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E-scooter company goes bust after spending big on Facebook ads

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Re: E-scooter company goes bust after spending big on Facebook ads

#61
post #40

Earlier quoted context omitted.

You're not wrong, you're an idealist, which typically are very closely intertwined when it comes to reality. If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Which is to say, you paid for a pricey digital lottery ticket with…

Indeed, how many Kickstarter projects will it take to convince people preordering on an unsure thing is a gamble and basically an investment in an idea that interests you. Tons of billion dollar projects, let alone those with only a few million, have been delayed for years, changed half way through, or have died before finishing. The failure rates for new businesses is pretty high, 50% in the first year. One could qu…

> preordering on an unsure thing is a gamble

Even though you are trying to warn people, you've accidentally fallen into Kickstarter's "dark pattern in broad daylight" by using the word "preordering."

Kickstarter donations (I consider it a charity) are not pre-orders. If I preorder a book on Amazon and it is late, tough for me. If the publisher closes down, Amazon gives me my money back.

Kickstarter donations, on the other hand, don't even have that recourse. We're giving them money out of the goodness of our hearts, and if everything works out for them and they feel like giving us our reward, we receive a nice "thank you gift."

Kickstarter transactions are charitable donations. We don't get a tax receipt, but if things line up, we do get a reward. If we think of it as charity without the tax benefits, we won't go wrong.

But the moment words like "preorder" or "purchase" enter into the conversation, we've fallen into the trap of thinking that we're consumers purchasing a good or service.

Re: E-scooter company goes bust after spending big on Facebook ads

#62

Earlier quoted context omitted.

A class action lawsuit against who? You cannot sue a company that no longer exists. It is unlikely consumers would be able to defeat limited liability, particularly with the argument that "the company should have allocated resources differently."

An LLC does not protect one in cases of fraud. IANAL, but I believe the practices of Unicorn may constitute fraud under a legal definition. In such a case, Nick Evans would be personally liable for damages.

The reason to use crowdfunding platforms like Indiegogo or Kickstarter is because you are not liable to pay people back who give you money for your project. By accepting credit cards directly you forego this release from liability. Not only is there personal liability for damages, there would also be a criminal investigation. Lily Robotics had a similar situation. A warrant had been served to collect information for a criminal investigation, but Lily paid everyone back since they held all the money separately.

It is fraudulent to take payment and not deliver product regardless of the intentions of the founders to be successful. Lacking mens rea, perhaps makes it a misdemeanor instead of felonious, but courts will push the founder all the way to bankruptcy and potentially to jail if they cannot repay damages.

Seems like other comments may not understand what constitutes fraud. I have experience with this situation and discussed it with my lawyer when my company eschewed kickstarter/indiegogo and opted for direct sales instead. We even used our rejection of crowdfunding for PR to boost sales (thanks techcrunch!). Our sales spike was such that PayPal held our money in reserves, which led me to take on all sorts of awful loans to pay for scaling production and made for a slow and painful fulfillment process.

Re: E-scooter company goes bust after spending big on Facebook ads

#63

Earlier quoted context omitted.

> If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Is that what happened with this company? That's the model of kickstarters and the like, but this story sounds like it was a real company offering a product for sale. If a co…

>what's to stop the same employees and founders from following that method ad infinitum? Informed consumers

I didn't realize scamming was a legal business venture.

Re: E-scooter company goes bust after spending big on Facebook ads

#64

If you give $700 to a company that promises to deliver a scooter, and they spend that money on advertising, that’s fraud. They have no plausible argument that they didn’t know they couldn’t deliver or refund customers after they started spending pre-order funds. I hope customers get successful chargebacks and there’s a class action lawsuit. This wasn’t a crowdfunding campaign. Consumers were lied to, and the law shou…

there (allegedly) isn't any $ left to gain for a class of plaintiffs from the defendant, so a class action lawsuit is pointless

If it were found to be fraud then you would be going after the officers of the company directly.

Re: E-scooter company goes bust after spending big on Facebook ads

#65

Earlier quoted context omitted.

> If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Is that what happened with this company? That's the model of kickstarters and the like, but this story sounds like it was a real company offering a product for sale. If a co…

>what's to stop the same employees and founders from following that method ad infinitum? Informed consumers

"There is a sucker born every minute"

Re: E-scooter company goes bust after spending big on Facebook ads

#66
I feel horrible for the people who had to scrape together the $700 for a Christmas present for their kids, who won't be getting their scooter (like the person in the article). For most middle class people, that's a lot of money. I second the comments about successful chargebacks, because this will probably be ruining some kids Christmases out there otherwise. :(

Re: E-scooter company goes bust after spending big on Facebook ads

#68
post #54

Earlier quoted context omitted.

There’s large differences between bad luck, failed plans, mismanagement, and fraud. It’s optimistic to assume the best of the person who raised funds.

A misguided marketing strategy isn't fraud. That doesn't sound like deceiving people for personal gain by itself. Unless the whole plan was to sell preorders and feigning failure in order to take the funds. But that's a serious claim and it could be grounds for an investigation if law enforcement was pressured. But it would take more than complaining about FB ads.

>A misguided marketing strategy isn't fraud. That doesn't sound like deceiving people for personal gain by itself.

Quite right. It's potentially an dereliction of duty and could be seen as being dumb enough that shareholders in a company could force an officer out (of course, here it doesn't matter b/c the company is bankrupt), but unless you can prove malice or untoward gains (like, the person making the Facebook buys was getting a cut from Facebook or money was being funneled from the ad buys into someone else's pockets, which does NOT appear to be the case here), there is no fraud.

When a company is going bankrupt, the best that can be done is that the backers can try to fight to be higher on the creditor list to get whatever scraps are left (assuming any scraps exist at all).

Re: E-scooter company goes bust after spending big on Facebook ads

#69

Earlier quoted context omitted.

You're not wrong, you're an idealist, which typically are very closely intertwined when it comes to reality. If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Which is to say, you paid for a pricey digital lottery ticket with…

> If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Is that what happened with this company? That's the model of kickstarters and the like, but this story sounds like it was a real company offering a product for sale. If a co…

You don't really "sell" products on kickstarter, you try and convince people that you'll actually follow through on your vision.

I've backed a dozen or so, and I've got about a 50% hit rate of anything coming through. The failures are always interesting. Trying to guess, ahead of time, which ones are failures (or scams) - is an education into itself. They always seem so earnest in the beginning.

But, yeah - go into kickstarters with your eyes open. Particularly with people who don't have a track record of deliverying - that, in my mind, is the best signal around. If they've come through more then 3 or 4 times in the past, that's a good indication they may come through on this one.

Re: E-scooter company goes bust after spending big on Facebook ads

#70
post #12

I have read people say that a key difference in entrepreneurship in the US versus European countries is that European company founders are much more likely to be held responsible for their companies' debts and are therefore much less likely to experiment with new businesses at the rapid pace we see in the US. Would that have been true here? If a German startup had raised $150k in venture capital and taken $250k in or…

There's a Germany company, called Relocatly that took money from hundreds of people shipping household goods from Europe to the US -- they went insolvent, our goods were held in port by the actual shipping company and now we have to pay the shipping company despite having already paid Relocately.

They took money for shipments even after they already knew they were insolvent. Now our original payments are trapped inside the insolvency account and the managers of the company? No consequences at all even though they took money for a service they knew they wouldn't be able to provide.

Small anecdote, but the claim that "European company founders are much more likely to be held responsible for their companies' debt" is not true in my experience. If anyone is interested in reading some of the customer stories of Relocately: https://www.international-movers-reviews.com/company/relocat...

My point isn't to complain about that specific company, but to provide a counterexample that the idea that European corporate governance isn't necessarily "better" at all. They scam and fraud just as readily as anyone else.

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