Tech startups, and particularly 3D printing startups, have had a rude awakening as of late. More and more companies are coming face to face with the realities of the industry. As a result, the 3D printing industry has seen many Kickstarters go up in flames due to a mix of wild expectations, bad planning and overly ambitious promises.
Tiko was the latest company to fall to the wayside in the wake of the recent failures in 3D printer crowdfunding. We covered the whole ordeal in an earlier article.
As a result, M3D dove in and graciously vowed to support Tiko and its backers. M3D was one of the successes of the 3D printer crowdfunding game. Being one of the industry’s stalwart forerunners and a survivor of the harsh crowdfunding environment, the CEO of M3D, Michael Armani had much to say about the state of the business today. He is about to release a new book next month, titled “Death Valley Curve”, that is set to tackle this very topic.
We got in contact with Michael Armani to ask him a few questions about the current state of tech crowdfunding:
You’ve stated your dissatisfaction with crowdfunding. In what ways do you consider crowdfunding to be unfair towards startups?
“My dissatisfaction is with crowdfunding for technology projects, and probably a little bit with games and design projects as well. Because technology moves so quickly, creators try to offer too much value in order to capture market awareness early. And because creators can post whatever they want, crowdfunding sites for tech products (namely Kickstarter & Indiegogo) have become a sort of wild-west ponzi scheme tech bubble, especially toxic for 3D printers.
The platforms take a 5% cut in exchange for access to the platform (which only brings 3% of revenues for projects on average these days due to lower press coverage), but offer no help to guide or check in with project creators. They do require a prototype before launching a tech product. However they’re insensitive to the higher failure rates within the technology category because they’re lacking the skills needed to do a technical risk evaluation, so they treat all campaigns equally. To them the failure rates are constant, and the few failures that make the new (one of our estimated at 9000 projects for KS) are considered par for the course.
In the case of crowdfails like Tiko, It is without a doubt the crowdfunding platform that should have evaluated the technical feasibility, cost analysis, or credibility of the creators, before letting them get trapped in that ponzi scheme. Of course backers and creators could have done a better job to flag these issues too, but excited groups of individuals tend to ignore the flaws and focus too much on the potential benefits.”
It’s very admirable that you’re looking out for Tiko and its backers. Not many companies would stick their necks out in this way. You have our respect. This raises the question about what can be done to save the state of crowdfunding in general? What actions is M3D taking or planning to take to curb these drawbacks?
“We’re in it here for the long haul – the 5-10 year vision where 3D printers routinely print human organs, and make assembled products so good that it disrupts trade, manufacturing, and engineering as we know it today. In the mean time there needs to be a critical mass of creators and users in our industry – nurturing the technology by building applications and awareness – to help get us to that dream. By some estimates over 500,000 smart thinkers/creators, enthusiastic users, and dedicated companies are making their dreams happen in part thanks to consumer 3D printing. When “crowdfailures” happen, like Tiko, they give bystanders the impression that 3D printers are a joke and that crowdfunding platforms are a scam – and this is good for no one.
We are actually in close to final talks with Xmachines, who recently ran out of funds to deliver their really well-designed Lorei machines. We’ve offered to finish delivering their <1500 backers rewards by completing procurement, delivery, and eventually assembly, at near cost, and they’ve been very receptive to our offer to help. In the case of Tiko most of their backers still badly want a printer that is easy to use, and affordable – under $200. But because they are so large, we are offering their backers, a throwback to our original Kickstarter campaign deep discount price of $199.”
Does the recent string of crowdfunding failures mean that the 3D printing market will suffer?
“The hype in our markets really ended in 2015 when the “race to the bottom” ended around $199. These failures are really isolated to the budget / entry-level / consumer portion of the market, which actually is not that big yet due the majority of people not knowing what 3D printing is or how it could benefit them. The underlying fundamental trend however is exactly as it has always been – power users with money demanding the best quality product they can get, and demand is growing steadily for professional desktop 3D printers.”
What did M3D do differently to succeed in this same market? And what can other companies learn from it?
“What we did better than most companies is focus on solving the only biggest problems and reducing or eliminating them. So one by one all the links fell into place for a working business that we could improve later on. One of these challenge was to not over-perfect the design. It was the right decision to release the product when it was at about 90% ready for market, and to keep improving iteratively along the way, or we could have ended up like Tiko. We get asked this question so frequently so that I will be publishing a book about how to succeed after funding, and it’s title is “The Death Valley Curve,” and it’s expected to be on Amazon in about a month.”
A special thank you to Michael Armani for answering our questions and to Tim Williams for putting us into contact with him.