High-end 3D Headphone Company Shuts Down, Refuses Kickstarter Refunds

Ossic, a high-end 3D headphone company supposedly dedicated to building cans for VR users, has formally shut down. The company has given notice that it will be unable to deliver any further headphones, cannot offer refunds, and will not be distributing any more of the 250 headsets it actually completed. Even if you read the announcement in the most charitable way possible (meaning, assuming no fraud or deceit on the part of the company), it’s a textbook example of why users should think long and hard before backing any Kickstarter campaigns.

The team writes:

The headphone went through 5 proof-of-concept level builds, 4 engineering/factory builds, and 1 pilot production build—where we completed 250 units and delivered the first ones to those backers on Kickstarter who pledged for the innovator edition reward… The addition of stretch-goals to add mobile support increased the software scope from two operating systems to five, added an incredibly powerful 32-core processor onboard the headphones for processing, and required us to enter into substantial business development with mobile manufacturers to support multi-channel connectivity. It ultimately doubled the size of our development…

This project was complex because it had 3 large categories of development, all with new and unique elements: 1.) Hardware, 2.) Software, and 3.) Audio Ecosystem.

Hardware new/unique/different features: A typical headphone would only have 2 playback transducers, but the X has 8 playback transducers, 6 microphones, and multiple sensors. In addition to the complexity of more elements, head-tracking was a new feature, yet the trackers on the market were too slow. Thus we needed to upgrade mid-stream to achieve smooth tracking.

It’s always possible, of course, that the company fell victim to the usual suspects, including burning cash on exorbitant salaries, other “investment” projects, and various forms of pocket-lining, but the final project update claims that the development team was as high as 20 people. If you’re paying an average salary of $50,000 per year, that’s $1M per year in salary costs, not counting any expenses actually associated with producing the headphones.

From the sounds of it, the BOM on Ossic’s headphones wouldn’t have been low, either. New design revisions are also expensive and the feature creep surrounding the products sounds like it would’ve bled the company of cash as well. And yet, at the same time, Ossic wasn’t some fly-by-night. The company raised $6M on crowdfunding services and was matched for the same amount by seed funds, according to Gizmodo. Some of those seed funds could’ve been tied to certain goals, and prototype development can be quite expensive. But there was more than enough money on the table to raise questions of where the funding went — or why Ossic didn’t cut its losses and start offering refunds while it still had enough money to do so.

This is, in a nutshell, why is very careful with Kickstarter or crowdfunding campaigns in general. (I could literally write about nothing but the Kickstarter campaigns we get pitched on a daily basis). A $200 set of headphones with the features Ossic was promising would’ve been an incredibly powerful piece of kit for a rock-bottom price. Unsurprisingly, developing that incredible deal proved more difficult than anticipated. Now, outside a handful of early backers, nobody gets anything.

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