What the Kickstarter Hangover will do to the 3D Printing Industry

Kickstarter has been transformative for many companies, and for the last year or so, the 3D Printing industry has in particular been benefiting greatly from it with over 80 projects and a healthy 50% fund rate (even higher in the last 6 months). Unfortunately, like having too much of a good thing to drink one night, we’re headed for a painful hangover in the 3D Printing industry thanks to Kickstarter.

We’ve seen the data before. Only 25% of KickStarter projects deliver on time, and for wildly successful funding projects it’s even lower at about 16%. This means a lot of waiting and a lot of disappointment for those that may never receive the project at all. There’s no reason to believe 3D printing would be immune to the issues other projects have faced.

So what are the consequences of these delays?

Impatience:  Many users are going to get their printers 6 months to a year after they ordered it. This slows the adoption rate of the industry as people tie up funds they’d invest in a 3D printer they could use immediately. It’s unlikely people are going to buy another printer while they’re eagerly hoping for their Kickstarter one to arrive. With no printer, users won’t be able to start experimenting with the technology.

Obsolescence: While users wait to receive their printers, the technology is evolving and improving rapidly. Will someone who bought a RepRap-style, assemble-yourself printer be happy with it when they see others buying better printers as theirs (finally) arrives? When the other printers have more advanced features like multi-extrusion, out-of-the-box functionality or has a significantly larger build size, how will users feel?

Disappointment: There is something truly magical about watching an object being built right in front of your eyes. Many of the videos on Kickstarter do a great job of highlighting this and the great story behind whomever is making the product. Unfortunately, when you actually get your printer, getting the magic to work for yourself isn’t always easy. These videos don’t show the 6 steps it may take to actually get your design to print or the steep learning curve for design software. They also don’t account for what many of these first-time hardware startup founders are going to face with manufacturing a quality, reliable product. And this ignores greater challenges like the unfortunate IRS issues Printrbot faced, which are bound to strike some campaigns.

The Hangover

Most of the major 3D printing projects funded over the last year are still within their delivery time period, so we’re likely to start seeing some of the delays and pains soon. Like the slow growth in intensity of a hangover’s headache, as the months proceed, people will get anxious for their Buccaneers, Rigidbot (which was due starting in September and likely coming this fall) and Peachy Printer.

Like the blaming of Tequila for your worst hangover, I expect these issues will lead to buyer’s remorse and a black mark for the greater consumer 3D Printing industry; the current market offerings may have solved many of the issues that the Kickstarter projects had, but the wounds from problems with a campaign a user funded will deter them from buying another printer for awhile (as will the financial ties). This is exactly the kind of events that can contribute to the predicted bottoming out of the hype cycle Gartner talks about.

The Hangover Cure

Like a large bottle of water, 2 Advil and some greasy food, I expect there will be a few tactics that will help the market overcome these issues:

1) Feature bonuses

In its early days, Microsoft was notoriously late on projects. They would placate angry partners by promising (and delivering on) new, additional features in exchange for a pushed delivery date. If Kickstarter projects are late, those companies may try a similar tactic to placate their users. This opens up 3rd parties to supply those solutions like I hear the guys at DGlass3D are talking about being an OEM supplier for 3D printing companies that found them on KickStarter.

2) More help with manufacturing

Finding manufacturers is a scary, risky proposition.  On top of the challenges of choosing the right one, a company’s initial design isn’t always easy to manufacture, which requires redesigns and negotiations. Fortunately, there are a growing number of programs to help first time hardware founders like the Highway 1 program in San Francisco. There is also an ever expanding group of people to learn from that have successfully set up their first manufacturing as more hardware startups launch and grow.

3) Shift in models

The early days of the PC industry saw computers sold by mail order pre-orders in Popular Science Magazine and other publications, which isn’t that different from the crowdfunding on Kickstarter today. After a few years of pre-orders, specialty stores started opening where you could see computers, there was real inventory and friendly help. Those stores can provide a much better experience than a pre-order, but they require a greater sales volume, which we’re just starting to get to a market state to support. Such stores are just starting to open like HoneyBee3D in Oakland and MatterHackers in Lake Forest, California.

4) Deliberate marketing to differentiate from Kickstarter printers

If Kickstarter printers are viewed with increased skepticism, then experienced, growing 3D Printing companies will want to differentiate from them. These companies can focus their marketing on being a team of experienced engineers and manufacturers with the latest technology and no wait time for delivery.

5) More evidence of deliverability on Kickstarter

Kickstarter is still an unparalleled way to get press, partnership opportunities and most importantly, paying customers for 3D printing companies. Showing more progress and possibly even manufacturing already fully planned could go a long way to being the “responsible drinking” solution to the Kickstarter hangover.

In general, I expect that a shift away from Kickstarter will occur as there is an industry shake out and consolidation; there are over 300 3D printing companies now and so there’s no way they will all survive in the coming years. As they consolidate, user bases will also, lending itself to sales and marketing being done by each company without the need of Kickstarter (or their 5% cut).

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Consequences of the New Wave of Consumer 3D Printing

On Friday, the Zeepro Zim 3D Printer hit Kickstarter. It has dual extruders, a consumer-friendly print interface, wifi capabilities and the aesthetic of a true consumer product, all for under $1,000.  While not the first printer to have some or all of those capabilities (see also the Buccaneer and while a different technology, Formlabs nails the precision and aesthetics) it marks the growing trend of moving beyond raw, exposed RepRap style printers so beloved by the hacker/hobbyist. While the past few years have been dominated by RepRap and the open source community efforts, I believe we’re in the midst of a transition to the next phase of the market.

The Capitalism Transition

What started for many as simply a desire to make printers for people like them is now becoming a very competitive business. Those that want to continue on those efforts and compete with the 300+ other consumer 3D Printing companies are challenged with keeping pace with current product developments or be lost in the dust.

With all the hype, it’s easy to forget how early it still is. Even the most optimistic estimates only show 200,000 consumer printers owned as of the end of 2012, which isn’t much if you spread that across 300 companies and know the leader has 20-30,000 of those. As a consequence, some companies will starve as they fight to stay relevant and get a piece of the growing revenue pie.

In this new era, a number of changes are occurring:

1) A different kind of founding team

As the market matures, it is attracting more experienced entrants. Zeepro was founded by successful serial European entrepreneurs. They have significant manufacturing and business building experience having previously taken companies to IPO. I’ve spoken to another stealth startup with significant, relevant manufacturing experience with similar designs of conquering the market and starting out with many of the most common problems solved and requested features included in version 1.

This stands in stark contrast to many of the founders to date who are either students/recent graduates or small teams of hobbyists. Many of the post-Kickstarter manufacturing challenges faced by some of the early entrants are unlikely to affect these new teams.

2) A race to feature parity

The roadmap for most companies has been clear for awhile: add a second extruder, a heated bed, eliminate manual calibration, network the printer, expand your print size and improve reliability and stability. With more entrants like the Buccaneer and Zim as well as Makerbot charging ahead, the stakes are raised. To stay relevant, you have to be able to meet those same feature demands faster.  As competition heats further, I expect more companies to push the innovation envelope so they can make feature comparison charts that make them stand out.

zeepro feature chart

3) The slow decline of open source

If it were not for the RepRap movement, we would not have the printers of today. Every company has borrowed from open source and in many cases contributed back. However, as competition has heated up, the amount opened back to the community appears to be decreasing and talks of patents and keeping technology closed has increased. As companies try to stay one step ahead and create breakthroughs based on their own efforts, I expect the lure of a competitive advantage leading to more sales to supersede their desires to contribute to open source.

This will mark the steady decline in relevance of the open source movement for 3D printing as companies with employees working intense hours will surpass what hobbyists and researchers can contribute.

4) A new focus on user experience

As we move from the innovators to the early adopter market, the needs of the user are changing. For every user that wants to build their own printer from scratch, there are many more who lack the skills or interest to do so. New printers that “just work” will become the standard and companies that can both minimize support issues with a quality product and provide great service when there are issues will stand out.

Some companies will not survive this. Having had a Solidoodle 3 for a month now, I have easily spent more time fixing problems and emailing back and forth with support than I have printing. Like other printers currently on the market, when it works, it’s great, but it is not stable enough to recommend to others, especially if they’re less technical.

5) The quest for the killer app will intensify

With more reliable printers with greater functionality hitting the market, new uses will emerge.  As more people own the printers, experimentation on how and what you can print will grow. As this happens, we’re likely to finally see the emergence of the “killer app.”

In the PC market, early consumer computers were considered toys and a hobby until the invention of the word processor and spreadsheet changed everything. When PC features finally allowed for a quality version of each, consumers changed their tune from, “Why would I want a computer?” to “I’m buying a computer specifically for that application.” Today, we’re still in the “Why would I want a 3D printer?” phase as scanning your favorite gnome figurine is far from a killer app. That will change in the next few years.

——–

The 3D Printing market is in a rapid state of change. This new phase of the market is one of the first shifts of many to come. Companies that adapt will not only survive, but thrive, while others are soon headed for footnotes in history like IMSAI and Kentucky Fried Computer in the early days of the PC market.

You can see this transition for yourself and check out companies like Zeepro at the Inside 3D Printing Conference in San Jose tomorrow and Wednesday. You can save 15% by entering code “JE15”.

3d conf

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How 3D Printing Companies are using Kickstarter to Accelerate the 3D Revolution

In January 1975, Popular Science magazine ran an article on the first consumer computer: the Altair. Ed Roberts, the founder of the company making the Altair, ran ads in the magazine for pre-orders of his device for a then-shocking $400. He needed to sell 200 to break even, but ended up selling over 2,000 instead. There were many challenges in actually delivering the device and plenty of upset customers due to delays and limited functionality, but it marked a key moment at the start of the PC revolution. A small company named Microsoft would work closely with them to run BASIC software on it and many other hobbyist computers would emerge in coming years.

Today, the chosen pre-order crowd-funding source is Kickstarter and once again early adopter backing is funding a new revolution: consumer 3D Printing.

A quick search shows there have been over 75 projects posted on Kickstarter related to 3D printing. Of those, 5 are currently active and 35 have been funded (a 50% fund rate on completed campaigns). Since the start of 2013, 38 of these projects have launched, with 17 funded and 16 failed (the other 5 are still active). Some projects have even raised millions of dollars like the Buccaneer ($1.43mn, 3,520 backers), RigidBot ($1.09mn, 1,952 backers) and the 3Doodler ($2.34mn, 26,457 backers). All 3 of those projects launched in the last 6 months.

So with all this funding, how is it affecting those that post? To find out, I spoke to a variety of companies currently crowd-funding, planning to crowd-fund and already completed both successful and failed campaigns.

Preparation matters

The first thing that stood out for all the companies that I spoke with was how important preparation was for their projects. No matter how much time they spent to understand the work ahead, there were always surprises and new challenges. Those that hadn’t figured out the finer details of their project before launching the Kickstarter were significantly more likely to fail in funding.

The preparation also extends to marketing. Designer Todd Blatt, creator of the funded Google Glass project, GlassKap, observed, “[Many projects] think you just make a Kickstarter and people come. You can’t count on that.” I asked companies what the ratio was for backers that came organically from Kickstarter versus their own efforts and it was usually 60% their efforts. Getting ahead in their marketing meant thinking about press and forums to post to at launch and building lists in advance. DeltaPrintr, a delta-style RepRap design launching in the fall, is smartly already collecting signups on their detailed website which explains their product’s benefits and differentiators.

Screen Shot 2013-08-28 at 12.12.21 PM

The value extends beyond funds

Like a good angel investor, many of the backers on Kickstarter add more value than just their money. File2Part, a 2012 campaign for better 3D printing software, found that about 15% of their backers were tremendously helpful in debugging their beta release of their software as the backers were also software engineers. Meanwhile, DGlass3D, a current campaign to create a better dual extruder for 3D printers, has already gotten great feedback from hobbyists and hackers backing the project.

With so much traffic and attention given to many of the Kickstarter projects, it can also be a signal to those in the market that your company is someone they should work with. Volumental, a current campaign for browser-based 3D scanning and printing, has received numerous business opportunities because of the attention around their Kickstarter. They’ve also turned the campaign into press that extends beyond the project and helped raise the visibility of their company.

Even more impressive is how a failed campaign by 3Dagogo actually inspired them to start their business.  Their May 2013 campaign to sell 250 useful 3d printing designs did not fund, but many members of the 3D community reached out to them saying they were working on an important problem. That was all the encouragement they needed and they’re now working towards a site launch.

Critics can be harsh

While Kickstarter tries to manage backer expectations on projects, there are still times when users can be difficult or even angry. In the case of DGlass3D, some potential backers were upset with the way they planned to handle their IP for their design (a hot button subject in the 3d community). After some passionate discussion, it led to DGlass3D changing their IP plans and updating their description of it on their Kickstarter page.

Meanwhile, File2Part has had a number of delays on their project enraging some backers. Co-founder Eugene Giller told me that when they launched the campaign, they had a prototype of the software working with the printer they owned. Unfortunately, there are many variations on the firmware for other printers and some companies not only change them, but sometimes make them closed to 3rd parties (most notably, MakerBot). It has put them in a endless loop playing catch up, which unfortunately not all backers empathized with:

angry kickstarter backer

Stories like File2Part’s is why when I spoke with DeltaPrintr, they told me they are trying to have everything in line, even suppliers and manufacturing, before they launch their campaign. They hope that Kickstarter can simply then be the platform to connect with their first customers and add the funding needed to fulfill orders with their manufacturer, without delays and drama.

Funded projects do not guarantee success

It would be great to say that every campaign that funds on Kickstarter has a fairy tale ending of delivering on time and launching to ongoing success. Unfortunately, we know that’s far from true. 

Going beyond the disappointment of the end user who may receive their orders late, below their expectations or sadly, not at all, companies can face struggles as well. After the costs of making his video, marketing and adding the cost of printing the objects, 3D designer Todd Blatt found he didn’t make any money on his funded GlassKap project. He did tell me, he will likely do another project in the future based on his learnings from this one.

File2Part, who had the aforementioned firmware challenges, actually hired a consultant to help them with those issues. Unfortunately, the cost of that consultant exhausted all their funds raised which led them to take a loss overall on the project.

Understand your audience

The stories of success on Kickstarter have spread far and wide, which is why all of the people I spoke with turned to the platform for their company. However, it’s important to realize that like any website, there’s a specific audience that is generally found on Kickstarter. They are often consumers, with a bit of an early adopter and hacker edge to them. Some will back many projects, showing more allegiance to Kickstarter than any of the individual companies they back.

This proved a solid audience for GlassKap, as Todd was able to fund his project even though there are only 10,000 Google Glasses in the public now. Similarly, the consumer-friendliness of Volumental’s browser-based scanning also funded well with the Kickstarter audience.

Screen Shot 2013-08-28 at 1.46.31 PM

Meanwhile, 3Dagogo’s 250 3D print designs failed to fund, as many Kickstarter backers are still waiting for their Kickstarter-backed printers and many of the hackers and hobbyists with printers already have proven to be less interested in the pre-made designs.  And while File2Part did fully fund, they found many of their backers were not who they were hoping for; their goal is to build an industrial-grade 3D printer to sell and were not expecting to have so many consumer printers to support.

Kickstarter is an amazing platform for discovery and funding of great projects. Like the pre-orders of the Altair, it doesn’t always go as planned, but great things can come of it. Two 20-somethings from Harvard moved to New Mexico to write the software for the Altair. We may not have had Microsoft today if early adopters of the Altair hadn’t sent those checks to get their first consumer computers.

What new industry titans will come from crowdfunding like Kickstarter and the ecosystems they help create?

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Sources:

Thanks to all of the companies that spoke with me for this article: