Chip Off the New Block

Startup ChipIn changes its game plan and name. Big-time success might not be far behind

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Chief executive officer Carnet Williams, left, and chief technology officer, Kevin Hughes, of Sprout. That’s the new name of local startup ChipIn. Photo: Scott Kubo

When Hawaii Business last left local tech startup ChipIn in February 2007, CEO Carnet Williams had decided to take the company in a whole new direction. Goodbye destination Web site. Hello fundraising widgets. It was an inspired move. In January 2008, Williams and his team won a DEMOGod award, one of eight such honors handed out at the prestigious DEMO conference held in Palm Desert, Calif. DEMO is considered the premiere showcase for startup tech companies and a hothouse for venture capitalists on the hunt. Its seal of approval is a huge wind at Sprout’s back. That’s ChipIn’s new name, a nod to its new mission.

Intrigued yet?

To recap, by February 2007, insufficient traffic and transaction volumes for the original iteration of ChipIn.com had convinced the management team that the strategy of pulling people to a destination Web site where people chipped in money for everything from lunches to humanitarian causes was not viable. What’s more, running a payment processing system required expensive technology overhead and raised a whole host of security concerns. Williams then considered the rise of widgets. No, not the widget you read about in Econ 101. Rather, these widgets were small pieces of software that could be used to create and share content anywhere online. Like more static Web sites, widgets have the ability to carry such things as hyperlinks, video, music and chatboxes. Unlike Web sites, widgets are easily distributed by simply copying a small piece of code and pasting that code into the body of an email, the template of a Web site or blog.

In other words, widgets act like completely portable mini-Web sites. For nonprofit veteran Willams, widgets sounded like a neat way to run a fundraising campaign. If ChipIn could make it easy to create widgets that could collect money and, say, host videos or images or music as well as fundraising messages, then that could turn into a powerful money-gathering mechanism. “You could have an AYSO soccer team raising money for a trip and everyone on the team could send a copy of a widget they made to their friends and family, who could post it on blogs or email it to their friends. It could work for political campaigns, big charities, alumni groups -- you name it,” says Williams.

ChipIn would make money by providing tools to build these widget fundraising campaigns and take a small percentage of each donation once a campaign crossed a certain dollar threshold. Trusted industry player PayPal would serve as the company’s payment gateway. Another possibility was that ChipIn would license its tools to fundraising technology specialists who worked with large charities and universities and were constantly searching for new tools to get their message out. Williams and chief technology officer Kevin Hughes called this the “White Label” product, referring to the capability of paying customers to place their own branding on ChipIn widgets. Todd Kurie, the VP of marketing and business development, began drumming up customers and striking partnerships with large providers of fundraising IT.

Williams and Hughes also realized that, if they wanted to keep big customers happy, they would need to build sophisticated tracking technology that would allow a fundraising campaign manager to locate where each widget resided on the Internet, monitor activity and turn them off and on remotely if necessary. For example, if a Red Cross fundraising widget got posted on a blog dedicated to porn, the Red Cross would want to find the errant widget and shut it down fast. By the same token, the Red Cross might want to upload new images to the widget each day or to quickly identify which donors spurred the broadest viral spread of the widget. Williams knew that payment widgets would soon be a dime a dozen, so adding this capability would give ChipIn’s model far more stickiness and legs.

Building Traction

There was some pain involved in the switch over to the new model. ChipIn cofounder Song Choi was dismissed from the company. Williams says Choi was an asset in the initial phases of the company but his skill set and Rolodex were not sufficient for a nationally focused enterprise. On the upside, the new vision got de facto thumbs up when ChipIn landed in the spring of 2007 with a $2 million injection of venture capital from Global Venture Capital. Williams finally began to pay himself an annual salary and to pay down credit-card debt. And William J. Raduchel, a former CTO at AOL Time Warner, joined ChipIn’s board of directors and ponied up some of his own money. ChipIn began to garner serious press, with mentions in both the Wall Street Journal and the New York Times. Things were definitely looking up for the scrappy Honolulu startup.

In late 2006, Hughes and his team had started formulating an online software tool that would make building a rich media widget, a task once best left to sophisticated programmers, as easy as making a PowerPoint presentation. The whole process would take place online with no downloads required and no heavy software licensing fees. As far as Williams knew, no other company had built a similar tool -- not surprising, considering that the term widget only entered the tech vocabulary in mid- to late 2006. Such a builder tool would make it even easier for large nonprofits and technology consultancies serving nonprofits to justify selecting ChipIn’s widget management tools.

Then Williams started thinking that fundraising might be only a small part of the potential market. Advertising experts told him that easy-to-build-and-configure widgets, using the write-once-publish-anywhere Flash programming language could save agencies big dollars. These widgets could replace so-called “mini-sites,” which were essentially small Web sites built for specific marketing campaigns. Mini-sites cost tens of thousands of dollars to build and often took several weeks to put together. ChipIn’s widget could conceivably do the same thing and perhaps do an even better job with tracking tools, for a fraction of the cost.

The son of an advertising executive, Williams had long sworn he would avoid Madison Avenue madness. However, Williams’ brain trust convinced him that the future of the company lay with a broader adoption of its technology across consumers and businesses alike. In fact, the first marquee customer for ChipIn’s widget management system (WMS) turned out not to be a nonprofit but PC giant Dell Computer in May 2007. With the help of an advertising agency, Dell built a ChipIn widget on a specialized Web site that would allow college-bound kids to raise money online toward the purchase of a Dell computer. “It was pretty amazing to get a customer like that right off the bat,” recalls Williams. But ChipIn was unable to leverage the deal into other widget sales and made little money on the arrangement, which had sucked up the company’s development resources for a number of weeks.

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