William Leonard
Hey everyone! Welcome back to the Atlanta Startup Podcast. My name is William Leonard. And I’m excited for this episode today with Matt Pfaltzgraf, founder and CEO of Softgiving. Softgiving is a platform offering alternative fundraising solutions that connect influencers, charities, and brands, all to support the causes that they’re most passionate about. And the ultimate mission of Softgiving is to help bridge the gap between charities, influencers, brands, and truly the next generation of donors. In this conversation, Matt and I will talk about his prior experience as regional director of payment at Shazam, and the Boys and Girls Club of America and how those experiences really helped shape his entrepreneurial journey. Also, you’ll want to stick around to hear Matt’s story of packing up his car, driving cross-country, and moving to South Georgia to begin his entrepreneurial endeavors. I’m excited for this episode. So, let’s tune in and hear from Matt Pfaltzgraf, founder and CEO of Softgiving. Matt, welcome to the podcast.
Matt Pfaltzgraf
Hey, William, thanks for having me.
William Leonard
Awesome, man. I’m excited about this conversation. I feel like there are a lot of lessons and true takeaways that our listeners are going to gain today. We’d love for you to just kick it off and give us the intro to who you are, Matt. What’s your background?
Matt Pfaltzgraf
Sure, I grew up in a town called Ankeny, Iowa. When I was younger, I was more involved in politics and I got into payments. Because of my early childhood, where I was raised by a single mother, we were really reliant on charities, such as the Boys and Girls Club, the YMCA, Goodwill, Salvation Army. That led me to be very involved in philanthropy and eventually want to start my own business around it. I had always had an entrepreneurial kind of background. I had my own eBay store when I was in college and things like that. I just melded the two together and that’s what led me to start Softgiving, which is my first business.
William Leonard
Awesome. It sounds like you’ve really been an entrepreneur since day one. What is the core basis of Softgiving? What’s the quick overview?
Matt Pfaltzgraf
Softgiving, what we do is work with charities and we create online events focused on gaming and gamers. We run online live charity streams and created interactive marketing campaigns to help them raise money from a younger demographic from all over the world.
William Leonard
Interesting. It seems like this is a solution that probably should have been in the market at some time, previously, but it sounds like Softgiving has seen a wedge in the space. I’m curious as to what ultimately led you to start Softgiving. Were there just no solutions in the market that were helping charities and nonprofits access this market? Or were the solutions just so bad that you said I need to go out and build?
Matt Pfaltzgraf
What we did was we were actually a business that was originally created around this product called Change that allowed a donor to link their debit card or credit card to a charity and donate the rounded up change to that cause, and then we built a really great software. We had signed up a bunch of charities and what we saw was they had a real inability to market to younger people. Over a couple of years, we saw that being a real opportunity for a business. Charities have people that they hire to help them with their galas, their golf outings, their mailings, their TV ads, all other site types of fundraising, but they didn’t have some go-to solution in the online live stream space, which is a large space of 30 million people tuning into it daily. What we saw was that there was a real gap there, from our own experience of trying to activate a charity and instead, we just built a solution to solve what was holding us and the charities back.
William Leonard
Yeah! As you were thinking of how to build this solution, I’m sure you had to do a ton of customer discovery to really understand the intricate needs of the charities. What was that process of customer discovery like? You had to pivot in the sense here and how did you go about that pivot? What was the moment where you and the team sat down and said, “Hey, this is the angle we need to take instead of how we’re attacking and selling it to the market currently?”
Matt Pfaltzgraf
What it came from was us running out of money, like any good startup. You get scrappy when funds are depleting. In the summer of 2019, it was another do-or-die moment for us where funds were running out and we needed to get scrappy. We had just implemented digital wallets as a way for people being able to sign up to donate. I had my team run a friends and family campaign where they just reached out to anybody within their network to sign up to donate and then get us some users in. Through that one of my employees that I had hired who was a college student at Georgia Tech and was doing a summer internship for us, was a small streamer on this platform called Twitch. She played this game called The Sims. One weekend, I was out on a hike, and all of a sudden I get back from the hike, and my phone is just blown up with all these emails from all these donors that had signed up. Back then I had an email notification every time somebody donated, that’s how few they were. All of a sudden, there were like 20 of them which was a lot for us at that time. I went and found out what had happened, they had streamed on their channel, and signed up over half of their audience. To me, that was a real breakthrough, because that conversion rate was just so incredibly high that from then on out, I wanted to know, how do we duplicate that? How do we scale it? It really took the next year and year and a half of customer discovery, not only on the charity side but also on working with the streamers, the talent, and then the audience as well, because you had to figure out what kind of business model makes sense for the charities. What kind of business model makes sense for bringing on streamers and being able to manage them most effectively and then what kind of model is going to get those viewers to turn into donors?
William Leonard
I’m curious as to how you thought through that process and really formulated a model to align incentives for both the charities and the streamers?
Matt Pfaltzgraf
With the charities, it was trial and error. Taking our best guesses, having conversations, and seeing what worked and what didn’t with the charities. We knew we had to prove ourselves out first and so for the first year or so, we really did it at no cost to the charities at all. Once we figured out a model that worked really well, we were able to start charging. We came up with a model around 100% ROI for the charity to acquire new donors. We really love that and are proud of that model because most charities it costs them or they lose money acquiring new donors but with us, they double their money. That was a real breakthrough in the summer or fall of 2020. With the streamers, it was just allowing creating a campaign that was simple enough to be scaled. A lot of streamers can range from being teenagers to adults and they’re not running charity streams every day. They’ll do it once a year, for the most part, a couple of times a year. You really had to make a simple process and procedures so that they could understand it, be trained, and be able to be successful on an ongoing basis. That took us to do about 1000 streams before really settled in a tried and true model.
William Leonard
Wow. And the majority of those streams are all on Twitch?
Matt Pfaltzgraf
It was on Twitch, YouTube Live, Facebook gaming, and a couple of other different platforms, but the majority were more on Twitch.
William Leonard
I’m curious. It sounds like that was more so at the early stages of the business where Twitch was incredibly popular. Now, you’ve got platforms like Discord that have come into the fray. I’m curious as to how you see Discord impacting Softgiving in a sense?
Matt Pfaltzgraf
Discord is our communication channel with the streamers and talent. That’s become invaluable there. What really differentiates between Discord and Twitch is the audience on Twitch, tunes in to a specific streamer for an average of an hour or hour and a half. It’s a long engagement. They’re really dedicated to that individual. What we’ve seen not work so well on other channels like Tiktok, Instagram, Twitter, and Snapchat is the engagement with the content creator is so short and there are thousands of different content creators that don’t develop relationships with any of them. Their ability to convert somebody is minimalized because you’re engaging with the content for just seconds, whereas on Twitch, we focus because somebody tunes in and goes on to Twitch for a specific individual. It’s not just to see what’s there, it’s to go to that individual and consume their content. And they’ve developed a relationship and that’s why we’ve chosen the platforms that have more long-form content because the conversion rate is astronomically higher than any of the other platforms.
William Leonard
That makes total sense. If you think about Instagram reels and TikTok short bursts of content are likely going to lead to less engagement so that makes perfect sense. What’s the state of Softgiving today? After you all made that pivot, it sounds like customer adoption really went through the roof. I’m curious as to where you see the business situated today in 2022?
Matt Pfaltzgraf
We had about four employees and we grew to about eight or ten. We have about 500-600 subcontractors working for us in any given quarter and it’s just grown exponentially over the last couple of years. We don’t expect it to stop anytime soon. We’ve been fortunate we got into the live streaming before COVID. We were already doing some initial groundwork. COVID helped gather more attention and more focus to the space and it’s really just continued to grow ever since. It hasn’t slowed down. That’s where we expect the opportunities to continue to be, we’re going to diversify our offerings, and there are just a million different ways we can go with it that’s really exciting.
William Leonard
You mentioned the team headcount has grown significantly. As you think about how you made hires at the true early stages of the business, what were some of the critical aspects that you had to think about when factoring in, “Okay, we need to grow. We need to iterate off of this pivot but these hires need to be the right people.” A lot of our audience happens to be early-stage founders who are at this inflection point right after a pivot, or maybe they’re just building on their core thesis. What do you think about hiring at the early stage of a startup and what are some of the critical things to have in at the top of your mind?
Matt Pfaltzgraf
A couple of things – one, with hiring there are no guarantee that whoever you hire is going to be the right person. I’ve hired people that I’ve been incredibly excited about only for them to not work out within a couple of months. In my view, there’s no perfect science, it’s a trial and error thing. Early on, I would hire based on who had a great resume, do they have their master’s, and then when it came to executing, they were just really too rigid to meet the needs of a startup. You need people that are hungry, that are smart, and are wanting to make their mark. A lot of my successful hires never even went to college. They have very diverse backgrounds and are from all over the world at this point. They have something to prove to themselves and want to grow. What I do is, I set up a culture where people can be whatever they want to be, and they can grow into whatever position they want to grow into. I don’t care how old they are, what other companies they worked at, it’s all about just proving yourself and the day-to-day, and then they get rewarded accordingly. That’s really what I look for, somebody’s going to go out there, really just make this their own, and be a mini entrepreneur themselves. Because I don’t like getting into the weeds of every part of the business. I don’t think it’s healthy for the CEO to try to do everything. I try to find people that I can trust, coach, and mentor to be what I need them to be. I don’t know how helpful a lot of that is. If somebody doesn’t work out, I’m very quick, to let them go.
William Leonard
Interesting. How are you going about that? Because it’s like you said, it’s difficult hiring people, let alone the right people. Two, if it’s just not going to work out, what are some of the things that just give you that indicator that you just need to move on? How do you know when to assess, alright, let me maybe give this person a different task? Let me see if they’re better suited in a different position. How do you manage that balance as a leader?
Matt Pfaltzgraf
Sure. One of the things I do that might be a little different, it’s I don’t haggle over compensation. I have somebody tell me what they want to get paid and I don’t try to haggle them down. I say okay and then I come up with, “Alright, one thing. I need this, this, and this from you.” I try to start off on a good foot where it’s like, “Okay, you tell me what you want to be compensated and I tell you what I need in return, so we’re just in agreement.” Nobody’s upset about what their pay is. The other thing is, I look at am I communicating clearly to them what their responsibilities are? I tried to really take ownership and to make sure that this person know what job they were supposed to be doing and what their tasks are going to be? Are they qualified for that? Sometimes, the task is a whole new job where they have to credit themselves. They work with the content creators on making milestones for when they hit different fundraising goals. Some of those fundraising goals are dying their eyebrows, or bleaching their eyebrows, eating raw lemons, and plain BeanBoozled where they eat disgusting jelly beans. I mean, there’s no other career out there that prepares you for that. You have to go into it with an open mind and in what you’re trying to accomplish. If somebody just has grit, persistence, and is truly capable, they can learn. They can learn the job. They can figure it out, they can make it happen. Whether it’s led to somebody being let go quickly is that they’ve been dishonest about something like we don’t tolerate that at all. That’s a very quick rejection. People just need to come prepared for things and need to handle whatever their task is. My problem is I’ve always been with salespeople and keeping track of their funnels and telling very glitzy stories, but when it comes down to measurable pieces, it’s very difficult. But beyond that, the other thing is just attitude. If somebody has a negative attitude, you gotta cut them because it’ll poison everybody else.
William Leonard
Everything that you’re saying that you keep an eye on is rooted. I would say it’s all rooted in culture, right? It’s rooted in how well this team member can fit in, how well they can be a valuable team member, and be a valuable asset to the business. If you’re not producing, it is what it is. I think culture is at the root of everything you just said, right? And that starts with the leadership. You have to build this culture, like you said, where everyone can be themselves, regardless of where they went to school, and what their certifications or qualifications may be. If you create an environment as a leader that is conducive for all people of all backgrounds, of all walks of life, then it becomes easier to hire. It becomes easier to retain talent and it becomes easier to grow. Because there’s one accord, there’s one culture. I think that’s really strong advice, man. I want to pivot here a bit. In the beginning, you mentioned that you’re from Iowa, originally, and you moved to Atlanta. What led you to leave your hometown and come to the East Coast?
Matt Pfaltzgraf
I was working as the regional payment director at a debit network called Shazam which was headquartered in Des Moines, Iowa. I’d been there for a few years and just gotten the entrepreneurial bug of wanting to go and try something new and try to build something. And so I quit and I put myself in a situation where the only path is forward. I burned the path to the future. I quit my job. I had not had any investors lined up. I had nothing and I was very determined to build something. I thought if I was still working, I wouldn’t be as focused and as hungry. I quit my job and started Softgiving. During the first few months, I only found one person that was interested in being an investor. They lived in South Georgia. I had worked with them for a few months and after they had committed to doing the initial $100,000 investment, it just slowed down and I hadn’t received the check. Months started going by and I didn’t have any luck with any other potential investors. I thought I need to do whatever I can to show this person that I’m committed to seeing this through and making it successful. I loaded my car with a couple of baskets of clothes and I drove 13 hours across the country to Atlanta. I moved in with this guy that I met for like 60 minutes that just had a spare bedroom.
William Leonard
Have you been to Georgia before this trip?
Matt Pfaltzgraf
I had been there a few days before for a work trip but that was it. I didn’t have any family and I knew a couple of people and that was it. He lived down in Valdosta. Moving there allowed me to be closer where I could drive down there, a three-hour drive, and meet with him in the back of this coffee shop and slowly kind of get him to come around to doing the investment. It took a few months after moving to Georgia, but then he finally agreed to be an investor. I thought $100,000 is all I was gonna need.
William Leonard
Interesting. When you started this endeavor and ultimately made this decision to move cross-country and live with the guy you had met for 60 minutes, my assumption is that you had no prior entrepreneurial fundraising experience–is that correct?
Matt Pfaltzgraf
Correct. I’ve never started a company before. The closest was when I sold collegian T-shirts at the University of Iowa, like on an eBay store, where I buy them from the college bookstore, three for $20. I’d sell them on eBay for $20 a piece and that was the closest to running a business that I had done before. I just thought I believe I can do this, I believe I can figure it out. I just started taking the next best step to put myself in a position to be successful. When I got to Atlanta, I got involved with the Atlanta Tech Village pretty quickly. I got a reserved desk there. I started meeting some people and just started continuing outreach and building a little bit more, and try, try and fail, over and over, and over and over again, until things started working. It was three to four years of failure over and over.
William Leonard
You move cross country, you start basically from zero, and you build this network organically. You hustle, you go make connections in ATV and around the city of Atlanta and Valdosta as well. Now you’ve built this company that is serving as a key indicator in the market. How do you see 2022 shaping up for Softgiving? What are some of the key milestones that you and the team really want to accomplish this year as you think about growth?
Matt Pfaltzgraf
The big milestone that we want to get to is we have a very ambitious goal of growing 200-300% over last year, which puts us at the eight-figure mark for revenue. That’s one of our goals. Our goal is to expand and to brand more. We ran a pilot with Capital One Shopping last November. They loved it. They’re picking us up for an extended campaign starting next month. We want to go further with our charity partners and the different offerings that we have for them. Become more engaged and embedded. It’s just seeing where the opportunities are and placing bets on where we think we can grow. But we want to be beyond just philanthropy, we want to be really the go-to solution for brands in interactive and engaging marketing campaigns that reach these demographics that we were able to solve for the charities and we want to solve it for the brands too. We think that could be gigantic.
William Leonard
What size brands are you all targeting?
Matt Pfaltzgraf
Big ones. We will do a lot with our CPG brands but I mean Capital One obviously is massive. We were part of the Xbox console launch the other year. We were the go-to fundraising platform when Xbox launched its new console. We’ve worked with them and with Gopuff, Vodafone, just a number of different ones in various different capacities but they’re really any brand that can benefit from our services. We make it so that they’re engaging, there’s something that the audience enjoys participating in, not just something that they’re forced to consume. We really think across all social media platforms that it’s just been suffocating how many ads are played all the time. That makes none of them worth anything because you get exposed to 1000 ads a day, how are you going to remember and care about any of them so quickly? That’s where we tried to make it fun.
William Leonard
I love that, man. It sounds like you’ve taken such a unique and innovative approach to getting exposure and it’s working. I’m excited to see another Atlanta company continue to grow, continue to build relationships, and impact this ecosystem in such a positive fashion. I’m super excited, Matt, and we certainly delved into how Softgiving is helping charities and helping the streamers build their network as well. Your background of living in Iowa, getting in the car, driving 13 hours to Atlanta, and taking one of the biggest risks that I’ve ever heard of–meeting and living with somebody that you’ve met for 60 minutes, having them invest into your business and ultimately, scaling this business to serve about 25 to 30 employees now. It’s just such a unique story. I’m excited about what 2022 is going to bring for Softgiving– for you, your customers, and everybody who’s involved in the Softgiving ecosystem. Really appreciate you jumping on this morning to share some of your key thoughts around hiring, pivoting, and go-to-market strategy. I think a lot of our listeners will extract tremendous value from your insights in this dialogue.
Matt Pfaltzgraf
I appreciate that. It’s been an incredibly rewarding experience for me. I was just appointed to the Boys and Girls Club of America Board of Trustees this year and so it’s really something that’s come full circle for me being a club kid myself. I love it. It’s just the daily grind and being willing to think past your preconceived view of what you think your business is and see the signs that say where you need to go. To me, that’s what success is. Thank you for having me this morning.
William Leonard
Awesome, man. Congrats on being a member of the Board of Trustees at the Boys and Girls Club of America. Looking past your own internal preconceived notions of what you can do, having the blinders on, and going forward, no matter what. I think your story speaks to that wholeheartedly. Appreciate you, Matt, and look forward to seeing you build a great company at Softgiving.
Matt Pfaltzgraf
Great. Thanks, William.
William Leonard
Cheers.
Lisa
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