Kickstarter funded analysis of what happened with the Zano drone meharris/how-zano-raised-millions-on-kickstarter-and-left-backers-with-nearly-nothing-85c0abe4a6cb#.mh9a6i7ld

The summary points to incompetence rather than malevolence.


I would hope folks take the time to read the full article as I found it to be a very good write up of a failed company/product. I always cringe when I see a project get way over funded as crowdfunding is a great way for small companies to get some funding but when you get this many orders, you are entering a whole new game that snacks on newbies. I remember when this product came out and I saw the video and thought wow, gotta get me one of these, but then the drugs wore off and reality kicked in and I passed on it as I thought that was just way to good to be true and clearly it just wasn’t true and all the wishing and dreaming and effort couldn’t change that. Never deny reality as she doesn’t like it and will beat you to a pulp at her convenience.

I treat things like Kickstarter pretty much as I would any investment, it just has a way smaller scale. I invest a limited number of bucks and I might get a small reward, or like in investing I might get squat as really these guys are fishing for money to invest in finishing their product and clearly some projects are less further along then others, but the point is they aren’t finished and Kickstarter isn’t to be confused with Amazon. Certainly these sites could work a little harder to vent projects posted on their sites, but that would be counter to their business model and ‘makers’ have lots of choices as to where to fund their project so there is likely just a bit of competition to get the business of crowd funding a given project on their site and not a competitors, but certainly KickStarter has taken a bit of a image beating over some of the failed projects and it has no doubt affected their bottom line so I expect they are working to on the credibility thing.

But a very good read.

I found the article a fun read as well - I hadn’t heard of the Zano.

Having said that, a linked army of drones deployed worldwide, connected to a single server that could upload new software at any time…brings to mind a few interesting scenarios.

@ mtylerjr


@ Mike - Literally in the Sky network lol

I finally finished the entire article. It sounds to me like there needs to be a professional services company that creators can contract to assist them with this exact type of problem. Kickstarter got their fees and the CC processors got their fees. I think that for hardware startups like this, Kickstarter should take the Amazon approach: Send us one. Just one, we’d like to see it. What it costs to build just one is irrelevant, we just need to know that the tech works.

There are many companies that already do the kind of work you mention @ MrJohnSmith. Dragon Innovation is one that springs to mind - they did a lot of work with Pebble (apparently) and many others.

@ Brett - Actually no, not Dragon. I mean a company that you can send a PCB file, they tell you whats wrong with it so you can go back and fix it; and they don’t care that you’re not a permanent resident of the 50 US states and District of Columbia.

you mean if you have what you think should be a working prototype but it doesn’t work ? That to me is a part of the bring up process debugging you’d do - it’d be really hard to take a random PCB that didn’t work with little background and then reverse engineer / troubleshoot diagnose it. “Never working” devices are hard to debug, and the designer is probably best situated to deal with that as they have the background and the electronics building blocks. Surely the prototyping process has led you through multiple revisions or subsystem boards that work, to help you see what is different. In the case of a product going down the gurgler, you really need someone to untangle the manufacturing or production woes, whatever you’ve got yourself into, to bring back the likelihood of a commercial success.

@ Brett - No, the pcb works however there could be problems that an amateur would do that a professional would pick up on. E.g. Accidental RF emissions, or incorrect decoupling.

In the context of Zano, and you completing reading the report, I fail to see what good that would have done? Their issues weren’t the PCB or even the technology implementation, it was an overall project perspective that they never took. The fact that the commitment to hard dollar production was made before the foundational parts were resolved would have been addressed by someone like Dragon, and potentially led to an earlier winding up, but that’s the reason these types of companies exist, to make sure things that are commercially focused will be commercially successful

And I am sure there are hundreds of worldwide electronic design firms who do short-term design review work. Pick your local yellow pages or favourite search engine and search away…

@ Brett - There is no such person/company in my region who does electronic design work commercially.

EDIT: Also, as far as I can tell Dragon doesn’t do design reviews. At least their website doesn’t lead me to believe that.

I read the article in its entirety. It looks like to me that when a Kickstarter projects gains a lot of momentum and over a certain funding point (maybe $1,000,000) there should be a little more scrutiny put into the project by Kickstarter. Maybe a pause in accepting new backers while it is reviewed. If done right it could be a celebrated milestone and a boost of confidence after the review. I am not sure how or who exactly would review it as each project is different.

The BIG downside, and why it won’t happen, is it puts Kickstarter in a position of “endorsing” a project. If the project fails they would share in the liability.

In the end there is no perfect solution. It is clear that many people on these funding sites do not understand the “buyer beware” aspect. They see it as an online store with cool new gadgets to buy.

@ skeller - Or what they should do, is send the money that the project was hoping to raise first. After that is delivered, THEN release the rest of the funds.

So you should be that person then !!! Opportunity awaits !
BUT: in the (small) world of the modern internet age, you don’t need to have someone sit next to you to do this kind of service. Pick someone who has a good reputation for this kind of thing and will work with you in line with your timezone requirements, ship them the design brief and the outputs, and work through it.

Yes, that’s not an explicit service Dragon offer. I never suggested they did. They are the type of firm that could have helped Zano be a success by properly estimating and orchestrating their project. You keep talking like you think the Zano needed a design review to help them, but that’s not what the analysis this thread started with said, or even hinted at, that they needed. If you’re looking for that service, might be worth a) being explicit that you need it, and b) create a separate thread - there’s at least two people on the forum who do what I loosely call “freelance” work that I am sure would offer advice and possibly consultancy, or other direct suggestions

As the article suggests, KS have considered this type of throttling of payments, but the view was that this is likely to lead to worse outcomes in general rather than more successes. If you have to manufacture thousands of your widget, but you estimated only a hundred in your KS goal, then there’s no way you could be successful - you’re either going to manufacture a worse product in the overall scheme of things (more cash up front gives more freedom in investigating the best way to produce something) or you’re going to produce in two waves, instead of a single larger run where you get the benefit of production stability.

@ Brett - If Dragon had done a design review of the Zano before all that money got spent, then they could have come up with a solution to make it work or at least be able to refund the backers some of the money. At one point Zano didn’t do a test run when they should have. Further, if they had a dragon on board they might have avoided those delays where the plastic parts were incorrect or broke easily.

@ Brett - So let me get this straight. You have a goal of 100K on KS. You were prepared to deliver the product given that 100K. You end up raising 1M. Are you saying that because you didn’t get the 1M and only get the 100K that you will obviously deliver an inferior product? Because it has to be done in 2 waves?

“obviously” is a pretty black-and-white word, and “inferior” too. That’s not what I said nor implied.

Lets make this example a little more real.

I am planning to make 1000 widgets. I set their price to $100. I set my KS funding goal to $100k. The funding campaign ends with me needing to produce 10,000 of these, a 10x over-subscription.

I wanted to produce something that used plastic parts. My plan and pre-work had this all being done with 3d printing but nobody is interested in scaling up production on a 3d printed part to that volume. I need to look at a proper injection mold instead. If I have extra cash behind me (when KS give me all up-front) I can go through the mold design and making process, using expert designers and manufacturers, to get the best outcome for my 10k unit production. If I don’t have the extra cash behind me (when KS only give me the up-front $100k) I have to decide on a compromise - can I afford to eat into more of the overall cash reserve to do it right (and maybe have to compromise on some of the other engineering work in my product) hoping I can then pass KS’s requirement to get the second funding, or do I have to shop around and get the cheapest thing I can find that would be acceptable but not necessarily the highest quality (a race to the bottom). Either way, not having access to the extra cash introduces risk to my completion and provides an avenue for the result to be less than it could have been.

I need to buy packaging for my units. I had worked out where I would get this done, at what price point / features / quality I’d get, and what suppliers would be happy to do my job, to achieve my 1000 unit run. Now I need to scale that to 10k units. Because I now have greater buying power with my larger run size, I can now shop around to the larger scale, higher quality, providers since I’m now above their minimum order quantity limits, which helps me drive the per-unit cost lower. I can opt to get a higher quality product, get more folding lines made on the box, get a custom shape, get higher quality colour printing, or a clear plastic insert while still keeping the per-unit cost in the same ballpark. But I don’t have the cash reserve to purchase this in one large run - what compromise should I make?

So ultimately, I can see how making an artificial decision on limiting the funding to my original $100k adds (not removes) risks and can mean a product could be less than what it would have been with all the funding being released. KS came to that conclusion as well, in the article.

Dragon don’t do design reviews. Dragon help people navigate the intricacies of production. Absolutely I believe that had Dragon or a similar firm been involved in Zano from the outset (or early on) they would have been able to help navigate some of the issues that they hit and made different decisions - but that involvement couldn’t have been just a “design review”. A design review doesn’t show you chose a crappy supplier for your props, or you didn’t spec them right or you didn’t have the right relationship with the vendor to achieve an outcome. A design review doesn’t tell you that you need a second or third or whatever test run before pulling the trigger on the full production run, or that you needed someone in the factory when the production run was occurring to guide the outcome if issues were found. It wouldn’t stop the team from moving too far forward in certain areas when earlier milestones weren’t being hit or couldn’t be hit without significant rework, that might have stopped the bleeding of cash. It wouldn’t have stopped someone from having a flawed business plan or making too many bold assumptions. Only looking at the situation holistically would someone have been able to guide the team in addressing all these things.

I also want to make my position on KS known - I have backed many products there, including Agent (which purports to still be going to deliver [something?]) and also one other non-delivery where I’ve lost money (all spent, nothing to return, and no product). That won’t stop me backing others. I think of that money as a way to get the cheapest first run of a product, and hopefully allow that person/company to build a sustainable business for that product and others. Sometimes, backing a horse you will lose, other times win - business is sometimes no different to that.

Brett, then you would have does exactly the thing that would cause the entire project to fail. You will be chasing the dog in the reflection with the bigger bone. “When it is good enough, it is perfect”. The backers of the project were perfectly fine with the 3d printed version you were giving out at first, why would you go off and try to create injection molded versions? You had a plan, suppliers, a design and you would basically go back to redesign because you got 10x orders for a product you now consider crappy. Who knows, perhaps those backers were supported it BECAUSE it was 3d printed. Now they get a normal looking injection moulded case and they feel buyers remorse.

I was suffering from exactly the same thought pattern. And I’m in the same boat as you, except my widget’s selling price is $3,000 USD. If I start up on Indegogo with a goal of 30K and it goes up to 3M; I’m not going to change a single thing. Why, because I must be able to acknowledge that I put my best foot forward and did the absolute best that I could have done at this point. And if people were willing to give me 3 grand for that product then it means that they see value in that work that I have done. I will not jepordize those people’s trust trying to over deliver and end up not delivering. This is what I think Zano did. This is why I think kick starter should withhold the stretch funds until the initial goal funds have been delivered. “Faithful with a little, faithful with a lot”.