Why Are Hybra’s Kickstarter Backers So Upset? CEO Joe Thiel Responds

Why Are Hybra’s Kickstarter Backers So Upset? CEO Joe Thiel Responds

[Updated 4/24/14 and 4/25/14. See below.] When we last reported on Hybra Advance Technology, a Traverse City, MI-based consumer electronics startup, it was September 2013, and the company was days away from closing an extremely successful Kickstarter campaign.

Now, half a year later, Kickstarter backers are up in arms, some going so far as to call for Michigan’s Attorney General to investigate the company for fraud, and all because it hasn’t delivered its product yet—though that’s not exactly unheard of when a startup is trying to get a piece of brand-new hardware to market.

Xconomy contributor Dan Ryan, a startup CEO, wrote a guest post last year outlining why it’s a risky proposition for hardware startups to use Kickstarter: “Going from prototype to mass production is an enormous challenge. You need the help of experienced industrial designers, engineers, and manufacturing experts to make everything work,” he wrote. “For the types of companies that go on Kickstarter, they often don’t have the expertise required to successfully deliver on their promises. Delays are inevitable.” Kickstarter has also taken pains to remind backers that they shouldn’t expect fully finished products, especially in light of the fact that 75 percent of hardware and product-design projects fail.

Meanwhile, Hybra has waffled between responding in detail, somewhat defensively, or not at all to its Kickstarter backers. But it has always maintained that despite the many delays, its speakerless headset, Sound Band, is still heading to market. How did what seemed like an entrepreneurial success story go so far off the rails?

“People think we stole $500,000 and are driving around in Ferraris, and that is absolutely not the case,” says Joe Thiel, Hybra’s founder and CEO.

I met with Thiel to try to get to the bottom of the Kickstarter fracas (more on that later). First, a bit of history: Hybra Advance Technology initially popped up in the media in 2010, after an early prototype of Sound Band won a prestigious design and engineering award at the Consumer Electronics Show (CES) in Las Vegas. Last September, Hybra co-founder Ryan Wells told Xconomy that recognition at CES opened the doors to some key relationships that allowed the product to get closer to market.

After a few design iterations, Hybra set out to raise $175,000 to help get Sound Band to market. Sound Band is a speakerless headset that is crescent-shaped and fits around the back of the ear. It incorporates surface sound technology similar to the Google Glass bone conduction speakers; it has flat panels that vibrate very quickly so that, when placed against the back of the ear, the vibrations bypass the outer ear and are transmitted directly through the bone.

The initial response from Kickstarter backers was enthusiastic: When Hybra’s campaign ended on Sep. 13, 3,292 backers had pledged $547,125 toward commercializing Sound Band. Hybra told backers the estimated date of delivery for Sound Band would be December 2013, with other rewards promised as early as October 2013. As part of its Kickstarter pitch, Hybra had claimed that Sound Band was “production ready” and just needed $175,000 for manufacturing.

As those dates came and went with no sign of product, commenters on the company’s Kickstarter page began to express worry. At first, they just seemed to want an accurate estimated date of arrival for their Sound Bands. Since Kickstarter merely facilitates the transaction between a company like Hybra Tech and its … Next Page »

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The Author

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com.

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  • Leewelo

    @Sarah
    Please try and take the time to learn Hybra’s Kickstarter backers’ side of the story. Get access to KS updates and comment threads.

    Do some investigative journalism, instead of just reporting your local inventor’s story.
    There is more to the setbacks in bringing Sound Band to the market.

    • http://www.xconomy.com/detroit Sarah Schmid

      I was in communication with two Kickstarter backers, actually. If you read the story, you’ll see that I found fault with both sides.

  • Kevin K

    The article here shows the awful communication skills of Hybra and does not touch on the many controversies surrounding this project, such as the unwillingness of Hybra to give backers even the most basic information such as an address. In the 7 months since the close of the project, Hybra has provided no proof that they ever worked out the issues with the product and have repeatedly blamed backers for everything.

  • Jenn

    I appreciate the explanations to many of Hybra’s faults, but you completely ignored Hybra’s attempt to delete their KickStarter account and disappear (KickStarter actually restored it), as well as Joe Thiel personally backing the project, which is against the KS Terms of Service.

  • Chris C

    The comment suggesting that Joe Thiel is paying for my hotel is a false statement and I insist that you remove that section.

    This is shoddy reporting at best simply making statements reported as facts that are simply untrue. It would not have been difficult to verify his statement however you decide not too.

    I politely request that you edit this statement from your review or you will force me to publicly post the email conversation that will prove your article is factually incorrect.

    • http://royblumenthal.com/portfolio royblumenthal

      Hi Chris…

      I don’t think Sarah is the culprit here. I think Joe Thiel probably put on his charming, ‘I’m a reasonable guy’, salesperson face, and uttered a pure lie to prove how reasonable he is. Sarah had no reason to doubt the bloke.

      I think this story still has a long way to travel, and Sarah is going to be able to sink her teeth into the juicy details.

      When you head to Detroit, it might be a good story opportunity for Sarah to interview you. She can even ask you if you live in a basement with your cat!

    • http://www.xconomy.com/detroit Sarah Schmid

      Can you please email me at sschmid@xconomy.com?

  • http://royblumenthal.com/portfolio royblumenthal

    Hi Sarah…

    Thank you for providing a balanced view of the Hybra situation. I really appreciate the effort you put in. And I’m really glad that you’ve been able to get this story off the KickStarter forums and into the real world.

    I think you’ll enjoy taking a look at some of the most recent links on the Sound Band comments forum. We’ve managed to unearth evidence that suggests that Joe Thiel may have been rather economical with some aspects of the truth regarding the pre-pack/quickie bankruptcy he mentioned in the interview.

    Once again, thanks for the article.

    One quick question… most of the backers have been sticking around for an independent review of the Sound Band headset. Is there any chance you could write some more about your experience with it? Do you happen to have more video footage?

    All the best,
    Roy

    • http://www.xconomy.com/detroit Sarah Schmid

      Thanks, Roy. I do have a bit more video, but it’s only of Joe connecting his smart phone to the Sound Band via Bluetooth. I listened to parts of two songs, and the sound was quite rich in both cases, yet I could still hear the world around me. Frankly, I was surprised by its quality.

      I’m sure I could spend months researching this story, but alas — I am a one-woman news bureau. If people have concrete proof that Joe misled me in our interviews, please email it to me so my editors and I can decide what to do.

      • http://royblumenthal.com/portfolio royblumenthal

        Thanks for your reply, Sarah. Really cool of you!

        I’m really really really glad to hear that this gizmo is actually real, and that an actual human being listened to it! Gives me a bit of faith that I might one day actually get one!

        Re Joe being misleading… Yikes… That would probably be an understatement. We’ve been uncovering a tangle of new business registrations, lies about his residential address, withholding of his business address.

        I received an email from the Michigan Attorney General in response to a complaint I laid against Hybra. The AG told me that the postal service returned their mail as undeliverable. This was using the address Hybra had online at the time, before their website went dark for several weeks.

        The most disturbing info would probably be the business registrations. It appears that they are in the process of a pre-pack right now, as we speak.

        If you take a look at this comment on the KickStarter project page for Sound Band, it summarises some of the findings: https://www.kickstarter.com/projects/hybratech/sound-band-finally-a-headset-without-speakers/comments?cursor=6601208#comment-6601207

        (I’ve had commenting privileges revoked by KickStarter, at the request of Hybra, because I posted Joe’s residential address as the correct address to refer the Attorney General and feds to when for investigation.)

        There’s a whole bunch of craziness happening in the comments section. If you’ve got an hour, you might find it very entertaining to comb through it.

        Thanks again. I really enjoyed reading your article. It’s well written, and unbiased. But I do think Joe’s charm pump was working overtime, cos he minimised issues backers have, and he obfuscated key problems, and he may have actively misled you about the revised project timeline. He may have let you believe that the timeline was for completion of the whole project, when I’m actual fact, it only covers one single component.

        Blue skies,
        From Johannesburg, South Africa,
        Roy

        • http://royblumenthal.com/portfolio royblumenthal

          Oh… One interesting thing… KickStarter has a very strict anti-shilling policy. Project creators are strictly forbidden from backing their own projects.

          But Joe Thiel is listed as a backer, and for a week or so, after the Hybra KickStarter profile was removed, Joe posted multiple comments from his backer account.

          In essence, posting comments from a backer account is proof positive that someone is a backer. In other words, Joe contravened one of KickStarter’s biggest rules.

          We believe that there are many ‘backers’ who were either employed by Hybra, or were false accounts created by them.

          There were 13 backers who pledged as beta testers, at $450 a pledge. So far, we have confirmed the existence of only one of those thirteen. And she smelled a rat early on, and got her credit card company to issue a refund in December, based on non-delivery. She was supposed to have been in a conference call with all the other beta tester backers. And that conference call kept being put off for various reasons. The call never happened. We believe that there were no other beta testers.

          Of course, Joe knows who those backers are. And if he were an honest business person with nothing to hide, he would gladly show the names and details of those 13 backers to you, knowing that he could trust your journalistic integrity to not reveal the names to the world if he showed them to you in confidence. But I’ll predict that you’ll never be granted access to that list.

  • SarahD

    That was an interesting article although clearly biased and somewhat un-researched.

    Hybra made it very clear towards the end of the campaign that they could not only deliver the V4 Soundband but all the enhancements without any delay and that the Soundband had CE certification
    .. [quote]All consumer electronics sold in the US have to have CE certification. So yes, Sound Band is CE certified. The Hybra team will not commit to any upgrades or design changes until we are confident that we can deliver them. That would be lying to our current and future backers just to make an extra buck…not going to happen. We have been working on Sound Band for years now. 45 days is not a lot of time to be offering unreasonable goals. Can we add three new production runs for three new colors?…sure![/quote]

    Both of these statement are absolute lies. Hybra stated later on that the CE certification was something they would have to get before production – but would not be an issue. We all know that they have used the upgrades and enhancements as the excuse for the 1st set of delays.

    Having run a campaign on Kickstarter, I can also give you the Creator set of rules which would prove without any doubt that Hybra have consistently acted against them and without regard for them. Many backers are now also posting copies of letter received from Kickstarter who say that they have repeatedly tried to work with Hybra to be more communicative with their backers.

    The transgressions continue – there is too much information to put here.

    You may have spoken to 2 backers but have you actually looked at the written facts? Based on what is written in your article, it would appear not.

  • schekker

    Thanks for the story. With such opposing sites you were never going to satisfy everyone. I’m one of the disgrunted backers myself and I can assure you that Hybra has only itself to blame for my dissatisfaction. I’ve backed tens of projects and more than half are late to very late with their delivery and a few even have trouble delivering at all. Yet Hybra is the only one I’m angry at. Why? Because of their very poor and deceitful communications. Joe says it all when he characterises me as someone living in my mothers basement. People living in basements don’t have the money to back these kind of projects. People with jobs, living in their own houses do!
    Given the very poor communication skills of Hybra I was actually starting to doubt the very existence of the Sound Band. Your story at least assured me such a product is indeed in development, a prototype exists and it is now a matter of getting this into production. Thanks for that.

  • Nathan V

    Sarah Schmid, Thank you for taking a second look into this emerging story. While you may have been in communication with two of the backers, it appears as though they have only provided you with a portion of what has transpired and what is known. Which is understandable, it’s hard to keep up with everything that has taken place.

    Just for starters, the timeline you referenced in the article is not a timeline of when Sound Band would be in the hands of Backers but simply their estimate for resolving a single specific issue. Based upon that timeline, assuming that no other issues crop up between now and then and that the timeline holds true, actual production is not be expected until the second have of 2015 at the earliest.

    I would encourage you to stick with this story and dig deeper. There is much more to learn and report on. I feel communication with Chris C would be a good place to start as he is widely considered to be a fair and trusted backer. It has been openly stated by many backers that their stance on this project going forward will be determined by the outcome of his visit with Hybra and his review of Sound Band.

  • fruvous

    “I think we’ve communicated better than most on Kickstarter, but it was never enough.”

    Sarah, Have you taken a look at the updates that were posted? I think they speak for themselves at how bad they were and no, they are nowhere better than most on Kickstarter. I would rate them near the bottom.

  • Kevin K

    @everyone For the record, the majority of the updates were designated “For Backers Only”, so unless Sarah backed the project or was provided these updates by Hybra she could not have seen the updates.

    @Sschmid:disqus If you would like to see the non-public update as well as a full history of the comments made by Hybra please email me at kevkulbacki@aol.com

  • Ron M

    Sarah, I appreciate your balanced approach to your follow-up on Joe Thiel and the Sound Band, but feel with a little more digging you’d uncover an alternative, uglier explanation scratching the surface of your article – that Thiel is a selfish person of such low character that he’s willing to sacrifice the people closest to him for his own personal gain. For a person like that, nearly four thousand backers who contributed over half a million dollars would be totally inconsequential.

    That he paints himself the victim while showing such disdain to his Kickstarter backers might be a clue. Blaming his “best friend” and former partners for his troubles might be another. I’m guessing if you talk to Ryan Wells and the others who also happened to contribute years of their lives and now find themselves on the outside, you might get a different picture of who the victims are in this case. I’m guessing that the more you dig into his past business ventures, the more victims you’ll find that have been left devastated in Thiel’s wake.

    The whole Kickstarter Sound Band campaign was launched on a lie – that the product was ready to be manufactured. Yet here we are, over half a year later from that campaign promise, and Thiel is claiming that it will be at least another nine months before they can even think about making any – and he has still refused to give a target date for when backers might finally get their Sound Bands.

    It’s also extremely convenient for Thiel that none of the forward progress he’s claimed since the Kickstarter campaign can be verified. He claims the Kickstarter funds (“really nothing” in his own words) were earmarked for materials to produce the Sound Band, but with production over a year behind schedule still can’t account for where the money went or issue refunds to backers who want out. He claims that he’s working with a team of engineers to resolve the production problems, but won’t specify how many there are or whether they are employees or contractors. He claims that he’s hired a new VP of Engineering (the second in a just a few months) but won’t give a name or credentials. He claims to have a version 5 of the Sound Band but only demonstrates version 4 – the same version that was used to launch the Kickstarter campaign over half a year ago.

    Meanwhile, the facts that can be verified paint a more daunting picture for the Kickstarter backers. Hybra’s first announcement of a delay conveniently came 45 days after the campaign closed – that was the cut-off date for people to request refunds through Kickstarter and their payment partner, Amazon Payments. Now, with the revised delivery date looming, Thiel announced another delay of at least nine more months, all the while constructing a web of Hybra companies.

    Thiel claims he’s not doing a quickie bankruptcy now – but it’s not because he’s “not a dick.” It seems like he’s not doing it now because he just needs a little more time to protect the assets he thinks he’s earned. His delay tactics could be the way to buy himself that time, and if he does pull that trigger he’ll probably blame all the basement dwellers and best friends he shafted along the way.

    In case you’re wondering, I’d never heard of Joe Thiel before this campaign; I’m not a friend of his former best friend or former business partners; I’m not disgruntled over a couple hundred bucks pledged on his campaign – I did back the project but worked with my credit card company to get a refund. For me, it’s a matter of principle – it galls me that someone treats the people who backed his “dream” with such little respect. It galls me that same person may walk away with half a million dollars of other people’s money.

    So I urge you – please dig a little deeper. I think you may find there’s legitimate reasons so many of the Sound Band backers are upset, other than that the product is delayed.

    • http://royblumenthal.com/portfolio royblumenthal

      @Ron… This is excellently put. Thanks for writing this. Sums up the situation perfectly for me.

      @Sarah Schmid… The fact that your story has generated this type of response is exactly why journalism is so important. Thank you for your story, and for giving the underbelly a strong light shone on it.

  • http://royblumenthal.com/portfolio royblumenthal

    Hi Sarah…

    There’s some seriously nefarious stuff happening with the Hybra guys today. They’ve just gotten KickStarter to ban a backer called ‘Mr B’ from the forum, because of something he posted on my behalf.

    The post in question reveals several highly suspicious details of company registrations, indicating that the pre-pack/quickie bankruptcy we anticipated might actually be taking place under our noses.

    I’m posting the full text of the comment that got Mr B banned in my reply below.

    Sarah… I think you have a VERY interesting follow up story if you pursue this.

    • http://royblumenthal.com/portfolio royblumenthal

      Yikes, guys. Take a look at this email I’ve just received from my source. (The ‘Matty’ mentioned at the end is Matty Maroun, Detroit billionaire whose offices they seem to have relocated to.) It appears obvious that the pre-pack/quickie bankruptcy that we feared is actually taking place right now.

      Anyone wanna risk the wrath of the pathetic KickStarter censorship team and post this?

      ———-

      Something, beyond the obvious, is going on.

      If you know somebody has reported you to the DA, you do not hide, you accept the letter, give it to your attorney, and have him/her call the DA. Most likely they know each other, Traverse City is not so big.

      Legally in the US, avoiding investigators cannot be used as evidence of guilt, however, I know that investigators will only become more suspicious and treat them more harshly than if they just turn it over to their attorney.

      Hybra Advance Technology MARY A GALLO-POLIUTO (Centra employee) is the resident agent which means she is responsible to receive all legal notices. She is at the Warren MI office. You might need to contact the local DA to file another complaint. The change to her as resident agent was done on March of 2014, you might want to let the Traverse City DA know this.

      http://www.dleg.state.mi.us/bcs_corp/image.asp?FILE_TYPE=UCO&FILE_NAME=D2014032014085INT000A6F00.TIF

      A guy named Hal Briand is listed as Treasurer of Hybra, don’t know anything about him, but assume he is in MI and you can probably locate him on linkedin.

      Hybra Energy has a status of ‘automatic dissolution’ which means either they did not file an annual report for 2 years or there was some type of legal action taken against them and they were forced to dissolve the company. Check the local county newspapers for any notices posted by Hybra, they are required by law to make such notices public through this means. http://www.dleg.state.mi.us/bcs_corp/dt_corp.asp?id_nbr=03514R&name_entity=HYBRA%20ENERGY%20CORP.

      New LLC formed this week http://www.dleg.state.mi.us/bcs_corp/image.asp?FILE_TYPE=ELF&FILE_NAME=D2014042014111E0131413.TIF

      Same resident agent, and the person that filed the doc is Fredrick P Calderone http://www.forbes.com/profile/frederick-calderone/

      Looks like they are going to take over all of Hybra’s assets.

      Another new company http://www.dleg.state.mi.us/bcs_corp/image.asp?FILE_TYPE=ELF&FILE_NAME=D2014022014057E0121517.TIF

      Kevin Kalczyynski is named as resident agent https://www.linkedin.com/pub/kevin-kalczynski/11/464/497

      Looks like you might be right about liquidating Hybra assets, in the US it is not easy to go after the executives personally unless they have broken the law. Piercing the corporate veil is difficult if they have not willfully broken the law.

      It just seems abundantly obvious that Matty and his team is taking control.

      —————-

      My contact immediately fired off another message, saying the following…

      —————-

      I forgot to say 2 things.

      1. Could be a good thing for everybody if Matty truly believes in the project.

      2. The over-mold excuse is very bogus, anytime you are going to be using over-mold in manufacturing, you must design specifically from the beginning. So either they did not design for OM manufacturability or they did and had knowledge this could be a problem.

      —————–

      Roy here again…

      I have a very nasty feeling that these moves are good for people other than the backers. There has been no sign whatsoever that the backers are being kept in the loop. There have been abundant signs that or needs and wants are irrelevant.

      Please take urgent action to report these people to the authorities. As suggested by my source, the TRAVERSE CITY district attorney is a good starting point. Along with the IC3… http://www.ic3.gov.

      We are being handled. Bigtime.

      • http://royblumenthal.com/portfolio royblumenthal

        A banning pattern we’ve noticed is they get people banned whenever sensitive information is posted on the forums.

        The implication is that the info contained in that post has hit a nerve, and they’re scared of it being shown to backers or the DA or the feds.

        • Tyson Edwards

          That could be true, however it seems like whenever someone gets banned it is when they post Joe or someone else’s home address or personal legal histories. While that information is public record and is itself easily locatable, it makes sense why someone would feel “targeted” or even “threatened” when said information is put out there in front of dozens of very angry people. The personal info could just be a good strawman to get the rest of the “uncomfortable” information taken down though. No one can really know their motives besides them.

          • http://royblumenthal.com/portfolio royblumenthal

            Hi Tyson…

            The post that got ‘Mr B’ banned is the one I copied and pasted above. It contains no personal details of any kind. It contains only links to the various business manoeuvring being done by Hybra.

            I absolutely understand that they would be uncomfortable about these things being out in the open.

            However, KickStarter is the only entity that can ban a commenter and take down a post. And while they CAN do so at their discretion, they SHOULD only do so when a post contravenes their community guidelines.

            The post above does not contravene those guidelines in any recognisable way. I can’t even imagine what part of the post would have caused them to action the ban.

        • Tyson Edwards

          I may be misremembering.
          When someone is banned, their posts are removed so I lose the ability to refer back to them, but I do distinctly remembering *someone* getting banned shortly after posting Joe’s home address in one of your copy / pasted updates.

          Please don’t think that I consider Hybra blameless in this.

          I do agree that when Hybra correspondence sent to their last known operating address at a time when they claim to be operating for that location goes undeliverable, they up and move “somewhere” that they refuse to tell anyone, and Joe’s home address is on business registrations that it should be provided to lawyers who are in the process of investigating them.

          If Mr B did not at any point post Joe’s address than I apologize for suggesting that that may be the true justification for the bans. Unfortunately once someone is banned, their contributions go away making a historical account

          • http://royblumenthal.com/portfolio royblumenthal

            No worries! And certainly no need for apologies!

            Just a clarification…

            There are two levels of action KickStarter can take in dealing with an ‘offender’:

            1. They revoke commenting privileges. This simply means that the person cannot post comments. They’re still on the site, capable of backing projects, seeing comments, navigating through the site. Their comments are not deleted. However, the ‘offending’ comment is deleted.

            2. Full-on banning from KickStarter. I have no idea what this would look like, nor how it manifests.

            —-

            In Mr B’s case, the only comment of mine he posted is the one in this thread. And I really can’t see ANYTHING that even resembles personal details in that post. It would seem that Hybra took offence, manufactured a ‘reason’ in their motivation to KickStarter in having it removed, and had Mr B’s commenting rights revoked.

            The goal is most likely to remove ‘dangerous’ information from the public eye. And it’s probably partly to harass and alienate backers who they see as adversaries.

            KickStarter’s willing collusion with Hybra in these bannings is highly disappointing.

  • Thinxbigger

    Roy I see you have found a new forum to spout your madness.

  • Thinxbigger

    No one here listen to royblumenthal he is a conspiracy theorist and down right rude. He spends all of his time trying to rouse up bad blood at any chance he gets. We are sick of him in other forums and just wish he would stop. PLEEEEEAAAAASSSSEEEE!!!!!!!!

    • Kevin K

      I initially thought the same in all honesty until I started reading the content of his posts. He has been more logical and provided more facts than Hybra has throughout the entirety of the campaign. Believe it or not @Thinxbigger, he has done more for us backers than almost anyone and I am glad that he is on our side.

  • Smokey_the_Bear

    This is the first time I’ve heard of the deadline getting moved into early 2015…very disappointing, it seems this company is only good at creating one thing very well, and that is frustration.