Skully
The hardware start-up that sank before it could deliver its augmented-reality motorcycle helmet
- Founded
- 2013
- Closed
- 2016
- Lifespan
- 3 years
- Total funding
- $11 million
- Country
- United States
- Sector
- Hardware
- Founders
- Marcus Weller, Mitch Weller
- Investors
- Intel Capital
- At its peak
- An Indiegogo campaign that raised about $2.5 million and more than 3,000 pre-orders (2014-2016)
- Cause of closure
- Product problems
What did it do?
Skully was a hardware start-up developing the AR-1, a voice-controlled, Android-based smart motorcycle helmet that projected navigation information and a rear-camera feed into the rider's field of view. The company planned to move into production by selling the helmet on pre-order for about $1,500.
Why did it shut down?
The company began taking pre-orders in August 2014, but production was postponed again and again; by July 2016, internal estimates put the number of helmets delivered at between 20 and 100. While the search for new investment was under way, founder Marcus Weller was removed as CEO on 12 July 2016; according to TechCrunch, he had fallen out with investors over an acquisition offer. A few weeks later the board shut the company, more than 50 employees were laid off, and in August 2016 Skully filed for liquidation under Chapter 7. The manufacturer Flextronics sued over more than $1 million in unpaid inventory costs. The new owners who bought the assets in 2017 could not deliver the helmet either, and operations quietly came to an end in 2020.
The story
When Marcus Weller founded Skully with his brother Mitch Weller in 2013, the aim was to let motorcyclists see directions and the traffic behind them without taking their eyes off the road. The helmet, called the AR-1, projected navigation information and the rear camera's feed into the rider's field of view through a small display, ran on Android and could be controlled by voice.
The idea quickly drew a great deal of interest. The company began taking pre-orders in August 2014; its Indiegogo campaign was the fastest ever to reach $1.1 million and raised about $2.5 million in total. Then came $11 million of venture capital from investors including Intel Capital. More than 3,000 pre-orders for the helmet piled up.
The real challenge was making the helmet. Deliveries were postponed again and again, and by internal estimates only between 20 and 100 helmets had reached customers by July 2016. While the search for new funding was under way, Weller was removed from his post on 12 July 2016; according to TechCrunch, he had fallen out with investors over an acquisition offer. A few weeks later the board shut the company, more than 50 employees lost their jobs, and in August Skully filed for liquidation under Chapter 7.
After the closure, a former executive assistant filed a lawsuit alleging that the founders had used company money for personal spending such as luxury cars. Marcus Weller denied the allegations, and the suit was later withdrawn. The manufacturer Flextronics also went to court over more than $1 million it was owed. The thousands of backers waiting for the helmet, meanwhile, could not get their money back.
The story also had a second act. Ivan and Rafael Contreras, who bought the assets in 2017, tried to revive the brand as Atlanta-based Skully Technologies and showed a new prototype at CES 2018. But neither the old backers nor new customers ever managed to get a helmet; the company's website went dark in February 2020.
Lessons for founders
- In hardware, pre-order money is not production capacity; base your delivery schedule on a mass-production plan verified with your manufacturer.
- When crowdfunding and venture capital are flowing in at the same time, put spending rules and oversight in writing; claims of personal spending, even if unproven, quickly destroy investor confidence.
- If founder and investors disagree on sale or funding strategy, set up a governance mechanism that resolves it before the cash runs out.
Sources
- Skully (helmet) (Wikipedia)
- AR helmet startup Skully goes down in flames (TechCrunch, 2016-07-26)
- Bankruptcy imminent for failed Indiegogo startup Skully (CNN Money, 2016-08-11)
- High-Tech Helmet Manufacturer Skully Has a New Owner (The Drive)
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