Coolest Cooler, $13M-funded Kickstarter project, needs another $15M | Hacker News Reader

Coolest Cooler, $13M-funded Kickstarter project, needs another $15M

oregonlive.com

91 pointsdanso68 comments

Ultimately the problem with most crowdfunded hardware products can be summed up here:

>> Coolest wasn't able to manufacture the exact cooler in the promo videos.

>> "The Coolest Cooler in that video was a one-of a kind prototype," Grepper said. "Ultimately it's not a scalable design – it's an industrial design."

>> The proof-of-concept prototype cost him $15,000 to make, he said.

>> Grepper had no idea how much each cooler would cost to manufacture.

>> "At the early stages, you simply can't get that information," he said.

A model != a DFMA'd product.

There's tooling costs (I suspect the Coolest Cooler has several hundreds of thousands of dollars in tooling needs), there's supply chain, etc.

This takes time, testing, dozens of iterations, etc.

He sold a product he didn't understand the real cost of. Not maliciously but because he was naive and didn't understand the process.

Knowing what your true landed BOM costs are can take over a year of modeling, making production samples, negotiating with manufacturers and suppliers, etc. Even then you wont really know the cost until you enter volume manufacturing since there's scrap rate and QA issues you run into.

Yep. It used to be prototypes looked like prototypes and so the 'polish' of a demo/concept gave you some idea of how mature the manufacturing/operations process was. Now it's so easy to fast prototype just about anything it's easy to bamboozle easily-fooled gadget enthusiasts by showing them something that makes them think the future is now, but in truth the "product" they're looking at is the modern equivalent of a bare PCB and a bundle of wires.

This VC firm does a great job breaking down a lot of the mistakes that this guy made and provides a set of frameworks startups can use to avoid this fate: https://medium.com/@BoltVC

>> The proof-of-concept prototype cost him $15,000 to make, he said.

>> Grepper had no idea how much each cooler would cost to manufacture.

Maybe this should be part of the lesson learned for the CrowdSourcing community. The kickstarter project should be more transparent on how much it cost to make the prototype, and also show how much experience the kickstarter had (or access to the experienced) for creating such a product.

Mass manufacturing of a physical product is a totally different ball game to writing a code for a XaaS product.

A big problem with crowdfunding is that many backers don't seem to understand the risk they are taking on. It is distressing to see pages and pages of comments complaining about a project's failure, but in the same vein, I've never seen a gambler bang on a slot machine because it didn't payout this time. Is this due to a lack of basic business knowledge among the public?

I think a big reason I've never contributed to a campaign is because there's a greater than 50% chance my money will evaporate.

> A big problem with crowdfunding is that many backers don't seem to understand the risk they are taking on.

The bigger problem is that the people starting crowdfunding initiatives have no idea about what it takes to bring a new product to market, if they're not outright scams.

And yes, indegogo, but its basically the same platform as kickstarter.

It looks like I just got burned on an Indiegogo project myself (https://www.indiegogo.com/projects/zaptip-the-world-s-first-...) - I was aware of the risks, but the product was "just" a cable, so I considered it low risk. I had previously participated in a couple of other Indiegogo projects worked out wonderfully.

The worst thing about my IndieGogo Zaptip failure is that there are now tons of ZapTip knockoffs already available through Amazon, eBay and other channels, and at lower price than what I paid to fund the Indiegogo project.

Indiegogo is where projects go when they're too shady for Kickstarter. They're much less willing to give the boot to scammers and actively welcome projects that have been kicked off Kickstarter.

The reality is no one can 100% derisk a new venture, and hardware is a particularly complex industry. Even those with lots of experience in hardware face challenges (google Tony Fadell and Nest). It's up to consumers/backers to do their due diligence on a campaign and its founders. The same is true of any investment or purchase.

I think the most annoying thing about the Coolest Cooler campaign is this quote: I'm just frustrated that people who live in my same town [...] who purchased their Coolest cooler AFTER I did [...] have received their shipment before I have. I've contributed to several Kickstarter campaigns, one of which failed. I was bitter about the failure, but I understood the risk. However, I think I would be much more upset if my neighbor received their product and I didn't.

People expect immediate gratification. They pay for it and expect it two days later. We become upset because it falls out of the patterns we have adapted to.

People don't expect to be ripped off.

I've been watching one project since 2013. $500k raised, and they seem to have blown it on initial set-up and tooling.

The items are being sold through an "exclusive" deal with a famous online outlet, and most backers still haven't received anything.

I think that counts as outright fraud, and not just "becoming upset".

Some backers have been talking to the FTC, so we'll see what happens then.

Not to say this can't happen with accredited investors but the risk is less. Appropriate due diligence is a competitive advantage but not a requirement. At the end of the day, crowdfunding should be seen as an investment due to the risk and the crowdfunding reward is just as much of a resource for the founder as it is to the customer.

>A big problem with crowdfunding is that many backers don't seem to understand the risk they are taking on.

That's because Kickstarter advertises the potential benefits and buries the risks.

If you read their KS page [1] it states: "Pledge $185 or more: COOLEST COOLER: Get your very own COOLEST, complete with blender, a waterproof Bluetooth speaker, USB Charger and all the other awesome features. You will be saving $115 off of the retail price of $299. (Just watch people flock to your gathering when you're the only one with a powered blender and thumping music!). You'll also get the COOLEST Drink Guide and all our updates. (add $15 for shipping)".

Now, you and I know that means "maybe", but does the average backer? I don't think so - honest. It says, right there, in black and white, if I pay $185 I get XYZ. Sure, it says maybe not in the contract, but who reads those? Don't forget home loans in mid-2000. In that case, you heard "HOMES FOR $899 A MONTH!" not so much about the adjustable rate and the potential to collapse your living situation.

Ramble ramble...

[1] https://www.kickstarter.com/projects/ryangrepper/coolest-coo...

Coolest Cooler always reminds me of the "I can't believe they invented it" on the simpsons and the "S.S. Microwave".

https://frinkiac.com/caption/S04E21/90156

or another quote from that episode "people are afraid of new things, you should have taken an existing product and added a clock".

I am amazed that the founder didn't plan the exact cost of each unit during the kickstarter phase and I'm even more amazed that people are so careless to put money in projects with no clear plan and cost figured out.

Please send me some money now for my virtual cat project. I just need to raise $100MM. I promise it will deliver!!! =<O.0>=

I have a family member who knows the founders and apparently they're completely nontechnical "idea guys" who have a trail of shitty projects like this and have already moved on to other projects. So it's not that surprising to me.

This isn't an "everyday joe" who loved camping and hit upon a neat cooler design...

He had been working to perfect his pitch on all sorts of novelty items. Washington Post had an article on prior failures (https://www.washingtonpost.com/news/the-intersect/wp/2014/08...).

Professional crowd funder looks like his only skill.

The WashingtonPost article linked by another reply mentioned he was a sign welder at one time, and talked about him working in his workshop. Do you think the article overstates these things? It seems like he has at least some hard skills.

It said in his part time he welded, it never said he did it as a career.

In my spare time I engineer electronic devices, fabricate parts, enclosures, mounts and simple machinery, manage data networks, and perform landscape and automotive maintenance. And you'd be an idiot if you hired me to do any of those things professionally.

I'd imagine a large amount of kickstarters don't have BOM/Exact cost of products when they launch kickstarters.

Which makes it additionally funny when this guy actually has a prototype which in an unscalable way costed <x> $. Simple depreciation would put it at an order of magnitude higher price for early, mid scale production. That's per unit.

Timely, since I had the chance to use this on the beach this week. My friend ordered one after me - he got his 3 months ago. It looks like I'm going to get diddly-squat. Having said that...it's a kick ass product. Kept beer cold on our porch over 20 hours (probably would have been longer, we drank the contents in that time). The blender churned out 3 full pitchers of margaritas + halfway through another - as we hung out on the beach. Was very easy to roll on the sand. I'm more pissed the attitude this guy has had all along - "whoa, it's hard to find reliable providers in China." "Shipping is hard!". I would have paid more to cover the costs if they had just priced it out right. Now I hope he ends up getting tied up in legal challenges - maybe that'll knock the It's-Not-My-Fault attitude down a peg or two.

Has there been an explanation as to why later backers received theirs before early backers?

I'm not sure about later backers, but as money ran out, they gave priority to Amazon customers because it was priced at $499 on Amazon, not the $199 that backers paid. The logic was that the retail purchases would subsidize the early backers.

If you don't fulfill Amazon, you get kicked off Amazon, plus that's bringing in about $450 per sale (after Amazon fees) as opposed to $0 for a Kickstarter fulfillment.

Crowdfunding hardware is often a dangerous mix of "get this amazing unsustainable discount over our future retail price" at a time when the per-unit costs are highest and the up-front engineering costs are still unpaid (and likely to grow from anyone's best estimates). This is an obvious recipe for trouble.

That doesn't mean it isn't worth trying. But it does mean that project creators should build in sufficient margins to absorb all of that, and project backers should understand that asking a creator to deliver a not-yet-production-ready product with near-zero margins is likely to end in a total loss of their backing funds. It's possible that if you had paid more, you might be likely to lose less.

""The Coolest Cooler in that video was a one-of a kind prototype," Grepper said. "Ultimately it's not a scalable design – it's an industrial design."

The proof-of-concept prototype cost him $15,000 to make, he said."

"[After Amazon approached us] we recognized that every Coolest cost more than each backer had given us for the manufacturing process,"

Incredible.

Am I reading this right, that it's just the swiss-army- knife of coolers? I'd ask why anyone would want this but the mob has clearly spoken. That being said, why didn't he just take an existing cooler that's already available in large quantities and figure out a clever way to enhance it with all these capabilities? Maybe just swap out the cover?

I daresay plastics are the cost issue here so I'm not sure swapping out the cover would help. Personally, I'd have done this as some sort of cooler add-on kit in a custom cloth case of some sort and pitched it as letting you use your existing cooler or pick the cooler that meets your needs. But then, as I said elsewhere, I'm not the audience and don't see the attraction :-)

"Ultimately it's not a scalable design – it's an industrial design."

So which one of us doesn't understand what "industrial design" means? Because my understanding says his statement is a contradiction. I thought part of "industrial design" was to design things for mass production, not one-offs.

Actually industrial design doesn't mean the design will work for mass production. Usually they should think about the manufacturing part as well. That step is called Design for Manufacturing (DFM). Usually the mechanical engineer works on the DFM part.

----Round 1---- $13m raised 20k units shipped ~$650 per unit

----Round 2---- $15m needed 36k units remaining ~$420 per unit

Obviously I'm not factoring in initial manufacturing costs.

Having 13 million to invest in manufacturing at scale, brought costs per unit sold down 35%, which is good. But I don't know many people that would buy a cooler for $500.

Grepper, speaking during a live-streamed web conference, also said the company is seeking an additional $15 million, a third of which would be used to fill 36,000 outstanding orders from backers.

I did have to laugh though at that cute info-graphic of where all the money went, tucked in the bottom right corner has a little asterisk -- "* not to scale".

I know plenty of fishermen that have spent more than $500 on coolers which do absolutely nothing more than keep cold things cold. People are willing to pay money for the tools that meet their needs.

It's not clear to me that this cooler is actually good at keeping things cold. Their kickstarter page doesn't seem to want to talk about it.

I'd thought maybe this thing had its own tiny built-in compressor and that's why it was so exciting, but it appears to be a boring old regular cooler with a bunch of cheap junk bolted on.

It is. I have always been perplexed by the start. For the need, the cost and ultimately the trust required that it would even deliver. Let alone the quality!

Give me a $500 per unit budget and I can pretty much guarantee you that I could put together a nice kit of higher quality components with plenty of money left over for profit.

Have you considered starting a Kickstarter?

Not really. If I did, it would be to market and gauge interest in something that I largely knew how to do already and didn't involve a big capital outlay.

ADD: In this case, my point is that with an hour of research and shopping I could source existing retail products that (for me) would be a better bundle. Of course, this wouldn't be cool.

The Kickstarter charged $165 or $185 per cooler.

What I don't understand is why this was so exciting in the first place. It looks like a normal cooler with a few cheap accessories (ice crusher, blender, light, usb charger, bluetooth speaker) and it's not even very big. Why were people so damn excited about it that they were willing to put up $165 for this Sharper Image wannabe.

Their website doesn't even talk about how good it is at being a cooler. How long does ice stay frozen in the hot sun? Can you keep your meat from going back over a long weekend at the campsite? Not that there is enough room in this thing for a camping trip. It's apparently focused on the beers on the beach crowd. How the hell did this shatter Kickstarter funding records?

> It's apparently focused on the beers on the beach crowd. How the hell did this shatter Kickstarter funding records?

I guess you're underestimating the size of the "beers on the beach" crowd.

I think there is also a big "Want to be part of the hype" crowd. I'm not saying it's a bad thing, but I think many Kickstarter backers are impulse shoppers.

Yeah, I'm apparently not the audience. Yeti seems to be doing well selling what are, to me, somewhat ridiculously expensive coolers but at least those are optimized for actually keeping stuff cold. The accessories on this thing are either gimmicks that I can see using once or twice because they're coo1--Make a frozen margarita at the beach!--or they're easily replicated with an inexpensive standalone speaker or whatever. (Indeed, there are also hand-cranked and battery-powered blenders for camping.)

ADDED: >Sharper Image wannabe

I had to laugh. This is EXACTLY the sort of thing that one would expect to see in a Sharper Image catalog.

Yeah, it is ridiculous. Even if the CC sold for exactly as advertised, and did exactly as advertised... it still isn't a good buy.

So you use the blender for a while... and then it breaks (through no fault of the cooler itself, say the dog chewed on it).

Now what? Send the whole thing back? Ditto for all the other crap tacked onto it. After a couple things break on it, then it turns into a large piece of junk.

And these things never work as well as dedicated devices.

Furthermore, there's a lot to be said for a cooler that can get wet or covered in sand, be hosed off, etc. while electronics are kept protected. If I really wanted something like this for the beach, tailgating, or a boat, I'd just buy whatever size/price point cooler met my needs (assuming I didn't already own one), pick up an appropriate waterproof/water resistant bag, and fill it with a battery-powered blender and whatever other accessories and eating/drinking implements I wanted.

We have a Yeti that we got for family road trips. It keeps stuff well refrigerated for long periods of time. I dunno how much wasted lunch meat we will need to save to make up for the ridiculous price ;)

This thing is so stupid. Each time I read about it it boggles my mind. Its "The Homer" of coolers. Looks like one of those crappy multifunctional things they would sell on tv with even more crap tacked onto it. And then theres the price... I don't get it.

Engel, Yeti and others make expensive coolers. Some can reach $500... but most people try to buy them on sale. Also, the market isn't massive as they are used mostly for recreational activities which are expensive endeavours to begin with.

The product design section of Kickstarter is basically the new "as seen on TV." Except half the time they can't even deliver the product they're pitching.

Kickstarter does a lot of great things, but it seems that the highest profile projects never live up to their expectations, even when they are able to deliver.

The issue is he will only ship the existing orders if he gets $15M in investment but a large part of that investment is to fund operations after shipment of the existing coolers. Hmm....

Where has this money gone? I'd love if Kickstarters that failed had to get audited and get those results posted publicly.

I remember looking at the original campaign with fascination. The inventor had already attempted a kickstarter campaign and failed. He came back with an improved design but it was obvious that he did not increase his price sufficiently to make up for the additional considerations in regards to injection molds, tooling, BOM etc... Must admit I was super jealous when he raised that record amount (I was running an unsuccessful kickstarter at the same time which actually had realistic goals and costs) but the end result is not a surprise.

I think he knew the cost was not realistic and chose to sell it anyways, hoping to raise additional funds after the fact. Same thing happened with Broken Age and you can bet it will happen again (people are very optimistic for cool sounding products).

When I saw the cooler I thought it was great and I would own it. But when I finally saw the price tag on Amazon, I just couldn't justify the purchase. I can't say the speaker is necessary and I wonder how much cheaper the cooler would be if I could just remove that feature.

Bluetooth speakers are like $5. Seriously. It's not like this is some expensive Bose nonsense or like it comes with 18" subs. This is a shitty shower speaker glued into the side.

I'm surprised an oversea's manufacturer hasn't ripped this off yet.

Well, that manufacturer just has to fulfill these $500 originals then they can turn around and spit out a $150 version.

Probably because it's not worth the effort to do it

Imitation is the sincerest form of flattery, so is snubbing it and not copying the worst insult?

There are 30,000 people who are waiting for a cooler with these added features, 20,000 or so that have bought one already. They all paid $190 I think, therefore manufacturers know the price point they need to hit and know there is a market for them.

The innovative features are all easily copied (LED lights, strap, wide wheels, bluetooth speaker, USB charger). The blender is perhaps the part they choose to leave out.

I think they sort of have - there are coolers on Amazon with integrated Bluetooth speakers, wheels, extending handle, phone charging, basically everything but the blender.

I don't know why or how on earth this costs so much to make.

* Speaker? $5 for something decent enough to work. Find AmazonBasics supplier, crank that up to $10.

* Blender? I can buy a "good" blender from Hamilton Beach for $20.

* Plastic parts? I don't know. Can't be that much, can it?

* Power? $20 will get you a really nice battery. Just put in a power brick battery thingy.

* Bottle opener? $4 will get you the nicest one from China, and it's probably coated in diamonds.

what confuses me is it costs so much, but they want to make the cooler _look_ like any other $30 cooler? are people throwing money at this just because it has some gimmick features?

Where's Elon when you need him?

> Plastic parts? I don't know. Can't be that much, can it?

Yes, it really can be that much. Making ordinary plastic parts involves electro-machining very precisely shaped chunks of metal designed to optimise the flow of the hot plastic injected into them at high pressure and make sure it cools properly without too much shrinkage or warping and then ejects reliably. It's expensive. Since this is a cooler that needs a foamed plastic insulating layer as well, I imagine it's even more complicated.

Don't forget the plastic plates!

I can actually understand why the costs might be so high if they're doing custom parts. The per-unit cost might be low but setting up molds etc. could be quite expensive. (Though that doesn't quite square with the claim of needing more money to complete an additional lot.)

In general, this seems like the sort of thing which really doesn't make a lot of sense in a Kickstarter context. I get the fact that it's cute in a certain gimicky sort of way but if I actually wanted something like this personally, I'd buy whatever size cooler at whatever price point made sense to me and put together a nice kit with whatever other accessories I wanted.

I bet a lot of the cost is the plastic, as the design I've seen from pictures would require fairly expensive molds as they would have to have moving parts (I wouldn't be surprised if the molds were $500k for just the body). Complex molds also need more time on the machine so the price per part goes up. Also, do to the size, there are fewer places with machines that big so the manufacturer has more leverage to get a higher rate.

They could have also specified the wrong class of molding to make the coolers as they could have hired the wrong engineer to design it for them. They could have specified traditional injection molding rather than blow molding or other techniques more suitable for large cheap plastic objects. Injection molding machines that can do small parts (dozen cm square at most) are very common, and time on them is cheap ($10k for mold + <$0.25/part). Large Machines (1m, also with a large draw) are rare, and the per-part price alone can make the $180 product impossible, as they would need the outer shell and the inner liner made on a large machine. I would not be surprised if they were charged $100 for the two pieces after yield was factored in. Also, the molds probably would take 6 months to make, which pretty much is the timeline they promised the units. Making 2 large pieces of steel have a even, thin gap with moving parts is non-trivial and expensive.

A good comparison for how much they would have to charge would be how much 2 knock-off pelican cases the size of a cooler would cost (hint: more than $180).

I can imagine a conversation like this:

CC: I just raise 13M, I am hiring you as our lawyer.

Lawyer: Confirmed

CC: How much can I legally pay myself as CEO?

Lawyer: Literally all the money.

CC: Here is your check for $350k.

Lawyer: Always satisfying to do a good job for a client.

(CC has already left, moments later you see the CEO drive by the window in a huge boat)

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