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Crowdfunding companies look to Alibaba for their next big idea

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Frank phone Image: Frank

A company called Frank wants its backers to feel good about buying into its crowdfunding campaign for a new Android phone. Its Indiegogo page is filled with videos emphasizing that the young team at Frank — one co-founder is 17 years old — is subverting "the man" by going around big-name phone manufacturers to release an affordable, decent device. It's a nice idea to sell people on, but it's one that relies on a clever crowdfunding workaround: the Frank team didn’t do most of the work. Instead, they sourced prototype designs and manufacturers through Alibaba.

Although the campaign has only been live for a day, Android Police has already published a takedown of the company saying, essentially, the device is a scam. You can read all of Android Police's argument here, but the reporter points out that an unrecognizable Chinese manufacturer already sells an Android phone on Alibaba with the same design as Frank's product, and that the Frank team greatly misrepresented their design work given that a factory in China already created the prototype.

The Frank squad did give backers a false idea about the work they did in designing the phone, especially given images like these on the crowdfunding page:

The reality, though, is Frank's crowdfunding campaign isn't all that different from many others. Alibaba is a frequent source for ideas and prototypes. It's just that, in this case, Frank went over the top on pushing the work it did behind the scenes in an effort to crystallize its marketing message.

I spoke with Frank co-founders Fahd Alhattab and Mo Omer, the company’s CEO and CTO, about their project and why their phone is already listed on Alibaba. They said that the purpose of Alibaba is to help creators find manufacturers and vice versa, so the platform allows for the "democratization of technology and industry."

While the phone design already exists through a manufacturer called Leegoog, Alhattab and Omer say no individual customer could have bought one because the company requires buyers to purchase at least 3,000 phones between $125 and $135 a unit. Basically, if you wanted this phone, you'd have to get 2,999 of your friends together to buy one. Now, you can back Frank's version of it and bring it to North America with a bunch of randoms instead.

Of course, the Frank team is taking a cut of the money for their matchmaking efforts. Their phone costs $180 on Indiegogo, so with a goal of $250,000, the Frank team could theoretically purchase around 1,800 phones. This could mean up to $55 of profit per phone in addition to unused cash made through the campaign. Alhattab and Omer note, however, they're paying for licenses and certification for North American bands, quality assurance testing, and multiple other aspects of this campaign.

The co-founders also say their design work isn't exaggerated. They had a vision for the phone and called in multiple prototypes from Alibaba manufacturers. They then contacted all those companies to see which could be flexible with customization. Ultimately, they say they pushed their OEM, Leegoog, to offer 64GB of storage, which is now listed on its Alibaba page. Frank’s founders also say their phone's rear-facing camera is better than the one listed on Alibaba — though I don't see a difference. The biggest change they say they made, however, was the software.

Leegoog's prototype runs a skinned version of Android 6.0. Frank says its device will ship with untouched Android 7.0 and will be kept up to date both through its own update processes and Leegoog's quality assurance managers. It isn't clear how many people Leegoog employs or how many would be dedicated to keeping Frank's OS updated. This seems like a crucial task, and so far, one reviewer says the Frank prototypes don't include the newer version of Android. Frank says this is because they aren't final units. Whether they eventually get the update is a matter of trust, and Alhattab and Omer say that's exactly why they went through Alibaba.

"We thought [using Alibaba] was an advantage," Alhattab tells me. "The fact that you can find it on Alibaba tells you that there are legitimate manufacturers who are creating this phone. This phone is made." Many crowdfunding campaigns end up months or years behind their stated timeline because of manufacturing complications, so a listed supplier paves an easy path to existence, they say.

Alhattab and Omer's aren’t the first to take this approach to crowdfunding. Plenty of people have talked about how Alibaba makes crowdfunding life easy. The symbiotic relationship goes both ways, with Alibaba manufacturers also ripping off original ideas before they can even get onto a crowdfunding site. Earlier this year, entrepreneur Dan Demsky published a post on Reddit about how he created a clothing company from Alibaba-listed suppliers and readers lamented that the "secret was out." Aja Romano, who now works at Vox, wrote about this idea in 2015 after a "firestarter paracord survival bracelet” and “paracord survival keychain” were outted as Alibaba-first products. Kickstarter explicitly bans products that have existed in other places, likely as a tactic to avoid Alibaba products, but Indiegogo isn't as strict.

Does that take away some of the crowdfunding magic? Maybe. It isn’t as exciting to imagine a group of teens sorting through a manufacturer directory to vet Android prototypes, but the reality is that it’s often one of the easiest ways to get a product made. The Frank phone may not be a carefully crafted device brought to life through a small team’s passion, but the team’s reliance on an existing manufacturing chain at least means the phone can be made and shipped. And maybe that’s less of a disappointment than a dream gadget that never shows up.

Correction 9/8, 8:59 AM ET: A previous version of this article said the phone had 16GB of storage; it's actually 64GB. We regret the error.