The last half-dozen or so years have not been kind to traditional electronics stores—Circuit City has vanished, Best Buy has struggled, and RadioShack has filed for bankruptcy protection.
Then there’s SparkFun, an untraditional online retailer selling supergeeky stuff like microcontrollers and circuit boards. Its annual revenue, while still modest, has tripled since 2009, reaching $32 million. Defying convention, the 154-person company has never taken investor money, staying profitable as it has grown.
Unless you’re a computer-hardware hacker, you probably haven’t heard of SparkFun. It’s a beneficiary of the rise of the maker movement, that convergence of old-school hobbyist tinkering and the age of programmable electronics. Like previous tools that have democratized digital creation, customizable hardware is making it cheaper and easier for do-it-yourselfers to create their own gizmos and gadgets, and people need to buy their programmable circuit boards, motion sensors, accelerometers, and LED lights somewhere. SparkFun “is basically in the unsexy part of the business—supplying components,” says Tim O’Reilly, founder of O’Reilly Media, which tracks emerging technology. “But they’re absolutely a major player.”
Founder Nathan Seidle, 33, cheerily admits that he did not predict the maker movement. He just had a knack for dreaming up customized products and kits that simplify the maker’s job. (The company offers around 500 SparkFun-specific products in addition to another 2,500 or so third-party items.) “We make the technology accessible,” Seidle says. “We make [components] a little bigger, a little easier to use; we give you the hookup guide.”
Today, SparkFun might be in a better spot than almost any other company in the rapidly changing world of “electronics.” Maker hobbyists are becoming entrepreneurs. Schools are teaching youngsters to program hardware. Last year, SparkFun attended the first-ever Maker Faire at the White House. And big business is interested too. Recently, SparkFun collaborated with Intel on a batch of custom products based on the chip giant’s new maker-focused circuit board. “Over the next couple of years,” Seidle says, “I think we’re in a fantastic position.”
As an electrical engineering undergraduate at the University of Colorado in 2003, Seidle burned out a circuit board. He needed a cheap replacement, but the only options seemed to be in huge online catalogs with no pictures. He finally found an overseas seller called Olimex, which had the right price but a cumbersome ordering process—it involved faxing Bulgaria.
Figuring that there might be a market of engineers like him, he set up a user-friendly website reselling stuff from Olimex. It was a bedroom operation: Seidle played customer service department by telling callers he’d check with the “shipping department”—i.e., him. In time, he and a small crew added “manufacturing” (on a hot plate): combining, say, a sensor and a circuit board and selling that as a new product. This was the seed of SparkFun’s strategy. Engineers could do such assembly on their own, but SparkFun’s version was ready-built, debugged, and pretested. Tailoring offerings according to its customers’ needs, SparkFun kept expanding its product line. Within three years, it fulfilled 10,000 orders.
Gradually, SparkFun has updated its business model. It now creates and assembles its own designs and groups products in custom kits, backed with documentation and tutorials that help distinguish its versions from commodities that can be purchased more cheaply elsewhere. (The company’s top seller is the SparkFun Inventor’s Kit, a $100 pack of gear and instructions for learning to program hardware.) An open-source model allows customers to sell iterations of their own inventions, provided those iterations are “open” too. Seidle used to dream of having his own patents but ditched that when he figured that open source was better for business, since it increased enthusiasm and forced discipline at SparkFun, which must innovate quickly and constantly, to give its customers the new products they want. Meanwhile, SparkFun is keeping inventory thin. It adds a dozen or more offerings a week and retires others. Its home-brewed products are assembled on the manufacturing floor of its Colorado headquarters. The company is now taking a more proactive role in marketing. “We had a fantastic monopoly—and then these other companies started popping up,” Seidle says. New York–based Adafruit launched in 2005; by 2013, its revenue hit $22 million. Make magazine debuted the same year, becoming a sort of movement bible, holding Maker Faires and starting its own Maker Shed online store. Similar sellers in China and elsewhere have added to the competition. Seidle fought back by selling SparkFun’s gear in more expensive, snazzy red boxes that are now a familiar sight wherever hacker types gather. The company began producing a steady stream of videos highlighting talkworthy projects devised by “creative technologist” Nick Poole. It belatedly embraced social media.
Most recently, SparkFun has pursued the education market, organizing hardware-hacking workshops and teaching teachers to make more makers. “It is the long-term bet,” Seidle says. Today there are ninth graders using his company’s products to get hands-on experiences he didn’t have until his senior year in college. “How much more successful and engaged are they going to be in their pursuits in life?” he asks. If they owe some of that to SparkFun, that can’t be bad for business.