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When Crowdfunding Fails The Backers Are Left With No Way Out

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A few years ago an enterprising programmer dug through Kickstarter’s data to figure out how many failed projects there really were. Thanks to a trick in the coding, however, none showed up. This system, which was described as an effort to bring the best projects to the fore, worked well for Kickstarter when it was small and the projects were usually tiny. Now, however, the failures are big and the potential for backer disaster is only getting bigger.

Take the Coolest Cooler, for example. This chimera – a cooler with a built-in blender (a project that our own Matt Burns didn’t review because of quality issues with the system itself) – originally raised $13 million but failed to ship because of a strike at the plant that was supposed to supply blender motors. The company then began selling the product on Amazon even as backers waited for their heavy coolers and posted snarky reviews on the commerce site.

This Cooler looks amazing! I also LOVE the fact that I may one day receive one, with the plates, knife and cutting board! I was informed that all the attributes to this cooler; the blue tooth speaker, the ground-pounding wheels, and the smooth look of it are on the way! After prompting folks to discourage the purchase of this item earlier today, based off of the notification on kicksatrter, I’m left wondering who they paid to give this many phony five star reviews!! I’m a backer and can’t WAIT for my chance to get screwed!!!!
I’m not sure how anyone can post a review for a product they just ordered, but Coolest seems to be the champ at this!! Where’s my cooler, ryan!!??

Europe joined the crowdfunding failure club with the Zano, a tiny drone that was supposed to fly in concert with others. This project raised $3 million only to go bankrupt. “We are greatly disappointed with the outcome of the Zano project and we would like to take this opportunity to thank everyone who has supported us during this difficult period, especially our loyal employees whose commitment has exceeded all expectations,” the company wrote. Fans, for their part, created some excellent parody videos.

Add in a $1 million dragonfly that failed and a low cost 3D printer that never shipped and you’ve got a litany of big-ticket crashes.

The common reaction is a refrain of “Buyer Beware” and this always holds true. By pledging you are not pre-ordering, a common misconception, and fledgling hardware manufacturers often don’t realize the dangers associated with creating a complex product with little experience.

Hardware is hard. Unlike software or creative projects the world is not kind to hardware manufacturers who, in the end, face massive R&D costs, manufacturing contracts, and shipping payments. While the hardware startup renaissance is still going full steam – there are far more examples of successful projects than failed ones – few realize why it took so long for micro hardware manufacturing to take off in the first place. For decades the only companies with the skills and cash to produce hardware were already established players like Samsung, LG, and Sony and, thanks to ham-handed brand dilution, they are no longer the powerhouses they once were. Add just-in-time manufacturing and small contract builders to the mix and you’ve got a recipe for disruption and the incumbent failure associated with it.

In the end it sucks that we can’t get our coolers and our dragonflies and our 3D printers. But when overly optimistic founders meet overly excited backers it’s a recipe for disaster. However, as someone who has covered this space for a decade I’m happy that these products exist in the first place, warts and all. So again, buyer beware because without hardware projects we all would just be able to back a film of paint drying – a project that, while goofy, is more in line with what we should truly expect from a Kickstarter not populated by pie-in-the-sky hardware projects. The choice is yours.