[Updated 4/24/14 and 4/25/14. See below.] When we last reported on Hybra Advance Technology, a Traverse City, MI-based consumer electronics startup, it was September 2013, and the company was days away from closing an extremely successful Kickstarter campaign.
Now, half a year later, Kickstarter backers are up in arms, some going so far as to call for Michigan’s Attorney General to investigate the company for fraud, and all because it hasn’t delivered its product yet—though that’s not exactly unheard of when a startup is trying to get a piece of brand-new hardware to market.
Xconomy contributor Dan Ryan, a startup CEO, wrote a guest post last year outlining why it’s a risky proposition for hardware startups to use Kickstarter: “Going from prototype to mass production is an enormous challenge. You need the help of experienced industrial designers, engineers, and manufacturing experts to make everything work,” he wrote. “For the types of companies that go on Kickstarter, they often don’t have the expertise required to successfully deliver on their promises. Delays are inevitable.” Kickstarter has also taken pains to remind backers that they shouldn’t expect fully finished products, especially in light of the fact that 75 percent of hardware and product-design projects fail.
Meanwhile, Hybra has waffled between responding in detail, somewhat defensively, or not at all to its Kickstarter backers. But it has always maintained that despite the many delays, its speakerless headset, Sound Band, is still heading to market. How did what seemed like an entrepreneurial success story go so far off the rails?
“People think we stole $500,000 and are driving around in Ferraris, and that is absolutely not the case,” says Joe Thiel, Hybra’s founder and CEO.
I met with Thiel to try to get to the bottom of the Kickstarter fracas (more on that later). First, a bit of history: Hybra Advance Technology initially popped up in the media in 2010, after an early prototype of Sound Band won a prestigious design and engineering award at the Consumer Electronics Show (CES) in Las Vegas. Last September, Hybra co-founder Ryan Wells told Xconomy that recognition at CES opened the doors to some key relationships that allowed the product to get closer to market.
After a few design iterations, Hybra set out to raise $175,000 to help get Sound Band to market. Sound Band is a speakerless headset that is crescent-shaped and fits around the back of the ear. It incorporates surface sound technology similar to the Google Glass bone conduction speakers; it has flat panels that vibrate very quickly so that, when placed against the back of the ear, the vibrations bypass the outer ear and are transmitted directly through the bone.
The initial response from Kickstarter backers was enthusiastic: When Hybra’s campaign ended on Sep. 13, 3,292 backers had pledged $547,125 toward commercializing Sound Band. Hybra told backers the estimated date of delivery for Sound Band would be December 2013, with other rewards promised as early as October 2013. As part of its Kickstarter pitch, Hybra had claimed that Sound Band was “production ready” and just needed $175,000 for manufacturing.
As those dates came and went with no sign of product, commenters on the company’s Kickstarter page began to express worry. At first, they just seemed to want an accurate estimated date of arrival for their Sound Bands. Since Kickstarter merely facilitates the transaction between a company like Hybra Tech and its
