Part 1 of this series presented an introductory overview of crowd funding vis a vis 3D printer startups and the dynamism, democratization, distortions and dangers that this new and novel mode of bankrolling startups engenders. Part 2 looked into Brooklyn-based Kickstarter — the engine of much of this 3D printer activity — as far as we could peer. However, this gleaming KS driver is fairly tightly locked down — like a highly polished, air-scooped hood on the engine compartment of a competitive “muscle-car.” KS is pretty much a black box that becomes a black hole — from a public information point-of-view. Numbers — from 100,000 plus entrepreneurial projects attempting to achieve a “kickstart” — have poured into its rigorously, resolutely, religiously online-system over its five-year history. Yet, Kickstarter doesn’t, won’t or can’t provide statistics on some of the most important, interesting and informative number-based analyses for which it has the raw figures — if nothing else.
This is Part 3 in our series covering some of the important 3D printing industry questions that surround desktop printers and the crowd-funding phenomenon. Within the Additive Manufacturing realm, desktop 3D printers have made the most impact on the segment and the public in the last three years. Thus, we seek to take a closer look at some of the distortions and dangers that have crept into the increasingly popular crowdfunding route undertaken to bring some of these consumer/prosumer 3D printers to market.
OK! From our own research and publically available stats, we know that to date about 200 companies have involved themselves in making desktop 3D printers. That is — in fact — around the same number of automobile companies that launched car brands in the U.S. in the early decades of the 20th Century.
Also instructive — for those of you hoping that the hot-coals of recent history-making will illuminate our 3D printing future — is the life-cycle of the “Auto Boom.” THE disruptor of that age counted only a handful of car makers in the late 1890s. By 1910, more than 200 U.S. auto manufacturers were producing cars —mostly in the MidWest. By the 1940s, those 200 were consolidated back down to a surviving eight OEMs. Further, the eight had become an industrial-segment cluster centered geographically in and around Detroit.
Now, what would have happened if Henry Ford could have “crowdfunded” his car-building innovations in the late 1890s? Would Henry Ford have dominated industrial-scale auto manufacturing sooner and out-competed, bought-up and/or crushed his challengers in consolidating car-making more quickly and effectively?
A lot of his competitors had gasoline-powered runabouts like his, but it was Ford’s innovated mechanized-production process that buttressed his industry-changing successes.
(Want to REALLY contemplate disrupting our current auto-making paradigms: think 3D printing the entire car vis a vis a Local Motors…!!)
So, are we at the apogee of desktop 3D printer manufacturer, crowdfunded startup-launches? Or, is something else going on…?? If I were MakerBot or Ultimaker, would I be concerned that yet more well-funded experiments to undercut my marketplace position might succeed — lighter, faster, cheaper, smaller and better? This is what I call Moore’s Corollary: his Law applied to atoms — hardware-based products — with similar time-frames and outcomes…! Or, would I be even MORE concerned “something else [IS] going on” AND, worse, I don’t know what it is…!!
At some slouching-towards-us date, it’s likely that the thrice-bit public — who currently approves of and willingly (mostly) participates in crowdfunding new 3D printers (particularly through KS) — will demand closer regulation of the process. Either by the individual and/or collective, proactive and self-interested leaders of the industry (Kickstarter, IndieGoGo et al); and/or by government intervention — via existing agency-imposed restrictions or the legal constraints of new legislation.
This current oversight will be addressed because the calls for redress of abuses by crowdfunded start-up entrepreneurs will become a dinning chorus. Actively gaming the system — while nearly impossible to prove conclusively — certainly seems to be a mode more and more suggested by circumstantial evidence.
Now, if you’re in the business of business, your tools of product sales persuasion are typically functionality, design, quality, durability, positioning, service, marketing, delivery and price.
The last of these — price — is most often the blunt-edge tool of unskilled entrepreneurs. Price-driven marketing and sales strategies always have a lower-bound limit. Especially when aligned with the first of our sales “tools” —functionality. In practical application, you can view Price vis a vis Functionality as a direct proportion. As Price goes down so must Functionality. If Price is raised — for strategic or tactical reasons — then Functionality can be raised, too.
One of the clues to the apparent “gaming” of crowdfunding systems is the advent of the hyper-low-end “YowzaPrinter!” (The Urban Dictionary defines “yowza” — a popular Brooklynism — as a “Euphemism for any vulgar expression of surprise or sudden pleasure. Usually used in a positive sense.”)
My 3D YowzaPrinter presents an impossible combination of features — especially those directly proportional Price and Functionality tools of sales persuasion. (The “sale” in this point is the crowdfunding buy-in by a given participant-funder-premium buyer of the printer in question.)
Above all else, the YowzaPrinter usually sports a compelling-unto-outrageous price point. One that is guaranteed to provoke such “headline excitement” that the PR-leverage promises “viral-ity!” Another term for this phenomenon — in retail — is “loss-leading”: selling at below all-up cost to generate other profit-making behavior among buyers.
Now, one of the pleasures of writing for our very knowledgeable audience of 3DP hands-on enthusiasts and in-the-marketplace experts is the feedback we get on matters of high interest. This being one…
3DPI has heard from a 3DP entrepreneur in Australia with a direct perspective on “loss-leading” in the 3D-printer crowdfunding space. This Down-Under Gent (DUG) — professionally identifying himself to us while requesting to remain anonymous publicly in our “pages” — provides us with some experience-educated and insightful comments that corroborated our point of view in this series of posts. Here is one of DUG’s incisive introductory remarks:
“…I spent 2 months full-time developing a low-cost 3D printer with a team of 3 other people and I came to the realisation that all other ‘low cost’ printers are loss-leading, even on their ‘normal’ price! The kickstarter earlybird specials are usually far below cost. It is clear this strategy is to get market penetration but they all destroy themselves by marking up significantly after the campaign to recoup losses, therefore losing their major selling point and the reason anyone bought them.”
DUG went so far as to encapsulate his experience in a chart that presented a “Line of Viability” for crowdfunding 3D printer startups. He persuasively argued that below this line was insolvency.
Please let me suggest that you return for Part 4 of this series. In it, I’ll present DUG’s chart “argument” — and other compelling perspectives on the viability (or otherwise) of YowzaPrinters!
