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It doesn't sound like they set out to deceive - rather they had a vision which a lot of people, including themselves, bought into, promising far more than they

by dm319 9y ago

It doesn't sound like they set out to deceive - rather they had a vision which a lot of people, including themselves, bought into, promising far more than they could deliver. Even if they got to the stage of having a fully-working prototype that could do everything the video claimed, they then had the task of translating the prototype into mass-production. I remember when the raspberry-pi started to take pre-orders (6 years after the inception). They had massive public interest, and 100 of thousands of pre-orders taken within days. Despite being far simpler than an autonomous drone, they still ran into several show-stopping problems with manufacturing at launch[1]. Personally, I think it is the investor's responsibility (and that should be the term for someone who pre-orders the product) to be convinced that the project is feasible within the time-frame they were stating. Crowd-funding is disappointing because no questions are asked beyond watching a slick video and an FAQ. An investor would be trying out the prototype on a ski slope, and asking how they were going to translate their 3D-printed prototype into mass-production at a price-point of 500 euros within a year. And then not investing. [1]https://www.raspberrypi.org/blog/manufacturing-hiccup/ https://www.raspberrypi.org/blog/manufacturing-hiccup/

jermaustin1 9y ago
> and that should be the term for someone who pre-orders the product I'm sorry I can't agree with this at all. A person who pre-orders something isn't investing in the company, they are buying a product being promised. Now, long delays and things of that nature are perfectly acceptable, but you aren't investing. An investor gets a stake of the company. An investor (of certain worth) has a say in what is going on. A customer doesn't, they speak only with their desire to buy whatever product is being pitching. And after they hand over their money, their opinion doesn't matter anymore. Sure they can dispute the charge and get kicked off whatever crowdfunding site they are on, but they still have no voice in the company.
- alekratz 9y ago
  > A person who pre-orders something isn't investing in the company, they are buying a product being promised. I agree with this. I always saw pre-orders as a way to reserve your "spot" for a physical object. My first encounter with pre-orders was video games, before platforms like Steam where physical copies of a game aren't limited. The problem with pre-ordering now is that it's becoming a method of funding incomplete products, with the promise of a finished product. It involves the consumer in the production phase of a project, shifting the risk of "it didn't work out" from the investors to the consumers. And like you mentioned, > An investor gets a stake of the company. An investor (of certain worth) has a say in what is going on. ... A customer doesn't, they speak only with their desire to buy whatever product is being pitching. But, at the same time, it looks like they acquired a nice chunk of money ($14m in capital) only after they released their video. Would it have been possible to finish their product, advertise, and start shipping without that $14m, and however much they received from pre-orders? I can't say. To me, it seems like they started advertising to the public and accepting pre-orders before an actual product was ready for the mass market; but if they were running low on funding at the time, it may have been their only option to secure funds. (Take that with a grain of salt; I know next to nothing about business + entrepreneurship)
- Retric 9y ago
  You might get a mug from donating to a charity, but your not really buying a mug. Preorders are much the same in that you have high risk of not getting anything and there is no compensation for that risk other than helping them make the product.
  - EvanAnderson 9y ago
    Such a transaction shouldn't be called a "pre-order", then. If it amounts to a donation it should be called that.
    - Retric 9y ago
      EX: https://www.kickstarter.com/projects/2000580152/neil-degrasse-tyson-presents-space-odyssey-the-vid?ref=home_nearly_funded https://www.kickstarter.com/projects/2000580152/neil-degrass... I don't see any "pre-order" text there is even a big: "Make a pledge without a reward" the others also start with Pledge X and simply list rewards.
  - Qworg 9y ago
    It is more like an unsecured loan with great lending terms and high likelyhood of default vs a donation.
    - Retric 9y ago
      Loans imply some type of obligation to repay. I was thinking more a raffle tickets. You pay X money and have some odds of getting something you want. But, they have no obligation to compensate you if they fail. Further, the negative expected value of raffle tickets support some cause, in the case of these reorders that's R&D of some cool product.

by dm319 9y ago

jermaustin1 9y ago

> and that should be the term for someone who pre-orders the product I'm sorry I can't agree with this at all. A person who pre-orders something isn't investing in the company, they are buying a product being promised. Now, long delays and things of that nature are perfectly acceptable, but you aren't investing. An investor gets a stake of the company. An investor (of certain worth) has a say in what is going on. A customer doesn't, they speak only with their desire to buy whatever product is being pitching. And after they hand over their money, their opinion doesn't matter anymore. Sure they can dispute the charge and get kicked off whatever crowdfunding site they are on, but they still have no voice in the company.

alekratz 9y ago
> A person who pre-orders something isn't investing in the company, they are buying a product being promised. I agree with this. I always saw pre-orders as a way to reserve your "spot" for a physical object. My first encounter with pre-orders was video games, before platforms like Steam where physical copies of a game aren't limited. The problem with pre-ordering now is that it's becoming a method of funding incomplete products, with the promise of a finished product. It involves the consumer in the production phase of a project, shifting the risk of "it didn't work out" from the investors to the consumers. And like you mentioned, > An investor gets a stake of the company. An investor (of certain worth) has a say in what is going on. ... A customer doesn't, they speak only with their desire to buy whatever product is being pitching. But, at the same time, it looks like they acquired a nice chunk of money ($14m in capital) only after they released their video. Would it have been possible to finish their product, advertise, and start shipping without that $14m, and however much they received from pre-orders? I can't say. To me, it seems like they started advertising to the public and accepting pre-orders before an actual product was ready for the mass market; but if they were running low on funding at the time, it may have been their only option to secure funds. (Take that with a grain of salt; I know next to nothing about business + entrepreneurship)
Retric 9y ago
You might get a mug from donating to a charity, but your not really buying a mug. Preorders are much the same in that you have high risk of not getting anything and there is no compensation for that risk other than helping them make the product.
- EvanAnderson 9y ago
  Such a transaction shouldn't be called a "pre-order", then. If it amounts to a donation it should be called that.
  - Retric 9y ago
    EX: https://www.kickstarter.com/projects/2000580152/neil-degrasse-tyson-presents-space-odyssey-the-vid?ref=home_nearly_funded https://www.kickstarter.com/projects/2000580152/neil-degrass... I don't see any "pre-order" text there is even a big: "Make a pledge without a reward" the others also start with Pledge X and simply list rewards.
- Qworg 9y ago
  It is more like an unsecured loan with great lending terms and high likelyhood of default vs a donation.
  - Retric 9y ago
    Loans imply some type of obligation to repay. I was thinking more a raffle tickets. You pay X money and have some odds of getting something you want. But, they have no obligation to compensate you if they fail. Further, the negative expected value of raffle tickets support some cause, in the case of these reorders that's R&D of some cool product.