An Apology to Our Backers + Parting Ways with Flextronics.
We’d like to begin this update with our deepest apologies. Through all the challenges we’ve faced, the only thing that has kept us going is your belief in us. The last thing we wanted to do was to disappoint the nearly 8,000 people who generously backed our project so long ago. Unfortunately, some hard news follows.
In our last update, we discussed a contract that Flextronics asked us to sign regarding what we were allowed to publish about this project. After reading that update, Flextronics decided they were no longer willing to negotiate the terms of that contract or the language within it. When we were informed of this decision, we were also told that they would like for us to arrange to pick up the parts and equipment we own as production has been halted.
This is the latest chapter in what has been a challenging relationship and project to date for everyone involved. Flextronics is a renowned manufacturer who works with the world’s top brands in wearables and other consumer electronics. They’re a good choice for a lot of big, global companies. Unfortunately, in our opinion, it turns out they were not a good fit for the technical challenges of this small startup with, in mass-manufacturing terms, a relatively small number of units. Flextronics is well known for shipping millions of units for many of their customers.
We chose Flextronics—above two other manufacturers—because of their expertise in wearables, their location in the US (which enabled us to make frequent trips to California to work on-site), and because they included us in their LAB IX incubation program. We’re sad to say that even with all the knowledge Flextronics has about wearables, little could be transferred, or was relevant to, the specific challenges of the CST-01, namely because of its sub-1mm thickness and sensitive components.
We thought working with one of the world’s largest wearable manufacturers would set us up for success. We certainly didn’t think we would ever have to be writing an update like this.
Hindsight is always 20/20. If we were to do this all again with the knowledge we now have, we would likely search for a partner that had specific expertise in developing new processes in ultra-thin electronics who was used to working on 10,000 unit runs. We would likely not have limited ourselves to US manufacturers, although, at the time, it was important for us to try to keep as much of the watch made in America as possible. We’ll share “lessons learned” and “mistakes made” in following updates to help anyone in the future avoid some the same challenges we faced.
(Deep breath.) The next step is to pick up the parts, assemblies, and tooling that have been paid for that are currently at Flextronics in Milpitas. We’ll work with Flextronics so that all the paperwork is correctly completed and everything can be released into our care. Once we have all the details and paperwork dealt with, we’ll make a trip out to Milpitas to physically load everything and move it.
Once we have everything in our own storage, we can do a proper inventory of all these items and take detailed pictures. We know some of you are eager to see this. We haven’t been able to do this as freely as we would’ve liked in the past because of guidelines from Flextronics on what we can share from within the factory walls. Understandably, we have been limited in taking pictures inside their facility because Flextronics doesn’t want competitors to know some of their processes and capabilities.
Below is a detailed list of all the items we plan to pick up. There are some parts that Flextronics have paid for that we do not currently own. We have not put those on this list. We also do not own some of the Flextronics machinery needed to assemble the watches such as an ultrasonic welder and a hot bar machine.
We’ve had meetings with several organizations who we hoped would be able to help continue production of the CST-01 and get you rewards. To date, however, none of these conversations have been very positive because of the production problems we face. Because of the low, 54% yield, these problems effectively double the costs of the watch, making each cost around $260 to make.
At this point, the future looks bleak. A plan somewhere between Plan B and C is now our only option.
Here are those plans from the previous update:
Plan B: Find buyers for all the above IP, equipment, and parts, liquidating everything we have and redistributing money as required by law.
Plan C: In the event that there’s no traction with the above options, we’d essentially make all development “open source” to our backers. We’d share all CAD, schematics, drawings, and design-for-manufacture documentation down to a detailed bill of materials that have all part numbers and suppliers down to the last resistor.
We’d share everything we can on how to make the CST-01. We’ve had requests to do this and mail the parts to the backers. This is something we could do, but it’s at the bottom of our list of options because without the proper machinery—hot bar machines, ultrasonic welder, CNC encapsulation machine, specialty adhesives, screen printing, die cutting, etc.—backers simply won’t be able to assemble the watches by themselves. Parts not requested by backers would be liquidated and funds redistributed.
As far as liquidation of all assets, we’ll have all photography and inventory of all the pieces and machinery. We have even talked about selling everything on a public site like Ebay so backers can all see the exact amount we’re able to recoup.
If there’s anyone out there who has been through anything like this, please reach out. Our friends and families have been incredibly supportive and helpful, but they can only advise us so much.
On a personal note, we both have had to take paying jobs to continue to keep this project moving forward and pay for flights and other costs. We’re lucky enough to have employers that know about crowdfunding and the challenges of manufacturing. They are allowing us to keep working on this and give us time for meetings and trips to California.
We’d like to end with another apology from us to all of you for letting you down. As disappointed as we are in ourselves, we’re even more sorry to have disappointed our backers. We’re trying to keep our chins up, but we feel awful and are trying to resolve everything as quickly as we can. We’ll make every effort to get to the best outcome possible.
Dave & Jerry