Earlier this week, my daughter, 4-and-a-half, looked up at the cardboard and tissue-paper butterfly we made from a kit some time ago and told me she wanted to do another one.
I smiled. Christmas is coming, so I hinted to her—vaguely—about a cool new tool that would let us make all kinds of neat projects with cardboard, and numerous other materials. Since ordering a Glowforge laser cutter and engraver on the first day of the record crowdfunding campaign that saw thousands of units sold in fall 2015, I’ve never mentioned it to her by name, or explained it in detail. Managing expectations is a big part of parenting, I’ve learned.
And it’s a big part of crowdfunding campaigns—or it should be, both on the part of the companies conducting the campaigns, and the people who buy in. When you pre-order a product from a couple of individual inventors or a startup, especially something complex and new to the world—in this case, a laser cutter billed as simple enough for an average consumer to operate—what you’re really buying is someone else’s dream and the hope that the team you’re buying it from will deliver. Think of it as willing something, with your hard earned cash, into being.
Caveat emptor, as should be obvious. It’s not always—companies are great at selling the dream, and people are often inclined to believe—but building things in the real world is hard, and crowdfunded products often leave early backers with feelings of regret and a lightness in the wallet.
Like thousands of others, I woke Friday to an e-mail from Glowforge CEO Dan Shapiro: “You should have your Glowforge already, but we let you down,” he begins.
Shapiro is a well-respected serial entrepreneur and technologist, and, in all my interactions with him, a genuinely good person. In his missive explaining what’s gone wrong—and importantly, what he and his 40-person company are doing to fix it and make amends—Shapiro seems truly pained. “As hard as we’ve tried to make our schedule, we failed, and that’s entirely on me,” he writes.
Short version: In the rush to meet deadlines for shipping in December (which was already a considerable delay—as much as a year—from what pre-order customers were expecting), Glowforge was losing sight of quality. Shapiro applied the brakes and committed to further testing. The new plan is to begin shipments next spring. Shapiro writes, in bold, that all orders placed during the crowdfunding campaign will be shipped by July 31, 2017. If I were editing that before it went out the door, I would have hedged, but maybe by now customers are doing their own expectation management.
Indeed, some people are rightfully pissed off, skeptical, and venting on social media and the company’s own community forum. I’m not one of them. Not yet, at least.
Before I spill hundreds more words on this, let’s step back for perspective. This is perhaps the definition of a first-world problem, for me anyway. I don’t make my living as a craftsperson, and this tool is not something I’m counting on for my livelihood. I’ve never had a laser cutter before, so I’m not missing it now—cardboard butterfly projects notwithstanding. I was incredibly fortunate to have a spare $2,000 to shell out for this last fall. (It came from a modest life insurance benefit I received after my Dad passed away two months before the crowdfunding campaign began. It’s something I know he would have loved.) And I’m incredibly fortunate to be in the position today of not needing that money back to pay for necessities—though Glowforge has consistently offered a full refund to anyone who pre-ordered, and Shapiro says people will have the option to cancel right up until their unit is ready for shipment.
What is the cost to me of the delay? One over-simplified way to view it: Between Sept. 24, 2015, and Thursday, the S&P 500 gained about 13.4 percent. So my $1,994 for a Glowforge (that’s the $1,995 pre-order price, plus $99 shipping, less a $100 discount) would have grown by as much as $267, not including fees and taxes, if I had used it to buy an index fund. But I wasn’t really contemplating that at the time I pre-ordered. Another way to look at is I saved $1,000—the pre-order discount from the current sale price for the basic unit.
Glowforge clearly understands that people are incurring an opportunity cost due to the delay. The company previously promised its patient pre-order customers a package of its branded materials—woods and plastics designed to be easy to use in the machine—worth $150, as well as a $50 gift certificate to its design store, and a 10 percent discount on future purchases. (The sale of the materials and designs points to a razors-and-blades business model.) The company is now throwing in even more freebies: free designs for some of the projects shown in the company’s campaign launch video; a $50 gift certificate to Inventables, another materials vendor; and another gift certificate to its own products that grows by $20 for each month of delay beginning now.
Someone who receives a pre-ordered Glowforge next April would be in line for more than $330 in goods and services to use with the machine. Shapiro also announced that the warranty will be extended by 6 months to ease customers’ nerves.
All of this—the delays, the gift certificates, the warranty extensions—is expensive. “Every month that you wait, we spend more than a million dollars to make your Glowforge better,” Shapiro writes.
It’s enough to make a crowdfunding supporter wonder whether their cash is circling some widening drain. Shapiro provides this assurance:
“A normal company wouldn’t do this; they would have to rush their product out the door because delays are so profoundly expensive,” he writes. “But our investors support us in putting quality ahead of profit. We’ve put aside your pre-order payment to be used only when we manufacture your Glowforge.”
Glowforge has raised $31 million from investors, on top of the $28 million in pre-orders during the 30-day crowdfunding campaign. And people have continued buying. The company said in September that the pre-order total had grown to $45 million. Some have also cancelled, around 6 percent of orders after the April delay. Shapiro tells me Friday, 12 hours after this latest delay was announced, that a small number of additional cancellations are trickling in. “We feel deeply sorry to those people who we let down who couldn’t stick around to see it to the end,” he says.
Shapiro has written a book on life as a startup CEO. Glowforge, which he co-founded in 2014 with Tony Wright and Mark Gosselin, is his fourth startup, though most of his previous experience was in software. The detail he’s shared on the process of building a hardware company is instructive. Here’s more from his e-mail, posted in full on the Glowforge community forum, on what’s led to the delays:
“We’ve been working feverishly all year to deliver to you on schedule. The last six weeks have been a flat out race as we’ve pulled out every stop to move production forward.
“But I lost sight of something. Even though I say it all the time, I started paying less attention to ‘how do we build the quality product you deserve’ and instead focused on ‘how do we deliver to more than 10,000 customers who’ve already been waiting a year, on schedule’?
“One morning early in November I arrived at the office. On my right was the row of Glowforge printers that we use every day. On the left was the row of printers that were not working, waiting for troubleshooting.
“The row on the left was longer than the row on the right.
“I realized we had a problem.
“I pulled together the wisest advisors I know: our consultants, manufacturers, suppliers, investors, and, most of all, our team. I shared data on customer feedback, hardware failures, shipping damage reports, and the statistics from tens of thousands of prints. Instead of my usual question ‘How do we ship in December’, I asked each person what shipment schedule they thought would ensure that our product was great.
“After talking to everyone, I sat down with our team. After hours of consideration, we came to a painful conclusion. We are not ready to start producing in quantity yet. The only way to build your Glowforge with the quality and care it deserves is by spending more time on testing.
“This means adding more time to our production schedule. We previously planned to go from producing hundreds of units one month to producing many thousands with three round-the-clock shifts to get things done faster. But we’ve had to acknowledge that the path to a quality product means scaling up more gradually.”
Shapiro shares some other details on previously undisclosed features, such as an interchangeable head unit—so you could potentially swap the laser for an inkjet printer cartridge; and a suite of 50 sensors that help protect the Glowforge from malfunction. The company also announced last week that Flex would be its manufacturing partner, making the units in California, and that beta and pre-release units are reaching customers.
As a pre-order customer, my thinking is pretty much the same now as it was when Glowforge announced a shipment delay last April: I’d rather wait for a laser cutter that works well than have a crumby one today.
In the meantime, there’s scissors and glue.
