Ryan GrepperIn a live-streamed web conference last week, Coolest Cooler creator Ryan Grepper told Kickstarter backers his Portland company has stopped producing the tricked-out coolers, and would need an additional $15 million worth of funding to fill the remaining 36,000 orders.
In 2014, the company broke Kickstarter's crowdfunding record, eventually raising more than $13 million in pre-orders.
But execution proved a problem for Coolest. Many of the tens of thousands of backers, who were initially promised their coolers last spring, still haven't received their coolers.
In recent weeks, Grepper has told backers the funds wouldn't cover the costs to manufacture and ship the remaining coolers, and that his company was looking for investors to help him fill the gap.
Here are the highlights from last week's web conference, in which Grepper responded to questions he had received. Watch the whole thing here.
Coolest wasn't able to manufacture the exact cooler in the promo videos.
"The Coolest Cooler in that video was a one-of a kind prototype," Grepper said. "Ultimately it's not a scalable design – it's an industrial design."
The proof-of-concept prototype cost him $15,000 to make, he said.
Grepper had no idea how much each cooler would cost to manufacture.
"At the early stages, you simply can't get that information," he said.
In order to get a final quote from the factory, Coolest needed to supply it with all the engineering for all of the parts, he explained. And to do this, the company first needed to engineer and design all these parts. This process, plus building up the infrastructure to deliver the products, ended up costing the company "multiple millions" of dollars, he said.
"Ultimately that first prototype is a long way from the final delivered product," he said.
Its promises to quickly deliver coolers put Coolest at a disadvantage.
"It's hard to negotiate the best deals with such a short timeline," Grepper said, especially with "a product of this scale and complexity."
Backers' funds were not used to make the coolers for Amazon Launchpad.
"[After Amazon approached us] we recognized that every Coolest cost more than each backer had given us for the manufacturing process," Grepper said. "So we would need to raise additional money and this was a great opportunity. We also expected that by the time Amazon Launchpad had their units, we would have fulfilled and delivered all the backers' coolers.
"When we committed to the Amazon order, it's important to recognize it was not the backers' funds that paid for these units. This was an order from the Amazon Launchpad that is for their inventory. They purchased this inventory. The profits from that purchase have helped subsidize the cost of manufacturing for everyone else's Coolest."
Since backers have voiced frustration about not receiving their cooler, the company has temporarily suspended pre-orders on its site, instead directing customers to Amazon.
The company has about 36,000 backer orders to fill.
In its three months of production – roughly from the end of July to the beginning of November – Coolest manufactured and shipped about 20,000 coolers and other products to backers, Grepper said. The company still has 36,000 remaining orders from pledges to fulfill, he said.
Coolest won't produce or ship any coolers without additional funding.
"Ultimately the production is tied to funding, and without the funding completed, our knowledge for when production will resume is pretty limited," he said. "Right now we are not producing units. We had expected to resume production after Chinese New Year, but that was tied to having a funding partner identified. That hasn't happened yet."
As production and delivery are dependent on funding, the company doesn't have a date for shipping its first batch of coolers, he said.
A lot more funding.
"To get the rest of the backer units made, our fundraising goal is around $15 million," Grepper said. A third of that will go to producing and shipping the rest of the coolers, slightly more than a third will be used to build up inventory, and the remainder will go to future product development and building the company's staff, he said.
Grepper said the company has seen lots of interest from small investment groups in the last several weeks.
"Our fundraising process is going along quite well," he said. "It's just that right now, it's not complete. I understand that can raise some nervousness from our backers. ...It's just part of the process."
But hey, Kickstarter's not a store.
Because of the nature of crowdfunding, and because the FTC rarely goes after campaigns that fail to deliver, backers are not guaranteed to receive the products that inspire them to open their wallets. They're certainly not guaranteed to receive them right away.
"When a product is backed on Kickstarter, it's not as simple as a buy now button," Grepper said. "There's not a way to support today and get your product tomorrow."
The web conference received mixed feedback from backers:
"I'm just frustrated that people who live in my same town, less than 20 minutes from Portland mind you, who purchased their Coolest cooler AFTER I did (because I told them to check it out, and they decided to purchase it), that they have received their shipment before I have. I know it will be a quality product, but my faith that I'll ever receive it has been dropping exponentially." – Bryan Goldman
"Two years already. I'm in for $380 USD. ... 33 minutes and all I've heard is that you are no longer producing these, don't know when you are going to start again and now looking for original backers to send you more money to get this started again." – David Noseworthy
"So he needs 15 million to make the remaining 36000 coolers that have not shipped. That is $416.00 per unit." – C jr
"Ryan, thank you for your hard work and for a great product! I love my Coolest Cooler. It took much longer to receive than I expected, but it was worth the wait. I believe that I got an excellent value by being a backer. Don't listen too much to the haters. Most of them didn't understand the concept of Kickstarter before they place their backing pledge. Thanks again!" – Nick Andreacci
-- Anna Marum
amarum@oregonian.com
503-294-5911
@annamarum