The 15% got me. I would wager A2.0 got the initial 5 and the remaining 10 didn't come AT the close of the campaign. With A2.0 hoping to ride crowdfunding out for years to come it makes perfect business sense to pull out ASAP. 5% paid the bills and the 10% pure profit. If A2.0 wants to stay in the good graces of the CF world why take the chance your rep could be ruined for ever.
Jon Hopp vs Storm will be the next lawsuit.
A 2.0's fee is likely, (and I see Crowdfunding insider corrected the initial article)
All advertising costs (estimated at 5% of gross revenue); plus 10% of gross sales (net of Indigogo fees) to be paid on the back end. Agency 2.0 justified this commission rate because they advanced the monies needed to fund advertising. As it stands Agency 2.0 "worked for free" as they committed all their employees to this task. It seems like a hell of allot of work, and risk, for $550,000.
Agency 2.0 did not pull out, they got bilked by a dead-beat!
Crowdfunding correction; "The understanding was 5% of revenue would go to marketing like Google Ads etc. Following the completion of the campaign Agency 2.0 would receive 10% of gross revenue generated on top of the 5% for promotion. This is after Indiegogo has collected its service fee from the accrued funds. "
The expectation up front was to sell 10,000 to 14,000 units with Agency 2.0 and Indigogo privy to the potential and the projected numbers of this campaign. They were counting on a large number of unit sales to have economies of scale. The parties are intimately connected thus you should ask both Storm and Indigogo for a refund {while you can}.
My guess is that the campaign was not designed to be a loss leader; instead these guys failed to cost their business plan thereby deluding themselves that margin would be available both for Agency 2.0 and Storm..
Put a single cost into the equation such as "product liability insurance," a warranty, product testing, Samsung battery, customer service, legal fees, or even paying your advertising agency and all the assumptions in their spreadsheet just blew up, aka went "tits-up."
My thinking, is they transmuted "at cost shipping" into a fixed price profit center. But even with shipping as a profit center, there may not be enough money to cover all the costs. This change from cost based shipping to fixed cost shipping is also a materially false representation.
Charging $120 for "insurance," as an additional profit center, is also egregious. The purchase guarantee needs to be unconditional anytime prior to delivery.
Charge the battery in 90 minutes and watch literal explosions sure to launch a rider upwards 50 miles into the air and 50 miles away from the bike into the Twilight Zone.
Buyers might get a bike, but they are going to get bilked.
"Pages from the Deadbeats Playbook" <- my guess it applies here;
"Because he is smarter than everyone else, including the dumb folks that follow rules"
The deadbeat knows he has no case, but he knows he is in the winning position!
He knows how to win by losing!
Honest folk, who have not seen this before, don't know how to deal with him
The court, being a process, lets time do all the work (that is why it costs a fortune to litigate)
The deadbeat knows this, and he pays NOTHING to go to court..
--It is cheaper to be sued than it is to sue
--The deadbeat "don't pay anyone," including the attorneys he hires.
--Attorneys are more numerous, and therefore more desperate to have a client, even more desperate than gullible crowdfunding agencies!
-With a court date scheduled
--The deadbeat will bide for time and work to confuse the issue
--He won't show up to court
--He will publish pictures of him hard at work in China, an outstanding citizen hard-worker!
--He might send a lawyer in his place, to ask for a postponement (being in China)
--He might not send a lawyer and thus be a total no-show
--The judge will "give him the benefit of the doubt" and he will postpone
--The guy will (or won't) show up to the next hearing in three months time
----At that time he will ask for a postponement on the grounds he is not ready
--For the second time the lawyer will ask for more time and the court will grant it
-The third time in court they will argue venue
--That will delay things for a few more months, and cause more confusion
--The deadbeat will change law-firms a few times because he won't pay up
--That will result in more delays and confusion.
--This "not showing up and deflecting, can go on and on for about a year or so
--Eventually a judgement will be won, but there will be nobody to collect from
I have seen "this guy" a few times before; the usual outcome is "you win in court" only to find "you cannot collect." Net net you lose. Best to avoid "this guy" in the first place. If you cannot avoid him, or get rid of him, cut your losses.
I would urge you to ask all parties for a refund and to file complaints with the FTC and CA AG.
