More crowdfunding risks

This is detail that I originally wrote for the main post, but the post was getting too long, and this was the logical stuff to take out.

• Time overrun:

  Time estimation is hard. Estimate too long, and people won’t want to commit to the project, and the product may not even be relevat to the market anymore. Estimate too short, and managing expectations will become challenging, while surprises and costs will quickly eat up the remaining budget.

• Budget overrun:

  This can get scary really quickly. Where is the money to keep the project going, going to come from? Mortgage the house? Maybe that’s already been done. Get a traditional investor? What strings will come with that? What happens if the money can’t be found?

• Investor pullout:

  If you’re well down the path, most of the money has probably already been spent (Eg Employees, suppliers, building, equipment etc paid for). The simple act of an investor pulling out, can cripple an otherwise healthy project.

• Supplier unable/unwilling to supply a component:

  There’s a fairly controvertial example for the Astro Slide 2021-01-11 update 42, where Mediatek appeared to have committed supplying a particular SoC (apparently the device was even listed in one of Mediatek’s news letters, but I was too late to see it), and later were not able to offer it, and instead offered a lower-end SoC. I’m not privy to the conversations that happened between Planet Computers and Mediatek, or why the situation happened in the first place, but I think Planet Computers have done well at handling the situation with backers. Ie they’ve been up-front about it, and they’ve increased some of the other specs. I am confident that they would have spent a long time bantering with Mediatek trying to find a solution that was not a downgrade, and then internally trying to work out how they were going to compensate for it without destroying the budget, because a downgrade is not a conversation you want to have with your backers. This could have been so much worse. They might not have been able to get any SoC. Or maybe they’d have to pay significantly more and destroy their budget.

• Supplier goes out of business:

  • When this happens, hopefully there is a competitor that is compatible with the work already done, and available at a similar price. But when there isn’t, this can mean the project has to do one or more of:
    • Stop the project.
    • Redesign key components of the design. This could be a significant undertaking, and could have cascading changes in other aspects of the project.
    • Change suppliers of other aspects of the supply chain due to compatibilities with other components.
  • The supplier may have already been handed a large part of the project budget. Maybe they are part way, or completely through manufacturing. Will you be able to get what has already been done? Will the dept collectors take it?

• Failure to get certification:

  Each region has a number of certifications that many types of products must adhere to and obtain. For example, electrical devices must not emit more than a certain amount of EMF radiation, and also must be able to tolerate it. Failure to obtain the relevant certifications means time and money spent revising the design. Proceeding without could lead to fines and/or legal action, and likely blame for ANYTHING that goes wrong whlie customers use the device, whether or not the incident was actually caused by any fault of the device.

• Market changes:

  This could include things like

  • a competent competitor popping up that has something compelling to offer. - This would eat into profits.
  • an idea catches on that makes a feature of your product, or the entire product undesirable. - This could dry up demmand, or lead politicians to making uninformed laws.
  • a foreign president making it ilegal for you or your suppliers to operate. - This would be game over, you’ve just invested time and money into paper weights that you will probably never even touch.

• Law suits:

  • Law changes: Law changes can affect any aspect of the project. It could be changes in tax, certification, office requirements. The changes could be sensible, and things you’re already doing. They could completely inhibit your ability to continue the project. Or somewhere in between.
  • Accidental patent infringement: Excluding cases where a project intentionally choses to infringe on a patent and take the risk, it’s really easy to infringe on a patent without realising it. Even for the simplest of designs, there can be hundreds of relevant patents. And “common sense” doesn’t help, because it’s common for there to be patents that conver things that have been common pracise for years. It’s also common for independent parties to come up with the same solution at the same time. You just need to look at history around the world to see that. Eg look at flight experimentation, medical advances, physics advances etc. Companies like Apple and Samsung may be able to absorb the cost of suing each other, but for a small project/start-up, this can be beyond crippling. On a side note: Imagine how much cheaper our phones would be if the companies just calmed down and stopped suing each other.
  • Intentional patent infringement: Don’t do this.
  • Liability for faulty design: If all goes well, a recall will be sufficient, which will be expensive. If not there could be lawsuits, or worse, death.

• Not In My Back Yard (NIMBY):

  If a local resident doesn’t like what you’re doing, they may get the local government involved to shut you down or place restrictions. It doesn’t matter whether they are right, only if they are able to convince the local politicians. If they haven’t managed to convince the local politicians, they might have convinced other residents, in which case it may become a safety concern rather than a legal one.

• Contagious speculation:

  Without naming names, or taking sides, it’s very easy to point to politics over the last few years and see what happens when an idea gains traction. There don’t need to be facts involved. This happens within projects as well. A good commmunications strategy might help. Or it might feel like this.