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#DigitalSkeptic: JOBS Act Maker Investors Face Major Retail Hurdle

FLUSHING MEADOW PARK, QUEENS, N.Y. ( TheStreet) -- Austin Frawley didn't need to make the trip here to the New York Hall of Science, this year's site for the World Maker Faire, to figure out the big business problem lurking in the big "maker movement."

"With these new startups you can tell pretty quickly that they're only in it for themselves," Frawley told me on the phone last week, long before the weekend's festivities.

A new generation of investors, let loose this week by the deregulation of private investment via the JOBS Act, will want to pay close heed to Frawley. He's director of operations for Kidding Around, a chain of three upscale specialty toy stores in Manhattan and Northern New Jersey. Frawley grew up in the world of actually selling pricey, hip gadgets to kids and young adults and as such offers a unique perspective on the red-hot market of privately financed pricey, hip products enabled by a new generation of 3-D printers such as MakerBot, open-source chip development platforms such as Arduino and Raspberry Pi and computer numerical control tools such as ShopBot.

His mother started the business 23 years ago, and over the past two decades this 30-year-old has witnessed one major business innovation onslaught after another.

"We got so beat up on price with Walmart (WMT), Toys R Us and Amazon (AMZN)," he explained, "that you learn the hard way that even the greatest product in the world will not be something you can touch if the price is wrong."

Frawley is blunt about the pricing challenges the new generation of smart products faces.

"We are really excited about some of the toys coming out of these companies," he said. For example, Frawley was initially attracted to a line of snap-together circuits and control kits from a Manhattan-based company called littleBits.

"They are here in town. It's a great toy," he said. "But we took a look at what they are selling it for online, and there is no room left for the retailer."

Makers don't have much room to make any money
To get a feel for just how serious the retail pricing challenge will be for the larger maker movement, I made the trip out here to check in with some of the maker movement's biggest movers. And sure enough, Frawley's take on the challenges of making money as a "maker" hit a bullseye.
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