Enough Is Enough Already
The personal 3D printing industry is in the throes of a self-destructive trend that needs to be addressed. Fueled by an overabundance of competition and easily attained headlines such as, "New Printer Blows Up On Kickstarter," crowdfunding has become viral marketing roulette, a game of chance that utterly blurs the definition of success.
The speed and extent to which a campaign's goal is surpassed has started taking precedence over a viable business venture emerging from the process. A suicidal price war has ensued, but unlike most price wars, this one does not necessarily benefit the consumer.
Those who launch on a crowdfunding site face a dilemma. With so many similar machines constantly being funded, how does one stand apart? The solution increasingly seems to be pricing the product as if it were only about selling units and not about funding a startup. The resulting discount entices throngs of new users who were formerly sitting on the fence, waiting for a machine that fits within their budget. Many of these buyers aren't acutely aware of just how different Kickstarter is from Amazon and when they learn, new and creative ways to voice displeasure on the internet are invented.
Undoubtedly, some who crowdfund a project are cognizant of the significant percentage of indirect costs associated with running a manufacturing business. However, these costs are often being ignored simply because others are ignoring them. And there are so many others – five printers currently on Kickstarter and four currently on Indiegogo.
Printers (particularly FDM printers) priced in a range that could adequately cover direct and indirect expenses, get delivered in a timely manner and result in a sustainable company are frequently being forsaken by a fresh consumer base that thinks falsely deflated prices are the new norm, and that those selling at such prices are actually making good money.
Even the reigning crowdfunding champion, this year's aesthetically pleasing M3D Micro, with over 10,900 units sold, is not enjoying the economies of scale historically seen in 2D printer manufacturing. 3.4 million dollars is a lot of money, but it only averages out to $311.48 per printer. For comparison, production runs of 2D ink and laser printers were much larger before prices fell below $500 and that's when the toner/ink-reliant profit model snapped into place. The Micro 3D printer does not require proprietary filament, so M3D's profit needs to come solely from the printers. I believe they will fulfill all the pledges, but can prices remain that low after the crowdfunded printers are delivered? If they must raise prices for the retail launch, how will they feel about competing with future crowdfunded printers that will inevitably undercut the crowdfunding price example they set?
Underpriced crowdfunding is not new. In January 2012, the Filabot filament maker was successfully funded, but went on to become something of a nightmare for mechanical engineering student Tyler McNaney. His costs ended up being higher than estimated. He did what he had to do to personally cover the project and Filabot is alive and well, but the price is now roughly twice what it was during the Kickstarter campaign. McNaney had all he could take of working to lose money and who can blame him?
The difference between McNaney's story and what we are seeing now is that the Filabot's pricing was an accident. Many of today's crowdfunded projects are intentionally underpriced, because campaign coordinators feel they don't have a choice.
Loss leader creativity recently reached new heights with the MOTA. The printer was comically cheap for the first 50 backers at $99. The next 160 backers were more than willing to pay $299 – a price similar to the aforementioned M3D Micro. The next group of backers were required to pay $499. As someone who has studied hundreds of 3D printers, I can safely say $499 was still a great price. Sales started to slow, but it looked like the $100,000 goal was a certainty. That is, until the campaign was suddenly cancelled and a letter including the following text was posted by MOTA co-founder Kevin Faro on the Kickstarter page.
"I wish there were a way to offer truly high-quality, highly precise 3D printers at incredibly low prices. That would bring about the mass-market adoption that this technology so needs. The reality is, like any technology, it is expensive to develop and manufacture. At MOTA, our vision is to always bring you the best of what technology offers at the absolute minimum price possible. We don't want to promise something that cannot be delivered, or whose quality is anywhere below outstanding, and the fact of the matter is that delivering this high standard of quality would cost a premium."
If the team knew delivering a high standard of quality costs a premium, why weren't they charging more in the first place? Because pricing for the M3D Micro and the New Matter MOD-t, both of which were funded within the previous two months, changed everything. Going back further, it's hard to imagine the MOD-t and Micro weren't influenced by the Pirate3D Buccaneer – the first stunningly inexpensive 3D printer.
The truth is that the MOTA team did have a plan to make money, but as is sometimes the case with Kickstarter projects, a vehement crusade took place on the campaign's comments page to drive that plan into a ditch. The MOTA was going to have a proprietary filament cartridge like the 3D Systems Cube and XYZ Da Vinci 1.0 – a proven method of making money on materials instead of the machine itself. Unfortunately, the campaign fell victim to something I'll never understand. If you are going to allow people to jump into your campaign's comments section and demand that you change your business model, device's features or intended consumers, shouldn't you charge them more than one dollar to do it? This is a negative example of the crowdfunding-as-marketing gamble and we've seen it before with other perfectly good products.
However, it was the conceivably negative outcome of the crowdfunding-as-venture-capital gamble that I believe worried Kevin and Michael Faro the most. They only needed to sell 72 more printers at the $499 price in order to reach their goal. It looked like they were going to do it, but it didn't look like they were going to sell many times their goal like Pirate3D, M3D and New Matter had done. This meant terrible economies of scale on a printer priced to make money off the materials. In order for that price to work with a printer that employed generic filament per the comments crusade, they may have needed to sell a thousand more printers, or get stuck losing money.
Frankly, I applaud MOTA for bailing on the project instead of succumbing to pressure and doing something that might have killed them before they got started. Some of the backers expressed similar sentiments. Of course, the internet being what it is, others took it upon themselves to pontificate reddit-style.
J Morley wrote, "if wishes were horses. You wish ????? I wish people would deliver on their promises! MOTA = LOSERS." He later continued, "do you really have a company? Is there really a product? What's your next project? Potato salad?"
Is Crowdfunding Really Necessary?
In 2011 and 2012, the Printrbot, B9Creator and Formlabs' Form 1 clearly inspired a generation of entrepreneurs, but would any of those campaigns have succeeded today? Even the Printrbot, a brand now synonymous with affordable 3D printers, was backed at an average pledge of $567.89 and most of that was for unassembled kits, some of it for just parts of kits. Fully assembled pricing started at $750. Has manufacturing changed so much in the last two and a half years that fully assembled machines should now be selling on Kickstarter for closer to $300?
Luckily, the Printrbot had enough margin built into the price that Brook Drumm was able to birth a company that stands as one of the most popular personal 3D printing manufacturers on the planet. One has to wonder, would this have been possible without Kickstarter? I asked Drumm that question.
"It wouldn't exist as such a fast growing company. But I'm as tenacious, obsessed and stubborn without seed money. We wouldn't have sold as many as we have I don't think. And I would have warmed to the idea of venture capital sooner. So maybe we would be bigger having secured bigger funding sooner," said Drumm.
In my opinion, Printrbot was going to succeed with or without Kickstarter. The secret to Printrbot's success is Drumm, not how his startup was funded. He isn't just a 3D printer designer, he is a marketer and businessman. For those of us in the media, getting Brook Drumm to answer an email is easier than getting out of bed in the morning. He goes out of his way to maintain ties with the maker community, both local and online. He regularly exhibits, attends or speaks at Maker Faires and 3D printing trade shows, where he is one of the friendliest people you will ever meet. He also understands branding. He left the "e" out of Printrbot because he knew the unique spelling would make him easier to find on the internet. He analyzes his decisions and reacts rapidly to mistakes. He boasts of running his company lean and says he doesn't know any other way to do it.
SeeMeCNC successfully crowdfunded two 3D printers in 2012. The campaigns didn't generate titanic numbers like the Printrbot, but the company has gone on to great success using many of the same methods as Drumm. The majority of SeeMeCNC's printer parts are manufactured in their own factory. It was already an operational machine shop business, so adding 3D printers to the mix wasn't much of a stretch. John Olafson and Steve Wygant are easy for the media to reach and they are active online and in their local community. They exhibit, attend and speak at 3D printing-related events and they are promoting a 3D printing education curriculum.
Eva and Erick Wolf never crowdfunded a 3D printer, but Airwolf 3D is one of America's fastest growing 3D printing companies. When we first visited Airwolf's facility in the spring of 2013, there were four employees. There are now 27 and the company recently hired Mark Mathews, former president and CEO of Toshiba America Business Solutions, as their new president.
Without crowdfunding, how did Airwolf get started? You could say it was done the old-fashioned way. Educated as a mechanical engineer, Erick built a 3D printer in his home and sold it on craigslist.org (trivia note: his first printer is still in use in MatterHackers' shop today, with something like 8,000 hours on it). He worked on more printers during his spare time, but kept his day job as a patent attorney. His wife, Eva, dealt with the fledgling business during the day, taking tech calls and using their garage as a factory until the company was in a position to support Erick joining her full time. The entire operation was funded by sales of printers they were building in their home.
They now have plenty of people to help them manufacture printers faster, but Erick still designs the machines and Eva still manages the social media and blog, and isn't afraid to get her hands dirty. They do onsite and in-house 3D printing and modeling instruction for local educators and other interested parties. When they want publicity, they don't look to crowdfunding. They make a phone call, send email or do a press release, because they know the secret – there are so many 3D printing web sites competing with each other for stories, you don't need crowdfunding to get multi-site coverage for a new product.
Like SeeMeCNC and Printrbot, Airwolf frequents trade shows, so people who don't happen to live nearby can watch their printers in person. All three companies primarily make their money by selling printers on their own web sites or via retailers.
On separate occasions, I recently spoke to Erick Wolf of Airwolf and Steve Weatherly of 3D Stuffmaker USA. I relayed a story to them about a certain crowdfunded printer that shall remain nameless out of respect, one that was considered very successful last year, but whose backers know how much pain the project has caused its founders. "They said the printers cost about $350 to make and they were being sold for $850-$1000, depending on bells and whistles," I told them.
Wolf and Weatherly responded with the exact same phrase. Each told me, "that's not enough."
Weatherly went on to talk about costs like office space, storage, equipment upkeep, web site maintenance and hosting, bookkeeping and R&D for the next product. "There is a lot more to running a 3D printing business than parts and labor."
My conversation with Wolf went to the crux of the issue. I asked him if he would still be a 3D printer manufacturer if he was trying to make $500 printers. He laughed quietly and said, "No way. I can't make my printers for that price. I would do something else for a living."
For SeeMeCNC, Airwolf 3D, Printrbot and 3D Stuffmaker USA, the crowdfunding price war has not gone unnoticed. The interesting thing is how they are responding to it. Instead of following the lemmings over the cliff, they are doubling down on quality and innovation. Instead of producing less expensive printers, 3D Stuffmaker USA and Airwolf are carving a niche in the prosumer realm alongside MakerBot's higher end and Holland's Leapfrog. SeeMeCNC just announced the welcome addition of an SLA printer and Printrbot's best seller is now the Metal Simple, which is not the company's least expensive machine. Rumor has it that new, larger printers from Afinia and UP are also on the way, but you didn't read that here.
These manufacturers are proving that new features, printer model options, old-fashioned marketing and company stability are all important aspects of continued success, along with pricing based on a desire to offer these traits. They are not alone, but I can only talk to so many when dealing with a deadline.
It Was A Fun Ride, But...
Thanks to crowdfunding, tomorrow's early adopters now expect old technology pricing and before they take possession of what they bought, they are angry because they see a new crowdfunded printer they think is a better value. That is no way to introduce unfamiliar consumers to 3D printing.
I'm not suggesting vendor collusion should be the order of the day, but a little common sense wouldn't hurt. Everybody doesn't get to be Formlabs. The lightning in a bottle we've seen the last three years is quickly becoming mud in a jar – a slow jar with a small build area, sitting on a shelf with a hundred others like it.
3D Printer World has been as guilty as anybody of promoting crowdfunding as a marketing solution instead of a venture capital solution, if not more guilty. I have personally written many of those catchy headlines and as a media group, all of the 3D printing news sites have been so hungry for stories that we have at one time or another covered a crowdfunding project that in our hearts we knew had no chance of reaching its goal, nor should it.
Perhaps this is as much a statement about the plenitude of hyperactive 3D printing news sites as it is an essay on crowdfunded 3D printer competition, but for our sake, and we believe for the sake of the industry, we are changing. We no longer write articles about every single crowdfunded printer project there is. We are still likely to mention new campaigns to our healthy Facebook following, because some people want to know, but we aren't going to do a story unless there is something special or new being brought to the table, or unless the crowdfunding fire hose gets choked off and it is no longer passé to cover yet another campaign, not very different from the last.
Kickstarter isn't the only way to market a new product and dropping prices to unprofitable levels drags down the entire industry. It is far better to teach new users about getting what they pay for than it is to create a company that can't cover its rent, provide decent support, or develop its next product without going back to Kickstarter, where it is likely to fail because of similar machines priced as a loss leader to gain media buzz.
The end of the Kickstarter gold rush is in sight. It was fun while it lasted, but the bandwagon's wheels are bearing too much weight.