
So Close - vkdelta
https://hackernoon.com/so-close-806b8ae77fa6
======
twblalock
If I understand the sequence of events properly, the company entered
acquisition negotiations and agreed not to solicit other bids during that
time. When the acquisition fell apart, the company was out of money and had to
stop operations.

If that's correct, it seems to me like it's something they should have known
in advance -- if they knew they would be out of money by the end of the year,
why would they enter acquisition talks that were planned to last until then?

Either they didn't know when they would run out of money, which is a pretty
important thing to know about a startup company, or they decided to bet the
company on the assumption that the acquisition would not fail, which was very
irresponsible.

An employee named Ben Havilland wrote a comment on the article that's worth
reading.

~~~
ricardobeat
Those were exactly my thoughts upon reading it. “Four weeks from generating
revenue” and then sudden death because of a failed acquisition sounds like
awful planning for a well-funded startup.

Also, it’s a damn internet-connected door lock with Bluetooth. Do you really
need $45M and designing new mechanical systems from scratch to make it work?
I’m sure their team did amazing work but all of it sounds incredibly head-in-
the-clouds.

~~~
twblalock
It reminds me of Juicero. The mechanism was total overkill -- it was actually
very well engineered and machined as though cost was no object. They would
have taken a loss selling them even at $699.

The mechanism of a deadbolt is pretty simple. Other smart lock companies do
fine with simple mechanisms. The way to differentiate a product in that space
is ease of use and battery life, not by needlessly over-complicating a part
that the users won't see.

~~~
retreatguru
From their website: “Freed of keys, you might just have more time and
opportunity to explore life’s possibilities.”

C’mon really?

Similar to Juicero they could have gone to market with a simpler and less over
engineered product and have a viable company but leadership had their heads in
the clouds. He even starts the article with how amazing the Swiss watch
engineer respected their work - as if that matters in the door lock market.

From the article: “... our customers would fall in love with the way they
engaged the product and actually experience joy as they used it.”

I’m having a hard time visualizing myself experiencing joy unlocking a door.

~~~
username223
> From the article: “... our customers would fall in love with the way they
> engaged the product and actually experience joy as they used it.”

He doesn't seem to have literally copy-and-pasted that palaver from somewhere
else, but the first page of these search results suggests a malfunctioning
robot stringing together memorized phrases at random:

[https://duckduckgo.com/?q=our+customers+would+fall+in+love+w...](https://duckduckgo.com/?q=our+customers+would+fall+in+love+with+the+way+they+engaged+the+product+and+actually+experience+joy+as+they+used+it)

------
tlb
Ouch. A sadly common outcome of talking to corp dev.
[http://paulgraham.com/corpdev.html](http://paulgraham.com/corpdev.html)

Agreeing to no-fundraising and exclusivity clauses during a long due diligence
process really puts your head in their vise. And once it's there, people
within the acquirer will start saying, Hey, we could built this ourselves!
Let's run the clock out and kill the competition.

~~~
michaelt
Seems strange that anyone would agree not to raise more funds or negotiate
with other parties for their entire remaining runway.

I mean, it puts you in the situation that you either sell to that company or
you go out of business. They could offer you a fraction of the amounts they
were talking about before you signed, and you'd have no alternative.

Hell, even _asking_ you to agree to such unbalanced terms seems like a sign
they're planning to pull a fast one on you and they don't intend to negotiate
in good faith.

What kind of chump would agree to shoot themselves in the foot like that,
unless they'd exhausted every alternative?

~~~
siddharthdeswal
Not defending him, but seems like a chump who had exhausted every alternative,
but won't talk about it honestly, and prefers to go with "this wasn't a
failure, you were amazing, I was amazing, product was batshit amazing, onwards
to our next adventure!"

~~~
xadhominemx
Yes, for sure.

------
cocktailpeanuts
Stuff like this--naive "CEO" making rookie decisions--happens all the time so
I'm not surprised.

However, I really don't understand what made him think it's OK to celebrate
the failure going out, with such an idiotic blog post, pretending that
everything is OK. That's the thing that makes people angry about stuff like
this.

If you failed, just acknowledge it and move on. Better yet, don't even proudly
write a medium post about how it's not your fault. It's your fault if you're
the CEO, period. Feel sorry for those who you've hurt while you're riding
around in your Tesla.

I knew this would be just another bullshit "incredible journey" article even
before reading it, just based on the title.

Why are there so many bullshitter founders nowadays? There used to be days
when people used to actually feel some shame when they fail their startups.

~~~
exergy
Haha, I predict 2018 will be the year of the "I failed at my startup and _didn
't_ write a Medium piece" Medium piece. Similar to the "I quit Facebook/cut
the cord but it's no biggie" Medium post.

------
fencepost
My immediate reaction on reading it was "Whoever they were talking to wasn't
serious about buying them but was serious about killing them." There's a
reason why a lot of acquisition deals include a "breakup fee" like the one
that allowed T-Mobile to buy a bunch of spectrum.

I also can't imagine a $700 lock unless I'm desperately trying to keep my
collection of Juiceros safe, but I'm not really their target market. Likely
even consumers weren't their target market, builders of very high-end homes
were because they were selling image and style as much as functionality.

~~~
kevinburke
Your reaction does not reflect the reality of the situation

~~~
fencepost
Obviously you're a lot closer to the situation than some shlub reading a
Medium post from the guy who shafted everyone working for him.

It's entirely possible that a major player in locks or home automation was
going to invest a big chunk of change or outright purchase the company. It's
also entirely possible that with no earnest money or termination penalty in
the negotiations stringing Otto along until it folded (and its IP might become
available at fire sale prices) probably cost that potential suitor very little
- a few tens of thousands of dollars in salaried employee time and travel, but
that's about it. Depending on who it was, that company might also have a much
better grasp on the potential market size for a high-tech wireless smart lock
- be it at $700 or something significantly lower.

I will note that a simple search for "Bluetooth door lock" turns up a wide
variety of listings with prices ranging from $90-260, and even if some have
different feature sets right now anything truly innovative could likely be
copied and added to the firmware on many of them. Even the concept of a door
with a sensor that picks up the presence of something carried and unlocks is
far from novel - you can find that in hundreds of thousands of office
buildings around the world.

------
csytan
This is not surprising to me. I've worked in this space, and I think consumer
hardware startups are just incredibly hard. I just finished my stint at one
([https://www.electricobjects.com/](https://www.electricobjects.com/)) last
year after we failed to raise series B.

Why are consumer hardware startups hard?

\- Consumers have high expectations and want high quality products from the
get go.

\- Quality products are incredibly capital intensive, resulting in much
shorter runways.

\- Building a quality product often times means partnering with an expensive
design firm + hiring the engineering talent to back it up.

\- Margins are much lower than a typical SAAS. This makes it less appealing
for VCs than a pure software play.

\- Scaling hardware is harder than scaling software. Lead times are long. The
right decisions have to be made ahead of time. Any missteps or problems with
your suppliers will delay your launch. If this happens around Black Friday /
Christmas -- it's a big deal.

\- Not only do delays impact your sales, they will also delay fundraises for
much needed cash infusions.

------
ridgeguy
No opinion on the product, market, etc. But two business lessons:

Never sign a 'no-shop' agreement unless the other party covers your burn rate
during the no-shop period. Burn gets paid weekly, one week in advance. A
missed burn payment auto-terminates the no-shop in seven days. This protects
your enterprise and screens against tire-kickers.

Never assume a deal is done until the check or EFT clears. Doesn't matter how
good the vibes feel. I lost a $10M scale-up round when (Big ChipCo) pulled its
"solid commitment" less than 24 hours before the signing meeting. I do feel
your pain.

------
jmull
Very interesting. I love to hear the other side of it though, because it feels
perhaps self-serving.

E.g., he seems to imply the potential acquirer unexpectedly screwed them over,
but no deal is done until it’s done, and this one did not really seem like it
was that close.

There’s no reason for Otto to agree to an acquisition process that prevents
them from raising money they desperately need if they had any reasonable
prospects. As he said, they were not actually looking for acquisition. So it
seems like this was a last gasp effort to stay afloat in some form, which
ultimately failed (as previous efforts had).

One reason an acquisition might be looking good before due diligence and fall
apart after is because things turn out to be significantly less rosey than
initially presented. When you’re looking to make a deal of course you’re going
to accentuate your positives but you have to acknowledge and address your
problems as well or you’re simply wasting everyone’s time.

I suspect the fundamental problem is that a $700 smart door lock is a very
difficult sell, especially with all the competition out there.

------
john_moscow
>Our signed agreement restricted our ability to solicit other bids or
fundraise and targeted a close on December 11th, 2017. It is hard for me to
understand the logic of doing that at the end of your runway, without a backup
plan and without agreeing on a compensation in case the deal falls through.
Unless you are deliberately trying to crash the company and blame someone else
for it.

So looking more into this, is it just me, or it looks outrageously inefficient
to raise $45m and have ~40 employees spend 4 years to release a product that
is basically an IoT door lock? Both the mechanical and the electronic parts
are based on commodity components, so I can imagine a well-motivated team of 5
delivering something like this in a year and being able to offer it at a much
lower price.

So was making a competitive product ever a priority here, or have the founders
discovered a different way to benefit from the over-optimistic tech investment
climate?

~~~
solarkraft
It seems that they focused on perfection (security, UX) way over a low price
and by own claims people were actually willing to buy. Still not sure how they
managed to burn through that much money developing it. The IT security parts
are likely already available for free as well. Maybe inviting a mechanical
watch guru to review their design in person and having the whole team watch
him doing it is a good example of their spending.

~~~
_aarti
The product was built in China on the same lines that build the iPhone with
the same detail. Manufacturing quality hardware is capital intensive, Finding
people who can support that level of engineering is capital intensive, Hiring
security engineers is capital intensive, they chose to go all in.

The company was not wasting money. I have worked in Silicon Valley startups
with lavish spending. This was not one of them. There was no free food, no
wine/beer on tap, no lavish parties, no free memberships to the equinox.

~~~
john_moscow
I dunno. Going all in before you have validated the product/market fit sounds
like a textbook rookie mistake. I don't understand how you can raise close to
$50m while having a business aptitude of a 3 year old.

~~~
bartread
This has been blowing my mind for years, because I think it's surprisingly
common.

I won't name the company because to my shock (and frankly vast horror) they're
still chugging along and I don't especially want to get sued but, a few years
ago when I was still working for Red Gate, one of the leadership of a local
company - also significantly hardware driven - came in and told their story to
anyone who wanted to listen.

Over a period of maybe a decade or so, through successive rounds of funding,
they'd managed to raise about half a billion and had produced... nothing
commercially viable. Zilch. This guy's job in the company had been and
continued to be to raise the necessary funding from investors, and I have to
say he was clearly pretty damn good at separating fools from their money.

So imagine the situation: this guy comes in to a bootstrapped software company
that had always been profitable and acts like he's really pleased with himself
for raising half a billion dollars and pissing it up the wall because they'd
gone all in over and over again with no clear product market fit. (N.B., it
may have been pounds, but it was years ago and I can't remember, so let's call
it dollars to keep it less dramatic.)

The reaction was _quite hostile_ : I don't think we knew whether to be
befuddled or enraged.

I mean you _literally_ could get a better ROI by handing me $50M or $500M or
whatever it is and standing by whilst I try to blow it all on cocaine and
high-end hookers because there's _just no way_ I can snort my way through that
much coke in an _entire lifetime_ without overdosing so you'd at least get
some, and probably most, of your money back.

Don't get me wrong: I understand that VCs expect most ventures to fail, and to
an extent that's perhaps reasonable, but surely there comes a point where you
stop throwing good money after bad?

~~~
john_moscow
Could it have been a way of "privatizing" the institutional investors' funds?
Invest a few mil in a startup, then spend a chunk of it on hefty consultancy
fees to a company conveniently owned by the fund manager's wife and another
chunk to the CEO's best friend's firm.

I'm wondering if the investment funds and startups provide enough transparency
to the people whos money is actually invested to detect such schemes.

~~~
bartread
That's an interesting thought although in the case I was talking about all I
can say, sadly, is I don't know. As outsiders we certainly didn't have any
visibility. I suppose - working for different companies, mind - I've
encountered enough of the whiff of low grade nepotism to imagine that on a
larger scale that kind of thing does go on from time to time.

------
kevinburke
I worked on Otto's server side software as a contractor for five months. The
company had some servers written in C and exchanging messages using a custom
binary protocol, designed for millions of transactions per second, when they
needed only 2-3tps, readability, and the ability to make fast changes. We
rewrote those servers in Go, found and fixed consistency errors in them, and
actually got to the point where you could understand the code and deploy
changes to it in hours, in other words, we delivered in a big way on what they
asked us to do.

The company did not have the money to pay its bills for at least two months
before shutdown, finally laying everyone off on December 12. There was nothing
to indicate they didn't have money to pay us before then. I probably won't see
a dime for the last two months of work. Other contractors took bigger hits
than me. In total Otto owes hundreds of thousands of dollars to contractors
for work already performed.

I'm beyond upset at the recklessness of the management and the board in this
situation. They could have laid off the contractors in October when they
realized they did not have enough money to pay all liabilities. They could
have explained the situation and offered a bonus in the event of a successful
exit.

Instead they said nothing about their insolvency, continued having us working
on the (implicit) assumption that they could pay us, and continued gambling
with invoices owed to me and other contractors.

If I ran my own company this way, if I just lost customer data or wrote broken
code, I would not be in business for very long. Yet in VC land, the board
(Reid Hoffman, Josh Elman, Sam Jadallah) will just go to the next venture.

I'm in a hole and looking for work in January, if you or your company needs
help. I'm also happy to pass on the names of the other contractors who are
getting 86 cents on the dollar for their work in 2017.
[https://burke.services](https://burke.services)

~~~
rahimnathwani
In the UK, the situation you described is called 'wrongful trading', and
company directors can be held personally liable:
[https://www.icaew.com/archive/library/subject-
gateways/law/i...](https://www.icaew.com/archive/library/subject-
gateways/law/insolvency/legal-alert/when-directors-can-be-personally-liable-
on-company-insolvency)

Is there any similar thing in the US?

~~~
kevinburke
As I understand it, not really, unless management or the board were freely
mixing personal and company assets, for example using a company credit card to
pay personal expenses. No evidence that took place here.

Reading the law at the link, it says you’re only liable if there was no
“reasonable chance” of avoiding insolvency. The sale they were pursuing would
have provided enough cash to pay debts so I don’t think it would even pass
that test. Poor management is not a crime, unfortunately.

~~~
rahimnathwani
I wonder whether directors' salaries were paid whilst contractors' invoices
were overdue.

Also, does the company have any assets? Even it's out of cash then, unless
it's filed for bankruptcy/insolvency/administration (I think it's called
'chapter 8' in the US?), can't you still file a small claims court case?

Maybe get some Aerons in lieu of cash?

~~~
kevinburke
Small claims doesn't get you anything if there's nothing to claim. Sure I
could get chairs but I could also just go back to work and make the money
back.

------
hoodoof
When making a deal, don't agree to stop all negotiations with other parties.

One of the very most important properties of a deal is competition.

A sense of competition ensures deals move along in a timely manner and push
the value of the deal and keep everyone's options open.

If a company ever wants you to stop negotiating with all other parties, say
"YES, when you've put the sale price in our bank account, until then, we are
dealing with other parties too".

And if they refuse to deal because of this point, then it's not a real deal
anyway so walk away and save yourself the price that this company paid, which
is total.

------
simonebrunozzi
Can we use titles that are more self-explanatory? "So close" doesn't mean
anything, and it forces me to take a peek at the article.

E.g. "how smart-lock startup Otto almost became a success, but eventually
failed"

~~~
a13n
Who are you asking? The article's author?

~~~
DoreenMichele
My assumption: the general audience here. When someone submits an article,
they are supposed to use the actual title of the piece, unless (insert list of
provisos). In practice, if there is a problem with the name, one can alter it
before submitting.

------
code4tee
This smells way off. Solid companies don’t fold and close up shop overnight
because one acquisition deal falls though. Sounds like company leadership
trying to take attention away from their own mismanagement.

------
lqet
The amount of pompous wording in this article is simply unbearable. They are
describing an electric door lock, right?

It seems fitting that the first name "Otto" is informally used in German to
describe a person of little practical avail.

------
JepZ
Why are there so many (large) companies calling themselves or their product
Otto? A probably incomplete list:

\- [http://www.otto.com](http://www.otto.com)

\- [https://www.ottomotors.com](https://www.ottomotors.com)

\- [http://www.otto-company.com](http://www.otto-company.com)

\- [https://www.meetotto.com](https://www.meetotto.com)

~~~
majos
Presumably for the "auto" homophone?

~~~
mikeash
And it makes for a nice _Airplane!_ reference.

------
wellboy
> While a tedious process, we built a close working relationship and shared
> their enthusiasm about our future together. On December 11th, they called me
> and stated they would not complete the acquisition nor revisit the
> investment proposal. I was stunned. The reason is still not understood.

That's the problem if your CEO is an inventor with no or little business
acumen. They are always super-enthusiastic and can be played like puppets by
some M&A guys with mediocre experience.

Memo: Don't be enthusiastic with "acquirers", restraint enthusiasm is the
keyword. Screen them vs. them screen you.

Memo2: Deals are made to fall trough - Paul Graham. Never bid everything on
one horse, don't put all your eggs in one basket etc. 9 out of 10 deals like
this fall through, adjust accordingly.

~~~
zemvpferreira
However, this article was written by an experienced executive who had raised a
$45M seed round for the company. Lack of business acumen or paper-thin attempt
to excuse himself of this ridiculous failure? You be the judge.

------
mikeash
Is (was?) there something more to this product that I missed, or is it really
a $700 smart lock?

~~~
twblalock
It doesn't even have a proximity sensor -- you have to touch it to make it
work. Might as well stick a key in at the same time. If I paid that kind of
money I would expect my door to unlock for me when I approached it.

It also has no manual override with a key like some smart locks -- it just has
some backup batteries that last an unspecified amount of time. Because it has
no key, it can't be re-keyed, so good luck convincing a landlord to let you
install it in an apartment or rental home. And the company says it needs to be
professionally installed.

I bet the owners of these things would spend more time thinking about and
solving problems with them than most people spend operating their normal
deadbolts with a key.

~~~
nkkollaw
It's so awesome when people create problems to fix non-problems.

I never once thought my life would be better if I didn't need to put up with
those nasty keys...

~~~
lobster_johnson
There are many cases where a virtual lock beats a physical one. Most of them
involve scenarios where the main occupant is absent, but needs to give access
remotely; for example, let's say I went on vacation, then realized I left one
of the windows of my apartment open. Not everyone has access to trustworthy
people (friendly neighbours, friends, relatives, colleagues) who are also
guaranteed to be around and willing to show up on short notice. Involving the
landlord might be a no-go, too.

When I travel and let friends or family stay in my NYC apartment, I leave them
the keys in an envelope at a nearby 24/7 supermarket. It's not ideal. Key
concierge services exist, but are not super practical either.

~~~
nkkollaw
Sure, but is that actually an actual problem? I and my mom while I was little
have given keys to the house to maids and similar and nothing ever happened in
40 years. I know most people do the same.

I would be more afraid of actual problems like a malfunction of some kind (no
battery, money in the house so that I can't buy batteries, etc. etc.), and I
can't enter the house. Or, I lock myself out and no one can open that door
(while regular locks can be opened by specialized companies).

~~~
fphhotchips
> given keys to the house to maids

I mean, everything is simple when you can pay someone to do it. Of course, if
you're paying $700 for a smart lock, you can probably afford a maid.

------
nkkollaw
That doesn't sound like a good deal.

They went all-in with the acquisition with no backup plan, and lost.

~~~
jphoward
It’s striking how little humility there is in the post. The majority of it
sounds like a sales pitch, and I suppose, who can blame them if it is one in
disguise?

------
3cham
I just couldn't understand it all, how could a CEO decide to sell his startup
without any plan for the interim period, at least let the production can
continue in that time and several months afterwards?

~~~
kevinburke
They have literally zero dollars in the bank. They have not had enough money
to cover their liabilities since at least October.

------
brucephillips
> I define startups as companies that don’t have control of their own destiny
> because they rely on investor cash infusions to operate.

By this definition, Microsoft wasn't a startup.

~~~
TeMPOraL
Did someone say they were?

------
rdiddly
It's better that this happened, than if they had gotten further and become the
Juicero of door locks.

Edit - all the things that had my subconscious chanting ¡Juicero!

The consultation of a Swiss watchmaker, indicating an exacting exquisiteness
of mechanical design (for a door lock) indicating idealistic overdesign.
¡Juicero!

The resulting $700 price tag. ¡Juicero!

...to replace an older system that _already works great_. ¡Juicero!

...despite its not having any of what he calls "intelligence," which equals an
internet connection and a CPU. When in fact, a system as old as the deadbolt
lock has a lot of true intelligence built in, and reliance on an internet
connection and a CPU is a weakness, not a victory. ¡Juicero!

------
a13n
The deal's not done till it's done.

I wonder if the bigger company had that plan all along...

------
siddharthdeswal
It's good this happened, else we'd have another Juicero on our hands.

Ridiculous price, beautifully over engineered product, a slight update to a
centuries old problem, but at least they didn't get the opportunity to burn up
as much investor money as Juicero.

~~~
jamestimmins
That said, most people use locks multiple times a day (and keep keys with us
at all times), whereas we rarely drink juice. Juicero was a high cost solution
for a relatively uncommon use case. This appears to be a high cost solution
for a common one. It's possible that it was overpriced, but the idea of paying
$600+ for a phone would have seemed nuts years ago as well.

It's easy to say something has a ridiculous price, but there are plenty of
products that have launched with a high price and 1) redefined a category as
something where premium is worth paying for, and 2) used a premium first
product to pay for development of a cheaper model afterwards.

~~~
dingo_bat
> and keep keys with us at all times

Except this lock also has a key. It's the $1000 smartphone you carry
everywhere. That is prone to running out of charge, getting stolen, getting
broken, not being in range of a signal, etc. The whole idea was bullshit from
the get-go.

~~~
_aarti
> The whole idea was bullshit from the get-go.

The market says otherwise - Amazon is all over this at the moment, so is Nest.

------
JohnJamesRambo
Wow you made a digital door lock, it doesn't need all this purple prose. It's
debatable whether what you made is superior to a 97 cent key from Walmart. You
would think you landed on the moon!

------
hackathonguy
This doesn't feel right. The CEO managed to raise $45M; he must know a deal's
not done until it's done. There's more to this than meets the eye.

------
rosegarden
there's a ton of focus on the price, but they could have easily priced it at
$499 or $399 and ended up in the same situation. the acquisition was going
forward even at that product price. It clearly wasn't the price that was the
issue. They were pre-revenue and the acqusition fell through - that's a very
vulnerable spot for a start up.

~~~
dingo_bat
What about if the lock was priced according to the established prices of
locks?

This is a random lock of the same type:
[https://www.amazon.com/gp/product/B01CMMBATI/ref=abs_brd_tag...](https://www.amazon.com/gp/product/B01CMMBATI/ref=abs_brd_tag_dp?smid=ATVPDKIKX0DER&th=1)

$40 on Amazon.

So you've got a lock with bluetooth which adds utility. So double it, hell
triple it. $120. I think if their product was priced at $120 we would not be
looking at this result.

------
milkmilklemon
State filings pointing to the same entities make it look like the CEO might
still have a dog in the great lock race:
[https://www.wedgetls.com](https://www.wedgetls.com)

Wonder why it's not full of bluetooths and clouds since that's clearly the way
of the future.

------
goatherders
Lots of people making the points that occurred to me so I'll avoid repeating
those. But does anyone have any insight into what data (if any) supported a
$700 device that no one seems to have asked for?

~~~
amarkov
A $700 lock isn't meant to be even an MVP. It's public proof that you're doing
something, and a test that your production pipeline can generate reasonable
quality products.

The strategic vision for these kinds of startups is that the industry is super
far behind the times, and billions of dollars can be captured by just _trying_
to innovate. Remember that Keurig was originally a $900 coffeepot.

------
boltzmannbrain
tl;dr Otto was almost successful in making a high-end smart door lock, but
despite incredible engineering and design, bad luck (read: negligence) through
an acquisition deal led Otto to run out of money.

------
garganzol
Why not bootstrap it if the product is ready? Sell 100 of locks and boom you
have some money to produce and sell another 200. Rinse and repeat.

I bet there is a bigger issue down the rabbit hole.

~~~
ryanbrunner
Generally manufactured goods require at least some economy of scale. Selling
100 locks would probably mean that the per-unit cost to produce the locks
would be an order of magnitude higher than a proper sized run.

------
brucephillips
> planned for first revenue in just four weeks

Not "so close".

------
ikeboy
So they had people willing to pay for the product, but not enough runway to
launch?

Why not get people to pay in full ala Tesla and use that money to launch?

~~~
greglindahl
This is not what Tesla has ever done. Only a small fraction of people pay a
large deposit for super-premium cars that come out first, and the rest pay a
limited deposit.

On the other hand, just about every Kickstarter ever has a ton of people
who've paid in full. Yet these Kickstarters frequently fail, because it takes
a lot more money than entrepreneurs expect to ship a quality product.

~~~
mikeash
Tesla took in $250 million of full-price preorders for their next-gen
Roadster, which is years away from production. The comment you replied to
didn’t imply that Tesla does this with _every_ car.

~~~
greglindahl
The next-gen Roadster has 2 preorder levels, one that's full price for an
early car, and another for 1/5 the amount that's farther back in the queue.

Tesla has done the same system with every car they've launched.

My purpose was to explain what Tesla actually does. I was not implying that
the previous poster was wrong.

~~~
mikeash
I’m not aware of any previous model where Tesla has offered a full price
preorder. Certainly they haven’t done so for the X, 3, or semi.

I don’t understand how “This is not what Tesla has ever done” could mean
anything other than that they were wrong.

------
nartz
Its a good post - but it must be said: the CEO (and board?) fucked up
hardcore. They let themselves be tempted by acquisition, and then didn't
protect themselves or the team in negotiations.

------
rgbrenner
Can someone fix the title? it's click bait. There's no way to tell what the
article is about without clicking on it. At least mention the company. (Good
article though.)

~~~
a13n
It's the title of the article though, seems fine to me.

~~~
yoodenvranx
No, it is not fine. I know it is standard practice on HN but I really don't
like it at all.

Just imagine every submitted article had a title like this: the HN frontpage
would be full of links like "so close", "a look back", "introducing our most
important features yet", "a statement regarding the events last weeks"...

HN would completely unusable like this because you would have to click on
every single link to figure out what it is about.

~~~
nkkollaw
Luckily, most writers pick better titles than this guy. If what you describe
actually happened, the rules would change.

~~~
yoodenvranx
The problem is that this guy did not select the title for HN but for his own
personal/company blog. If you visit his blog then his title makes completely
sense in this context but it loses its meaning in all other contexts.

------
textor
Hard to put into words how reassuring it is to see so many sane, grounded and
critical reactions (both here and on hackernoon) instead of gullible hackneyed
accolades that the author's tone implicitly demands. I feel like thanking
everyone for calling him out, but this is a bit tasteless.

I wonder, though, if Sam himself believes his narrative. Startup CEOs tend to
be borderline delusional in their optimism, one could even argue this is a job
requirement. Still. Is there a subtler interpretation, such as this being a
smart cover-up for personal irresponsible enrichment, or does he really think
they did their best?

------
stevemk14ebr
This title needs fixed. I had no idea what I was clicking on

~~~
dang
On HN not every title needs to explain itself immediately. It's good for users
to have to work a little.

With this type of post-mortem post in particular, there's a tradition of
elegaic titles, and it seems fair to give poetic license to the author under
such circumstances.

~~~
smackfu
It doesn’t help that the url doesn’t give any clue either. If this post was on
their domain, then that would probably give enough context.

------
angel_j
What a garbage post from a garbage project that wasted lots of time.

Locks keeps honest people honest, they don't stop a determined burglar. A
digital, key-less system with new gears to move the same deadbolt, is
providing zero innovation, b/c it's still just a little deadbolt securing all
~inch of door-perimeter to the frame (unless I missed something and they also
re-invented the door hinge).

So much business BS in this post, too. Like claims of a new UX! As if the
process of unlocking is the "experience" factor of importance! And the part
about wanting to create an "addictive experience"! About a door lock! And the
part about "we created a culture of innovation"!!! What inflated garbage!

~~~
austenallred
Respectfully, fuck this attitude.

Trying to recreate something each of us uses every day and make it delightful
is a completely worthy goal. To say that a “keyless lock” isn’t a new user
experience makes zero sense whatsoever - it’s a new UX by definition. The fact
that it wouldn’t stop a SWAT team from breaking the door down is beside the
point - they never claimed it would, and that wasn’t the goal.

Why is their passion for building great locks any more silly than the passion
each of us has? They took a stab at it and it didn’t work out, and that’s too
bad, especially since it seems to have been for business reasons as much as
product reasons.

It’s ok to say it shouldn’t have worked out because it’s fundamentally flawed.
But to cheer and mock the demise of a project a lot of people were passionate
about, one that was dedicated to making a great _anything_ , seems to me to be
the antithesis of what a community of hackers and makers should be for.

~~~
mikeash
I’m all for reinventing the wheel to make it better. It rarely works out, but
when it does it’s well worth it. But if you can’t even describe what makes
your wheel better, what are the odds it’s actually better?

------
rosegarden
the focus on price is misleading. they could have priced their product at $399
and still be in the same situation. they were in a financing window - so they
needed the cash - and it became an acquisition. They had no hedge just in
case. Lots of lessons to be learned and the CEO clearly sparked a
conversation.

------
jamestimmins
These responses contain a lot of condemnation (based mainly on price) of a
product that these people have never used. Building a premium first product to
fund further development is a common approach (think Tesla), as is creating a
premium niche in an otherwise commoditized market (Apple).

While it does sound like costs/scope got out of control, please remember that
price is oftentimes determined fairly far down the development path, and that
the ending price may not reflect the initial plans. They may have just pushed
scope too far and then backed themselves into a corner. Once the money is
spent on R&D it's not like you can get the money back just by developing a
simpler product.

Startups are hard. Hardware is hard. Products are hard. Security is hard. This
is a site for people who want to build things. Please stop pissing on the
grave of a failed attempt to build something new, especially when your
information is limited to a Medium post by the CEO who just had to fire all of
his employees days before Christmas. That hardly counts as an objective or
substantial source of information.

~~~
peoplewindow
Yes, but ... surely questions should have been asked at the point where they
raised $45 million? It's a lock. Has there been any ordinary door lock in
history that cost even a fraction of that to develop? I don't think this can
just be blown off by saying "hardware is hard". People have been making locks
for millenia. It is objectively not hard. Hotels and offices routinely have
cryptographic unlock keycard systems that are managed remotely and they do not
cost $700. There just seems to be a disconnect from the rest of the world in
this business plan.

~~~
_aarti
They chose to do it their way and not make incremental improvements. It's
America - Land of dreams - right?

