Survey results, Reboot or Hibernation

gianfranco · September 9, 2022, 1:22pm

Dear MOD users

I would like to thank all those who filled out the survey. We received a total of 543 responses showing a very high engagement.

First and foremost, I would like to applaud the respect and understanding of the users. Only three respondents made use of the F-word in the open fields, which is remarkable in such a dire situation. Getting the amount of hate I am currently getting, it is refreshing to see a small number of disrespectful comments. I thank you guys immensely.

The results of the survey bring valuable insights regarding the future of MOD, from the relationship with customers to the possible additional revenues it might have.

The most important conclusions we have are:

1 - MOD should act as a business as the majority of the users want to be in a buyer-seller relationship.

If we remain in the hardware business, there is not even questioning about this. Hardware is capital intensive and requires a network of business relationships (the supply chain).

2 - Open Source

88.4% of the respondents consider that the importance of releasing the code as open source ranges from medium to high.

Furthermore, there is a meaningful amount of Raspberry Pi owners:

There is a meaningful conflict between the wish for open source and the business orientation of the company and we will tackle this conflict in an open way.

3 - Community engagement and contribution

There is a high percentage of users willing to contribute, either for plugin development or pedalboard creation. Both efforts though would be made in a community goodwill mindset.

4 - Referrals and involvement of users in the sales

There is a willingness to use referrals, both actively and casually.

5 - Possible additional revenue sources

There is a meaningful perception of value and willingness to pay for:

Specially crafted pedalboard collections
Releases of System updates
High-quality plugins

Furthermore, there is an openness to payment of subscriptions for one or more of the above items. There is, although, a concern about the use of such subscription systems and we need to further investigate the sense it would make for our business. Given the user base size, it would not make sense to have a subscription while we do not reach critical mass for that.

End of survey results
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What now?

The assets are all frozen in the insolvency estate, preventing us from making any decision about the codebase. If we or someone else purchases the assets from the insolvency estate, they can then be released as wished. If the assets are not purchased until the company is finally liquidated, the immaterial assets are handed over to me (as a founder and general manager). This process can take more than a year.

Although many have manifested interesting visions for the future here, including software-only models, none of this works without funding. As some have correctly pointed out, any new development will require considerable time without revenue and that is a luxury we do not have. Furthermore, there is no evidence that such a software-only model could turn into a healthy business.

On the other hand, there is the existing hardware-based business model with many proof points that has not yet fully fallen apart and has a chance of success. Production of the Dwarf is in place, we have a working and operational ecosystem, we have sales channels in place and we have a number of “low hanging fruits” in terms of improvements we can do using what we have in our hands.

That said, we are drawing a timeline for either:

Reboot the hardware-based business, giving continuity to the production and sales of Dwarf units and providing a path to deliver the crowdfunded units.

or

Hibernate and search for another business model aiming at a refounding. In this case, the hardware business cannot be continued. We would try to secure the IP assets and work with the community to provide a minimum level of operation for current device owners.

Reboot - Last attempt

At our initial announcement of the insolvency and the reboot plan, we created a medium-term plan to bring the business back to operation with some key changes:

Focus on Dwarf
- Improvement of pedalboard offerings (Killer Apps model)
- Creation of services for device owners like the AI pedalboard assistant.
Focus on a few big B2B customers

The survey and also the inputs we have received here in the forum show that many adjustments can be made to our longer-term plans, but the reality is that if we want to reboot, we need to act with what we have currently at our disposal.

Since the only way to have a perspective of delivering the crowdfunding units relies on the survival of the hardware-based business, we have created a new budget of 200k€ by further cutting down costs to a very minimum in order to secure survival and make time for further fundraising.

Contrary to the previous 300k€ budget, in this new one, we wouldn’t accommodate the shipping of the crowdfunding units. We continue carrying the moral obligation to deliver the units to backers, but we can only produce and ship them after raising more funds. But, on the other hand, we can offer a way for backers to receive their units by paying an additional amount of 150€ to receive their units. With this payment, the total unit cost for backers remains below the current Thomann retail price. This 150€ would be paid back in the form of plugin coupons.

I know that this is not the desired outcome, but, among the possible options, this is the one in which there is perspective. Flunking the company will make any delivery perspective go away.

To summarize, in this second reboot attempt we are:

Considering the leanest possible structure
Delivering additional value in the form of pedalboards
Delivering crowdfunding units against a voucher purchase
Preparing for higher financing

Currently, we have 120k€ from private investors that continue to be committed.

An additional 24k€ were committed by community members. We have 48 respondents to the survey that manifested a business interest.

I would like to try this last funding sprint until September 15th and collect the commitments for the remaining 56k€

If we cannot commit to proceeding with the reboot until then, we will be forced to proceed with the hibernation option.

If you would like to receive information on participating in this funding sprint as an investor, please fill out this form:

Click here and fill out the form if you consider investing

This is the same form I have previously shared. If you have already filed it, please don’t do it again. I am sending via email the updated information on this fundraising sprint.

The sum of commitments will be displayed in the dashboard at the link below:

MOD Reboot Fundrace #2

I am happy to hear your comments and I am available for any questions regarding this reboot attempt or the hibernation.

Best regards

Gianfranco - The MODFather

plutek · September 9, 2022, 1:48pm

thanks a lot @gianfranco !

intriguing survey results… thanks for sharing.

great to see a clear plan and timeline to one of two concrete options; as much as it is a relief to me that an answer is soon to emerge, i’m sure it’s much more so for you. let’s all land safely, and be content, wherever that destination ends up!

this new shortfall in funding doesn’t seem huge… i’ll be watching that handy funding meter, and am hopeful.

just for clarity and completeness, i have one little question which you don’t mention: in the reboot option, what happens to the Expression Pedal and the backers of that device? it came so close to, at least, a functional and manufacturable prototype – i’d be sad to see the value of all that development work lost! do you see that device as just dead, up for resurrection soon, or is it just a long-term wait until the financial state of the company reaches some threshold of stability? …or something else?..

take care of yourself through all this… cheers!
.pltk.

Rino2 · September 9, 2022, 1:57pm

How and when we’ll pay for the crowfunding device? I’m quite happy to do it (in my case isn’t lower than Thomann) but I’ll do

dreamer · September 9, 2022, 2:14pm

Such details would wait until we know that a reboot is possible.

I know a lot of backers will not be happy that they are asked to invest more (even if there will be plugin store credits as compensation). However I would also be willing to give this final push. At the price we where promised the Dwarf during the crowdfunding it was already an absolute steal. Even still, knowing what these devices are capable of, I think the regular sales price is very very fair considering everything.

gianfranco · September 9, 2022, 2:34pm

Just as @dreamer pointed out, it depends on the Reboot reaching the minimum funding, otherwise, we cannot start turning the gears.

On September 15th, if we have reached the 200k€, we´ll immediately proceed with the production of a 1st batch.

mj_prod · September 9, 2022, 4:14pm

Thank you, @gianfranco Gianfranco
for the results of the survey and your thoughts.
You and your family are still on my mind.

Greetings and God bless, Marius

gianfranco · September 9, 2022, 5:09pm

Hi @plutek

Yes. The Expression is ready to shoot for a pilot run - something like a dozen units - and we do it immediately in case we get the reboot on. These pilot units will serve for the finalization of SW, the creation of material for the launch, documentation, and so forth.

We plan to run the 1st production batch still within the 6 months and fulfill the owed units from this batch. The finances for these owed Expression units are yet not fully detailed as we have still some question marks regarding costs and prices for the Expression.

In the worst case, we will need to resort to a solution similar to the Dwarf to cashflow it, but we will surely proceed with it, as it is an important part of the focus on the Dwarf.

plutek · September 9, 2022, 5:17pm

such good news!

…makes it even harder to be not just constantly checking the funding meter!

gianfranco · September 9, 2022, 5:57pm

It does not move up on its own

I am following up on the people who manifest interest. Let’s hope it reaches the threshold

looperlative · September 9, 2022, 6:03pm

@gianfranco If the code base is tied up in insolvency, how can you produce units and support them?

jetztgradnet · September 9, 2022, 7:19pm

In order to do that you would need to instantly get hold of all existing assets including existing parts, cases, etc. as well as the immaterial IP and access to cloud portal etc.

Does that mean that there is a pre-arranged settlement with the insolvency administrator that you are just waiting to trigger/sign as soon as the funding is available?

Good luck with that second try, my trust and committed funding is still there for the reboot.

As restart of fabrication / assembly of the units from remaining parts and cases would still be slow, maybe offering the first ones to people participating in the funding would be an additional incentive?

OTOH, I would totally understand if people would not be willing to invest even more money on top of an additional 150 EUR to get the originally promised device.

But as all backers with unfulfilled delivery sit in the same boat anyway, any contribution would still help to get there in the end…

gianfranco · September 9, 2022, 7:27pm

If we manage the reboot, it includes buying the assets. I mean, it is part of the reboot budget

unbracketed · September 9, 2022, 7:37pm

For those of us who remain in love with the vision, but skeptical about the road ahead, can you elaborate on what this means?

How many working units are expected to be produced?
Are retail / reseller channels established? Will inventory need to be stored and managed?
What will be the benchmarks for success in terms of number of units sold over time and minimum viable revenue to keep production running? What needs to happen financially to make it to the 2nd batch?
Will there be a community involvement and/or an ability for users to: host or help maintain plugins, host and share pedalboards, contribute fixes or new features to the codebase?

I also have some open questions related to execution and accountability but I don’t think it’s a good idea to try to present them in this format. I believe that in order to succeed, the team will need a talented Product Manager, and a focused CTO. It could be that those roles are already well covered but visionaries don’t always make great captains (said from some personal experience). Before the pandemic there were unfinished products, missed deadlines, and marketing efforts around features that were never delivered (typical of a startup, I"ve been there myself). It is important to hear what was learned during these times that be can taken forward.

gianfranco · September 9, 2022, 7:52pm

Yep. We are in constant contact with him working out a solution.

gianfranco · September 9, 2022, 9:33pm

Hi Brian @unbracketed

Thanks a lot for the straighforwardness. I’d be happy if you guys use this topic to challenge me and Andreas @friedsilence on the planning for these next months.

To avoid confusion, in the quote you took, I was referring to the Expression Pedal question from @plutek

But your questions still apply

In these initial 6 months, only 350 for retail plus the crowdfunded units that backers decide on getting via the additional payment.
As part of the assets, we have around 1600 enclosures already here in Germany, including the Founder edition units.
Our contractor in Germany is very flexible and can handle up to 150 units per week.
We have confirmed the availability of SOMs and there are no components in the Dwarf PCBs under scarcity.

We have sales confirmed channels for Europe and Japan, plus a relationship with multiple smaller dealers in other areas. In these 6 months, we plan to give the first steps towards opening the US.

Only at a small scale, as we mostly “build to order” when working with the bigger customers we are working with.

I do not have a benchmark for the sales at this point and the priority is to put production back on track to make sure we can deliver. I will really not be impressed if we surpass the 350 units forecast as we have already sold more than that in the same amount of time, but I do not want to be surprised by low sales, so I only have added sales numbers that were either confirmed in writing or smaller than previous orders.

The company requires much more to break even than the monthly volume that we are forecasting for the next 6 months. At this insolvency stage, I first need to prove that I can bring the company back to life before investors put big money in, but as for the previous plan, we will need to raise funds again in 6 months. Until then we need to show investors that we can produce according to sales, and scale it if needed.

I understand 2nd batch as production above these 1600 units to which we already have enclosures. We will need confirmation from bigger customers, especially in the US, in order to trigger the transition to higher-scale suppliers which we have already qualified in Q2.2021 and Q1.2022.

I’d like a lot to have the involvement of the community but not really for the development of our assets. There are discussions related to Open Souce that we need to have, including with the community, in order to proceed with a bigger involvement of the community in our core assets.

On the other hand, I want to involve community members in the improvement of plugins, creation of pedalboards, and also content. We had quite some responses on the form regarding help on these topics and I will release specific forum topics for them.

danielblues · September 9, 2022, 11:15pm

So my extra 150€ dont count to reach 200k?

gianfranco · September 10, 2022, 6:27am

No. That will be needed to be paid in case you want to receive your unit in these 6 months

jetztgradnet · September 10, 2022, 8:27am

Just to manage people’s expectations a bit (*): do not expect this counter to go up hour by hour, the process is a bit slower.
When chiming in with a bit of invest, there is a two-step process of electronically signing an agreement to commit to that amount and I would assume that @gianfranco would only add proposed funding when that commitment was signed.
So specifically don’t treat this as an indicator that nothing is happening if it takes a while for that to climb up. Excessive polling of that page will not be required

Having said that, it’s on all of us to make that happen, so if you can (and have enough trust), chime in! Go, MOD, go!

(*) I am not affiliated in any way with the MOD team or have any inside knowledge, just having gone through that I thought that tis would help to set people’s expectations…

gianfranco · September 10, 2022, 9:01am

You assumed right

Chen_Gershuni · September 11, 2022, 1:28pm

I filled the form during the first reboot attempt and immediately received an e-mail with the investment information for the first reboot attempt. I am yet to receive an e-mail with the updated information for investing in the second reboot attempt. Am I supposed to receive it?