One of the co-founders of an Auckland startup that's been slammed in the media this week has broken her silence - saying her company will eventually come through with its portable coffee maker, and detailing a comprehensive refund programme - with 100 paid out - for those who can't wait.
Co-founder fronts up as Kiwi startup PortaPresso draws global anger over its coffee machine crowdfund
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"We could have communicated better," the co-founder conceded this morning, before detailing recent events (keep reading).
The Auckland startup got a lot of buzz - including from the Herald - when they showed off a prototype portable coffee maker in late 2017.
Ellin (then 18) and Mittendorff (then 20) spent the past year working with a product designer on the "PortaPresso" - an espresso machine that could grind coffee beans, boil water, compact and press coffee and froth milk using a CO2 canister and a battery that can be charged via a USB port.
Then Icehouse chief executive Andy Hamilton weighed in with a supportive comment, telling the Herald the pair's age would be no barrier to success - if they had the right support network.
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Ellin and Mittendorff registered a company in NZ, and - also in late 2017 - embarked on a crowdfunding campaign via the US site Indiegogo, attracting $76,604 from 304 backers around the world.
One was Alice Springs runway safety officer Shane Martyn. The Central Australian told the Herald that the PortaPresso seemed perfect for his remote work. He handed over US$245 ($321) to back the startup by pre-ordering one of its machines. He says he has now given up hope on the project and wants the money refunded.
But over the months that followed, PortaPresso detailed a series of design and manufacturing issues on its Indiegogo project update page. And after an April 13, 2020 update, in which Ellin said she and Mittendorff had travelled to Shenzhen, China in a bid to resolve manufacturing issues and that "We want to emphasise that this project has never been put on the back burner", the startup went silent on the crowdfunding platform and social media, despite comments from backers asking for updates.
PortaPresso speaks
Ellin finally broke cover last night, sending the Herald the following message:
"We underestimated the complexity of this project at the outset as we were quoted NZ$70,000 and an estimated timeline of approximately six months.
"We had never done anything like this before, nor do we have an engineering background, so had no reason to question whether or not this was attainable.
"Upon completion, the total cost of this project will have cost us well over a million NZD.
"That being said, we are 100% committed to the delivery of this project.
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"We have had a functioning prototype for some time now and continue to work on the mechanical optimisation to ensure we deliver the best possible version.
"We have had one of the best design companies in the world working full time on this project with no downtime other than government restrictions relating to Covid-19. The company we opted to use has a credible international presence and their clients include Samsung, Nestle, Alibaba, Audi, Panasonic, Ikea, BMW, Bosch and other global brands.
"As we have stated previously and as we continue to communicate to our backers, we are willing and able to refund anyone who is no longer able to join us on this journey. Some of our backers who have understandably vocalised discontent about the timeline of the project have already been offered refunds on multiple occasions. We encourage our backers to accept a refund and they can purchase the product once it is ready to ship.
"Of course, it is in our best interests to complete this project as soon as possible without compromising the final product, which we have invested so much time and money into."
Ellin - forwarding screenshots to back up her version of events - said she contacted Martyn via Facebook Messenger earlier this week to offer a refund, but the Australian did not provide his bank account details as requested. Martyn told the Herald that PortaPresso had his details from his original purchase.
Could Ellin define "multiple" refunds?
"We have refunded exactly 100 backers to date to a value of US$22,335/$31,198," Ellin said.
And is there a timeline to get the product to market?
"Due to the setbacks we have already faced, it is difficult to predict which is why we have refrained from providing a timeline however we are doing everything within our control to finish this before the end of the year."
Why the radio silence since April last year, despite backers' requests for updates?
"We haven't been posting updates as regularly as we have continued working on the mechanical optimisation and software engineering which is behind the scenes and largely confidential," Ellin said.
The co-founder said she and Mittendorff are funding the $1m or so required to get the PortaPresso to market "from our own pockets". The pair have started a second company, Shekou, which has two physical stores, as well as an online presence.
Asked how well Shekou was doing, Ellin said: "One of the most famous people on TikTok Dixie Da'melio wore our pants yesterday."
The young entrepreneur said Shekou was profitable, and employed around 30 staff between its head office and stores in Auckland and Wellington.
Between Instagram and TikTok, the new venture had around 780,000 social media followers.
No recourse
The Commerce Commission says it has received three complaints from PortaPresso customers.
Auckland University Associate Professor Alex Sims said that was by-the-by; no NZ regulator had any control over how business was conducted over a US-based service such as Kickstarter or Indiegogo - as opposed to a local crowdfunding platform such as PledgeMe or Snowball Effect.
Indiegogo did not respond to a Herald request for comment, but Martyn said he had received an email from the site telling him he had pre-ordered a PortaPresso machine as one of the available "perks" for bankers, he had bought into a concept or design, not a finished product.
While the response annoyed Martyn, Sims says it was quite correct. PortaPresso had not represented its machines as ready for sale.
"Indiegogo makes it clear on its website that it can't guarantee that the projects will succeed or that a campaign's 'perks' - in this case a coffee maker - will be delivered," Sims said.
"It is simply a case of people taking a chance that the project will succeed. Some of the crowdfunding projects succeed, others do not. When using crowdfunding platforms like Indiegogo it isn't the same as someone purchasing a product online."
The washup
"When projects go badly it's vital that companies continue to communicate with customers, especially ones who have spent money on a product which you can't deliver," communications expert and tech commentator Paul Brislen said.
"Most people back projects like this because they want the project to succeed so you've already got them on board as supporters. Ignoring questions isn't exactly going to win hearts and minds.
"The best thing to do is explain what's going on, what's happened to the project and what you plan to do to fix it."
'That's life'
The Herald tapped Andy Hamilton for comment at the start of PortaPresso's life, so it seems appropriate to hear his wisdom about its current woes.
"It reminds us how hard it is to start and grow a business over time," the Icehouse Ventures director told the Herald last night.
"When we raise money from investors, including equity crowd funders, there is always an opportunity to learn for the founders on what went wrong and also to communicate to the investors and backers the reasons for things not going the way it was hoped.
"I always feel for both sets of stakeholders – the founders and the backers, because they all believed it had a chance, and it appears that it did not work out that way. That is life."
