Welcome back — for Part 4 of our series on Crowdfunding, 3D-printer ‘Preneurs and suicidal gaming of the new 3DP/startup/mob-VC “ecosystem.” Here’s a quick recap (with direct links back to previous “Parts” for your ready reference):
In Part 1 of this series, I presented an introductory view of Crowdfunding vis a vis 3D Printer Startups and the dynamism, democratization, distortions and dangers this new and novel mode of bankrolling startups engenders.
In Part 2, I looked into Kickstarter — the favorite engine of this 3D printer-Crowdfunding — as far as I could peer.
In Part 3, I examined the concept of gaming the Crowdfunding system with ploys like the “YowzaPrinter” and charting the “Line of Viability” below which Crowdfunded, 3D-printer startups face serious threats of insolvency.
As a great adherent (unto cheerleading!) of 3DP, I love the fact that crowdfunding has amp’ed up the dynamism and democratization of our already booming segment. One of my bald-faced motives for covering 3DP is the fond hope — justified, I’m convinced, by the accelerating torrent of innovation in this and related fields — that our segment will buttress the renaissance (or the initial launch!) of the Middle Class: in the U.S. and around the world. 3DP will equal jobs…good ones.
Still — with my journo-hat on and as I’ve said more than once in this investigative series — I’m also concerned by the “distortions and dangers this new and novel mode of bankrolling [3DP] startups engenders.”
To keep the spotlight on these downside issues is to help assure that they don’t rend the expanding fabric of our 3D printing ecosystem.
As promised at the end of Part 3, let’s gain further from the hands-on insights of DUG. (This is our acronym for the “Down-Under Gent” — a 3DP entrepreneurial Aussie — who requests anonymity.) You’ll recall that DUG lead a team trying to innovate a new low-cost 3D printer BUT gave up the campaign — after two months of full-time effort.
DUG explained that early on he realized his organization was faced with intense and inexorable competition from kickstarted 3D-printer ‘entrepreneurs’. These “can-you-top-this” players (or, “bottom-this,” actually) were daily dropping the price-floor on which he and his team were trying to build…and rebuild at each new lower-level!
DUG continued with “…I hope maybe in time one of your journalists will dig up the numbers and find how many kickstarter printers have passed their goal, and how many of those are still around 1 year later — respective to how much they actually earned [KS’ing]. I think you’ll find the same thing I found: which is any company that earns less than $500K in the [Crowdfunded] budget 3D printer market is doomed. Only the Micro has the ability to survive and they need to be very careful to not get overwhelmed [in the fulfillment of all their KS ‘sales’ — in timely fashion with quality product].”
Here’s another cogent point of view on this same constellation of Crowdfunding problems. This time from a “Comment” offered up at the end of Part 2 of this report (tip of my journo-hat to “BillD”):
“Every time I see a company trying to produce a 3D printer for $299, I cringe. These companies fail a lot. Their KS pricing should contain the cost of manufacturing plus an extra amount to be put toward finishing development of the product. The manufacturing money should never be used for anything other than manufacturing. They end up taking forever to deliver the printers they’ve
promised and the resulting public outcry on social media rips them apart.”
To help illustrate DUG’s educated contentions, here is his very-informative “Line of Viability” chart. (The X-axis is “Selling Price of Printer” and the Y-axis is “Required Kickstarter Goal.”) Note — as mentioned in Part 3 — DUG feels that Crowdfunded players who fall below this “Line” will become insolvent.
Finally, DUG shared his conclusion with us: “…the reality of low-cost 3D printers…is basically, they all become insolvent shortly after [kickstarting] — unless they meet extremely lofty goals. I honestly think it is dangerous. Countless people are left without printers for months, even years. And, those who do get them, are left with ‘doorstops’ — after a short while —as the manufacturer folds.”
Obviously, DUG is passionate about this issue. As well he might be: the increasing distortions that gaming crowdfunding by low-cost, 3D-printer startups —intentional or as an artifact of overzealous business-neophytes — appears to have prevented DUG’s organization from entering the marketplace at all. DUG — trying to make his case — also employs hyperbole with unsupported statements like “…all become insolvent…”
3DPI — to date — has been unable to conclusively document specific information that would sustain such black-&-white statements about VERY-high proportions of low-cost, 3D-printer startup failures post vrowdfunding. However, we have been able to produce triangulated anecdotal evidence, multiple individual-startup coverage by my fellow 3DPI writers, in-bound reports from in-the-marketplace players (like DUG), Crowdfunder-project comment threads and partial counts where hard data does exist.
Our 3DPI integration of all this information clearly points to distortions — and even probable manipulations — of this ecosystem.
As discussed in earlier parts of this report, Kickstarter is the one organization with the primary-research data that would illuminate much of the “darkness” around the distortions and dangers here. But, as I’ve also stated, KS doesn’t seem to see this kind of service as part of their corporate responsibility. I contend that Kickstarter — for their long-term health and positioning as the crowdfunding innovator — should provide the organized operational knowledge and conclusive resultant facts around the disturbing evolution of this influential segment of the 3DP market.
This kind of leadership — in policing the ecosystem KS has built via the prospective delivery of accurate information — would serve and help protect their “project clients” in the crowdfunding market. This KS leadership would certainly assist in maintaining project-client goodwill among Kickstarter-coalesced funders. They could, in theory, at least see how other comparable projects are progressing…or not. AND, this proactive, knowledge-based service would go a long way toward diffusing the confusion, dismay and anger building among some—abused?—“project-funders” of the most-egregiously acting individual KS “project clients.”
At some point, those who feel abused by a system that Kickstarter ultimately controls may transfer their anger from the KS’ing client — often nearly incommunicado (one of the symptoms of problems!) — to Kickstarter itself. If KS’ own goodwill is damaged by the unfettered or unguided actions of intentionally rogue, or simply incompetent, KS “project clients” — everyone loses. (Just consider the commercial and common-good betterment that the “dynamism and democratization” of Crowdfunding — discussed prior — has afforded us all.)
Come on back for Part 5. In this upcoming part, I will examine specific, crowdfunding, 3D printer-based startups — both questionable and successful. Plus, some additional conclusions about Kickstarter and our 3D printing segment. And, see what lessons we can glean from each…
Please keep this going. This should be the most read article in the entire 3D printing industry. “When the smoke clears” in 3D printing we shall all see who is left in/on the field. A product is not a business.
“A product is not a business” Its so simple, and so true.
Excellent reporting Land, looking forward to part 5. I would also be particularly interested in what happens after a ‘successful’ 3D printer kickstarter campaign, from a developers perspective and the communication or lack of from a backers view. Then how do they survive the chasm after rewards have been shipped and interest turns to both customer and product support. –
Maybe Brook from Printrbot would be willing to share his thoughts on how they made a success of it?
Yes I would love to hear his story.
The problem here is that many of the startups are actually engineers and not businessmen. Engineers are great and quite frankly without them there would indeed be no 3D printers. However running a business and accurately costing a business model is not easy, I know from bitter personal experience. I am often amazed by the number of people I meet that have a business idea that they expect to run on a wafer thin margin.
Bank loans are difficult to obtain for this very reason. I am no supporter of mainstream banking in fact the opposite but crowd funding seems rather too open to naivety on behalf of the investor and even open to downright fraud at the worst end of the scale. Better vetting procedures are badly needed.
Oh boy, I rarely read an article with so many lofty words and acronyms yet so light on content.
To sum up in one sentence: “Extremely cheap 3D printers on Kickstarter fail often”.
Interesting article, the analysis is superficial. It’s true that if the company try to sell 3-D printer for $299 with no other revenue or investment, they have underestimated the real cost of developing and shipping the commercial product and then running a business, and thus profitability is almost impossible.
However, most of the 3-D printer kick starters are hitting a $299 price either as a limited volume “teaser” offer, with higher ongoing retail price, or it is a low entry point with the range of upgrades, Driving up their average sale price. And for the smarter ones, they already have a product and company, with independent investment (or self funded), and they are just using kick starter as a way to generate press coverage and early customers, not as their only revenue stream.