News & Views

Opinion / Crowd Tough

by Contagious Contributor

Jordan Husney, strategy director at Undercurrent, explores why communities make businesses anti-fragile

On June 19th, 2013 3d printer manufacturer Stratasys announced it was acquiring the leader in consumer desktop 3D printing, MakerBot.

It was a smart move.

Stratasys was founded by S. Scott Crump in Eden Prairie, Minnesota in 1989 when he thought of an automated, layer by layer process for creating toy frogs for his daughter using hot wax and a craft glue gun. Over time, Stratasys grew to be the market leader in fused deposition modelling (‘FDM’) – a 3D printing process. After its IPO in 1994 and merger with Israeli competitor Objet in 2012, Stratasys grew its market cap to more than $3bn. It found itself competing in the highest echelons of the additive manufacturing market with 3D Systems and EOS. It begs the question: why would Stratasys pay nearly $400m in stock for consumer entrant MakerBot? 

Compared to Stratasys’s industrial offerings, MakerBot’s printers are simple enough for children to use  – indeed they are excellent for making toy frogs. As the firm has matured, it has created an ever better performing set of printers and accessories for its customers, improving on accuracy, volume, material mix, speed, scanning capability and more. MakerBot’s Replicator 2 offers much of the capability of relatively expensive FDM printers at a fraction of the cost. Beyond a doubt, the MakerBot’s 3D printers fit Clayton M. Christensen’s definition of a disruptive product from Innovator’s Dilemma to a T:

‘Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies under-perform established products in mainstream markets. But they have other features that a few fridge (and generally new) customers value. Products based on disruptive technologies are typically cheaper, smaller, and, frequently, more convenient to use.’

However, MakerBot’s products do not justify its acquisition price alone. 3D Systems showed it wasn’t difficult to competitively enter the lower end of the market by rapidly developing its Cubify offerings. Some, such as VentureBeat, have pointed out that MakerBot’s brand power can help justify its price tag. This is true , of course , but there is an aspect to MakerBot’s brand power that shouldn’t be glossed over: the value of the MakerBot community.

Brand equity rests on more than recognition and sentiment. In the age of the internet, it also depends on community: its size, level, and quality of engagement. The MakerBot Thingiverse community is vast. During its 2014 CES announcement, MakerBot revealed its community had uploaded more than 214,000 designs that had been downloaded more than 44 million times. That scale is impressive, but MakerBot Thingiverse is more than just content: it makes MakerBot the company Antifragile.

Scholar, author, and statistician Nassim Nicholas Taleb coined the term Antifragile to describe entities which benefit –  rather than being harmed – by volatility. Undercurrent CEO Aaron Dignan describes antifragile systems as those which, ‘tend to promote intense variation and randomness to ensure that new mutations, models, and approaches are always present, ready to take the lead if/when circumstances change.’ Like nature.

When we first received our MakerBot Replicator 2, I hated it. I was used to working with commercial/industrial class machines like those from Stratasys. The machine was unreliable. Mid-way through a print the machine would stop extruding plastic and dance stupidly over a deformed print – wasting time and material. Fellow MakerBot users called this unfortunate phenomenon ‘air printing’. Working with it was very frustrating.

I wasn’t alone. Other users on MakerBot’s Thingiverse community noticed this deficiency  and (unlike me)  began designing a solution which could be printed on the very machine with the problem. Machine, heal thyself. Soon, MakerBot combined the best ideas from the community into an official design that it posted to Thingiverse. Mere days later, I received a packet in the mail with parts and instructions to fix our own MakerBot. 

Community co-designed extruder drive block sent by MakerBot

What in another era would have been a product quality fiasco was instead an opportunity for MakerBot to connect with their customers and improve their product. If you peruse Thingiverse you’ll find hundreds of Replicator 2 product improvements. MakerBot has the optionality  – unlimited upside and no downside  –  to pursue or not pursue each and every one of them.
 
Which company would you rather invest in: the company who designs and ships a product every 12-18 months or a company whose products are continuously improved by an engaged community?

The Thingiverse community makes MakerBot antifragile. It is also a large part of what makes MakerBot valuable. Valuable enough for Stratasys to pay what they did for acquiring them.

At Undercurrent, we understand that today’s fastest growing, most impactful companies organise themselves around a fundamentally different operating model –  one that is able to take advantage of variability and uncertainty –  a responsive operating system

Predicting specifically what types of innovations and uses the Thingiverse community will provide for Makerbot and Stratasys is not only difficult, it’s impossible. However the small expense of administering the community (the limited downside) compared to the large benefits which will emerge from it (the tremendous upside) will prove, again and again, that more organisations need to think how to build, acquire, or harness these sorts of community platforms.

Jordan Husney is strategy director at Undercurrent, New York