Today I’m starting the series of the biggest crowdfunding failures. The objective of this series is to look back on the notoriously failed crowdfunding projects and try to find a pattern of possible fraudulent projects so as to avoid them in the future.
The subject today is called the “Coolest Cooler“: 21st Century Cooler that’s Actually Cooler. I first noticed this project back in 2014 and was blown away by its awesome video and marketing collaterals. I fell in love with the idea and almost backed it, but decided to give up at the last minute (lucky me).
62,642 backers pledged $13,285,226 for this project, in a month! Look at its features!
It’s been 6 years, and over 20,000 backers are still waiting for their rewards. The comment section is full of grumbling posts from backers.
It’s really, really a disaster.
Actually, this project reminds me of the Fyre Fraud. It’s funny that, if you think about it, both projects have quite a number of similarities. First, they were both selling a similar kind of “lifestyle”: partying, vacation, beach & sunshine. In the Fyre Festival video, you see hot models, yachts, villas, and crazy parties. The Coolest Cooler video is a slightly more modest version, but it’s also all about having fun. Some editor even referred to it as the “ultimate party box”. Second, they both failed because the founders both overpromised to their backers and underestimated the cost of the project. Fyre Festival promised villas on a tiny island where there just weren’t enough villas, and it’s impossible to build them just for this event. Coolest Cooler also promised features such as the Blender that’s just too expensive for a product that only costs $185. And last but not least, both projects got their attention from the social media frenzy, and grew too big to control.
How to avoid this kind of scandals in the future? Or if you are a creator, how to avoid this kind of risk? Here are some tips for both the backers and creators.
- Calculate the production costs carefully to see if the price is too good to be true.
Before you back any project, do some basic calculations and don’t back them if they look too good to be true. Take Coolest Cooler as an example, it has an ice-crushing blender, a Bluetooth water-resistant speaker, a USB charging port, LED lamps, a bottle opener with magnetic cap catch, plates, knife, corkscrew and a removable divider that can also be used as a cutting board. That’s a lot of features, and each feature costs money.
A lot of crowdfunding projects that their product has so many features and if you buy them separately you need to pay three times more. It might work for some products if they redesign the electronic components, for instance, a power bank and charger 2-in-1 or a charger and a hub 2-in-1. However, for a cooler, if you just stack these together, you are not going to save the cost. A blender would still cost that a normal blender does, let’s say $50. A Bluetooth speaker still costs at least $50.
In fact, this is the biggest reason that the Coolest Cooler failed. If they sell this for $300, they might get a lot fewer backers, but they will survive.
- Calculate shipping costs.
Another factor that a lot of people overlook is the shipping cost, and I think Ryan Grepper, CEO of Coolest Cooler, probably did the same. The shipping rate that the Coolest Cooler charged was only $15, which is barely enough when you ship a power bank. The Coolest Cooler’s box measures 26″ (L) x 21″ (W) x 19″ (H) and the internal volume is 55 quarts. With all the gadgets included, the Coolest ships at 39 pounds. The creator needed to ship this from China to the US and then use local ground shipping to your house. Shipping costs alone would be over $60, at least.
What’s more, there’s customs duty when international shipping is involved. One of the reasons that finally crushed Coolest Cooler was the 25% customs duty that the US imposed on goods shipped from China, although some may argue that it’s just another excuse from Coolest Cooler because it’s been 5 years since the launch of the project when the duty was raised.
- Read the descriptions for technical details.
if you read the descriptions on the Coolest Cooler Kickstarter page, you’ll notice that there isn’t much detail about the technical specs of the product.
For instance, what’s the power of the blender? What’s the output wattage of the speaker? What’s the output of the USB charger? How bright is the LED light on it? They don’t even have the basic specs such as the size and the weight of the product. That’s a little fishy, isn’t it?
If a creator has really done his job, he’ll show you all the detailed specs of the product. He will know every tiny detail inside out of this product because this is his product. He created it from scratch so he should know it like a parent should know their child. When a creator doesn’t know all those details, it’s a sign that he hasn’t done his job.
To sum up, the Coolest Cooler might be the biggest failure on Kickstarter because it raised so much money, but it may not be the worst. Over 2/3 of the backers got the products, and the creator has been trying their best to amend their mistakes for the past several years until they went bankrupt. In my next blogs, I’m going to write about some more notorious projects where the creator was deliberately trying to rip off backers and took all the money pledged.
Kickstarter said in a statement regarding Coolest Cooler: “Kickstarter is a home for creative projects. There’s always a risk in creating something new, and some projects won’t end up working out. In this case, unfortunately, 1/3 of the backers won’t receive the reward they were promised. We’ve worked hard to make it clear that Kickstarter is not a store. And in the five years since this project was funded, we’ve taken steps to help creators be more transparent with backers and to better understand what it will take to bring their project to life. Our goal is to help improve the chances that a project will work out for everyone, with the understanding that the risk will never be fully eliminated.”
Indeed, every year, 9% of the projects on Kickstarter don’t work out, but the majority of the creators are really authentic in trying to build something new and innovative, and that’s why we love crowdfunding, isn’t it?
