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The Almighty Buck Technology

Another Crowd-funded Drone Project Collapses (bbc.com) 211

An anonymous reader writes: Less than two weeks after we heard about the "robotic dragonfly" project failing, the BBC brings news that an even bigger crowd-funded drone project has given up development as well. The ZANO mini-drone raised a whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground. They were supposed to start delivering drones in June, and a few hundred of them slowly trickled out. In October, they posted a long update detailing their plans for shipping the other ~15,000 drones they had been paid for. Their latest update, posted today, says, "Having explored all options known to us, and after seeking professional advice, we have made the difficult decision to pursue a creditors' voluntary liquidation." This will leave thousands of backers without a drone, despite paying £140 or more apiece.
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Another Crowd-funded Drone Project Collapses

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  • Follow the money (Score:3, Insightful)

    by BarbaraHudson ( 3785311 ) <barbarahudson@NOSPaM.gmail.com> on Wednesday November 18, 2015 @02:23PM (#50956551) Journal
    For once, the advice "follow the money" is especially apropos. How can you make $3,500,000 disappear? Sounds like there should be some recovery options against the people running this.
    • by The-Ixian ( 168184 ) on Wednesday November 18, 2015 @02:37PM (#50956695)

      If you want to invest your money in risky ventures you should expect to lose it.

      Don't risk what you cannot afford to lose.

    • Re: (Score:3, Insightful)

      How can you make $3,500,000 disappear?

      Oh please! You're kidding, right [reuters.com]? We can make 8.5 trillion disappear, okay? In fact, multiply that by about 500, and you have the derivatives markets...

    • What 'recovery'?

      You're not an "investor", you're essentially a "benefactor".

      Think of these crowd-sourcing things as giant tip jars. You don't get any guarantees.

      Why do people act like these things are any different than throwing change into someone's guitar case?

      • Re:Follow the money (Score:4, Interesting)

        by Triklyn ( 2455072 ) on Wednesday November 18, 2015 @03:04PM (#50956957)

        it's slightly different, it's a conditional purchase/pre-pay.

        i make a pre-payment with the understanding that there's a chance that the venture might completely fail, but also with the understanding that if i don't, collectively i mean, then this item/idea that i find intriguing WILL never materialize.

        But if it does succeed, then i am owed this thing that i payed for.

        it's a purchase conditioned on them not completely screwing the pooch.

        • it's slightly different, it's a conditional purchase/pre-pay.

          Yes, it's conditional on the parties being able to deliver. And unlike an actual "purchase" you have no recourse if the condition is not met.

          Seriously, crowd-funding is a gigantic scam. Think of the thousands of games getting kickstarted right now and now tell me how many kickstarted games have actually seen a final release where people weren't disappointed. I can count them on one hand and still have enough fingers left over to pick my nose.

        • it's slightly different, it's a conditional purchase/pre-pay.

          This might be what it feels like, but it is not the arrangement caused by giving money to Kickstarter.

        • it's slightly different, it's a conditional purchase/pre-pay.

          Is it really?

          Because I don't think that's what happened; it's far too easy to spend all the money and fail, or have the magic of accounting say you've spent all the money and failed.

          You're looking for something which is insured, underwritten, and guaranteed.

          I don't think you get any of those things. In fact, judging by the summary, I'd say you don't get that at all.

          Having a mission statement and a promise of being sure it will work ... well, good

      • by vux984 ( 928602 ) on Wednesday November 18, 2015 @03:13PM (#50957033)

        Why do people act like these things are any different than throwing change into someone's guitar case?

        I expect it is because the guy with the guitar case isn't promising to give anyone a drone if you put money in his case.

        You aren't wrong that people are setting their expectations wrong with kickstarter. The money goes in and the product may or may not ever come out. That's a gamble you take.

        Its certainly not really an "investment" because your maximum reward is a consumer product worth roughly what you put in, and you certainly aren't a shareholder of the venture that creates the product.

        But kickstarters do have an obligation to make a good faith attempt to deliver on their promise. Its not illegal or even a breach of contract to fail at the attempt. But it would be a breach to simply take the money and walk away or otherwise act fraudulently.

        Its clearly a very different proposition than outright charity too.

        • When they have a sign that says "I have no money for food" you expect them to buy food with the money you give them. Or "i have no home", you expect they're saving for a bond and rent.

          Instead they spend the money you give them on drugs and alcohol.

          • by vux984 ( 928602 )

            Instead they spend the money you give them on drugs and alcohol.

            1) You are not affected by their choices in any way.
            2) Clearly they are eating something between the drugs and alcohol.

            • I am affected by their choices in that I wouldn't have given the money knowing that it was going to be misappropriated. But more importantly, the victim is the person in genuine need who I can no longer help since I have a maximum amount of charity that I can give (If I'm very generous that's 100% of everything I have but it's still finite). So that person is causing a great deal of harm to society. If they piss in a well that I don't use, I'm still upset about it.
              • by vux984 ( 928602 )

                I am affected by their choices in that I wouldn't have given the money knowing that it was going to be misappropriated.

                Riiiiight.

                The homeless junkie you gave a dollar too... your going to blame HIM, a person with a mental disorder / addiction problem -- for 'misappropriation' of funds when he buys junk?

                I'd blame the guy in the mirror for that misappropriation.

              • But more importantly, the victim is the person in genuine need who I can no longer help since I have a maximum amount of charity that I can give

                So after wresting with your consciousness, you decided to buy a neato app controlled drone with an HD camera instead of donating to charity?

      • What 'recovery'?

        You're not an "investor", you're essentially a "benefactor".

        Think of these crowd-sourcing things as giant tip jars. You don't get any guarantees.

        Why do people act like these things are any different than throwing change into someone's guitar case?

        Not when there's fraudulent misrepresentation involved. The promo video they showed everyone was totally fake.

    • by Lumpy ( 12016 ) on Wednesday November 18, 2015 @02:48PM (#50956793) Homepage

      Not just follow the money. They had NOTHING but a napkin idea at the start, that is how you end up with a guaranteed failure.
      Back projects that have real prototypes and real ideas on how to scale up to delivering thousands or tens of thousands. Honestly if any of the people running it was getting more than 100K a year in income from this then they are dirty thieves that need to have their pants set of fire.

      • This is why I haven't opened any video game projects yet: until I have art and some kind of video to show, it's not worth trying to get money to hire artists to create the graphics. Just a plea of "I know how to make this work, but I'm not an artist or musician" and a picture of XKCD Adventures that demonstrates nothing isn't a good way to beg for cash. Credibility isn't returning actual results; it's convincing people you can return results eventually.
      • They had a demo of what appeared to be a working product. They said it worked. They lied. I want my money back.

        • by Lumpy ( 12016 )

          They had a clever bit of video that even then people were calling out as staged, faked, or possibly CG.

        • They had a demo of what appeared to be a working product. They said it worked. They lied. I want my money back.

          P.T. Barnum had a word for people who find themselves in situations like yours.

        • https://www.youtube.com/watch?... [youtube.com]

          i guess anything could be faked, but this really doesn't look like it. the video doesn't show anything special for sure, but it seems like proof they at least tried to build a product.

          3.5m USD is nothing when it comes to hardware. i don't know much about manufacturing, but i do know it's really, really hard. triple that when it comes to something with moving parts. it's completely plausible that they built a few semi-working prototypes, but taking it to a quality consumer p

      • they built flyable drones and built the smartphone app to control it.
        https://www.youtube.com/watch?... [youtube.com]

        i guess anything could be faked, but this really doesn't look like it. the video doesn't show anything special for sure, but it seems like proof they at least tried to build a product.

        3.5m USD is nothing when it comes to hardware. i don't know much about manufacturing, but i do know it's really, really hard. triple that when it comes to something with moving parts.

    • by bv728 ( 943505 )
      3.5m - 5% for failed Pledges = 175k - 10% for Kickstarter and Credit Processor Fees = 350k - 20% for Taxes (this is income!) = 700k Total received budget ~= 2.28m Now, figure 30% of that is shipping (684k), 40% of it is manufacturing (912k). Left over: $684K Now, common wisdom is that hiring one guy at $60k a year costs you $100k a year total in physical plant, HR, Payroll, benefits, etc. While I doubt they had ALL of that, let's say they're five guys, so now they have $184k to absorb any unexpected expen
      • Their original ask was around $175,000. Obviously, since they have yet to produce a product that works anywhere near spec (or that works at all, really), and they've only shipped a few (so no 648k in shipping), have only received a fraction of the parts (there were different runs scheduled for different color schemes) so no 912k for manufacturing), so where is all that money that they haven't spent on shipping and manufacturing?

        the answer is "Most of what the campaign made was already earmarked to known costs - each pledge did not make them a lot of money, because what they were doing was expensive!

        If the money was earmarked for known costs, and most of those unknown costs hav

    • How can you make $3,500,000 disappear?

      Ten engineers at silly valley rates for a year, or various other other legitimate ways.

    • Step 1: kickstarter needs to limit the money. Put a hard cap at (just as an example) 2x the original goal.

      Many kick starters end up making so much money, that they are compelled to create a matching product on a scale for which they did not plan. Instead of building a couple hundred drones on a £125,000 budget, they were forced to increase production by an order of magnitude. They simply weren't prepared for production on that scale.

      I'd wager that some feature creep found it's way into the

  • by Archangel Michael ( 180766 ) on Wednesday November 18, 2015 @02:24PM (#50956571) Journal

    I'm beginning to think that Crowd Funding is the latest greatest version of a scam artist's dream.

    Step one: Promise the world
    Step two: Set up crowd fund account
    Step three: Exploit Media for free publicity
    Step Four: ???
    Step Five: Profit!
    Step Six: don't deliver anything to anyone.

    • by paiute ( 550198 ) on Wednesday November 18, 2015 @02:30PM (#50956627)
      It's like The Producers, only with computers.

      I smell a remake.
    • by tnk1 ( 899206 ) on Wednesday November 18, 2015 @02:51PM (#50956823)

      Presumably that can and does happen, although most are not scams, just poorly run or run into unforeseen difficulties.

      Kickstarter is about backing projects, and when those projects are advanced, like this concept, the project can fail due to either technical difficulties or inability to cost effectively manufacture the objects.

      So, realistically, while most people would prefer to invest in projects that will produce a result, there is a substantial difference between a Kickstarter for something like a board game, which is relatively easy to publish, compared to an advanced drone, which is not easy to build, and the manufacturing process has to be built from the ground up.

      People who get into Kickstarter projects expecting a product at the end are advised to have some understanding of the relative difficulties involved of the project they are supporting and then not support it if it is too speculative.

      In this case, the project was sort of speculative. They were asking for 120,000 to get started, and they got two million. While that improved their ability to work on the project, it caused expectations to rise, and probably caused the team to make the mistake of increasing the scope of their project beyond their comfort zone.

      • Sorry, but there are already fifty different "drones" on the market. This wasn't ever going to be successful, mainly because it wasn't really new or innovative. It was "me too" project.

      • by Kjella ( 173770 )

        So, realistically, while most people would prefer to invest in projects that will produce a result, there is a substantial difference between a Kickstarter for something like a board game, which is relatively easy to publish, compared to an advanced drone, which is not easy to build, and the manufacturing process has to be built from the ground up. People who get into Kickstarter projects expecting a product at the end are advised to have some understanding of the relative difficulties involved of the project they are supporting and then not support it if it is too speculative.

        Sure, there are a lot of real risks. But what you always have to ask yourself on a Kickstarter is "Have they been working on it as if they were $100k deep (in time or cash) from their own pockets, or has this been more of a dotcom-startup with high salaries, Aeron chairs and lavish company trips?" Because say you're 10-20% into this project, you start getting real numbers on the table and the costs are higher than expected, the market prices lower and you haven't really struck gold. Do you stock up on Ramen

    • I'm beginning to think that Crowd Funding is the latest greatest version of a scam artist's dream.

      Step one: Promise the world
      Step two: Set up crowd fund account
      Step three: Exploit Media for free publicity
      Step Four: ???
      Step Five: Profit!
      Step Six: don't deliver anything to anyone.

      Crowdfunding is just like a startup or any other kind of project, failure is to be expected.

      If you want a guaranteed product then go to a store and buy an item that already exists, but if you're banking on the creation of something new there's a real chance it won't work out.

      • go to a store and buy an item that already exists

        You mean, go to the store and buy a drone, like I can do now? This was nothing more than a "me too" project.

    • by plopez ( 54068 )

      Read "The Road to Wellville". It is set during the great breakfast cereal and processed food boom in the 1890's. A pattern followed by the great railroad buildout, the automobile boom of the late 1800s to early 1900's, the tech boom ofthe 50's, 70's, 80's, 90's, and later. The oil boom, cattle boom, etc. Nothing ever changes.

    • No need for step four!
  • It'll be called LightingHundredDollarBillsOnFire.com
  • >> whopping £2.3 million on Kickstarter ($3.5 million), after asking for a mere £125,000 to get off the ground

    Yeah, if I were the project founders, I'd say "fuck it," pocket the money and head to the beach too.

  • Yup, I "invested" (Score:5, Informative)

    by iplayfast ( 166447 ) on Wednesday November 18, 2015 @02:41PM (#50956735)

    They showed a completed project. They said it appeared in numerous places. It looked like all they needed to do was get money to start production.
    Their Risks and challenges paragraph. 100% confident. They know it works. How are you supposed to do due diligence on a product when they outright lie.
    I've complained to kickstarter, letting them know they are being tarred with the same brush, because dammit, kickstarter recommended them!


    Risks and challenges

    Through innovation and diligent research and development, We are 100% confident in delivering an Autonomous and Intelligent aerial photography and video platform. We know our technology works.

    We have enlisted a world-class British EMS (Electronic Manufacturing Service), with over 20 years of experience in bringing cutting edge high-end technology products to market, to manufacture ZANO for our Kickstarter backers.

    We have taken into account that component lead times potentially could cause delay in delivering ZANO to our backers on time. We have conservatively estimated a June delivery, however, Our component suppliers often need to order the raw materials to manufacture their components 12 months in advance, as a brand new product, it is difficult for us to estimate initial volumes and provide an accurate forecast to our suppliers. We want everyone to be able to experience ZANO experience, that's why we have not put a cap on the amount of ZANO's we are making available for the Kickstarter campaign. We have built fantastic relationships with our component suppliers who believe in ZANO and our vision to make aerial photography and video accessible to everyone. Our component suppliers have set aside large volume buffer stock to cope with the initial demand from Kickstarer! However, there is always a risk involved with large volume component supply, we thought we had better mention it! The risk isn’t if you will get it, it is simply when you will get it, if any supply issues arise! (We are working hard to ensure they do not!)

    • Re:Yup, I "invested" (Score:5, Informative)

      by Lumpy ( 12016 ) on Wednesday November 18, 2015 @02:53PM (#50956851) Homepage

      All of that is 100% bullshit out of their mouths unless they were making them out of strange space materials. and if these were all custom carbon fiber and titanium , everyone should have walked away understanding that it was 100% BS for the price point.

      Absolutely NO plastic injection company requires a 12 month lead time for ABS supplies, that is complete horse shit. Circuit boards even auto placed and tested have a MAX 3 month lead, and these jokers should have had the board design done and the files ready before the first kickstarter order came in.

      They were bullshitting everyone and they knew it.

    • Every time I read a kickstarter risk and challenges it demonstrates that most designers do not have any concept of what risk and challenges are. They assume the happy path to everything, so there is never or understated risk.
    • First they say there may be delays due to component suppliers, then they say their suppliers have set aside large stockpiles specifically for this campaign.

      It's a carefully crafted spiel, to first convince you they're being realistic - so you trust them - but by the time you've finished reading the paragraph, they're now convincing you it's a shoe-in and no way it can fail.

    • "kickstarter recommended them"

      Did they?

      Because KS's position on these has always been: we're simply providing a venue, a digital orange-crate for them to stand on and hawk their projects.

      Don't look at me because I've thought the entire KS thing is ridiculous Pollyanna'ish bullshit from the start. It might have been well-intentioned, and there are almost certainly valid projects that are what they seem, but it was bound to turn into a "money/gullible people" Separation Engine.

    • They may have been 100% confident, but that was solely their opinion. If they had had the ability to demonstrate the reliability of what they claimed they would have gone through traditional investment channels.
  • by TechyImmigrant ( 175943 ) on Wednesday November 18, 2015 @02:42PM (#50956747) Homepage Journal

    Excess revenue is a big problem for a crowd funded project.

    You might know how to build 200 units and ship them. Get some friends in to a soldering party.
    But if you need to build 200,000, you need manufacturing.

    Manufacturing require up front investment, employees, time and effort. The payoff is over a longer period as you ship products to market. If you build 200,000 then stop, you're going to make a huge loss, because you spent all that money setting up the manufacturing.

    • Also the incentive to squander the money and not deliver is greater- sure your name gets dragged through the mud but it is 3.5 million dollars!

    • ^Second this.

      I'm in the middle of spinning up my second contract manufacturer for a relatively simple device. It took 4 weeks just to load the Bill of Materials in their system! That was after all the kinks were worked out on our end and with direct relationships with half the suppliers. Now they can finally order the parts which have generally have a 6-12 week lead time. Digikey might have 800 motors in stock for 200 drones but you need to talk to at least 2 different middlemen if you want 1,000,000 of som

      • They said they already had a manufacturer
        They said they already had suppliers with parts in stock

        They didn't have 200,000 orders, they had 15,363.

        fyi: these motors are not from Digikey, they're from unicorns that shit out raindow jellybeans. They can go from 100,000rpm to -100,000rpm, with a prop attached, in 200ms. There's 4 of them powered from a tiny lithium battery.

      • by TheSync ( 5291 )

        t took 4 weeks just to load the Bill of Materials in their system! That was after all the kinks were worked out on our end and with direct relationships with half the suppliers. Now they can finally order the parts which have generally have a 6-12 week lead time.

        I think you need to physically move to Shenzhen!

    • They had a stretch goal of 2 million pounds. They got 2.3 million.
      You can't say they weren't expecting it.

      They also state, many times, they have already partnered with manufacturing house. No soldering party required.

  • by rsborg ( 111459 ) on Wednesday November 18, 2015 @02:44PM (#50956761) Homepage

    I really don't like the whining here.

    Let's see what happens to the actors involved:

    1) Project owners - will now have egg on their face and shouldn't (hopefully) have further options to scam on kickstarter (or gofundme) projects.
    2) Contributors - note the title isn't customer or consumer - should be happy they weren't strung along for longer. Some projects simply don't pan out, and this was one of them. Next time ask for credentials or track record before contributing.
    3) Kickstarter - Laughs all the way to the bank on their commissions. Will they ever take action against these kind of projects? Sounds like it's detrimental to their bottom line, so probably not likely.

    • Business impact: damages brand reputation. Business profit source: Nearly 100% contingent on brand reputation, 100% reliant on technological platform.
  • by allquixotic ( 1659805 ) on Wednesday November 18, 2015 @02:52PM (#50956835)

    The fact that they were able to trickle out a few hundred units suggests that their production process was not at all fit for producing as many units as were demanded once they got popular. They were happy to accept the money coming in, but they didn't realize until it was too late that it would cost way more than that to develop a production facility that could pump out the units requested in a reasonable timeframe.

    Building huge quantities of things is hard. Very hard. Just ask any car manufacturer that has tried to take a prototype or limited run vehicle and pump out hundreds of thousands of them per year. It's a completely different ballgame. It requires a very large investment in production facilities, automation, tooling, labor, supply chain, and distribution to take even a relatively inexpensive product concept and make many thousands of them, compared to making a few hundred. Some companies offer parts of the solution "as a service", but ultimately you are going to need some kind of deep customization for most products, and especially for something fairly unusual like drones.

    If you only had 500 orders, you could very possibly build each one by hand in a garage. It would be tedious as all hell, but with someone dedicated to making trips to hardware stores to acquire tools and parts, someone dedicated to boxing them up and shipping them, and 2 or 3 people building them, you could definitely have a garage business where you churn out 500 drones every 3 to 6 months or so. 15,000, though, is a quantity that demands a completely different manufacturing approach, unless you plan to tell people who ordered last that their drone is scheduled to be delivered in 2025.

    Based on the fact that hundreds of people got (presumably working) product out of them, I'm willing to bet that their primary, and successful, production "facility" was most likely a garage and/or basement, or a small leased or rented building with only the most basic facilities. The other possibility is that they actually tried to pay for the much more expensive full-blown process, the scale of which would let them produce around 50,000 or more drones per year, and completely ran out of money when trying to fulfill the remaining orders.

    This is what happens with crowdfunding, unfortunately, unless they agree to sign a contract up-front that they either owe you your money back, or a finished product as originally advertised.

  • Hardware is hard [medium.com]. Really [techcrunch.com] really [tech.eu] hard [nytimes.com].

    The list goes on [appadvice.com], and on [arstechnica.com].

    Even hardware projects with experienced teams can fail. If you see a hardware crowdfunding project, be fully willing to accept that your 'investment' (which is what it really is) is more likely to disappear than result in a finished product.

  • by modi123 ( 750470 ) on Wednesday November 18, 2015 @03:07PM (#50956989) Homepage Journal

    Even though places like Kickstarter really try to make it look like some sort of store the projects are all gambles. There are a few areas that seem to have it down right (books, comics, etc) and I have had success, but tech stuff? *low whistle* You have to approach those different.

    Neal Stephenson's 'Clang' comes to mind.
    https://www.kickstarter.com/pr... [kickstarter.com]
    http://www.polygon.com/2014/9/... [polygon.com]

    • Neal Stephenson at least has a reputation to maintain. A KS where he takes money and mismanages may cost him in his other business areas. For some projects, it's enough money for the recipients just to go hide out on an island somewhere.
    • Even though places like Kickstarter really try to make it look like some sort of store the projects are all gambles. There are a few areas that seem to have it down right (books, comics, etc) and I have had success, but tech stuff? *low whistle* You have to approach those different.

      Neal Stephenson's 'Clang' comes to mind. https://www.kickstarter.com/pr... [kickstarter.com] http://www.polygon.com/2014/9/... [polygon.com]

      Kickstarter has a reputation to maintain as well. While they may not promise anything in the fine print, if enough people get screwed and request a chargeback form the credit card company then the card issuers may decide to stop serving KS; even if no money gets refunded. In auditor, at some point a court may rule that despite KS' declaiming any responsibility they indeed do have some and order them to refund money.

  • Drones, meh.

  • It's pretty simple people - stop pre-paying for things. Video games, devices, anything... If it's not ready to be shipped or you can't walk out the door with it, don't hand over your money.
  • My background:

    I've run 6 Kickstarters with my wife to launch and expand our family business. The first project failed to make goal because we didn't understand that Kickstarter doesn't deliver an audience. We learned and the next four similar projects succeeded spectacularly - and now we have a viable business - with zero debt and nobody owning a share of our business but us. We have lots of very happy customers, lots of expensive equipment - and around a thousand very happy supporters. We also had one

    • IMHO, Kickstarter should create a two-tier system - in tier #1, projects have to justify every penny they'll spend in mind-numbing detail - and they should be limited by KS themselves to 200% of that goal or $50,000 - whichever is greater.

      Yeah, but they won't. They make 5 cents on the dollar, so how would it benefit them as a company to artificially limit revenue? Even with the occasional bad press, it's quite apparent people are still willing to shovel money into the machine.

  • There should be a "secondary market" build into crowd funding platforms.

    Imagine you put $150 towards a crowd funded drone. A year goes by, and you are getting nervous, so you can sell your $150 slot for $100 cash to someone else. Or if it starts to look like the product is going to be awesome, someone may offer $200 for your slot.

    There should be a "short market" as well. You offer a $140 slot to someone else for a $150 drone. Then if the drone doesn't get built, you keep the $140. If the drone does get

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