Mark Fasciano and John Murcott

Connect with a Cause

Interview by Kevin Ohashi of Ohashi Media

This is a MO.com first, a double interview with the co-founders of Karma 411, an online fund raising platform for non-profits, John Murcott and Mark Fasciano. This isn’t John and Mark’s first startup together either. Before Karma 411 they founded Fatwire Software, a content management software company, which they grew to a company employing over 140 people and 40 million dollars in sales. Today, Mark is the CEO of Karma411 and John handles product development and engineering. Both of them have impressive resumes to back up their stellar successes. Mark won the Ernst and Young Entrepreneur of the Year award in 2000. He also completed a Ph.D in Computer Science from the University of Chicago. John attended The University of Maryland where he received his MBA focusing on Information Technology and Operations Management.

Karma411 is designed to help non-profits fund raise web 2.0 style; which they call People to People fundraising. They address the fundamental problem of people giving to friends ahead of institutions. They use their software to help non-profits create fundraising campaigns as well as leverage social media along with traditional efforts to maximize the amount of donations. They don’t limit themselves to simply donations though; they have expanded to cover nearly all the non-profit fundraising activities such as auctions, awareness, memberships and more! They also help individuals and businesses get the most benefit from their money as well by helping match messages and causes.

MO:

You two were friends since 6th grade where you played baseball together. You guys founded FatWire Software (along with Ari Kahn) in 1996. Mark must have just finished his Ph.D and the next thing you know you three are starting up what was to become a huge enterprise content management system toting clients like Ford, Best Buy and the New York Times. Tell us a bit more about your experience starting up FatWire and was it even your first business venture together?

Mark Fasciano (MF):

The experience for Fatwire was one of energy and chaos and learning. We did not have any money and we did not know how things were going to turn out. The important foundation, on which we built the business, was our friendship.

John Murcott (JM):

At the time Fatwire was just an idea, I was working for Anderson Consulting, working on a project with literally a hundred other consultants. Mark and I were out to lunch when he asked if I would like to join him and a few others start a software company. I thought about for about 3 seconds or so before I jumped on board. A few weeks later I found myself programming with three other people around a desk in a bedroom.

MO:

Did you both leave FatWire Software before starting Karma 411? What caused you guys to move onto Karma 411? Was is a transitional thing or did you both quit and go full-time right away? What made you decide ‘that is our next project’ versus any other ideas that might have been kicking around?

(MF):

We transitioned into Karma411 right after leaving Fatwire Software. We kicked around ideas for several different entrepreneurial products. We decided on the Karma411 platform simply because we thought it had greatest opportunity for rapid growth. The experience was similar to Fatwire, on Day 1; we didn’t have a complete picture of what Karma411 was going to offer. We were able to jump right in knowing our ability to create products quickly and realizing the potential demand for this type of product in the sector.

(JM):

From a technology perspective, Fatwire is what you might consider a Web 1.0 service. We had strong publishing capabilities, good e-commerce tools, even customization options for each site, but these web pages were not user-generated content. We recognized that is where the Internet was going and we wanted to be in that Web 2.0 space. Also, we wanted to take our ten years of expertise and apply to providing some social good.

MO:

Karma411 appears to operate on a ‘freemium’ business model by providing free accounts and simply taking transaction charges while offering premium services. What is the biggest difference between running a business with this type of business model versus a more traditional product/service based business model?

(MF):

The benefit of offering this type of model, for both Karma411 and its clients, is that our company can match the risk appetite of the customer. In other words, if the customer is earlier in its learning curve of and isn’t prepared to make a full commitment to this level of technology, they can still get started with no upfront risk. In contrast, if we were selling a software solution back in the days of Fatwire, which would require a minimum of $50,000 to $100,000 upfront, the customer needs to be further along in its education and decision making process. So there is nothing better for Karma411 and its customers than to begin with a Freemium model, where you can produce results right away.

(JM):

In a business with a traditional product/service business model, a lot of effort is spent on knowing the small details of every deal. We learned from Fatwire, it’s a real investment of time and energy focusing on closing those deals. There’s no greater feeling then receiving an email or an update about activity on our platform happening without any interaction from the Karma Team. We will receive notifications quite frequently where a donation was made or a campaign was created by a nonprofit or a user I have never heard of before. It’s a very nice feeling.

MO:

Is Karma411 a non-profit business? If not, do you ever encounter any issues about making money off the non-profit sector and how do you address those concerns?

(MF):

Karma411 is a for-profit company and we have not had any problems with our customers who are used to paying for technology and other services. There are plenty of precedent where nonprofits purchase tech systems; anything from purchasing Microsoft Word to paying for a Donor Management System. There is a whole ecosystem of vendors that are there to support the nonprofit world that are not non profits themselves. So we have not received any pushback.

(JM):

There is a category of entrepreneurs who are interested in causes. Being entrepreneurs you want to create and grow a business, focusing on revenue and the financials is part of that process. We are serial entrepreneurs who also want to make a difference in the world.

MO:

What are the biggest challenges in raising money and how does Karma411 use technology to overcome some or all of those issues?

(MF):

I think the biggest challenge is going from a classic model of outreach, which worked for the past 50 years, to a more grassroots “people to people” fundraising approach. It is not a easy leap for most of these organizations. The path to achieving success in P2P fundraising can be done in a series of steps, where they don’t have to jump in head first. Organizations can begin fundraising within a small scope and then build their grassroots community over time. We truly look at this shift as an increment process.

(JM):

Mark brings up a great point in the idea of institutions having to rely on peer to peer relationships to develop communication. The nonprofit executives of today grew up in the world where charitable organizations had a strong relationship with the public and if the nonprofit was successful, the name of the organization carried a lot more weight. However the donors of today seem to have a weaker relationship to specific organizations, which means they are relying more on their friends to decide where to make their charitable contributions.

MO:

You guys have mastered the art of online marketing/social marketing for non-profits. Do those same principles translate into commercial areas as well? If so, can you give us some tips for marketing our own businesses online that you’ve learned marketing non-profits?

(MF):

Definitely. In fact, you can say we “eat our own dog food” so to speak. We use Karma411 ourselves as an online collaboration and communication tool to manage some of our internal projects. We also use the same concept of social media promotion and engagement of an audience, creating a Facebook fan page and building up our Twitter following, that we provide to our customers. Generally we do not provide a service that we don’t use ourselves.

(JM):

The same societal shift I mentioned in the previous answer applies here as well. As consumers move their trust away from institutions and rely more on their peers for decision making, commercial business will need to adopt the same community strategies that are a part of Karma411.