AIrDroids (PocketCopter) ceasing operations

Sorry to see this notice from AirDroids, who had launched the PocketCopter on Kickstarter, but glad to see their list of "lessons learned". Manufacturing is really, really hard, and they were not the first or last Kickstarter project to get in over their head in the process of going from prototype to product. 

Dear Drone Lovers,

We are writing to let you know that AirDroids, Inc. is ceasing operations. As of this week, we have sent out units for all the orders that we received addresses for. Our company ran out of money a few months ago, but we have been able to fulfill all orders through a recapitalization of the company funded by the projects creators taking out tens of thousands of dollars in personal loans.

In this message we want to answer two questions. First, how did a project that raised nearly a million dollars run out of money? Second, what does this mean for our Kickstarter® backers and customers?

There are three primary factors that led to significantly greater costs than we originally anticipated. Some of the issues that arose could not have been predicted, others were attempts to make things better for our customers.

First, the unprecedented success of our Kickstarter® campaign meant that we manufactured around 20 times more orders than we originally anticipated. To address this challenge and to make the product more durable for our customers, we decided to do a complete redesign of the system. After seeking advice on how to handle the higher production numbers, we engaged contract engineers who had more experience in designing for higher production runs and who were specialized in designing plastic parts for injection molding. The cost for their services cut significantly into our budget.

Second, since the redesign caused delays in the production schedule, we decided to minimize further delays by making our molds and doing assembly in the United States, rather than outsourcing production to China or Taiwan. This approach was intended to give us the flexibility that we needed to make course corrections and was also a great opportunity to support local businesses. However, this decision significantly increased our mold and tooling costs.

Finally, given the success of our Kickstarter® campaign, we ordered extra parts to be able to build more units for post campaign sales. Much to our disappointment, our Shenzhen suppliers did not consider orders for 2000 units to be sizable enough to give us a large volume discount. We were forced, therefore, to estimate our market demand and our “part failure” rates in order to get the pricing necessary. Further, when the parts arrived, the “dead on arrival” rate was higher than we anticipated.

These key decisions, combined with the already high bill of materials and Kickstarter® and Amazon Payments taking an 8% cut of total funds raised, left us with a minimal financial cushion. In addition to these expenses, the cost of assembly, packaging, shipping, and salaries for our small manufacturing staff caused us to be significantly in the red financially.

The company’s leadership did not receive any profits or distributions off of this project, and took on over $100,000 in personal debt to be able to contribute additional capital to the company in order to assemble and ship all the units that were ordered. Of course, this is all due to our own decisions and we are not soliciting sympathy. Our hope is to provide you, our backers, with some context for what happened and perhaps help other makers with Kickstarter® dreams avoid similar mistakes.

Our small staff has been notified that they are being laid off. Unfortunately, upon the completion of the final orders, the company has ceased operations and will not be able to receive returns or send out additional parts or units, as there is neither staff nor money to do so. We have sent out all orders that we received addresses for. A small group of Kickstarter® backers never provided addresses in response to the backer survey we sent out and we have not been able to ship those orders. Also, some of the packages that were sent out could not be delivered by UPS as the address and contact information provided was incorrect or the recipient did not follow up with customs to meet local import requirements. 

We are putting our design files on our website, which you can access at www.airdroids.com/files.html. You may attempt to use these to generate your own spare parts, although please be advised that results created from a 3D printer may differ significantly from what we created using injection molded plastics and we make no guarantees regarding the designs and their functionality. Please use them at your own risk. 

With The Pocket Drone®, we wanted to provide our customers with a powerful user-friendly tool to enhance exploration and preserve memories. We are deeply grateful for the support and forbearance of all of our backers and customers. We have also been impressed and humbled by the amazing community of people who came together to improve upon the designs we generated and support other users. We wish you safe flight, and hope you will all continue to enjoy the magic of being able to see the world from a new perspective.

Team AirDroids

Views: 10780


Developer
Comment by John Arne Birkeland on May 22, 2015 at 12:45pm

In my book the key to a successful kickstarter is very simple. Do not over-promise and then think/hope you can figure it out once the money is there to throw at it. Just having money can be useless if you don't have the skills needed or worse if the technology you promised don't actually exist.

The current copters hype seem to be a prime example of this, with unknowns coming out of the woodwork promising bleeding edge features and a short time to delivery. And often those features are things the expert community have been working for years on or know can't be done that way.

Comment by Marc Dornan on May 22, 2015 at 1:01pm

Ouch. Maybe we should have read those posts before giving them the full benefit of the doubt that they did all they could and acted honorably. Quadzimodo may have a point here. Did they use Kickstarter money to actually get a patent. Did they? Can we find out who submitted the patent. 

It seems founder TJ Johnston is an IP Attorney. WTF!!! Really.

Hmmm. Do they have a Patent/Pending Patent? One of the people that should know, Chance Roth has stated that Hobbyking may be in breach of their pending patent. Because if this is so then how much was paid to get that patent and who did that work? Surely it had to be the IP Attorney founder of Airdroids. Who owns that patent if it existed, or will own it? Is there a possibility Kickstarter money was 'spent' on legal fees paid to the Airdoids founder to acquire a patent and that patent now does not reside with Airdroids.

Lots of talk in the linked article written at the peak of funding success about now having money to deliver a superior product -- better metal servos etc.

http://makezine.com/2014/03/06/the-pocket-drone-a-kickstarter-succe...

It does seem incredible to take a million bucks and not even deliver something that a experienced hobbyist can get to fly. Possible I suppose. The only think I would REALLY like to know is: 1) How much was paid to whom to prepare and submit the patent. It is not cheap you know --especially when I am writing my own invoice and potentially have a sack of cash to pay myself!!! 2) Who own the patent/pending patent now (it may have some value).

TJ Johnston can of course set the record straight. It maybe wild speculation. It seems maybe a little fishy.

Comment by Pritam Ghanghas on May 22, 2015 at 1:27pm

Nobody is going to set any record straight. Either the rules of the world have changed or I only recently learned the rule and it was always like that. The rule is "if you get cheated, its your mistake". Some places may have laws to protect you. But if someone has the intention to cheat you from the very beginning, he most likely knows about those laws and will work around them like a magician. A decent amount of suspicion and due diligence pays off. I used to think "suspicion" was a trait associated with dishonest people.

PS: I was just getting a little philosophical there, I didn't order pocket drone and I don't know what really happened there. Only things that I have bought from USA are a 3DR pixhawk, gopro and FLIR lepton and I think all of them are exceptional products and good value for money.

Comment by Marc Dornan on May 22, 2015 at 1:34pm

Unless I am incorrect, there was a Patent filed for Airdoids.

http://tmsearch.uspto.gov/bin/showfield?f=doc&state=4802:8me71g...

Look at the date this was starting: September 2014. Seems someone was hard at work patenting when they should have been focusing on delivering on their promises. This stinks, potentially. Behind the scenes this project must have been in full-scale meltdown. Look at the Kickstarter timeline. They must have known at this point this was NEVER going to fly, literally.

But patents were being sought and money was doubtlessly being spent.

Comment by Pritam Ghanghas on May 22, 2015 at 1:47pm

But on second thought somebody starting a company is most likely not thinking of sinking the company and pocketing the money. Who doesn't want to build a big successful company. It may be possible that they realized at some point that its not going to work but had already spent enough of the campaign money to go back and refund.

Comment by Marc Dornan on May 22, 2015 at 1:48pm

I am not outraged on behalf of consumer that spent $500 on kickstarter. I seriously doubt anyone was in the poor house because of this. But it is an interesting post mortem. This was potentially not just a technology fail that I thought may have been a bit unlikely from the get-go. Nothing wrong with failing and blowing people's money in the process. Some of us have honestly done this.

But when I saw that the founder is an IP Attorney that was clearly doing IP work for Airdroids in a time frame when it must have been clear this device was not actually even going to fly, literally, then you have to start questioning integrity. Why should be we believe the PR piece put out. Why should we believe work was being done pro bono. It is not a leap at all to think that a substantial amount of money was cynically spent on this and something rather token was actually delivered.

Could this be The Producers meets Drone Kickstarter? I am not saying it started out like this but it could have ended up that way...

I think it is valid the ask these questions and have these discussions about patents and Kickstarter. 


3D Robotics
Comment by Chris Anderson on May 22, 2015 at 1:48pm

Marc, that's a Trademark, not a Patent. All companies file trademarks. 

Comment by Marc Dornan on May 22, 2015 at 1:53pm

Well I may be way off base an howling at the moon. I do not know how to search for patents. I just know that one of the former founders made reference to a pending patent.......so I did a quick search.


Developer
Comment by Bill Bonney on May 22, 2015 at 2:05pm

@Marc. The patent application is just part of the process in creating a company with IP. Filed in April 2014. It's a mechanism to attract investors. The other options are 'Trade Secrets', Trademarks and "Trade dress".

IMHO I believe they did not act fraudulently. Some mistakes that have been identified in the write-up of lessons learned (though I think the Amazon Pay and Kickstarter being blamed for their cut is lame as those are declared upfront costs by those entities)

What would have been interesting is to know when the key decision to go / no go was made? Was that made when investors where on-board to help launch the company, or made with the hope of investors coming on-board later. Persumably they didn't get the kind of angel investment they needed.

What is clear, a $500 RTF package drone needs more than sale-price to develop. Which isn't that surprising as 3DR Kit prices where about that at the same time. 

As for Kickstarter, it a 'market validation' tool when it comes to manufacturing. It does not take into account the capital costs need to start manufacturing a product. A successful Kickstarter Campaign needs to lead to a successful funding campaign before 'Go" can be decided.

[On a side note, I think Pebble di their new watch on Kickstarter for the benefit of kickstarter and marketing, more than need, and I bet they are not paying 9c on every dollar to do so!]

Comment by Gary McCray on May 22, 2015 at 2:13pm

Whatever else is true, this is a valid cautionary tale.

As this discussion points out there are a lot of reasons to be very careful about investing in this sort of project.

If it's something you really believe in and you can afford the loss then fine, toss the dice, but be clear, it is a toss of the dice.

I still like the concept, there are just a lot of ways it can go wrong, intentional, careless, lack of foresight or just bad luck.

As for the patent thing, mostly our technology moves so fast that very few patents are going to have any long term effect, they are mostly obsolete by the time they are implemented.

The reason this stuff has moved (and is moving) so fast is because the open source, open hardware fanatics (us) keep leapfrogging the system.

So, damn the torpedoes, full speed ahead and up the institution.

A lot to be said for the benefits of Anarchy.

Best Regards,

Gary

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