Quoted from flynnibus:Sure, but the customers also shouldn't be irrational and upset when they learn the company spent product revenue on... the company's expenses.
This is why every company starts with SEED money - you can't startup a company with just sales revenue on your first product. The goal is to start generating money to show promise (and get more investment) or get cash neutral before the seed money runs out... John didn't do either.
No one has discussed how much seed money John started out with, or other revenue sources and instead assumed the only money in the pot was pre-order dollars. I'm sure the preorder was the dominate portion... but I doubt he started with 0 dollars before taking MG sales. If that's the case... a lot of the blame does go to the customers for taking such great risks. Why throw 5 digit numbers at a company with zero capital?
When I started my business 23 years ago, my partner and I used our savings accounts to get started.
We did not take a salary.
A year later, that money ran out so we both took line's of credit on our homes to the tune of $250K.
We did not take a salary.
Another year went by and we were out of money again, but the business showed real promise so we borrowed another $500K.
We did not take a salary.
The fourth year we started making a profit and began to pay the bank back.
We still did not take a salary.
In year 6, we finished paying the bank the $750K plus interest and made a small profit.
Only then did we take a small salary.
How did I live for almost six years without income? I ate Ramen noodles and mac and cheese. We did not go on a single vacation. We lived on the money my wife earned as a dental assistant. We were poor, but I was motivated.
What happened? We were motivated because we put our entire life on the line. We HAD TO MAKE IT WORK. We had no choice. We really did work 7 days a week. I risked my home, my kids college savings, my retirement, etc... I went ALL IN. I still arrive at the office every single morning by 7AM and often work till 9PM (14 hour days sound familiar?).
The problem is that John never had to go ALL IN. He didn't even put the tip in. If he did, his sole focus would have been on the BOM, making games, and getting them out the door SO HE COULD EVENTUALLY MAKE A PROFIT and get paid. If he had taken a $250K line of credit on his home, risked his kid's college fund, and been eating Ramen Noodles instead of Starbucks, we would all have games in our homes. The model certainly could have worked. Look at Ben and Charlie.
I have ZERO respect left for this man. He justified his salary because he was doing the job of 10 men. Listen to his interview again. "It took 3 or 4 guys just to do the cabling." He probably feels that people still owe him all of the remaining money on these games, not for the actual games, but for all of his dedication and hard work. Nobody ever owed me anything in my life. I EARNED every penny by generating a profit.
HERE IS MY OFFER TO ONE PINSIDER:
If you were burned by John, and you cannot afford to hire Zane Smith because the conditions in your life have changed, please send me an email with your purchase contract and proof of payments attached, and I will send $500 to Zane Smith on your behalf. You will be part of the lawsuit and will maximize your position to try to get something back.
If times have really gotten tough (because life happens and much can change in 4 years) and you don't want to go through Zane, send me all of your info, contracts, payments, etc... and I will send the $500 to you personally instead. It is your choice, but again, I can only do this for one person at this time.
Whoever I help, I will keep your information private. I will not share your information on this forum or anywhere else in my life. You have my word.
My contact info:
Jim Tracy
[email protected]