Case
Teaching Notes
Supplementary Resources
Abstract
This case study focuses on 3D Robotics, a drone company with UAV platforms. The case study focuses on what 3DR should pursue at its critical inflection point within its history. The case study highlights what is unique about 3DR, particularly when compared to a more traditional non-open, non-Maker company.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1: 3DR Financials
Rudimentary, fictional income statement (in thousands $US)
| Year | 2013 | 2012 | 2011 |
| Total Revenue | 20,000 | 10,000 | 5,000 |
| Cost of Revenue | 11,000 | 6,000 | 2,900 |
| Gross Profit 1 | 9,000 | 4,000 | 2,100 |
| Operating Expenses | |||
| Research/Development | 10,000 | 3,000 | 1,700 |
| Selling General and Administrative | 4,000 | 1,000 | |
| Non Recurring | - | - | - |
| Total Operating Expenses | - | - | - |
| Operating Income or Loss | -5,000 | 0 | 100 |
Source: 3DR.
Exhibit 2: Funding History and Cap Table
| Round | Date | Amount | Investors |
| Self-Financed | $50,000 | ||
| Series A | 11/5/12 | $5.1 million | True Ventures, O’Reilly AlphaTech Ventures, and others |
| Series B | 9/12/13 | $31 million | Mayfield Fund ($6 million), Foundry Group, True Ventures, O’Reilly AlphaTech Ventures, and others |
Fake Cap Table:
1,000,000 shares total
Chris Anderson: 200,000
Jordi Muñoz: 200,000
True: 180,000
OATV: 90,000
Foundry: 80,000
Mayfield: 50,000
Other investors: 100,000
Options pool: 100,000
Source: 3DR.
Exhibit 3: Open/Maker Example: MakerBot Industries
MakerBot Industries is a Brooklyn, New York-based company that made 3D printers. It was founded in January 2009 by Bre Pettis, Adam Mayer, and Zach Hoeken Smith (he was one of the founding members of the RepRap Research Foundation, a non-profit organization that advanced research in open-source 3D printers). Seed funding was provided by Jack Lodwick ($50,000) and Adrian and Christine Bowyer ($25,000). In August 2011, the Foundry Group invested $10 million and joined the board. As of March 2011, the company had sold 3,500 units and by 2012, more than 5,200 MakerBots had been sold. Revenue in 2013 was $75 million, and the company had sold more than 22,000 units. On June 19, 2013, Stratasys Inc. acquired MakerBot in a stock deal worth $403 million based on the share value of Stratasys, making MakerBot a subsidiary of Stratasys. Stratasys paid $403 million in exchange for 100 percent of MakerBot’s stock. The remaining two-thirds of the deal (a $604 million total deal) would be subject to MakerBot’s performance over the following two years.
Early on, MakerBot made the first mainstream $1,000 3D printers. Rather than using laser, the MakerBot Thing-O-Matic printer built up objects by squeezing out a 0.33-mm-thick thread of melted ABS plastic, which comes in multi-colored reels. MakerBots were personalized and decorated with Day-Glo letters.
MakerBot was designed by a community, built upon several previous open-source projects such as RepRap mentioned above, the Arduino microprocessor board, and a series of software packages that turned CAD files into instructions for the three motors that controlled a 3-D printer’s motors. Anderson said: “In this case, open source means open everything: electronics, software, physical design, documentation, even the logo….It is a shining example of how abandoning intellectual property protection can actually grant even more protection in the form of community support and goodwill.” 2
By 2014, MakerBot had numerous products like the MakerBot Replicator Mini (compact 3D printer), MakerBot Replicator (desktop 3D printer), MakerBot Replicator Z18 (3D printer), MakerBot Replicator 2 (desktop 3D printer), MakerBot Replicator 2X (experimental 3D printer), and the MakerBot Digitizer (desktop 3D scanner).
Source: Various. http://store.makerbot.com/replicator-z18
Exhibit 4: 3DR’s Reward System
Source: Chris Anderson, Makers, 2012, p. 111.
Exhibit 5: DJI Profile
Products:
- 5 Ready-to-Fly drones ($499 to $1,200) available on DJI’s website
- 4 Flying Platforms (for high-level professional aerial photography and cinematography at $2,000 to $6,000) available through dealers
- Multi-rotor and Helicopter Flight Controllers available through dealers
- Camera Gimbals, and Accessories ($2,000 to $3,000) available through dealers
Revenue: $131 million
Employees: 900 in China, Japan, Europe, and the U.S. with 30 researchers in Hong Kong (many of them students or graduates of Hong Kong University of Science and Technology)
R&D: Unknown
Source:http://www.scmp.com/news/hong-kong/article/1370451/apple-pearl-river-delta-dji-innovations-taking-flight, December 2, 2013.
Exhibit 6: Potential Markets
Security and Monitoring: Drones could complement or replace static security cameras. In New York, for example, former Mayor Michael Bloomberg said drones will ultimately supplement or replace the many security cameras operating throughout the city. Security drones might also replace or supplement foot and vehicle patrols at large commercial facilities like factories, office parks, and power plants. Another likely application is the monitoring of ecologically sensitive areas for fires, illegal logging, poaching, and other environmental threats such as invasive species.
Exploration, Aid Efforts, and Disaster Recovery: Drones and other robots could conduct searches to find lost vehicles or enter situations that are too difficult for humans.
Entertainment: Recreational drone flying is already a fairly established category in the toy industry. The quadricopter by Parrot was a trailblazer in developing technology that allows toys to be remote controlled by an iPhone. And one gyroscope-equipped helicopter manufactured by Syma places routinely among Amazon’s top 20 best-selling toys.
Delivery and Errands: Drones could be deployed to deliver items such as prescription drugs from pharmacies, meals from restaurants, and food from supermarkets, as well as corporate documents. While not able to fly yet due to the FAA restriction, the “TacoCopter,” designed in Silicon Valley, is already able to deliver tacos right to doorsteps in San Francisco via unmanned helicopter.
Logistics: Theoretically, large drones could travel between Amazon’s warehouses (carrying heavier loads) for use in inventory management, rather than just final customer fulfillment.
Journalism, Filmmaking, and Photography: The possibilities for using drones in the realms of video journalism and documentary filmmaking are endless.
Farming: The Environmental Protection Agency is apparently already using drone technology to monitor livestock farms, and some farmers will likely eventually begin using drones to manage agricultural crops (see above).
Military: According to Peter W. Singer, a Brookings Institution drones expert, the military now has 8,000 UAVs in the air and 12,000 on the ground. The U.S. Air Force now trains more UAV operators than fighter and bomber pilots.
Source: Shortened and edited from Marcelo Ballve, “Commercial Drones are Becoming a Reality, with Huge Impacts for Many Industries,” Business Insider, April 28, 2014.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
