Taking a look at the current state of 3D print Vertical Markets, and if we can trust the numbers being reported. How many different industry areas is 3D printing being found in?
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Current State of 3D Print Vertical Markets
The 3D print industry may have changed or not changed so much from 2015 to 2016 in a certain area when you look at the vertical markets. Sculpteo puts out a report on The State of 3D printing annually. They surveyed about 900 customers. Keep in mind that it is skewed because it is already their customer base. That skews it a bit to professionals in and around the world. They probably have more international customers than they do because they are newer to the US. They are talking about vertical markets, and vertical markets are these market segments that are high tech. These are electronics, higher education, healthcare, automotive, aeronautics.
It is different market segments that 3D printing or 3D print technology is being used in. We’ve been trying to get someone in aerospace to come on the podcast to talk about it, but a lot of those companies are very secretive on how they do it. There is nonstop talk about use of 3D printing in the aerospace industry, so it is surprising that they list it as only 3%. These numbers are the vertical markets segment for the service bureaus, let’s be really careful not to overstate these number as being industry wide numbers. We have to be really careful. This is why we bring this up on Business Monday. Where you pull your data from when you are building your business is a very big deal. Too often, we pull the one we think that shows what we want it show.
I disagree with the aerospace industry vertical markets statistic this puts out. I think they are using additive manufacturing 3D printing a whole lot more than the other industries. If you go look at this article on Sculpteo’s blog, you see this graphic. This is in no way a market share percentages. When you use market research like this, it is just too easy to pull a report that supports what you want to say, but is inadequate in terms of its survey size or a survey from the wrong audience. This is surveying from Sculpteo’s customers. Vertical markets are represented by people whom they pull their respondents into their survey which may very well be that.
Additive manufacturing is being used so much. In terms of even thinking about market share, the cost of the parts that are being made are very expensive. In terms of dollars being spent, it is very high. I see this happen so often in start up business plans. They get data from somewhere and the data is so wrong. There is no way that it is true. When you bring up something that is so distractingly off, it makes you look bad from building a business plan. Be careful about where you are getting your vertical markets information and your data. 3% for aerospace is not big enough, it’s not a big enough market, and somebody might say that when they look at that data. In reality, the dollars in that market, even if it is 3%, because there is not as many companies as there might be variety of companies using it for consumer goods. There aren’t a lot of companies but they are spending way more dollars. It would be completely off either way. You got to dig deeper into the numbers.
These percentage numbers aren’t terribly useful to very many people in the industry if they are preparing a business plan. It is misleading. The only thing I find useful is listing all of the different vertical markets that 3D printing is being used in amongst these 900 professionals that we surveyed – but it’s only 900 professionals that are using Sculpteo’s services. This is a smaller vertical markets sample of our niche. People want to publish charts and infographics, but if you take your internal information and turn it into the infographic, this tells me about your company. I just found out market information about you. You just revealed your inner workings. This is not something that you should be building charts and graphs off because it is misleading to the public and it is revealing something that is proprietary and important information about your user demographics.
This is not helping Sculpteo. This is giving their competitors information. They have on here, “Spending on additive manufacturing increased 68% from 2014 to 2015,” that’s their market. Now we know how much their business grew from year to year, I don’t think they intended to have the information put out into the world. I don’t think they should have. Not only is it not accurate, because it is not just what people are reporting overall, but you just revealed what is among your customer’s reporting. That is bad. This is not a way to do business and to build a plan as well as not a way to market your company. All in all, I just want to point this out because this market research information is very different from the product market research that we do. It is entirely different. People always ask me if I can do market research and I say that I don’t do that because of the sampling size. It is not scientifically or statistically accurate and precise in the most way that is done by many companies.
I do not get in to that because it is difficult. You need to have lots of money in order for it to be statistically accurate. You need to profile them and know who they are, and get them to answer your survey. And have good survey questions! If out of the 900 respondents, think about how misleading this can be. They may ask you what is your title in your company, and you say that you are the chief design officer for so and so aerospace company. Now you get put into the vertical of aerospace. But you personally printed a chess set at Sculpteo which is why you got on their list. Although you are responding to the survey and they have used your title and categorized you in one of these vertical markets, which may not be why you are using the service bureau and you might not be responding at all to it in terms of your core business because they ask the questions in the wrong way.
I’m not saying that’s what they did here in the State of 3D Printing report, but that is how these surveys go wrong. We are not trying to trash this survey, but unless they are going to lay out their entire methodology and how accurate or careful they were to make sure that people are responding based on their business versus their personal use or they are not posting statistical margin of error for the information, then you really need to take this report with a grain of salt. They are putting these things out there so that they would get tweeted and they will get Facebooked and will get Instagrammed. That is the point of these charts. But the charts are data useless. I don’t want you to build a business on any one of these charts.
Make sure you have the raw data. Make sure you have gone to someone who is statistically accurate like the Wohlers Report. Terry Wholers is really respected in the industry, go to his site and buy a report from him if you need it for your industry. He’s got the information. Dive in and get that if you are serious about starting a business. The last thing you want to do is to start your business on flawed data. It makes you really look bad and you could build your business wrong. You could be skipping the most important of the vertical markets or the most important one in terms of dollars. You could build your business wrong because you used the survey on Instagram.
We’ve learned over a lot of years here to be very careful with how we research and plan what it is we are going to do on business. Our most recent venture which is not directly 3D printing related. It is something that we are doing our homework on before we go forward. We have reports that run that the podcast advertisement industry is anywhere from $100 million to $170 million. I don’t believe this is true at all. There are 20 or 30 high level podcasts like John Lee Dumas that can command that kind of ad dollars. When you look at his information, it is not that much money a year in ad dollars.
They’ve got to be misleading in terms of where those ad dollars. Maybe they are in Blog Talk Radio or other areas of the market and lumping it and calling it podcast ad dollars even though it is not. It is not realistic. I saw that same number that they believed that the podcast advertising market is $170 million. If you take $170 million, there is only 150,000 English spoken podcasts on iTunes. If that is the case, you are talking about $1,000,000 per podcast in ad revenue, that does not happen. When you are in the market and you look at that, you say that it is not right.
However, there is a business that they built around that statistic. That is dangerous for you because this is where you get into crazy valuation areas. People value you, and you think you are worth a whole lot more that you are and you end up extremely devalued because you did not have your numbers right. Or you might build your business in the wrong direction and you then need to make a serious expensive pivot.
That happened with Pinshape, they built their business on flawed data, and we thought that from the beginning. We said how can you build a business based on a zero revenue model and just on member numbers? They had a plan to sell their business based on the number of subscribers, not the amount of money those people were paying or making on their site. They based it on the idea that they could get to a membership level that was impossible from the way I looked at it. It is not going to grow that fast and quick even at the most aggressive numbers in the industry. That’s where I didn’t see it and that was based on some report, that was not not data-accurate and precise report on those vertical markets. When they told us that on air, I was like, “That does not jive with my numbers.” They got themselves sold out and they got lucky that they had a fire sale. I am glad Pinshape lives on but it was not the acquisition that they planned it to be. This is because of flawed information. They were also under extreme pressure because they took in so much funding dollars.
We see these charts and things go through social media all the time. We try to be really careful what we retweet without saying something accurate about it or questioning it. For those of you guys who are building a business, this information is the most critical information. So often you try to get this information for free, and for free, you should be skeptical over it. You, who is the person responsible for your business or your future business that you are trying to build, you need to keep your eyes open and do your job in a diligent way on data gathering and fact gathering to make sure that you are basing your plan on realistic numbers, and not on some rosy scenario.
If you can convince someone to give you that high valuation and high money, the reality is, that is not going to serve you best in the long run because there will be higher expectations of return on that money. If you are half the level as planned, that is as bad as underestimating it.
For those who are out of the country and want to enter the US market, there is a researcher that I have met and spoken to, and who I am really impressed by, who specifically specializes in that. His company is 50 USA Markets. He makes market entry research and strategy. He does the right research to give you the entry strategy you need so you do not end up in the wrong company segment. His name is Thomas Moviel. This is our special gift to you for checking in on Business Monday.
If any of you have seen charts or stats of research that you think is completely over blown or wrong or bogus, we want to hear about it. Give us a comment below. Hopefully, we are not the only people who are skeptical of these things. Let’s share it so we can see it.
- Sculpteo State of 3D Printing Report 2016
- Wholers Report
- Thomas Moviel – Market Entry Research & Strategy at 50 USA Markets
- Thomas Moviel on LinkedIn
- 3D Print Content is King – interview with Lucas Matheson of Pinshape
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