The Coolest Con
As an entrepreneur, the idea behind Kickstarter really appeals to me. It has helped democratize the process of creating new products. You don’t need to convince venture capitalists or angel investors to back your company. You just need to convince enough potential customers!
Knowing the risks with supporting early ideas, I started backing Kickstarter projects in 2012. To date, I’ve supported 20 projects.
One of the projects I was excited about early on was the Coolest Cooler. It was the most successful Kickstarter project up to that point having raised over $13 million dollars. That’s more than I raised over 3 rounds of VC funding before we had a successful acquisition. Unfortunately, it’s been one of the most mishandled projects I’ve seen on Kickstarter.
Much like with any early stage venture, results from Kickstarter projects have been mixed. Almost half of the projects I’ve backed have delivered the proposed product. Out of those nine, only two delivered by the ship date they originally estimated and several took more than nine months longer than originally planned.
One of the projects I backed, Zano, flamed out spectacularly and suspiciously, leaving most of its backers high and dry. Another project I backed, DISPLIO (10 months late), blew out the charging cable when I plugged it in for the first time.
Based on my experience, if you are going to back Kickstarter projects you better do so 1) expecting it will take longer than the project team estimates (potentially a lot longer) and 2) knowing you may get a great product, crappy product or the company will flame out. That’s the price of buying ideas on the cutting edge.
What I didn’t expect to see is a Kickstarter project raise over $13 million, start selling their product on Amazon before they fulfilled their Kickstarter orders, repeatedly indicate units would be shipped soon, and then ask for more money two years later if you still want the product. That’s the way it’s gone down with Coolest Cooler.
The Coolest Cooler backers received an update a few weeks ago stating that many people asked for their money back, but we can get our money back only when our cooler is ready to be shipped at some unknown date in the future.
Another update, referred to as the “July 4th Option”, said we could pay another $97 to get “expedited” shipping and have the cooler by July 4th, 2016. Nothing about delivering a product a year and a half late should be referred to as “expedited”. Just a year early they released a “countdown” page on their website because production was supposedly imminent.
The head of the project states he underestimated the cost to make the cooler. It’s a tough predicament, but validating costs should have been job #1 back in 2014, and once he realized it wasn’t going to work, he should have cancelled the project instead of selling units on Amazon and dragging out the process indefinitely. And what happened to the $13 million he raised? That’s a lot of seed capital to get a company off the ground.
The company is looking for additional capital now, but apparently hasn’t found any takers yet. How is it that one of the most successful Kickstarter projects with over $13 million in pre-orders can’t raise any additional capital? I’m willing to take my losses with some of these projects, but something just doesn’t seem right about how this one was run.