How One Stupid Mistake And $35,000 From Kickstarter Made An Average Guy Bankrupt

seth quest hanfree kickstarterSeth Quest, the visionary behind Hanfree on Kickstarter

Photo: Kickstarter

Seth Quest had never founded a company. He was just a designer with a good idea for an elegant iPad stand called Hanfree.He and his business partner, Juan Cespedes, created a Kickstarter page and raised more than three times their goal: $35,004 from 440 backers.

But since Quest had never manufactured a product before, nor was he an entrepreneur, he didn’t have a working prototype. He also didn’t set up a business entity, so the liabilities of his “business” were all on him, and his bank account.

When five months came and went without a shipped product, backers began to get frustrated. They left more than 600 comments on Quest’s Kickstarter page looking for updates.

For one man named Neil Singh, the experience became too much. Before backing Quest, Singh had never heard of Kickstarter. He assumed it was a typical eCommerce site where products were already made, and shipping would be no issue.

“To me, it looked like a cool thing you could buy,” Singh tells Inc. “If you give me $70, I’ll send you one of them.’ I didn’t do any due diligence. I didn’t think I had to. I’m not investing. I’m not doing the same sort of things a potential shareholder would do. I’m just buying a product.”

On November 28, Quest admitted defeat. There were too many internal conflicts and engineering problems to bring Hanfree to life. Quest notified all of the backers, Singh included, that they would not be receiving the iPad stand, and their money would be returned to them.

Singh wasn’t satisfied. He sued Quest and Cespedes, although the suit against Cespedes was eventually dropped.

“Seth just stalled, and stalled, and stalled,” Singh explained to Inc. “For me, this is why I became a lawyer. I guess I’m more of an idealist than anything else. It just ticked me off.”

The lawsuit made Quest bankrupt. He spent last year in Brooklyn, dealing with lawsuit-induced anxiety and trying to find part-time work, which he says was difficult given his tainted reputation from Hanfree. Now he’s in Costa Rica figuring out what to do next.

“When you fail on Kickstarter, it’s a very public failure,” Quest tells Inc. “It definitely derailed my career substantially. Your backers can give you massive support, but they can also tear you down if you fail.”

Kickstarter, of course, took no hit. It’s technically not to blame if a product fails to deliver or if someone isn’t qualified to create a product.

For Quest, it was a very tough lesson to learn. But Singh isn’t sympathetic.

“I’m convinced this was more stupidity than it was fraud,” Singh says. “He just didn’t think this through.”

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