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A crowdfunded startup explains why crowdfunding can be a complete disaster

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After more than two years and two million dollars, Lockitron says it's ready to deliver on its promise

Like so many ambitious young hardware startups these days, Lockitron used crowdfunding to sell people a product before they built it. The company promised users a keyless door lock that paired with Bluetooth, Wi-Fi, and NFC, allowing customers to unlock it remotely or with a simple proximity sensor. Lockitron ran its own crowdfunding campaign and managed to collect more than $2.2 million in pre-orders for around 14,000 units; it aimed to start shipping in March of 2013. The success of that campaign and press attention on the company drove another 70,000 pre-orders through its website.

Fast forward to today and Lockitron has shipped just over 11,000 units, less than 14 percent of the orders it had taken over the past two-odd years. And while this early version of the device does work, it can be a struggle to set up, has fallen short on battery life, and is missing prominent features. More than a few customers found themselves locked out after the product malfunctioned. "Our crowdfunded backers became the unfortunate guinea pigs," says co-founder Cameron Robertson. In a survey sent out to customers, a question asked them to describe Lockitron in three words. "Beta, potential, unreliable," read one response.

"Our crowdfunded backers became the unfortunate guinea pigs."

In August of last year the company realized it needed to start from scratch, and today Lockitron is announcing the results. It has a new manufacturing partner and a completely redesigned product, called Bolt. "We made mistakes, we learned a lot, and now we are ready to deliver something that fulfills our ambition," says Robertson. The new unit is set to start shipping this March for $99, roughly one-third the cost of the original Lockitron.

Lockitron's struggles are symptomatic of challenges many young DIY hardware companies face. Crowdfunding, which seemed like the new face of innovation a couple years ago, has been humbled by the complex realities of mass production. The first big hurdle for the company, after the rush of receiving so many orders, was figuring out how to get them all built. "We didn't know the first thing about China, about how to find a good partner — someone with domain expertise building something like a lock with 41 discreet mechanical components, most of which were custom-made," says Robertson.

"We didn't know the first thing about China."

The factory they settled on delivered working units, but couldn't keep pace with the promises the company had made around shipping. "We got caught in a low-volume production trap," says Robertson. "We had over 70,000 units on backorder, and they were producing a few hundred each week."

Lockitron had come out of the prestigious Y-Combinator startup program, but that certainly didn’t guarantee success — they were able to build something that worked well for a demo and could endure testing in their lab, but they didn't have the capital to really field test something with the mechanical complexity of a lock. The complexities of testing were magnified by the fact that the product was expected to work in partnership with whatever lock customers already had on their door.

lockitron founders
The Lockitron co-founders with their original hand-built prototype.

Lockitron ran its own crowdfunding campaign, but unlike Kickstarter, they couldn't charge people for orders until they shipped. "We had $2.2 million in orders but none of that capital to work with, so we were super resource-constrained," says Robertson. The company used Amazon to take orders, but Amazon’s policy is not to charge until an item ships. (Kickstarter also uses Amazon, but gets the money earlier by framing its transactions as "donations," not pre-orders.)

Hardware products from established companies often get years of testing in the wild, using multiple prototypes, before finally being offered for sale. "Most of what we showed off in the video worked, but under ideal circumstances," says Robertson. "We tested against a fairly big lock library, but nothing like the diversity of old, discontinued, and well-worn locks out in the real world."

"In the real world people have a crappy router."

The same ideal conditions applied to things like battery testing. "In the real world people have a crappy router several hundred feet away with a few thick walls in between," says Robertson. "The Lockitron would struggle to stay connected, and that ended up being a big drain on battery."

It was the summer of 2013 when the company started changing course. It found a new manufacturing partner, one that specialized in locks. And it created a new device that replaced customers' existing locks entirely, instead of sitting on top, ensuring if it worked in testing, it would work on your door. Lockitron actually ran a survey of customers who had received the first unit. The overwhelming advice was to trim features and ship something that "just worked."

"They're interested in trying out and helping new companies."

Of the 70,000 people who ordered a Lockitron, about 10,000 have canceled their orders so far. Robertson says that the company has managed to help them keep the faith by being transparent about its struggles and communicating regularly about its progress. "Early on we started updating backers every two weeks like clockwork, and we're past 50 updates now. We send them out via email to all backers as well as post them to [our blog]," says Robertson. "They're early adopters, and they're interested in trying out and helping new companies that are working to create new categories of products."

Lockitron isn't taking any chances with over-promising this time. "We are telling customers, if you pre-ordered, you can be first in line for the Bolt. But be aware that the first batch will be a sort of pilot, and that after a few months with them in the field, we will produce a version two that addresses any big issues." Customers who backed the Lockitron may have waited a while, but Robertson says they are getting a more robust, functional, and affordable unit. "It’s unfair to ask somebody to wait two to three years," he said. "But hopefully we’re going to deliver them something of lasting value."

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