October , 2016 – An accounting of the complete failure of 3D Robotics is gone over in detail at this new Forbes article. Read our older articles below and then the Forbes piece if you want most of the story.
Recent events and announcements seem to indicate that 3D Robotics (3DR) dream of becoming a multi-billion dollar leader in the drone industry has failed. This post will lay out the timelines and events of 3DR history as well as the opinions of the author and others as to what happened – and why. Hopefully it will provide a cautionary tale to those, like Icarus, whose attempt to fly too close to the heat of the sun resulted in a similar crash.
3D Robotics History – Prelude
3DR was a garage operation started by a Mexican engineering student – who then partnered with Chris Anderson, an editor at Wired magazine. In 2012, Chris left Wired to work full time on the new drone operation.
The business was based around “open source” software and hardware designs which originated in Switzerland at the Federal Institute of Technology.
The Hardware portion is called Pixhawk and the software Ardupilot.
It can get confusing to sort out all the various efforts – but the bottom line is that 3DR doesn’t and didn’t own any of their designs and software – rather they were supporters and “community organizers” of the existing projects.
3D Robotics made their income by providing DIY hardware parts for hobbyists and others to build planes, helicopters and multirotors (drones) using the referenced hardware and software. Offices and a small factory were opened in Tijuana and San Diego. The company established a cult following among those handy with a soldering iron and multimeter. However, they had nothing in the way of consumer products – meaning they missed the strong uptick in sales that started to occur when Drones (Parrot AR Drone, etc.) hit the market in 2011/2012.
3D Robotics – going for the Gold
It makes sense to imagine that 3DR looked at the initial successes of Parrot, DJI and some other drone makers and decided they would take a shot at both higher growth and the consumer market. At the end of 2012 they raised their first investment from Venture Capitalists (VCs) – 5 Million dollars, followed by a number of other rounds to make a total of approx. 100 million dollars. Our sources indicate that this money was not raised from a position of great strength – that is, since 3DR had low revenues and few products they had to bet the farm (turn over most future proceeds) to the investors in order to raise funds. On the flip side, the VCs expected 3DR to make money – and lots of it – in a fairly short time.
3DR’s first attempt at a consumer drone was called the Iris. It arrived on the scene in 2013 claiming to bring “an out-of-the-box flying experience that brings the power of professional grade aerial robotics to the mass market.”
It didn’t. Sales were poor and consumers lacked the know-how to put together all the parts – software and hardware – to make it actually do anything. 3DR responded by bringing out an improved model which made the same claims and more…it too sold poorly because, once again, the usability was poor compared to the competition and sales suffered.
Flush with tens of millions of new money – and a drone market that was heating up – 3DR decided to go back to the drawing board and design the be-all end-all of consumer drones – namely the Solo. They ramped up to 100’s of employees (3DR Claimed 350+) and spread them into various locations including a new Berkeley HQ and a large Austin Sales and Marketing office. They hired Colin Guinn, the former pitchman in the USA for Chinese drone giant DJI – calling him “the world’s leading uav (drone) designer”.
The launch, pr and marketing blitz were at a level never before seen in the drone world – Solo was touted as the 2nd coming and a heavyweight contender in the consumer drone space. 3DR made various boasts to the press such as being #2 in the world or #1 in America.
Sadly, 3DR made a vast number of missteps resulting in a failed launch, high support/sales costs and the inability to meet sales and/or profit projections.
Here is a screen shot of just one tweet from the CEO of 3D Robotics extolling how their company may be one of the next “Unicorns” – meaning worth one billion dollars. At the time of these lists and tweets it was already clearly evident that this was highly unlikely.
Final Nails in the Coffin
In the recent weeks, 3DR has:
1. Cut most jobs at their Austin branch – where CRO Colin Guinn was based and where marketing, sales and video production was based.
2. Most all employees have been let go at their San Diego R&D, Warehouse and Customer Service Center (3DR has a 3 year lease there and is reportedly trying to sublet).
3. Ceased taking phone calls – this goes for both sales and service. A message of “we are no longer taking calls” is given to those who attempt to call. Support is now limited to certain hours and only by chat or email.
4. Done away with most of their financial and other support for the open source software they based their business plan on. Let go of most of the team members associated with the Ardupilot project (this project has been handed back to the world-at-large).
5. Announced restructuring and layoffs in the single remaining location in Berkeley California. Here is a recent MarketWatch article with that announcement as well as a letter from the CEO of 3DR to employees announcing the terminations.
6. The Co-Founder of 3DR – Jordi Munoz – is no longer with the company. This apparently happened many months ago and, for whatever reason, was kept very quiet.
Many more changes have been rumored – one source indicates that 3DR no longer has any manufacturing facilities anywhere, even in China. Other sources contradict each other…one says there is a vast surplus of unsold Solo models, another that there cannot be since only a relative few were made. These details, although interesting, have no real bearing on the future of 3DR as a serious participant in the drone business.
3D Robotics, in our view, is now finished with their attempts to be a top players in the consumer drone business. Statements from a shrinking company always have to be vetted as to what it truth and what is PR, and 3DR has been less than candid in their statements to the press and their consumers. Therefore we are left to read events as well as our “Magic 8 Ball” in an attempt to inform consumers of what the real situation may be. However, sales numbers (Amazon, dealers, forums, etc.) are hard to hide and 3DR is not positioned to be one of the companies vying for consumer market in camera drones. This leaves the market to DJI, Yuneec, Parrot, Horizon and perhaps one or more of the newer entrants (GoPro, Xiro, etc.). Given the state of the market it is difficult to see how more than 4 or 5 manufacturers will be able to achieve the critical mass to succeed in the $500-$1500 Camera Drone realm.
Based on their statements, 3DR is attempting to “pivot” or “remake themselves” as a seller of light commercials solutions as well as software and services in the drone business. This attempt, in our opinion, has little chance of success due to their lack of resources and the competition in this market. Regulations, or lack of such, are holding back this sector of the drone business. Also, 3DR is suggesting that the same consumer Solo model is up to the task of being repositioned as a commercial model. Our study shows it is not. Commercial customers have higher demands in terms of function, support and longevity than do consumers. If Solo was unable to sell for $1,000, it would seem that only a very limited number of people will spend vastly higher sums for Solo on a “subscription” basis.
Our Advice to both consumers and commercial/enterprise customers would be to wait – this is more fully laid out in the “Lessons” paragraph below.
No one can fault 3DR for an attempt…and failure…to achieve success in the drone business. However, their methods and hubris during the process left much to be desired. Marketing dollars and grandiose statements cannot replace pedal-to-the-metal hard work and proper engineering. In the end it appears that 3DR was simply devoid of the leadership needed to accomplish the task at hand. They were unable to chip away at the 100’s of small problems which need solved to deliver a true aerial robot.
For consumers and investors the lessons are perhaps different. We have always suggested that drone consumers WAIT a number of months after release of any new product to avoid being caught up in the hype. The fall of 3DR indicates this to be a wise course. Drones are HARD to do right!
Any company which claims to be able to leapfrog the market is probably in for a rude awakening. Aircraft are not like Dell Computers where you buy a circuit board and a sheet metal box and slap the thing together with your label on it.
We are likely to see the failure of many additional entrants to the drone business. Hopefully you, as a smart consumer, will follow our advice and not be left holding the bag as either an owner or an investor.