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Martin Jetpack - IToldYaSo

24 May 2019

It will come as no surprise to regular readers of this column that the Martin Jetpack has finally crashed and burned - at least metaphorically.

Media reports indicate that the company has run out of money, been unable to secure any realistic sales and has shut up shop.

I certainly hope that business lecturers are going to showcase this venture as a classic example of how to turn a hype into profit -- at least for the "inventor" and the early funders. Those lecturers and historians could probably find no better example of the typical life cycle of such a business... right from the "struggling inventor in his garage" genesis, through to the "company floats, is bought out and crashes" end-game.

I documented the various stages of this slow-motion train wreck right from the start, with my observations and predictions being right on the money. What a shame that so few people actually listen because anyone who's had their fingers burnt by this con-job will now be going back to realestate and swearing off technology investments.

It's the same old story -- people blame technology as a "risky investment" when the real problem is a failure by investors to perform adequate due diligence and instead just get sucked in by the media hype surrounding a company or product.

The really sad thing is that I've seen this happen again and again here in New Zealand, to the cost of naive investors and the tech sector as a whole.

Those who've been members of the Aardvark community for decades will recall my calling-out Indranet and their "intelligent mesh network" which never was. This company was perhaps another perfect example of the type of tech startup that was never going to amount to anything, yet sucked up millions of investor capital.

My track record is actually pretty good in spotting these losers and I hope that at least one or two people have saved themselves a fist-full of cash by heeding my warnings when it comes to stuff that is clearly doomed to failure but has a fantastic "sizzle factor", such that the media sings its praises at every turn.

Sadly, as long as the immortal words of PT Barnum continue to ring true, there will always be another crappy idea that unscrupulous people will latch onto and promote -- not as a way of actually turning that idea into a reality but as a way of roping in others a little further down the track to buy the early shareholdings they bought for a song, because that's how these things work.

I'll call these people "venture capitalists" but that's not really what they are. They're folk with a bit of money to burn who grab a venture with "sizzle points", pitch it to the media as "the next big thing", throw a little funding into it and keep feeding press from their hype machine.

"Revolutionary technology","big sales pending", "world-leading"... all these things are rolled out in an endless stream of press releases, convincing the public (and other unwary investors) that the product is going to be huge. Then they play on the patriotic aspect - "Another Kiwi success story"... bla bla bla.

It doesn't matter that critical milestones in development or delivery are missed -- because there are (people are told) much bigger and better things about to happen for the product in question.

At a certain point, these "venture capitalists" decide that the hype has peaked and they've seen that there are huge (often insurmountable) problems in fulfilling the claims and promises made -- so they prepare to float the company and allow the public to buy shares.

At this point, some "recognised" figurehead is hired to a key role. Their job is not to get things back on track or get the product to market -- their role is simply to add some credibility to the company and its shares.

A float is announced and people are effectively told that this is "a once in a life-time opportunity" to get in at the ground floor and buy a share of this fantastic technology". It is at this point the whole thing really starts to become a scam -- in my opinion. The existing shareholders (those "venture capitalists") know full-well that the product and the company created to make it are doomed. Things are so far behind and the promises made are never going to be honoured but they continue the charade and pitch it to the huge sea of gullible investors who think they're going to make a fortune.

The big tragedy here in NZ is that far too often, those investors might be mum-and-dad types who might have sold a rental property and are looking to get a good return on the money they've just deposited in the bank. They're sucked in by all the media hype, the chance to support a New Zealand company and the picture of imminent success that is being painted for the company.

The shares are floated -- and a while later the VCs divest themselves of their holdings, at a huge profit, then everything turns to custard.

The product is never finished sufficiently to become marketable so there are no revenues.

Funding has now ceased because all the shares have been sold and questions are being asked about missed milestones, unfulfilled promises and unacceptable delays.

Key staff start bailing because they have insider knowledge about the dire situation the company faces.

Then the liquidators or receivers are called in.

Lather, rinse repeat.

The Martin Jetpack is just one of many stories that have played out this way.

I'll keep an eye out for the next one and hopefully save some people the shirt off their backs by reminding them of the great Kiwi jetpack crash.

Here's a little look back at just some of my previous columns on the MJP:

I did write more but can't be bothered looking... time for a comprehensive Aarvark index me thinks!

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