MakerBot is not dead, but it is connected to life support waiting for a merciful soul to pull the plug.
This week, MakerBot announced it would lay off its entire manufacturing force, outsourcing the manufacturing of all MakerBot printers to China. A few weeks ago, Stratasys, MakerBot’s parent company, released their 2015 financial reports, noting MakerBot sales revenues have fallen precipitously. The MakerBot brand is now worth far less than the $400 Million Stratasys spent to acquire it. MakerBot is a dead company walking, and it is very doubtful MakerBot will ever be held in the same regard as the heady days of 2010.
How did this happen? The most common explanation of MakerBot’s fall from grace is that Stratasys gutted the engineering and goodwill of the company after acquiring it. While it is true MakerBot saw its biggest problems after the acquisition from Stratasys, the problems started much earlier.
The History of MakerBot
Today, MakerBot has precisely two reputations. The most generous reputation comes from tech enthusiasts suffering from low information, that sees MakerBot as the Kleenex and Asprin of 3D printing. With more machines coming out on the market, this reputation is fading.
The second reputation is one of a poorly designed 3D printer. This reputation is deserved thanks to the horrible failures of the MakerBot Smart Extruder introduced a few years ago, but also touches on the technology the 3D printers of 2010 were built upon. Anyone who has ever been to a hackerspace has seen a MakerBot printer, but that printer was broken.
Five years ago, this second reputation would be completely incorrect. MakerBot was the darling of the Open Source Hardware movement. MakerBot was the poster child of a new economy where anyone could manufacture hardware, at scale, and ship it to thousands of consumers around the world. The future would put a 3D printer in every office, if not on every desktop. MakerBot would sell those printers.
The first MakerBot printer, introduced in 2009 – the Cupcake CNC – was among the first consumer 3D printers available. Compared to printers from just a few years later, the Cupcake wasn’t the best printer, but it was a game changer. Available as a kit for $900, the Cupcake found its way into hackerspaces and garages across the globe. MakerBot released their second printer, the Thing-O-Matic at the first Maker Faire in Queens, NY in 2010. Given the fact that I’ve never seen a working Cupcake, the Thing-O-Matic was a vastly improved printer with a bigger build volume. The Thing-O-Matic was the future of desktop manufacturing. It was the printer [Bre Pettis] brought to The Colbert Report. For a short time, MakerBot was 3D printing, and anyone who wanted a 3D printer for their workshop had exactly two choices: buy a MakerBot kit, or build a RepRap, with printed parts that were probably made on a MakerBot.
In late 2010 and early 2011, MakerBot was at the top of the world. No company could ever catch up, and thanks to the goodwill imbued to MakerBot by their support of the Open Source and Open Hardware movements, MakerBot was held up as a new business model. With MakerBot as the example, you could become rich and famous by building Open Source hardware and building on the contributions of your userbase. Although [Bre Pettis] is not the most eloquent orator, he makes the case for Open Source very clear in a 2012 video:
When we started MakerBot, we knew we were going to be open source hardware. We were inspired by Arduino, and we were open source software nerds. So, we knew the idea if we could make it and share it, we’d get more back from it. And I think this is something we learned as kids, that sharing is good, that if you share something you get more back from it, but we forget this as adults. So, with open source hardware we’re back to that. When you get a MakerBot, you’re not just getting a machine, you’re getting the knowledge of how it works. You’re getting the information about everything that puts it together. So if you want to modify it, or if you just want to learn about it, if you want to hack it, you can do it.
Of course, even as a supporter of Open Source and Open Hardware, there were troubles in the House of MakerBot. [Zach ‘Hoeken’ Smith] and [Adam Mayer], the Woz to [Bre]’s Jobs, were cast out of the company. There was only room for one, and despite a strange affectation, [Bre] became the public face of MakerBot and a supporter of Open Source. MakerBot received $10 Million in VC funding in 2011, and the sky was the limit. With a large, enthusiastic community that was willing to develop improvements for the hardware, no company could match the potential of MakerBot.
Forgetting Open Hardware
Throw money at anything, and the vultures will start circling. MakerBot and the RepRap community had a friendly relationship, with MakerBot making contributions to the most popular 3D printer host software at the time. MakerBot created new tool heads for 3D printers, including a device that would print pastes. These designs were open sourced, and we all became richer. MakerBot’s contributions were held up time and time again as an example that Open Source Hardware could succeed.
In August of 2012, MakerBot’s resolve to democratize 3D printing would be challenged. The TangiBot was released on Kickstarter, and by any measure it was a straight-up clone of the MakerBot Replicator. Because the design files for the MakerBot Replicator were open source, the creator of this Kickstarter could simply send the files off to a contract manufacturer, beating MakerBot with their own design. To be fair, the creator of the TangiBot did improve on the Replicator design, making the PCB FCC compliant and using lock nuts, but by and large, this was a direct clone of the MakerBot Replicator.
Although the TangiBot Kickstarter did not succeed, MakerBot took this threat seriously. Even if the creator of the TangiBot ignored the unspoken rules of Open Source hardware, MakerBot thought Open Source was a liability. Previously Open Source designs, like the Automated Build Plate, a device that will remove a print from the bed before starting a new one, were expunged from the MakerBot home page, patented twice, and forgotten.
MakerBot turned their back on Open Source. Only a month after the introduction of the TangiBot, MakerBot announced their newest printer, the Replicator 2, would be closed source.
In June of 2013, MakerBot was purchased by Stratasys for $403 Million. With Stratasys’ earlier acquisition of Objet, it would become the largest manufacturer of 3D printers in the world. [Bre Pettis] would need to put in a few months as CEO of MakerBot and step down in September, 2014. The total take from the founders of MakerBot would be about $100 Million each for [Zach] and [Adam], and about $140 Million for [Bre]. While Stratasys’ purchase of MakerBot is frequently cited as the source of the Open Source frustration, this is not true. MakerBot turned their back on Open Source long before an offer from Stratasys.
The Stratasys Downfall
Before the acquisition by Stratasys, MakerBot sold an impressive 40,550 printers according to the Stratasys yearly report ending on December 31, 2013. According to the 2014 Annual Report put out by Stratasys, 79,906 printers had been sold under the MakerBot brand by the end of 2014. In a single year under Stratasys, MakerBot sold nearly 40,000 printers. A year later, in 2015, MakerBot sold only 18,673 printers, half of their 2014 numbers.
Sales numbers for 2016 are – of course – unavailable, but MakerBot celebrated their 100,000th printer sold on April 4th. From December 31st, 2015 to April 4th, 2016 – three months and four days – MakerBot sold only 1,421 printers, an average of about fifteen per day.
It is irresponsible to suggest MakerBot will only sell five or six thousand printers for all of 2016. Sales of 3D printers are remarkably seasonal, thanks to schools getting grants and back-to-school purchases. Nevertheless, it appears 2016 will be MakerBot’s worst year since 2010 or 2011. The writing is on the wall, and MakerBot will quickly be a footnote in the history of 3D printing. But how did this happen?
Although MakerBot reversed their stance on Open Source Hardware before their acquisition by Stratasys, that alone is not enough to kill a company. What did Stratasys bring to the table? Terrible engineering, ethically questionable practices, and patenting everything they could get their hands on.
The first days of 2014 saw the introduction of the first MakerBots designed under the auspices of Stratasys. These were the 5th generation of MakerBots, in the tradition of all hardware manufacturers at the vanguard of a new technology, three products were offered. The ‘good’ printer, the Replicator Mini, is a no-frills machine with about the same build area as the original MakerBot Cupcake. The ‘better’ model, the updated MakerBot Replicator, showed a tremendous influence from the earlier, 4th generation printers. The ‘best’ model, the Z18, was a monster with more than a cubic foot of build volume. All three printers in the 6th generation featured a Smart Extruder, a proprietary device that squeezes filament through a nozzle.
By any measure, the Smart Extruder was a terrible design. In every other RepRap-based printer, the extruder is the one part that should never break. Nozzles are consumables, yes, but the Smart Extruder was a complete failure. Estimates for the mean time before failure for the MakerBot Smart Extruder were between 300 and 500 hours. Assuming a single print can take an entire day, the $175 smart extruder would only last for a dozen or so prints.
The complete failure of engineering of the Smart Extruder was the source of a class action suit against Stratasys. Stratasys investors allege the 5th gen MakerBots were rushed into production, generating a bevy of negative feedback, warranty claims, and returns. The lawsuit alleges misleading positive claims about the reliability of MakerBot printers were used to artificially inflate Stratasys’ stock price.
Although the problems with the Smart Extruder are the most tangible, MakerBot failed on several other fronts. The MakerBot storefronts in New York City, Boston, and Greenwich were shuttered in the past twelve months. One of the first actions taken by MakerBot after its purchase by Stratasys was to patent several designs based on designs uploaded to MakerBot’s object repository, Thingiverse. Although the abdication of Open Source failed long before Stratasys took the helm, the new owners certainly didn’t reverse course. MakerBot and Stratasys are now reviled by the entire 3D printing community, not only for continuing the turn on Open Source seen under [Bre]’s leadership, but doubling down under Stratasys.
Where MakerBot Stands Now
2015 was a tough year for MakerBot. In April of 2015, MakerBot laid off 100 of its approximately 500 employees and closed all three of its retail locations in Manhattan, Boston, and Greenwich. Last October, MakerBot laid off another 80 people and shuttered one of its Brooklyn office spaces. This week, MakerBot laid off the remaining manufacturing staff and will begin to outsource manufacturing to China.
Stratasys, and by extension MakerBot, is a publicly traded company. Therefore, financial statements must be released to the public every quarter. The financials and sales figures are in the toilet, but even more damning is the value of the MakerBot brand. Like every aspect of a business, the value of the brand and reputation is tracked as an asset, and is called “goodwill” in company reports. For every quarterly report Stratasys has released after the acquisition of MakerBot, a goodwill impairment charge – a markdown on the value of the MakerBot brand – has been recorded. Including the 2015 yearly report, Stratasys has taken a total goodwill impairment charge of nearly one Billion dollars for MakerBot. Keep in mind Stratasys acquired MakerBot for $403 Million in stock. Stratasys has written off nearly double the value it paid through the failures of the MakerBot brand.
MakerBot is a dead company walking. Yes, the newest version of the Smart Extruder is more reliable, with most extruders printing successfully after 1200 hours. Thingiverse, a MakerBot property, is still the most popular object sharing repository on the Internet, but others including YouMagine are making inroads. What does the future hold for MakerBot? It will linger on as Stratasys division of consumer 3D printers, but it’s extremely doubtful MakerBot will ever be held in as high a regard as in the heady days of 2010 and 2011.