Please check the attached questions document (clear short answers in points if possible

Please check the attached questions document (clear short answers in points if possible


3D Robotics: Disrupting the Drone Market 3D Robotics: Disrupting the Drone Market Case Author: Toby Stuart & Chris Anderson Online Pub Date: January 04, 2017 | Original Pub. Date: 2015 Subject: Creativity & Innovation in Business, Entrepreneurial Strategies, Corporate Strategy Level: | Type: Indirect case | Length: 9340 Copyright: © 2015 Regents of the University of California Organization: 3D Robotics | Organization size: Medium Region: Northern America | State: California Industry: Manufacture of computer, electronic and optical products Originally Published in: Stuart, T. , & Anderson, C. ( 2015). 3D Robotics: Disrupting the drone market. The Berkeley-Haas Case Series. University of California, Berkeley. Haas School of Business. Publisher: The Berkeley-Haas Case Series. University of California, Berkeley. Haas School of Business DOI: https://dx.doi.org/10.4135/9781526407849 | Online ISBN: 9781526407849 www.princexml.com Prince - Non-commercial License This document was created with Prince, a great way of getting web content onto paper. javascript: void(0); javascript: void(0); javascript: void(0); javascript: void(0); javascript: void(0); https://dx.doi.org/10.4135/9781526407849 © 2015 Regents of the University of California The case studies on SAGE Business Cases are designed and optimized for online learning. Please refer to the online version of this case to fully experience any video, data embeds, spreadsheets, slides, or other resources that may be included. This content may only be distributed for use within George Brown College. https://dx.doi.org/10.4135/9781526407849 SAGE © 2015 Regents of the University of California SAGE Business Cases Page 2 of 17 3D Robotics: Disrupting the Drone Market https://dx.doi.org/10.4135/9781526407849 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. Case Keywords: Corporate Strategy, Entrepreneurship, Innovation, Crowdsourcing Ultimately, the way society best figures out how to think about a powerful new technology is to set it free and watch where it flies. —Chris Anderson, 3D Robotics CEO 1 Chris Anderson is incredibly special because he is not just creating a product, he is creating a movement. —Jon Callaghan, True Ventures 2 On a sunny, brisk spring day in 2014, Chris Anderson, CEO of 3D Robotics (3DR), a developer of drones, was squinting as he looked towards the sky at a small flying black and blue object with four spinning propellers. He was in the grassy patch outside their office testing the IRIS, a small drone that flew autonomously 3 via an Android tablet, phone, or laptop. Remarkably, it could be programmed to takeoff and fly from precise point A to B, avoid obstacles through sensors, and land on its own. While the word “drone” (or Unmanned Aerial Vehicles—”UAVs”) conjured up images of stealthy military crafts zipping around in secret unmanned missions, Anderson, former Wired Magazine Editor-in-Chief, 4 was changing that perception through 3DR, the company he had co-founded in 2009. 3DR was an example of the manufacturer of the future—a modern-day hardware designer that coordinated a large community of open source software developers who supported its devices. Anderson described the company as “using the software of today to build the hardware of tomorrow.” 5 The company, which initially targeted hobbyists, was exploring commercial uses in market segments that did not require FAA 6 approval. At the time of this case, drones were only permitted for personal use in the U.S. and were restricted to heights of 400 feet, to be within visual line of sight, and remain away from populated areas and airports. However, the FAA did offer special permits for commercial use (since 2009, the FAA has issued 1,387 of these Certifications of Authorization for limited UAV flights to government, educational, and research entities, and as of December 2013, there were 545 active permits). 7 The FAA was considering commercial use of drones to begin in 2015, but was cautious due to safety concerns. 3DR’s UAV platforms captured breathtaking aerial imagery for consumer enjoyment and data analysis, enabling mapping, surveying, 3D modeling, and more for possible commercial applications such as agriculture, photography, surveillance, search and rescue, construction, and ecological study. The worldwide drone industry was estimated by some to be $6 billion in 2013 and expected to grow to more than $11 billion over the next decade. 8 Some estimated market figures were much higher (see below). Amazon’s release on December 1, 2013 of an 80-second video and a 60-Minutes interview highlighting what drone package deliveries might look like (Prime Air program) undoubtedly contributed some hype to market assessments. 9 By 2014, 3DR had 200 employees in North America with a research and development office in Berkeley, California, and a manufacturing facility in Tijuana, Mexico (that manufactured ready-to-use drones that sold for as little as $400). The company had sales of $10 million on 30,000 orders in 2012, 10 and over $20 million SAGE © 2015 Regents of the University of California SAGE Business Cases Page 3 of 17 3D Robotics: Disrupting the Drone Market in 2013 by charging for the hardware and “giving away the bits [design files, software, etc.]” 11 to its 28,000 customers worldwide who also bought motors, batteries, cables, and propellers from 3DR. 3DR’s product line included a single plane-style drone, four copter drones, and IRIS, its new consumer drone (Exhibits 1 and 2). As Anderson’s eyes were riveted by each subtle movement of the IRIS, he was excited about the future of 3DR and amazed at the drone boom he and 3DR helped to create. In his head, he replayed a scenario that he’d been frequently mulling over: “We need to be the future of x.” One of his critical tasks over the next few months was to figure out, what is x going to be?—big data (e.g., agriculture, climate, search and rescue), personal aerial cinematography, or something else? Moreover, there was additional urgency in this decision because the competition had come on strong. In particular, the Chinese company DJI’s Phantom 2 personal drone had snuck up to dominate the market, which concerned Anderson and his team. DJI had raced to nearly 20 times the size of 3DR with 1,600 employees, 400 engineers, and over $500 million in revenue and focused entirely on drones for commercial and consumer markets. “At first, investors thought drones were not a market,” he said. “Then around nine months ago, they realized they were one. Now the question is, will we be the leader?” 12 The Maker Movement The internet democratized the tools both of “invention and of production,” according to Anderson. Now anyone could use software and new production tools to design and manufacture a physical product and “ship it” to people around the world. In essence, the internet liberated this world of “bits.” The internet’s model of innovation spurred entrepreneurship and economic growth, democratizing publishing, broadcasting, and communications that led to an increase in participation in everything digital—the Long Tail of bits, according to Anderson. Consumers’ wants could now be met in ways that physical stores could not. Anderson cited Amazon, which could list many more products than any physical retailer could carry, as an example. He argued that products no longer needed to sell in large quantities and instead, companies could use the internet to reach the increasingly discriminating consumer who follows social media and word of mouth to buy specialty products online. And the Web revolution went beyond just the ability to buy more things with greater choice. It allowed people to “make our own stuff” that others could consume, such as videos on YouTube, words (blogging), and pictures. “If you had talent and drive, you could find an audience, even if you didn’t work for the right company or have the right degree.” 13 Beyond the world of bits lay an entire massive world of “atoms,” or the real world of products and things. “Just imagine what a similar model could do in the larger economy of Real Stuff…the Long Tail of things…the shift in culture toward niche goods.” 14 This new world was what Anderson called “The New Industrial Revolution.” “The past 10 years have been about discovering new ways to create, invent, and work together on the Web. The next 10 years will be about applying those lessons to the real world,” he said. 15 By real world, Anderson was referring to physical products that—because of expertise, equipment, and costs of production on a large scale—had been closed to the pursuits of hobbyists and even entrepreneurs. He said: “Physical products are increasingly just digital information put in physical form by robotic devices…hardware is mostly software these days, with products becoming little more than intellectual property embodied in commodity materials….In short, the reason atoms are the new bits is that they can increasingly be made to act like bits.” 16 In this new world, anyone could invent or design something, upload files to a service to have the product made, or even make it themselves on a 3-D printer (an industrial robot that could make three-dimensional solid objects of virtually any shape from a digital model). Any designer now has the ability to quickly experiment with new product designs using such 3-D printers. These changes drove a new social movement aptly called the “Maker Movement” where participants could make things ranging from crafts to advanced electronics (Exhibit 3). Makers used digital desktop tools to create designs for new products. The “making” part of the Maker Movement could start with a 3-D printer SAGE © 2015 Regents of the University of California SAGE Business Cases Page 4 of 17 3D Robotics: Disrupting the Drone Market like MakerBot, a Brooklyn-based company that for six years has been building inexpensive 3-D printers in an open source development model, much like 3DR. Its latest products had an easy to use system, driven by a simple desktop application that allowed users to turn CAD files into physical things just like printing a photo. Anderson added: “And what’s clear about these new producers is that they’re not going to be making the same one-size-fits-all products that defined the mass-production era. Instead, they’re going to be starting with one-size-fits-one and building from there, finding out how many other consumers share their interest, passions, and unique needs.” 17 Makers could even share production spaces around the world called “makerspaces” like TechShop, 18 “a vibrant, creative community that provides access to tools, software and space,” started by a former executive of Kinko’s printing and copying. The Maker Movement also encompassed Etsy, for example, a web marketplace for Makers who sold arts and crafts and many other homemade things, as well as included the Maker Faire, “the Greatest Show (and Tell) on Earth—a family-friendly festival of invention, creativity and resourcefulness, and a celebration of the Maker movement.” 19 Many Maker companies started as hobbies and even raised money on crowdfunding sites like Kickstarter. “Today, the Maker Movement is where the personal computer revolution was in 1985—a garage phenomenon bringing a bottom-up challenge to the ruling order of the time,” said Anderson. “The great opportunity in the new Maker Movement is the ability to be both small and global. Both artisanal and innovative. Both high- tech and low-cost. Starting small and getting big….The shape of the twenty-first century’s industrial structure will be very different from the twentieth century’s. Rather than top-down innovation by some of the biggest companies in the world, we’re seeing bottom-up innovation by countless individuals, including amateurs, entrepreneurs, and professionals. We’ve already seen it work before in bits….Now the conditions have arrived for it to work again, at an even greater, broader scale, in atoms.” 20 Anderson emphasized that it was in the how prototypes could be made today that made all the difference: “As we’ve learned over the past few decades, digital is different.” 21 The fact that digital files could not only be shared and copied, but more importantly, modified, led to an open and collaborative culture. New Open Source Culture But Makers didn’t just make things. They could now share those designs and collaborate with others in online communities (an example was the rise of “open hardware” companies, like open source software and communities that launched Firefox or Linux) where makers launched companies like Arduino electronics development board, Google with its Android mobile operating system, open source cars, watches like Pebble, toaster ovens, and 3DR itself. Anderson called this new culture, a “remix” culture where he said the ability to easily “remix” digital files “is the engine that drives community….You don’t need to invent something from scratch or have an original idea. Instead, you can participate in a collaborative improvement of existing ideas or designs.