Light Harmonic (LH Labs). Scam? USD$6 million not delivered since 2014

[John Dyson]

This problem makes me wonder -- was this an overreach by an overly enthusiastic person who didn't realize what they were getting into, or was this a scam from day 1?

I can understand getting in over ones head, and development costs being overwhelming, but a person should not even THINK about selling something without the project being almost ready AT LEAST.   My own values say -- either work on an hourly basis, project completion basis or as a complete product that is already in manufacturing (hopefully recieving working units.)

 

Encouraging customers to double as investors is a dangerous game.  There is no equity as a customer -- esp if there is no contract.  The risk is very high for the consumer, and also the risk of reputation is high for the developer/seller.

 

As someone who has REALLY developed things in the past, and had both successful and unsuccessful projects -- in one case, the failing was my own health -- I could never try to pre-sell something that I don't have in-hand, ready for production, special components already in-hand.  TOO OFTEN, there need to be design changes, and will change the eventual specifications.  Also, there is the issue of component availability, as sometimes the component manufacturers can cause real problems.  Small manufacturers should purchase a fairly large supply of necessary and/or uncommon components for a big part of the product lifetime.  Some parts just 'disappear' pooft...

 

I just don't get it, how this situation should happen...   Apparently someone is a better salesman than product developer...  (Note that I didn't use the term 'engineer' for 'product developer  -- because being just an Electronics Engineer alone is NOT enough to produce a complex manufactured product -- unless that person can stay awake 48Hrs/day, and understands pacakging and a few other disicplines like FCC/EMC compliance  :-)).   I don't know the rules today, but I have been involved in several small company, small volume (<1k) products that still needed all of the regulatory compliance issues resolved.  Have things changed?

 

 

John

 

[John Dyson]

53 minutes ago, labjr said:

Judging by the way they changed from Kickstarter to IndieGoGo, leads me to believe it was a deliberate switch to deprive people of any opportunity to change their mind. Larry and Gavin were flying all over the world to trade shows and renting luxury automobiles. They didn't just get in over their heads. They were spending money like they had three days to live! LH & Co.should be the subject of an episode of American Greed.

Whenever working in small companies, the most succesful were penny pinchers.   I learned that a really, nice fancy office didn't pay the bills.  Sure, one has to put on a little show, but being thrifty helps build up the resources of a potentially profitable company.

 

The days of the tech boom should be a lesson about waste in some cases.

 

John

 

[John Dyson]

44 minutes ago, jsiegel said:

It is amazing how many products were unfinished. 

If they had been finished he could have teamed up with a chinese manufacturer or Drop (MassDrop) to execute production.  Instead we have a few sample products in the wild that are reported to have sort of worked at one time. 

 It would be nice to know how the "money" was spent. 

Did he get caught in the "we can make it still better" spiral?

Did he lose interest in each project before the troubling "production" details were finished?

Did the prototypes prove unproducible or way over production "budget"?

 

It seems that one project could have been finished with the 3-5 million and it would have funded the company thru each product in turn.  

 

Schiit Audio has boot strapped a very successful company in the same state with currently 29 products and have evolved/discontinued another dozen products in the same time we have waited for larry to finish one.   And Schiit didn't have the "benefit" of pre selling 10 products to get the cycle started.

 

Indiegogo should share some blame in keeping their 10% with no follow up.

 

WRT the 'make it better' spiral.   I am stuck in that mode right now...  However, I haven't taken anybody's money while witholding the product.   I sure hope that grown-up developers realize that the only time that the developer can allow themselves to get caught in that spiral for an extended time is when they are working as a  hobbiest and not a professional.  Sometimes, I have been funded to do 'research' -- but most of the time, there is a focus towards a product.

By the time that a developer accepts someone elses money, they had BETTER have control over the development.

 

Kind of embarassing for that 'team' who took the money -- none of this is 'rocket science'.    If there is a risk of losing a critical developer (there almost always is), some kind of preparation for plan B is a good idea.   Also, key-man insurance and other kinds of back-ups are a good thing to consider.   When in that kind of situation where I am a key-person, just as a matter of respect, I have tried to help plan for back up.  One time, things did crash on me (health), and I feel intensly sad about the situation.   Being prepared is so important when money is involved.

 

From what I can gather, enough money was probably accepted to actually produce SOMETHING.   Obviously, something really badly went wrong (obviously -- long discussion in this forum), and an investigation (legal) would be apprporiate.   Simply trying to find the problem and make an example of the guilty parties might be good, or maybe just better understanding the problems would make the 'investors' feel more comfortable.   (My dad got taken in by something similar/with a different structure, and mistakenly didn't get equity for his investment...  Still not 100% sure if they were actually crooks.)

 

John

 

[John Dyson]

1 minute ago, Jud said:

At least a couple of projects were fully funded within a few weeks (if that long), and quickly collected large multiples of their stated goals, meaning at an early date they had use of more money than they said they needed. And in some cases, the products were produced - not for backers, but sold commercially. LHL claims at one and the same time that funding for the commercially sold products was independent, and that production of the backers’ products that have already been paid for depends on sales of the commercial products.

What you described that they did -- almost definitely someone did something really wrong (like theft.)   If I had skin in the game, would be incredibly angry along with being incredulous -- wondering what-the-hell?   I know ZERO about the legal system.  I realize that there is probably no-way to 'punish', and probably no-way for the 'customers' to be at least somewhat compensated or at least meaningful apology, but it smells SOOOOO bad.  'My bad' is not good enough...  It is a regrettable/frustrating situation for sure.

 

John