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.

Comments

Follow the money

[BarbaraHudson]

For once, the advice "follow the money" is especially apropos. How can you make $3,500,000 disappear? Sounds like there should be some recovery options against the people running this.

Re:Follow the money

[The-Ixian]

If you want to invest your money in risky ventures you should expect to lose it.

Don't risk what you cannot afford to lose.

Re:Follow the money

[fustakrakich]

How can you make $3,500,000 disappear?

Oh please! You're kidding, right? We can make 8.5 trillion disappear, okay? In fact, multiply that by about 500, and you have the derivatives markets...

Re:Follow the money

[gstoddart]

What 'recovery'?

You're not an "investor", you're essentially a "benefactor".

Think of these crowd-sourcing things as giant tip jars. You don't get any guarantees.

Why do people act like these things are any different than throwing change into someone's guitar case?

Re:Follow the money

[Lumpy]

Not just follow the money. They had NOTHING but a napkin idea at the start, that is how you end up with a guaranteed failure.
Back projects that have real prototypes and real ideas on how to scale up to delivering thousands or tens of thousands. Honestly if any of the people running it was getting more than 100K a year in income from this then they are dirty thieves that need to have their pants set of fire.

Re:Follow the money

[jwdb]

Further, considering that they raised nearly 30x the crowd funding goal -- the estimated necessary funding required to fulfill pledges ...

That's not how manufacturing works. Minimum funding goal is how many pledges you need to at least overcome your anticipated fixed costs, but there's still a marginal cost associated with fulfilling each individual pledge. When you get 30x the expected number of pledges, that means your variable costs will also be 30x greater. On top of that, if you have to produce 15,000 pieces rather than 500 (say), then your fixed costs also rise as you now have to redesign your product for volume manufacturing, whereas previously your prototype process might have been sufficient.

... there's clearly something worthwhile to investigate ...

No, there's not much to see here, just another startup that underestimated the challenges in going from prototype to volume, spent too much money on the transition, and went bust. The backers have my sympathy, but without evidence there's no basis for assuming malfeasance.

Re:Follow the money

[bluefoxlucid]

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.

Re:Follow the money

[bluefoxlucid]

This is why I haven't opened any video game projects yet: until I have art and some kind of video to show, it's not worth trying to get money to hire artists to create the graphics. Just a plea of "I know how to make this work, but I'm not an artist or musician" and a picture of XKCD Adventures that demonstrates nothing isn't a good way to beg for cash. Credibility isn't returning actual results; it's convincing people you can return results eventually.

Re:Follow the money

[iplayfast]

They had a demo of what appeared to be a working product. They said it worked. They lied. I want my money back.

Re:Follow the money

[Lumpy]

They had a clever bit of video that even then people were calling out as staged, faked, or possibly CG.

Re:Follow the money

[Triklyn]

... you took that analogy way further than necessary... or i would say desired. but yeah, if i fund a kickstarter it's generally with the understanding that "if this project doesn't implode, then i've made a purchase, if it does implode, well, that's what happens sometimes."

Re:Follow the money

[Triklyn]

it's slightly different, it's a conditional purchase/pre-pay.

i make a pre-payment with the understanding that there's a chance that the venture might completely fail, but also with the understanding that if i don't, collectively i mean, then this item/idea that i find intriguing WILL never materialize.

But if it does succeed, then i am owed this thing that i payed for.

it's a purchase conditioned on them not completely screwing the pooch.

Re:Follow the money

[Balial]

So much this. If you think it's a great product, wait until it's all built and buy it on the store shelves. if you think it won't land on store shelves, and you really want it, and it's worth losing your money over it, then chip in on the kickstarter. All kinds of businesses fail, surely the ones that are started by a couple of guys with no experience and only a webcam are going to fail more. I'm not sure why people think these are risk free.

Re:Follow the money

[vux984]

Why do people act like these things are any different than throwing change into someone's guitar case?

I expect it is because the guy with the guitar case isn't promising to give anyone a drone if you put money in his case.

You aren't wrong that people are setting their expectations wrong with kickstarter. The money goes in and the product may or may not ever come out. That's a gamble you take.

Its certainly not really an "investment" because your maximum reward is a consumer product worth roughly what you put in, and you certainly aren't a shareholder of the venture that creates the product.

But kickstarters do have an obligation to make a good faith attempt to deliver on their promise. Its not illegal or even a breach of contract to fail at the attempt. But it would be a breach to simply take the money and walk away or otherwise act fraudulently.

Its clearly a very different proposition than outright charity too.

Re:Follow the money

[bluefoxlucid]

I'm not sure why people think these are risk free.

Because the world is fair and movies are technically accurate.

Re: Follow the money

[BarbaraHudson]

Their prototype doesn't work. The promotional videos were faked. You can read it in the comments in their funding page.

Re:Follow the money

[bv728]

3.5m - 5% for failed Pledges = 175k - 10% for Kickstarter and Credit Processor Fees = 350k - 20% for Taxes (this is income!) = 700k Total received budget ~= 2.28m Now, figure 30% of that is shipping (684k), 40% of it is manufacturing (912k). Left over: $684K Now, common wisdom is that hiring one guy at $60k a year costs you $100k a year total in physical plant, HR, Payroll, benefits, etc. While I doubt they had ALL of that, let's say they're five guys, so now they have $184k to absorb any unexpected expenses and such. So if you have to do thee site visits due to QC issues, or have a supplier disappear (not entirely unlikely, but one of the less well known issues), or have to hire two or three extra people to handle the volume you just weren't prepared for, that's gone, you don't have any flex left. And those are the more common issues - imagine you do two site visits and then have to pay to have someone else do your manufacturing at 50% more: because it turns out everyone was lowballing their quotes, and when you go back to the other companies they tell you that they can't do it at that price. Not excusing them, but people tend to go "How could they lose [LARGE AMOUNT OF MONEY]" when the answer is "Most of what the campaign made was already earmarked to known costs - each pledge did not make them a lot of money, because what they were doing was expensive!" And they made the same scheduling and budgeting mistakes everyone makes.

Re:Follow the money

[viperidaenz]

Right, it's not an investment.
It's a gamble.
People don't seem to get upset when their lottery tickets don't win. Kickstarter isn't much different.

Re:Follow the money

[viperidaenz]

When they have a sign that says "I have no money for food" you expect them to buy food with the money you give them. Or "i have no home", you expect they're saving for a bond and rent.

Instead they spend the money you give them on drugs and alcohol.

Re:Follow the money

[vux984]

Instead they spend the money you give them on drugs and alcohol.

1) You are not affected by their choices in any way.
2) Clearly they are eating something between the drugs and alcohol.

Re:Follow the money

[PopeRatzo]

it's slightly different, it's a conditional purchase/pre-pay.

Yes, it's conditional on the parties being able to deliver. And unlike an actual "purchase" you have no recourse if the condition is not met.

Seriously, crowd-funding is a gigantic scam. Think of the thousands of games getting kickstarted right now and now tell me how many kickstarted games have actually seen a final release where people weren't disappointed. I can count them on one hand and still have enough fingers left over to pick my nose.

Re:Follow the money

[PopeRatzo]

They had a demo of what appeared to be a working product. They said it worked. They lied. I want my money back.

P.T. Barnum had a word for people who find themselves in situations like yours.

Re:Follow the money

[Tailhook]

the people who paid money likely feel differently

The people that put enough money into a Kickstarter campaign to actually hurt them or even upset them when it vanished are fools. I discount their feelings as such.

This planet is filled with legitimate manufacturers making multiple versions of everything physics, our knowledge and our laws will permit. If the toy you want is that important to you then go buy it from one of them.

investigate

Naturally. Bellow for cops. Cops will make everything better.

Re: Follow the money

[ttucker]

Trying to get something from Kickstarter is a fool's errand. It is not a web store.

Re:Follow the money

[Tough Love]

How can you make $3,500,000 disappear?

Ten engineers at silly valley rates for a year, or various other other legitimate ways.

Re:Follow the money

[ttucker]

Even calling it a gamble is misleading. It is a sort-of donation, that you might get a free gift for later.

Re:Follow the money

[ttucker]

it's slightly different, it's a conditional purchase/pre-pay.

This might be what it feels like, but it is not the arrangement caused by giving money to Kickstarter.

Re:Follow the money

[mwvdlee]

I'm actually surprised you don't hear this kind of thing more often.

The vast majority of startups fail.

Read https://s3.amazonaws.com/start..., especially chapter D.
The vast majority of startups fail. This report claims 74% of startups fail due to premature scaling alone.

Premature scaling seems to be exactly what has happened here; a company finding itself in a situation where it has to produce far more than it knows how to.

Re: Follow the money

[Anonymous Coward]

Really, I've backed 23 projects on kickstarter. Most of them have been funded. I've received everything I've expected from all but 3. None of those 3 are even late yet. Only one of those 3 has significant challenges remaining, and they claim to be on schedule.

So right now I'm batting a thousand on kickstarter. The trick is to apply some thought before backing a project and then understand a lot of these projects are new to manufacturing and will have some big challenges they are not expecting. For them, you have to be willing to wait.

Re:Follow the money

[Lagmo]

Indeed, exactly why i didn't back this but kept their now defunct page bookmarked so i could order when they sorted out manufacturing.
For once it paid off to be cynical, i never back anything on KS unless it's so trivial i can easily afford to lose it(under $50).

Re: Follow the money

[Aaden42]

I've had 100% successful delivery from the projects I've backed. Caveat emptor.

You need to do some background research. Treat it more like a speculative investment, not buying widgets from Amazon.

If there's a huge rift between their best prototype demonstration and reality, probably best not to back. If it looks half their funding goal is to cover the special effects budget in the "demo" video, pass that one by...

Re: Follow the money

[jxander]

Step 1: kickstarter needs to limit the money. Put a hard cap at (just as an example) 2x the original goal.

Many kick starters end up making so much money, that they are compelled to create a matching product on a scale for which they did not plan. Instead of building a couple hundred drones on a £125,000 budget, they were forced to increase production by an order of magnitude. They simply weren't prepared for production on that scale.

I'd wager that some feature creep found it's way into the project too. "Now that we have all this money, we can afford better rotor bearings and buggy whips..."

Re:Follow the money

[edtice1559]

I am affected by their choices in that I wouldn't have given the money knowing that it was going to be misappropriated. But more importantly, the victim is the person in genuine need who I can no longer help since I have a maximum amount of charity that I can give (If I'm very generous that's 100% of everything I have but it's still finite). So that person is causing a great deal of harm to society. If they piss in a well that I don't use, I'm still upset about it.

Re:Follow the money

[gstoddart]

it's slightly different, it's a conditional purchase/pre-pay.

Is it really?

Because I don't think that's what happened; it's far too easy to spend all the money and fail, or have the magic of accounting say you've spent all the money and failed.

You're looking for something which is insured, underwritten, and guaranteed.

I don't think you get any of those things. In fact, judging by the summary, I'd say you don't get that at all.

Having a mission statement and a promise of being sure it will work ... well, good luck with that.

Re:Follow the money

[Razed By TV]

It's not a gamble for Kickstarter. They get their cut whether it succeeds or fails.

Re:Follow the money

[vux984]

I am affected by their choices in that I wouldn't have given the money knowing that it was going to be misappropriated.

Riiiiight.

The homeless junkie you gave a dollar too... your going to blame HIM, a person with a mental disorder / addiction problem -- for 'misappropriation' of funds when he buys junk?

I'd blame the guy in the mirror for that misappropriation.

Re:Follow the money

[vux984]

Your assuming the guy was playing a guitar. And the presence of a guitar case lends some reasonableness to that assumption.

But lots of homeless people have their guitar case out for donations whether htey are playing or not. And some don't even have an instrument.

Re:Follow the money

[viperidaenz]

From Kickstarter's point of view there's another G word for it.
Gravytrain

Re:Follow the money

[BarbaraHudson]

It wasn't a scaling problem. They delivered a few, but none of them could fly for more than a few seconds, the supposedly hd video was crappy, the app to control it didn't work, pretty much nothing worked.

Re:Follow the money

[BarbaraHudson]

If a project fails, kickstarter shouldn't get their cut. This will incentivize them to keep a closer eye on the projects they accept, and the freed-up funds could go to give at least a token compensation to those who lost out.

Re:Follow the money

[BarbaraHudson]

Your assuming the guy was playing a guitar. And the presence of a guitar case lends some reasonableness to that assumption.

But lots of homeless people have their guitar case out for donations whether htey are playing or not. And some don't even have an instrument.

Maybe they're begging so they can buy an instrument?

Or someone ripped them off?

Or someone broke it?

Re:Follow the money

[BarbaraHudson]

What 'recovery'?

You're not an "investor", you're essentially a "benefactor".

Think of these crowd-sourcing things as giant tip jars. You don't get any guarantees.

Why do people act like these things are any different than throwing change into someone's guitar case?

Not when there's fraudulent misrepresentation involved. The promo video they showed everyone was totally fake.

Re:Follow the money

[BarbaraHudson]

Their original ask was around $175,000. Obviously, since they have yet to produce a product that works anywhere near spec (or that works at all, really), and they've only shipped a few (so no 648k in shipping), have only received a fraction of the parts (there were different runs scheduled for different color schemes) so no 912k for manufacturing), so where is all that money that they haven't spent on shipping and manufacturing?

the answer is "Most of what the campaign made was already earmarked to known costs - each pledge did not make them a lot of money, because what they were doing was expensive!

If the money was earmarked for known costs, and most of those unknown costs have yet to be incurred (almost nothing manufactured by their supplier, almost nothing shipped), that earmarked money should be somewhere.

What really happened was that they bit off way more than they could chew, had a lot more money to blow on it so "no problem with delays - we can burn through this wad of cash", and for 3 years lived off that money. Now that it's gone, they've put the business into receivership. Must have taken lessons from SCO.

Re:Follow the money

[farble1670]

But more importantly, the victim is the person in genuine need who I can no longer help since I have a maximum amount of charity that I can give

So after wresting with your consciousness, you decided to buy a neato app controlled drone with an HD camera instead of donating to charity?

Re:Follow the money

[interval1066]

If you want to invest your money in risky ventures you should expect to lose it.

Trvth. Plus; isn't the space saturated with flying things?

Re:Follow the money

[farble1670]

Not when there's fraudulent misrepresentation involved. The promo video they showed everyone was totally fake.

https://www.youtube.com/watch?...
doesn't look faked to me.

Re:Follow the money

[farble1670]

they built flyable drones and built the smartphone app to control it.
https://www.youtube.com/watch?...

i guess anything could be faked, but this really doesn't look like it. the video doesn't show anything special for sure, but it seems like proof they at least tried to build a product.

3.5m USD is nothing when it comes to hardware. i don't know much about manufacturing, but i do know it's really, really hard. triple that when it comes to something with moving parts.

Re:Follow the money

[farble1670]

https://www.youtube.com/watch?...

i guess anything could be faked, but this really doesn't look like it. the video doesn't show anything special for sure, but it seems like proof they at least tried to build a product.

3.5m USD is nothing when it comes to hardware. i don't know much about manufacturing, but i do know it's really, really hard. triple that when it comes to something with moving parts. it's completely plausible that they built a few semi-working prototypes, but taking it to a quality consumer product was just too far of a stretch.

Re: Follow the money

[jwdb]

Fair enough, there's the evidence of malfeasance then. However, that has absolutely nothing to do with how much money they took in, as GP implied.

Re:Follow the money

[Solandri]

Yup. I've funded just one Kickstarter campaign. The project had working prototypes, demonstration videos, and a cost breakdown outlining exactly how much of the money would be spent on which step of the manufacturing process. And most importantly, I thought it was a cool device which needed to be on the market (in fact I had thought of ways of making something similar myself). I had high confidence I would receive the promised goods, but I wouldn't be upset if I lost the money since I felt this was something that deserved to be made.

Re:Follow the money

[BarbaraHudson]

They had put a video up showing the camera following some bikers along a bike trail, claiming it was demoing their automatic collision avoidance system. Too bad they had to admit later that it hasn't been developed yet. (see the comments on their funding page).

Also, the video from the demo camera is jerky, with dropped frames. This is in ideal conditions - indoors. And as people who got units have pointed out, it's not HD. And the app doesn't work properly. All this and more by users.

Re: Follow the money

[BarbaraHudson]

Their variable costs haven't gone up 30x. First, they were ordering bodies in batches, one for each color scheme. They only got one (or maybe two) batches. Same thing with shipping - they haven't shipped the bulk of the orders, so shipping costs are also not an excuse for "no money". Also, if you read their postings, they were still planning on hand-assembling ALL of them, over a period of several months, which is why they said some people would have to wait until February. In other words, they didn't change their assembly process. Since they haven't assembled the vast majority of them, most of that money should also be floating around.

They weren't planning on hiring extra staff for the increased production requirements (even though many backers suggested they do so), just sticking with their original plans and extending the time. 5 days a week, 40 hours total, no additional staff. So there was no "scaling up production" issue. Oh, and they told everyone that they were taking a 3-week Christmas vacation. No crunch time for these dudes, not in their work ethic.

They've said there's no money for refunds for those who pre-ordered, or for those who were backers. So it's all been spent while only minimal production has taken place, and most of the parts haven't been ordered.

They've blown through the money, continuing even when simple accounting would have shown that they couldn't meet their commitments. Why? Gotta keep paying themselves for their amazing leadership and ingenuity, I guess ... Should have been put into receivership when it was obvious that from a financial point they had spent so much that there wasn't enough for the rest of the parts, or shipping. People would have at least gotten some money back.

Re:Follow the money

[farble1670]

Also, the video from the demo camera is jerky, with dropped frames. This is in ideal conditions - indoors. And as people who got units have pointed out, it's not HD. And the app doesn't work properly. All this and more by users.

absolutely, but creating a product that doesn't work well isn't the same as "scamming". folks here are claiming this was all a big smoke and mirrors campaign. i looked through a lot of their promotional videos and they clearly have prototypes working. i'm curious what people think? that they had this devious plan to poorly implement the product ... over 3 years of their lives ... and what? rathole some of the money by cutting corners?

as for the biker video, there's such a thing s concept videos. if the product was finished and perfect, what was the kickstarter for? sounds like you thought you were purchasing a completed product off of amazon or something. that's not how it works.

Re:Follow the money

[Swistak]

You have heard about casinos right?

Re:Follow the money

[BarbaraHudson]

Normally, concept videos have a disclaimer, same as promotional videos for cars that say "professional stunt driver on closed circuit. do not try this yourself."

Re: Follow the money

[ttucker]

I have gotten 100% of the things that I invested in too, but never felt bad when the schedules got pushed back, or it looked like the thing might never come.

It is fun if you are chill, but if you really really expect something, even the wait for a project that produces fruit might be too much.

For example, I invested in a few HexBright flashlights. They eventually came, and were cool... it took a really long time. Watching the team design them, and watching progress update videos was fun. During the wait, I had to buy a different flashlight to satisfy my flashlight needs, from a real store. Kickstarter is not a store.

Re:Follow the money

[edtice1559]

No, I don't own a drone of any type. But I do donate, on a monthly basis, an amount of money about equal to the cost of buying one. I give it to charity organizations that can (hopefully) ensure that it goes to better use. And when I see a person in distress begging for help, I can display a callous disregard because I know that most likely they are playing on my sympathies but don't want real assistance. So now I am partially immune to the suffering of other human beings. It's a pretty significant cost in many respects and it's a shame that the world is this way.

Re:Follow the money

[edtice1559]

Yes I am going to blame him if he asks me for money to buy food and instead buys heroin. Who else would I blame for that? I think your argument is that I should assume that the money won't be spent properly. And, therefore, when I see a person in legitimate need and have no way to separate them from those just looking for drug money, I can assume that they are in the latter group and not feel any pangs from my conscience. Which is pretty much what I end up doing. But that's a pretty exacting price that has been extracted.

Re: Follow the money

[daid303]

Depends. I backed 9 kickstarters. 2 delivered on time. 1 is 2 years after schedule But that is still going. But I didn't research this properly beforehand, as his goals where too ambitious for the time period. Most projects are just a few weeks late.

What I invested is a small amount of money. Because if a bit of research and common sense ("if it looks to good to be true, it is") I have a high return of unique products, that would normally not see the market.

Only 1 of the projects I backed made more then 1mil. As I think making a lot more money then your goal is also a risk.

So, yes, there is a chance I get nothing. But then I'm only out of $10-$100.

Backing a sub $300 3D printer, that's stupid for example. Just in raw materials you need $150 for any printer (electronics, hotend, motion parts). Add production, shipping, R&D, and you'll go over that.

Re: Follow the money

[orasio]

It's not exactly that.

If successful, you also get the existence of the product, in the offered conditions.

Example, you pay $200, and you get you widget next year, or you have to wait until Apple/whoever "creates" it in 4-5 years, patents it, and then you have a chance to buy it for $500.

It _is_ an investment.

Re:Follow the money

[tibit]

If you're onto something that's actually feasible, Kickstarter can be the infusion of capital you need to bring an otherwise fleshed out and well tested premarket prototype to market properly. Say that I had a widget that is pretty much ready to go other than the funds needed for regulatory approvals (FCC/CE/UL), and for whatever prepayment the production facility needs - and the costs of setting the production up (face to face meetings are a thing!). That's IMHO what Kickstarter should be for. Not for basic R&D. In my case, if I decide to offer my project(s) for sale, Kickstarter will cover the costs needed to bring an otherwise finished project to market. The only R&D it'd cover would be potential manufacturability and compliance tweaks. Even then, you really don't want to be designing late prototypes without compliance as a key requirement. I don't believe in post-facto EMC or Low Voltage Directive fixes... You really have to be doing the design with relevant standards in hand. It bothers me to no end that so many "engineers" are doing designs without being able to reference the regulations that apply to their damn products. If you can't afford to access the standards pre-Kickstarter, at least attempt to find downloads of the things - it's not that hard.

Re:Follow the money

[Triklyn]

oh, we're working on the assumption that it's not outright fraud. in a lot of cases it looks like people can call that when they see it. i think kickstarter now claims that they are now liable for all reward promises... you know, if they aren't bankrupt.

Re:Follow the money

[Triklyn]

i've kickstarted maybe 8-10 things, i've received my reward for all of them, certainly, almost always, not in a timely fashion, and one of them, i'm not sure was "worth it." but all things done in good faith.

I'm just saying, if it smells like a scam... or if it smells like they're biting off a bit much for them. use your discretion to wait.

http://www.gamasutra.com/blogs...

lawsuits will determine what the relationship is.

Re:Follow the money

[Triklyn]

or, it's your kryptonite. but i also like to fund things that seem like they've got a decent gameplan.

hexbright was my first, and a damn fun idea too. and the guy definitely knew what his challenges were, he took like, a year extra. but everybody got their stuff.

Re: Follow the money

[U2xhc2hkb3QgU3Vja3M]

Backing a sub $300 3D printer, that's stupid for example. Just in raw materials you need $150 for any printer (electronics, hotend, motion parts). Add production, shipping, R&D, and you'll go over that.

Depends on the 3D printer. If you assume the "standard" parts then yes, I might agree with your $150 for the parts alone. But the Tiko 3D bypasses a lot of those standard parts and even has one member of their team in China to oversee the manufacturing.

Re: Follow the money

[U2xhc2hkb3QgU3Vja3M]

It is a good deal if whatever the Kickstarter is about doesn't exist at the moment. A perfect example is The Link, a quick-release arcade joystick shaft.

Re: Follow the money

[jwdb]

Their variable costs haven't gone up 30x.

Have you seen their balance sheets? Their orders? Their setup costs? How much of the raw materials did they already procure? How much did it cost to get their electronics partner tooled up? If not, then on what basis are you making such assertions as though they are fact?

Unless we get to see a financial report, neither you nor I will ever know what happened. If you really care, go get them to open up their financials, but until then all you have is speculation.

In other words, they didn't change their assembly process.

The update linked in the summary says they've worked out how to get their partner to do the motor mounting as well, so they don't have to. Sounds like a production change to me.

Since they haven't assembled the vast majority of them, most of that money should also be floating around.

So it's all been spent while only minimal production has taken place, and most of the parts haven't been ordered.

Why? Gotta keep paying themselves for their amazing leadership and ingenuity, I guess ...

Speculation, speculation, and speculation edging towards slanderous.

Should have been put into receivership when it was obvious that from a financial point they had spent so much that there wasn't enough for the rest of the parts, or shipping.

Very true, and is the actual discussion we should be having here, rather than all the pedestrian complaints and accusations.

Doing this would require having accountants and oversight from some kind of board, say of contributors and/or Kickstarter staff (feature request for Kickstarter v2.0?), and we'd need to work out a system to keep them accountable. Of course, that would increase the overhead, and thus make some otherwise-viable projects unviable again. It also turns Kickstarter into just another shopfront, while I'm more interested in using it as a staging ground for ideas that could not make it on their own, so I'm not sure I'd support having more oversight.

Re:Follow the money

[david_thornley]

If I'm a banker wondering whether I'm going to lend some guys $100K to start their business, I'm darn well going to do some due diligence. If I'm spending $200, I'm not. It's a gamble (but some are safer than others; a follow-up product by people with a good track record is a good bet), and I don't gamble more than I'm willing to lose.

Also, I have an inherent distrust of deals that look too good to be true.

Re:Follow the money

[david_thornley]

There's nothing wrong with concept videos. There is something wrong with claiming that they're anything more. Claiming that the finished product, or current prototype, has significantly more capability than it has, that's deception, likely fraud, since it's for profit.

Re:Follow the money

[david_thornley]

The incoming money is gross income, not net, in a money-making venture, so the people involved don't get a large chunk removed for taxes. Of course, if they didn't bother with many business expenses, and pocketed the money, the IRS will want its cut.

Re:Follow the money

[farble1670]

Kickstarter pages are not product descriptions. They are ideas, or visions for what a product / service COULD be if they receive the funding. They are not guarantees of features or even a completed product of any sort. Kickstarter isn't store where people advertise their cool new products for sale. You weren't buying a product. You were funding a possibility.

You are upset because they had a concept for a feature (motion tracking, object avoidance) that didn't get implemented. It's perfectly reasonable to put out a video of what "could be" if the product was funded. It's not a guarantee of what will be done if the product is funded. Maybe do some investigation into what it takes to bring a hardware / software product to consumers. It's f****** HARD. Companies fail at it all the time.

Like I said, looking at their promo materials and progress it's pretty clear they made a reasonable go at it. It wasn't a scam, they just failed.

I'd suggest not involving yourself in Kickstarter. If you like an idea, wait for it to come to market. Follow independent reviews of the product to understand if it will meet your expectations. It's the course that most consumers follow.

Re: Follow the money

[david_thornley]

A mechanical engineer friend of mine was working on a product quite a few years ago. He told me that he did know what he was going to do about manufacturing if he hit it big. Of course, he knew what he was doing (except for software estimation).

Re:Follow the money

[bluefoxlucid]

Then it's a good thing we have a platform that lets you and a million others pitch a few dollars at a high-risk venture, instead of begging banks for the payoff.

Re:Follow the money

[vux984]

Yes I am going to blame him if he asks me for money to buy food and instead buys heroin.

Blaming a heroine junkie for buying H with any cash he gets is like blaming a rabid dog for biting you.

Who else would I blame for that?

You don't blame anybody for that. He's sick. That's what his sickness does. Blaming him or anyone else for it is counter productive.

And, therefore, when I see a person in legitimate need and have no way to separate them from those just looking for drug money,

Those 'just looking for drug money' are in legitimate need too. They just aren't in need of drug money.

I can assume that they are in the latter group and not feel any pangs from my conscience.

That's on you. Your line of logic here that you can't tell X from Y so therefore you treat everyone as Y, even though you know many of them are X. That can be used to rationalize are lot of really nasty stuff.

Re:Follow the money

[edtice1559]

No my logic is that claiming to be X when you are really Y is wrong because it hurts the Y group. If I disguise my finances in order to claim a scholarship reserved for a low income student, I've harmed the group of low income students. If I bundle a bunch of subprime mortgages together and lie and claim that it's a AAA investment, I've harmed the investors. You don't have to go very far to find the path from deception to harm. It shouldn't be so hard for you to understand. By your logic, you can justify any type of deceit as long as you get the outcome that you want and then you can blame the victim. There's nothing wrong with standing at a freeway intersection with a sign that says "I need heroin money." There is something wrong with standing there with a sign saying "Need money for my newborn to have milk" and then spending the received money on heroin. By your logic, it's okay for a banker to rip off all of their poorest clients because they *need* to make their Lamborghini payment. You're trying to make a simple issue complicated. Deception is wrong. That doesn't mean you can't sympathize with the addict whose life has gone so far off the rails that they are willing to engage in deception to support their habit. But you don't do that by justifying the wrong behavior. If they *need* heroin, is it okay if they engage in armed robbery? What if I *need* laid, is it okay if I force your wife?

Re:Follow the money

[vux984]

No my logic is that claiming to be X when you are really Y is wrong because it hurts the Y group.

Your problem is that you are blaming someone with disrupted mental faculties for their behaviour.

A person in a coma can't be blamed for not picking you up at the airport despite your prior arrangements before they fell into a coma. And a heroin junkie can't really be blamed for spending every penny on heroin.

If I bundle a bunch of subprime mortgages together and lie and claim that it's a AAA investment, I've harmed the investors.

Sure, but unless you are claiming that the functioning of your brain was literally chemically impaired throughout the process by a chemical alteration that created a base overriding drive to commit securities fraud then its not really applicable here.

By your logic, it's okay for a banker to rip off all of their poorest clients because they *need* to make their Lamborghini payment.

Are you really equating the brain chemistry of someone with a heroin problem so bad they are a homeless street junkie to the brain chemistry of a dishonest banker here?

That doesn't mean you can't sympathize with the addict whose life has gone so far off the rails that they are willing to engage in deception to support their habit

They aren't "willing to engage in deception" their brain lives for heroin now. Expecting them to make better choices is absurd, the person who took the heroin isn't in control anymore. The heroin addicted brain is running show.

. If they *need* heroin, is it okay if they engage in armed robbery?

Of course not. But it goes back to my rapid dog comparison. Its not the dogs "fault" it's biting people. Its not ok for it to bite people, and we need to deal with it... but the dog isn't going to get better on its own. You can't yell "Make better choices" and "Heel boy" in your best alpha male voice and expect the rabid dog to settle down. Its rabid. Its brain chemistry is altered. Its not operating under normal dog brain rules now, and can't be expected to. The rabies are in the drivers seat.

A heroin junkie is the same... its not the person it was.

The junkie made a bad decision to take heroin in the first place, and just as with alcohol we've made a collective decision to hold one accountable for the results of the things you do while you are impaired (largely to avoid the undesirable situation where people would claim they werent' responsible for shit they did while drunk), but it is strictly effective as a *deterrent* approach to make the sober person think twice about getting impaired in the first place.

On a purely practical level ONCE they are impaired, they can't, by definition, be expected to be making rational decisions anymore.

Re: Follow the money

[BarbaraHudson]

Read their crowdfunding site. That's where I got the info from - there is no way in hell that they have spent all the shipping budget, since they planned to have shipping done through February. And they only receive parts as they do each color - which is why they were able to incorporate one change in the mold after the first batch, so they also haven't spent all their parts budget either.

Re:Follow the money

[BarbaraHudson]

They didn't JUST take money from backers - they also took money for pre-orders. Then they shipped to some of the pre-orders, probably because the pre-orders have a legitimate legal claim.

Re: Follow the money

[jwdb]

Tooling, Barbara, tooling. Go look it up.

Re: Follow the money

[BarbaraHudson]

If you had read the site, you would know that only ONE part was modified - very slightly. So no, there is no way that tooling would have eaten up, say, the $900k for shipping (most of which wasn't shipped) or the $600k for parts that haven't even been ordered yet.

Crowd Funded = Scam Artist

[Archangel Michael]

I'm beginning to think that Crowd Funding is the latest greatest version of a scam artist's dream.

Step one: Promise the world
Step two: Set up crowd fund account
Step three: Exploit Media for free publicity
Step Four: ???
Step Five: Profit!
Step Six: don't deliver anything to anyone.

Re:Crowd Funded = Scam Artist

[paiute]

It's like The Producers, only with computers.

I smell a remake.

Re:Crowd Funded = Scam Artist

[tnk1]

Presumably that can and does happen, although most are not scams, just poorly run or run into unforeseen difficulties.

Kickstarter is about backing projects, and when those projects are advanced, like this concept, the project can fail due to either technical difficulties or inability to cost effectively manufacture the objects.

So, realistically, while most people would prefer to invest in projects that will produce a result, there is a substantial difference between a Kickstarter for something like a board game, which is relatively easy to publish, compared to an advanced drone, which is not easy to build, and the manufacturing process has to be built from the ground up.

People who get into Kickstarter projects expecting a product at the end are advised to have some understanding of the relative difficulties involved of the project they are supporting and then not support it if it is too speculative.

In this case, the project was sort of speculative. They were asking for 120,000 to get started, and they got two million. While that improved their ability to work on the project, it caused expectations to rise, and probably caused the team to make the mistake of increasing the scope of their project beyond their comfort zone.

Re:Crowd Funded = Scam Artist

[quantaman]

I'm beginning to think that Crowd Funding is the latest greatest version of a scam artist's dream.

Step one: Promise the world
Step two: Set up crowd fund account
Step three: Exploit Media for free publicity
Step Four: ???
Step Five: Profit!
Step Six: don't deliver anything to anyone.

Crowdfunding is just like a startup or any other kind of project, failure is to be expected.

If you want a guaranteed product then go to a store and buy an item that already exists, but if you're banking on the creation of something new there's a real chance it won't work out.

Re:Crowd Funded = Scam Artist

[Archangel Michael]

Sorry, but there are already fifty different "drones" on the market. This wasn't ever going to be successful, mainly because it wasn't really new or innovative. It was "me too" project.

Re:Crowd Funded = Scam Artist

[Archangel Michael]

go to a store and buy an item that already exists

You mean, go to the store and buy a drone, like I can do now? This was nothing more than a "me too" project.

Re:Crowd Funded = Scam Artist

[plopez]

Read "The Road to Wellville". It is set during the great breakfast cereal and processed food boom in the 1890's. A pattern followed by the great railroad buildout, the automobile boom of the late 1800s to early 1900's, the tech boom ofthe 50's, 70's, 80's, 90's, and later. The oil boom, cattle boom, etc. Nothing ever changes.

Re:Crowd Funded = Scam Artist

[Kjella]

So, realistically, while most people would prefer to invest in projects that will produce a result, there is a substantial difference between a Kickstarter for something like a board game, which is relatively easy to publish, compared to an advanced drone, which is not easy to build, and the manufacturing process has to be built from the ground up. People who get into Kickstarter projects expecting a product at the end are advised to have some understanding of the relative difficulties involved of the project they are supporting and then not support it if it is too speculative.

Sure, there are a lot of real risks. But what you always have to ask yourself on a Kickstarter is "Have they been working on it as if they were $100k deep (in time or cash) from their own pockets, or has this been more of a dotcom-startup with high salaries, Aeron chairs and lavish company trips?" Because say you're 10-20% into this project, you start getting real numbers on the table and the costs are higher than expected, the market prices lower and you haven't really struck gold. Do you stock up on Ramen noodles and long hours for a slim chance of moderate success? Or do you just go slacker and burn through the budget for a guaranteed good time as long as it lasts?

Remember they have no investors with any oversight, nobody deeply invested and if they can simply provide a little evidence to appear as a poorly thought out project that failed due to unforeseen circumstances and not a total scam, they're good. That's the difference with having real investors on board, they make sure the attempt is mostly honest. Of course I'm not saying that's what happened here, for all I know they could all be hard-working people who's given it their very best, but you don't know. With Kickstarter you never know.

Re:Crowd Funded = Scam Artist

[edtice1559]

No need for step four!

Re:Crowd Funded = Scam Artist

[Hognoxious]

The difference is that a startup usually gets a grownup in charge at some point.

I'm starting my own crowd-funding site

[JoeyRox]

It'll be called LightingHundredDollarBillsOnFire.com

Re:I'm starting my own crowd-funding site

[TFlan91]

404

Re:I'm starting my own crowd-funding site

[ColdWetDog]

I think that already redirects to boating.com.

Re:I'm starting my own crowd-funding site

[viperidaenz]

You'll lose money.
Kickstarter take 8% or something.

On that note, is kickstarter going to return the profit they made from this scam?

Re:I'm starting my own crowd-funding site

[Coren22]

Naa, BOAT stands for break out another thousand. Hundred dollar bills are so passe to a boat owner.

Re:I'm starting my own crowd-funding site

[farble1670]

On that note, is kickstarter going to return the profit they made from this scam?

Just because it failed doesn't mean it's a scam. It was super ambitious and it failed. 3.5, USD is peanuts for a project that involves (flying) hardware, firmware, and smartphone controller apps across 2 platforms.

Their Linked profile says they have 11-50 employees. Half of the 3.5m would have gone to salaries. Ramen is fine for the founders but the engineers, designers, tech writers, marketing, QA, etc. won't work for nothing.

Re:I'm starting my own crowd-funding site

[david_thornley]

You can get some naive or speculative engineers and designers on board with equity.

Yeah, I'd say "f it" and head to the beach too

[xxxJonBoyxxx]

>> whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground

Yeah, if I were the project founders, I'd say "fuck it," pocket the money and head to the beach too.

Re:Yeah, I'd say "f it" and head to the beach too

[iplayfast]

>> whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground

Yeah, if I were the project founders, I'd say "fuck it," pocket the money and head to the beach too.

They did!

Re:Yeah, I'd say "f it" and head to the beach too

[BarbaraHudson]

What they shipped worked worse than the cheapest drone you can buy on the market. Couldn't fly for more than a few seconds. You could do just as well with a stick of balsa wood, a rubber band, and a propeller.

Re:Yeah, I'd say "f it" and head to the beach too

[fustakrakich]

Couldn't fly for more than a few seconds. You could do just as well with a stick of balsa wood, a rubber band, and a propeller.

40 minutes... Not too shabby

Re:Yeah, I'd say "f it" and head to the beach too

[BarbaraHudson]

I remember when I was a kid reading about balsa airplanes with a celluloid-like film floated onto the wings - super light. 40 minutes for a balsa-and-rubber band airplane is amazing!

Yup, I "invested"

[iplayfast]

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!)

Re:Yup, I "invested"

[Lumpy]

All of that is 100% bullshit out of their mouths unless they were making them out of strange space materials. and if these were all custom carbon fiber and titanium , everyone should have walked away understanding that it was 100% BS for the price point.

Absolutely NO plastic injection company requires a 12 month lead time for ABS supplies, that is complete horse shit. Circuit boards even auto placed and tested have a MAX 3 month lead, and these jokers should have had the board design done and the files ready before the first kickstarter order came in.

They were bullshitting everyone and they knew it.

Re:Yup, I "invested"

[iplayfast]

Easy to see with 20/20 hindsight. I can buy quad copters down the street for under $100, they were offering an upgrade of the same thing with a better camera and software. Still don't see how I could have known it was bullshit.

Re:Yup, I "invested"

[pkinetics]

Every time I read a kickstarter risk and challenges it demonstrates that most designers do not have any concept of what risk and challenges are. They assume the happy path to everything, so there is never or understated risk.

Re:Yup, I "invested"

[Lumpy]

No, it's easy to see if you take the time to learn about it first and put in effort, why people refuse to take the time to research things before making a decision I'll never understand.

Never ever believe a kickstarter promises without researching what they say first if they dont deliver proof already. The ones I back gladly will reveal sources and other information by just asking. If they wont tell you, they are scammers.

Re:Yup, I "invested"

[viperidaenz]

First they say there may be delays due to component suppliers, then they say their suppliers have set aside large stockpiles specifically for this campaign.

It's a carefully crafted spiel, to first convince you they're being realistic - so you trust them - but by the time you've finished reading the paragraph, they're now convincing you it's a shoe-in and no way it can fail.

Re:Yup, I "invested"

[viperidaenz]

It's got HD video with image stabilization
WiFi control
Lots of bright, animated flashing lights.
Sonar obstacle detection
On-board microphone, that can apparently filter out the whine of the propellers?
On-board speaker
Motors can spin both directions! Up to 100,000rpm! in case you want to fly it upside down? wtf?
Fully autonomous
Facial recognition
Mesh networking, swarm capabilities

All in a tiny drone that fits in your hand, with 10 - 15 minutes of battery life, weighing less than 60 grams

Back to their claim of 100,000rpm motors: With a 1.5 inch diameter prop size, that means the tips are spinning at over 450mph. They also claim to be able to go full speed one direction to full speed the other direction in 200ms. That's a delta of 900mph in 200ms. From motors too small to have ball bearings. Too small to be brushless. They're fricken pager motors.

A 1.5 inch prop with a 4 inch pinch at 100,000rpm only has a static thrust of 60 grams. It needs 100 watts to spin it. It's terribly inefficient.

It's all bullshit.

Re:Yup, I "invested"

[argStyopa]

"kickstarter recommended them"

Did they?

Because KS's position on these has always been: we're simply providing a venue, a digital orange-crate for them to stand on and hawk their projects.

Don't look at me because I've thought the entire KS thing is ridiculous Pollyanna'ish bullshit from the start. It might have been well-intentioned, and there are almost certainly valid projects that are what they seem, but it was bound to turn into a "money/gullible people" Separation Engine.

Re:Yup, I "invested"

[Attila Dimedici]

They may have been 100% confident, but that was solely their opinion. If they had had the ability to demonstrate the reliability of what they claimed they would have gone through traditional investment channels.

Re:Yup, I "invested"

[iplayfast]

Come on. They had a video of a working prototype. I had no idea it was faked. I'm not going to look to closely at detail specs (100K rpm) if they have a video of the thing actually working. Then during the campaign, they showed videos of them playing air volleyball with them. Looked like they were making progress on some of their more extravagant claims.

You can't say buyer should have known better, when the evidence is all a lie. It's just fraud pure and simple.

Re:Yup, I "invested"

[tibit]

Circuit boards even auto placed and tested have a MAX 3 month lead

Heck, you can get prototype runs (qty 100) done in under a week!

Re:Yup, I "invested"

[tibit]

The slo-mo guys would have probably loved to film their 100kRPM props and drone in action. If someone claims 100kRPM anything, ask for vetted high framerate videos or tell them to fuck off.

Manufacturing is Hard

[TechyImmigrant]

Excess revenue is a big problem for a crowd funded project.

You might know how to build 200 units and ship them. Get some friends in to a soldering party.
But if you need to build 200,000, you need manufacturing.

Manufacturing require up front investment, employees, time and effort. The payoff is over a longer period as you ship products to market. If you build 200,000 then stop, you're going to make a huge loss, because you spent all that money setting up the manufacturing.

Re:Manufacturing is Hard

[iplayfast]

There were only 12,000 backers, so even if every backer ordered 2 zanos that's only 24,000. Not exactly mass production.

Re:Manufacturing is Hard

[Anonymous Coward]

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.

Re:Manufacturing is Hard

[avandesande]

Also the incentive to squander the money and not deliver is greater- sure your name gets dragged through the mud but it is 3.5 million dollars!

Re:Manufacturing is Hard

[Anonymous Coward]

There were only 12,000 backers, so even if every backer ordered 2 zanos that's only 24,000. Not exactly mass production.

Have you ever tried making 24 thousand of _anything_ yourself? Or with a small group? Even if all the components were off the shelf, putting it all together (wiring, some soldering I suspect, _testing_ each and every one...). Sounds like a project you'd be lucky to complete in a day... Heck even if you could get ten done in a day, that means about six years working 7 days a week. Not sure about you, but that sounds exactly like you need some kind of mass production, yes...

Re:Manufacturing is Hard

[CaptainLard]

^Second this.

I'm in the middle of spinning up my second contract manufacturer for a relatively simple device. It took 4 weeks just to load the Bill of Materials in their system! That was after all the kinks were worked out on our end and with direct relationships with half the suppliers. Now they can finally order the parts which have generally have a 6-12 week lead time. Digikey might have 800 motors in stock for 200 drones but you need to talk to at least 2 different middlemen if you want 1,000,000 of something. Don't forget $50k for test fixtures. Then there is the NPI build (100 units), validation (2-4 weeks), run 1 (1000 units), line shut down for re-validation and a slow ramp up.

Its going to take us about 8 months for us to go from contract signing to quantities of 15k/month...for a finished design. Delivering 200k by a specific date means you need to build production capacity of greater than a million units a year. And that's a whole other step up from what I'm dealing with.

So yeah, $3.5M is quite a bit to disappear but I doubt the founders are walking away with it. More than likely a lot of mistakes were made, bad contracts signed, checks were written for the wrong things and a few opportunistic middle men took the rest. Our finished good price went up almost 15% between final full BOM guaranteed CM quote and production. The best thing to do for situations like this is cut off funding real soon and use some of your extra money to hire a engineering manufacturing services consultant....or just take the money and run.

Re:Manufacturing is Hard

[viperidaenz]

They had a stretch goal of 2 million pounds. They got 2.3 million.
You can't say they weren't expecting it.

They also state, many times, they have already partnered with manufacturing house. No soldering party required.

Re:Manufacturing is Hard

[viperidaenz]

They said they already had a manufacturer
They said they already had suppliers with parts in stock

They didn't have 200,000 orders, they had 15,363.

fyi: these motors are not from Digikey, they're from unicorns that shit out raindow jellybeans. They can go from 100,000rpm to -100,000rpm, with a prop attached, in 200ms. There's 4 of them powered from a tiny lithium battery.

Re:Manufacturing is Hard

[TheSync]

t took 4 weeks just to load the Bill of Materials in their system! That was after all the kinks were worked out on our end and with direct relationships with half the suppliers. Now they can finally order the parts which have generally have a 6-12 week lead time.

I think you need to physically move to Shenzhen!

Re:Manufacturing is Hard

[tibit]

$50k for test fixtures? What are you guys testing? I do most test fixturing for precision analog instrumentation in-house and it's way cheaper than that, if you ignore the value of my time spent designing it and doing software tooling to support the fixture.

Re:Manufacturing is Hard

[CaptainLard]

it's way cheaper than that, if you ignore the value of my time spent designing it and doing software tooling to support the fixture.

I doubt your boss ignores that time and I really hope you don't ignore the value of your time. And don't forget lost opportunity cost where you could have been refining or iterating your specific product.

Kickstarter = inherent risk

[rsborg]

I really don't like the whining here.

Let's see what happens to the actors involved:

1) Project owners - will now have egg on their face and shouldn't (hopefully) have further options to scam on kickstarter (or gofundme) projects.
2) Contributors - note the title isn't customer or consumer - should be happy they weren't strung along for longer. Some projects simply don't pan out, and this was one of them. Next time ask for credentials or track record before contributing.
3) Kickstarter - Laughs all the way to the bank on their commissions. Will they ever take action against these kind of projects? Sounds like it's detrimental to their bottom line, so probably not likely.

Re:Kickstarter = inherent risk

[bluefoxlucid]

Business impact: damages brand reputation. Business profit source: Nearly 100% contingent on brand reputation, 100% reliant on technological platform.

Re:Kickstarter = inherent risk

[iplayfast]

I understand inherent risk. However there is a difference between inherent risk and being conned. I've backed several projects on kickstarter and have only had a couple fail. These guys lied to us. Said they had a product ready for manufacturing, that they didn't.

Re:Kickstarter = inherent risk

[rsborg]

I understand inherent risk. However there is a difference between inherent risk and being conned. I've backed several projects on kickstarter and have only had a couple fail. These guys lied to us. Said they had a product ready for manufacturing, that they didn't.

Sure, not every project pans out. All of mine have, but most are late (loved my Pebble). However, is there no way for kickstarter to mandate more visibility or tie funds availability to progress?

Re:Sorry OP

[GWXerog]

how are your star citizen ships working out?

Rather well, actually. Thanks for asking. It's far from perfect or finished but there's been nonstop definable progress https://www.youtube.com/watch?...

Probably inability to scale

[allquixotic]

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.

Re:Probably inability to scale

[tibit]

Using an Armitron for fine assembly tasks is far from trivial. These cheap arms have a lot of play and backlash in every joint, and aren't stiff at all. With open loop or trivial control, they are barely good enough to manipulate a Rubik cube. Even then you have to lube up the damn cube first to reduce internal friction, I kid you not. Doing optimal closed loop control on these things requires graduate-level controls knowledge; it's not something a random Arduino-wielding kid will be able to pull off without first learning a lot of hard-core math. You have to be running system identification parallel to the control, as these arms wear in, wear out, and also change behavior as the ambient and internal temperatures change. I've seen this done while first coupling such an arm with a $10k+ motion tracking system. Then the sensors were designed for on-the-arm feedback, and were validated against the motion tracker. And only then could the motion tracker be removed, and the arm operate on its own sensors. The parts for the sensors cost way more than the arm itself and were anything but trivial. We ended up placing several strain gages on the molded parts of the arm, in addition to resolvers, current sensors, etc. The observer required to obtain arm configuration from the sensor data required on the order of a million floating point operations for a single update with a 0.5ms time step. To use it with a controller you need to run both hard-realtime, with 1ms latency from inputs to outputs.

A word to the wise

[OnceWas]

Hardware is hard. Really really hard.

The list goes on, and on.

Even hardware projects with experienced teams can fail. If you see a hardware crowdfunding project, be fully willing to accept that your 'investment' (which is what it really is) is more likely to disappear than result in a finished product.

Title

[Tsolias]

You get what you pay for.

Re:Sorry OP

[halivar]

Bad example. Star Citizen is actually delivering, and has daily progress updates. IMHO, it's exactly how a multi-million $ Kickstarter should be run. Contrast that with a $500,000 video game I backed with much more modest deliverable expectations: not an update in over a year. I'm pretty sure I'm out that money, but I understood that going it. Of the 11+ projects I have backed, it was the only one that turned into a turd. Then again, I try to be careful about what I back.

Re: They're just too dangerous

[GLMDesigns]

They also claim you have a right to free speech. Do we? Hillary says we don't. (See her response on limiting free speech when it comes to insulting Islam) And many college students and faculty are doing their best to limit speech that they don't agree with.

Maybe the Republicans are correct about owning guns. (the right to self-defense was not delegated away)

Crowd funding is not a store, but a gamble..

[modi123]

Even though places like Kickstarter really try to make it look like some sort of store the projects are all gambles. There are a few areas that seem to have it down right (books, comics, etc) and I have had success, but tech stuff? *low whistle* You have to approach those different.

Neal Stephenson's 'Clang' comes to mind.
https://www.kickstarter.com/pr...
http://www.polygon.com/2014/9/...

Re:Crowd funding is not a store, but a gamble..

[edtice1559]

Neal Stephenson at least has a reputation to maintain. A KS where he takes money and mismanages may cost him in his other business areas. For some projects, it's enough money for the recipients just to go hide out on an island somewhere.

Re:Crowd funding is not a store, but a gamble..

[Registered Coward v2]

Even though places like Kickstarter really try to make it look like some sort of store the projects are all gambles. There are a few areas that seem to have it down right (books, comics, etc) and I have had success, but tech stuff? *low whistle* You have to approach those different.

Neal Stephenson's 'Clang' comes to mind. https://www.kickstarter.com/pr... http://www.polygon.com/2014/9/...

Kickstarter has a reputation to maintain as well. While they may not promise anything in the fine print, if enough people get screwed and request a chargeback form the credit card company then the card issuers may decide to stop serving KS; even if no money gets refunded. In auditor, at some point a court may rule that despite KS' declaiming any responsibility they indeed do have some and order them to refund money.

Drones are so 2013

[Moof123]

Drones, meh.

Re:Drones are so 2013

[truck_soccer]

I remember when they were called quadrocopters and "drone" was relegated to military grade unmanned aircraft. Now get off my airspace!

Re:Drones are so 2013

[Viewsonic]

Hobbyists and actual stores call them Quadrocopters. It's mostly media that didn't want to put that into print and thought drone was good enough that did this. Or the OP in this case.. None of those linked stories even call it a drone, they call it a gadget.

Comment from youtube

[Tough Love]

Comment from a youtube unboxing video:

So, basically, it isn't autonomous, it doesn't swarm, it has a flight time of less than five minutes, it can't even save videos to its micro SD card and it's only slightly more intelligent than its backers. It has less functionality than a Hubsan X4 H107c and it's six times the price. Awesome, I bet you're delighted.

I'd be interested in hearing a founder response to this.

Re:Comment from youtube

[viperidaenz]

Probably something like "We had all these awesome ideas and thought "it's just software, we'll hire someone do build it when we get funding" so we figured we'd lie to everyone and tell them it's all figured out, all we need to do is pay the manufacturer. Turns out that shit is actually hard."

Re:Comment from youtube

[viperidaenz]

".... so instead, once we realised this, we took the rest of the money and got the fuck out of dodge."

Vaperware

[sdinfoserv]

It's pretty simple people - stop pre-paying for things. Video games, devices, anything... If it's not ready to be shipped or you can't walk out the door with it, don't hand over your money.

Re:Vaperware

[viperidaenz]

I think it's similar to vapor

Backing anything on KS is a Game of chance.

[truck_soccer]

Should be considered gambling.

I have run 6 Kickstarters so far...

[sbaker]

My background:

I've run 6 Kickstarters with my wife to launch and expand our family business. The first project failed to make goal because we didn't understand that Kickstarter doesn't deliver an audience. We learned and the next four similar projects succeeded spectacularly - and now we have a viable business - with zero debt and nobody owning a share of our business but us. We have lots of very happy customers, lots of expensive equipment - and around a thousand very happy supporters. We also had one attempt to diversify into a different market which failed to make goal.

Kickstarter is a very powerful thing for people like us. We were able to start with $100 and a crappy PC - and now we earn enough for one of us to give up the day job - and we'll likely grow until both of us are working it full-time.

So it's worthy of trying hard to keep it alive. It creates jobs and gets innovative products to market without the need to deal with bankers and all the horror that goes with that. It allows customers and product designers to work together. When it works, everybody wins.

But it's clear that these million dollar failures (with accusations of fraud, etc) have to stop - because they make the news and kill the entire beautiful concept of crowd-funding.

My feeling is that backers should avoid pushing too far above the "project goal" for a persons' first project. If they ask for $15,000...maybe let it ride to $25,000 - but then pledge no more. But on a second or subsequent project, when the business has succeeded at what they proposed - more or less within the estimated time - then let them earn a fortune the second time around.

Meeting goal SHOULD be enough to get a new business started...and after pushing through that first production run, we all learn a LOT. On the second time out, we know the ropes - and can be trusted with more money.

IMHO, Kickstarter should create a two-tier system - in tier #1, projects have to justify every penny they'll spend in mind-numbing detail - and they should be limited by KS themselves to 200% of that goal or $50,000 - whichever is greater.

When a project owner has successfully delivered on a tier #1 project, they should be released from probation and allowed to grow their business with either a new project - or a re-run of the previous one, but without the $$$ caps. Backers of the tier #1 project should be encouraged to leave feedback on the subsequent project without having to pledge against it.

I'd also prohibit "backer-only" updates...they allow bad projects to hide terrible news from the outside world - and muzzle their backers from commenting adversely.

    -- Steve

Re:I have run 6 Kickstarters so far...

[twotacocombo]

IMHO, Kickstarter should create a two-tier system - in tier #1, projects have to justify every penny they'll spend in mind-numbing detail - and they should be limited by KS themselves to 200% of that goal or $50,000 - whichever is greater.

Yeah, but they won't. They make 5 cents on the dollar, so how would it benefit them as a company to artificially limit revenue? Even with the occasional bad press, it's quite apparent people are still willing to shovel money into the machine.

Re:I have run 6 Kickstarters so far...

[iplayfast]

The problem isn't that they failed. The problem is that they lied about their product. They said they had a working prototype. They showed a video of it working. They had none of it.

I've backed some projects that failed, and didn't mind, I knew from the outset that it was an iffy project but I liked the concept and wanted to see it developed. The project was supposed to be a slamdunk, deliverable in 6 months.

Re:But but but but

[sbaker]

I agree that we are closing in on a time when perhaps people can make stuff for themselves...and in the case of software projects, we're don't have "manufacturing costs" anyway - once your software is "developed" and "tested" - you're done.

But we somehow need to pay people who are smarter (or more persistent) than we are to design those things...to slog through the 43 failed prototypes...to write the code, to promote the idea...and a Kickstarter is as good a way as any to make that happen. I've paid for several Kickstarter projects where the results of the projects are given away for free whether you pledged or not...but without the pledges, the work can't happen - so in a sense that doesn't matter.

      https://www.kickstarter.com/pr... - is a great example of that.

Earning money in an environment where people make their own physical objects demands a system like Kickstarter to pay for detailed design to get done.

Secondary markets for crowd funding

[TheSync]

There should be a "secondary market" build into crowd funding platforms.

Imagine you put $150 towards a crowd funded drone. A year goes by, and you are getting nervous, so you can sell your $150 slot for $100 cash to someone else. Or if it starts to look like the product is going to be awesome, someone may offer $200 for your slot.

There should be a "short market" as well. You offer a $140 slot to someone else for a $150 drone. Then if the drone doesn't get built, you keep the $140. If the drone does get built, you have to pay the $10 difference to deliver the drone to the person whom you offered the slot to.

And there should be various kinds of crowd fund slot options, including timed ones.

Re:High quantity manufacturing not more cost than

[U2xhc2hkb3QgU3Vja3M]

You only have 500 units to make, you use a commercial-grade laser cutter and CNC router. Let's say it takes one year to make all 500 units.

You have 150K units to make:
- you use the same setup and ask your backers to wait up to 30 years to get their unit
- you multiply your prototype manufacturing setup by 30 to be able to ship them all within one year, hoping you can increase your team in size 30 times with everyone knowing the product as much as needed to do the assembly. This will require more detailed assembly documentation, etc.
- you use a real company for the manufacturing but in the process you change the fabrication method, you may need to have custom tooling done, your costs go way up.

Re:High quantity manufacturing not more cost than

[Euler]

If you are using a low-volume, low setup-cost process like CNC or 3D-printing, then you have to consider the higher cost per unit (marginal cost) due to the time spent on the machine. You are paying rent on that expensive machine, and the time your parts take to build are directly correlated to that. Divide your engineering costs and other fixed costs over that small number, and you have a really expensive product.

Buying 30 parallel setups (or even renting them) becomes prohibitive very quickly (how many machines can you buy, or rent time on, who will operate them?)

A high-volume process has high tooling charges (molds, die cutters, etc.) for faster processing times (less time renting the machine per part.) But it will never be more expensive in the long-run unless there is something very peculiar about the geometry of the part being made. If that is the case, you have a problem and should reconsider what you are designing and/or doing overall.

Considering the expected volumes, this should have been considered from day 1. If the break-even on this was beyond a few hundred units, then something is very wrong and it was doomed from the start.

beware of unexpected expenses

[dsoodak]

This is just as much a cautionary tale for those thinking of RUNNING a crowd-funded project as it is for people buying into one. I wrote the libraries for an arduino-based robot where the engineering wasn't too complicated (an accelerometer, gyro, piezo, IR sensing/com, charging circuit, 2 motor PWM circuits, & half a dozen neopixel LEDs), and there were already 4 fully functional prototypes before the Kickstarter even began. However, it still ended up costing at least 50% more than expected to manufacture each unit.