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Comment: Re:Second bite at the kickstarter apple, second fa (Score 1) 210

If we are talking about hardware kickstarters, or book kickstarters, or anything which involves manufacturing, if they do not have a working prototype yet it is always a risk to invest in it. If they have a working prototype and the money is only to pay for low rate initial production then the risk is low.

Looking at their project page, it really seemed like they had a prototype. They had lots of pictures taken with their "really fast" prototype. Which was presumably actually an updated V1 unit, and not actually a prototype of the new one at all. This puts them in a nasty position legally. They claimed to have a functional prototype. They appeared to be displaying an actual cased prototype. They gave every indication of being further on than they really were.

Comment: Re:Kickstarter's Fundamental Problem (Score 1) 210

The fundamental problem with Kickstarter is that there's no accountability for handling the money.

Only if you completely, and entirely, miss what it's used for. If someone wants to set up a kickstarter equivalent where projects must be independently audited, project plans validated, and investors have some legally watertight form of ownership as well as power to intervene then they are welcome to set it up. Here's one of the projects highlighted on Kickstarter's frontpage: Help send The Kinsey Sicks to the Edinburgh Fringe Festival! They want ~$24,500 to go to and perform at a Festival. They aren't trying to sell a product, they are asking fans to help them. Some of the higher pledges include getting a CD or some such. Why on earth does a project like this need drowning in bureaucracy (the lack of which is what you claim is Kickstarter's weakness) because some other people naively think Kickstarter is a zero risk pre-order store?

I'm pretty certain that their budget is well-costed, because they know up-front the cost of flights, accommodation, venue hire etc etc etc. No design, no R&D, no prototyping, no retooling. The costs are easily identified and easily audited. You, perhaps, are the one who is missing the point.

Comment: Re:Insurance (Score 1) 210

I'm sure people will be happy to spend an extra $650 so they can recover their original $700

Given the way insurance works psychologically (people are risk-averse more than they are profit-oriented), you'd be surprised how many takers you'd find at a slightly lower price.

Given the poor rate of success of Kickstarter projects, you'd be surprised how much of a loss you'd make at a slightly lower price...

Comment: Re:No, not Pyrrhic. (Score 1) 210

Except that a Kickstarter project is a contract between a business and private individuals. Consumer law trumps contract law every time, because even if the contract doesn't state "your statutory rights are not affected", you're statutory rights are not affected -- there are very few situations where a private individual can sign away statutory rights, and in such conditions, you really have to be very explicit about what rights are being signed away.

Kickstarter's boldest of bold text is the statement that the project once funded is obliged to deliver. That, I would argue (IANAL), makes it a contract of sale and subject to commercial law. Right after that sentence it goes on to enumerate remedies if a project can't complete, but by that point, the die is already cast. This hasn't been tested in the courts yet, perhaps because of low levels of loss, but this project has just lost $400K, and the company is still solvent, so there is the real possibility that this could be the first test-case.

Comment: Re:Morale of the Story (Score 1) 210

I don't think they've got a leg to stand on. (IANAL, although I did a course on human anatomy at university, so I know what legs look like.) First up, you don't need to include the term "your statutory rights are not affected" for your statutory rights not to be affected. This is a business-to-consumer relationship, so all consumer law still applies. Secondly, the wording of that agreement is tremendously vague. "used funds appropriately" -- just what is the legal definition of "appropriately"? I mean, it's clear that buying a Ferrari would be inappropriate, and it's clear that buying the PCBs would be appropriate, but the line between is so fuzzy as to bring us right back to "statutory rights". Now these guys have admitted to: A) failing to engage a suitably experienced project manager and B) commissioning code for a component that they could never afford to use. They failed to do the most basic of due diligence, and thus frittered away other people's money... inappropriately. And now they appear to be writing off the cost of their failure to follow basic good management practice out of other people's money, rather than carrying the costs of their own mistakes.

Ya'll hear about the geometer who went to the beach to catch some rays and became a tangent ?