In November, the company behind Europe’s biggest ever Kickstarter project told its backers it was shutting down. The Torquing Group had raised more than £2.3 million ($3.6 million) to fund its palm-sized Zano drone, but after delivering only around 600 of the 15,363 units paid for, the company went into liquidation. Now, with frustrated backers still smarting from their loss, Kickstarter wants to find out what went wrong. The company has hired technology journalist Mark Harris “to write a story about the collapse of the Zano drone project on Kickstarter.”
As it was reported recently, about 9 percent of Kickstarter projects fail, but when they do fail, they fail BIG, it seems.
Nick Statt at the Verge on the Coolest Cooler Kickstarter disaster:
Coolest, the company behind a popular Kickstarter-funded cooler, is now selling its product for $499 on Amazon in an effort to raise enough money to continue producing new units. The news may frustrate Kickstarter backers, who were promised the product in February of this year. Coolest said today it now plans to deliver the last shipment of coolers to Kickstarter backers by April 2016.
In a video uploaded to YouTube, CEO Ryan Grepper said the Amazon sale is to “keep the lights on” and “make certain that every single backer’s Coolest can get made and shipped.” The problem lies in the cooler’s blending motor, which is made by a supplier that’s currently on strike, he said. Coolest has been unable to find a viable replacement.
As I’ve said before, making things at scale is not something you want to take lightly.
User interpol in the comments makes a great point:
Uhh, so $12,000,000 in funding — take off $1mil for Kickstarter fees — divided by 60,000 units is only $200 per unit.
This seems like a vastly underfunded project.
My two successful Kickstarter projects, Bicycles for Our Minds and Charms, Quivers, and Parades both involved two ingredients: paper and ink. Once your project involves electronics and moving parts it takes the complexity to a much higher level.
This doesn’t mean poster and book projects can’t be highly complex. Then can be.
PuzzlePhone is a new project on Indiegogo. It’s a phone with modular parts. It runs Android. And they claim it lasts up the 10 years? No way. Apple just introduced 3-D Touch on the iPhone 6S. There’s no telling where Android is going to be in 10 years (or the smartphone market).
James Vincent at the Verge also notes their flexible funding structure:
Flexible funding can be something of a warning sign on Indiegogo as it means that the campaign organizers will keep the money they raise no matter what happens. Obviously this doesn’t mean that all flexibly funded campaigns are scams, but it’s not always a good look. Puzzlephone says it was “forced” to go with flexible funding as Indiegogo only allows payment via PayPal for fixed funding campaigns. The company notes that it has also already raised funding for R&D, so the Indiegogo money is only for manufacture, shipping, and the product itself.
There’s no way I would give them my money to be a guinea pig. Their goals of being ‘upgradable and sustainable” are admirable (if they’re genuine) but they’re not realistic.
I launched a new Kickstarter project. It’s called The Phoenix Jacket.
I created it because I’m tired of having my iPhone 6 Plus jab me in the leg when I sit down. I’m also tired of trying to put my wallet in either my front OR back pocket. Jeans pockets were not designed for our modern world.
This is the part of my life where I realize necessity really is the mother of invention.
Nearly two years after “the world’s thinnest watch” was supposed to arrive to Kickstarter backers, the project has announced that it’s pretty much done for. It’s a disappointing update in the long saga of the $1 million campaign for CST-01, what was once supposed to be a stylish, 0.80mm-thick E Ink bracelet that displayed the time. The CST-01 project has been detailing its troubles for a few months now, but last week it informed backers that it no longer expects to fill all preorders or to find another company to take over production. It now expects to either liquidate all remaining assets or, if unable to find buyers, open up all designs and distribute and sell off as many remaining parts as it can.
- Do as much work up-front as possible—don’t just prototype your project
- lock down a manufacturer you can partner with if your project gets funded
- calculate the manufacturing costs for the minimum product volume and factor that into your funding goal
- calculate all supply costs
- calculate shipping costs
- factor Kickstarter’s 5% cut
- factor the 3-5% payment processing fee
- don’t make your product at a loss—charge what it costs to manufacture plus a reasonable profit margin
I had to do a lot of preparation before I launched my most recent Kickstarter project. See, getting the money is the easy part. It really is. I’m not saying that because I think money isn’t important. If you produce a great video about a great product idea with great photography and desirable reward tiers, that money will come rolling in.
The catch is, once that pile of money comes in, you have to make it last. You would do best to address all the bullet points above once, twice—shit, make it three times.
I was only dealing with paper and ink with my projects. Producing e-ink watch bands is a whole other world.
In crowdfunding news, states are being proactive on crowdfunding regulations:
In 2012, President Obama signed a law that he called a “potential game changer” for entrepreneurs seeking financing to start or expand a business: Small companies looking for financial backers could advertise their offerings online, and average people — not just wealthy accredited investors — would be allowed to buy stakes in businesses they found promising.
More than three years later, entrepreneurs are still waiting for federal regulators to finish drafting the long-overdue rules that would let that part of the law take effect. Now, state agencies and lawmakers, tired of waiting, are taking action, passing crowdfunding laws and regulations to let local businesses raise money from local residents.
Interesting, but “average” people need to understand the risks in whatever ideas they’re investing in.