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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
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.
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.
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.
Deal with it. You give away 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.
FTFY
Invest has connotations of being more rigorous than what I see of most crowdfunding
I am Slashdot. Are you Slashdot as well?
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.
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.