[Other SmartWatches] raffaeu:
Why crowdfunding

In this post I want to explain the product roadmap of OXY and why I am going for a crowd-funding campaign and what will happen if the crowd-funding campaign will fail.

OXY is a trademark to represent our vision of open source and reliable product. I truly believe that a product is reliable and worth the money if it is built around a community of expert and passionate people who are willing to make their product better over time. With OXY I do not want to build only a smartwatch but I want to make a wearable brand. A good smartwatch is made of hardware, software and a good customer service. If one of these keys is missing, the product can be shiny, durable or reliable but not all of them together. Having a community of passionate people behind us will help to avoid some mistakes made by others and to implement features that other famous vendors are not taking care of.

Now, we are on a point where we have the Android ELF (Executable and Linkable Format) OS available and executable on our products (both round and square watch, AMOLED and TFT displays).

•	We have 100% support from Ingenic in terms of bug fixes, warranty on hardware and updates on kernel (think about a new version of Android for example). Officially we are partners and responsible for the English version of ELF OS and IWOP (Ingenic Wearable Open Platform), including new features and bug fixtures. This is a great deal in terms of reliability of our smartwatch OS

•	We have Setup a Cloud platform on Azure where we will host updates, source code, apps market and any information that we will share with the public. We also have a mirror on Google

•	We have the mass production ready with 3 different manufacturers, one for Round watch, one for Square watch and one for the PCB, just to avoid any bottleneck. If one of them fail, the other one can act as a backup. That means that each factory is capable to produce both watch models and the PCB.

•	We have registered the trademark in UK, registered 2 companies, one in UK for the on-line sell and one in Turkey for operational, packaging, distribution and financial controls. Plus we have a partnership with a Mobile Software Company in est Europe which will help us in the beginning to polish and enrich the companion apps for iOS and Android.

All these steps have been made by me, using my personal funds and as you can imagine I am not talking about few thousands dollars, but probably almost one hundred thousands so far. Now, in order to become operational we need to:

•	hire more people to handle software development and operations

•	pay the manufacturers to start the mass production, which is usually paid 50% upfront and then spread over multiple months

To achieve this we had three options:

•	contact a VC (Venture Capital), sell our company and shares for a certain amount of money and produce a first batch of 5,000 pieces and go in PRE-SALE

•	go crowd-funding, collect the capital, pay the manufacturers and ship the product to the funders, which will also grant us visibility and notoriety on the public

•	go PRE-SALE as is, collect money and manufacturer the items sold in PRE-SALE, probably a first batch of 1,000 pieces

Going with a VC

This was the first though and we had some conversations with some of them but as soon as we mention open source or community they are not into the deal. Now I know how the IT market works, I have been in it since I was kid and playing with my AMIGA so I know that soon or later somebody will just grab an OXY smartwatch, take it apart and write a custom ROM for it. So, what's the point of hiding our code, wouldn't be better to make it public from the beginning and get feedbacks and contributions from the open source community, which will also make our product a better product?

The advantage of VC is the money, that's it. Within a week you get between 250K to 1M pounds in your bank account and 1 year to deliver what you have promised, plus a VC will do its best to increase the visibility. But 1 year later these money has to go back to them with a minimum of 10% interest.

The big disadvantage is that VC usually are not skilled on what they invest, so you end up having a partner that owns between 10% and 30% of your company and that keep try to take business decisions that are driven only on profit and not on customers satisfaction or quality of the product itself.

Going PRE-SALE

The biggest problem with going PRE-SALE is the visibility. Selling a batch of 5,000 pieces, which is the minimum order to have for a manufacturer in Asia means visibility. Guy Kawasaki said on a conference that if your product is seen by 100 people, usually you are lucky if 1 of them will buy it. So, considering our use case, we will have to show the product to a minimum of 5000 * 100 = 500,000 people in order to be sure that at least 5,000 of them will file a PRE-ORDER. Having such a visibility will require us to go to CES 2016 and other technology events which are very expensive plus will delay our product of at least 6 months, while our hardware is on T3 and ready to be produced.

The advantage of PRE-ORDER is that we can run multiple T rounds and get a more specific audience.

The disadvantage is the visibility, going PRE-SALE like this for a startup like us means investing minimum 50K in marketing, advertisement and other strategies in order to get visibility quickly and get buyers.

Going Crowdfunding

This is the biggest risk. Going crowdfunding for us means IndieGogo or Kickstarter. At the moment the best deal is on IndieGogo because they hold only 5% of the funds generated including CC transactions and PayPal, while KickStarter has some extra fees and additional legal requirements.

The advantage of Crowdfunding is the speed, within 45 days we will know if people are interested in the product or not, we will collect quickly some money and being able to produce a first batch and gain visibility.

The disadvantage is the community itself. We will have to deal with people who have no clue about watch manufacturing and people impatient to wait few months before the product is delivered because they pledged a deal.

Now, based on the fact that we are building a community brand, that our strategy is to build product around the people who loves this kind of products, I personally believe that the best choice for us is the crowdfunding campaign. In our situation the risk is low because we have already the product, the software and the team, we just need customers and money to build it. But again crowdfunding can be your worst enemy and that's why we are working so hard on our marketing, video and flyers and we are still waiting before launching the campaign. Two brilliant examples are Pebble and InWatch. Pebble didn't have a great product on their hand at the time of the campaign but they made a clear video and they communicated very well with backers and media. In fact 75% of the success of Pebble campaign is due to the media around it.

InWatch in my opinion had a better product but the communication, the media used and the use cases adopted in their video didn't make the deal with the backers, and that's why their IndieGogo campaign failed.

Before the campaign will start we will publish the official website (way different than the current one), a render video of 2 minutes and a promo video of 1 minute where I will show our companies in UK, Turkey and our manufacturers in Asia. I am carefully selecting some tech writers to have our review up and running for the 15th of November and keep trying every single day to increase visibility and notoriety of OXY project.

So, these are my two cents (maybe four) about why we want to choose crowd-funding for our PRE-SALE campaign.

As always, any feedback, comment or objection is always very welcome and appreciated. :)