Speaker 4>the thirty first of December.

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<v Speaker 3>Those latter two for tax reasons, I imagine.

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<v Speaker 4>Yeah, people still like, yes, I've got to get going.

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<v Speaker 3>Got to get it in. How much of your businesses

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<v Speaker 3>go fund me as the consumers know versus the B

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<v Speaker 3>to B part, it's.

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<v Speaker 4>About two thirds one third roughly. Personal fundraising is the

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<v Speaker 4>bigger PoTA. But they're both.

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<v Speaker 1>Big, they're both being which one's growing faster.

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<v Speaker 4>They're both growing pretty nicely. And the interesting thing is

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<v Speaker 4>that I'll go fund me personal fundraising businesses in twenty countries,

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<v Speaker 4>whereas our software classy business currently has made it in

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<v Speaker 4>the US. So there's some big differences there as well.

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<v Speaker 1>Is it with plans to expand globally or we hope

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<v Speaker 1>so yeah, Yeah.

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<v Speaker 4>It's a little bit more complicated doing charity fundraising because

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<v Speaker 4>there's more complicated legislation around the world.

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<v Speaker 3>Yeah, how do you scale? How do you scale it

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<v Speaker 3>outside of the US? Then, like, is there you target

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<v Speaker 3>like a couple of different countries where you understand the legislation,

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<v Speaker 3>How does that work.

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<v Speaker 4>Well with the personal fundraising it also there's legislation, but

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<v Speaker 4>we look at how BIG's the market, how big is

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<v Speaker 4>the GDP, what's the disposal income? And also is go

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<v Speaker 4>Fumbi already known. So, for example, we just launched Mexico

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<v Speaker 4>as our twentieth country in April, and part of that

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<v Speaker 4>was understanding that we already had twenty twenty five percent

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<v Speaker 4>brand awareness. We had a lot of search activity, and

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<v Speaker 4>we had a lot of people who wanted and we're

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<v Speaker 4>trying to set up go Fumbies in Mexico but couldn't

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<v Speaker 4>because it was not yet a supported market. We saw

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<v Speaker 4>that demand, We're like, let's get in there. We worked

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<v Speaker 4>through all the steps to set that up.

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<v Speaker 3>Always working with local currency.

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<v Speaker 4>Do you think, yeah, that's it's critical.

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<v Speaker 3>I'm just wondering if we're going blockchain yet, is there

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<v Speaker 3>any crypto?

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<v Speaker 1>Yeah, that's quest.

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<v Speaker 4>We do offer crypto options for the software side of

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<v Speaker 4>the business, actually pretty small.

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<v Speaker 3>Yeah, does that mean people giving with crypto?

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<v Speaker 4>People giving?

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<v Speaker 3>Because that's the thing that I think has emerged in

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<v Speaker 3>recent years. It's not really people are holding onto their crypto.

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<v Speaker 3>They don't want to spend it. What they want to

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<v Speaker 3>do with it is hold it like a spec to

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<v Speaker 3>ask that.

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<v Speaker 4>Sure, Yeah, we're not seeing a lot of people spending there,

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<v Speaker 4>so we are seeing DAFT as.

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<v Speaker 3>A currency, don't advise funds.

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<v Speaker 4>Yeah, okay, we've been offering that now for most of

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<v Speaker 4>this year, and we're seeing a nice pick up there

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<v Speaker 4>and I think that's going to be a really strong

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<v Speaker 4>growth area.

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<v Speaker 1>Okay, we are Bloomberg, and so I hate to ask

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<v Speaker 1>this question when you're like helping people and some of

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<v Speaker 1>them in dire situations, you know, raise money for a

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<v Speaker 1>good cause. But how do you so what's the business

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<v Speaker 1>model for you guys? And do you just stay private?

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<v Speaker 1>Does it make sense?

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<v Speaker 4>Well, two questions, they will take the first one first,

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<v Speaker 4>add so much so. It is an innovative business model.

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<v Speaker 4>So we thought very carefully about this for the exact

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<v Speaker 4>reason that you preface the question, which is we're here

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<v Speaker 4>to help people help each other, and so we want

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<v Speaker 4>as much money as possible going to the recipients of

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<v Speaker 4>the fundraising. So the only thing we take out is

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<v Speaker 4>the transaction fees, basically the credit card processing fees that

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<v Speaker 4>the banks charge us. So let's say you raise one

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<v Speaker 4>hundred dollars, you received ninety seven and three percent, it's

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<v Speaker 4>two point nine percent in the US is taken out.

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<v Speaker 4>That's the that's the transaction processing fee. The way we

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<v Speaker 4>generate our primary revenue is ask donors to make an

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<v Speaker 4>optional tip to us. It's a very simple UI. We

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<v Speaker 4>have a suggested number, it varies, and then the user,

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<v Speaker 4>without a click, can slide that to zero.

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<v Speaker 3>What portion of users actually give a tip.

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<v Speaker 4>Enough for us to enough? People are generous to us,

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<v Speaker 4>They value the platform. Essentially, were saying, and just do

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<v Speaker 4>you tell us what you think our service is worth?

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<v Speaker 4>And if it's worth something to use at the price.

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<v Speaker 3>What do they think it's worth? Usually not in terms

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<v Speaker 3>of money, in terms of percentage of the donation of

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<v Speaker 3>the contribution. I don't want to keep saying donation, but

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<v Speaker 3>that's yeah, it's a contribution to us.

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<v Speaker 4>It's a it's a it's a modest percentage. Should I

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<v Speaker 4>put it that way?

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<v Speaker 3>Single digits?

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<v Speaker 4>Modest?

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<v Speaker 3>Yeah, but it's enough to keep the lights on, and

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<v Speaker 3>enough to its profitable.

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<v Speaker 4>Keep the lights on, keep us profitable, and critically keep

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<v Speaker 4>us investing in product technology, Trust and safety and customer service.

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<v Speaker 4>Those are the key areas.

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<v Speaker 3>That Okay, let's talk about trust and safety.

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<v Speaker 1>Sure, yeah, one quicker. So without that, would you guys

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<v Speaker 1>not be able to keep the lights on?

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<v Speaker 4>That's all revenue? Yeah, no, we rely on that is

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<v Speaker 4>the way we generate the revenue.

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<v Speaker 3>But it hasn't always been like that.

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<v Speaker 4>Yes, it's started out as a fixed five percentage fee

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<v Speaker 4>and then in this is about a year and a

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<v Speaker 4>half before I joined twenty eighteen. I think late twenty

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<v Speaker 4>eighteen shifted to a voluntary tip model, which we think

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<v Speaker 4>is much more in line with what customers want.

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<v Speaker 3>Do you make more from the voluntary tip model than

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<v Speaker 3>you did with that blanket five percent?

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<v Speaker 4>That depends on the country and the donor, so it varies.

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<v Speaker 3>Trust and safety. How do you know what you're giving

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<v Speaker 3>too is legit? I mean, look, I've used it and

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<v Speaker 3>I think I talked about this last year when we

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<v Speaker 3>spoke to you. But you know, my building has a

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<v Speaker 3>block party every year and they use GoFundMe to raise

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<v Speaker 3>money for the block party. I was on the board,

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<v Speaker 3>so you're welcome. But you know, as one of those

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<v Speaker 3>board members, he didn't do anything. I know, shocking, right.

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<v Speaker 3>There's always the one guy he does everything, But I'm

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<v Speaker 3>on the board.

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<v Speaker 4>That face is usually a woman.

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<v Speaker 3>It is usually the one.

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<v Speaker 1>He Listen, we get it done and we.

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<v Speaker 3>Are we projecting here? Yes, yeah, a little bit no truth,

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<v Speaker 3>but but I do wonder you know that, So then

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<v Speaker 3>then you're reaching out to people who you know and

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<v Speaker 3>you're actually going to see the fund But I think

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<v Speaker 3>oftentimes there are people out there who maybe stumble upon

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<v Speaker 3>one on social media or maybe they even just go

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<v Speaker 3>to your website and you know, you go to your website,

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<v Speaker 3>you see them highlighted there. How do you know those

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<v Speaker 3>are legit? They're going to the actual.

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<v Speaker 4>First, making sure that people have trust in what they're first,

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<v Speaker 4>that they trust us enough to put their story up there,

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<v Speaker 4>which often, as you said, Carol, is really important and

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<v Speaker 4>often some of the toughest things that people are going

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<v Speaker 4>through is they need to trust us as the person

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<v Speaker 4>asking for help. And your question is more about the giver,

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<v Speaker 4>and I trust what I'm saying. So think about it

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<v Speaker 4>in a few layers. First, you already head on it.

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<v Speaker 4>There's a huge social proof layer. The vast majority of

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<v Speaker 4>fundraising is with friends and family and cammunity, so you

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<v Speaker 4>know the block party's real, and so you're going to

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<v Speaker 4>give to the go fund right because you know that,

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<v Speaker 4>and so if you most fundraisers do not make any

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<v Speaker 4>progress unless they make initial momentum with the people that

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<v Speaker 4>frankly know you, love you, care about you. So there's

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<v Speaker 4>a social proof layer right there built into the way

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<v Speaker 4>the model works. The second thing is we've had over

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<v Speaker 4>thirty billion dollars raised, many many millions of fundraisers, so

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<v Speaker 4>have a huge amount of data that tells us what

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<v Speaker 4>looks like a legitimate pattern and what doesn't. That's when

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<v Speaker 4>the trust and safety team then kicks in because if

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<v Speaker 4>there's some behavior there that doesn't look quite right, then

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<v Speaker 4>our team will look at that make sure it's legitimate

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<v Speaker 4>or in some cases not, Actually very few are illegitimate

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<v Speaker 4>because it just doesn't work fun.

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<v Speaker 1>But how do you figure it out? Like do you

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<v Speaker 1>talk to the people you like? How do you figure

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<v Speaker 1>it out to make sure?

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<v Speaker 4>Yeah, so's there's a couple more pieces coming in as well,

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<v Speaker 4>which is once money starts to be raised, then we

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<v Speaker 4>go put the beneficiary through KYC, Know Your or KYB

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<v Speaker 4>if it's a business, which quite a lot of people

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<v Speaker 4>raise for a business, right And so that's both us

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<v Speaker 4>and those banks I mentioned that those payment service providers.

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<v Speaker 4>We're both doing KYC on the customer validating that it

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<v Speaker 4>is the person that they are going to use it

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<v Speaker 4>for legitimate means, and the fund's only released until that

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<v Speaker 4>is all correct.

0:10:20.360 --> 0:10:23.360
<v Speaker 1>So how do you validate someone like what is it

0:10:24.040 --> 0:10:24.840
<v Speaker 1>that you look for?

0:10:25.320 --> 0:10:29.600
<v Speaker 4>Well, looking for that their identity is correct, that it matches,

0:10:29.960 --> 0:10:33.360
<v Speaker 4>that they're verified to their bank account information, that all

0:10:33.400 --> 0:10:36.600
<v Speaker 4>the flows are clean and precise, and we're also looking

0:10:36.600 --> 0:10:39.880
<v Speaker 4>for the donor activity to make sure that there's correlation

0:10:40.160 --> 0:10:44.080
<v Speaker 4>and there's logical connectivity between the people donating that are

0:10:44.120 --> 0:10:46.760
<v Speaker 4>coming from the community, and there's patterns of behavior that

0:10:46.760 --> 0:10:49.120
<v Speaker 4>makes sense a little bit like what a credit card

0:10:49.200 --> 0:10:51.959
<v Speaker 4>company is looking at those kind of patterns that indicate

0:10:52.000 --> 0:10:53.800
<v Speaker 4>that something is legitimate and not legitimate.

0:10:53.920 --> 0:10:57.120
<v Speaker 1>Is that your biggest expense? What's your biggest overhead product?

0:10:57.200 --> 0:10:58.200
<v Speaker 4>Technology? Products?

0:10:59.520 --> 0:11:02.520
<v Speaker 3>The area is it most But is that is that development?

0:11:02.600 --> 0:11:05.000
<v Speaker 3>Is it paying people or is it servers? Like I'll

0:11:05.040 --> 0:11:05.400
<v Speaker 3>come to that.

0:11:05.440 --> 0:11:06.920
<v Speaker 4>I just want to hit one last thing because this

0:11:07.000 --> 0:11:09.160
<v Speaker 4>trust and safety is so important. So because I.

0:11:09.160 --> 0:11:11.000
<v Speaker 1>Can't tell you how many people are times it's like,

0:11:11.520 --> 0:11:14.319
<v Speaker 1>you know, how do you know how I've heard in conversations?

0:11:14.559 --> 0:11:16.120
<v Speaker 1>Is the last piece you know this is real?

0:11:16.280 --> 0:11:20.720
<v Speaker 4>So we a few years ago we instituted the Giving Guarantee,

0:11:20.720 --> 0:11:24.959
<v Speaker 4>which is a global guarantee any donation of any amount

0:11:25.320 --> 0:11:29.760
<v Speaker 4>made worldwide for up to a one year afterwards isn't covered. Wow,

0:11:30.559 --> 0:11:31.959
<v Speaker 4>and that's great.

0:11:31.960 --> 0:11:32.839
<v Speaker 1>What do you mean it's covered.

0:11:32.920 --> 0:11:35.280
<v Speaker 4>So if there's any kind of problem, Yeah, you want

0:11:35.280 --> 0:11:36.280
<v Speaker 4>a refund, you've got it.

0:11:36.559 --> 0:11:38.719
<v Speaker 1>Oh interesting from anybody who donates.

0:11:38.720 --> 0:11:40.679
<v Speaker 4>Anybody who donates up to a year afterwards.

0:11:40.679 --> 0:11:43.200
<v Speaker 3>Any So, if someone didn't have fun at the block party.

0:11:43.160 --> 0:11:46.360
<v Speaker 4>That would be different. That would be on you guys.

0:11:46.960 --> 0:11:50.040
<v Speaker 3>You guys didn't have enough snacks at the block party.

0:11:51.040 --> 0:11:53.640
<v Speaker 4>And the fortunate thing is we we we don't have

0:11:53.720 --> 0:11:56.920
<v Speaker 4>to use that policy very much at all because most

0:11:56.960 --> 0:12:00.280
<v Speaker 4>people asking for help are real people, legitimate p or

0:12:00.400 --> 0:12:02.920
<v Speaker 4>genuinely asking for help because they need it. That's what

0:12:02.960 --> 0:12:03.679
<v Speaker 4>most students do.

0:12:03.880 --> 0:12:06.080
<v Speaker 3>You know, when I see some of these big campaigns

0:12:06.120 --> 0:12:07.800
<v Speaker 3>that end up going viral, I think to myself, and

0:12:07.840 --> 0:12:09.599
<v Speaker 3>maybe it's because it's the bloomberg in me, but I

0:12:09.600 --> 0:12:12.120
<v Speaker 3>think to myself, this person is going to get a

0:12:12.120 --> 0:12:14.640
<v Speaker 3>sudden influx of cash, and that cash might be to

0:12:14.679 --> 0:12:17.280
<v Speaker 3>plan for their child's education if they lost a parent,

0:12:17.640 --> 0:12:20.560
<v Speaker 3>something absolutely tragic like that, which unfortunately we do see

0:12:20.559 --> 0:12:24.679
<v Speaker 3>with these campaigns. They need somebody on the side of

0:12:25.440 --> 0:12:29.640
<v Speaker 3>you know, wealth management or investing to help them manage

0:12:29.640 --> 0:12:32.160
<v Speaker 3>a windfall such as that. Do you guys do any

0:12:32.240 --> 0:12:33.120
<v Speaker 3>of that? We don't.

0:12:33.400 --> 0:12:36.240
<v Speaker 4>It's something we've thought about, because you're absolutely right. I mean,

0:12:36.520 --> 0:12:40.800
<v Speaker 4>someone's often put into a very demanding and unusual situation

0:12:41.320 --> 0:12:43.360
<v Speaker 4>and then they've got this influx of cash, which is

0:12:43.400 --> 0:12:46.120
<v Speaker 4>a great problem. But it's a problem. But it's not

0:12:46.160 --> 0:12:48.320
<v Speaker 4>something that we've gone into. And maybe it's something we

0:12:48.320 --> 0:12:49.920
<v Speaker 4>can help with in the future. But I agree with you,

0:12:50.000 --> 0:12:53.760
<v Speaker 4>it's something that's important. So you were asking about the

0:12:53.760 --> 0:12:54.360
<v Speaker 4>product stuff for.

0:12:54.320 --> 0:12:56.040
<v Speaker 3>A Yeah, I mean when you say the expenses in

0:12:56.040 --> 0:12:59.920
<v Speaker 3>the product, is it about paying you know, AWS for

0:13:00.280 --> 0:13:01.440
<v Speaker 3>service space or whoever?

0:13:01.679 --> 0:13:05.680
<v Speaker 4>It's people, righteers It is our product team, our design team,

0:13:05.720 --> 0:13:09.280
<v Speaker 4>our engineering team, who build a very unique product.

0:13:09.320 --> 0:13:11.400
<v Speaker 3>Is it hard to find them?

0:13:11.600 --> 0:13:17.720
<v Speaker 4>Actually, not terribly because we offer a really interesting set

0:13:17.760 --> 0:13:22.120
<v Speaker 4>of product and technical challenges to work on, and we

0:13:22.240 --> 0:13:26.640
<v Speaker 4>offer a really rare combination of it's technically interesting, it's

0:13:26.640 --> 0:13:29.320
<v Speaker 4>a it's a well paying job, and the purpose is

0:13:29.760 --> 0:13:32.360
<v Speaker 4>bar not right. You get to work on products that

0:13:32.440 --> 0:13:34.880
<v Speaker 4>help people help each other. So it is a really

0:13:34.960 --> 0:13:37.480
<v Speaker 4>nice blend. So we have a very We're very fortunate.

0:13:37.559 --> 0:13:40.840
<v Speaker 1>Is there an average raison kind of the individual side,

0:13:41.280 --> 0:13:43.000
<v Speaker 1>the crowdfunding side, or that.

0:13:43.320 --> 0:13:45.520
<v Speaker 4>It's really hard to say because it is across.

0:13:45.640 --> 0:13:49.240
<v Speaker 1>It is really, it's just it's the the data.

0:13:49.400 --> 0:13:51.760
<v Speaker 4>The average is meaningless though, here's the here's the here's

0:13:51.800 --> 0:13:54.080
<v Speaker 4>the problem. Right, The average is meaningless because it includes

0:13:54.120 --> 0:13:56.760
<v Speaker 4>some really small things and some gargantuan things.

0:13:56.840 --> 0:13:58.640
<v Speaker 1>What's the biggest amount that's ever been?

0:13:58.760 --> 0:14:03.560
<v Speaker 4>The largest amount was forty five million dollars raised for

0:14:04.440 --> 0:14:09.079
<v Speaker 4>a su campaign fundraiser on gofunme dot org, which is

0:14:09.160 --> 0:14:12.400
<v Speaker 4>our sister, which was America's Food Fund, which was set

0:14:12.480 --> 0:14:15.800
<v Speaker 4>up by Lori Powell Jobs and Leo DiCaprio, And that

0:14:15.880 --> 0:14:17.800
<v Speaker 4>was in covid so for food insecurity.

0:14:17.880 --> 0:14:18.360
<v Speaker 3>Wow.

0:14:18.800 --> 0:14:22.200
<v Speaker 4>The largest number of donations ever was for the George

0:14:22.240 --> 0:14:24.239
<v Speaker 4>Floyd family fundraiser.

0:14:24.800 --> 0:14:25.280
<v Speaker 3>Wow?

0:14:25.400 --> 0:14:26.040
<v Speaker 1>How much is that?

0:14:26.640 --> 0:14:28.960
<v Speaker 4>That was I think about fourteen or fifty million dollars

0:14:28.960 --> 0:14:32.680
<v Speaker 4>but the largest number of individual donors from about one

0:14:32.720 --> 0:14:33.720
<v Speaker 4>hundred and fifty countries.

0:14:33.960 --> 0:14:37.120
<v Speaker 1>Hu, Tim Cadugan, thank you so much, really appreciate that.

0:14:37.160 --> 0:14:39.360
<v Speaker 1>The CEO of go fundme joining us right here in studio.

0:14:39.360 --> 0:14:40.160
<v Speaker 1>Happy holidays.

0:14:40.600 --> 0:14:44.360
<v Speaker 2>This is the Bloomberg Business Week podcast of a Little Apple,

0:14:44.640 --> 0:14:48.600
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0:14:52.760 --> 0:14:56.080
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0:14:56.160 --> 0:14:59.080
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0:15:02.120 --> 0:15:08.520
<v Speaker 3>Mm hmm