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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."
I presume they'll be releasing into the public domain all their research notes, designs, prototypes, etc?
They can't license this tech to some bigger company? If the product had that much attention being producd why wouldn't some larger audio company want in on it? Unless of course it didn't deliver what the company promised and that is the real reason it's gone.
Sent from my TARDIS
Oh-shit!
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.
Yea! Lets laugh at people who lost money! It doesn't do anything to make our lives better. .
Okay.
HAHAHAHAHAHAHA
Sig Follows: "Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself." -- Mark Twain
Without any AI technology this was doomed to fail.
Yea! Lets laugh at people who lost money!
Looks like we found one of the suckers who backed this campaign. Hahahahahahahaha!
So much butthurt. Do I need to call the waaaahmbulance for you?
Crowdfunding is like an ICO. It's a way to avoid the critical eye of sane financial investors, and instead attempts to get funding from the least qualified people.
Imagine if Sennheiser started selling claims to future headphones they haven't yet developed. Consumers would rightly laugh at them. A company is expected to figure the financials to deliver a product. If they can't do that without crowdfunding, it's a strong sign the idea is shit, and they can't get traditional funding.
People are dumb and deserve to be laughed at.
Deal with it. You invest a certain amount of money, there may be a pay-off in the form of a product that would otherwise not have existed, but there may also not be a pay-off. Stop complaining.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
Two idiots that do not get it in a row. Special, even for /.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
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.
Weirdly enough, I know these founders. They were great people, hard workers, and smart. I got to mess with the prototype a bit and it was pretty incredible; as acoustic engineers they were amazing people.
But I never shook the feeling that it wasn't going to work. Where did it go wrong?
1) Ossic got the tech working, but that's not enough to build a successful business. It needs the right product-market fit. The problem I had with their business was it was predicated on the hypothesis that VR would take off creating a market for them to fill. It has not, and their business floundered. Even if it did take off, a game developer would have to build their audio portion of the game around what their system offered for it to provide the full experience, so it was also predicated on developers designing for their headset. THEN people would buy it. That's a tough sell. When VR floundered, they tried to re-position the tech, but it didn't have a good application outside of VR gaming.
2) Design costs - product engineering always costs more than you think. Always, and if you're not experienced developing hardware it's often 5X what you expect it to be. THis is the hard part with crowd funding: people budget assuming the gross margin on the hardware at scale, but it's the ramp to gross margin (engineering, prototypes, re-engineering, test lots, first batches, then the working capital cost to develop inventory to deliver at scale) that hardware projects die. Ossic's folk are actually quite experienced at product design, but it's in the operational and budgetary side that can be difficult.
I like these guys, they did the best job they could and did make an interesting tech. It's sad to see folks with such passion and heart go down.
At least the guys didn't just leave an almost blank webpage with the word "penis" on it or something.
And that his post isn't even worthy to insult.
Yes. Not exactly hi-fi though.
Copper? Audiophiles do it with silver.
I remember 3D audio being used on in music and theater sound effects back in the 90's. This is not new tech at all, except for the addition of making the audio source track with the image. I can see how this could be a real problem, especially when a SFX of any duration is triggered then has to follow an image's location in the game.
Republican leadership = Idiocracy
And you have to identify your custom pair of headphones by a blockchain...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
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.
I didn't back this, but I have to say I couldn't be too mad about this folding, as it was a reach to begin with - you don't back moon shots expecting every one to fly. You just back the ones you want to see try and enjoy whatever success you find.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
This. It's high risk very low reward.
One of the child comments mentions "if you can't get VC money then your idea is likely beyond crap" which is silly. Most VCs aren't interested in one-off hardware ideas. They don't have the explosive growth that's attractive to VCs. Hardware is hard, and I think someone needs to push for crowdfunding to involve more than maybe getting the product at a slightly-below retail price, or nothing. Laws need to be changed, but give these people stock in the resulting company. They're literally funding it...
No, son, we do it with platinum.
Oh, wait. Shit. I gave our secret away.
Jason Van Patten
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.
The problem is those that pledged money by crowdfunding are the ones holding their dicks, not the company. The assets, the technologies, etc., this small startup created in the short time they were around *will* be sold off. Creditors will get their cut of *that* revenue, but the peons on Kickstarter and Indiegogo are left with less than nothing.
Oxygen-free Silver with a Special crystal structure
The dangers of excessive individualism are nothing compared to the oppressiveness of excessive collectivism
Without debts? Without responsibility? By working on what they wanted for as long as they were able to do so? By having probably learned a lot thanks to having enjoyed the most appealing version of the best possible learning proceeding (= momentarily tough conditions without relevant long-term consequences, a bit of fear and stress but nothing too serious)? I have no words!
Custom Solvers 2.0 = Alvaro Carballo Garcia = varocarbas.
I mean, the same thing is true for VCs who invest in new/start up businesses. They are also the ones holding their dicks as they have no return on their investment.
Again...think of crowd funding like doing a VC investment, in terms of risk...It has a high-likelihood of failure.
However, unlike doing a VC investment...the rewards are often pretty low...you simply get the product you paid for. Not the large pay outs or ownership interest of a company that could be worth a lot of money.
Not really. Most VCs are looking for unicorns - companies that can reach a valuation beyond $1 billion. If you cannot reasonably build a market case to achieve that (and being a niche 3D headphone would not come anywhere close to that, given the ENTIRE headphone market is only worth $17 bilion), then 99% of all VCs will ignore you. No matter how good your idea or how well-developed the technology.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The good thing about crowdfunding is that there's no real collateral damage if the venture fails.
Sure the people who buy in because they like the idea, and want the finished product are on the hook what amounts to disposable income. The folks developing the product don't need to go into hock to fund their vision. There's no bank holding the bag in the event of default.
Seems like a pretty good setup to me.
An investor is someone who provides capital in return for a share of the company.
On Kickstarter you are NOT an investor, unless they are offering shares of the 'company' in return.
You are just an unsecured pre-order client, or donator, depending on what you choose to do.
The most obvious difference is profit share, why on EARTH someone would give captial investment without any form
of profit share agreement in such a case is... special?
The issue I have with Crowdfunding is that it is a High Risk Low Reward investment,
That is kind of the point of Crownfunding model. A lot of people risk a little money, and when it pans out, they get their bits, and if it doesn't, no big deal, because it is a RISK.
This is a poor mans version of venture capital. If you want the rewards of success for venture capital, then you'll have to be willing to risk the kinds of money those people invest. Most people don't have the money or the skills to walk a high risk investment to the reward stage, but want to participate "early" in a good idea. Crowdfunding is exactly that.
Money people can afford to loose.
Exactly. If you can't afford to lose the money, save it for when product is actually shipping, or ... find a similar product that works well enough. Personally, I won't invest in concept dreams, but will if they have working prototypes but need capital to fund low cost manufacturing, I will.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
ROTFL.
So, its an investment is it?
Great! Where is the documentation showing that these 'investors' now own part of the company? If enough of them get together they can control it!
Pity it was not a success, then they could all claim a share of profits!
Oh, wait, there is none, as it is an unsecured pre-order. At best. Oops.
Yep, I'm trying to keep the bitching on articles down to minimum, but how does this even pass for news? And I'm saying that because major news sources broke the story long before SlashDot, so apparently it IS news. Out of seven reasonable, reachable-goals Kickstarters (Which is supposed to be the verified, trustable projects) I've participated in, ONE delivered what they promised, after one delivered my "Beta Tester Ultimate Package" in a broken state after the product was already being delivered at lower price through their own web-store. Really, it should be big news if a crowdfunded project delivers as promised. But this is also largely by design.
What I have more problems is that all of the crowdfunding projects basically grab your money & disappear going totally incommunicado with no feedback either direction, whether they will or don't deliver the project at the end, if there's any backer-updates at all they will be late and clearly showing their contempt for providing any feedback at all. I can't find the statement now (Was it actually removed?) but I remember Kickstarter stressing this was supposed to be a common journey to create something new. Now they're working exactly like (and, in most cases, worse than) traditional closed up development projects with free funding.
Only one laughing is kickstarter, because they walk away with the money whether investors get the product or not. I don't understand why credit card companies still allow payments to go to kickstarter because they're not buying products, they're buying the hope of a product. Kickstarter really sells mystery bags. Users are told a bag might contain a product they want, they just have to pay full price and they can have whatever is in the bag. If a guy on the street did that you'd laugh, but because it's on the internet you trust it?
my karma will be here long after I'm gone
It's a little bit of this, and a little bit of that, but is neither one or the other.
Crowdfunding has the inherent risk of investments, but the rewards of a sale. As far as legal protection is concerned, it seems to be more under contract law than consumer law, at least going by the legal cases I've seen. Consumer law has only come into it if the project turns out to be fraudulent, and even then, no pledges were refunded.
Seems like you need to approach crowdfunding with an investment frame of mind, and only pledge what you're willing to lose.
No, VCs usually do own parts of the companies they invest in, so if that company goes bankrupt, they get at least something back if something of the company can be sold.
There's a distinction to be drawn between "crowdfunding" (seeking capital to develop a product) and "patronage" supporting the ongoing expenses of an artist. There are niches where crowdfunding can be effective (boardgames, for example), but anyone who crowdfunds an electronic device is a moron.