Connect with us

Business News

The anatomy of a Kickstarter scam, starring Peachy Printer

If as much effort went into actually building this product compared to scamming investors and covering their asses, the Peachy Printer founders might have actually come up with something worthwhile.

Published

on

Bad apples spoil the bunch

I always wondered what BS smells like and now I know. The Kickstarter Peachy Printer scam is so unbelievably crooked that I can’t help but wonder if these guys had just put the same amount of effort into actually following through on their promises that they did on siphoning money from investors, something worthwhile may have actually been produced.

This is going to be a wild read, hang on to your butts.

bar

The short version

Two young entrepreneurs come up with an idea to create a desktop 3D printer that would cost consumers only $100. Dreamy, right?

Impressed Kickstarter investors ponied up $600,000 (Canadian). For reasons that completely escape me, the inventor and his partner do this without having set up a business banking account, so all the money goes into a private checking account where one of the partners’ proceeds to spend most of the funds on a new house!

Said 3D printer never gets made, no one gets arrested, and the whole scam is covered up for more than two years before it goes public.

Note from the Editor: This all feels like an elaborate hoax, but is being reported by even the most credible sources (like BBC), but we’re still holding our breath – filmed confessions that sound like a high school play? We’ll see.

A template for success

Kickstarter has set up a process where entrepreneurs have the potential to find investors so funds can be raised and dreams can be realized. The track record for this is pretty good because Kickstarter seems to be stronger than ever and is extremely vigilant about protecting their community.

Further, Kickstarter tells you (in fine print) that respective products may never see the light of day. Which is why money pledged is considered a donation.

But I digress. The Peachy Printer debacle is a prime example of why the government is getting involved and trying to regulate crowdfunding sites in order to make those receiving funds legally responsible.

The fine print

Always read the fine print. This is from the Kickstarter Website:

“Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project. On Kickstarter, backers ultimately decide the validity and worthiness of a project by whether they decide to fund it.”

What is a creator obligated to do once their project is funded? (Notice it says fundamental and not LEGAL obligation). I’m glad you asked.

“When a project is successfully funded, the creator is responsible for completing the project and fulfilling each reward. Their fundamental obligation to backers is to finish all the work that was promised. Once a creator has done so, they’ve fulfilled their obligation to their backers. At the same time, backers must understand that Kickstarter is not a store. When you back a project, you’re helping to create something new, not ordering something that already exists. There’s a chance something could happen that prevents the creator from being able to finish the project as promised.

If a creator is absolutely unable to complete the project and fulfill rewards, they must make every reasonable effort to find another way of bringing the project to a satisfying conclusion for their backers.”

That is what is SUPPOSED to happen. It doesn’t mean that is what WILL happen.

Integrity is SO overrated

You can see Kickstarter has tried to insert some inherent sense of doing the right thing. All they do is provide a template. They get their percentage and sleep well at night because investors more or less know up front what they are getting into.

As bad as the Peachy Printer project is/was, it’s nothing compared to the recent Zano mini-drone initiative that scorched investors for several million dollars.

In both cases, the project developers apologized and tried to smooth things over by presenting professionally made graphics that explain how the money was spent. I noticed in both cases that no one made the effort to include a pie chart showing expenditures for a new house or a private island in the tropics, but I guess that’s neither here nor there.

Like money in the bank

In the bigger scheme of things how this ultimately ends is anyone’s guess. Regarding Peachy Printer, so far no printers have been made, most likely for the simple reason that one of the partners in the project took the money and built a house with it. Investors are likely pissed off because they got burned.

Will this give investors more pause before investing in crowdfunding sites? Maybe, maybe not.

Lino Rivera tells us, “My overall opinion on crowdfunding is a positive one, but there are no doubt pitfalls at every corner. I’ve had customers come from that space who were wildly successful out of the gate only to lose steam and ‘realign themselves’ a year after. I’ve backed a few projects myself, now that I think about it though, I haven’t received anything yet from those campaigns.”

“The last one I backed was actually from an established company who said crowdfunding sped up the time to market,” Rivera notes. “Really though, I believe it had more to do with market validation, which I think is one of crowdfundings greatest strengths. Before investing in huge amounts of capital, you get to see if it is even something the market wants.”

Will one bad apple spoil the bunch? Probably not, because as Rivera notes, there are other reasons for crowdfunding than the actual dollars. And Peachy Printer is hardly the first to victimize the crowdfunding space, so stay tuned.


All links he mentions are on this site.

#KickstarterScam

Business News

Keep your company’s operations lean by following these proven strategies

(BUSINESS) Keeping your operations lean means more than saving money, it means accomplishing more in less time.

Published

on

keeping operations lean

The past two years have been challenging, not just economically, but also politically and socially as well. While it would be nice to think that things are looking up, in reality, the problems never end. Taking a minimalist approach to your business, AKA keeping it lean, can help you weather the future to be more successful.

Here are some tips to help you trim the fat without putting profits above people.

Automate processes

Artificial intelligence frees up human resources. AI can manage many routine elements of your business, giving your team time to focus on important tasks that can’t be delegated to machines. This challenges your top performers to function at higher levels, which can only benefit your business.

Consider remote working

Whether you rent or own your property, it’s expensive to keep an office open. As we learned in the pandemic, many jobs can be done just as effectively from home as the workplace. Going remote can save you money, even if you help your team outfit their home office for safety and efficiency.

In today’s world, many are opting to completely shutter office doors, but you may be able to save money by using less space or renting out some of your office space.

Review your systems to find the fat

As your business grows (or downsizes), your systems need to change to fit how you work. Are there places where you can save money? If you’re ordering more, you may be able to ask vendors for discounts. Look for ways to bring down costs.

Talk to your team about where their workflow suffers and find solutions. An annual review through your budget with an eye on saving money can help you find those wasted dollars.

Find the balance

Operating lean doesn’t mean just saving money. It can also mean that you look at your time when deciding to pay for services. The point is to be as efficient as possible with your resources and systems, while maintaining customer service and safety. When you operate in a lean way, it sets your business up for success.

Continue Reading

Business News

How to apply to be on a Board of Directors

(BUSINESS) What do you need to think about and explore if you want to apply for a Board of Directors? Here’s a quick rundown of what, why, and when.

Published

on

board of directors

What?
What does a Board of Directors do? Investopedia explains “A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set policies for corporate management and oversight. Every public company must have a board of directors. Some private and nonprofit organizations also have a board of directors.”

Why?
It is time to have a diverse representation of thoughts, values and insights from intelligently minded people that can give you the intel you need to move forward – as they don’t have quite the same vested interests as you.

We have become the nation that works like a machine. Day in and day out we are consumed by our work (and have easy access to it with our smartphones). We do volunteer and participate in extra-curricular activities, but it’s possible that many of us have never understood or considered joining a Board of Directors. There’s a new wave of Gen Xers and Millennials that have plenty of years of life and work experience + insights that this might be the time to resurrect (or invigorate) interest.

Harvard Business Review shared a great article about identifying the FIVE key areas you would want to consider growing your knowledge if you want to join a board:

1. Financial – You need to be able to speak in numbers.
2. Strategic – You want to be able to speak to how to be strategic even if you know the numbers.
3. Relational – This is where communication is key – understanding what you want to share with others and what they are sharing with you. This is very different than being on the Operational side of things.
4. Role – You must be able to be clear and add value in your time allotted – and know where you especially add value from your skills, experiences and strengths.
5. Cultural – You must contribute the feeling that Executives can come forward to seek advice even if things aren’t going well and create that culture of collaboration.

As Charlotte Valeur, a Danish-born former investment banker who has chaired three international companies and now leads the UK’s Institute of Directors, says, “We need to help new participants from under-represented groups to develop the confidence of working on boards and to come to know that” – while boardroom capital does take effort to build – “this is not rocket science.

When?
NOW! The time is now for all of us to get involved in helping to create a brighter future for organizations and businesses that we care about (including if they are our own business – you may want to create a Board of Directors).

The Harvard Business Review gave great explanations of the need to diversify those that have been on the Boards to continue to strive to better represent our population as a whole. Are you ready to take on this challenge? We need you.

Continue Reading

Business News

Average age of successful startup founders is 45, but stop stereotyping

(BUSINESS) Our culture glorifies (yet condemns?) startup founders as rich 20-somethings in hoodies, but some are a totally different type.

Published

on

startup founders average age is 45

There’s a common misconception that startups are riddled with semi-nerdy, 20-something white dudes who do nothing but sip Nitro Brews and walk around the open office showing off the hoodie they wore yesterday. It turns out that it’s extremely rare that startup offices resemble The Social Network.

However, the academic backdrop for the real social network story (AKA Harvard), produced statistics that will serve to put the aforementioned misconception to rest. According to the Harvard Business Review, the average age of people who founded the highest-growth startups is 45. Say what?! A full-fledged adult?!

In fact, aside from the age category of 60 and over, ages 29 and younger were the smallest group of founders that are responsible for heading the highest-growth startups. I guess you can accomplish a lot when you’re not riding around the office on a scooter all day.

The study also found that older entrepreneurs are more likely to succeed. The probability of extreme startup success rises with age, at least until the late 50s. It was found that work experience plays an important role.

Many will argue, “Well, what about someone like Steve Jobs?” You could easily argue right back that it took Jobs until the age of 52 to create Apple’s most profitable product – the iPhone.

The study continues to answer questions like, why do Venture Capitalist investors bet on young founders? This goes back to the misconception at the start, and there’s a notion that youth is the key for successful entrepreneurship. Wrong.

There is also the idea that younger entrepreneurs are likely working with less financial options, so it may be common for them to take something from a VC at a lower price. As a result, they could be viewed as more of a bargain than older founders.

“The next step for researchers is to explore what exactly explains the advantage of middle-aged founders,” writes Pierre Azoulay, et al. “For example, is it due to greater access to financial resources, deeper social networks, or certain forms of experience? In the meantime, it appears that advancing age is a powerful feature, not a bug, for starting the most successful firms.”

Continue Reading
Advertisement

Our Great Partners

The
American Genius
news neatly in your inbox

Subscribe to our mailing list for news sent straight to your email inbox.

Emerging Stories

Get The American Genius
neatly in your inbox

Subscribe to get business and tech updates, breaking stories, and more!