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Summary:

The excitement around events like last week’s Maker Faire is huge. But are more people making or is the growth in this market coming from more electronics products finally coming within reach for existing makers?

The SparkFun braintrust of Lara Boudreaux (project manager in marketing), Pete Dokter ( director of Engineering), Lindsay Levkoff, (director of education, and Nathan Seidle (CEO).
photo: Stacey Higginbotham

The popularity of the maker movement, of Arduino boards, Raspberry Pi hacks and a variety of other DIY electronics projects are stunning. Businesses such as Tindie, AdaFruit and SparkFun have been created to feed the demand for boards, kits and forums built around open hardware.

There are new hacker spaces popping up around the country where people can borrow tools and hang with experts, while sites like Kickstarter and Indiegogo offer a viable venue for people to get their inventions before a wider audience. It really feels like something big, perhaps the third industrial revolution as Chris Anderson has called it. The founder of MAKE magazine has even spoken before a group of people at the White House.

Building a digital rotary phone project at SparkFun.

Building a digital rotary phone project at SparkFun.

And yet…there is a part of me that looks at those engaging in hackathons and learning to solder and wonders, how big is this market? Is it growing? Are these people who are now playing with new tools because those tools are now cheaper and more available, or is the ready availability of cheaper tools opening up a new market for people who had never had an interest in this stuff? In short, are more people actually growing interested in this, or is the existing market just latching onto products that were once out of reach?

To me, that’s the real question looming behind these articles about a 3D printer in every home and the maker movement in general. And I’m not the only one. During a trip to Boulder, Colorado in March, I visited SparkFun, one of the older sites offering DIY electronics kits, for a factory tour and a conversation with its executives. And the questions about the maker market were a big theme running through the entire visit.

The problem for SparkFun is that while it has experienced phenomenal growth, it’s also worried that it’s seeing a plateau. Lara Boudreaux, the project manager for the marketing department at SparkFun, said the company had sales of $27.5 million in 2012 but only grew 9.6 percent year over year.

The fear is that while the marketing interest in DIY and the maker movement is still high, the typical customer has been reached. Growth may now come from getting the established clientele to buy more. And while many DIY hackers are willing to spend on their hobby, growing in a saturated market is tough.

So, what’s SparkFun — or any other company in this market to do? Well, the first step involves a bus and a bunch of boards. Lindsay Levkoff, the director of education at SparkFun, who created an education division inside the company in 2011, has built a program where SparkFun will take its lessons about making on the road to schools and teachers. The program wasn’t created to boost profits, but it could have the added benefit of introducing the idea of making to new audiences.

sparkfunwestcoast

And yes, those audiences might be on an allowance, but the idea is that they will grow up to continue to pursue building electronics as a hobby, or maybe even entice their parents to join them in a project or two. Because as a business, running an open source hardware manufacturing business in the U.S. is tough. Matt Bolton, director of production at SparkFun, estimates that any design the company produces will be copied within 12 weeks of hitting the SparkFun web site.

So the company moves quickly from design to design, conducting small runs of each so as not to get caught flat-footed when cheaper imitations hit the market. It also has a DIY ethos that can help keep costs down. It makes its own ads and now does its own marketing. It’s also judicious in its outreach. While it used to operate a big booth at Maker Faire, it has toned that down because the success of the maker movement means that the sponsorship costs SparkFun a lot more at the big events. Instead, it send a smaller cadre of people and is focusing on its own events, such as its Autonomous Vehicle Competition coming up on June 8.

SparkFun's autonomous vehicle competition held in 2012. Shot by Juan Peña for SparkFun.

SparkFun’s autonomous vehicle competition held in 2012. Shot by Juan Peña for SparkFun.

Now these conversations about its growth or decisions to spend its capital in smaller Maker Faires or through its own events don’t necessarily mean SparkFun is in trouble. Having 9 percent year over year growth is nothing to scoff at. In fact, this month it broke ground on a 80,000 square-foot new campus to meet its anticipated growth. And a perusal of the blog post detailing the transaction shows that even if the company’s growth slows, CEO Nathan Seidle is capable of pulling together financially savvy deals that keep SparkFun operating without a lot of debt or financial pressure.

To me, and for others watching the maker movement unfold, SparkFun is a chance to answer what is an important question. How big can the maker movement get?

Because even as the mainstream discovers the maker movement and companies like SparkFun, it’s not clear if a large part of the population really wants to buy kits and make their own devices. Although if you look at other somewhat “alternative” hobbies like yoga or even gourmet cooking that have hit the mainstream there’s clearly the opportunity for a market to emerge that allows SparkFun to grow.

The big question is whether DIY becomes next decade’s yoga or instead is more like home brewing.

  1. Sparkfun’s growth may only be indicative of Sparkfun’s business practices. There are other sectors of the electronics/Maker area that have greater growth – many Kickstarter projects and most likely Adafruit (which does not post their data but most likely has greater growth). As in many sectors, product innovation contributes greatly to consumer adoption and satisfaction (eg. Apple). Both Adafruit and some Kickstarters introduce both hardware and accompanying software, allowing the Maker to get started right away (innovating) rather than reading a chip manufacturer’s data sheet and doing low-level coding to get the device to a useful state. Sparkfun’s educational practices are lauditory and I would encourage them to adopt some of Adafruit’s efforts to have code online for their products. Their work could even be complimentary to that produced by Adafruit, Freetronics, tronixstuff, yourduino, and even arduino.cc. Harnessing the power to open source software and online learning would fuel both company growth and hobbyist adoption.

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  2. Stacey, the maker movement might gain new momentum from those people who view this as more of a learning experience that could become the pathway for a career.

    If it’s true that in the coming years more people will question the ROI of escalating College and University tuition, then maybe some of the people who won’t accept that significant financial burden of traditional higher-ed will seek to learn practical and marketable skills instead.

    Educational kits combined with online mentoring may be a viable growth trajectory — not only in electronics but also in other sectors where small scale U.S. inventors are few and far between.

    I’m guessing that there are lots of young Americans that really don’t want to work in the Healthcare sector (the forecast highest-growth industry in the U.S. marketplace).

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  3. Kevin Rofheart Monday, May 27, 2013

    Stacey,

    Great post. I think the sky is the limit with this movement.
    In my opinion, It is just getting starting to take off. There are numerous growth markets (after-care school programs, community recreation departments, learning franchises) that are all that are just getting up to speed on these types of activities.

    As the ‘internet’ continues to evolve, it is going to manifest itself into a physical form (bots, cars, web-based projects of all shapes and sizes). We are just seeing the tip of the ice-berg…it is going to be fun, exciting and lucrative for everyone involved.

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  4. I share your framework on how physically is the next evolution of the internet, but I am a bit skeptical about what level people will engage in that physicality. I hope it’s deeper at the Maker level, but i could also be via well-designed interfaces that let people connect things via software.

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  5. How big the maker movement can get depends on expectations out of an US point of view. Here in Europe you can hardly speak of a movement. We know the hobbyclub boom of the fifties, last century. Later on we got the computer clubs, the hackerspaces and FabLabs. It are marginal activities not affecting mainstream as it seemingly does in the US. There are some big players in the field of electronic parts and kits, most established in Germany. Also Sparkfun is known by ‘insiders’. Shared hobby’s as the basis for an international movement is hard because of different languages. Even, english as common second language doesn’t change that much. Europe has it’s own dynamics in following US trends. What works in the US is not a priori a furmula for the rest of the world.

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  6. Emery Premeaux Tuesday, June 4, 2013

    1: To understand SparkFun’s business model, you have to actually research the market. They are, perhaps, the highest priced outlet in the industry. They seem to have a high markup on a lot of their products.

    I get that businesses have to make a profit (trying to start one myself, and having watched Akiba of Freaklabs go through the process). And if you ever hope to be a big business, you have to make big profits. But anyone in the know, knows that you only buy from SparkFun if you have no other choice, need the fast delivery, or are bundling a lot of bits and pieces onto one order.

    but on any given inventory part they have, you can easily find other retailers online selling the same conceptual material for considerably less. One just needs to be tenacious in searching out alternative retailers, and unconcerned about dealing with smaller shops, Chinese distributors, and pcb colors other than red.

    SparkFun is the Radio Shack of online retailers. With a similar “you’ll pay extra for convenience” business model. Nothing wrong with that. But I know a whole lot of people “window shop” at SparkFun, but actually spend their money everywhere else, and get more for it.
    So, If one wants to question why they are not growing faster than 9 percent, or how long they think the Maker/DIY bubble will last, then SparkFun is NOT the signpost to navigate by. If anything, Adafruit is a better indication of how the DIY/Maker movement really likes to operate (not necessarily on the point of price, but on loyalty. Adafruit has ONE face to the company, and that face actively engages every customer with advice, ideas, and demonstrations).

    2: The second point I take issue with is the use of the phrase “… when cheaper imitations hit the market.” As if somehow they are the market leader in all products, and everyone else is a Chinese knockoff. First and foremost, it is an open source market, meaning anyone can clone anyone els’s breakout board, project or kit and sell it. If those people happen to sell it for a smaller profit margin, great! (see No1). The phrase “cheaper imitation” implies lower quality. That is far from the truth. In fact, it is often true that another companies’ version of a product is BETTER in many respects, while remaining at a lower MSRP.
    Finally, only about 30 percent of the time are SparkFun the first innovator and not the copier. Again… an open source market. They copy off everyone else as much as anyone.

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