The Peachy Printer - The First $100 3D Printer & Scanner! ...has imploded.

[sswift]

https://www.kickstarter.com/projects/117421627/the-peachy-printer-the-first-100-3d-printer-and-sc/posts/1572573

Long story short, all the money was deposited into one of the founder's bank accounts, that guy embezzled over $300K of it to build a house, and the company has been forced to lay off its workforce.

[nowlan]

I saw the thread on reddit.com, but didnt watch the video.
Surely there must be some lawsuit that can recover funds. Sell the guys house, and refund backers.

[sswift]

Problem is the house is only a third of the way done and is presently not even worth what was spent on it.

Also it was explained to me that what happened, or what the guy's plan was anyway, was that he was supposed to get a loan from the bank to build this house, and he spent the Kickstarter money on it to begin construction with the intent of paying it back with the loan proceeds, but the loan fell through due to construction falling behind schedule.

I doubt a lawsuit will be able to recover much from these guys. 

[ferrix]

The inventor had some interesting ideas for improving limitations of resin curing printers.  I was looking forward to seeing how this affected the rest of the market.  Too bad it did this.

[Jeroen3]

Only one way left. Finish and sell the house.

[edy]

He should have 3D-printed the house!

[station240]

*sigh* banks
I've watched enough episodes of various UK tv shows where they turn an old house/barn/water tank into a home to know how this happens.
Bank won't lend you the money until the house is structurally sound and water tight, but of course getting it to that stage is most of the cost.

So the owners borrow from friends, rack up debt on the credit card and take out a bridging loan. No prizes for guessing who makes money from those last two sources.

I'm not sure I'd trust a $100 3D printer, as even the $3000 one I looked at last year had issues. I wish them luck.
Short of going out to finish the idiots house themselves every weekend, I don't see any quick solution to this.
Moron should have built a smaller house.

[Corporate666]

The "CEO" guy in the videos is also to blame.

I can sort of understand his desire not to publicize the issue a year ago when it happened, however when he made that choice, he also made the choice to take on some of the responsibility for that decision.  He also wants to deflect all blame to the guy who stole the money - but he bears responsibility too.  It does not take long to set up a bank account, it can be done easily within a day in most places.  And when it became clear the quantity of cash was many hundreds of thousands of dollars, he had a fiduciary duty to act in a suitable manner - which he completely failed to do by not becoming at least a signatory to the bank account and by not setting up a separate business account immediately, and by not maintaining oversight on that cash.

"That guy ripped you off - so we can't deliver" is a hollow excuse.

[Kalidor]

They asked for CAD 50000, got almost a million, 300k was stolen, 100k payed back.
So they used 736k+, 550k of it during 2013, 2014. It's a wonder that they managed to survive until today. Maybe even with these 200k they would be gone bankrupt a year later.

Not the best video but some background info:

https://youtu.be/Ain1y9_ZLuo
 

[uncle_bob]

They asked for CAD 50000, got almost a million, 300k was stolen, 100k payed back.
So they used 736k+, 550k of it during 2013, 2014. It's a wonder that they managed to survive until today. Maybe even with these 200k they would be gone bankrupt a year later.

Not the best video but some background info:

https://youtu.be/Ain1y9_ZLuo

Hi

If you look at the "burn rate" on most of these companies, it goes up significantly year over year. The closer they get to a real product, the more people they need. They also fund tooling and first run parts costs. A pattern like $X first year, $2X second year, $4X third year is actually fairly modest. I doubt that another $200K would have kept the doors open for very long. Since they already blew through their original estimate ... the $200K isn't the issue. Not having a clue how to get the product to market is the real issue.

Bob

[EEVblog]

WTF 
It's turned into a cheesy documentary:

[EEVblog]

Someone in the comments pointed out that the guy took 49.87% of the money, and he's a 50% owner in the company.
Coincidence? seems unlikely. Legally he owned that money.
Could be a very clever play. He could be off the hook on embezzlement, and being financial controller actually had say in how the rest fo the money was spent trying to deliver the goods. The CEO even admits they were very close to pulling it off, even with half the money gone. So it's likely going to be hard for the backer to take legal action for goods not delivered? The guy simply took half the money (his half) as wages and bonuses or whatnot.

 

[CanadianAvenger]

I was about to say "Unbelievable!" But then I remembered this was crowd funding.

[Corporate666]

Someone in the comments pointed out that the guy took 49.87% of the money, and he's a 50% owner in the company.
Coincidence? seems unlikely. Legally he owned that money.
Could be a very clever play. He could be off the hook on embezzlement, and being financial controller actually had say in how the rest fo the money was spent trying to deliver the goods. The CEO even admits they were very close to pulling it off, even with half the money gone. So it's likely going to be hard for the backer to take legal action for goods not delivered? The guy simply took half the money (his half) as wages and bonuses or whatnot.

 

That's what I was alluding to in this thread (or was it the other one?).

The backers have no claim against this David guy.  They are not owners of the business, nor are they partners in any way.  They are just backers, which is just a type of customer, but with less rights.

If the story is true as presented, Rylan is the aggrieved party.  But it doesn't appear he has really done much to solve this problem.  He sucked out almost $400k in funds, David sucked out $200-300k, and only $80k was spent on materials and tooling.

The video about illustrates that the pie chart wasn't even accurate - they had money from the gov't as well as family investment.  And the video doesn't, AFAIK, include the Backerkit "pre-order" money.  So it appears it was well over a million.

So they spent 8% on actual tangible goods, they spent almost half a million on salaries, a founder absconded with $200k, and who knows where the rest went.

And Rylan spent a lot of time (too much time, IMO) creating all sorts of charts, videos, reaction videos with backers and other content to absolve himself from any liability or blame.

I wonder how much he, personally, took out of the company?  I wonder if that family loan was paid back, and at what interest rate?  The Canuckian gov't really needs to investigate this one.  I smell fraud (either willful or otherwise) all over it.

[edavid]

The bad founder was not entitled to take half of the backer funds unless he was going to build half of the printers.

The salary expense in the pie chart includes what was paid to several employees.  I don't think it's been stated how much salary went to the founders.

[uncle_bob]

Hi

Was the pie chart audited? If so by which well known audit firm?

Bernie Madoff had some wonderful financial pie charts / statements. They even had an auditor's signature on them .... none of it bearing any relation to reality.

Bob

[Corporate666]

The bad founder was not entitled to take half of the backer funds unless he was going to build half of the printers.

The salary expense in the pie chart includes what was paid to several employees.  I don't think it's been stated how much salary went to the founders.

He might actually have been entitled to take it.  It depends what the ownership structure of the company is, what contracts are in place, who are authorized signatories on the bank accounts, etc.

[marcan]

Based on the files you released, it looks like there was a fair bit of feature creep and dead ends.

Dead ends? Certainly. Most notably, we spent a lot of resources pursuing the audio approach. In the end, digital turned out to be the right choice. While it’s unfortunate that we didn’t realize that sooner, that is the natural course of hardware R&D.

I could've told them that. In fact I did tell them that on the original thread here. How does it take "a lot of resources" to realize that you cannot control galvos accurately (down to DC frequency) with a random AC coupled line-out jack on a random laptop? Heck, the audio out jack on my Chinese barebone laptop (which is otherwise excellent) can't even drive headphones without massive LF rolloff because they undersized the AC coupling caps.

Embezzlement aside, it seems they had some serious engineering fail going on.

[EEVblog]

The bad founder was not entitled to take half of the backer funds unless he was going to build half of the printers.
The salary expense in the pie chart includes what was paid to several employees.  I don't think it's been stated how much salary went to the founders.

A private company owner is allowed to take whatever salary they like, even half if they so chose to.
If a company takes in say $1M and thinks (and has a plan for) they can deliver to customers using only 100k of that money, there is nothing at all legally wrong with the owner(s) paying themselves  $900k in salary. The rest comes down to regular consumer law about goods not supplied etc.

[snoopy]

Someone in the comments pointed out that the guy took 49.87% of the money, and he's a 50% owner in the company.
Coincidence? seems unlikely. Legally he owned that money.
Could be a very clever play. He could be off the hook on embezzlement, and being financial controller actually had say in how the rest fo the money was spent trying to deliver the goods. The CEO even admits they were very close to pulling it off, even with half the money gone. So it's likely going to be hard for the backer to take legal action for goods not delivered? The guy simply took half the money (his half) as wages and bonuses or whatnot.

 

I don't get it ?? He's in this youtube video interviewing the dude that ran off with the loot ?? Why isn't he beating the crap out of him 

[Jasper]

A private company owner is allowed to take whatever salary they like, even half if they so chose to.
If a company takes in say $1M and thinks (and has a plan for) they can deliver to customers using only 100k of that money, there is nothing at all legally wrong with the owner(s) paying themselves  $900k in salary. The rest comes down to regular consumer law about goods not supplied etc.

Creditors can easily have a claim against the management/owners/board for gross mismanagement in such a case, though. There are limits to how limited your liabilities are in a limited liability company. Depending on jurisdiction, of course.

Not that Kickstarter backers are creditors in any case.

[EEVblog]

I don't get it ?? He's in this youtube video interviewing the dude that ran off with the loot ?? Why isn't he beating the crap out of him 

Yup, it's the most bizarre thing I've ever seen.

[uncle_bob]

A private company owner is allowed to take whatever salary they like, even half if they so chose to.
If a company takes in say $1M and thinks (and has a plan for) they can deliver to customers using only 100k of that money, there is nothing at all legally wrong with the owner(s) paying themselves  $900k in salary. The rest comes down to regular consumer law about goods not supplied etc.

Creditors can easily have a claim against the management/owners/board for gross mismanagement in such a case, though. There are limits to how limited your liabilities are in a limited liability company. Depending on jurisdiction, of course.

Not that Kickstarter backers are creditors in any case.

Hi

... and there's the key. VC's might finance a company. You *might* get a bank interested in financing. In both cases, before you got a dime there would be contracts and forms to sign in one end and out the other. Regardless of your "limited" status, those contracts would tie you up pretty tight. It would not just be limited to your salary. Each time I've been through it, it includes minor things like "all your assets". A bankruptcy proceeding would leave you with more than those contracts. With Kickstarter, you still get a nice lump of cash to play with. It does not come with all those messy restrictions...

Bob

[EEVblog]

Not that Kickstarter backers are creditors in any case.

Bingo. They are just customers who didn't get their goods. But worse than that, they are customers who put in money in full knowledge that product did not yet exist and must be developed and there were risks in that.

[edy]

And therein lies the biggest problem with crowd funding. Seems like the entire concept is designed to circumvent various business and legal processes which have been refined over many years to protect all parties involved. Let's throw all that away... This here new fangled Internet thingy is gonna teach them old timers how we do things better now, gad nabbit!