It's been a rough month for everyone attached to Skully, and it appears the end isn't quite in sight. First, founders Mitch and Marcus Weller were kicked out of the company by investors. Then, nearly two week later, Skully announced it would be closing its doors permanently. Now, a lawsuit filed by a former Skully employee alleges misuse of company funds.
For reference, a bit of a timeline:
Skully announces heads up display (HUD) helmet with YouTube video and crowdfunding campaign through Indiegogo.
I interview Skully founders Mitch and Marcus and wear Skully AR-1 prototype for the first (and only) time (indoors only). Skully claimed December 2014 delivery date.
Skully push delivery date back to December of 2015.
Skully becomes most successful Indiegogo wearable campaign in history, meeting and surpassing their $250,000 goal to the tune of $2,449,000.
Customers (1,563 paid for or put down money for an AR-1) start to become uneasy with the lack of information and constantly missed delivery dates. I request information from Mitch Weller to write a formal update, but get no response. Days later, a reader sends me a link to a video update by Skully sent directly to their customers. Skully claim pre-holiday delivery.
Skully piss off the fans they have left with obnoxious Instagram stunt. I again make requests to interview them to catch up so we can clear the air and let people know what's happening. Again, no response (until a buddy started berating them on every one of their Instagram posts saying "let Sean MacDonald review one already!" at which time they responded that they'd reached out....they hadn't.
First AR-1 is delivered as one of a very limited batch.
I reach out again to attempt to see what's happening with the rest of the deliveries and when we can see a final product for review. No response.
First on-bike review is given to a of the Skully AR-1 is published in RideApart puff piece. Any outlet that's been skeptical of Skully continues to be ignored.
TechCrunch reports that founders Mitchell and Marcus (chief of staff/business operations and CEO respectively) have been given the boot by investors. TechCrunch sources cite differences in direction as the cause, as well as cash flow issues. Other reports say the Wellers were trying to sell the company and raise funds through a second series of fundraising attempts simultaneously. COO Martin Fichter takes over. Total funds raised at this time through crowdfunding and fundraising are $14,950,000.
TechCrunch reports that Skully was closing its doors for good. The shutdown leaves their staff of 50 jobless. The TechCrunch report details allegations that the Wellers botched a possible sale of the company, and had been so difficult after their ousting that the new management decided it best not to try to carry on.
Asphalt & Rubber reports that Skully filed for Chapter 7 bankruptcy, and does a masterful job at explaining exactly what that means and just how screwed anyone who paid for one is. I won't pretend to be able to explain it better, Beeler's legal background make this a wonderful walkthrough and it's worth the read if you're into this sort of thing.
Cycle World is sent a copy of a lawsuit on behalf of a woman who worked as a personal assistant of the Wellers, alleging some pretty serious misappropriations of funds.
The complaint, which was lodged through the San Francisco County Superior Court, outlines the former employees role with the company, ways in which she was allegedly treated unfairly, ways that Mitch and Marcus Weller allegedly abused access and control over company funds, and then ways in which the plaintiff attempted to notify others of the Wellers actions and their alleged retaliations. It's important here to note that these are just alleged actions, made by someone with an issue with the company and the Wellers. The sheer number of claims, and the rest of the Wellers actions are useful in that they paint a picture of what's been happening with Skully, but it would be illogical, unintelligent, and unwise to take anything as gospel.
Some of the more interesting allegations include:
- using company funds to pay for personal rent, claimed as corporate housing
- using company funds to pay for home cleaning services, personal groceries, and all meals out
- making an $80,000 payout to former co-founder as reimbursement for travel expenses
- taking a personal trip to Southern California and rented a Lamborghini on the company card
- purchasing an Audi R8 using company funds
- purchasing four motorcycles using company funds, two of which were only for personal use
- purchasing Dodge Viper using company funds
- renting an apartment for $6,200/month for brother as corporate housing, paying $15,000 in moving fees (when only $2,500 was offered to other employees)
- taking several trips to Hawaii using company funds, renting limos, going to strip clubs
When I first met Marcus and Mitchell back in the summer of 2014, I found their product to be lacking but the men to be fairly impressive. They told me how they'd each just sold their cars so they could go halvsies on a Dodge Viper, as it had been a dream since childhood. No one who starts a company like this is broke, they lived in San Francisco (a terrible city to drive much in), and I found it rather charming that these guys seemed to really love motorsports.
The product's biggest strength, as I wrote in my initial review, was that the team behind it was really attempting to look at what was best for the rider (instead of just turning motorcyclists into Iron Man). They spent their research dollars on trying to perfect the optics so the screen was easier and faster to reference, and we spoke at length about what information people needed to see instead of what information they could show. In execution, I found the screen far harder to reference than I thought would be useful. It sits much lower in your field of view than your speedometer is and quite small. In the end, I'd rather just use some tricked out Garmin mounted to my bars instead of an expensive, heavy, hard-to-see screen inside a helmet (though I want to be Iron Man as much as anyone).
But then the red flags came. The Wellers stopped responding to emails or questions as soon as more evidence surfaced that the helmets were likely being built in China. Meanwhile they were asking for some pretty incredible things from RevZilla in terms of becoming an online retailer (my employer at the time). By last summer, trying to get a response from either Mitch or Marcus was like trying to get a girl to notice I was alive in high school, even as I moved on to bigger and better outlets.
When it comes to HUD helmets, the war between "could" and "should" rages on, though there is now room for someone else to become the poster child for the movement. The Nu-Viz guys are also struggling to bring their unit to market, and BMW is still locked away in some underground secret R&D facility somewhere perfecting theirs.
Personally, I'd rather see someone working on something we can attach to the bars of a bike, and more companies focusing on remote controls for helmet bluetooth units, but that's just me. Also, this story stands as a caution about investing via crowdfunding; hopefully the Skully implosion and large sums raised will call attention to the structure of some of these agreements and bring about better protection for individual investors in such a crowdfunding model.
I reached out to Mitch to see if he wanted to comment what's transpired during the last month or so, and the lawsuit. He responded with the following:
"I can't, it violates the protections of the lawsuit. I want to but I'm forbidden. The lawsuit makes allegations only. We plan to vigorously defending ourselves against the allegations made. Because the matter is in litigation, we do not plan on making further comments outside of the lawsuit at this time. We look forward to the truth coming out and our day in court."