accusations of fraud, requests for refunds that were ignored or denied by both Hybra and Kickstarter, anger over being led to believe the Sound Band was production-ready in 2013, insufficient updates from Hybra, and an overall lack of useful information on the Sound Band’s status. Many complainants say they understood the risks of supporting a crowdfunding campaign and no longer even want the headphones; instead, they want Thiel and Hybra (and some say Kickstarter) to be held accountable.
I tracked down one of those complainants to find out more about his beef with Hybra. BJ Van Gundy works in politics, most recently having co-chaired Marco Rubio’s grassroots presidential campaign in Georgia. Four years ago, he helped run Newt Gingrich’s national presidential campaign. He’s also a serial Kickstarter backer. He estimates that he’s funded more than 130 projects over the years, everything from the Sound Band to a fancy golf tee to a cooler with a built-in blender. He likes supporting Kickstarter campaigns because he’s a fan of innovation and grit, but he said his experience with Hybra is almost enough to turn him off of crowdfunding forever.
Van Gundy said he was worried from the start that Hybra and the Sound Band were not what they appeared. Van Gundy is one of the more vocal disgruntled backers, and he often posts in the Sound Band comment section urging other backers to open their eyes.
In his FTC complaint, Van Gundy says in part that Hybra “claimed that they had a finished product back in July/August of 2013 and said delivery would be by October/November 2013. Then proceeded to claim problems and improvements being made… etc. BOTTOM LINE: They took the money and ran.”
One of the other Kickstarter projects Van Gundy backed was the Zano, a big European mini-drone effort that went belly-up last fall. Torquing Group, the startup behind the Zano, raised roughly $3.2 million from 12,000 backers to mass-produce its drone, and everyone from Popular Science to Engadget praised the project. Kickstarter even featured it as a staff pick. But ultimately, Torquing wasn’t able to deliver on any of the promises to its backers before it went under, unleashing the Internet version of an angry mob with pitchforks.
The furor of disgruntled Zano backers eventually led Kickstarter to commission a report from an independent journalist to determine if the project was legit or a scam, as many backers suspected it was. The BBC reported that the journalist did not accuse the Torquing team of dishonesty, but said that “as production problems mounted and the money began to run out they showed ‘a dangerous lack of self-awareness of the problems the company was making for itself.’” The reporter concluded that the reason for the project’s failure was the team, which “possessed neither the technical nor commercial competencies necessary to deliver the Zano as specified in the original campaign.”
Compared to Hybra, Van Gundy finds the Zano project to be a success, he said, because he believes that Torquing made a good-faith effort to the best of its abilities. “Hybra raised money in August 2013 and said they’d deliver by October. That’s mindboggling.”
At this point, Van Gundy said, the Sound Band’s technology is outdated and no longer has the magic it did three years ago when the project launched on Kickstarter. But the experience continues to leave a bad taste in his mouth.
Kickstarter: Caveat Emptor
Many dissatisfied Sound Band backers have asked why Kickstarter can’t step in and remedy the situation. The short answer is that Kickstarter, as it clearly spells out in its terms of service, is merely a facilitator between creators and backers and therefore can’t be held liable for failed projects. Spokesman David Gallagher said that in 2014, Kickstarter updated its rules to try and add a bit of clarification regarding what creators owe their backers.
Section three of Kickstarter’s terms of use page, titled “Things You Definitely Shouldn’t Do,” says that project creators can’t break the law or breach contracts; post false or misleading information; offer prohibited items; engage in threatening, profane, or abusive behavior; spam backers with promotional material; distribute code or viruses that can cause a computer to malfunction; or share backers’ personal information. In bold type, the rules say, “the creator must complete the project and fulfill each reward” upon a project’s successful funding. The rules don’t spell out the amount of time creators have to complete the fulfillment process, but they do say that creators “owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life.”
Section four of Kickstarter’s terms of service spells out what happens if a project fails: If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of the agreement. Kickstarter says creators must “make every reasonable effort” to satisfy backers if a project fails. The crowdfunding site will let creators off the hook only if they do the following: post an update explaining what work has been done, how funds were used, and what prevented them from finishing the project as planned; demonstrate they’ve used the money raised appropriately and made every effort to complete the project as
