Zano, another Kickstarter disappointment

[Corporate666]

A bigger battery could increase flight time, and Reedman told me he was trying to boost the battery size from 750 mAh (milliampere hours, a measurement of discharge capacity over time) to 1,000 or 1,100 mAh before he left Zano. A review of comparable batteries designed for drones (from makers and third-party replacements) finds even custom-fit modules would weigh at least 30g for 1,000 mAh, seemingly impractical without further design changes.

His solution at the time was to send back the original propellers for larger ones. However, says Reedman, “As far as [the Chinese supplier] was concerned, the propellers did work so therefore are not faulty and would not accept returns.” Torquing was left having paid for tens of thousands of propellers it could not use.

What idiot orders tens of thousands of propellers for a design which hasn't been finalized? 

When I was 24 or 25yrs old, I was the CTO of a software startup.  We had a seasoned CEO who was well connected with money people, and this was in the middle of the dot.com boom when money grew on trees.  We had an idea (which was actually a pretty good one) for a software/service and it was not difficult to get an initial investor on-board which was sort of like blood in the water for sharks, and other investors were worried about missing out and before long we wound up with a pretty substantial pile of cash.

The first orders of business were to pay ourselves nice salaries, rent swanky offices which we paid a lot of money to have decorated to an appropriate level of hipster-cool appeal, buy ourselves top of the line desktops and laptops and then have a lot of meetings to discuss "vision" and "the roadmap".  The money had come so easily that it wasn't respected, and we felt we had already achieved something just by securing the money and we were so awesome and wonderful that we deserved swanky offices and fat salaries.

It wasn't done behind the investors backs... that's just how it was in the late 90's.  Of course, things ultimately didn't work out and a year or two into the business, when investors were watching other dot.com's experience valuation explosions, the pressure was on to get the job done right away.  Money became impossible to get and the company entered a death spiral.

It was a great learning experience and when I started my own business, I bought all of our furniture from companies going out of business and selling their stuff cheap, and I was always VERY careful about what a metric of success is and to actually achieve it before feeling we had "made it".

That's one of the biggest problem with crowdfunding.  Inexperience, arrogance, total lack of discipline.  Most investors wouldn't touch these companies with a ten foot pole and if they did, they would require putting some of their own people in senior management roles.  There's nothing worse than a bunch of arrogant young people who got lucky and think they got there because they are just so skilled and awesome.  It's a recipe for failure.  KS and IGG should make a MUCH bigger deal about who founders are, their background and their qualifications to run a business.  KS makes a big deal about how 75% (or whatever) of projects deliver.  Unfortunately, a lot of those projects deliver total shit that is nowhere near what the backers expected.  I bet a metric on projects delivered where the deliverable met the commitment in terms of quality/performance/function is a small fraction of the total number of projects that delivered 'something'.

[Corporate666]

Why isn't there are a crowdfunding service like Kickstarter but with some sort of escrow menchanism where all money isn't given upfront - sounds like the crux of these issues - but contigent on the company meeting actual goals?

The article mentions Kickstarter took 5%, or roughly US$165,751 just for hosting the project (payment processing fees were separate). Surely they could afford to supply some management for these hyper successful projects.

The problem is that as soon as a company puts itself in a position where it has some control over the project, then they also necessarily have liability.  KS doesn't want to get involved in making sure projects happen, because they are a fat juicy lawsuit target for people the moment they do so.

There's just nothing in it for them at all to insert themselves in the managerial/escrow/payment-disbursement side of things.  And there isn't really enough demand for it from backers.  If there was demand, another company could emerge that would be like an escrow/guarantor service.  That company would take a cut of the proceeds to handle management/funds.  But the only way that would be worthwhile would be if such an alliance made the project significantly more fundable to the point lots more backers put money in.  I don't think they would... KS has enough stupid people parroting the "it's a donation, not an investment" idiot-think line and enough who don't mind getting anally ramrodded because "hey man we're bringing new things to fruition, this isn't an exact science, man" and the percentage of thoughtful and cautious backers is frighteningly small.

[mikeselectricstuff]

..the thing can't take off without first talking to their server... WTF??

[EEVblog]

..the thing can't take off without first talking to their server... WTF??

When I read that I 
If that was mentioned in the crowd funding pitch then people were pretty dumb to hand over their money.

[XFDDesign]

That's one of the biggest problem with crowdfunding.  Inexperience, arrogance, total lack of discipline.  Most investors wouldn't touch these companies with a ten foot pole and if they did, they would require putting some of their own people in senior management roles.  There's nothing worse than a bunch of arrogant young people who got lucky and think they got there because they are just so skilled and awesome.  It's a recipe for failure.  KS and IGG should make a MUCH bigger deal about who founders are, their background and their qualifications to run a business.  KS makes a big deal about how 75% (or whatever) of projects deliver.  Unfortunately, a lot of those projects deliver total shit that is nowhere near what the backers expected.  I bet a metric on projects delivered where the deliverable met the commitment in terms of quality/performance/function is a small fraction of the total number of projects that delivered 'something'.

I agree with much of what you said, and disagree about what KS and IGG should do. This is essentially open-market investing. People need to be burned when they make poor investment decisions, or else they'll never learn. They'll toss money into a black hole for MoonChakraCrystalMagnetHealing, get some pieces of quartz and be unhappy about it. The *worst* thing that could be done, is to make KS or IGG become the next SEC, with some sort of half-hearted guarantee on the "investment."

http://evilasahobby.com/2014/01/18/kickstander-only-around-a-third-of-kickstarted-video-game-projects-fully-deliver-to-their-backers/ presents an interesting analysis.

Knowing that 1/3 of computer games that show up on kickstarter will ever see the light of day, should demand of the investor to be very careful about expending funds. If a person keeps making bad investments, gets burnt over and over, and decides the whole place is a fraud, then it is only at that moment they learn not to play when they cannot make wise investments.

Most of these failures we've seen, do not actually show a lot of follow through. Just smoke and mirrors, toys, and "black boxes" of proof that the product works. People need to learn one way or the other, that this kind of thing is a red flag and not give these people money.

[Corporate666]

I agree with much of what you said, and disagree about what KS and IGG should do. This is essentially open-market investing. People need to be burned when they make poor investment decisions, or else they'll never learn. They'll toss money into a black hole for MoonChakraCrystalMagnetHealing, get some pieces of quartz and be unhappy about it. The *worst* thing that could be done, is to make KS or IGG become the next SEC, with some sort of half-hearted guarantee on the "investment."

http://evilasahobby.com/2014/01/18/kickstander-only-around-a-third-of-kickstarted-video-game-projects-fully-deliver-to-their-backers/ presents an interesting analysis.

Knowing that 1/3 of computer games that show up on kickstarter will ever see the light of day, should demand of the investor to be very careful about expending funds. If a person keeps making bad investments, gets burnt over and over, and decides the whole place is a fraud, then it is only at that moment they learn not to play when they cannot make wise investments.

Most of these failures we've seen, do not actually show a lot of follow through. Just smoke and mirrors, toys, and "black boxes" of proof that the product works. People need to learn one way or the other, that this kind of thing is a red flag and not give these people money.

I think the problem is that the people pledging on KS really have no idea they are taking a gamble.  Most folks have heard of KS and IGG these days, and I think the legitimacy of their brand leads people to think there is a lot more checking going on than actually is.  As much as it's tempting to blame the backers and give KS/IGG a free pass.. I think the reality is that KS and IGG are the only parties to the deal that have the information and tools necessary to do said background checking.  They don't require creators to list an address or even a real/full name to backers.  And they also don't make any serious effort to let people know the real risks of backing a project.  All other gambling/investment activities are heavily regulated, whether it's requiring investors to be accredited or having oversight by gaming commissions... but KS/IGG are the wild west.  On the one hand, we don't really need more government intervention, but on the other, KS and IGG have set up the game so where it's a win for them no matter the outcome and all risk is put on the backers without disclosing the level of due dilgence they have done (which is none) and the amount of risk a backer takes.

Of course we can agree to disagree.. it's not that I necessarily want federal oversight of crowdfunding, but I think there needs to be some consumer protection regulation in place.  It should actually be a good thing for honest/serious backers because it will eliminate alot of the crap that never delivers and had no ability to deliver.  I also still think that an optional (at an extra fee) insurance or escrow type service might actually help... someone who could underwrite a project and apply some oversight and control upon the creators.  In that instance it should be disclosed on KS/IGG which projects are and aren't underwritten.

[edy]

The more I read the different sides to the debate (regulation, non-regulation, etc).... the more I tend to agree with a hands-off approach to the entire Kickstarter and IndieGogo (and other) crowd-funding marketplace. I think the community should be the ones "policing" the sites, and not the government, SEC or anyone else. Once I heard about Kickstarter and IndieGogo (after they were already running for a few years), it only took me a few minutes to understand the risk involved in being a backer. Any person with more than 2 brain cells (which is all I have left) should be able to do the same. Here are some more reasons....

1. The internet is a wild and dangerous place to play with money
2. If you don't do your research and use your brain, you will lose your money
3. Lessons learned the hard way are sometimes the most valuable
4. There are plenty of opportunities to question and debate about products before "buying in"
5. Crowd-funding, to anyone but the most naive person, is obviously a risky venture (but can be rewarding)
6. There are places to purchase less risky products and you are free to use them
7. Consumer protection doesn't even apply to crowd-funding as far as legal framework
8. It also seems to be outside the investment and SEC jurisdiction

Perhaps the only way someone could make a case for chasing down a crowd-funding scammer is to claim they are using the funds for terrorism or to fund ISIS. That is sure to engage a whole pile of unknown government laws and mobilize agents and powers by various USA and allied countries to follow the money trail and make a mess for the crowd-funding site, scammers and so on. Imagine the headline "KICKSTARTER/INDIEGOGO USED TO FUND TERRORISM". Watch secret agent Black-Ops dropping from helicopters on the HQ of these crowd-funding sites and seizing all their machines. 

Here is what I propose:

The people who are involved in the crowd-funding community (creators, backers, etc) have a stake in it should be the ones managing it. There are plenty of opportunities to write comments, question the projects, discuss issues and generally make changes to the system if people complain to the Kickstarter and IndieGogo sites (and others). If you don't like the way things are handled, or you don't like the way the system works, don't go to those sites. Plain and simple. Nobody is forcing anyone to back projects... My issue is that comments should be allowed by non-backers, but either way you can pitch in $5 to participate in the comments and then pull out your funding money before the end of the campaign anyways.... So you can comment and be a $hit-disturber as much as you want to question what is going on without risking any money anyways. People backing the project (or potential backers who read the comments) can be warned about potential too-good-to-be-true projects and use their own judgement. A fool and their money are soon parted.... no matter how much you try.

Meanwhile, educate as many as your friends as possible from being potential future victims and post articles like this one:

http://www.doctorbraun.blogspot.ca/2015/07/indiegogo-and-other-crowd-funding.html

That's my 2 cents (one from each brain cell). 

[edavid]

..the thing can't take off without first talking to their server... WTF??

When I read that I 
If that was mentioned in the crowd funding pitch then people were pretty dumb to hand over their money.

It didn't seem to discourage people from buying Glowforge laser cutters @ $2400+ each 

http://faq.glowforge.com/hc/en-us/articles/216014307-Can-the-Glowforge-print-without-wifi-connection-

[MT]

It all reminds me of how bank's are run! Creating money from nothing even more unregulated, since people are idiots Kickstarter Indigogo should be closed down. Save the fools from being ruined!

[XFDDesign]

It all reminds me of how bank's are run! Creating money from nothing even more unregulated, since people are idiots Kickstarter Indigogo should be closed down. Save the fools from being ruined!

A better world is one where warning labels are removed.

A lot of misinformation exists about banks (at least referenced from the US) being 'unregulated,' when in fact the toxic assets were "guaranteed" by the US Govt, in the same way people want KS or IGG to eat the fallout from bad projects. No. People need to live in reality, without having a windfall from their bad decisions. If they're protected from every whoopsie they make from birth to death, then all it does is breed generations of perpetual children with no sense of consequence for action.

Zero regulation on KS and IGG.
Let all the regular people get burned by their shit investments. Let them talk among eachother, uttering tales of woe for how their perpetual motion machine never came to life and their $5,000 lost with it. Let the very idea of KS and IGG scare off the person who does not approach investing with the appreciation of risk. It will resolve itself.

[mikeselectricstuff]

..the thing can't take off without first talking to their server... WTF??

When I read that I 
If that was mentioned in the crowd funding pitch then people were pretty dumb to hand over their money.

It didn't seem to discourage people from buying Glowforge laser cutters @ $2400+ each 

http://faq.glowforge.com/hc/en-us/articles/216014307-Can-the-Glowforge-print-without-wifi-connection-

You're not likely to be using that in a field though....
I heard an interview with one of the creators, and a major reason for that was to avoid needing to support lots of different platforms.
 

[edavid]

..the thing can't take off without first talking to their server... WTF??

When I read that I 
If that was mentioned in the crowd funding pitch then people were pretty dumb to hand over their money.

It didn't seem to discourage people from buying Glowforge laser cutters @ $2400+ each 

http://faq.glowforge.com/hc/en-us/articles/216014307-Can-the-Glowforge-print-without-wifi-connection-

You're not likely to be using that in a field though....

Maybe the Zano was never really intended to fly outdoors - it didn't exactly seem robust.

For the Glowforge, I was thinking more about not being able to use it if the company goes out of business.  I guess there's the same issue with the 3D printers that use DRM-ed filament cartridges.

[nwvlab]

I read some of the about 10k comments on the Zano campaign, and mostly are like: "thanks Kickstarter, from now on, forget I will be backing another ks campaign!".

I also read other similar comments even on other projects from different creators: "@creator due to the mismanagement of the zano project I'm retracting my pledge from this and other projects. I'll happily buy your product once it comes to market. You idea is fantastic and I look forward to seeing it after crowd funding."

This really makes me sad and angry. Because of some few thieves/crooks, the entire KS community (in particular the creators) will be damaged

[XFDDesign]

This really makes me sad and angry. Because of some few thieves/crooks, the entire KS community (in particular the creators) will be damaged

Don't be either. This is precisely what needs to happen. This is both market correction and consumer education. No government nannying required. Those who don't go into this knowing it's a risk (it's investing) and get burned, learn through pain and don't participate again. It self corrects. When these people leave, the KS campaigns are up against much higher standards than showing off some bling and well edited videos.

The departure of the ignorant and the careless is the best thing that could happen to crowdfunding.

[KL27x]

From what I've read of the article/report, it does seem like the main protagonist lives inside some kind of self-perpetuating bubble of bullshit of his own making.

Reedman + Wayan Sutawan. Put them together and give them a few million dollars. Can you imagine the possibilities? It would be worth the money for the headlines.