#startup failures

  Continue reading LES ERREURS QUI TUENT 90% DES STARTUPS DANS LEUR PREMIÈRE ANNÉE

A short blog post I wrote for a recent class, Technology and Innovation Management.

Crowdfunding has become quite common in the past few years: not only is it a great way to raise cash, it’s also a very telling litmus test of how the market will react to your product. Kickstarter is still perhaps the most renowned name in this space, and it benefits from the network effect it has grown from being a first mover.

The scale at which Kickstarter can raise money is astounding; some of its most successful projects will raise anywhere from USD$100,000 up to $1M or more. So far, it has listed 141 projects that have raised $1M or more.

One of those such projects is for a product named Zano, a drone promised to be lightweight, small, sophisticated, and with “swarming” capabilities. Created by Torquing Group Ltd from the UK, it raised £2.3M (USD$3.4M) last year in under two months from over 12,000 backers. It became Europe’s most backed Kickstarter project ever.

After months of sporadic updates and a general lack of progress, Torquing Group invited two news outlets to visit their warehouse in Wales during the summer of 2015. From what the BBC and Ars Technica reported, the progress looked grim; the few units they had on hand that were demonstrated simply failed at flying, its most essential function as a drone. It seemed that the couple hundred units that were waiting at the warehouse did not even live up to its core functionality promised, let alone the bevy of snazzy features and futuristic options it was purported to have.

In the past few weeks, the unraveling of the company and its very public and large profile failures have finally cumulated into the company’s final defeat: filing for bankruptcy. Most recently in November, Torquing Group’s founder and CEO Ivan Reedman has also stepped down from the position and left the company, citing health issues.

Suffice to say, backers should be angry and frustrated – there hasn’t been any discussion yet of refunds. Kickstarter issued a flimsy PR statement on how it learned of Zano’s failure the same way its backers did, and that it was following up with the project, potentially creating an independent inquiry into the project but without any mention of how and to what extent.

So where did all the money go? What are backers to do? Some of the most surprising reactions from backers throughout the whole process is not their anger at the failure to deliver on key milestones; rather it was the faith and loyalty the supporters made to the company throughout the journey, encouraging them to keep pushing through and to succeed at their original promise. Even when most outsiders could see that something was not quite right with the project, the backers were deeply involved in hoping the project would be seen through to the end. Surprisingly, we still have yet to see simmering rage boil over into troubling consequence for Torquing Group.

What also seems surprising is the laidback approach of Kickstarter in monitoring this project, and that their issued statement did not seem to claim any greater responsibility in the matter. It could be that they are holding back from claiming responsibility for as long as possible since it would open the floodgates to new administrative and overview requirements of projects; on the other hand, maybe Kickstarter was just naively crossing their fingers hoping this would sort itself out.

The buzz of Zano drones is no more, but perhaps we should brace ourselves for the angry buzz directed towards failed projects and Kickstarter’s role in managing them.

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