Drone company fails to take off, tells pre-orderers: You can have your $34m back Lily Robotics, which three years ago set out to create a flying camera, is shutting up shop and returning $34m to customers who had placed pre-orders. The firm announced yesterday that it had conceded defeat in its race against the "clock of ever-diminishing funds" despite the capital raised for the $899 camera-copter. Lily …
The idea was you could throw it up in the air and then it would follow you as you ran a ski, mountain bike course etc. Bit like one of those sci fi type drone cameras they show hovering and follwing journalists types around in the odd film, tv show.
Apparently it was supposed to be cheaper than a pro level phantom or whatever.
The trick I think they missed was thinking that implementing it would be easy and that DJI just hadn't figured it out.
seems to me they had the implementation... the article states "Lily Robotics said it was winding the company down because it simply hadn't managed to secure the necessary financing to manufacture its first units"... certainly sounds like it was manufacturing, not implementation, where the failure came in...
The whole infomercial industry works on the business model that you pre-sell your product and use the cash from the pre-sales to fund the manufacturing.
Even if the Lily folks didn't want to do that, but wanted to fund the manufacturing with a bank loan or raising new investor money, raising that when you have $34M in cash as an asset, should be trivial. Unless the banks or potential investors don't believe you can make what you pre-sold, or at least can't make it at a profit.
I agree there's something afoot.
However for me it's how they still have the $34 million to refund. Surely the process is to raise funds, burn through it, apologise via email and start again. To have the money to return is in itself impressive and makes a change.
What exactly have they been spending these last couple of years?
AFAIK, they had 60,000 pre-orders which means the $34M collected represents nearly a 2/3 deposit. They also had a $15 million in venture capital which I imagine is what they worked with along with a little interest on the $34M. Unfortunately for them the droning venture capital has all but dried up at this point so they were unable to obtain more VC dollars which meant the crossroads were burn the deposits or close the doors.
No doubt some clever numbers guy actually did the math and discovered that they were only looking at another $20M income on the promised 60,000 units and that it would require much more money to actually get the product ready. Rather than continue while knowing there was little or no profit at the end of the rainbow they simply decided it better to turn off the sprinkler and lights.
Not a Ponzi scheme.
It's perfectly legal if you can deliver the goods (or refund the money if you can't). But that is why a lot of new products sold via infomercials have long lead times. If the pricing vs manufacturing costs have been set up correctly, this just primes the manufacturing pipeline in a manner that does not require any investment risk on the part of the company.
and you STILL can't get a device in production?
I'm launching a kick starter.
Cold Fusion reactor, size of a shoe box.
Need £100 million funds.
Stick the lot into property for 3 years.
Say can't deliver, blame the Chinese and/or lack of further investment.
Return £100 million.
Keep the profits....Kerching!
.. is the precise risk you run, entering a market with a me-too product or service.
Unless you offer a compelling difference (and, let's not forget, can make that clear to your possible customers) you're in a race to the bottom line, usually won by either those who cut the most corners, or who have a longer financial breath than you have and thus can wait for your company to die a "natural" death.
That said, there's no difference with the dotcon boom where a number of people where making good money conning investors out of their money and then move on when it all went to pot. The fact that they failed to get further financing suggests that at least *some* people have learned their lesson.
That said, no doubt the main players in this are already trying to pick up a new startup job, using their "experience".
The point is that at the time it was launched, it wasn't a me too product. It was very innovative.
They took so long to get it to market that the rest of the industry caught up with all of the practical bits, leaving only the impossible features for them to implement. So it took even longer to get to market whilst they figured out that the reason no-one else was doing that stuff was because it was very, very hard.
So they ended up with a me too product, late to market. But that's not where they started.
The issue here is that innovation is hard, and the competition is fierce. That's not at all the same as the dot com boom, which majored on things with imaginary profits. We know drones are profitable - they turned DJI into a billion dollar company in very short time. The challenge is replicating that fierce pace of innovation.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
