$13m+ Swiss Army Knife of blenders biz collapses to fury of 20,000 unfulfilled punters

If you want to hear a tale of woe, you don't need to dust off some Dostoyevsky – just head to Kickstarter, which has no shortage of stiffed punters and failed projects. The latest example in a long line of crowdfunding cockups is the Coolest Cooler, which raised over $13m in 2014 and collapsed earlier this week with 20,000 …

[Zarno]

And yet nobody involved will ever get shut in the cooler for defrauding people.

Penguin, because the one from "The Wrong Trousers" was a chilly wee biter I could see selling coolers...

[Yet Another Anonymous coward]

Did anybody do anything illegal ?

Stupidity isn't necessarily a crime.

I can choose to pay upfront to a kickstarter and take the risk in return for getting it cheaper/earlier or I can wait until it's available at Walmart and buy it with the rest of the punters.

Of course the chance of anyone making a successful electro-mechanical consumer product on their first attempt is zero, but not knowing that is equally the buyers fault.

[Michael Wojcik]

Did anybody do anything illegal ?

Perhaps. Note the bit about the Oregon probe and resulting agreement.

But this is the point, isn't it? Kickstarter and the like are potentially a nice legal way to run profitable scams. As long as you can make it appear that you made a sincere effort to deliver the product, you're in the clear. Meanwhile, you've been able to give yourself X years of income.

[Jimmy2Cows]

Re: Oregon probe agrreement

That doesn't mean there was anything illegal either. Could have been some contractual obligation whtat was misunderstood or not noticed which had particular weight in Oregon state law. Which agains doesn't necessarily imply they'd done something illegal. It can equally mean they were about to but not delivering on their contract obligations.

[Henry Wertz 1]

Fraud?

"Did anybody do anything illegal ?

Stupidity isn't necessarily a crime."

This looks like a situation to me where they got in over their head; but, in fact, fraud is likely.

First, as soon as he talked about selling additional units to the public, to raise money to ship the original people's units, that sounds a lot like a ponzi scheme. Maybe not illegal since he straight up informed people what was happening.

He apparently said the original $190 was not enough to ship the units, asked some backers for an extra $97, then shipped theirs; fine. Later, he says he can't possibly ship any more, because the total cost for production and shipping was like $235. OK, so $190+$97 is $287. Seems like fraud to claim they neeeded an extra $97 a unit when they needed an extra $45, and not even apply the extra $52 a unit to ship any other people's coolers.

If you watch shows like American Greed, this kind of thing's not too uncommon. A lot on that show are straight-up grifters, they say whatever to get the most money possible then try to split town before they get either thrown in prison on ordered to repay the money. He's not one of them, they would have ran off without shipping a single cooler.

BUT, a lot on that show intend to run a legit business, and simply seem to be unable to admit the deal's scuttled; they have the best intentions but keep assuming that next deal will sort out all the financial problems. They will claim things are going to ship soon (or you'll get your money back soon), just one more issue to work out, just be patient, dragging it on and on until either the money hits $0 with no further cash coming in, or they get arrested or shut down by legal action.

[Stuart Halliday]

Check the CEO's car.

Probably top of the range something or another.

[oldtaku]

Stop backing gadget products, you twits

Book projects generally work out, and physical game projects (though there have been a couple spectacular failures) because producing books and boardgames is a mostly solved problem.

On the other hand, producing an unproven gadget is incredibly risky (as are video game projects). First, making prototypes is fun and easy. Making a production ready design and production line is anything but - suddenly you have to worry about whether that hinge can open 50K times without breaking. During R&D you just swapped out motors when one burned out - you can't do that now, all motors have to keep working. Oops, that molded plastic you used scratches really easy. Finding, characterizing, and fixing each of these things takes time. There are just dozens or hundreds of slow, tedious issues for anything you want to productize. As an engineer I've done it lots of times and it's always miserable and more work than you expected.

Second, if you get enough orders to require third world production, dealing with China is a major nightmare - I haven't had to deal with others like Vietnam but it's probably not hugely different. You might naively expect you can give them the BOM (Bill of Materials), Solidworks files, and instructions. Oh no. First you have to find someone to deal with. They will all promise you to the world. Then there will be lots of flying and calling as you laboriously explain various things and realize they haven't really understood or looked at your schematics, and they will explain to you they can't get these parts, or this part can't be manufactured like that. Lots of expensive prototypes and production test runs.

Then, and this is the worst part, even when things are working perfectly they will decide to randomly swap things without telling you. We had an entire run of printers die in weeks because they quietly changed one of the motors with a cheaper one to save and pocket 5 cents per unit. *To pocket a 1 cent saving per unit, a Chinese factory owner will happily make changes that can kill people* - I've seen it happen! They will be completely lax on quality control because they can use cheaper/fewer workers and send you batches with half the units defective. They will run your production line to make no-brand Chinese knockoffs they will sell cheaper than you. They will sell your design to other Chinese companies and prioritize them so the knockoffs are out before your product. The only way to deal with all this is to keep a manufacturing expert out there all the time to babysit - and best if they speak Chinese. Do you know someone like that?

So with all that, never back a gadget product unless it's a VERY minor refinement of an existing shipping one. And even then, why not just wait for it to be sold as a real product? So you didn't save 20%, one failed project will wipe out five of those.

[Imhotep]

Re: Stop backing gadget products, you twits

This comment is the kind of thing I like about this site.

[Marcus Fil]

Re: Stop backing gadget products, you twits

Whatever your favourite tipple is you deserve it. Clients look at me like I am mad when i suggest keeping the manufacture of their revolutionary concept within the UK. I am keeping a copy of your post a extra ammunition.

[Tom 7]

Re: Stop backing gadget products, you twits

Outsourcing in a nutshell, no clamshell, no slideout keyboard unit...

[Orv]

Re: Stop backing gadget products, you twits

Another major peril is if your idea *is* reasonably easy to produce, it's likely someone will make a copy based on your marketing materials and start selling it before your campaign is finished.

[Martin an gof]

Re: Stop backing gadget products, you twits

even when things are working perfectly they will decide to randomly swap things without telling you

This is exactly what happened to the Raspberry Pi when they were manufacturing the first batch in China, though they called it "accidental" at the time.

After that, of course, they moved production to Wales.

M.

[James Hughes 1]

Re: Stop backing gadget products, you twits

Majority of Raspberry Pi manufacture is Wales, although we do have quite a bit of stuff made in China. But we do have people over there a lot, and have a Chinese/Hong Kong guy there permanently looking after stuff. And we still have problems....

Kickstarter people NEVER realise how much work is involved in taking a product from concept to full scale production. We get quite a bit of stick because of how long it takes us to get stuff out. But it's really because we do it properly and try not to release stuff before its ready and because doing it right takes HUGE amount of time and money. We do have occasional glitches before anyone brings them up!

[Martin an gof]

Re: Stop backing gadget products, you twits

Just out of interest - I presume you also have problems in Pencoed, so is it that you have more problems in China, or just that it's easier to deal with a company a couple of hours' train ride away?

As an aside, I work for the National Museum of Wales and use quite a lot of every generation of Pi, mostly as low cost video players. Our curator of Modern and Contemporary Industry has "accessioned" one of my original model Pis, though he hasn't yet got around to putting it in the display case next to the Dragon and the Electron...

M.

[Mage]

Re: Book projects generally work out

No-one at all should back book projects.

The production cost for an ebook is simply the author's time.

A glossy colour coffee table book costs as much in postage outside the USA as the proof copy. POD is cheap.

Board games cost more to produce. However a playable mock-up can be done for less than posh night out for two, so only back ones that have already been prototyped and playtested.

I agree, do not back any sort of gadget unless you are a rich expert and getting real voting shares.

[Yet Another Anonymous coward]

Re: Book projects generally work out

>No-one at all should back book projects.

>The production cost for an ebook is simply the author's time.

That's precisely why you should back book/album projects.

An artist without a hugely successful publishing deal behind will not be able to afford to take the time to write a book. Even a successful author who wants to write a book in a different genre might not be able to get an advance big enough to live on.

Kickstarter is arguably a better deal for both the artist and the readers/listeners than the traditional publisher model

[Michael Wojcik]

Re: Book projects generally work out

The production cost for an ebook is simply the author's time.

Not for a good ebook.

Very few people are talented authors, competent writers, and capable of decent development editing and copy-editing. And even those rare sorts know that editing your own work is considerably more difficult than editing someone else's (due to various psychological factors, such as reading what you expect to find rather than what's actually on the page); and trying to do all the work yourself is very resource-intensive.

[Jon 37]

Re: Book projects generally work out

A book author that wants money to live on while writing, doesn't need all that money up front. So they don't need a Kickstarter. Patreon allows authors to write ebooks, post at least a chapter each month, and their readers each pay a small amount each chapter (with a per-month cap). If they don't post they don't get paid; if quality goes down too much then people will stop subscribing.

That way, the risk to the readers is much much lower - they're paying for results, not for the promise of results.

When the book is written, the author can give a complete electronic copy to their Patreon supporters, and/or publish the ebook, and/or do print-on-demand. If they want to, that's the time the author could do a Kickstarter for a bigger print run which is cheaper per book than print-on-demand.

[John Gamble]

Re: Book projects generally work out

"The production cost for an ebook is simply the author's time."

Copy editing, layouts, artists, all these take time, money, and someone's talent other than the author's, and who says that the only format is the ebook or picture book?

And even ebook creation is still not as simple as the techno utopians want us to believe -- I've caught errors in one format that didn't show in another.

[SundogUK]

Re: Book projects generally work out

This. Google for Charlie Stross on it...

[Lazlo Woodbine]

Re: Book projects generally work out

There was a company called Pledge Music, they allowed fans to pledge funds in advance for albums and books.

All very well, except Pledge Music's US parent decided to repatriate all the pledged funds and almost none went to the artists, and the fans lost out.

[Throatwarbler Mangrove]

Re: Stop backing video game projects, you twits

I . . . I backed Homeworld 3, and I'm not ashamed to admit it. Don't you laugh, damn you, don't you laugh!

[Michael Wojcik]

Re: Stop backing video game projects, you twits

Eh, there's no shame in it, in my opinion. Sometimes you want to gamble a bit on the possibility of getting something you'd like. It's an investment.

Years before there was such a thing as Kickstarter, I was one of a hundred or so folks who pre-paid for ADV to license and subtitle the Kimagure Orange Road series. My name's in the end credits that run in the final tape¹ of each of the two box sets, along with the rest of the backers.

I haven't watched those KOR tapes in many years; my tastes have changed a bit. In fact, I loaned the first box set to someone and never got it back. But I don't regret supporting the project.

¹I did say this was some years ago.

[Henry Wertz 1]

Re: Stop backing gadget products, you twits

"We had an entire run of printers die in weeks because they quietly changed one of the motors with a cheaper one to save and pocket 5 cents per unit."

Got to be honest, I would make it clear to my producer they will NOT be paid if they make units that are not to spec. Then do it: these are not the specified motors, you are not being paid for this run. I bet that would keep them in line!

Excellent post, BTW! I didn't realize there was quite that much problems with overseas production!

[Tom 7]

Kickstarter motto

never give a sucker an even break.

[Marcus Fil]

25% Tariff

Another lesson here - if you have a business plan remember to factor in that 50% of the electorate of your country are below average (mean) intelligence. It can be very hard to factor in the impact the election of specious, mendacious chancers can have on your county's trade relationships. Just sayin

[sbt]

Don't be mean, Or, Lies and Statistics

50% of the electorate of your country are below average (mean) intelligence.

No thumb either way, but you're thinking of the 'median', as in 50% ... are below the median intelligence.

With those ten-dollar words like mendacious, I figured you'd be interested in precision and correctness; just sayin'.

[maffski]

Re: Don't be mean, Or, Lies and Statistics

Well, if it's correctness you're after then '50% of the electorate of your country are below average (mean) intelligence.' is an impossible statement to make, for instance 100% of the electorate could have the same intelligence, in which case 0% would be below the median.

[sbt]

Assume a spherical brain, in a straw man

Sure, let's say your country is populated by robots, all the same model (including firmware revision), with the same IQ. The median and the average are the same, as are the maxima and minima. It's a pretty artificial example, though.

If your sample is more varied, but the distribution is symmetrical about the mean, then the median and average (mean) can be the same, and therefore 50% would be below the average. But again, those are pretty special circumstances but will be true of IQ in human populations if the scores are scaled/weighted in order to adhere to such a distribution. They seem to be scaled such the mean is 100, but I've seen no claim to symmetry.

In general, given a statistical distribution of real world populations (which is the category of the statistic that was challenged), the claim that 50% will be below the median holds. Not so for the mean.

[SundogUK]

Re: 25% Tariff

Yes, the fools keep voting for socialists who bribe them with other peoples money.

[Oh Matron!]

Re: 25% Tariff

https://www.ukpublicspending.co.uk/uk_national_debt_analysis

Come back later when you've had a read and tell me how those " socialists" you speak of are doing.,.,.

[Doctor Syntax]

Re: 25% Tariff

Perfect illustration. Mopping up the consequences of the Blair/Brown let the future pay for it approach when it finally hit the buffers is painfully obvious. It would take at least another decade of a flourishing economy to pay it down. What a pity we're not going to get that.

[DrXym]

What do people expect

These crowdfunding sites exist to charge a sizeable % rake to hookup incompetent / scammy / non-viable businesses with people that have more money than sense.

[Aristotles slow and dimwitted horse]

Re: What do people expect

Dammit you commentards with your cynicism!!! I had this almost totally legit Kickstarter grift lined up for a giant IOT and GPS connected model Badger as well. Just think of the use cases... invading French held castles remotely for one eh? Yes?

I was only looking for an almost reasonable £15,000 per person initial investment as well.

[streaky]

Man...

I remember laughing my tits off at this kickstarter and how much money it was pulling in.

Never once had an issue with a kickstarter, maybe because I pay attention to who is selling and what they're selling.

[chivo243]

Can I get on that fits on a Unicorn?

https://www.theregister.co.uk/2019/12/11/unicorn-scooter-failed/

Really, we have to stop the making of shitty products...

[John Brown (no body)]

Re: Can I get on that fits on a Unicorn?

My Kickstarter project relies on unicorn shit. Are you saying I have to go back to square one now?

[Anonymous Coward]

If you fund a product on Kickstarter or Indiegogo...

... you are gambling that it will deliver, and when it doesn't you are fucked.

This scam artist is gaming the system, and his last fraud scheme netted him millions.

Expect to see more of this shit on Kickstarter/Indiegogo, with this twat and his ilk all over it.

[eldakka]

5 years inordinate?

Five years is an inordinately long time for a product to be delivered, even by low standards set by many crowdfunding campaigns.

I've been waiting (not really, haven't expected to receive it for years now, not since they stopped responding to emails) more than 5 years for my Mycestro mouse.

[Anonymous Coward]

Re: 5 years inordinate?

Why? There are optical ones about that size. Band dade one to your finger, job done.

[hoola]

Crowdfunding

The entire concept of crowdfunding is reliant on these websites that facilitate the process. As with any financial instrument those running the scheme, IPO or whatever will be taking a commission. It is this commission that is the important thing to them, particularly in this area of unregulated Internet funding. It is just seen as a more acceptable version of the scroats that try and sell worthless shares for startup companies.

Unfortunately, for whatever reason there appears to be a never-ending pool of people who are sucked in by these "kickstarter" promotions who end up losing money.

[TeeCee]

...with a built-in blender, phone charger, wheels, speakers and more.

Aha. Design by committee. That always works out well.

Did it also have a tool for removing stones from horses'camels' hooves?