The 20,000 Kickstarter backers who have been waiting two years for their high-tech Coolest Cooler to arrive learned they may have to wait another three after founder and CEO Ryan Grepper issued a long-awaited update on Friday.
In a lengthy message to those who helped crowdfund the 2014 project, Grepper spelled out what’s been going on with delays and a Department of Justice investigation in Oregon. And he delivered the news that coolers likely won’t be showing up anytime soon as the Portland-based company needs to make money before it can make more products.
It’s a tough pill for people who paid for and want to party with the gadget which blends drinks and plays music and charges devices. The project originally raised more than $13 million from 62,642 backers to set a Kickstarter record.
Manufacturing issues and delivery delays and the legal saga have plagued Coolest practically since the outset, but 40,000 people have received the devices. GeekWire even got to test drive one after a backer brought his by the office last summer.
Grepper said in his message that he was happy that the DOJ investigation was concluded and that he felt “vindicated” by the outcome.
“As part of the agreement with the DOJ, we have a time frame of three years to ship all remaining backers their Coolest rewards,” Grepper wrote. “If we don’t succeed, we have to provide a settlement for any remaining Backers.”
Grepper said the only way to fulfill orders for Kickstarter backers is to sell more coolers and make more money — a point that frustrates those who paid $185 in 2014 and think they should get their coolers first.
Read the entire message from Coolest Cooler here:
Posted by Ryan Grepper (Creator)
Hey Coolest Backers,
Sorry for such a long period of silence from us, but finally here’s an update with some answers you’ve been waiting for.
I’m pleased to announce that the DOJ investigation of Coolest has finally been resolved, and we feel vindicated by the outcome. I know it feels like we haven’t shared an update for a very long time, but we really didn’t have much we could say until this was resolved.
The backstory, in case you had not heard, some Backers felt we were promising a shipping window, and when that didn’t happen, complaints were filed against us with the Oregon DOJ. Others felt there must be financial shenanigans going on, which were just conspiracy theories, as we were clear through the entire process that the cost of the Coolest ended up more than what we asked or collected per Backers. Still, no one wants to feel taken advantaged so more complaints were filed and, unfortunately, this really hurt all remaining backers because it put us at a virtual standstill.
During the last 12 months we’ve been cooperating with the DOJ, sharing all our financial documents, answering what felt like a million questions, and submitting our best proposals to get things resolved
Here’s the outcome:
- We committed to allocating a minimum defined percentage of net income from sales of Coolest Coolers to generate the money to make and ship Backers their reward. This is almost exactly what we said we would do last year in many updates, but now it’s been specified and part of the agreement with the DOJ. We will share the progress with those of you who are still waiting for your reward after the close of each financial quarter.
- As part of the agreement with the DOJ, we have a time frame of three years to ship all remaining backers their Coolest rewards. If we don’t succeed, we have to provide a settlement for any remaining Backers. This was a scary part since no one can order a company to make millions in profit, but it was either this or close the doors and give up. Hopefully, with the investigation resolved, we can focus on doing this as quickly as possible.
- Fortunately this loop-hole is now closed, and no one can get their reward faster by complaining to the DOJ. Some people did get to cut to the front of the line and will get their Coolest rewards shipped over the next four months. To be clear, though, that’s no longer an option and per the agreement with the DOJ, all the remaining 20,000 Backers will be fulfilled by the net income from sales of Coolest Coolers. These complaints stalled our progress and only hurt our ability to get remaining backers their coolers faster.
Yeah, but when will I get MY Coolest?!
Part of the cause of the trouble came from trying to share our best guesstimates in the past and we need to be careful not to do that moving forward. What I can tell you is that unfortunately for most of the remaining backers it won’t happen this year. Such an incredible amount of money and time resources went to cover the legal expenses that we are very limited in what we can do this summer. In fact, in Q1 we were not able to generate enough excess money to ship any additional Backer rewards.
When we are able to send your Coolest reward we will contact you in advance and confirm we have your current shipping address and all info is correct. That will be our notification to you that your reward is shipping.
The DOJ looked at our financials and despite many frustrated backers the only clear reality is that we can only ship more Backer rewards with money made by selling more coolers. We have made a huge accomplishment and made and shipped nearly 40,000 backer Coolest rewards, but we still have about 20,000 left to fulfill. As we shared in updates almost the entire journey, the Coolest cost way more to fulfill than we ever raised in the Kickstarter campaign and that’s why we’re in this situation. To fulfill the rest of the pledges, we still need to generate $3-4 million dollars in profit — obviously this isn’t going to happen overnight.
Below is our plan to move forward. We can’t do it without you, and we especially can’t do it against you. I hope that all those who have made this process tremendously more difficult for us will come onboard and allow us to focus on the business at hand so that we can get every last backer their reward.
Before I share the plan, I wanted to remind you that I’m a person trying to do my best in this situation. Yesterday, I was recognized by a couple who backed this project nearly three years ago who still don’t have their cooler. The message I shared with them is the message I’d like to share with all of you who are still waiting…
I’m truly sorry you don’t have your Coolest Cooler yet, and every day I feel your frustration at (sic) We’ve had a long hard road with lots of challenges and a steep learning curve, but the easiest thing would have been to quit long ago and just move on. I’ve gone into debt to keep this thing going and am doing my best to make good on my commitments. I still can’t promise a time frame, but I can tell you we are doing the hard work every day and persisting because it’s the right thing to do.
You can read our plan below. As always, thanks to all who have supported us, to all those 40,000-plus people enjoying their coolers, to those waiting patiently, and to every single person who believed and still believes in us.
-Ryan and the Coolest Team
Our 4-Part Plan
We’ll continue to seek to sell more units at retail to generate the profit we need to be able to keep the doors open and order the inventory we need to survive and fulfill backer units. Every week, we get multiple emails from angry folks who want to know why, if we are selling coolers at retail, then why can’t we ship them theirs. I’ve explained this in previous updates, and the reality continues to be that we have limited inventory, and we need to sell (turn over) the inventory to make enough money to operate and buy more units many times throughout the year. The agreement with the DOJ specifies a minimum allocation of net income from Coolest Cooler sales. Every time we sell units at retail, we (hopefully) make more money than it cost us to operate the business, including paying expenses, taxes, insurance, salaries, and other costs. Any profit we have allows us to send extra coolers to Backers and start the process again.
If we took all the coolers in inventory and sent them to backers this month, then we’d make less than 2% of them happy, but still 98% would be unhappy forever because we’d be out of business. So, we have to take the longer view if we hope to get everyone their Coolest within the three year window. While nobody likes to wait we can all agree that later is better than never.
We’ll share progress updates with those of you still waiting for your Coolest after every quarter, and anyone else who would like them.
Here’s the big picture moving forward:
- Reduce Costs. After development and tooling costs, it costs about $235 to make and ship a Coolest cooler to each Backer. With 20,000 remaining units to fulfill, this means we need to generate $4.7 million in excess cash to make this happen, and as I shared above, this can only come from retail sales profit. We have been working hard this year to identify cost reductions within our supply chain and starting this fall we should be able to reduce this by at least 25%. This saves $1.2 million right off the top, and we’re hopeful we can reduce it even more while staying committed to delivering the Coolest-level of quality you all expect and our backers have loved.
- More International Sales. With reduced costs there will finally be an opportunity for international distributors who want to sell the Coolest in foreign markets. This will generate more income which means more profit and more money for Backer rewards. It will also set the infrastructure for an easier path to shipping rewards to our international Backers.
- New Coolest Products. As cool as the Coolest Cooler is, we have learned that retailers are hesitant to deal with a company that only has one product. We are working within our supply chain to develop some great new products with very little upfront cost to us. More products mean more sales, and more income and profit means more Backer rewards we can ship.
- Outside Investors. No matter how optimistic I was, it was impossible to raise capital when we were being investigated by the DOJ. With this finally resolved, and with new products and international expansion a possibility, there is a much higher opportunity for outside investment.
All this said, nothing is going to be accomplished overnight. There is a lot of hard work still to be done and we simply can’t guarantee our future success. I can tell you we are trying to make the best decisions and chart the best path with the options at hand.
Thanks again for all your patience and for your continued belief and support in us. We’ll send another update next quarter.