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Another Crowd-funded Drone Project Collapses (bbc.com)
An anonymous reader writes: Less than two weeks after we heard about the "robotic dragonfly" project failing, the BBC brings news that an even bigger crowd-funded drone project has given up development as well. The ZANO mini-drone raised a whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground. They were supposed to start delivering drones in June, and a few hundred of them slowly trickled out. In October, they posted a long update detailing their plans for shipping the other ~15,000 drones they had been paid for. Their latest update, posted today, says, "Having explored all options known to us, and after seeking professional advice, we have made the difficult decision to pursue a creditors' voluntary liquidation." This will leave thousands of backers without a drone, despite paying £140 or more apiece.
They showed a completed project. They said it appeared in numerous places. It looked like all they needed to do was get money to start production.
Their Risks and challenges paragraph. 100% confident. They know it works. How are you supposed to do due diligence on a product when they outright lie.
I've complained to kickstarter, letting them know they are being tarred with the same brush, because dammit, kickstarter recommended them!
Risks and challenges
Through innovation and diligent research and development, We are 100% confident in delivering an Autonomous and Intelligent aerial photography and video platform. We know our technology works.
We have enlisted a world-class British EMS (Electronic Manufacturing Service), with over 20 years of experience in bringing cutting edge high-end technology products to market, to manufacture ZANO for our Kickstarter backers.
We have taken into account that component lead times potentially could cause delay in delivering ZANO to our backers on time. We have conservatively estimated a June delivery, however, Our component suppliers often need to order the raw materials to manufacture their components 12 months in advance, as a brand new product, it is difficult for us to estimate initial volumes and provide an accurate forecast to our suppliers. We want everyone to be able to experience ZANO experience, that's why we have not put a cap on the amount of ZANO's we are making available for the Kickstarter campaign. We have built fantastic relationships with our component suppliers who believe in ZANO and our vision to make aerial photography and video accessible to everyone. Our component suppliers have set aside large volume buffer stock to cope with the initial demand from Kickstarer! However, there is always a risk involved with large volume component supply, we thought we had better mention it! The risk isn’t if you will get it, it is simply when you will get it, if any supply issues arise! (We are working hard to ensure they do not!)
The fact that they were able to trickle out a few hundred units suggests that their production process was not at all fit for producing as many units as were demanded once they got popular. They were happy to accept the money coming in, but they didn't realize until it was too late that it would cost way more than that to develop a production facility that could pump out the units requested in a reasonable timeframe.
Building huge quantities of things is hard. Very hard. Just ask any car manufacturer that has tried to take a prototype or limited run vehicle and pump out hundreds of thousands of them per year. It's a completely different ballgame. It requires a very large investment in production facilities, automation, tooling, labor, supply chain, and distribution to take even a relatively inexpensive product concept and make many thousands of them, compared to making a few hundred. Some companies offer parts of the solution "as a service", but ultimately you are going to need some kind of deep customization for most products, and especially for something fairly unusual like drones.
If you only had 500 orders, you could very possibly build each one by hand in a garage. It would be tedious as all hell, but with someone dedicated to making trips to hardware stores to acquire tools and parts, someone dedicated to boxing them up and shipping them, and 2 or 3 people building them, you could definitely have a garage business where you churn out 500 drones every 3 to 6 months or so. 15,000, though, is a quantity that demands a completely different manufacturing approach, unless you plan to tell people who ordered last that their drone is scheduled to be delivered in 2025.
Based on the fact that hundreds of people got (presumably working) product out of them, I'm willing to bet that their primary, and successful, production "facility" was most likely a garage and/or basement, or a small leased or rented building with only the most basic facilities. The other possibility is that they actually tried to pay for the much more expensive full-blown process, the scale of which would let them produce around 50,000 or more drones per year, and completely ran out of money when trying to fulfill the remaining orders.
This is what happens with crowdfunding, unfortunately, unless they agree to sign a contract up-front that they either owe you your money back, or a finished product as originally advertised.
It's a venture with risks; you took the gamble. When banks do this, they want a market analysis, a comprehensive business plan, timeline projections; when people play on Kickstarter, they just throw money in and ignore the disclaimer of no responsibility. I can speak the language of comprehensive project plans and market projections; most folks can't, and wouldn't understand it if you put it in front of them, so what do you want?
The lower-regulation space allows fools to part with their money, and it brings the advantage of funding people whose vision stares down the longest barrel of hell--or just picks up on things the usual suspects can't grasp. You want those advantages, you allow that sphere, and you warn the players this is the nondescript poker table where we don't check too close for credentials; you might meet a few card mechanics who can shuffle four times and put the cards in any exact order they desire, but they're mostly decent people trying to play fair. You want it both ways, you set up two tables, and let the players pick where they want to sit.
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Making 12 000 items at a rate one per day would take 33 years of working daily, assuming one person. 396 could make them in a month. That starts sounding like a mass production effort.