The Kreyos Smartwatch was one of the most successful Indiegogo crowdfunding campaigns of 2013. With a goal to raise $100k, they were able to raise over $1 million in order to fund their new product. As time began to move on, however, it became very apparent that Kreyos was not going to be able to live up to its many promises. Backers who did get their product were not happy with the products being received. Refunds were being issued.
As of September 2014, Kreyos is now officially out of business. They don’t have any money. According to Steve Tan, who was the CEO and founder of Kreyos, the company doesn’t even have the cash to be able to pay their employees. What are the lessons learned from the failure of Kreyos?
1. You Need to Have a Solid Working Prototype Before You Begin
Kreyos backed their product almost solely on the successes of the Pebble smartwatch, another successful venture. The problem was that they hadn’t really created a working prototype or contacted distributors to get pricing on the components of their watch. They had no plan. When it came time to implement production, they discovered that locating needed items wasn’t going to be as cheap as they thought it would be.
2. You’ve Got to Have Fingers in All of Your Pies
Tan says that he was responsible for handling the brand and the marketing. That was it. In effect, he’s saying that his consultants and his people were responsible for the failure of the product. As a CEO or a sole proprietor, you’ve got to know everything that is going on with your product at every given moment so that you have some form of quality control. Without this, as Kreyos clearly demonstrated, even some of the most successful campaigns can become a train wreck.
3. Money Needs to be Accounted for in Some Way – Every Dollar
One of the promoters of Kreyos was a professional crowdfunding “expert.” After seeing the successes of Pebble, this pro contacted Tan and said that another smartwatch was possible. Then, once the funds started coming in, Tan believes that this consultant misappropriated the funding that was available. It is even believed that the funds were either used for personal benefit or in this professional’s other business ventures. If you don’t have clear controls over your cash, people will take advantage of you.
4. Know How Good Your Product is Going to Be
Kreyos went to CES with 20 prototypes of the new watch that was being created. In the end, only one of those prototypes actually worked. This clearly indicated that there was no testing of the product whatsoever. Before shipping out any product to someone, it is extremely important to make sure it works. A chef tastes their food before serving it. A writer proofreads his work. A smartwatch designer needs to wear the watch to make sure it keeps working.
Most crowdfunding efforts are legitimate and based on good business plans. Take the lessons learned from Kreyos and avoid them so that your next campaign can be successful as well.
Strong proponent of individual liberty and free speech. My goal is to present information that expands our awareness of crucial issues and exposes the manufactured illusion of freedom that we are sold in America. Question everything because nothing is what it seems.