It’s on the risk/reward axis that the entrepreneur rotates. Product comes to market, consumer buys product, profit is made. The risk is in ensuring bang-for-buck sufficiently stokes demand so that the ensuing revenue outweighs costs. Otherwise, the entrepreneur waves farewell to his/her investment capital and then some. S/he’s in the red.
What if that risk could be mitigated by re-jigging the order in which the deal goes down: consumer buys product, product comes to market, profit is made? In other words, production costs are covered by pre-orders. Now our entrepreneur (potentially) waves goodbye to more risk and less capital. Hello black.
Michael Li of Hong Kong’s Nativ Sound wants to pull on our collective coat about his Vita “High-Resolution Music System And Touchscreen Control Center”. Sounds fancy, looks fancier.
In other words, the Vita is a high-resolution streamer and server that’s also one heck of a looker. Canting back in an American oak or walnut plinth sits a “premium-grade 7000 series aluminium” chassis that’s fronted by a Japanese Asahi glass 11.9” touchscreen “with IPS technology”.
Baseline functionality sees the Vita connect to an outboard DAC via four S/PDIF outputs (RCA, Toslink, BNC, AES/EBU) or asynchronous USB over which it will dispatch PCM up to 32bit/384kHz or DSD up to quad rate via its in-built, bit-perfect playback app.
It’ll do MQA too but as the Vita houses no internal DAC of its own, an MQA-compatible D/A converter is still required.
Getting more technical, the press release reads: “Audiophiles will appreciate the high-end digital output stage with independent ultra-low noise power regulators, galvanic isolation and a special in-line filter to eliminate jitter and noise from the audio signal.”
Music can be pulled from 2 x (optional) 2TB SSD/HHD drives, configurable as a straight up 4TB or a RAID-ed 2TB, or from over the LAN via 802.11ac or Gigabit Ethernet.
A Roon playback client is also listed in the Vita’s feature set but requires Roon Core to be running on a Mac or PC elsewhere on the home network.
Music can also be streamed from a LAN-connected smartphone or NAS via the aforementioned in-built playback app (network transmission protocol unspecified).
Streaming from Apple Music, Spotify, Pandora, Tidal and YouTube are also part of the deal.
But the Vita will also stream to other nearby devices; over Bluetooth, over Spotify Connect and over Apple’s AirPlay. It will even stream video content via Google Cast to a larger TV display equipped with a Chromecast. The Vita’s HDMI port is for those not yet be in possession of Google’s video dongle.
Clearly, the Vita begs to be touched. Except if you’re the kind of person for whom even the smallest fingerprint annoys. In which case you’ll want to use Nativ’s iOS and Android apps to control the Vita. Or its in-built voice control. “Simply tell it what to play, adjust the volume or skip to the next track,” says the press release.
According to Li, the underlying operating system is a combination of Linux and Android and is open source, ready for extension by third party software developers.
MSRP starts at US$1599. Add US$200 per 2TB HDD. The 2TB SSD version is pegged at US$2195.
But there’s a catch; and not one to be gleefully ignored.
The Nativ Vita comes to market in the first instance via crowdfunding site Indiegogo where pricing
is was as low as US$699. Still available at time of writing were discounted options at US$999, US$1099 and US$1199.
For all intents and purposes a crowdfunded ‘purchase’ such as this looks and feels like a pre-order: you pay cash up front – hopefully at a discounted price – and then receive the product at a later date. (Vita is slated for shipping in October 2016).
Except, technically speaking, it isn’t a pre-order. There is no contract between buyer and seller. Why? Because the consumer is backing a campaign via a donation that merely brings the product into being. It’s within the details of language that the devil lurks.
Kickstarter’s FAQ tells it like this:
“A creator is the person or team behind the project idea, working to bring it to life. Backers are folks who pledge money to join creators in bringing projects to life. Rewards are a creator’s chance to share a piece of their project with their backer community. Typically, these are one-of-a-kind experiences, limited editions, or copies of the creative work being produced.”
Indiegogo has their FAQ doing a similarly lively dance with semantics. Substitute ‘project’ for campaign and ‘backer’ for contributor.
A recent report suggests that around 9% of all crowdfunding campaigns fail to deliver on their promises. That’s a seemingly small percentage but cold comfort to anyone contributing to a campaign where production schedules slip and crowdsourced funding evaporates.
One of the more high profile collapses of recent times was the Zano mini-drone. Multiple delays and a loss of CEO preceded the manufacturer’s voluntary liquidation last November. Of the 12,000 backers who generated a whopping 2.3M GBP of upfront capital, only 600 received a (barely functional) Zano drone. The rest came away with nowt.
Or how about the Coolest Cooler that loaded a USB charger and Bluetooth speaker (among other features) into a cool box to become the second largest Kickstarter campaign of all time? 56,000 people stumped up between US$165 and US$225 for their very own Coolest Cooler. That was mid 2014.
Two years on, 20,000 had received their ‘reward’ when the Coolest Cooler appeared on Amazon at full retail US$399; remaining backers were asked to stump up an additional US$97 for ‘expedited shipping’. Oh dear.
How did this happen? Campaign creator Ryan Grepper reportedly seriously underestimated production costs and ripped through the initial crowdsourced US$13m faster than expected, leaving a US$15m hole in the company’s balance sheet and 36,000 unsatisfied project backers in its wake.
It’s not only hardware manufacturers that test their backers’ patience. Animal Collective’s Josh “Deakin” Dibb took seven years to make good on his promise of an album that would be recorded on the back of a trip to Africa. Funding to the tune of US$26,000 was raised via Kickstarter in 2009 but the album only saw light of day several weeks ago.
Clearly, with reward comes risk.
But who really shoulders that risk here? With little to no comeback when things go awry, one could argue that it’s the customer more so than the entrepreneur.
According to Indiegogo: “When you contribute to a crowdfunding project you are supporting a startup or a new creative endeavor. The reality is that many startups and new ideas – and even some established business – fail. This is why it’s important for each contributor to assess the risks of the project to determine if they are willing to accept them before supporting a campaign.”
In other words, you’re on your lonesome in dealing with the project creator and his company should your reward not ship on time, not function as promised or see substantial changes to its form.
Perhaps the crowdfunding manufacturer has done the hard yards on costings, production and distribution and is all set. Or perhaps he hasn’t (and isn’t). How to separate the kid out of college with a brilliant idea to the experienced businessman with the same? Clues don’t come easy.
This apparent lack of buyer protection is the number one reason DAR ordinarily takes a pass on covering crowdfunded products that have yet to ship.
In fact, the Nativ Vita would have happily sailed on by had my personal interest not overcome my skepticism: funding before production = cart before horse.
I plugged creator Michael Li for further information via email.
“I assume you have a working prototype with ALL the features mentioned in the video?”
Li’s prompt reply: “We are still about 6 months away from shipping so not all features are implemented yet. However, all key features are currently working such as music browsing & playback, streaming from Mac/PC/NAS, music importing to local HDD, playlist & play queue creation and music service support.”
“In the coming months we will focus on refining the UI and implementing the other open features, the biggest ones being full integration of smartphones and multi-room streaming.”
“All factories for A-parts are chosen. We are in the final phase of refining the mechanical design and will then start tooling. Tooling usually takes around 8 weeks and should be complete in July.”
“A-parts are all parts that are crucial to the product (either based on cost or lead time or both) such as processor, DAC ICs, toroidal transformers, enclosure, glass, touchscreen, LCD etc.”
“We plan to start a pilot run production in August, with first shipments going out to supporters in October,” continued Li.
“We do not anticipate any major delays as we factored in enough buffer times. Of course there can always be natural disasters that can affect the supply chain (like the earthquake in Japan just now), but we hope this will not be the case.”
The way I see it, shipping delays and feature trimming are two big pressure points for crowdfunded products. Unforeseen delays can and do occur. Of the Vita we might want to know before ordering if the UI smooth or janky? With crowdfunding sales we have no way of knowing. Or what if Spotify Connect gets the chop at the last minute? One particular feature might prove pivotal to one’s decision to back a project with cash.
Therefore, could a backer seek a refund if the Nativ player didn’t ship in October as planned? Or, if certain features advertised in the IGG campaign didn’t make it to the final product, could a backer also then seek a refund?
Li’s response was encouraging: “Yes, we offer a refund to backers if we do not ship in time, or if features that are communicated for the shipping version of the product are not implemented.”
Few outside Nativ’s inner circle will get hands-on with the company’s products before they ship. Unlike the traditional sales model where the first production run is completed and samples sent out as stock is dispatched to dealers, the Vita will remain untested by reviewers or early adopters prior to arriving at your door. The consumer is the guinea pig in the crowdfunding sales model.
If you’re not motivated by FOMO, the Vita – along with Nativ’s Wave DAC and Pulse power supply (LH Labs much?) – will be made available via Nativ’s website once all Indiegogo contributor rewards have been fulfilled. That’s the plan. Here’s hoping the Vita ships on time with all features in tact and doesn’t appear for sale on Amazon before then. If it does, at least you have Michael Li’s word on refund availability.
UPDATE 18th April: An email from Nativ Sound’s Michael Li. “As usual your article is beautifully written and well researched. It’s nice to see that there are still real journalists out there that try to understand the product and see where it fits in. Many just copy and paste the press release. We really appreciate the coverage.”