StoneAgeGamer and Mnemo Fiasco

Taken directly from the product page on StoneAgeGamers site for the Dreamcast USB-GDROM Controller by Mnemo..

DISCONTINUED...
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Dear Stone Age Gamer Customers,
Unfortunately, we must announce that we will no longer be carrying any product created by the developer known as Mnemo.

After over a year of dealing with Mnemo we have found him to be impossible to do business with. We normally would not attempt to cause any drama, but in this case we feel without explaining our reasons because it may be hard for our customers to understand why we would stop selling a product that seemed to be in such high demand.
We originally reached out to Mnemo to sell his 3DO USB-CDROM Adapter mods. Although we did sell some units, his production was completely erratic so for a while we stopped selling the 3DO adapter.

Eventually we found out Mnemo had finished development on a similar modification for the Dreamcast. We were very excited at this prospect because the Dreamcast is a vastly more popular system. So, we reached out to Mnemo again in late 2014 and made a much harder push for this product.
We were shocked by his wholesale price; it was basically what we thought the MSRP price should be. We suggested that by lowering the price it would allow both of us to sell way more units. He refused. Although we did not agree with his decision, we weren’t going to beat him up on the price.

Using our normal retail mark-up, we began selling the Dreamcast adapter at $219.99. However, it quickly became apparent that his issues with 3DO adapter production carried over to the Dreamcast adapter as well. Production was sporadic and unpredictable.

Over the year of 2015 it was hard for us to get any sustained production from Mnemo. Late Summer 2015 he alerted me that he would be significantly raising the price of each unit by almost $50/ea. because he only had a few hundred Molex connectors left and he could not find any more so this will probably be the last few hundred he sells.

I told him to hold off on the price increase and I would see if I could find some of the connectors. After much searching, I found most places would only sell me them in batches of 17K at about $4/ea. So basically $68K, which was out of the question. Eventually I found a company that brokered an agreement between another company and I. This company had tens of thousands of these connectors for their own production. That company agreed to sell me 1,008 connectors for $4.57 ea. I asked Mnemo if he was still committed and if I should purchase these connectors. He told me to purchase them. So with shipping I paid about $4,700 out of my pocket for the connectors.

After receiving the connectors, he asked me to ship him about 300. So I shipped him 324 (they came in tubes of 18 units/ea.). He said he would just credit me more for them once he received.

With our new found connectors and an agreement to increase production I told him we were going to start taking back orders on the Dreamcast adapter. Eventually we got to 50 back orders and yet units we still very slow to ship. So we halted all back orders to not further dig anymore of a hole.
After his initial shipment of 20 units for the back orders he tells us from this point on he will now be increasing the wholesale price of each unit by $30/ea. Even though he knew we still had another 30 back orders to fill, back orders that were already paid for. There is no way we are going to go back to customers and ask for more money, but this price raise essentially destroyed our profit margin. So, we begged him to at least fill the remaining 30 orders under his original price and we would talk about new price after the rest of the back orders had shipped. He did eventually agree.

We received another 15 units at the original price. However, before sending the last 15 units he e-mailed us saying that he has the 15 units ready. However, he is raising the price, even though he agreed not to until all 50 had shipped. He said if we want them he will give us our credit for the 324 connectors and we would just pay the difference. Yes, you heard me right, he told us he would credit us for the connectors, but then raised the price by $30 per unit and here’s the kicker: he said if we would not buy at that price he would just sell them himself or to someone else. So he essentially exploited our position and forced us to pay more per unit and effectively making our credit for the connectors worthless, not to mention destroying our profit on the 15 reminaing units we already took money for.

Really, hindsight being 20-20 we should have cut off all business relations with him at this point. He obviously had no respect for us or his customers. After the dust settled I said if the new price means we will get much more consistent production then, we would accept it. So we had to raise retail price significantly.
Finally! We started to receive somewhat consistent shipments. From December 2015 to mid-March 2016. We were receiving about 34 units a month.

On March 25th he then dropped another bomb. The next two batches he was going to charge us $12 more per unit and also I would need to pay for his PayPal withdrawal fees. Now I send money to him as a Friend/Family so I pay his PayPal fees. So I am not sure why he is also getting charged to withdraw money, but as far as I am concerned that was not my problem. So no warning, nothing, just raises the price for no apparent reason.

So now I am very unhappy. I explain all the stuff I have done to help him, much of which I never even mention in this letter so far, and I tell him I want a good explanation for why he is charging me more for the next two batches. He replies back ending each one of his responses with “LOL.” So he is essentially laughing in my face and basically down-playing anything I did for him. He explains that a full explanation would take too long, but he basically said he was not going to produce any more units until June 2016, so these are his last 34 units until then. So basically, again he was attempting to exploit more money from me, however this time by apparently creating a false demand by halting production for a few months.
At this point we cut all ties with Mnemo. There were a lot of details which I left out of this letter, but here is some of them:

• He had the audacity to insult my employees in one conversation, telling me to hire better people.
• Never once during our whole correspondence did he ever thank me for anything I did for him. He was arrogant and rude, treated me like I was an idiot.
• He thought our mark-up should only be 10% to 15%, anyone who knows retail know this is ludicrously low margin.
• I offered to help him with branding and logo design and offered to make a logo for free. He thought that was a stupid idea.

Since he did not seem interested in increasing production I actually talked to KRIKzz to see if he would be interested in manufacturing the Dreamcast adapter and just pay Mnemo royalties. Similar to his agreement with Ikari_01 and the SD2SNES. KRIKzz agreed, but Mnemo absolutely refused. I took a big risk by doing this because if Mnemo agreed I would essentially lose my exclusivity over the product, but personally I just wanted the product to exist and for us to be able to sell it, so I was willing to forfeit that for increased production.
Mnemo was having trouble getting PCBs made, so I actually asked dbElectronics where he got his PCBs made to help Mnemo. He told me, which I passed on to Mnemo and I believe he ended up using this company to produce his PCBs. No gratitude ever given.
And the list goes on...
His business plan (or lack thereof) appeared to be not using the money he made to buy equipment and/or hire employees to increase production, but was to continue to create a demand with low production and just raise the price to milk the market for as much money as he could with this false demand. We sent him well over $30K by the way, would have been way more if he actually produced more.

I have experience with this kind of business arrangement. KRIKzz and dbElectronics for example. Both of these guys have been nothing but excellent to deal with. I would even consider KRIKzz a friend at this point and I hope to soon be meeting him in person. Even dbElectronics had to raise his price at one time, but he wrote me an e-mail explaining why, it was completely understandable and we offered no objection to it.

I understand that to some people this all may seem like petty drama. However, we tried and tried to work with Mnemo and we could have continued to just go with the flow and keep raising our prices to compensate for his price increases, but we felt we had to draw the line. We personally feel the guy was exploiting us and essentially using us like his personal bank account and we had enough. We will never do business with Mnemo again.
We are still sitting on over 600 Molex connectors for the Dreamcast. So if some other developer out there is working on a Dreamcast adapter we would love to do business with you, please contact us.


We will continue to look for new products to offer the community and we would like to thank our customers for all their support.

Sincerely,
Ryan Cross
President
Stone Age Gamer LLC

 

Legally binding is only legally binding if you are going to take someone to court. Isn't Mnemo based in like Russia or somewhere like that?

Good luck taking him to court.

 

Seems like Mnemo had a chance to make some good money - and blew it in style.

 

I'm sorry, but in the words of MNEMO, LOL!!!! A legal contract with a guy in Belarus or Kazakhstan or wherever he is? Completely worthless for Stone Age. MNEMO has been erratic from day one. His pricing is complete lunacy.

 

The guys at StoneAge seem pretty passionate about the products they sell. I bought all of my KRIKzz stuff through them and had a great experience.

That being said, it looks like they chased the allure of having good availability of this product. Bad business decisions? Sure...but I still respect them for fighting this hard for "us" (the general retro hardware community). I also think it takes balls to come out and make this story public, so props to them for that as well.

Looks like Mnemo got offered the ideal situation and turned it down. KRIKzz has his manufacturing down solid and would certainly be a good steward of the design. If a designer isn't interested in the sales/manufacturing side and still wants to make a few bucks, why wouldn't you let your most successful peer take the design and send you money for it? If you're scared that this will create unlicensed clones, you shouldn't be. There's even more incentive to clone the device if demand is high and availability is poor.

 

well if thats the case, I'm sure you could pay someone to knock on his door an ask politely for your money back

 

Is there a TL;DR version of this?

 

Sadly, there are people who have the technical know-how (or whatever field of expertise) to come up with a pretty good product, but lack any real knowledge of business when it comes down to it - particularly supply and demand, scaling operations, mass manufacture, licensing, (international) wholesale and the like. Even worse, these people sometimes are on an egocentric power trip, having to remain in full control and do things the only way they know how. Consequently, they won't meet demand and won't be able to keep prices down.

Unfortunately, these are cases when you just have to say that you tried your best to offer advice and they'll have to learn from their own mistakes. Yes, StoneAgeGamer should have done things differently, as a businessman. It's commendable to have faith in someone and want to see their product on the market - in fact, a retailer should have confidence in the products they sell, even be excited by them. At the end of the day, though, a retailer needs to remember they're running a business. Be excited by the product, but remember that your ultimate goal is to profit from it. If the retailer REALLY only cared about a great product reaching as many people as possible, they wouldn't quibble about low profit margins. They are there to make as much profit as possible.

Where someone's struggling to meet demand, certainly the retailer should tell them that they need to scale up. If they refuse, they should tell them that they're sorry, their product isn't right for them - they deal in volume. If the manufacturer then goes on to talk about an increase in costs, they should definitely walk away. If there is that much demand for them, the manufacturer should be looking at how to increase assembly whilst decreasing costs - i.e. working in larger volume. If they're not doing that (and if they only deal in PayPal), I'd be worried that it's just a man in a garage and he's not actually registered as a business (or probably declaring this to the tax man). Under no circumstances should a retailer be offering to purchase stock for the manufacturer! Inform them where they can get the parts. If they really have that many customers, they could get a business loan if they need funds.

Clearly, this guy doesn't have a head for business at all. His scoffing properly marketing the product and thinking about artwork illustrates this. However, Ryan sounds like he's being too nice a guy and not leaving his business cap on, which is a terrible mistake. Yes, he should have pulled out far earlier. He shouldn't be offering free design work - it's an admirable gesture, but the attitude just goes to show Mnemo wasn't a person with whom you'd want a business relationship.

 

I'm well aware courts exist in Russia. But I doubt its going to cost you anywhere near 50 Euros. We have "starting from 50 gbp" too, but it very much depends on the value and doesn't mean anything, the amount it starts at is never the total cost.

Also, Russian legal system isn't the same as the usa or even the UK. Just googling a Russian website isn't going to get you very far. Here is some difference in breach of contract
http://uk.practicallaw.com/6-504-1460

Basically, you wouldn't be getting much. No loss of profits or anything like that. you will basically get back your money paid to him.... Doesn't seem like much to deter Mnemo. And it would cost money to get just your original money back (which doesn't seem to be the major issue, it's supplying something not that Mnemo ran off with his money).

So, even if he had gone with a contract (and actually got him to sign, which I doubt as he is still selling them direct and seems to be the whole cause of this) its not the same stick to hit him with that it would be the in USA.

It sounds like he was in the situation of not stocking or doing what he did. As said above, stone age gamer seems passionate about stocking this type of stuff and really didn't have much choice if he wanted to sell it. His choice probably should have been not to deal with him, not try and get a contract that doesn't do much to protect him anyway.

It's easy to sit there and say he should of have gotten a piece of paper signed, but not all countries are the USA.

In short, I'm not a lawyer. You are certainly not a lawyer, especially a Russian one. Let's leave law advice to the lawyers. We just have to acknowledge other countries have different rules, rather than just assuming everywhere is like the USA.

 

I actually have a project that requires that connector and intend to talk with him. But if he wants rid of them, will need to be cheaper than what he paid. I can get them for half that price with 2 seconds of googling (and probably a lot cheaper with some effort) .... I'm not sure why it's implied they are hard to get.

http://www2.mouser.com/Search/m_ProductDetail.aspx?Molex/52602-0579/&qs=/ha2pyFaduhK3sujmwefsx4eSbnhXOyqwIDYgugho8s=

But yeah, fronting the money to buy the connectors was the biggest mistake imo.

 

I'm not saying its right, but If I were stiffed by someone being a jerk, I would probably do what all Chinese do best... Just reverse the product, get someone in China or KRIKzz to knock them out cheaper, and laugh in Mnemo's face.

 

When I was looking to purchase them I could not find them. Trust me I looked. I even looked at Mouser, since I buy other components from them. Many sites said they had smaller amounts, but when I called to get a quote every single one said I must order the minimum of 17k units. Its good to see that there are possibly some out there now, but at the time I was absolutely shocked how hard they were to come by. Mnemo also tried (not sure how hard) and he could not find them in smaller amounts either. He got lucky once early on and found like 500 or so, but once those ran low that's when he wanted to jack the price up even higher.

 

I've bought a few over the years (built g1 ata when ozone first made it, still have one of his test boards here) and always been able to buy them easy enough. You can also get samples from molex readily.

I do source a lot of parts from China and been doing it awhile. If you get stuck with something like that in future, you should drop me a line.

 

Well that's good to know, I don't do a lot of part's sourcing so I will admit I am pretty inexperienced when it comes to that. However anytime I needed a part I could always find it, until this damn part.

Also, just to be clear I never posted that letter as "please feel sorry for me." I knew the risks of getting involved and I even looked past obvious red flags, which pointed out in the letter. I should have pulled out at the first sign of trouble, but I was (somewhat) blinded by the potential (aka possible sales figures) of the product. Its a lesson learned by me and hopefully any other businesses that reads the letter. Sometimes you got to take risks in business, sometimes they pay off and sometimes they don't.

Normally I wouldn't have even posted such a letter. Its not the first business deal I have had go south. However the way this guy conducted himself and the way he treated people, I couldn't just let it go. Probably not the most professional way of handling it, but sometimes business does become personal, no matter what people try to tell you. It wasn't just me either, since posting the letter there have been others that have e-mailed us saying that they had terrible experiences with the guy.

 

I haven't been there or bought anything (though it seems I need to, they're only about an hour away), but I haven't really heard anything bad about them.
My guess would be Mnemo wanted all the money for the units instead of just some of the money (I'd assume he'd get some license out of that deal for making the units originally). Also, if someone can hook up the guy who made GD-EMUs so he can make them full time, that would be awesome.

Mnemo developed a Dreamcast USB GD-Rom controller (not 100% sure what it is, since I just heard about its existence today) and Stone Age Gamer became one of, if not the only, reseller of it. He then proceeded to make the supply in a less than timely manner. He then says he's going to raise the already high price by $50 per unit, and that he can't find any Molex connectors. Stone Age Gamer eventually finds a seller willing to sell them a thousand of the connectors. That transaction happens. Mnemo only wants 300 of them, so they send him those and he agrees to credit them for the ones he received. They then take orders for 50 units, he gives them 30 and wants to raise the price again. They get 15 at the original price, but he wants more for the rest. Then, after a little while smooth, he starts raising the prices again, by which time SAG cuts all ties with him because he's unprofessional and kind of a dick.
That's a relatively cut down description that does leave a lot out.