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Check it out.
https://techcrunch.com/2018/05/20/after-tens-of-thousands-of-pre-orders-high-end-3d-headphones-startup-ossic-disappears/QuoteAfter 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. -
Kickstarter is not a webshop. What can we say?
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" ... 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. -
What a lame excuse for stealing $3.2M.
Again, Kickstarter is not a webshop. -
Does anyone know what the success/failure ratio for Kickstarter projects?
The old motto: "Caveat Emptor" certainly applies here. -
Does anyone know what the success/failure ratio for Kickstarter projects?
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.
The old motto: "Caveat Emptor" certainly applies here. -
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. -
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. -
Does anyone know what the success/failure ratio for Kickstarter projects?
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.
The old motto: "Caveat Emptor" certainly applies here.
Correct. It should be Caveat Investor, but I don't know the Latin word for investor
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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. -
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.
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May be a little different
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.
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.
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. -
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.
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Am I?
How does the quoted text lead your conclusion without taking a family sized load of narcotics?
" ... crowdfunding campaign stretch goals ... bogged down their R&D team".
Sounds like big salaries (must've eaten up $3.2M) and apparently no results. -
Am I?
How does the quoted text lead your conclusion without taking a family sized load of narcotics?
" ... crowdfunding campaign stretch goals ... bogged down their R&D team".
Sounds like big salaries (must've eaten up $3.2M) and apparently no results.
It's called logic. You may try it some day. -
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. -
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. -
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").
[url]https://www.kickstarter.com/projects/248983394/ossic-x-the-first-3d-audio-headphones-calibrated-t[/url]
[url]https://www.indiegogo.com/projects/ossic-x-immersive-3d-audio-headphones-vr#/[/url]
[url]https://www.ossic.com/[/url]
[url]http://www.sandiegouniontribune.com/business/technology/sd-fi-ossic-failure-20180521-story.html[/url]
[url]https://www.head-fi.org/threads/buy-ossic-x-or-not.799484/[/url]
[url]https://techcrunch.com/2018/05/20/after-tens-of-thousands-of-pre-orders-high-end-3d-headphones-startup-ossic-disappears/[/url]
_________________
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
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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. [url]http://www.businesstimes.com.sg/companies-markets/creative-brings-3d-sound-to-headphones-after-us100m-rd[/url]
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. -
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 -
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.
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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.
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.
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 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? -
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. -
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.
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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.QuoteInvestment is not a donation. Investors expect something in return.
Yes, they expect a return, but shit happens, and sometimes you are left with nothing.QuoteIf this was a public company, they would be sued by investors for the investor fraud.
What fraud took place? Please provide evidence. -
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.