I’ve been sitting here for some time trying to think of how to open this letter. I’m sure it’s obvious to everyone by now – as it stands right now, Ez3D is insolvent, and at the very least, our customers, backers, vendors, and beyond deserve a post-mortem. Some kind of explanation as to what happened to their time and money. Everyone also deserves an apology. I suppose the best way to do so would be to tell the entire story of Ez3D, start to finish. I apologize in advance for its length.
We started designing 3D printers in response to the designs and printers we had originally purchased. None of them worked the way we liked. So, we set out to design a new printer. We showed it at the MakerFaire in San Mateo, California in 2012. At a $1,500 price point, it flopped. It didn’t distinguish itself enough from the competition to sell any units. But we got tons of valuable feedback from passersby, and used that to design the Phoenix.
So, we ran the Kickstarter. The idea was to sell 50 units. That’s all. The Phoenix was supposed to be a stepping-stone for us to design better, more complex units. We didn’t think it would take off like it did, going on to pre-sell nearly $110,000 of product. As we watched the pledges come in, we realized that this stepping-stone was going to be a big deal. And being a business, we didn’t want to turn away sales. This was mistake number one – and one that we would repeat.
When the Kickstarter project concluded, 8% of the money was immediately gone. Five percent went to Kickstarter, and approximately 3% to the credit card companies. We decided to repeat the process on Indiegogo. There seemed to be some post-campaign demand, and being a business that didn’t want to turn away sales, decided to repeat the process on Indiegogo. This also allowed us some time to firm up who we wanted to buy inventory from.
Flash forward three weeks later, we start buying inventory. Over 80% of the money we received was used on inventory.
All of the inventory finally arrived around February 2014, some four months after the Kickstarter concluded. As we started building our “fleet” of printers to print out additional parts, we realized there was a problem. At the rate the three of us could build printers, it would’ve taken us over a year to fulfill the Kickstarter and Indiegogo orders. Between the printing time and assembly time, it would have taken too long.
We started investigating resin casting. This was major mistake number two. Resin casting is a fantastic technology for artists, and artistic endeavors, and is a horrible technology for creating low-volume parts production. The silicone rubber used for the molds is relatively expensive, and didn’t seem to last for very many impressions. We created some molds that lasted only six impressions before the quality of the parts started degrading significantly. Unfortunately, injection molding the parts was out of the question – we didn’t have the money, expertise, or the money to hire the expertise to make this happen.
For the longest time, things were always looking “okay.” Things always looked like they were just about to improve significantly. We were figuring out the casting process, and the parts we decided to print were printing more reliably.
Back to the topic of time: we knew that the three of us could not do it alone, it would take too long to finish the Kickstarter printers, and we would run out of money for basic living expenses. The instinct here was to hire people, because that’s what growing companies do – they hire people!
This proved to be challenging. We found some talent in our rural community, but they were, unfortunately, not helping to expedite the processes. Of course, these were employees – which meant that we were now starting to put money into payroll. This led to the first round of layoffs, and our move into Fort Collins, to be closer to a more diverse workforce where, hopefully, we could find people with actual experience in assembly or manufacturing.
Now, we have introduced two new recurring expenses to the mix: rent and utilities, in addition to payroll. Overall, some $3,500/month, on average, was going out the door simply to make rent and utility payments. Payroll was a whole different story. I remember distinctly one payroll cycle we paid out nearly $13,000 to employees for 2 weeks worth of labor (and no, none of us were on the payroll).
This process of laying people off and hiring new ones repeated a few times. We went through three or four large groups of employees trying to find the right mix of talent. As deposits came in for new orders, we were able to open a line of credit to start buying more inventory.
There was still one problem: casting. Molds were still getting burned up left and right. Our initial thought was the resin was too harsh for the molds, either in terms of its chemical make-up or the heat that it produced while curing. We tried a variety of techniques to mitigate this: refrigerating the resin, icing down the exterior of the molds (liquid inside the molds was bad juju – this would lead to very bad bubbles as the liquid would boil from the high temperatures of the resin curing). In the end, no matter what we tried, molds were still getting burned.
We fought and fought molds. Jerry spent countless hours creating new molds trying to replenish them as they died. We eventually came up with a template technique to make that process faster, but it didn’t work for all the molds.
Sales were remaining steady. As we continued to work on casting and getting molds figured out, we thought things would even out, and everyone would be able to get printers, despite the massive amount of money we had to spent to keep re-creating molds (all in, I’m guessing we spent well over $10,000 on silicone).
But, obviously, word got out that deliveries were a problem, and that delivering was slow. My favorite comments were the ones calling us “horrible people.” We honored deposit refunds as long as we could, but there was still money going out the door for inventory, silicone, resin, and payroll.
I’m not really sure what the final moment was that made us say “it’s over,” but it wasn’t easy. Even after we dismissed all our employees for the last time, we still oscillated, thinking of new ideas to improve the casting process to maybe get things back on track. But this didn’t solve the mountain of refund demands and general unhappiness.
Nobody won in this deal. We are sitting on tens of thousands of dollars in personally secured debts directly related to the business, tens of thousands of dollars of credit card debt (since none of us took salaries, all of us basically lived on credit cards), as well as a lease that we personally guaranteed that was worth well over $100,000. And if you’re reading this, chances are you’ve lost something, too. Some people seem to have assumed the worst and are under the impression that we’ve taken all this money and run. I can assure you this is not the case. Over $100,000 went to payroll, over $100,000 went to inventory, and at least $25,000 went to rents, utilities, and more.
Of course, this is just the story. It doesn’t change anything, and it doesn’t get you your money back. At least now you know, though, that we tried to bring this product to market – and just failed.
It’s a horrible feeling knowing that you’ve disappointed hundreds of people. And we’re sorry that we failed you, and right now, we don’t have any way to make it up to you. While we do still have some inventory, our bank has a lien on all our assets. As a result, any liquidation proceeds will first be directed to our bank before being distributed to any other creditors (primarily our customers).
There is a company in Brea, California that has been in touch with us about potentially licensing the design and software from us and beginning to sell a re-branded Phoenix alongside our former distributor. They would pay us a royalty per unit, which we would use to refund people’s money. It could take years, though, to get everyone’s money back. We have everyone’s name and e-mail address, and if the time comes that we can get you your money back, we will. Understand, this is not a guarantee of any kind, the deal may not go through – but it’s something. If there is any update on this development, we’ll post it here.
From the bottom of our hearts, everyone, we’re sorry.
The Ez3D Team