

Matchstick to refund everyone's money - ChuckMcM
https://www.kickstarter.com/projects/matchstick/matchstick-the-streaming-stick-built-on-firefox-os/posts/1266549

======
AndrewDucker
The thing about Matchstick was this line from the original campaign:

"The product is fully functional today, with the hardware design final,
tooling complete, and manufacturing ready to ramp up in the next 30-60 days"

followed six-months later by:

"We want to update the hardware" and "is being updated to support DRM" amd the
ship date being moved back to now.

A lot of people backed Matchstick because it was going to be open - the plans
were all available for download, it was all ready to go, and we were going to
have kit in our hands really quickly. Instead we were going to get something
that was slowed down by six months so that it could have closed DRM-support
added. And then it's cancelled because they added support for something that
wasn't even part of the original campaign!

It's not surprising that the backers are upset.

------
braythwayt
The old reality, with companies like Google, was that if you aren’t paying
money, you aren’t the customer, you’re the product.

Then Kickstarter came along, and the premise was, “Gives us $X0,000 and we’ll
do our best to give you product Y as a so-called-reward. But this is not a
store.”

So now you’re giving them money, but you still aren’t a customer!

Because people are now using this as astro-turf marketing campaigns for
products that are already funded by other investors, or as market research, or
as a line item on their pitch deck to raise money from investors.

In this egregious case, the company seems to have had no intention of really
entering into a “deal” with the backers of its kickstarter campaign, it was
entering into a deal with its other investors, in accordance with a business
plan its backers have never seen. Thus, they struggled to build DRM into the
product, although DRM had nothing to do with the product they promised their
backers, and everything to do with their other business dealings and plans.
And now their backers are discarded like a one-night stand, but hey, here’s
your own money back.

Frankly, this stinks.

If you go on Kickstarter and say you’re going to build product Y, that’s what
you should do. If your business plan requires raising Kickstarter backing and
then going after investors, you should say so up front and not pretend you are
off to start work as soon as the project is funded.

And as for the investors, shame on you. If you invest in a company that has
entered into an agreement with backers to build product Y, you should actually
make them do that, or not invest in the first place.

Whatever pivot the go on to do, everyone has been forewarned that simply
giving them money and receiving promises in return means very little to them,
their attitude seems to be, “well, if we change our minds, we just give you
your money back and do whatever we like.”

That is not a principled way to run a business. If they couldn’t build this
thing with the funds raised on Kickstarter, then they shouldn’t have been on
Kickstarter.

~~~
Eliezer
They _gave the money back._ Regardless of surrounding events or further
stories, you do not get to call them unprincipled.

~~~
jlarocco
I disagree.

If they were principled, they would have followed through with the original
product. Instead they used the money to start building something slightly
different. It was a bait and switch.

Giving people's money back is saving face to avoid a huge backlash.

~~~
AndrewKemendo
So Kickstarter companies aren't allowed to pivot?

Things change, other groups get involved. That's just real life, hell, look at
Oculus.

~~~
pjc50
Not without consulting their backers. 'Pivoting' means not delivering the item
people backed. On the other hand, I think the refunds should be the end of
complaints.

~~~
claudius
Refunds + appropriate interest rates for such a high-risk “investment” +
penalty for not upholding their end of a promise + …. I don’t see how they
could afford to satisfy any morally (if not legally) reasonable demands.

~~~
pjc50
It's definitely not an investment (as Kickstarter continually remind you), and
there were no penalties agreed upfront. Seriously, do you want more
restrictive consumer protection on KS projects than when you buy offered
products at retail that have the order cancelled because it wasn't in stock?

I'm normally the last person to get libertarian about "you agreed to this
contract", but this seems to be one case where it's appropriate. Or does it
need more warning that you're not buying an extant product?

~~~
claudius
AndrewDucker’s comment above,
[https://news.ycombinator.com/item?id=10002117](https://news.ycombinator.com/item?id=10002117)
, does not look like “you’re not buying an extant product” to me. In fact, it
looks like the exact opposite of that, more like “we’re finished and can start
making these _now_ ”.

------
blhack
Huh...

I've always thought that "this thing might totally fail" was something that
people understood when backing a kickstarter project.

The idea that if they fail, they have to refund everybody's contribution
kindof stinks, since I've always thought kickstarter was for people trying new
things (which is obviously going to have a lot of stories about failure)

Maybe there is more to the story here.

~~~
TillE
There's been a lot of persistent misinformation floating around about
Kickstarter, and I don't really understand why. It's not complicated.

Yes, Kickstarter projects are legally obligated to fulfill their promised
rewards, or else provide refunds. It has always been this way. Really, the
only difference between Kickstarter and a preorder is that the schedule is a
lot looser.

~~~
ghaff
That is no longer the case in the current ToS. Among the current verbiage:
"they offer to return any _remaining_ [emphasis mine] funds to backers who
have not received their reward (in proportion to the amounts pledged), or else
explain how those funds will be used to complete the project in some alternate
form."

As you say, the older ToS looked a lot like a pre-order which wasn't really
the intention and didn't frankly make a lot of sense for a project that had
some material probability of failing. After all, if the money is gone, it's
not there any longer to issue refunds.

~~~
makomk
It made sense because it was the only thing holding Kickstarters accountable
to the people funding them. With an investment, you're taking a risk but have
some control over how the company's run. With a pre-order, you have no control
but they have to deliver the product or refund you. Kickstarter now is the
worst of both worlds: projects don't have to deliver anything and you can't
even make sure they give it a decent try. Someone could promise the Earth, use
the money to pay all their friends living costs for years while they tool
around and fail to make a working product, then say "sorry, the money's all
gone" and that's fine now according to Kickstarter.

~~~
ghaff
Yes, but an ostensible requirement that the promised reward or a full refund
had to be delivered _no matter what_ simply never made any sense. You can't
get blood from a stone and all. Now, like then, you could pursue legal action
but this isn't a realistic option in most cases, at least outside of clear
fraud. The current ToS does it pretty clear that not delivering a project or a
full refund is a bad thing and also outlines other obligations. But, by not
imposing requirements that are typically just not realistic to meet with most
failed projects, to me it establishes a more useful baseline for behavior.

~~~
makomk
We already have a way of dealing with these kinds of debts that can't be
repaid: it's called bankruptcy, it has a whole bunch of safeguards to stop
people abusing it, and it's what you'd have to do if you took on any other
kind of debt to fund your business and couldn't repay it. There is absolutely
no reason why Kickstarter needs to be any different.

~~~
ghaff
So now the Kickstarter project which has increased its costs by incorporating
(though that's probably a good idea in any case) spends its remaining funds on
bankruptcy lawyers and there's now nothing to return to the backers. Nothing
is certain and Kickstarter projects certainly aren't. Whatever the ToS, it's
probably not something you should use if you're looking for "satisfaction or
your money back" sort of guarantees.

------
tinco
_Netflix is half of all Internet traffic (crazy), and all the content owners
are hopping on board. We want to create an ecosystem built on open hardware
and software so its easy for anybody to get to this great content, anytime,
anywhere, without one of the "big guys" imposing their rules on who gets what,
when, or where. _

This is plain crazy. Netflix can't offer their service without DRM, Intel
can't even release a chip without supporting DRM. How on earth did anyone
expect this to be succesful without DRM? In the kickstarter movie they even
show clips of Game of Thrones and John Oliver, how did people envision the
Matchstick to play that content without DRM support?

And then the craziest part, after working for 11 months with I imagine a team
of at least 3 but probably more, they fail which is understandable but then
they _refund_ the kickstarter campaign. That means they actually have 470k
lying around. Probably from VC funding.

So they used the kickstarter money as leverage in VC negotiations, got funded.
Then worked for 11 months on something the kickstarter backers didn't ask for
which creates a backlash, then they decide to drop the kickstarter. I wonder
what their investors think of it "Oh yeah, the initial 17000 people that
believed on our project whom we woo-ed you with? Yeah they're not happy with
the direction we're going in so we're dropping them". So now it's just going
to be an HDMI TV stick which to my knowledge already exist right?

(BTW the proper way this should've gone is: After 11 months Matchstick admit
they got nowhere because of supplier issues (i.e. they couldnt get DRM) have
run out of money and give up. The backers sue for reimbursement. Matchstick
LLC files for bankruptcy, court finds no wrongdoing, no one gets money. The
end and everyone lives happily ever after. Faith in Kickstarter restored)

~~~
georgemcbay
Yup, assuming they were on the up-and-up to begin with, they could have saved
a bunch of time and effort by just asking anyone who had worked on video
playing devices in the past 10 years if their idea was remotely feasible to
bring to market while keeping both open source developers and content
providers on-board.

The Sony Dash was the only locked-down "tivoized" (in the rms sense of the
word) "chumby powered" device and also the only "chumby powered" device that
had netflix support. These two facts are not unrelated.

------
ChuckMcM
Ok, on the one hand as a backer of the project I'm thinking "So DRM is hard,
why not ship without it? Why not give people the choice?"

Another possibility is this :
[http://www.faqs.org/patents/app/20120243158](http://www.faqs.org/patents/app/20120243158)
although I don't see that it has been allowed yet so perhaps not a "real"
patent?

I'm one of the people who would have settled for working hardware and just a
basic Linux port with graphics support.

~~~
JoshTriplett
I agree; this would be useful even if it only played local content. I wouldn't
expect a "Firefox OS" device to play Netflix or similar.

~~~
zz1
Also: DRM-reading capabilities is a software feature, right? Couldn't they
deliver it through a software update and just send me a frigging Matchstick
not reading DRMs like I wanted it!?

~~~
eclipxe
Not always. Many DRM mechanisms require trusted hardware components to work.
That is hard.

~~~
zz1
I guess that wouldn't be the case: since they are using Firefox OS, the DRM
would work like they do on the Firefox desktop. But there might be something I
am not paying attention to.

------
dlitz
More useful tech destroyed by DRM. How long are we as an industry going to
keep this up?

The only DRM that's even remotely defensible is like what KDE's PDF viewer
has: a checkbox that says "Enforce DRM restrictions". For that, we don't need
anything more than a couple of flags and some copyright metadata.

~~~
mseebach
> we as an industry

Step 0: There is no "we". There are millions of individuals in thousands of
companies across dozens of industries with wildly divergent goals, priorities
and philosophies.

------
joshstrange
I'm a plex user (Local media server) and I've found after trying Chromecast,
AppleTV+PlexConnect, and FireTV Box I've found that using a Raspberry Pi 2
running RasPlex (total of around $85 w/ media center remote, I don't use it
but it got the USB->IR so I could use my universal) provides the best
experience of all (by which I mean sub $100 sticks/boxes). Similar results can
probably be experienced with XBMC.

~~~
natrius
I'm a heavy Chromecast + Plex user. What do you prefer about the Raspberry Pi
setup?

~~~
joshstrange
Direct play for everything. Way less stressful on the server and you can skip
around in the video without hardly any delay (this is something I've never
experienced with any other clients). I also quite enjoy being able to browse
my collection on the TV instead of just on my phone.

------
olympus
Really bummed that the team came to this conclusion. I am a backer and found
them at CES 2015 since they said they would be there with a demo. They had
screencasting working and controlled it with an app on their phone. It was a
little buggy and froze once, but totally worth the amount I backed them for.
Around this time they decided to redesign the sticks with more processing
power. I figured respinning the boards would take a while, but the software
looked so good in January that I never thought it would be what brought the
project to a halt.

Personally I'd be fine with transcoding videos on the fly from another machine
to remove the DRM, but I suppose that defeats the purpose of a small hdmi
stick if you have a full powered desktop running in the next room over. But
really most of the stuff on my local netowrk doesn't have DRM and I don't do a
whole lot of online streaming beyond Amazon Prime and I have an app on my TV
for that. I suppose all I really wanted was screencasting without having to
pay $100 for a WiDi adapter. Oh well.

But at least I'm getting a refund, so I don't suppose I have any ill will for
the team. I have backed projects before that did a magic trick with my money -
one shoe KS took $130 for a pair of boots and kept up a sham for almost a
year, even claiming that production had started and we would see our boots in
a few weeks (it was always just a few weeks away), and then abruptly vanished.
So I hope whatever project the Matchstick team works on next pans out better
for them.

~~~
TD-Linux
>Personally I'd be fine with transcoding videos on the fly from another
machine to remove the DRM

That would probably be either illegal or against the ToS of the streaming
service they were trying to add.

------
qopp
Doesn't this go against what Kickstarter is about? Will other projects feel
pressure to refund if they don't pan out?

~~~
itafroma
> Will other projects feel pressure to refund if they don't pan out?

They should as it's one of the remedies Kickstarter requires projects to
pursue should they be unable to complete the project and fulfill the
rewards:[1]

> If a creator is unable to complete their project and fulfill rewards,
> they’ve failed to live up to the basic obligations of this agreement. To
> right this, they must make every reasonable effort to find another way of
> bringing the project to the best possible conclusion for backers. A creator
> in this position has only remedied the situation and met their obligations
> to backers if:

> [other required remedies]

> * they offer to return any remaining funds to backers who have not received
> their reward (in proportion to the amounts pledged), or else explain how
> those funds will be used to complete the project in some alternate form.

[1]: [https://www.kickstarter.com/terms-of-use#backer-
creator](https://www.kickstarter.com/terms-of-use#backer-creator)

~~~
derefr
Well, obviously, if you still have the money, it's _nice_ to refund the money.
I think the parent meant more "will this create an expectation in Kickstarter
backers that they'll always get either the product or their money back, thus
creating some sort of reputational debt-slavery for the project creators who
genuinely just use up the money and fail? And doesn't that defeat the purpose
of Kickstarter?"

~~~
itafroma
> will this create an expectation in Kickstarter backers that they'll always
> get either the product or their money back, thus creating some sort of
> reputational debt-slavery for the project creators who genuinely just use up
> the money and fail?

Hyperbolic imagery aside, the expectation is _already there_. They can't just
walk away from the project with a shrug should it fail: they have a
contractual obligation to demonstrate that they did not squander their funds
and to provide the best possible outcome to their backers. If they fail to do
that, the terms of the agreement allow backers to seek legal action:

> The creator is solely responsible for fulfilling the promises made in their
> project. If they’re unable to satisfy the terms of this agreement, they may
> be subject to legal action by backers.

In this case, Matchstick's project creators have assessed that they have
enough money to pay everyone back, so they're doing exactly what the terms of
the Kickstarter agreement between backers and project owners have obligated
them to do: provide the best possible resolution to backers by, in part,
returning the money.

Another project may determine that they can't pay everyone back: in that case,
they're subject to the requirement that they "demonstrate that they’ve used
funds appropriately and made every reasonable effort to complete the project
as promised". If they can't do that to the satisfaction of every backer,
they're still on the hook. That's why a lot of times, project failures will
have a note about providing a refund to anyone who requests one instead of
Matchstick's strategy of proactively refunding everyone.

------
zz1
"Rumor is that they're being bought out by the Chinese company they've been
developing the unit with. So the refund is so that no can have claim the
designs (like a bunch of people who bought a product because its all open
source.)"

[https://www.kickstarter.com/projects/matchstick/matchstick-t...](https://www.kickstarter.com/projects/matchstick/matchstick-
the-streaming-stick-built-on-firefox-
os/posts/1266549?cursor=10773496#comment-10773495)

------
idlewords
I pity the people who have to run 17K refunds by hand.

------
Avshalom
Where are they getting the money for the refunds?

~~~
_delirium
One of the executives' pages on LinkedIn says he manages 30 employees at the
company. If true, it must have gotten some kind of venture funding, since the
$500k they raised on Kickstarter is nowhere near enough to run a company that
size for over a year.

~~~
javert
If I were a VC and my money were being used to repay kickstarter backers
instead of me, I would be pretty pissed.

I wonder if there is more to the story. Maybe the company is pivoting.

~~~
Sanddancer
I imagine a pivot is likely, given the tone of their message. Everything they
wrote talked about how hard their goals, like the DRM portion, were under
Firefox OS, and there was no talk about winding down the company. Leads me to
believe that there will be /a/ product from them, just not one based on
Firefox OS.

------
pjc50
Look, if you want this it could undoubtedly be done much more cheaply by not
building new hardware and taking one of the Chinese Android sticks and getting
it to run Firefox OS. A hassle, and not an inconsiderable project, but much
less so than building the thing from scratch.

------
downandout
I don't know why they are actually shutting down, but this explanation doesn't
ring true. They're blaming DRM complications - a part of the project that no
one cares about - as the lynchpin that has taken down the whole thing.

To be honest, I would be quite surprised if anyone receives any money back.
The "everyone should have their money back by the end of September" thing
seems quite long. Having seen some other, very similar scenarios play out, to
me it sounds like they did something else with the money and are trying to
stave off the consequences of it or are trying to buy time hoping for a
miracle that will allow them to replace it.

~~~
eclipxe
They need DRM to support most Chromecast apps (that people care about)

------
michaelbuddy
Good lesson in keeping product simple. They could have delivered their
original product. And the backers would have figured out what they'd do with
it. Why wouldn't Netflix help them succeed I wonder instead of just scrapping
it.

------
JustSomeNobody
I wonder if this could, in any way, be covered under bait and switch laws.
Yes, I know people are getting their money back. I'm just thinking to help
prevent other people on kickstarter from trying to switch up their product
midway.

------
coderjames
As a backer now apparently getting a refund, I'm extremely disappointed with
the way this project was managed.

The DRM that apparently blew up the project wasn't in scope when I backed it.
This was supposed to be an open source, No-DRM stick. After they had
everyone's money, they decided to build a Chromecast clone instead. Classic
bait-n-switch.

~~~
thieving_magpie
The old "Take their money then give it back to them 11 months later" con.
Great theory ya got there.

~~~
javert
I'm pretty sure I could make money if I had $470K to hold on to for 11 months.
Of course, I could just get a job, that would be easier.

~~~
davnicwil
Yeah, for sure. I remember once I bought tickets for a large stadium gig. The
gig was postponed at a late stage, for a year, and the options were:

1) get a refund, lose the ticket you'd been lucky to get at face value back
into the pool, probably never to be seen again for the same price. 2) hold
onto your ticket, wait a year, go see the gig

It therefore resulted in $millions being held by the organisers for over a
year - there are extremely low risk ways to gain a meaningful profit from a
large amount of capital. Intentionally or not, and whether or not it was
invested by them during that year, this situation turned out to be a great way
to get a huge, zero-interest loan of said capital.

I'm not sure if there are laws that prevent this kind of thing from happening,
but it's certainly easy money in theory.

~~~
javert
If you're looking for something extremely low risk, you're only going to make
a few percent. (I'd be thrilled to learn that I'm wrong on this.) So, may not
be worth it if you have other costs or people you have to share the profit
with. 3 percent of a million is only 30K.

~~~
davnicwil
Depends on your definition of meaningful but, I was thinking more along the
lines of 10 million -> 200-300k, almost guaranteed.

Obviously if the starting capital is less, you could potentially notch up the
risk of the investment etc, but that's a very meaningful profit for most
companies I should think. At the least it's a very valuable individual's
salary for a year.

------
CmonDev
Their fault for dealing with Firefox OS.

