Hello! Yes, I went into this wondering if this were a scam; came out of it after editing the story (and reading transcripts and background material) believing it was an overambitious founder who didn’t match an understanding of the limits of his technical abilities with good business planning.
The saddest part is that I think if he’d started with a more limited, less-ambitious featureset, it would have still been compelling, and given themselves at least a year for the first batch, it could have been manufacturable. They would have raised less money, had less pressure, and not run out of cash. Even then, it might have fallen short, but the reports from employees and of some of the well-calibrated units indicate they were working their way towards something.
I’d also say this highlights a real flaw at Kickstarter: anyone being able to raise unbounded money. While Dan et al here at Glowforge come from a proven background in hardware and software, a lot of hardware makers don’t know how to make the hardware they’re producing—they lack the relationships and expertise. And I’ve been hearing that some projects line up suppliers, who then (when they hear about the success of project) boost prices, holding them hostage!
Kickstarter should probably put in tiers and limits for less-experienced creators.
@glenn, you and Mark Harris did really fine work on that article. Investigative work is always hard, and I came out of it feeling as though the final article was both compellingly readable and didn’t fall into the deadly practice of dumbing down the ambiguity and complexity of the situation. Kudos also to Kickstarter for commissioning the article, letting it be written with full freedoms, and allowing the full 13K words to be published. (from a former journalist and current editor)
I’ve been following Zano for a while, along with other high-profile failures (CS-1, the original Pebble, etc). While they are in the distinct minority, they are spectacular and certainly worth examining when they happen.
You hit on the common thread - lack of experience, underestimation of time/money/ difficulty, no plan b if something goes wrong. My dad used to say that it’s not the part of the iceberg that you can see that actually sinks the ship in the end…
We’ve run 9 Kickstarter projects and delivered on time for all of them - the Zanos of the world hurt us all.
Thank you! Mark did a great job, and I was happy to assist. It’s interesting having no “editor” as such: Mark set his own parameters, and my job was to make sure I thought he was going in depth enough and making sense. He and I are both pretty self-driven people, so we didn’t need a publication structure to produce this.
I hope it spurs positive discussion and helps shape thinking about crowdfunding. I really come away thinking that too much money is a problem.
Glowforge raised a massive amount, but they were already planning for growth, not struggling with funding turning prototypes into production. This definitely pushes them faster, but the fact that they started pushing out promised deliveries by months during the campaign, coupled with full pre-shipping refunds, is such a different approach than most large-scale, high-$ crowdfunding campaigns.
A great read. Thanks. Lest we think that only crowdfunding projects end in disaster and think less of them, recall the baggage handling fiasco at the new Denver International. Every once and a while when I get a little too ambitious and reckless in planning, I reread this article: Why Projects Fail
And one of many government software project failures: FBI case files
I’ve never heard of that, but I can imagine. My experience was the reverse. When Robot Turtles turned out to be bigger than planned, I went back and won an additional discount from the manufacturer since I was now ordering much bigger volumes.
Yeah, the suppliers are more savvy. I don’t think it was Coolest, but I know there was one very public situation lately, and I’ve heard more privately, that the initial bid that signed off on for a certain quantity is suddenly not honored when a campaign blows up. It makes sense if you go back for 10x or 100x and the supplier says they need to rethink it, but when the price goes higher for greater quantity? Or even for the initial batch that was already signed off on? Rrrrr
One of my key takeaways from the article is a quote from the founder: “The technology was so close.” As @glenn put it, a significant imbalance between ambition and ability.
But what about the scaling problem? What I gathered from the article, is that the decisions made for shipping 10,000 units are a lot different (and more dangerous) than the decisions made for shipping 1,000 units. Apparently being wildly successful isn’t always a good thing.
What I learned early on is that any given manufacturing mechanism or partner will have a “good zone” and a “bad zone”. To use Turtles as an example, I could have hand-cut and assembled a few dozen for about $5 (numbers as examples only - these aren’t correct), not including labor. I could have brought in workers to do a few hundred, which might have cost $10. A print-on-demand service could have done any number, but for $35 each. One manufacturer would do 500-5,000 for $8-$12. From 5,000-100,000, there are factories who manufacture for $4-$7. And finally there’s massive factories that don’t talk to you for orders less than 10k.
For Turtles, I basically persuaded a 5k-100k printer to print 1k and charge me for 5k. That meant I would lose money if I broke even, but I budgeted for that (I called it my ‘degree in kickstarterology’ plan). I would only break even if I hit 5k, which I didn’t think was going to happen. But taking that approach gave me the headroom to move up when eventually it got much bigger than I predicted. When it did, big companies started calling and asking for my business, so I asked my current vendor if they could discount further - which they did.
Another key consideration is how much you lock yourself in to a manufacturer. For games, I could switch at any time - it was just art files. One mistake I’ve heard people make is transferring their tools to a manufacturer without strong legal protections. Then the manufacturer has them tied up. It’s one of the reasons our injection molding tools are being created and, for the time being, run by a 3rd party. We may move it into the main factory when we ramp, but for now, it gives us some flexibility in case we get a nasty surprise.
This is all fascinating insight, you know. Something I’ve heard repeatedly from people who grew in scale by orders of magnitude over time is the flip-flop from in-house to contract to in-house. You made 100 of something, in house. Then you hit 1,000 and contract it out. But at 10,000, you’re better served to buy some equipment, because the cost savings is huge plus the QA/QC is much better. Then you ramp to 100,000 and you’d need millions to buy what you can have manufactured on a larger scale pretty cheaply…but then you need 500,000…
It’s pretty cool, though. One of the trends I’ve seen talking to crowdfunding folks, too, is that there are so many better small-scale options, between 3D deposit-style printing, CNC, and even xerographic output, through modest run (hundreds) of injection molding and so forth. Used to be a huge gap between handmade prototypes and large-run manufacturing/printing/whatever.
I even saw this on my Kickstartered The Magazine book. It was affordable to offset printing even as few as 1,000 and make it all work. I did a run of 1,500 and sold something closing on 1,350 or 1,400. When I was doing book printing 10 to 15 years before, it would have been hard to make that work below 5,000 without having a huge price tag attached to the book — like $50 (for a 216-page four-color hardbound) instead of $25.
"There is no forward progress without missteps."
That’s why we put that little piece of rubber on the end of a pencil.
All of us here are really glad you have been down that road and back up it @dan!
I am an outsider to the business world. Sometimes I wish I were in the game because it can sound so powerful and important. Then I read stories like this and remember why I am not in the business world. Here is a tale from Target Canada’s adventure. Wow. I had no idea. http://www.canadianbusiness.stfi.re/the-last-days-of-target-canada/?sf=xjldbv