Originally Posted by
Gibsonsean
I'm on the pre-order list and need to decide on committing the deposit in 20th or not.
Risk of delay aside, the question is how big a risk is there that the company will fail with orders (KS and pre-order) unfulfilled and investment/deposits lost.
Discounting the scam scenario, I guess the two key risk drivers are an insurmountable cashflow crisis or a design flaw in the product design or manufacturing process which results in the manufactured product ultimately being non-viable either from a quality standpoint or in terms of profitability at a marketable price point.
As has been observed in earlier posts, capital may have been eroded by delays and changes in manufacturing approach, in particular the unexpected need to invest up front in dedicated production tooling and capability. This could lead to cashflow issues.
Where he's got to and assuming a sound business case and proof of market interest e.g. a healthy pre-order book and the KS interest, would be significant positives if he needed to secure further investment. The track record of delay would of course count against.
On the sound business case front, inherent profitability is perhaps another question given the assertions by some that "you can't do a Ti folder at that price". Previous posts have highlighted the arguments against this concern: bulk pricing, Ti tubing not that expensive, relatively low spec components, the price hasn't been hiked for pre-order etc.
The second risk is the less graspable risk for me. The product design has been iterated numerous times and there seem to have been small numbers of prototypes. The design is pretty innovative and the current configuration of the organisation sounds light on actual manufacturing experience outside of equipment vendor support.
I'd appreciate people's thoughts on this and any further insight from backer comms.
I guess in the end, it's all a lot of speculation and comes down to how passionate you are about having the product ( pre-ordering may be a factor in keeping Helix alive) and how much you can afford to tank the deposit (I wonder if my credit card purchase protections would cover the deposit in the event of non-delivery?).
Here are some thoughts regarding being able to deliver KS bikes:
If you assume that the factory setup cost especially large pieces of complex machinery are bought outright, then that could present a problem. A much smarter way is to lease such equipment, amortising the purchase cost over some years. That's what you do when buying a new car too. So in that scenario, there isn't much upfront cost and KS production should not present any serious cash problems. So my previous pessimism didn't take that into account; I only had thoughts for outright buying which isn't very smart.
The CEO has been very smart so far with making sure the bike design is reliable and producable. I am guessing he would be smart in this too. He has been very careful up to now wrt manufacturing; that has caused some delays but if the final outcome is much better then delays are good. Better to be circumspect than to rush into something.
Also, the cash burn rate seems to have been quite low; because he has been working alone for perhaps 6 months or even more during this design refining stage and the patenting of new technology, there have been no unnecessary payroll payments either. So in hindsight, that is also on the plus side of the ledger.
(You can see I tend to fluctuate wildly; I'll be quelling any negative thoughts which are not helpful.)
Regarding the 50% deposit and attached risk for production pre-orders, I read (read back over it this morning again) that you can cancel your order right up to the moment of delivery. You can even send the bike back unused within 30 days; in that case postage would be on you. So it seems the risk is mitigated. If you have that in writing too, then I would be inclined to go ahead. Perhaps a quick email to confirm.