Monday, August 24, 2015

Crowdfunding: Is anyone really looking out for the buyer?

To my faithful blog readers:  This entry has little to do with writing, but as members of the online community, we all have a vested interest in the topic. Please give it a read.

Crowdfunding is all the rage, allowing innovators to bring exciting new products to market in a way that has never before been possible. A long time ago, I invented a product myself. And while I did successfully get it to market in a pretty big way, had crowdfunding been around in the mid-nineties, my process might have looked very different. It's exciting to see the little guys have an opportunity to reach the masses with product ideas and generate real results if the idea catches the crowdfunding public's fancy.

But there are problems. In the past, you typically had to have more than an idea. If you wanted to take an idea from daydream to market, you had to do a lot of work in between. You had to turn your idea into something tangible; in inventors' parlance, you started with a working model, something that proved your idea would actually work in the real world. From there you moved on to prototypes, more polished versions of the working model that more closely resembled the final product that you wanted to sell to the public. If all that worked out, you finally moved on to either licensing the product to an existing manufacturer, or went about the fundraising process to make and sell the product yourself.

All that has changed. Thanks to the ready availability of 3D modeling and rendering tools, along with countless people skilled in using them, it's easy to create a "product" in the virtual world that looks real, sounds real, and is accompanied by tantalizing descriptions of how it's going to change your life. More to the point, it's now easy to do all this without ever having proven that the idea works in the physical world. And you can take that purely virtual creation to Kickstarter or Indiegogo and present it to the masses and ask those masses to fork over tons of cash to you for it.

Many times, the process works as promised. You spend your money and you get a product in return. That often doesn't happen within the promised timeframe, but you eventually get something for your cash. There are a lot of people using the system honestly and ethically, and nothing in this post should be seen as disparaging to those operators.

But what if the "product" doesn't work? Case in point:  The Body Dryer. Although I should have known better, I saw the slick renderings of this device and signed up right away. (I loved the idea of stepping out of the shower onto a little platform that encircled me with warm air that dried me without the need for a towel, and I was the second backer overall in its crowdfunding campaign.) The campaign was a success (more than $304,000 raised) and hundreds of thousands of dollars were turned over to the people behind the invention. There was only one big, huge, mammoth issue. In the real world, it didn't work. The projected delivery date came and went. And time passed. And more time passed. And more time. Eventually, the sad but inevitable news came in an email to those of us who had bought into the campaign:  "Sorry, our idea didn't work out." (That's of course a paraphrased summary.)

The Body Dryer as shown on its Indiegogo campaign page

I'll give credit to the guys who were trying to invent the Body Dryer. I believe their intentions were pure, and when they eventually had to throw in the towel, they did make arrangements to return to the backers what cash hadn't been spent. Looks like I'll get back about $45 of the $125 plus shipping that I forked over. Pure intentions or not, however, this campaign highlights the troubling problem that people are able to sell something to the public that doesn't really exist, and may never exist.

So who's looking out for the buyer in the crowdfunding world? I'm not talking about complying with the legal minutiae we agree to when we participate in crowdfunding. I'm sure the fine print at Indiegogo and Kickstarter spells out the fact that we understand we may be spending our money for nothing. But in a simpler sense of right and wrong, who has the public's back? I'm a huge believer in personal responsibility. I'm technical and mechanical enough that I should have been able to look at what was being promised in the Body Dryer and know that it wouldn't work. It's on me.

But that doesn't alleviate the seller, or the facilitators, of responsibility. When these crowdfunding companies collect thousands, or hundreds of thousands, or even millions of dollars from the public in a campaign, then take their cut and hand the remainder over to the "idea guys," don't they have at least a moral, ethical burden to take a look at what's being promised and determine that the promises are at least realistic?

To be certain, both Kickstarter and Indiegogo tout their oversight and their careful examination of campaigns for problems. But is that translating into serious protection of backers' interests, or is caveat emptor their real underlying mode of operation?

There are many, many articles out there from major publications detailing high-profile crowdfunding failures and problems. Click here for a look. I'm not here to delve into the stats and such that others with far more resources have already covered. My big question and concern is just what I posted in the preceding paragraph:  Are the crowdfunding companies serious about looking out for backers, or at the end of the day is their cut of a huge campaign irresistible even when significant problems and challenges should be obvious?

There's one campaign in particular that has driven me to ask this question. I, along with about 18,000,000 fellow Americans, suffer from sleep apnea. The most common treatment is a CPAP (continuous positive airway pressure) device that keeps us breathing through the night. An oversimplified explanation of CPAP is that it blows a steady stream of air into your nose (and/or mouth depending on the configuration) that is of significant pressure to keep the throat inflated and the oxygen flowing.

While I and countless others consider CPAP a blessing, the technology is cumbersome, uncomfortable, and restrictive. It takes quite a bit of air pressure to keep the human airway inflated and open, and maintaining that pressure requires not only something to generate the air pressure, but also a hose to deliver the air from the device to the mask, a mask that straps to your face tightly enough to maintain a perfect pressure seal.

So the idea of something tiny and unobtrusive to replace today's CPAP devices is very appealing. Very. Meet Airing, an Indiegogo campaign that as of this writing has generated over a million dollars in pledges. In case you're not familiar with the Indiegogo process, when you pledge to "back" a product, you give your credit card information up front in exchange for the promised "perk" that's supposed to be delivered at some future date. When the fundraising campaign ends and the goal has been met, Indiegogo charges the credit cards of all backers, takes out 4% of the total for themselves, then gives the remainder to the campaign owner.

Airing looks like a miracle device to those of us who go to sleep every night with a CPAP mask strapped to our faces. It's tiny. No hoses to string from the CPAP device to your face. No claustrophobia-inducing apparatus. No strap and mask grooves etched into your skin when you wake up. A miracle. This comparison photo from the Airing campaign page on Indiegogo makes a pretty dramatic statement.

My instant emotional response was to sign up for this miracle. Then I remembered the Body Dryer and started really examining the Airing concept and claims. After some time pondering it, I was bothered enough by the campaign that I decided to contact Indiegogo. I sent the following to their Customer Happiness Team (not kidding) on July 7, 2015.

Although the site said I would hear back from them in 24 hours, it actually took a week for this form response to arrive.

Tell me if I'm wrong but it reads like a blow-off response to me, and given that well over a month has passed since this exchange and Airing is still live on the Indiegogo site, I can only assume they found nothing troubling about the campaign.

Although I'm technical and mechanical, I'm absolutely not an engineer. For that reason, I'd love to hear from any engineers out there who are proficient in the relevant fields. If I'm wrong, please tell me, but to my mind, this "invention" looks completely impossible in today's state of technology. I laid out a lot of my concerns in the letter pictured above, but for starters I don't believe microblowers exist that can possibly move the necessary air in the space available in this device. (I see that the campaign page now talks about using the money to develop these microblowers. It's possible I'm misremembering, but my memory is that a couple months ago, the page was presenting the microblowers as something that already exists; and I still get that same impression when I watch the main video on the campaign page.)

I also can't fathom any battery tech that's going to fit into that device along with "hundreds of microblowers" and provide continuous power for eight hours. Finally, even if you deliver the necessary airflow and the electrical power required, how is the pictured device going to stay in the nose and provide the pressure seal required? Are we to believe that the manufacturers of today's CPAP devices include the plethora of straps and such just for fun? If it were possible to maintain such a seal with a couple of nosebuds, I suspect that style of mask would have been introduced a long time ago.

Wrapping up, this one campaign makes my point about the glaring problem with today's crowdfunding apparatus. While making clear that I'd be delighted to be proven wrong, I think this campaign is cashing in on the desperation of apnea sufferers by promising a product that cannot possibly be produced and delivered. I think Indiegogo has a duty to seek out those with relevant expertise and ask if they think the device is possible with today's level of technology. But from where I'm sitting, it seems to me that Indiegogo is more concerned about their cut than they are about protecting those who pledge their money.