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3D Headphone Startup 'Ossic' Closes Abruptly, Leaving Crowdfunders Hanging (npr.org)
An anonymous reader quotes a report from NPR: Ossic raised more than $3.2 million in crowdfunding for its Ossic X, which it touted as the "first 3D audio headphones calibrated to you." But after delivering devices to only about 80 investors who'd paid at least $999 to for the "Developer/Innovator" rewards level on Kickstarter, Ossic announced Saturday it had run out of money -- leaving the more than 10,000 other backers with nothing but lighter wallets.
Ossic, which The San Diego Union-Tribune notes was founded by former Logitech engineers Jason Riggs and Joy Lyons, had excited gamers, audiophiles and other sound consumers by creating headphones that used advanced 3D audio algorithms, head-tracking technology and individual anatomy calibration to "deliver incredibly accurate 3D sound to your ears," according to its funding campaign on Kickstarter. In less than two months in 2016, it was able to raise $2.7 million from more than 10,000 backers on Kickstarter. It raised another $515,970 on Indiegogo. "This was obviously not our desired outcome," the company said in a statement. "To fail at the five-yard line is a tragedy. We are extremely sorry that we cannot deliver your product and want you to know that the team has done everything possible including investing our own savings and working without salary to exhaust all possibilities."
Ossic, which The San Diego Union-Tribune notes was founded by former Logitech engineers Jason Riggs and Joy Lyons, had excited gamers, audiophiles and other sound consumers by creating headphones that used advanced 3D audio algorithms, head-tracking technology and individual anatomy calibration to "deliver incredibly accurate 3D sound to your ears," according to its funding campaign on Kickstarter. In less than two months in 2016, it was able to raise $2.7 million from more than 10,000 backers on Kickstarter. It raised another $515,970 on Indiegogo. "This was obviously not our desired outcome," the company said in a statement. "To fail at the five-yard line is a tragedy. We are extremely sorry that we cannot deliver your product and want you to know that the team has done everything possible including investing our own savings and working without salary to exhaust all possibilities."
It didn't have that much attention. Only 10,000 backers.
Yea! Lets laugh at people who lost money! It doesn't do anything to make our lives better. We are short of a new product that a lot of people may had wanted, some people are out money, who probably could had invested it into an other product that could had come to be.
The issue I have with Crowdfunding is that it is a High Risk Low Reward investment, But it is relatively cheap to get into. So often the money people put into crowd funding is the old equivalent of smoking money. Money people can afford to loose.
However the idea of the product and the credentials of the people, made it seem plausible. However 90% of all businesses fail within the first year. We should know this. That is why there is Bankruptcy protection laws. Because it is to allow people to fail, without having to lose everything.
However, I would much rather see success in such ventures. As I would have a new gizmo that I may want to have, and if the product goes, the company will expand and hire more people to work for it. An overall net benefit.
But screw all this Nerd Economics stuff. Lets laugh at someone misfortune, because they didn't make the best business decision.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Buying (hoping to buy?) a pair of headphones through a crowd-funding site is hardly an investment, unless you believe your headphones will become some kind of family heirloom.
People who "fund" things on these sites are stupid. You are basically giving someone free money in hopes you might get something back someday.
Finding out that a crowdfund collected a lot of money and then disappeared without fulfilling their obligations is like a news alert that Trump tweeted something controversial today. You know it's coming, just a matter of when.
Just because you know something is stupid when you are doing it doesn't change the fact that it is stupid.
And you are very, very wrong. As in you do not understand the model at all. Sure, some investors are this stupid, but many are not. And many get hit by the offer not materializing rarely enough that the overall thing makes a lot of sense. I have about 10 things I invested in, 1 outstanding, 6 nice results, 2 mediocre results, 1 fail. That is a lot better than would be needed to make my investments very worthwhile.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Buying (hoping to buy?) a pair of headphones through a crowd-funding site is hardly an investment...
And that's the problem with crowd funding: People don't understand what they are doing and think they are just pre-ordering a product. You are not buying headphones, you are providing capital to a company to make headphones, and as a thank you, they will send you a pair when they are done. It's a micro-investment but since they are not allowed to reward you with ownership due to government rules (like a regular investor would be), they reward you with a product. People need to understand there is always a risk the company won't make it and they will be out their investment with little recourse.
I browse on +1 so AC's need not respond, I won't see it.
In a real startup, the risk is offset by the possibility of getting a piece of the profits if things go well.
In crowdfunding you accept all of the risk in exchange for none of the reward. Palmer Luckey turns your $2.5 million into $2 billion and you don't see a dime.
People who join crowdfunding are rubes.
Also, VCs and other investors are one step removed in the wants prediction game. They try to predict what other people will want, where crowdfunding backers only need to figure out what they themselves want. Keynesian beauty contests can take you strange places, so this advantage is not small.
The other thing you need to figure out though, is the entrepreneur's ability and willingness to deliver. The crowd does not have an advantage here. Professional investors should ideally be better at it, but they do their share of investing in frauds and failures too. We pay the price for their failures too, in the form of higher prices on the stuff that succeeds.