Slashdot Mirror
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.
It's like The Producers, only with computers.
I smell a remake.
If Slashdot were chemistry it would look like this:Cadaverine
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!)
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.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
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.
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.
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.
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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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.