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An Important Lesson from the Zano Drone Failure

One of the most infamous boom to bust stories around a crowdfunding campaign to date is that of the Zano Drone. This story hits home personally for me because I was one of the original backers on Kickstarter. For those fortunate enough to be unfamiliar with the story, a company called Torquing Group led a Kickstarter campaign for an ambitious mini-drone capable of doing everything except take the dog for a walk — and raised £2.3 million in the process.

Everything was going swimmingly well, or so it seemed. In fact, as recently as October 15, 2015 the company was singing praises about their progress and claimed that over 7,000 drones would be manufactured and shipped before Christmas.

A month later on November 18 the company sent a terse note out to all backers stating that they were bankrupt. While not stated explicitly, no drones would be shipped to backers. In hindsight yes maybe it was a bit too good to be true to get such an advanced drone for the £139 early bird backing fee, but with so many others jumping on board and the amount of press around this little guy most of us were not paying attention. What can campaigners and backers both learn from this experience to avoid this happening again?

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Mark Harris, a freelance journalist, was commissioned by Kickstarter to conduct an in-depth investigation of the Zano project to provide lessons for itself and for others. Mark has done a remarkable job digging into the nitty- gritty of every detail around this case — it’s a lengthy read that explores the entire story from Zano conceptualization through to the eventual flameout.

For me, there are three main takeaways from this report that can truly be actioned upon. Two of these are geared towards those entrepreneurs seeking to have their project crowdfunded, and the third is aimed at contributors themselves.

Campaigns need to be wary of over-extension during both the Funding and Production phases

The Zano Kickstarter campaign was wildly successful, raising over 20 times the £125,000 originally sought by Torquing. In doing so, backers unlocked an increasingly complex array of stretch goals. What was originally a pretty cool little drone (albeit with some hefty expectations to live up to) ultimately became an unachievable endeavor for the Zano team.

Features promised as stretch goals such as on-board storage, thermal imaging, the ability to fly upside down, wireless charging, facial recognition, and a 1080p camera are simply not a “stretch” — they’re features that took this drone into a whole new product-class. Mark’s report indicates that the Zano team was in fact very dedicated to the project, often working extended hours in an attempt to pull things together. Ultimately however the Torquing management team had simply made promises that couldn’t be met.

This was the beginning of the end, as Torquing subsequently went bankrupt before the needed changes could be made.

The 2nd critical error made was the decision by Torquing management to skip a pilot build of the drone and order stock for full-production, presumably in an attempt to meet the quickly approaching shipping timeline commitments to backers. The decision to skip proper testing, particularly in light of the excessive stretch-goal additions being added, ultimately led to failure.

The drones that were finally assembled simply would not fly, due to a complex combination of weight, propeller choice, and battery power. To resolve the issue, Torquing would need to make extensive design changes but much of the material had already been purchased and could not be returned. This was the beginning of the end, as Torquing subsequently went bankrupt before the needed changes could be made.

The ultimate lesson here for project managers is not to get carried away in the excitement of a run-away campaign that far exceeds the original target. Stretch goals should be perks and not necessitate a wholesale redesign of the project. Seek professional guidance from your team (or externally if warranted) before making commitments you can’t keep.

Secondly, never commit to excessive inventory before your product is fully tested and proven, or at the very least negotiate terms with your suppliers that will allow return or exchange of unused material. It’s important to examine failures such as this and learn from them so that we don’t repeat the same mistakes as others.

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