Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg business Week Inside from the reporters and
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Speaker 2: Gloomal Business, finance and tech news. The Bloomberg Business Week
Speaker 2: Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
Speaker 3: Okay, so Carol, you we do a cool guest. I'm
Speaker 3: gonna do the setup. Okay, take it away, because over
Speaker 3: the last week I'm thinking, Okay, you got Thanksgiving. Yeah,
Speaker 3: then you got Black Friday. Yeah, apparently of small business Saturday.
Speaker 1: Yes, indeed, I.
Speaker 3: Don't know what happens on Sunday, so skip that one.
Speaker 3: Don't take a cyber Monday. Do nothing on Sunday, Giving
Speaker 3: slash travel Tuesday. I know what's tomorrow? You're out of here.
Speaker 3: You don't care Giving Wednesday. It's Giving Tuesday today.
Speaker 1: Yeah, so is that your point?
Speaker 3: What's tomorrow? Oh? Wednesday? Something I don't know. They need
Speaker 3: to fit fgure out something for Wednesday.
Speaker 1: You're confusing me, buddy.
Speaker 3: All right, that's the idea. Last year in the US
Speaker 3: people gave three point one billion dollars. This is according
Speaker 3: to the Giving Tuesday data Commons. It works with various
Speaker 3: data labs to source info around Giving Tuesday. For an
Speaker 3: idea about how this year is shaping up, we turned
Speaker 3: to Tim Cadugan. He is the CEO of the crowdfunding
Speaker 3: platform GoFundMe, which raises more than fifty million dollars each week.
Speaker 3: It's amazing he's back with us in the Bloomberg Interactive
Speaker 3: Brokers studio. Good to see you. How are you any?
Speaker 3: Very good?
Speaker 4: Thank you for having me, especially today.
Speaker 1: I got to ask you since we talked about Elon
Speaker 1: Musk before, and you know, he didn't get the approval
Speaker 1: second time. A judge rejected this massive pay package, and
Speaker 1: we said, you know that we don't necessarily have to
Speaker 1: do a GoFundMe page for him yet. Has anybody ever
Speaker 1: done a crazy go fundme page for Elon? For Elon?
Speaker 4: I haven't seen that, but I have seen some high
Speaker 4: school students do it. Go fundme to get a tank
Speaker 4: to take too high school graduations. Seriously, doth veda Outrighters?
Speaker 3: Did it work? Did they raise the money up?
Speaker 4: They raised? I think about twelve hundred bucks and it's
Speaker 4: a hilarious video. I mean, that's just one of many
Speaker 4: examples so yeah, all kinds of crazy stuff, but that's
Speaker 4: not typically giving to you.
Speaker 3: That's not typical. Well, so it's interesting that you're here
Speaker 3: on Giving Tuesday, because I do feel like go Fundme
Speaker 3: is year round. It's not necessarily the type of thing
Speaker 3: that is seasonal like a lot of other charity And
Speaker 3: I don't want to say you're not a charity, but
Speaker 3: like in a lot of like a lot of charities
Speaker 3: that are given to on Giving Tuesday, what do you
Speaker 3: see on the platform around this time of year versus
Speaker 3: other parst?
Speaker 4: Sure? Well, I think the key thing to understand is
Speaker 4: there's two parts of our business. There's go fund Me,
Speaker 4: the consumer personal fundraising part, which nearly everyone knows, and
Speaker 4: then there's Classy, which we acquired in twenty twenty two,
Speaker 4: which is nonprofit fundraising, so it's software typically for mid
Speaker 4: size and larger nonprofits. These are people like the Salvation
Speaker 4: Army or Tunnel to Tows which is a great New
Speaker 4: York based charity, or World Central Kitchen. And for those organizations,
Speaker 4: you're exactly right, like this is the giving season. Really
Speaker 4: Giving Tuesdays the kickoff for that. The three biggest days
Speaker 4: of the year are Giving Tuesday, thirtieth of December and
Speaker 4: the thirty first of December.
Speaker 3: Those latter two for tax reasons, I imagine.
Speaker 4: Yeah, people still like, yes, I've got to get going.
Speaker 3: Got to get it in. How much of your businesses
Speaker 3: go fund me as the consumers know versus the B
Speaker 3: to B part, it's.
Speaker 4: About two thirds one third roughly. Personal fundraising is the
Speaker 4: bigger PoTA. But they're both.
Speaker 1: Big, they're both being which one's growing faster.
Speaker 4: They're both growing pretty nicely. And the interesting thing is
Speaker 4: that I'll go fund me personal fundraising businesses in twenty countries,
Speaker 4: whereas our software classy business currently has made it in
Speaker 4: the US. So there's some big differences there as well.
Speaker 1: Is it with plans to expand globally or we hope
Speaker 1: so yeah, Yeah.
Speaker 4: It's a little bit more complicated doing charity fundraising because
Speaker 4: there's more complicated legislation around the world.
Speaker 3: Yeah, how do you scale? How do you scale it
Speaker 3: outside of the US? Then, like, is there you target
Speaker 3: like a couple of different countries where you understand the legislation,
Speaker 3: How does that work.
Speaker 4: Well with the personal fundraising it also there's legislation, but
Speaker 4: we look at how BIG's the market, how big is
Speaker 4: the GDP, what's the disposal income? And also is go
Speaker 4: Fumbi already known. So, for example, we just launched Mexico
Speaker 4: as our twentieth country in April, and part of that
Speaker 4: was understanding that we already had twenty twenty five percent
Speaker 4: brand awareness. We had a lot of search activity, and
Speaker 4: we had a lot of people who wanted and we're
Speaker 4: trying to set up go Fumbies in Mexico but couldn't
Speaker 4: because it was not yet a supported market. We saw
Speaker 4: that demand, We're like, let's get in there. We worked
Speaker 4: through all the steps to set that up.
Speaker 3: Always working with local currency.
Speaker 4: Do you think, yeah, that's it's critical.
Speaker 3: I'm just wondering if we're going blockchain yet, is there
Speaker 3: any crypto?
Speaker 1: Yeah, that's quest.
Speaker 4: We do offer crypto options for the software side of
Speaker 4: the business, actually pretty small.
Speaker 3: Yeah, does that mean people giving with crypto?
Speaker 4: People giving?
Speaker 3: Because that's the thing that I think has emerged in
Speaker 3: recent years. It's not really people are holding onto their crypto.
Speaker 3: They don't want to spend it. What they want to
Speaker 3: do with it is hold it like a spec to
Speaker 3: ask that.
Speaker 4: Sure, Yeah, we're not seeing a lot of people spending there,
Speaker 4: so we are seeing DAFT as.
Speaker 3: A currency, don't advise funds.
Speaker 4: Yeah, okay, we've been offering that now for most of
Speaker 4: this year, and we're seeing a nice pick up there
Speaker 4: and I think that's going to be a really strong
Speaker 4: growth area.
Speaker 1: Okay, we are Bloomberg, and so I hate to ask
Speaker 1: this question when you're like helping people and some of
Speaker 1: them in dire situations, you know, raise money for a
Speaker 1: good cause. But how do you so what's the business
Speaker 1: model for you guys? And do you just stay private?
Speaker 1: Does it make sense?
Speaker 4: Well, two questions, they will take the first one first,
Speaker 4: add so much so. It is an innovative business model.
Speaker 4: So we thought very carefully about this for the exact
Speaker 4: reason that you preface the question, which is we're here
Speaker 4: to help people help each other, and so we want
Speaker 4: as much money as possible going to the recipients of
Speaker 4: the fundraising. So the only thing we take out is
Speaker 4: the transaction fees, basically the credit card processing fees that
Speaker 4: the banks charge us. So let's say you raise one
Speaker 4: hundred dollars, you received ninety seven and three percent, it's
Speaker 4: two point nine percent in the US is taken out.
Speaker 4: That's the that's the transaction processing fee. The way we
Speaker 4: generate our primary revenue is ask donors to make an
Speaker 4: optional tip to us. It's a very simple UI. We
Speaker 4: have a suggested number, it varies, and then the user,
Speaker 4: without a click, can slide that to zero.
Speaker 3: What portion of users actually give a tip.
Speaker 4: Enough for us to enough? People are generous to us,
Speaker 4: They value the platform. Essentially, were saying, and just do
Speaker 4: you tell us what you think our service is worth?
Speaker 4: And if it's worth something to use at the price.
Speaker 3: What do they think it's worth? Usually not in terms
Speaker 3: of money, in terms of percentage of the donation of
Speaker 3: the contribution. I don't want to keep saying donation, but
Speaker 3: that's yeah, it's a contribution to us.
Speaker 4: It's a it's a it's a modest percentage. Should I
Speaker 4: put it that way?
Speaker 3: Single digits?
Speaker 4: Modest?
Speaker 3: Yeah, but it's enough to keep the lights on, and
Speaker 3: enough to its profitable.
Speaker 4: Keep the lights on, keep us profitable, and critically keep
Speaker 4: us investing in product technology, Trust and safety and customer service.
Speaker 4: Those are the key areas.
Speaker 3: That Okay, let's talk about trust and safety.
Speaker 1: Sure, yeah, one quicker. So without that, would you guys
Speaker 1: not be able to keep the lights on?
Speaker 4: That's all revenue? Yeah, no, we rely on that is
Speaker 4: the way we generate the revenue.
Speaker 3: But it hasn't always been like that.
Speaker 4: Yes, it's started out as a fixed five percentage fee
Speaker 4: and then in this is about a year and a
Speaker 4: half before I joined twenty eighteen. I think late twenty
Speaker 4: eighteen shifted to a voluntary tip model, which we think
Speaker 4: is much more in line with what customers want.
Speaker 3: Do you make more from the voluntary tip model than
Speaker 3: you did with that blanket five percent?
Speaker 4: That depends on the country and the donor, so it varies.
Speaker 3: Trust and safety. How do you know what you're giving
Speaker 3: too is legit? I mean, look, I've used it and
Speaker 3: I think I talked about this last year when we
Speaker 3: spoke to you. But you know, my building has a
Speaker 3: block party every year and they use GoFundMe to raise
Speaker 3: money for the block party. I was on the board,
Speaker 3: so you're welcome. But you know, as one of those
Speaker 3: board members, he didn't do anything. I know, shocking, right.
Speaker 3: There's always the one guy he does everything, But I'm
Speaker 3: on the board.
Speaker 4: That face is usually a woman.
Speaker 3: It is usually the one.
Speaker 1: He Listen, we get it done and we.
Speaker 3: Are we projecting here? Yes, yeah, a little bit no truth,
Speaker 3: but but I do wonder you know that, So then
Speaker 3: then you're reaching out to people who you know and
Speaker 3: you're actually going to see the fund But I think
Speaker 3: oftentimes there are people out there who maybe stumble upon
Speaker 3: one on social media or maybe they even just go
Speaker 3: to your website and you know, you go to your website,
Speaker 3: you see them highlighted there. How do you know those
Speaker 3: are legit? They're going to the actual.
Speaker 4: First, making sure that people have trust in what they're first,
Speaker 4: that they trust us enough to put their story up there,
Speaker 4: which often, as you said, Carol, is really important and
Speaker 4: often some of the toughest things that people are going
Speaker 4: through is they need to trust us as the person
Speaker 4: asking for help. And your question is more about the giver,
Speaker 4: and I trust what I'm saying. So think about it
Speaker 4: in a few layers. First, you already head on it.
Speaker 4: There's a huge social proof layer. The vast majority of
Speaker 4: fundraising is with friends and family and cammunity, so you
Speaker 4: know the block party's real, and so you're going to
Speaker 4: give to the go fund right because you know that,
Speaker 4: and so if you most fundraisers do not make any
Speaker 4: progress unless they make initial momentum with the people that
Speaker 4: frankly know you, love you, care about you. So there's
Speaker 4: a social proof layer right there built into the way
Speaker 4: the model works. The second thing is we've had over
Speaker 4: thirty billion dollars raised, many many millions of fundraisers, so
Speaker 4: have a huge amount of data that tells us what
Speaker 4: looks like a legitimate pattern and what doesn't. That's when
Speaker 4: the trust and safety team then kicks in because if
Speaker 4: there's some behavior there that doesn't look quite right, then
Speaker 4: our team will look at that make sure it's legitimate
Speaker 4: or in some cases not, Actually very few are illegitimate
Speaker 4: because it just doesn't work fun.
Speaker 1: But how do you figure it out? Like do you
Speaker 1: talk to the people you like? How do you figure
Speaker 1: it out to make sure?
Speaker 4: Yeah, so's there's a couple more pieces coming in as well,
Speaker 4: which is once money starts to be raised, then we
Speaker 4: go put the beneficiary through KYC, Know Your or KYB
Speaker 4: if it's a business, which quite a lot of people
Speaker 4: raise for a business, right And so that's both us
Speaker 4: and those banks I mentioned that those payment service providers.
Speaker 4: We're both doing KYC on the customer validating that it
Speaker 4: is the person that they are going to use it
Speaker 4: for legitimate means, and the fund's only released until that
Speaker 4: is all correct.
Speaker 1: So how do you validate someone like what is it
Speaker 1: that you look for?
Speaker 4: Well, looking for that their identity is correct, that it matches,
Speaker 4: that they're verified to their bank account information, that all
Speaker 4: the flows are clean and precise, and we're also looking
Speaker 4: for the donor activity to make sure that there's correlation
Speaker 4: and there's logical connectivity between the people donating that are
Speaker 4: coming from the community, and there's patterns of behavior that
Speaker 4: makes sense a little bit like what a credit card
Speaker 4: company is looking at those kind of patterns that indicate
Speaker 4: that something is legitimate and not legitimate.
Speaker 1: Is that your biggest expense? What's your biggest overhead product?
Speaker 4: Technology? Products?
Speaker 3: The area is it most But is that is that development?
Speaker 3: Is it paying people or is it servers? Like I'll
Speaker 3: come to that.
Speaker 4: I just want to hit one last thing because this
Speaker 4: trust and safety is so important. So because I.
Speaker 1: Can't tell you how many people are times it's like,
Speaker 1: you know, how do you know how I've heard in conversations?
Speaker 1: Is the last piece you know this is real?
Speaker 4: So we a few years ago we instituted the Giving Guarantee,
Speaker 4: which is a global guarantee any donation of any amount
Speaker 4: made worldwide for up to a one year afterwards isn't covered. Wow,
Speaker 4: and that's great.
Speaker 1: What do you mean it's covered.
Speaker 4: So if there's any kind of problem, Yeah, you want
Speaker 4: a refund, you've got it.
Speaker 1: Oh interesting from anybody who donates.
Speaker 4: Anybody who donates up to a year afterwards.
Speaker 3: Any So, if someone didn't have fun at the block party.
Speaker 4: That would be different. That would be on you guys.
Speaker 3: You guys didn't have enough snacks at the block party.
Speaker 4: And the fortunate thing is we we we don't have
Speaker 4: to use that policy very much at all because most
Speaker 4: people asking for help are real people, legitimate p or
Speaker 4: genuinely asking for help because they need it. That's what
Speaker 4: most students do.
Speaker 3: You know, when I see some of these big campaigns
Speaker 3: that end up going viral, I think to myself, and
Speaker 3: maybe it's because it's the bloomberg in me, but I
Speaker 3: think to myself, this person is going to get a
Speaker 3: sudden influx of cash, and that cash might be to
Speaker 3: plan for their child's education if they lost a parent,
Speaker 3: something absolutely tragic like that, which unfortunately we do see
Speaker 3: with these campaigns. They need somebody on the side of
Speaker 3: you know, wealth management or investing to help them manage
Speaker 3: a windfall such as that. Do you guys do any
Speaker 3: of that? We don't.
Speaker 4: It's something we've thought about, because you're absolutely right. I mean,
Speaker 4: someone's often put into a very demanding and unusual situation
Speaker 4: and then they've got this influx of cash, which is
Speaker 4: a great problem. But it's a problem. But it's not
Speaker 4: something that we've gone into. And maybe it's something we
Speaker 4: can help with in the future. But I agree with you,
Speaker 4: it's something that's important. So you were asking about the
Speaker 4: product stuff for.
Speaker 3: A Yeah, I mean when you say the expenses in
Speaker 3: the product, is it about paying you know, AWS for
Speaker 3: service space or whoever?
Speaker 4: It's people, righteers It is our product team, our design team,
Speaker 4: our engineering team, who build a very unique product.
Speaker 3: Is it hard to find them?
Speaker 4: Actually, not terribly because we offer a really interesting set
Speaker 4: of product and technical challenges to work on, and we
Speaker 4: offer a really rare combination of it's technically interesting, it's
Speaker 4: a it's a well paying job, and the purpose is
Speaker 4: bar not right. You get to work on products that
Speaker 4: help people help each other. So it is a really
Speaker 4: nice blend. So we have a very We're very fortunate.
Speaker 1: Is there an average raison kind of the individual side,
Speaker 1: the crowdfunding side, or that.
Speaker 4: It's really hard to say because it is across.
Speaker 1: It is really, it's just it's the the data.
Speaker 4: The average is meaningless though, here's the here's the here's
Speaker 4: the problem. Right, The average is meaningless because it includes
Speaker 4: some really small things and some gargantuan things.
Speaker 1: What's the biggest amount that's ever been?
Speaker 4: The largest amount was forty five million dollars raised for
Speaker 4: a su campaign fundraiser on gofunme dot org, which is
Speaker 4: our sister, which was America's Food Fund, which was set
Speaker 4: up by Lori Powell Jobs and Leo DiCaprio, And that
Speaker 4: was in covid so for food insecurity.
Speaker 3: Wow.
Speaker 4: The largest number of donations ever was for the George
Speaker 4: Floyd family fundraiser.
Speaker 3: Wow?
Speaker 1: How much is that?
Speaker 4: That was I think about fourteen or fifty million dollars
Speaker 4: but the largest number of individual donors from about one
Speaker 4: hundred and fifty countries.
Speaker 1: Hu, Tim Cadugan, thank you so much, really appreciate that.
Speaker 1: The CEO of go fundme joining us right here in studio.
Speaker 1: Happy holidays.
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Speaker 3: Mm hmm