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Kickstarter project spent $3.5M to finish a prototype and ended in disaster

189 points by tmflannery 12y ago

deleted 12y ago
[deleted]
danielweber 12y ago
$500,000 from Kickstarter, $3,000,000 from "investment rounds."
funkyy 12y ago
So people supported project and paid for a product they were presented, but creator decided on the fly it wasnt good enough so they changed it? How ridiculous is this. People paid for a product (support) in order to receive what they were presented. The creator could then release version 2.0 after a year with updated features instead of making this decission. It would be like person would buy an Iphone 4 in shop and after he paid the guy behind the counter would say "sorry, I changed my mind, you will get Iphone 5 in 1 year because its better. Your money is ours now, so good bye and see you in a year." The decisions made behind this seems to be immature - similar unfortunately to pretty large chunk of Kickstarter startups. The Kickstarter seems to replaced government grants for some, where people would risk it to achieve success, but if they fail cause of issues/bad decision they don't care because it wasn't their money anyway. To many people with no prior life experience starting projects and businesses.
- mianos 12y ago
  Please read the above comment. Kickstarter is not a store.
- dm2 12y ago
  Donating money to a KickStarter project is not the same as buying something. You're not paying for a product, you are helping fund a company or project who has no legal obligation to give you anything. If you are donating to a KickStarter just because you want the reward they are offering then you should do sufficient research on the company and their founders to ensure that you trust that they will deliver what they promised.
  - JeremyBanks 12y ago
    While I agree with the spirit of the above comment, and am not upset when projects I fund are delayed or cancelled, you're not technically correct: Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill. https://www.kickstarter.com/help/faq/kickstarter+basics https://www.kickstarter.com/help/faq/kickstarter+basics This isn't just hypothetical: http://www.pcworld.com/article/2150780/firstofakind-kickstarter-lawsuit-highlights-risks-of-crowd-funding.html http://www.pcworld.com/article/2150780/firstofakind-kickstar...
    - dm2 12y ago
      If a project creator takes the money and disappears then it's fraud, that's what that quote is referring to. From that same FAQ: "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." In court it's probably about as valid as a Terms of Service agreement on a website or a "by reading this you must keep the contents of this email confidential" at the bottom of an email.
      - funkyy 12y ago
        What if project creator takes money, then over thinks it and uses money to sponsor his ambitions? Is Kickstarter ego boost fund, or actual project funding? Most users sponsor project to get early and discounted access to cool stuff - if you fund Kickstarter projects for other reasons - good for you. But dont expect others to follow. Some people hard earned money are in stake, they expect to get something from it and when creator just blatantly changes what he has to offer while sponsoring his high lifestyle from money received - thats just bad. You got money for something - do it. You want to develop something different, better? First finish what you have promised, then move on for money your company earned itself.
- cyorir 12y ago
  I disagree with your conclusion, that there are "to[o] many people with no prior life experience starting projects and businesses." I think a large number of people starting projects like this is necessary. True, many of them fail. However, it is in the process of failing at a first attempt that many people will gain the experience necessary to help them in later projects. So there is nothing inherently wrong with failure. My interpretation of the article is that the developers did not handle their failure correctly. They were not clear in communicating and responding to the difficulties they were facing. The failure was left unaddressed, and only compounded over time; this was the fault of the developers. A more adequate solution would have been to recognize that changing the product to quickly was not the right approach; releasing a project without all of the desired features at a sooner date may have been preferable.
tibbon 12y ago
I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might get something, but it isn't a promise. Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project. Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed. I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"
- makomk 12y ago
  > Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.
  - pessimizer 12y ago
    >We can't expect people who back Kickstarter projects to accept VC-level failure rates The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
    - eropple 12y ago
      You assume that people are able to evaluate risk effectively and knowledgeably. Is there any substantiation for that assumption? (I know, it's rhetorical. VCs get a lot more information and have a lot more experience than Kickstarter backers.)
Eduardo3rd 12y ago
Sounds like a larger version of the problems that most hardware crowd funding campaigns run into. I think that we've done ourselves a disservice as a hardware community by promising to deliver consumer electronic devices for less than $250k in a few months. It doesn't seem to matter how complete your design is, what manufacturing partner you've lined up, or what pedigree your team has - everyone is spending more than they raise and taking longer than they budgeted. I think it would be wise for hardware companies to collectively start lowering expectations from campaigns like the one described here. The team at Spark Devices did a great job with this process. Their first project, the wi-fi bulb socket [0], had a large funding goal and a more realistic timeline. When the campaign failed to materialize they shifted directions to the Spark Core [1], which was much more successful and delivered very close to the projected timeline if I remember correctly. Now they are closing a sizable series A [2] to build an operating system for the internet of things. If they had originally made the Spark socket goal $100k they would have reached their goal and then likely failed to deliver with the cash they raised, which would have pulled them down into the mess that is described in this article. Maybe more hardware teams should take a good hard look at how they view failure and decide if they want to be the next Spark or the next myIDkey. [0] - https://www.kickstarter.com/projects/sparkdevices/spark-upgrade-your-lights-with-wi-fi-and-apps https://www.kickstarter.com/projects/sparkdevices/spark-upgr... [1] - https://www.kickstarter.com/projects/sparkdevices/spark-core-wi-fi-for-everything-arduino-compatible https://www.kickstarter.com/projects/sparkdevices/spark-core... [2] - http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million-series-for-an-internet-of-things-os/ http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million...
- sliverstorm 12y ago
  I have no evidence, but it seems like as a community people significantly underestimate the challenges of hardware development. I'm not sure whether it's because the community thinks "Oh, hardware is so much easier than software! This will be a snap!" or if it is the more subtle "We haven't done this before, so we aren't aware of the pitfalls"
  - greenyoda 12y ago
    "Oh, hardware is so much easier than software!" I'm not sure how people could think this. Hardware is a much less forgiving medium than software: - If your web application requires three times the resources you thought it would, you can easily add more servers. But a device that needs to fit in a USB key has hard limitations on size, memory, power dissipation, etc. You can't ask people to carry around a briefcase-sized device (or even another phone-sized device) to hold their passwords. - If your web application has a horrible bug, you can wake up your developers and have them fix it at 3:00 AM. If you find a bug in your embedded software after you ship, it can only be fixed by getting all your users to upgrade their software (assuming your embedded software is in flash memory, not in ROM). If you find a bug in your hardware after you ship, you need to send everyone a new device.
fleitz 12y ago
Of course it didn't pan out, you can only do a project like this on a budget of 20-50K. Beyond that budget everyone will focus on engineering it to work with every authentication system ever, rather than creating a simple USB HID device that types a username, the tab key, a password, and presses enter. Problem: Users cant remember their passwords. Actual Solution: Device that stores and recalls their passwords. Engineering Solution: A bunch of crypto stuff, tempest hardening, pen testing, some more crypto, a provably secure RNG, 3 different interfaces and drivers to integrate the device with Linux, OSX, and Windows crypto systems, a bunch more user installable software for 3 platforms, tamper resistant chips, etc.
- dublinben 12y ago
  That actually sounds like the Marketing Solution, since they had a simple, working prototype at the very beginning.
post_break 12y ago
This reminds me of lockitron. It's still not really shipping. Take a look at the lockitron subreddit. http://www.reddit.com/r/lockitron http://www.reddit.com/r/lockitron
lhnz 12y ago
It's plainly obvious that Kickstarter is a way of crowdfunding investment in creative projects. It's in tabloid's interests to stroke controversy by suggesting it's a store whenever projects fail. Clickbait articles like this will continue to be made as people are gullible and easily manipulated.
- astrange 12y ago
  It's a store for the reward you paid for. The projects have absolutely promised to give it to you.
  - lhnz 12y ago
    Either way it's on the project founders and the consumer-investors not Kickstarter.
    - VikingCoder 12y ago
      If some noticable percentage of the time, you walked into Costco, and paid for something, but then they didn't give it to you, that would be news, too. It's valid to question the Kickstarter model, because sometimes, projects don't deliver. I still think it's a great model, but I understand the risk. It is valid to inform people of the risk, though. That's news.
- VikingCoder 12y ago
  ...except it's not "investment," and projects do have a legal responsibility to deliver. From their FAQ: Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
- angryasian 12y ago
anjc 12y ago
How much value is lost through poor investments which nobody hears/cares about? "Disaster" seems a bit strong. Tough luck to the backers, but that's how it goes.
jokoon 12y ago
well with capitalism the only viable option is to waste money until a project works... didn't bill gates already say something about it ? the revenues from IT project investments are so high compared to investment costs, that in the end you never lose money by seeing so many projects crash like that. Of course if the government would manage those things, it might be a little more efficient and might deliver more results... I guess that's how the silicon valley works... Freedom has the advantage of letting the market decide, but for innovation it's never really obvious... go and downvote my political comment
- macspoofing 12y ago
  >well with capitalism the only viable option is to waste money until a project works... What's the alternative? The economy is an incredibly complicated system. Any top-down model will fail. What we have right now (free-market base and government regulation) kinda works. Or at least, it works better than anything else we tried.
  - jokoon 12y ago
    > What's the alternative? government research, like darpa.
    - macspoofing 12y ago
      Government-funded research is perfectly fine, and necessary even. Private market wouldn't send a man to the moon or build the LHC because it's just too expensive and not at all commercializable. Then again, government research can't match the rate of innovation of private industry, when it comes to products with an actual market need, across the millions of products in the industry (from cars, to smartphones, to web-apps, to blenders, to toothpaste). So you need both. A top-down approach to controlling all aspects of the economy, a la communism, has pretty much been shown to be a disaster. It has to be. How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise? Even conceptually, at best, you'll be behind. At worst, you destroy the economy.
dsugarman 12y ago
I wonder the % of really unhappy funders and % who understand the risk. I assume most funders would know there is not 100% chance of a deliverable and fund projects hoping to contribute to a brighter future.
aikah 12y ago
are there any "aborted" projects where backers sued and won? it seems it's up to the justice system to decide what kickstarter terms are because their own TOS are quite vague.
deleted 12y ago
[deleted]
hristov 12y ago
It is very curious as to why they failed if they had a working prototype. They are blaming feature creep, but I am not sure about this. If it looks like you are going to fail because of feature creep, why not just go back to the original working prototype? Personally, I very much doubt they ever had a working prototype.
DigitalSea 12y ago
I remember when I first about all of the buzz about this Kickstarter project, I knew it was going to be trouble. Hardware is a notoriously expensive business to get into. As the company learned you can easily burn through a few million in cash just putting out a prototype. Once you have something ready for production, until you're manufacturing at a decent scale, your costs are incredibly high: economies of scale 101. Call me crazy, but how about Kickstarter clamps down on ambitious hardware products like this? I don't think they are doing enough and it's tarnishing their image as a credible crowdfunding platform (at least to me anyway). It's obvious that there are very few exceptions here that a hardware Kickstarter campaign will not fail (Oculus Rift comes to mind and a few other smaller ones).
- famousactress 12y ago
  Don't forget Pebble :) Definitely hardware failures are a PR challenge but kickstarter's margins aren't affected by COGs and hardware projects tend to require more money (as you pointed out). They've got lots of motivation to make it work.
  - DigitalSea 12y ago
    Pebble is definitely a success, OUYA is another success, the Neil Young endorsed Pono player and service seems to be well underway and looking like another success and of course, the LIFX wifi enabled multi light-bulb as well. When you run the numbers, the percentage of success for hardware projects is quite small. But as you point out, Kickstarter get their fees regardless of success or failure. I think Kickstarter does care, the problem is just a lot bigger than they currently know how to fairly solve.
bsder 12y ago
Standard startup problem--too many salaries. This kind of project needs something like 2 engineers max who really know what they're doing. Unfortunately, very few people know what they're doing. Anything more than that and you are doomed. The hardware is about $100K to develop if you know what you're doing. Probably closer to $250K if you don't. Everything else is time--software, debugging, user testing, etc. Andrew "bunnie" Huang's blog is great for understanding all the crap you are going to wade through to do production. http://www.bunniestudios.com/ http://www.bunniestudios.com/ The discussions about what goes into producing the DEFCON badges each year are also fascinating: http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-16-Badge.pdf http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-1... The DEFCON discussion is always especially interesting because it is a VERY constrained problem: low volume overall (for electronics <50,000 is low volume) but high volume in terms of units-per-time, tight cost constraint, generally a tight battery constrain, and a desire for hackability. Operations is hard. Let's go shopping. There is a reason why there is a Chief Operations Officer in manufacturing companies ...
- jackgavigan 12y ago
  It's a bit of a cliché at this point that the bottleneck for DEFCON badges is Customs and they always arrive at the very last minute. The exception was DEFCON 19's non-electronic, titanium badges, which were not just on time but arrived so early that the DEFCON staff hadn't taken over the conference location yet, so they ended up getting stored in someone's hotel room.
- GFischer 12y ago
  Thanks to the link about the DEFCON badges, really cool :)
  - bsder 12y ago
    Read some of the articles about other years, as well. They are ALWAYS a fascinating read.
autodidakto 12y ago
Grammar Nazi Time. An excerpt from Oxford's American: 1 (of a person) surprised and confused so much that they are unsure how to react: he would be completely nonplussed and embarrassed at the idea. 2 informal (of a person) not disconcerted; unperturbed. usage: In standard use, nonplussed means ‘surprised and confused’: the hostility of the new neighbor's refusal left Mrs. Walker nonplussed. In North American English, a new use has developed in recent years, meaning ‘unperturbed’—more or less the opposite of its traditional meaning: hoping to disguise his confusion, he tried to appear nonplussed. This new use probably arose on the assumption that non- was the normal negative prefix and must therefore have a negative meaning. It is not considered part of standard English.
arbuge 12y ago
>> But when Ars reached Chen by phone, he seemed nonplussed by his own company's failure. "Do you know what the percentage of completion is for Kickstarters in general for technology-based startups?" Chen asked. "Probably 85 percent of all startups fail." I wonder if this is actually true and if there's any hard historical data on this. It sounds to me like a statistic he just made up.
dredwerker 12y ago
This was created in response to this if I remember rightly: http://hackaday.io/project/86-Mooltipass http://hackaday.io/project/86-Mooltipass The mooltipass is an offline password keeper. The concept behind this product is to minimize the number of ways your passwords can be compromised, while generating and storing long and complex random passwords for the different websites you use daily. It is designed to be as small as possible so it can fit in your pocket. Simply visit a website and the device will ask for confirmation to enter your credentials when you need to login.
alexnking 12y ago
In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. We already have something just like that called "stores" and "preorders". I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. And I certainly don't want people to be able to sue those creators if it doesn't work out.
- dragonwriter 12y ago
  > In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. There's an easy way around that for projects, don't offer the output of the project as a reward for backing it. > I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. Okay, back projects where the creators don't offer the output of the project as the reward for backing it. (Or, projects where the development is already done, and the Kickstarter is just being done for initial production costs, so the product isn't speculative.) > And I certainly don't want people to be able to sue those creators if it doesn't work out. The only reason people could sue the creators is if the creators offered something in exchange for money, received the money, and didn't deliver as promised. The creators are in full control of what they offer as rewards. It seems to me that the problem is that some people want creators to be able to use the promise of a product they don't know that they can produce as inducement for people to give money, but not be obligated to actually follow through.
  - jacalata 12y ago
    This project advertised itself as having all the development finished and only needing pre-order cash to kick off the manufacturing, so that's not really a good guide: The "Designs" are complete, patents filed, component suppliers selected, the manufacturing process is defined, the CM [contract manufacturer] chosen so all we need is your support in this project as we size the first myIDkey production run and ship product in September 2013. Please make a pledge and receive your myIDkey!
- saraid216 12y ago
  Why only hardware rewards?
patio11 12y ago
Please remember this article the next time you're inclined to say "Why did Paypal freeze pre-orders of a promising new startup when they clearly look like intelligent, diligent founders and have not a whiff of scam risk about them?"
- jay_kyburz 12y ago
  Who is PayPal to decide whether or not a company can achieve their goals.
  - kalleboo 12y ago
    The ones left holding the bag when the credit card chargebacks come flying in.
  - aristus 12y ago
    They are deciding whether or not to take on the risk of essentially underwriting the project. PayPal is on the hook for chargebacks; recently I got back $400 we had paid last November to a company that turned out to have been incompetent / scammy. I didn't initiate a chargeback until a couple of months ago. Whether or not you agree with the outcome of their decisions, you can't simply huff that PayPal has no "right" to decide whether to take on those kinds of risks. They clearly have skin in the game.
    - jxjdjr 12y ago
      But they shouldn't have skin in the game. Treating people like children without the capacity to make grown up decisions will only encourage this type of behaviour. Whytf do we need something like charge back?! To me it just seems like a poor justification for having a centralised router of money.
      - lmm 12y ago
        We need chargebacks because there are scammers out there and people get themselves into trouble with credit, so we made the democratic decision to require that mechanism.
pistle 12y ago
Wait. I might not get my bite of potato salad?
lily2014 12y ago
I do think that Kickstarter is a famly type project. We saw one's idea. And his plan.We back him.And there are many backers so each of backer will not loss much money. We backed a dream together, we share the risk. And we do wish a success fund project can reach their goals, build a great company.
lily2014 12y ago
Kickstarter is a platform where normal people can back those people have dream and great idea. As to the creators company can not acheieve their goas, kickstarter can not guarantee it. But it has already list all those rules to protect backers right.
richardw 12y ago
This is a story? A well funded tech product didn't materialise? Typical day for a VC. Selected and paid for by the general public? That's insane. Kickstarter sounds almost destined to fail but somehow it's succeeded so well that a failure is a story.
dkersten 12y ago
A3 to an A5 ARM processor That was never going to be an easy switch. A3 is a microcontroller, A5 is a full blown cpu.
volaski 12y ago
I think HN is pretty much a biased crowd for this topic. A lot of people seem to think of it as a charity kind of thing here--which is understandable because HN is full of creators who sympathize with them--but I doubt that's what the real majority of the people who backed those projects think.
xorcist 12y ago
When an operation that should be "two guys in a garage" starts futzing with C[ETF]O titles, that is my cue to run the other way. So far it's been a 99% successful guiding principle (with the big exception early in Internet advertising I wouldn't have enjoyed anyway).
gearhart 12y ago
From the title, I thought this was an Onion article.

189 points by tmflannery 12y ago

deleted 12y ago

[deleted]

danielweber 12y ago

$500,000 from Kickstarter, $3,000,000 from "investment rounds."

funkyy 12y ago

So people supported project and paid for a product they were presented, but creator decided on the fly it wasnt good enough so they changed it? How ridiculous is this. People paid for a product (support) in order to receive what they were presented. The creator could then release version 2.0 after a year with updated features instead of making this decission. It would be like person would buy an Iphone 4 in shop and after he paid the guy behind the counter would say "sorry, I changed my mind, you will get Iphone 5 in 1 year because its better. Your money is ours now, so good bye and see you in a year." The decisions made behind this seems to be immature - similar unfortunately to pretty large chunk of Kickstarter startups. The Kickstarter seems to replaced government grants for some, where people would risk it to achieve success, but if they fail cause of issues/bad decision they don't care because it wasn't their money anyway. To many people with no prior life experience starting projects and businesses.

mianos 12y ago
Please read the above comment. Kickstarter is not a store.
dm2 12y ago
Donating money to a KickStarter project is not the same as buying something. You're not paying for a product, you are helping fund a company or project who has no legal obligation to give you anything. If you are donating to a KickStarter just because you want the reward they are offering then you should do sufficient research on the company and their founders to ensure that you trust that they will deliver what they promised.
- JeremyBanks 12y ago
  While I agree with the spirit of the above comment, and am not upset when projects I fund are delayed or cancelled, you're not technically correct: Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill. https://www.kickstarter.com/help/faq/kickstarter+basics https://www.kickstarter.com/help/faq/kickstarter+basics This isn't just hypothetical: http://www.pcworld.com/article/2150780/firstofakind-kickstarter-lawsuit-highlights-risks-of-crowd-funding.html http://www.pcworld.com/article/2150780/firstofakind-kickstar...
  - dm2 12y ago
    If a project creator takes the money and disappears then it's fraud, that's what that quote is referring to. From that same FAQ: "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." In court it's probably about as valid as a Terms of Service agreement on a website or a "by reading this you must keep the contents of this email confidential" at the bottom of an email.
    - funkyy 12y ago
      What if project creator takes money, then over thinks it and uses money to sponsor his ambitions? Is Kickstarter ego boost fund, or actual project funding? Most users sponsor project to get early and discounted access to cool stuff - if you fund Kickstarter projects for other reasons - good for you. But dont expect others to follow. Some people hard earned money are in stake, they expect to get something from it and when creator just blatantly changes what he has to offer while sponsoring his high lifestyle from money received - thats just bad. You got money for something - do it. You want to develop something different, better? First finish what you have promised, then move on for money your company earned itself.
cyorir 12y ago
I disagree with your conclusion, that there are "to[o] many people with no prior life experience starting projects and businesses." I think a large number of people starting projects like this is necessary. True, many of them fail. However, it is in the process of failing at a first attempt that many people will gain the experience necessary to help them in later projects. So there is nothing inherently wrong with failure. My interpretation of the article is that the developers did not handle their failure correctly. They were not clear in communicating and responding to the difficulties they were facing. The failure was left unaddressed, and only compounded over time; this was the fault of the developers. A more adequate solution would have been to recognize that changing the product to quickly was not the right approach; releasing a project without all of the desired features at a sooner date may have been preferable.

tibbon 12y ago

I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might get something, but it isn't a promise. Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project. Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed. I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"

makomk 12y ago
> Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.
- pessimizer 12y ago
  >We can't expect people who back Kickstarter projects to accept VC-level failure rates The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
  - eropple 12y ago
    You assume that people are able to evaluate risk effectively and knowledgeably. Is there any substantiation for that assumption? (I know, it's rhetorical. VCs get a lot more information and have a lot more experience than Kickstarter backers.)

Eduardo3rd 12y ago

Sounds like a larger version of the problems that most hardware crowd funding campaigns run into. I think that we've done ourselves a disservice as a hardware community by promising to deliver consumer electronic devices for less than $250k in a few months. It doesn't seem to matter how complete your design is, what manufacturing partner you've lined up, or what pedigree your team has - everyone is spending more than they raise and taking longer than they budgeted. I think it would be wise for hardware companies to collectively start lowering expectations from campaigns like the one described here. The team at Spark Devices did a great job with this process. Their first project, the wi-fi bulb socket [0], had a large funding goal and a more realistic timeline. When the campaign failed to materialize they shifted directions to the Spark Core [1], which was much more successful and delivered very close to the projected timeline if I remember correctly. Now they are closing a sizable series A [2] to build an operating system for the internet of things. If they had originally made the Spark socket goal $100k they would have reached their goal and then likely failed to deliver with the cash they raised, which would have pulled them down into the mess that is described in this article. Maybe more hardware teams should take a good hard look at how they view failure and decide if they want to be the next Spark or the next myIDkey. [0] - https://www.kickstarter.com/projects/sparkdevices/spark-upgrade-your-lights-with-wi-fi-and-apps https://www.kickstarter.com/projects/sparkdevices/spark-upgr... [1] - https://www.kickstarter.com/projects/sparkdevices/spark-core-wi-fi-for-everything-arduino-compatible https://www.kickstarter.com/projects/sparkdevices/spark-core... [2] - http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million-series-for-an-internet-of-things-os/ http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million...

sliverstorm 12y ago
I have no evidence, but it seems like as a community people significantly underestimate the challenges of hardware development. I'm not sure whether it's because the community thinks "Oh, hardware is so much easier than software! This will be a snap!" or if it is the more subtle "We haven't done this before, so we aren't aware of the pitfalls"
- greenyoda 12y ago
  "Oh, hardware is so much easier than software!" I'm not sure how people could think this. Hardware is a much less forgiving medium than software: - If your web application requires three times the resources you thought it would, you can easily add more servers. But a device that needs to fit in a USB key has hard limitations on size, memory, power dissipation, etc. You can't ask people to carry around a briefcase-sized device (or even another phone-sized device) to hold their passwords. - If your web application has a horrible bug, you can wake up your developers and have them fix it at 3:00 AM. If you find a bug in your embedded software after you ship, it can only be fixed by getting all your users to upgrade their software (assuming your embedded software is in flash memory, not in ROM). If you find a bug in your hardware after you ship, you need to send everyone a new device.

fleitz 12y ago

Of course it didn't pan out, you can only do a project like this on a budget of 20-50K. Beyond that budget everyone will focus on engineering it to work with every authentication system ever, rather than creating a simple USB HID device that types a username, the tab key, a password, and presses enter. Problem: Users cant remember their passwords. Actual Solution: Device that stores and recalls their passwords. Engineering Solution: A bunch of crypto stuff, tempest hardening, pen testing, some more crypto, a provably secure RNG, 3 different interfaces and drivers to integrate the device with Linux, OSX, and Windows crypto systems, a bunch more user installable software for 3 platforms, tamper resistant chips, etc.

dublinben 12y ago
That actually sounds like the Marketing Solution, since they had a simple, working prototype at the very beginning.

post_break 12y ago

This reminds me of lockitron. It's still not really shipping. Take a look at the lockitron subreddit. http://www.reddit.com/r/lockitron http://www.reddit.com/r/lockitron

lhnz 12y ago

It's plainly obvious that Kickstarter is a way of crowdfunding investment in creative projects. It's in tabloid's interests to stroke controversy by suggesting it's a store whenever projects fail. Clickbait articles like this will continue to be made as people are gullible and easily manipulated.

astrange 12y ago
It's a store for the reward you paid for. The projects have absolutely promised to give it to you.
- lhnz 12y ago
  Either way it's on the project founders and the consumer-investors not Kickstarter.
  - VikingCoder 12y ago
    If some noticable percentage of the time, you walked into Costco, and paid for something, but then they didn't give it to you, that would be news, too. It's valid to question the Kickstarter model, because sometimes, projects don't deliver. I still think it's a great model, but I understand the risk. It is valid to inform people of the risk, though. That's news.
VikingCoder 12y ago
...except it's not "investment," and projects do have a legal responsibility to deliver. From their FAQ: Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
angryasian 12y ago

anjc 12y ago

How much value is lost through poor investments which nobody hears/cares about? "Disaster" seems a bit strong. Tough luck to the backers, but that's how it goes.

jokoon 12y ago

well with capitalism the only viable option is to waste money until a project works... didn't bill gates already say something about it ? the revenues from IT project investments are so high compared to investment costs, that in the end you never lose money by seeing so many projects crash like that. Of course if the government would manage those things, it might be a little more efficient and might deliver more results... I guess that's how the silicon valley works... Freedom has the advantage of letting the market decide, but for innovation it's never really obvious... go and downvote my political comment

macspoofing 12y ago
>well with capitalism the only viable option is to waste money until a project works... What's the alternative? The economy is an incredibly complicated system. Any top-down model will fail. What we have right now (free-market base and government regulation) kinda works. Or at least, it works better than anything else we tried.
- jokoon 12y ago
  > What's the alternative? government research, like darpa.
  - macspoofing 12y ago
    Government-funded research is perfectly fine, and necessary even. Private market wouldn't send a man to the moon or build the LHC because it's just too expensive and not at all commercializable. Then again, government research can't match the rate of innovation of private industry, when it comes to products with an actual market need, across the millions of products in the industry (from cars, to smartphones, to web-apps, to blenders, to toothpaste). So you need both. A top-down approach to controlling all aspects of the economy, a la communism, has pretty much been shown to be a disaster. It has to be. How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise? Even conceptually, at best, you'll be behind. At worst, you destroy the economy.

dsugarman 12y ago

I wonder the % of really unhappy funders and % who understand the risk. I assume most funders would know there is not 100% chance of a deliverable and fund projects hoping to contribute to a brighter future.

aikah 12y ago

are there any "aborted" projects where backers sued and won? it seems it's up to the justice system to decide what kickstarter terms are because their own TOS are quite vague.

deleted 12y ago

[deleted]

hristov 12y ago

It is very curious as to why they failed if they had a working prototype. They are blaming feature creep, but I am not sure about this. If it looks like you are going to fail because of feature creep, why not just go back to the original working prototype? Personally, I very much doubt they ever had a working prototype.

DigitalSea 12y ago

I remember when I first about all of the buzz about this Kickstarter project, I knew it was going to be trouble. Hardware is a notoriously expensive business to get into. As the company learned you can easily burn through a few million in cash just putting out a prototype. Once you have something ready for production, until you're manufacturing at a decent scale, your costs are incredibly high: economies of scale 101. Call me crazy, but how about Kickstarter clamps down on ambitious hardware products like this? I don't think they are doing enough and it's tarnishing their image as a credible crowdfunding platform (at least to me anyway). It's obvious that there are very few exceptions here that a hardware Kickstarter campaign will not fail (Oculus Rift comes to mind and a few other smaller ones).

famousactress 12y ago
Don't forget Pebble :) Definitely hardware failures are a PR challenge but kickstarter's margins aren't affected by COGs and hardware projects tend to require more money (as you pointed out). They've got lots of motivation to make it work.
- DigitalSea 12y ago
  Pebble is definitely a success, OUYA is another success, the Neil Young endorsed Pono player and service seems to be well underway and looking like another success and of course, the LIFX wifi enabled multi light-bulb as well. When you run the numbers, the percentage of success for hardware projects is quite small. But as you point out, Kickstarter get their fees regardless of success or failure. I think Kickstarter does care, the problem is just a lot bigger than they currently know how to fairly solve.

bsder 12y ago

Standard startup problem--too many salaries. This kind of project needs something like 2 engineers max who really know what they're doing. Unfortunately, very few people know what they're doing. Anything more than that and you are doomed. The hardware is about $100K to develop if you know what you're doing. Probably closer to $250K if you don't. Everything else is time--software, debugging, user testing, etc. Andrew "bunnie" Huang's blog is great for understanding all the crap you are going to wade through to do production. http://www.bunniestudios.com/ http://www.bunniestudios.com/ The discussions about what goes into producing the DEFCON badges each year are also fascinating: http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-16-Badge.pdf http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-1... The DEFCON discussion is always especially interesting because it is a VERY constrained problem: low volume overall (for electronics <50,000 is low volume) but high volume in terms of units-per-time, tight cost constraint, generally a tight battery constrain, and a desire for hackability. Operations is hard. Let's go shopping. There is a reason why there is a Chief Operations Officer in manufacturing companies ...

jackgavigan 12y ago
It's a bit of a cliché at this point that the bottleneck for DEFCON badges is Customs and they always arrive at the very last minute. The exception was DEFCON 19's non-electronic, titanium badges, which were not just on time but arrived so early that the DEFCON staff hadn't taken over the conference location yet, so they ended up getting stored in someone's hotel room.
GFischer 12y ago
Thanks to the link about the DEFCON badges, really cool :)
- bsder 12y ago
  Read some of the articles about other years, as well. They are ALWAYS a fascinating read.

autodidakto 12y ago

Grammar Nazi Time. An excerpt from Oxford's American: 1 (of a person) surprised and confused so much that they are unsure how to react: he would be completely nonplussed and embarrassed at the idea. 2 informal (of a person) not disconcerted; unperturbed. usage: In standard use, nonplussed means ‘surprised and confused’: the hostility of the new neighbor's refusal left Mrs. Walker nonplussed. In North American English, a new use has developed in recent years, meaning ‘unperturbed’—more or less the opposite of its traditional meaning: hoping to disguise his confusion, he tried to appear nonplussed. This new use probably arose on the assumption that non- was the normal negative prefix and must therefore have a negative meaning. It is not considered part of standard English.

arbuge 12y ago

>> But when Ars reached Chen by phone, he seemed nonplussed by his own company's failure. "Do you know what the percentage of completion is for Kickstarters in general for technology-based startups?" Chen asked. "Probably 85 percent of all startups fail." I wonder if this is actually true and if there's any hard historical data on this. It sounds to me like a statistic he just made up.

dredwerker 12y ago

This was created in response to this if I remember rightly: http://hackaday.io/project/86-Mooltipass http://hackaday.io/project/86-Mooltipass The mooltipass is an offline password keeper. The concept behind this product is to minimize the number of ways your passwords can be compromised, while generating and storing long and complex random passwords for the different websites you use daily. It is designed to be as small as possible so it can fit in your pocket. Simply visit a website and the device will ask for confirmation to enter your credentials when you need to login.

alexnking 12y ago

In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. We already have something just like that called "stores" and "preorders". I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. And I certainly don't want people to be able to sue those creators if it doesn't work out.

dragonwriter 12y ago
> In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. There's an easy way around that for projects, don't offer the output of the project as a reward for backing it. > I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. Okay, back projects where the creators don't offer the output of the project as the reward for backing it. (Or, projects where the development is already done, and the Kickstarter is just being done for initial production costs, so the product isn't speculative.) > And I certainly don't want people to be able to sue those creators if it doesn't work out. The only reason people could sue the creators is if the creators offered something in exchange for money, received the money, and didn't deliver as promised. The creators are in full control of what they offer as rewards. It seems to me that the problem is that some people want creators to be able to use the promise of a product they don't know that they can produce as inducement for people to give money, but not be obligated to actually follow through.
- jacalata 12y ago
  This project advertised itself as having all the development finished and only needing pre-order cash to kick off the manufacturing, so that's not really a good guide: The "Designs" are complete, patents filed, component suppliers selected, the manufacturing process is defined, the CM [contract manufacturer] chosen so all we need is your support in this project as we size the first myIDkey production run and ship product in September 2013. Please make a pledge and receive your myIDkey!
saraid216 12y ago
Why only hardware rewards?

patio11 12y ago

Please remember this article the next time you're inclined to say "Why did Paypal freeze pre-orders of a promising new startup when they clearly look like intelligent, diligent founders and have not a whiff of scam risk about them?"

jay_kyburz 12y ago
Who is PayPal to decide whether or not a company can achieve their goals.
- kalleboo 12y ago
  The ones left holding the bag when the credit card chargebacks come flying in.
- aristus 12y ago
  They are deciding whether or not to take on the risk of essentially underwriting the project. PayPal is on the hook for chargebacks; recently I got back $400 we had paid last November to a company that turned out to have been incompetent / scammy. I didn't initiate a chargeback until a couple of months ago. Whether or not you agree with the outcome of their decisions, you can't simply huff that PayPal has no "right" to decide whether to take on those kinds of risks. They clearly have skin in the game.
  - jxjdjr 12y ago
    But they shouldn't have skin in the game. Treating people like children without the capacity to make grown up decisions will only encourage this type of behaviour. Whytf do we need something like charge back?! To me it just seems like a poor justification for having a centralised router of money.
    - lmm 12y ago
      We need chargebacks because there are scammers out there and people get themselves into trouble with credit, so we made the democratic decision to require that mechanism.

pistle 12y ago

Wait. I might not get my bite of potato salad?

lily2014 12y ago

I do think that Kickstarter is a famly type project. We saw one's idea. And his plan.We back him.And there are many backers so each of backer will not loss much money. We backed a dream together, we share the risk. And we do wish a success fund project can reach their goals, build a great company.

lily2014 12y ago

Kickstarter is a platform where normal people can back those people have dream and great idea. As to the creators company can not acheieve their goas, kickstarter can not guarantee it. But it has already list all those rules to protect backers right.

richardw 12y ago

This is a story? A well funded tech product didn't materialise? Typical day for a VC. Selected and paid for by the general public? That's insane. Kickstarter sounds almost destined to fail but somehow it's succeeded so well that a failure is a story.

dkersten 12y ago

A3 to an A5 ARM processor That was never going to be an easy switch. A3 is a microcontroller, A5 is a full blown cpu.

volaski 12y ago

I think HN is pretty much a biased crowd for this topic. A lot of people seem to think of it as a charity kind of thing here--which is understandable because HN is full of creators who sympathize with them--but I doubt that's what the real majority of the people who backed those projects think.

xorcist 12y ago

When an operation that should be "two guys in a garage" starts futzing with C[ETF]O titles, that is my cue to run the other way. So far it's been a 99% successful guiding principle (with the big exception early in Internet advertising I wouldn't have enjoyed anyway).

gearhart 12y ago

From the title, I thought this was an Onion article.