Sunday, December 22, 2013

Kickstarter Risk Example - E-Bike Co. Goes Bust

I suppose I should take care not to appear obsessed with Kickstarter . . .

For a while I have looked at the Bike Portland blog fairly regularly because I guess I thought of Portland as somehow advanced in its support for cycling. Now I'm not so sure "advanced" is the right word, but anyway, it is a source of bike related news that can be stimulating to read.

They just had a blog post about a company ceasing operation - the company, Conscious Commuter, was trying to bring a folding e-bike for commuter use to market. Although not evident from their web site, they have packed it in - the Bike Portland blog post quotes extensively from an email sent out from the company to its Kickstarter supporters.

So yes, in addition to other funding sources, this company sought and got $25,000 through a Kickstarter effort. Thirteen of the people who contributed were at the $1,395 level, for which the "reward" was to be, "You are pre-ordering and will receive a numbered, signed, limited edition folding e-bike, numbered in the order your Kickstarter pledge was placed. In addition to special pricing, you will get another pre-release offer -- a 2 year warranty!" (Estimated deliver - March 2012.) Anyway - no, that didn't and isn't happening, as it turns out. Instead you get an email more than two years later that says, "We appreciate your support of Conscious Commuter. We wish we had been able to raise the additional funds needed to continue what we believed was a very promising business- but after two and a half years filled with momentous achievements and challenges, financial issues have forced us to close our doors." Actually the email says a lot of other blather. At this point anyone who gave them $1,395 is probably not too surprised.

Since this proposal was made in 2011, Kickstarter has tried to clarify that there is some risk in such things with their "Kickstarter is not a store!" blog post, that requires proposal to include a "risks and challenges" section (which the e-bike proposal didn't have) but in my experience these never say, "there is risk we spend the money on something other than producing the thing you think you will get."

Just from the fifteen minutes or so I have spent acquainting myself with this effort (admittedly after the fact) it appears they had problems staying on track. Even the Kickstarter people say, "under-promise and over-deliver" - instead they seemed to have tried to come up with every conceivable variant imaginable - the same bike without the electric drive, the same bike with the e-drive but you don't have to (or can't?) pedal the thing, even a version in carbon fiber.

A slick video pushing a carbon-fiber variant

Most amazing to me, for a project that involves Kickstarter funding, is the "about us" page on the Conscious Commuter site. (This page is most likely going to disappear soon, but no worries, I used the Internet Archive's "archive this" functionality to make a copy for posterity, which is here: I mean, good lord, the company describes nine different management or adviser types and nothing about anybody who puts their hands on a bicycle!! You know, to make one. The 25,000 bucks from Kickstarter, less the five percent to Kickstarter and the credit card charges, wouldn't pay for this crew's $ needs for very long. (Yeah, I get that maybe one of these people was focusing on this full-time - but still, can't they say something about someone who gets grease on his hands occasionally?)

Again, it's easy for me to look at this critically more than two years after they created their Kickstarter proposal. Perhaps there is something be learned here. Hmm.

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