Author Topic: $3.2 million OSSIC 3D Headphone flop  (Read 4646 times)

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Offline snoopy

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$3.2 million OSSIC 3D Headphone flop
« on: June 05, 2018, 07:42:25 pm »
Check it out.

https://techcrunch.com/2018/05/20/after-tens-of-thousands-of-pre-orders-high-end-3d-headphones-startup-ossic-disappears/

Quote
After taking tens of thousands of crowdfunding pre-orders for a high-end pair of “3D sound” headphones, audio startup Ossic announced this weekend it is shutting down the company and backers will not be receiving refunds.

The company raised $3.2 million across Kickstarter and Indiegogo for their Ossic  X headphones, which they pitched as a pair of high-end head-tracking headphones that would be perfect for listening to 3D audio, especially in a VR environment. While the company also raised a “substantial seed investment,” in a letter on the Ossic website, the company blamed the slow adoption of virtual reality alongside their crowdfunding campaign stretch goals that bogged down their R&D team.

“This was obviously not our desired outcome. The team worked exceptionally hard and created a production-ready product that is a technological and performance breakthrough. To fail at the 5 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.”

We have reached out to the company for additional details.

Through January 2017, the San Diego company had received more than 22,000 pre-orders for their Ossic X headphones. This past January, Ossic announced they had shipped out the first units to the 80 backers in their $999 developer tier headphones. In that same update, the company said they would enter “mass production” by late spring 2018.

In the end, after tens of thousands of pre-orders, Ossic only built 250 pairs of headphones and only shipped a few dozen to Kickstarter backers.

Crowdfunding campaign failures for hardware products are rarely shocking, but often the collapse comes from the company not being able to acquire additional funding from outside investors. Here, Ossic appears to have been misguided from the start, and even with $3.2 million in crowdfunding and seed funding, which they said nearly matched that number, they were left unable to begin large-scale manufacturing. The company said in their letter that it would likely take more than $2 million in additional funding to deliver the existing backlog of pre-orders.

Backers are understandably quite upset about not receiving their headphones. A group of more than 1,200 Facebook users have joined a recently created page threatening a class action lawsuit against the team.

Update: A representative from Indiegogo stated that the figure on their site included the funds raised by Kickstarter, putting total crowdfunding of Ossic X at $3.2 million, not $5.9 million.

 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #1 on: June 05, 2018, 08:03:18 pm »
Kickstarter is not a webshop. What can we say?
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #2 on: June 06, 2018, 12:37:46 am »
" ... 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.”

What a lame excuse for stealing $3.2M.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #3 on: June 06, 2018, 01:07:51 am »
What a lame excuse for stealing $3.2M.
Again, Kickstarter is not a webshop.
 

Offline schmitt trigger

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #4 on: June 06, 2018, 01:09:08 am »
Does anyone know what the success/failure ratio for Kickstarter projects?

The old motto: "Caveat Emptor" certainly applies here.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #5 on: June 06, 2018, 01:14:39 am »
Does anyone know what the success/failure ratio for Kickstarter projects?

The old motto: "Caveat Emptor" certainly applies here.
Caveat Emptor again suggests that you're buying a product. It's more like investing in a company in return for a physical incentive. Investments are more risky than simple purchases. Somehow people want to view crowdfunding sites as shops. Then again, people aren't know for being very sensible when it comes to financial products.
 

Offline EEVblog

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #6 on: June 06, 2018, 01:18:42 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.
 
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Online Cyberdragon

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #7 on: June 06, 2018, 01:30:41 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.

How so? If they squandered it, they basically ripped off/scammed their customers.
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Offline schmitt trigger

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #8 on: June 06, 2018, 01:30:56 am »
Does anyone know what the success/failure ratio for Kickstarter projects?

The old motto: "Caveat Emptor" certainly applies here.
Caveat Emptor again suggests that you're buying a product. It's more like investing in a company in return for a physical incentive. Investments are more risky than simple purchases. Somehow people want to view crowdfunding sites as shops. Then again, people aren't know for being very sensible when it comes to financial products.

Correct. It should be Caveat Investor, but I don't know the Latin word for investor  ;)
 
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Offline EEVblog

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #9 on: June 06, 2018, 01:36:24 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.

How so? If they squandered it, they basically ripped off/scammed their customers.

Err, if they genuinely tried (and it sounds like they did, as they delivered some units), and they are simply hopeless at running a business then that's not a crime, nor is it stealing.
They just sucked at running the business and delivering, there are countless genuine people starting Kickstarters every day that don't have a clue what they are getting into, or get caught out by unexpected stuff. That doesn't make them scammers etc
If you have evidence that that deliberately set out to squander the money, or ran off with the money etc, then present the evidence, otherwise the indications are they simply failed at their business, happens every day.
And producing hardware has lots of pitfalls. I could list a dozen ways that even a reasonably competent management team could fail on a project like this.
« Last Edit: June 06, 2018, 01:41:05 am by EEVblog »
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #10 on: June 06, 2018, 01:49:04 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.

May be a little different :)

They wanted to start mass production and they estimated they need $100K. They've got 32 times more and they still didn't do it. Where did the money go? Paid themselves good salaries for few years while sitting there doing nothing?

Investment is not a donation. Investors expect something in return. If this was a public company, they would be sued by investors for the investor fraud.

 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #11 on: June 06, 2018, 01:59:25 am »
May be a little different :)

They wanted to start mass production and they estimated they need $100K. They've got 32 times more and they still didn't do it. Where did the money go? Paid themselves good salaries for few years while sitting there doing nothing?

Investment is not a donation. Investors expect something in return. If this was a public company, they would be sued by investors for the investor fraud.
It may surprise you, but this is exactly what often happens. Companies get more money than they expected and start expanding and complicating their goals to the point things become unattainable. This is even mentioned in the text they posted; the stretch goals apparently cost them an excessive amount of work which bogged them down. Having a lot of money isn't necessarily an advantage. Running a lean operation with simple goals is often a much better idea for young companies and sometimes inexperienced people.

Besides, you're just handwaving "good salaries for few years while sitting there doing nothing". Unless you have more information, that's just taking potshots from behind your keyboard.
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #12 on: June 06, 2018, 02:51:26 am »
Besides, you're just handwaving "good salaries for few years while sitting there doing nothing". Unless you have more information, that's just taking potshots from behind your keyboard.

Am I?

" ... crowdfunding campaign stretch goals ... bogged down their R&D team".

Sounds like big salaries (must've eaten up $3.2M) and apparently no results.

 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #13 on: June 06, 2018, 02:58:31 am »
Am I?

" ... crowdfunding campaign stretch goals ... bogged down their R&D team".

Sounds like big salaries (must've eaten up $3.2M) and apparently no results.
How does the quoted text lead your conclusion without taking a family sized load of narcotics?
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #14 on: June 06, 2018, 03:15:33 am »
Am I?

" ... crowdfunding campaign stretch goals ... bogged down their R&D team".

Sounds like big salaries (must've eaten up $3.2M) and apparently no results.
How does the quoted text lead your conclusion without taking a family sized load of narcotics?

It's called logic. You may try it some day.
 

Offline edy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #15 on: June 06, 2018, 03:48:03 am »

Investment is not a donation. Investors expect something in return. If this was a public company, they would be sued by investors for the investor fraud.


When you back a project on Kickstarter and IndieGogo campaigns, you are *NOT* a traditional investor. Exactly what you said... This was not a public company, and the people backing the project were not real investors. If it was, there would be much more over-sight and transparency by investors or their representatives, controls in place to make sure they are meeting the goals and not squandering money or mismanaging it, and probably some intervention way before they went completely bankrupt.

That is why the whole premise of crowd-funding these gigantic corporate products is flawed and why it is so easy to abuse.

What could have happened is this.... The money from the earlier Kickstarter and IndieGogo backers went to pay off the REAL venture capitalist investor who had legal leverage and inside access to see where things were going and backed out after seeing it was going to end up flying off the edge of a cliff. Even big venture capitalists lose money, but they are not idiots... they would not give money to someone without some legal recourse being available in case things start going sideways. If there was still lots of money in the bank and they saw things weren't going to happen, they would start a legal process to pull out their money before it got completely burned up. Since they never had anything legally binding them to pay back Kickstarter/IndieGogo backers, guess what... they are last to collect after bankruptcy proceedings after everyone else gets their share first.
« Last Edit: June 06, 2018, 03:51:19 am by edy »
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Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #16 on: June 06, 2018, 03:50:25 am »
It's called logic. You may try it some day.
I'll ignore the snark for now. It says that the additional goals tacked onto the project slowed down development and hampered their original product, which is consistent with their story that they've suffered from what's essentially fatal feature creep. It's also consistent with the notion that complicating a project and taking the focus away from your original product can cost you in the end. How does that lead to the conclusion they sat on their hand and paid themselves for doing nothing? That's pretty much the opposite.

Additionally, they actually supplied a small number of headphones. This means they developed and manufactured a product. According to the people who tested the product it's not shit, and reports are quite favourable. They probably jumped through all the certification hoops too. All that is no small feat. If you want to take the money and run you come up with some lame excuse without ever producing a result.
 

Offline Dave3

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #17 on: June 06, 2018, 06:02:35 am »
How about some 3D headphones from OSSIC?

Total of $6 million raised from Kickstarter, Indiegogo and others will vaporise per techcrunch. (EDIT -Over $3  million from Kickstatrer and Indegogo total & over $3 million from "investors").

https://www.kickstarter.com/projects/248983394/ossic-x-the-first-3d-audio-headphones-calibrated-t
https://www.indiegogo.com/projects/ossic-x-immersive-3d-audio-headphones-vr#/
https://www.ossic.com/
http://www.sandiegouniontribune.com/business/technology/sd-fi-ossic-failure-20180521-story.html
https://www.head-fi.org/threads/buy-ossic-x-or-not.799484/
https://techcrunch.com/2018/05/20/after-tens-of-thousands-of-pre-orders-high-end-3d-headphones-startup-ossic-disappears/


_________________

A Very Sad goodbye.

Hello Backers,

It is with an extremely heavy heart that we must inform you that OSSIC is shutting down and will be unable to deliver the remaining OSSIC X headphones.

The OSSIC X was an ambitious and expensive product to develop. With funds from the crowdfunding campaign, along with angel investment, we were able to develop the product and ship the initial units. However, the product still requires significantly more capital to ramp to full mass production, and the company is out of money.
Over the last 18 months, we have explored a myriad of financing options, but given VR’s slow start and a number of high profile hardware startup failures, we have been unable to secure the investment required to proceed.
This was obviously not our desired outcome. The team worked exceptionally hard and created a production-ready product that is a technological and performance breakthrough. To fail at the 5 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.

The OSSIC X was started as a campaign to create immersive and interactive audio. One of the biggest questions was, in a world of small earbuds and phone speakers, do people really care about good audio? Are they truly interested in the next generation of 3D audio? The success of the campaign was a resounding “YES” that has had a ripple in the audio industry.
We will forever be grateful to you and the team members, investors, and business partners who believed in us and helped give our dream a fighting chance. We were able to achieve some amazing things in an industry that was, and still is, ripe for innovation. Your voice of support throughout these past 2 years will continue to bring change to the industry, as bigger players than us refocus their efforts into better, smarter, and more immersive audio.

Thank you for all of your support, and we sincerely apologize that we could not deliver all of the headphones.

- OSSIC Team
 
---------
More information:
What was accomplished on the project and how were the crowdfunding funds used?
After spending over 2 years working on the Research and Development of the OSSIC X we were able to complete the development of the hardware and initial versions of the software.
The headphone went through 5 proof-of-concept level builds, 4 engineering/factory builds, and 1 pilot production build—where we completed 250 units and delivered the first ones to those backers on Kickstarter who pledged for the innovator edition reward.
It took, at times, 20 people with expertise in software, electrical, firmware, mechanical, acoustical, signal processing, and sound engineering, as well as UI/UX, industrial design, and program management to develop and ship those units.
The crowdfunding money we received played a huge role in allowing us to get as far and accomplish as much we did – funding half of the R&D and production costs needed to bring the product to life.
 
Why was this so expensive to develop?
Inventing something new while also developing complex hardware is expensive. The addition of stretch-goals to add mobile support increased the software scope from two operating systems to five, added an incredibly powerful 32-core processor onboard the headphones for processing, and required us to enter into substantial business development with mobile manufacturers to support multi-channel connectivity. It ultimately doubled the size of our development.
The unknowns that come from grounds-up development with so many new features ultimately stacked up to create delays and cost overruns.
What made this project so exciting, and ultimately ended up being its Achilles heel, was the complexity and scope. This project was complex because it had 3 large categories of development, all with new and unique elements: 1.) Hardware, 2.) Software, and 3.) Audio Ecosystem.
Hardware new/unique/different features: A typical headphone would only have 2 playback transducers, but the X has 8 playback transducers, 6 microphones, and multiple sensors. In addition to the complexity of more elements, head-tracking was a new feature, yet the trackers on the market were too slow. Thus we needed to upgrade mid-stream to achieve smooth tracking.
The software was complex because it required new algorithms to dynamically incorporate sensor information and beamform across the playback transducers. Additionally, with the stretch goals, we needed to support 5 different platforms: embedded-DSP, Windows, macOS, iOS, and Android for both UI and custom signal processing. A typical headphone has no software at all. The initial headphone units successfully incorporated custom algorithms and played back over Windows, macOS, and 3.5mm platforms. The iOS and Android app were created and were were on track to be finalized after working through the UI/UX with Beta backers on Windows and macOS.
Additionally, the audio ecosystem itself is complex as 3D audio continues to rapidly changing/developing. VR, gaming, film, and music workflows are different, with tools and formats varying across sectors, and VR/AR workflows were still being defined as we developed. 3D audio information is present in much of the media, but remained inaccessible to the user. Our goal was to ensure compatibility with as many devices as possible, and to give the best experience required ecosystem development and exploration of developer tools. To that end, developer tools including a VST plugin and FMOD Plugin were created, and released in beta to select developers.
 
How have other companies crowdfunding complex hardware projects succeeded?
Most crowdfunded companies working on similar complex hardware such as Oculus, and Doppler labs have raised >$10 Million in other investment before delivering on their projects.
As another reference, Creative labs claims to have spent over $100M working on 3D audio. http://www.businesstimes.com.sg/companies-markets/creative-brings-3d-sound-to-headphones-after-us100m-rd
 
Why can’t you ship the remaining units?
We were not able to secure additional funding, and are out of money. It would take more than 2 million additional dollars to complete mass production of the remaining backlog.
 
What about other investment?
OSSIC raised substantial Seed Investment from sources other than crowdfunding. Crowdfunding represented about half of total funding.
Initial investment traction was strong, but the slower than expected adoption of VR and the failure of several high-profile crowdfunded hardware companies made it challenging for us to raise subsequent financing.
We explored over 150 investor partnerships in total. While we had some we thought were going to come together, ultimately they did not materialize.
 
What about StartEngine?
In February of this year, OSSIC launched a crowdfunded equity campaign on the StartEngine platform, hoping it could raise the initial funds to start mass production, and be a catalyst for broader investment. While we secured $130k in commitments, it was not enough interest for us to be able to move forward into production and so we ended the campaign without taking the funds.
 
What about OSSIC the company?
The company is shutting down effective immediately. We have a very dedicated team up folks who have remained for the last 6 months, working for free, doing anything they could to try and make the company succeed. Through their efforts we were at least able to ship the innovator units.
 
Can’t someone else build the product?
We engaged with many larger companies who had interest in our technology, but ultimately none of them had both the appetite and ability to make the required investment to bring the product to market.
 

Offline Dave3

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #18 on: June 06, 2018, 06:03:18 am »
Recently, Ossic tried to raise capital on "StartEngine", which publishes some dodgy offering memos (OM) which are worth reading.

In the OM financial statements, Ossic claims to have blown through about $4.3 million in 2015 and 2016 combined. Those expenses were divided roughly: 50% marketing (!!!), 25% admin, 25% R&D.

As Ossic raised over $6 million, I suppose the remaining millions were burned in 2017 and 2018 . . .

https://www.startengine.com/ossic
https://d19j0qt0x55bap.cloudfront.net/production/startups/ossic/documents/offering_details/Ossic_Offering_Document_V5.pdf
https://www.sec.gov/cgi-bin/browse-edgar?CIK=0001731373&owner=exclude&action=getcompany&Find=Search
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #19 on: June 06, 2018, 06:13:38 am »
It says that the additional goals tacked onto the project slowed down development and hampered their original product, which is consistent with their story that they've suffered from what's essentially fatal feature creep.

Right. Which means that mass production hasn't even started. Thus, there was no money spent on production. All the money were spent on R&D. Generously assuming office at $10K/month = 300K and $500K for equipment, it's still $2.4M left to be spent on salary. Which means that they paid most of the raised money to themselves as salary.

We cannot know if they were just sitting there doing nothing, or they worked hard trying to design something. All we know, they failed to produce marketable design. If you hired someone and they produced nothing for 3 years despite of your regular payments, would you think of these contractors as honest people who sincerely and heroically did their best? Or would you think of them as bilks who robbed you?

Of course, they may have blown the money on advertising, or they may have paid their debt as edy suggests. However, this would be even less appropriate.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #20 on: June 06, 2018, 06:37:45 am »
Right. Which means that mass production hasn't even started. Thus, there was no money spent on production. All the money were spent on R&D. Generously assuming office at $10K/month = 300K and $500K for equipment, it's still $2.4M left to be spent on salary. Which means that they paid most of the raised money to themselves as salary.

We cannot know if they were just sitting there doing nothing, or they worked hard trying to design something. All we know, they failed to produce marketable design. If you hired someone and they produced nothing for 3 years despite of your regular payments, would you think of these contractors as honest people who sincerely and heroically did their best? Or would you think of them as bilks who robbed you?

Of course, they may have blown the money on advertising, or they may have paid their debt as edy suggests. However, this would be even less appropriate.
They sent out a few hundred sets. That's bound to be more expensive than "no money". We can guesstimate some very broad figures, but we really don't have a clue. And sure, a large part is going to be salaries. People in developed nations are expensive. Very expensive. Just looking at the cost of production when you're developing something new isn't sensible. But in all reality, we don't have a clue of what they spent on what and whether that was sensible or not.

They didn't produce nothing. Claiming that is framing what happened to fit a narrative. They produced and shipped a working design. A pretty decent working design apparently, and hundreds of shipped units. I'm not saying people shouldn't be disappointed because they have every right to be, but that seems to take it from "crooks that run with people's money" to "people who were maybe incapable of running a company properly but produced a product that coincided with the product what was promised". And again, Kickstarter isn't a webshop. People know what they got into, or should have.

You didn't lose any money to Ossic, did you?
 

Offline janoc

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #21 on: June 06, 2018, 06:46:56 am »
I think that the fatal mistake was the idea that the uber expensive and complicated head-tracking they were building (not sure why it was so difficult to build - a decent 3DOF tracker is a $2 IMU these days) was something that would be somehow beneficial for the virtual reality market (it is useless elsewhere, there is no "360 audio" market).

They forgot one thing - every head mounted display they wanted to use this with contains such tracker already and the headphones would have to synchronize with it, otherwise you could see one thing but hear another - very disturbing, especially if their IMU started to drift over time (the HMD IMUs are constantly being corrected by the optical tracking). The way this is usually done is that the 3D engine takes the head pose from the tracking system and runs the sound mix for the 3D environment through an HRTF (or some other model), producing a signal that any "dumb" headphones can interpret - for a tiny fraction of the cost of the OSSIC hardware.

So they spent ton of R&D time and money on a completely useless feature, IMO - the same could have been achieved by writing a plugin/driver for the 3D engine to generate the sound signals for their multiple transducer cans directly instead of trying to embed this complexity in the headphones themselves and to spatialize the sound there. The 3D engine would have to be adapted for this anyway - if for nothing else then to disable the sound spatialization meant for the "dumb" headphones ...

To me it has always sounded like a perfect example of the engineering maxim - the question is not whether you can do it but whether you should.
« Last Edit: June 06, 2018, 06:54:57 am by janoc »
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #22 on: June 06, 2018, 08:07:48 am »
You didn't lose any money to Ossic, did you?

No.

What they did is more or less trivial - you track the position of the head and adjust the sound signal accordingly. All the mathematics is already well known. Does it really take several $M and 3 years of R&D? If you were tasked to design the thing they did, how much money and time would you budgeted?

People gave them money to produce cool headphones, they used this money for "R&D" and they haven't even thought of fulfilling their promises. IMHO, this is a legal way to steal people's money. However, if a scam is legal, it doesn't make it less of a scam.

 

Offline EEVblog

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #23 on: June 06, 2018, 08:19:15 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.

May be a little different :)

They wanted to start mass production and they estimated they need $100K. They've got 32 times more and they still didn't do it. Where did the money go? Paid themselves good salaries for few years while sitting there doing nothing?

Err, the whole point was to start a company based around a product, the same with the vast majority of Kickstarters, because that's what Kickstarter is for!

When you get more company seed money than you expected, thing change, your goals change, and in this case they got outside VC investment which meant they were likely forced to change goals and direction.

You can easily burn that cash when you are expected by your VC investors to start and manage a "real business", you get a real CEO, you get extra engineers and marketing people etc. Add expensive tooling and other R&D expenses on top of that and the money can go very quickly.

Look at what happened to Jeri Elllsworth's CastAR. Once the did their KS the investors came in and changed the goals of the company, they didn't deliver their original product (but they did give refunds) and ultimately the company flopped and went bankrupt.

Quote
Investment is not a donation. Investors expect something in return.

Yes, they expect a return, but shit happens, and sometimes you are left with nothing.

Quote
If this was a public company, they would be sued by investors for the investor fraud.

What fraud took place? Please provide evidence.
 

Offline EEVblog

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #24 on: June 06, 2018, 08:22:14 am »
To me it has always sounded like a perfect example of the engineering maxim - the question is not whether you can do it but whether you should.

I'm about the release a video on Wi-Charge which is kinda like that. A ridiculously complicated system to do something that can be mostly solved with a much simpler solution. The product won't win in their originally intended market space.
 

Offline EEVblog

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #25 on: June 06, 2018, 08:24:44 am »
We cannot know if they were just sitting there doing nothing, or they worked hard trying to design something. All we know, they failed to produce marketable design.

They shipped several hundred units, they had something that worked, they did produce something.
 
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Online dunkemhigh

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #26 on: June 06, 2018, 08:32:57 am »
Quote
I'll ignore the snark for now.

Do you expect everyone else to ignore your snarks?

Quote
How does the quoted text lead your conclusion without taking a family sized load of narcotics?

Perhaps you might like to treat others as you'd want to be treated by them, and then deeply entrenched opposed positions might be less likely to occur.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #27 on: June 06, 2018, 08:37:11 am »
No.

What they did is more or less trivial - you track the position of the head and adjust the sound signal accordingly. All the mathematics is already well known. Does it really take several $M and 3 years of R&D? If you were tasked to design the thing they did, how much money and time would you budgeted?

People gave them money to produce cool headphones, they used this money for "R&D" and they haven't even thought of fulfilling their promises. IMHO, this is a legal way to steal people's money. However, if a scam is legal, it doesn't make it less of a scam.
You seem to be happy to wave the complexities of developing a technical product away. The irony is that that's exactly what trips up a lot of crowdfunded projects up. A lack of experience means fresh companies grossly underestimate what's involved, leading to the almost traditional delays and problematic phase between development and production.

I'm not claiming these people did well. I'm not claiming people who pledged money should be happy. However, if you want to call people criminals rather than inept you really need a lot more to go on than a few rough facts and a handful of guestimations. Intent and ineptitude are a world apart.
« Last Edit: July 01, 2018, 02:31:34 am by Mr. Scram »
 
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Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #28 on: June 06, 2018, 08:48:57 am »
Quote
I'll ignore the snark for now.

Do you expect everyone else to ignore your snarks?

Perhaps you might like to treat others as you'd want to be treated by them, and then deeply entrenched opposed positions might be less likely to occur.
I was trying to keep things a bit lighthearted. Apparently opinions vary on how successful that was.  ;D
 

Offline floobydust

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #29 on: June 06, 2018, 08:50:50 am »
3-D audio and how the brain locates sounds is really interesting, but still doomed to fail.

QSound Labs developed by Archer in the 80's, they used DSP to encode music with the outer ear's acoustic transfer function adding spatialization.
Madonna, Sting and other artists mastered music encoded with QSound and I found it worked well as an added effect, i.e. a sound above/below/behind you if you had a decent stereo system and were patient to the experience.

It failed for two reasons:
It got hyped for a Superbowl ad in a world's first "3D sound" commercial which of course did not work with a single TV speaker. It needed stereo at least and response above a few kHz.
So the stock plummeted after the flop - nobody got the 3D effect.

Second, everybody's outer ear is a different shape, we all have different comb-filter response, which is how we localize sounds.

The brain seems to be able to auto-correct, if you hair is longer or wearing a big soft coat (absorbs shoulder diffraction), you can eventually locate sounds despite changes to your "ears" acoustics.

But there is no math to accommodate everyone's unique ear shape. So that needs a solution.
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #30 on: June 06, 2018, 09:05:36 am »
You seem to happy to wave the complexities of developing a technical product away. The irony is that that's exactly what trips up a lot of crowdfunded projects up. A lack of experience means fresh companies grossly underestimate what's involved, leading to the almost traditional delays and problematic phase between development and production.

Perhaps. But marketing is even more important. Without good marketing strategy, a campaign will not even get funded and nobody is going to discuss what they did. There are countless campaigns which don't get funded because they had bad marketing.

These guys were very good at marketing, so they raised money and they keep it. May be, if they were more capable technically, they would do better, may be not. But even as is, they've done remarkably well compared to the campaigns which didn't get any funding.

People who funded them are left holding the bag. Is this because OSSIC are technically inept? Or, perhaps because OSSIC are good  marketers? Go figure.

 

Online coppice

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #31 on: June 06, 2018, 09:35:24 am »
What a lame excuse for stealing $3.2M.

They most likely just blew the $3.2M and couldn't manage the project, and ultimately have nothing to show for it.
Very different to stealing.

How so? If they squandered it, they basically ripped off/scammed their customers.
You do realise that the majority of product developments, especially of innovative products, fail, don't you?
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #32 on: June 06, 2018, 10:22:08 pm »
You do realise that the majority of product developments, especially of innovative products, fail, don't you?
Not just product developments. The vast majority of companies fail. I think it's something like 95% the first five years.
 

Online coppice

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #33 on: June 06, 2018, 10:41:41 pm »
You do realise that the majority of product developments, especially of innovative products, fail, don't you?
Not just product developments. The vast majority of companies fail. I think it's something like 95% the first five years.
One of the most intriguing things about startups is that the vast majority of startups which survive to reach IPO are doing something very different at IPO from the thing they started out to do. Sometimes its a completely different use of their original core technology. Sometimes its using a completely different technique to solve the problem they started out to solve. Often it has no connection to their original work at all.
 

Offline JohnnyMalaria

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #34 on: June 06, 2018, 10:46:14 pm »
Can't help thinking of binaural and holophonic recording as exemplified by BBC Radio 4 for decades and Pink Floyd's The Final Cut.
Tell me it can't be done and I'll do it. Or die trying.
 

Offline snoopy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #35 on: June 06, 2018, 11:20:06 pm »
Does anyone know what the success/failure ratio for Kickstarter projects?

The old motto: "Caveat Emptor" certainly applies here.
Caveat Emptor again suggests that you're buying a product. It's more like investing in a company in return for a physical incentive. Investments are more risky than simple purchases. Somehow people want to view crowdfunding sites as shops. Then again, people aren't know for being very sensible when it comes to financial products.

If it was an investment then one would expect that the investors would get some kind of equity in the company and share in any future profits and/or dividends as the company grows. This however is not what happens with crowd sourcing so it is still more like a shop taking pre-orders for a product that has not been manufactured yet.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #36 on: June 06, 2018, 11:56:45 pm »
If it was an investment then one would expect that the investors would get some kind of equity in the company and share in any future profits and/or dividends as the company grows. This however is not what happens with crowd sourcing so it is still more like a shop taking pre-orders for a product that has not been manufactured yet.
You're right, it's not exactly like a traditional investment. It's not a webshop either. Kickstarter makes this clear. Kickstarter 101, first paragraph:

"Kickstarter PBC is a funding platform for creative projects. Everything from films, games, and music to art, design, and technology. Kickstarter is full of ambitious, innovative, and imaginative ideas that are brought to life through the direct support of others."

Elsewhere it says:

"When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.

Throughout the process, creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life. At the same time, backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised."

It really should be very clear what you're getting into. Though it does fit the tradition of people selectively understanding the deals they get involved with, only to cry when the ignored part comes back to bite.

Don't get me wrong, I get that it stings if you lose good money. That's never fun.
 

Offline MicroBlocks

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #37 on: June 07, 2018, 02:15:36 am »
Everyone always forgets who is the real culprit.
And that is Kicstarter.com and Indiegogo.com.
They charge up to 9% basically for a self managed page and credit card handling.
I reported twice about a kickstarter that was basically scamming and nothing ever happened to it.
Backers were furious at me which was even a bigger surprise. Well, a sucker born every microsecond......
Still they got funded, monies were collected and nobody got anything.

Maybe they should change their website to not look like a webshop.

Make clear with every time someone 'invests' money you need to click a few checkboxes to make sure you understand the risks.

But they get away with, we are not responsible, we can not do anything, we are just the messenger, we don't check anything etc etc.




 

Online dunkemhigh

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #38 on: June 07, 2018, 03:28:51 am »
Quote
They charge up to 9% ...

You can't expect them to run it all for nothing or, even better, from their own pockets. So the issue you have with them is really about the size of their cut rather than the fact that they take one. As with any other service, if you don't want to pay the rate you either go somewhere else or do without (or, if you're one of the very few, start your own competing service). No-one forces the startups to use kickstarter or indegogo and no-one forces the punters to splash their cash on what might be a scam.

FWIW, and as a declaration of interest, I've backed a few of these on both platforms. One allegedly shipped a product to me but I never received it and although they guaranteed a resend, they didn't. Of the rest, most were as expected and a few were brilliant. In fact, I just ordered another Daisy plant waterer for Mrs Dunkem's birthday. I also backed the Mu thermal camera thing but got my money back when the spec changed, and backed three projects that didn't make the funding finish line. Maybe I've been lucky, or perhaps just choosy.

 

Offline janoc

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #39 on: June 07, 2018, 05:59:06 am »

What they did is more or less trivial - you track the position of the head and adjust the sound signal accordingly. All the mathematics is already well known. Does it really take several $M and 3 years of R&D? If you were tasked to design the thing they did, how much money and time would you budgeted?

It is and isn't trivial. IMU is not hard to build and to get working. However, making a stable IMU-based orientation tracker where the orientation won't drift even after some vigorous shaking and moving, in the presence of magnetic disturbances (e.g. from the headphone speakers or radio antenna nearby, such as in the headmounted display) is a different story, especially if you don't want the user to first have to rotate the headphones around several times before each use to calibrate the magnetometer (the rest is less critical).

Also the  sound spatialization is not that complex and the techniques are known (every computer game does it). However doing it in an embedded device with limited computing power, space and power budget is quite a different matter - that's why they talked DSPs and what not (plus they wanted to autocalibrate the user's personal HRTF, which is yet another layer of complexity).

So I can well believe that they wasted all their funding on this - some of the rabbit holes you can get into here are crazy.

(That it was, IMO, a pointless exercise building a feature that nobody really needs because it is solved by other means already is another matter).

Unless you have some actual evidence, I suggest that you stop attempting to insinuate that there was some sort of fraud or misconduct there - you are potentially exposing yourself to a libel liability there.
 

Offline janoc

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #40 on: June 07, 2018, 07:18:07 am »
To me it has always sounded like a perfect example of the engineering maxim - the question is not whether you can do it but whether you should.

I'm about the release a video on Wi-Charge which is kinda like that. A ridiculously complicated system to do something that can be mostly solved with a much simpler solution. The product won't win in their originally intended market space.

I just saw that video - I actually know Yuval Boger and had to make a double take when I saw you posting that exchange with him. He is the (former?) CEO of Sensics, company that made a lot of virtual reality hw, including some optics stuff.

EDIT: apparently Sensics just went belly up and he jumped ship to Wi-charge in May ...
« Last Edit: June 07, 2018, 07:31:22 am by janoc »
 

Offline ChargeGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #41 on: June 08, 2018, 02:01:33 am »
Yup, after 12 years at Sensics I felt it was time to do something else. Very excited about becoming part of the Wi-Charge team. Who knows, maybe we'll combine both activities and charge some AR or VR headsets soon.
 

Offline janoc

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #42 on: June 08, 2018, 02:26:06 am »
Welcome to the forum, Yuval :) And good luck with your new venture.
 

Offline edy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #43 on: June 08, 2018, 04:00:56 am »
Everyone always forgets who is the real culprit.
And that is Kicstarter.com and Indiegogo.com.
.
.
.
Make clear with every time someone 'invests' money you need to click a few checkboxes to make sure you understand the risks.
But they get away with, we are not responsible, we can not do anything, we are just the messenger, we don't check anything etc etc.


I know it can be tempting to blame these sites, but I still think most or all should sit on the users/backers. Nobody is twisting their hand to back these items. I think it's pretty clear to everyone except the most naive people that they are taking a risk with their money and that there is a fairly high chance they will get something possibly very different from what claimed and with quite a bit of delay.... especially for items which seem too far-fetched.

People who back these campaigns are not thinking logically, they are doing it emotionally and want to be the first ones to have something. Even the "pre-order" pricing isn't a heck of a lot better than the final product. Certainly after you factor in the risk and time, I would gladly pay $150 for something when it is ready and tested and has been reviewed in 2 years, than to spend $100 now for vapour that may never be made or end up being garbage. Unless it is an out-right fraud on the part of the project, the majority of the risk and blame sits on people who decide to fund these campaigns. Just stay away from Kickstarter and IndieGogo, and the entire "Crowd-funding" ecosystem/platform if you are not able to trust it or the people behind it. Just not worth it.

For Ossic X campaign they had the following for regular contributors:

1000 x $199 (we'll round it to $200)
1999 x $219 (we'll round it to $220)
5997 x $249 (we'll round it to $250)
704 x $279 (we'll round it to $280)

The headphone was supposed to "retail" at $399 (let's say $400). Who knows if that would have been the final price or not. Nevertheless, let's say you got in with the majority of people and paid ~$250, so you save $150. Let's say that's a typical "savings" although from the campaigns I've seen the percentage you save going in isn't a great deal better, this one happens to be but the majority are not.

Let's say there are 4 different gadgets A, B, C and D, all being Kickstarted, and all happen to be $250 early-bird and final consumer cost $400. You enter into 4 different campaigns and pay $500 into each (you want 2 of each thing for a total of 8 items).... ok that's $2000 on the table. Now you wait.... 3 months, 6 months, production delays, 12 months, 2 years...).  :-DD

If all 4 campaigns deliver, you just paid $2000 for $3200 ($400x8) worth of tech. Not bad! You just saved yourself $1200.

Ok, if 3 campaigns deliver, you just paid $2000 for $2400 ($400x6) worth of tech. You are still ahead, by about $400. Again, this is a serious savings... I don't usually see it so much discount. You also still assume the final price is $400.... maybe they just say that to "inflate" the amount of saving. The real market may never bear $400 for the gadget.... they may end up only selling them finally at $300-350 when you paid $250.

In that case, 3/4 campaigns deliver, the actual price they can competitively sell for is $333 (not $400 as originally claimed), making the value of the delivered items $333x6 = ~$2000. In that case, you just barely break even. You paid in $2000, only 1 campaign of the 4 failed (I'm sure the odds are worse than that) and the final retail ends up being $333 (not $4000) when you paid $250. Even though you saved $83 on each item, you just broke even.

So now if 50% of the campaigns deliver, you have paid $2000 for $1600 worth of tech. You just lost $400 if half of the items don't deliver. Again, assuming it is even "worth" $400.

My point is, statistically speaking (and I'd like Kickstarter and IndieGogo to release stats), I'd like to see what the average early-bird pricing and final predicted retail and TRUE RETAIL prices are, and also what percentage of campaigns actually complete to final product. These are stats which *should* be available but are sorely lacking. It may make people think a bit harder about using Kickstarter as a "webstore" which it is absolutely not, and get a better appreciation of the true risks that exist with crowd-funding.
« Last Edit: June 08, 2018, 04:06:16 am by edy »
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Online dunkemhigh

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #44 on: June 08, 2018, 04:44:37 am »
Quote
what the average early-bird pricing and final predicted retail and TRUE RETAIL prices are

I'd like to see that too, but to be honest it probably wouldn't make any difference to me :)

When I back a campaign it's generally not because it's cheaper than it will be retail (as you say, who knows what it will end up as) but because I want it and there is - literally - no other source. The monetary question for me is merely "Is the asking price acceptable to me right now?" Sure, I want to pay as little as possible, but trumping that is the desire to have one ASAP.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #45 on: June 08, 2018, 05:20:16 am »
I'd like to see that too, but to be honest it probably wouldn't make any difference to me :)

When I back a campaign it's generally not because it's cheaper than it will be retail (as you say, who knows what it will end up as) but because I want it and there is - literally - no other source. The monetary question for me is merely "Is the asking price acceptable to me right now?" Sure, I want to pay as little as possible, but trumping that is the desire to have one ASAP.
That's the attitude you need for crowdsourcing. You're funding something that might otherwise never exist. That's the value of the concept. You don't look towards investors or banks to finance things as those tend to go for guaranteed successes or meddle with projects to safeguard their money. People can get together and decide this product is cool enough to exist and make it happen. That's wonderful and a remarkable thing. To mitigate the uncertainties and risks you usually get a discount, but that really shouldn't be the point.

Unfortunately, some people see it as a webshop and get upset when it turns out it isn't.
 

Offline edy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #46 on: June 08, 2018, 05:47:33 am »
Agreed with the above 2 posts.... If it was a web shop then you would think through it logically, economically, calculate risks and final costs and make a rational decision after comparing everything. If you are someone who is excited about the project and wants to help fund the project and creator (and as a bonus get something back) then that is more of an emotional buy-in. You have to be willing to take the risk. If that is not your cup of tea, then there is always Amazon, eBay, Alibaba, etc.

My furthest experience on Kickstarter was with C.H.I.P. the $9 computer. I bought in "emotionally" and ended up spending more than $50 by the time I hit the purchase button (on all the add-ons). Before the campaign ended, I got cold feet and withdrew my contribution and was never charged. I'm not sure why, but I already had a RasPi and Arduino collecting dust and I realized my "emotional" brain was getting excited for yet another piece of kit that would collect dust on the table.

Here we are several years later, C.H.I.P. is still around but you can't find the original "$9" one (again, that price never was enough, most people likely paid as much as I did to get enough to make it worthwhile) and they have a few other permutations going which in as much as cost goes, isn't that much more in comparison to this crowd-funding campaign. But there was also a huge down-side which was that it may have never been made, period.  I didn't think about any of that when I made the emotional buy-in... it took me a few days to rationalize and once my more logical brain took over I realized it was not something I really wanted. Sure I could have still paid them to support the project but I have other things  I wanted to support with that money.
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Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #47 on: June 08, 2018, 08:54:56 am »
I would expect the "price" that backers pay to be higher than the future retail price. Otherwise, it doesn't make sense to even run the campaign. Backers must cover the production of the devices they get plus at least some of the design and initial expenses. Then the campaign can produce and deliver products, and also develop some sort of base for future operation. Thus, backing shouldn't be regarded as an opportunity to get things cheap. Rather, it's an opportunity to buy something which would never be possible without the campaign.

Of course, the campaign may be organized only for advertisement, hoping that backers, being active people, will write favorite reviews thus promoting the product for free. But such enterprise assumes that the campaign already has enough money not only to produce things, but also to sell them at the cost or cheaper. In this case, there's no real need for crowd funding. I would expect this to be relatively rare.
 

Offline thermistor-guy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #48 on: June 08, 2018, 01:20:50 pm »
.... It says that the additional goals tacked onto the project slowed down development and hampered their original product, which is consistent with their story that they've suffered from what's essentially fatal feature creep. It's also consistent with the notion that complicating a project and taking the focus away from your original product can cost you in the end. How does that lead to the conclusion they sat on their hand and paid themselves for doing nothing? That's pretty much the opposite.

Additionally, they actually supplied a small number of headphones. This means they developed and manufactured a product. According to the people who tested the product it's not shit, and reports are quite favourable. They probably jumped through all the certification hoops too. All that is no small feat. If you want to take the money and run you come up with some lame excuse without ever producing a result.

Like others here who have done ground-up product design professionally, I can verify that feature creep is alluring but dangerous. Yeah it can work, but it can so easily blow up in your face.

My guess is that someone tempted the company with a large payoff, on condition that the company reached a stretch goal. It takes a certain hard-headed shrewdness to resist the siren calls of dreams, ambition, and VC money, and focus on the original business plan - get something working, working well enough, and ship it. Cash flow from sales can then help fund the frenzy of better-faster-cheaper product evolution, and attract more investors, and move the team towards the next business goal.

I'm sympathetic to their story.
« Last Edit: June 08, 2018, 01:40:19 pm by thermistor-guy »
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #49 on: June 08, 2018, 01:48:12 pm »
I would expect the "price" that backers pay to be higher than the future retail price. Otherwise, it doesn't make sense to even run the campaign. Backers must cover the production of the devices they get plus at least some of the design and initial expenses. Then the campaign can produce and deliver products, and also develop some sort of base for future operation. Thus, backing shouldn't be regarded as an opportunity to get things cheap. Rather, it's an opportunity to buy something which would never be possible without the campaign.

Of course, the campaign may be organized only for advertisement, hoping that backers, being active people, will write favorite reviews thus promoting the product for free. But such enterprise assumes that the campaign already has enough money not only to produce things, but also to sell them at the cost or cheaper. In this case, there's no real need for crowd funding. I would expect this to be relatively rare.
Backers typically pay a lower price than the final retail price. This works out because the makers accept lower profitability for the chance of developing the product. It also allows them to avoid lending money at a non significant interest rate. Even if you make no profit, you still come out on top with a product to sell.

For this type of product, the cost of development can be high. This means chances are that the cost of development isn't amortized over those first batches. Ultimately, selling the initial units cheaper means it will take a bit longer to amortize the cost of development. If it isn't possible to get started otherwise, that's a small price to pay.
 

Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #50 on: June 08, 2018, 02:13:47 pm »
Backers typically pay a lower price than the final retail price. This works out because the makers accept lower profitability for the chance of developing the product. It also allows them to avoid lending money at a non significant interest rate. Even if you make no profit, you still come out on top with a product to sell.

But what do they gain from the campaign then? Say, they spent X amount of money on R&D and then you produce a number of unit and ship them at cost, or even at loss (don't forget about 10% of Kikstarter + processing fees). You could as well skip the campaign, spend X amount on R&D and be in exactly the same position with much less effort. What is the benefit of the campaign? Publicity?

What if you don't have the X amount of money for R&D? The campaign may only help you if backers pay more than you spend on the production/delivery/fees (or, of course, if you don't deliver anything). Otherwise, you still have to borrow for R&D, and if you fail to borrow you won't be able to deliver products to backers.
 

Online Mr. Scram

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #51 on: June 08, 2018, 03:33:29 pm »
But what do they gain from the campaign then? Say, they spent X amount of money on R&D and then you produce a number of unit and ship them at cost, or even at loss (don't forget about 10% of Kikstarter + processing fees). You could as well skip the campaign, spend X amount on R&D and be in exactly the same position with much less effort. What is the benefit of the campaign? Publicity?

What if you don't have the X amount of money for R&D? The campaign may only help you if backers pay more than you spend on the production/delivery/fees (or, of course, if you don't deliver anything). Otherwise, you still have to borrow for R&D, and if you fail to borrow you won't be able to deliver products to backers.
What's not to understand? You want to develop a product, so you need money. No money, no product. So you ask people that like the product to help you. Added bonus is that you have real world feedback on whether people actually like your idea to begin with. Doing all the work up front and then finding out nobody's interested isn't a lot of fun and a real risk.

I touched upon the second part in my previous post. You give up part of your profit for the ability to develop your product. Companies don't typically sell products at cost. They're in it to make a profit. Normally you'd use part of that to develop further products, but when you haven't started yet that becomes a chicken and the egg problem. So you ask people to help you and get your "profit" up front so you can get going.

Of course, there's a spectrum of possibilities. You can eat up your whole profit for R&D or even end up taking a loss, not earning back the full cost of R&D. In the latter case you amortize the cost over future sales too. After all, it only matters that you make back R&D and then some over the lifetime of the product. You don't need to do that right away, unless it means going out of business. Or maybe the success of the Kickstarter campaign allows you to borrow money from traditional sources more cheaply, or at all. Traditional forms of financing aren't fond of risks and having something tangible can make a huge difference.
 

Offline thermistor-guy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #52 on: June 08, 2018, 04:39:27 pm »
But what do they gain from the campaign then? Say, they spent X amount of money on R&D and then you produce a number of unit and ship them at cost, or even at loss (don't forget about 10% of Kikstarter + processing fees). You could as well skip the campaign, spend X amount on R&D and be in exactly the same position with much less effort. What is the benefit of the campaign? Publicity?

What if you don't have the X amount of money for R&D? The campaign may only help you if backers pay more than you spend on the production/delivery/fees (or, of course, if you don't deliver anything). Otherwise, you still have to borrow for R&D, and if you fail to borrow you won't be able to deliver products to backers.
...Added bonus is that you have real world feedback on whether people actually like your idea to begin with. Doing all the work up front and then finding out nobody's interested isn't a lot of fun and a real risk.

... Traditional forms of financing aren't fond of risks and having something tangible can make a huge difference.

As alluded to by Mr. Scram, there are two aspects to design:

* Does your design solve the problem you have in mind?
* Is the problem you have in mind, the right problem to solve?

Early real world feedback will prove whether you got both questions right. This is very important before you commit your life, and life savings, to taking it further.

I would change "can make a huge difference" to "DOES make a huge difference".
 

Offline edy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #53 on: June 08, 2018, 11:32:48 pm »
What's not to understand? You want to develop a product, so you need money. No money, no product. So you ask people that like the product to help you. Added bonus is that you have real world feedback on whether people actually like your idea to begin with. Doing all the work up front and then finding out nobody's interested isn't a lot of fun and a real risk.

Yes, I think the point here is that you ultimately make little to no profit on the first batch. Say something costs $100 retail at which $25 will be BOM and $25 will be all the other costs associated (including R&D, advertising, etc.)... so that $50 will be pure profit eventually once you are in mass production. However, you sell your first batch at $50 which is supposed to cover everything but profit, to get a fully-scaled company going. Along the way you build up interest and gauge the marketplace, line up potentional corporate partners or VC's, etc...

Ideally you should price your Kickstarter project and set your minimum funding level so that you have enough money to deliver what you promised. If the target is too low, I would be skeptical. Otherwise, people get their project funded, grab the money and then realize a few months in that they need 10x more money to actually deliver.

I laugh at these campaigns that want to make some gadget "X" that have campaign goals of $50,000 to get funded, when they will realistically probably require a minimum $500,000 capital (after factoring in all manufacturing costs) to just break even with a certain quantity of goods. This is exactly what happened with these guys, they had product ready and people paid, they still came up short so they got VC money, then they still came up short, then couldn't raise any more capital to deliver the remainder.

Ossic X had asked for a $100,000 goal to get started.... Seriously?  :-DD  And if they had reached that amount, would they have actually started on the project or returned everyone's money? They should have asked for $2,000,000 up front.... They ended up getting to $2.7 million on Kickstarter and got a pile more money from VC's (who obviously were encouraged by the fact that they already proved there was a huge amount of interest from Kickstarter on this project). However, they did not estimate their costs accurately from the beginning and together with feature creep, started eating up too much of their money.

I believe these guys were genuinely trying hard to make it happen, but what did they expect to deliver for $100,000 if they had met that goal only? Or maybe $200,000? Or maybe $500,000? Would they have taken the money and folded exactly the same way? Would they have been more careful and become more frugal and not allowed feature creep to set in? Did all that money that landed in their hands (many many times more than what they initially asked for) caused them to lose their minds and get caught up in the whole thing?  :-//
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Offline NorthGuy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #54 on: June 09, 2018, 12:18:07 am »
What's not to understand? You want to develop a product, so you need money. No money, no product. So you ask people that like the product to help you.

So, your viewpoint is that the campaign should lure the backers with cheap "prices" even though the received money are clearly not enough to develop/produce the product. Therefore, the success of the campaign would be contingent upon external sources of financing, and if they failed to raise extra money the backers wouldn't receive anything. Almost like you're not raising money from backers, but rather borrow the money (with very low risk because there's no legal obligation to deliver). This sounds contrary to the initial idea that the companies which don't have other means of raising money can do so through the crowd funding.

Added bonus is that you have real world feedback on whether people actually like your idea to begin with. Doing all the work up front and then finding out nobody's interested isn't a lot of fun and a real risk.

But it all depends on the price point. For example, Apple's Next workstations failed not because they were bad, but because they were too expensive. If you offer something really cheap, you may attract lots of backers, but when you go to real-world business with real prices, there may be no demand at all. On the other hand, if you offer real "prices" during the campaign, the success will be a good indication of the viability of your idea.

If companies keep luring backers with lower "prices", the "prices" will go lower and lower and thus the rate of success will be getting lower and lower, which will increase the perceived risks forcing the backers to look for even lower "prices". In the end, only the companies with substantial external funding will be able to participate. May be this is already happening ...

 

Offline edy

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #55 on: June 09, 2018, 12:49:09 am »
If companies keep luring backers with lower "prices", the "prices" will go lower and lower and thus the rate of success will be getting lower and lower, which will increase the perceived risks forcing the backers to look for even lower "prices". In the end, only the companies with substantial external funding will be able to participate. May be this is already happening ...


It's a vicious circle... Correct, the low prices and low goals are only creating an environment that leads to failure, or requires last-minute "save the day" partnership funding from VC's who are needed to keep the campaign going. The crowd-funding people are then basically used as a "carrot" to market to investors (who see there is interest and money already flowing in a project) to get "top up" funding, but it is they who ultimately hold the legal power whereas crowd-funding backers have no recourse and take the risk fully for failure.

On the other hand, you would probably not get too many people backing a project if the cost was MORE than the final retail would be. Although technically, these initial backers should be footing the bill not only for the product but also significant R&D costs, even if the project makers are taking no profit, that may still lead to costs higher than what the final mass-production retail competitive market price settles at. The only benefit then to the crowd-funding backers is that they would get to be FIRST to have the product, or perhaps exclusivity to the product or some specific design that recognizes them as limited edition (like Pebble I think had inscribed on the back of their Kickstarter watches).

However, given a more realistic price, and realistic target goal, you would probably improve the likelihood that these campaigns would actually deliver. But I imagine then the number of crowd-funding campaigns that actually get funded will plummet significantly.... Most people are buying in because they can get it cheaper than the final retail, not because they want it FIRST or have some SPECIAL/LIMITED edition. With regular higher pricing, but also recognizing the support of backers with the special edition, that may act as added incentive and also give you an idea how the product will do at the price you believe it needs to be to keep your company sustainable.
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Offline nathanielcustom

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #56 on: June 28, 2018, 10:04:59 pm »
You all have probably moved on from this topic, but I wanted to provide an additional take on this project as one who had backed it, has personally moved on, but still participates (and is ignorantly hopeful) in the facebook group "Ossic X Class Action Lawsuit".

:: Assess the Product ::
The Ossic X was touted as a product that solved the problem of making 3D audio more natural by addressing the uniqiue differences in each users' anatomy. The team spoke of utilizing sensors that would measure head size & ear structure and would process the audio to reflect delays and pitch changes based on that anatomy. The claim was a more natural sound that didn't reside in your headscape, but in the field around you.

The team was comprised of two former Logitech employees, a company with a reputation in quality computer peripherals. Jason Riggs and Joy Lyons appeared to be seasoned in the audio field each, with additional digging, some patents, while at Logitech, to their names. Though it was largely unclear, I assumed their time at Logitech ought to have exposed them to enough experiences essential to building a small company to produce a product

In the project, a product was presented as near completion. They provided...
- a chart that claimed actual, in-ear measurements
- a chart with spatial accuracy tests with a number of participants
- photos of "the latest design" (against Kickstarter policy to show renders)
- photos of development that brought them to this current stage


== Now some of you may be seeing red flags. I didn't. And of course, I may have been blinded by my excitment for the technology as I had spent much of my own time and resources pursuing developing my own 3D audio headset. I also know, hindsight is 20/20.


:: Post Campaign ::
Kickstarter is an interesting avenue. Backers are not investors, but according to Kickstarter's terms and conditions there are some obligations put onto the creators of projects.

- Kickstarter does not offer refunds. A Project Creator is not required to grant a Backer’s request for a refund unless the Project Creator is unable or unwilling to fulfill the reward.
- Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill.

In addition their are obligations in terms of communication which I can't find at this time.

To keep it short and sweet... Ossic released periodic updates indicating no signs of struggle other than the side effects of feature creep pushing back the production date.
- Jan 2018; developer units shipped (at least two people have confirmed that they recieved the units)
- Feb 2018; software update pushed out
- May 2018; doors close

One backer had reached out to Ossic in April 2018 and recieved a semi-canned response that production was still on for spring.
Throughout the post-campaign period many backers asked for refunds, but were denied as funds were commited to production.

Besides not being transparent about any financial troubles (as claimed by the May update) there was no effort put forth by Ossic to survey the backers and find a way to satisfy the rewards.


:: Not Just Kickstarter ::
But, this goes beyond Kickstarter. Yes, Indiegogo was another avenue that Ossic raised funds, but also their own website - taking pre-orders.
On each of these platforms the product was presented as soon-to-be-complete. Imagine the suprise of the individuals who pre-ordered that they found out they won't be recieving their product (or refund) after reading it in the headlines on their favorite tech blog.


:: Money ::
The obvious outrage is, "where did all the money go?" Some expense sheets have been circulating that were used by Ossic to raise additional funds through investors and it is clear that a large percentage of their money was spent on marketing. Flying around, doing trade shows, hyping the product.


:: Developer Units ::
So far, I've seen two people speak up about ownership of a developer unit. They both claim that the solution works amazingly well, but that the software is still very buggy.


:: Theories ::
Many theories are floating around out there, but not much is available to prove any of them...
- Inflated idea of their abilities to run a company
- Shell to obtain patents for later use
- Just a regular ol' con

What I can tell from reading screen captures of peoples emails with Ossic and the campaign updates themselves that there was lying going on.
 

Offline Dave3

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #57 on: July 15, 2018, 06:49:58 am »
== Now some of you may be seeing red flags. I didn't. And of course, I may have been blinded by my excitment for the technology as I had spent much of my own time and resources pursuing developing my own 3D audio headset. I also know, hindsight is 20/20.

Sorry you lost your money here. This was an interesting sales pitch.

It seems the founders raised over $6m and blew nearly $5m in "sales & admin". The tiny remaining R&D budget combined with expanding iOS & Android ambitions was an obvious train wreck for you and your fellow Kickstarter "investors".

One might fear that the founders had little interest in the Kickstarter headphones from the start. But were focused on selling the core technology to a large tech firm. One might go so far to claim that Kickstarter enabled the founders to run an unrelated, and risky, global marketing campaign and to keep the intellectual property. Good trick!
 

Offline Sudo_apt-get_install_yum

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Re: $3.2 million OSSIC 3D Headphone flop
« Reply #58 on: July 18, 2018, 06:54:11 pm »
Indiegogo and Kickstarter are not web shops but it does suck that so many campaigns fail. It’s a double edged sword that anybody with an idea can create anything and promote it on Kickstarter. It seems like most people underestimate the difficulty and work when creating/managing a project of this magnitude.
 


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