What’s wrong with 3D printing? (and why we acquired Micronics)
It’s hard not to be distracted by all the noise in 3D printing. Companies that raised eye watering amounts of venture capital funding are sold at a fire sale value (over a $1B raised between their private and public life, sold for $185M) or declaring bankruptcy (raised over $200M during lifetime).
These two examples are just from the last 7 days, but the struggles of the industry over the last few years have been well documented [1].
Formlabs is on a different path: growing, managed responsibly, but almost every day I get asked what I think is going to happen in our industry? Let’s break it down, I’ll focus on companies building and selling printers (OEMs).
3D printing industry in 2024
There are about 100–150 manufacturers of 3D printers out there, ranging from Kickstarter projects all the way to public companies that have been around for 30 years. A quick summary of their 2023 performance:
It’s pretty obvious there is a problem here — $7B is really not a huge number, in the adjacent industry of drones, that went through the hype cycle at the same time, a single company (DJI) is rumored to be reaching close to this revenue!
In 3D printing over 150 companies compete with each other for the same amount of revenue — the result is pretty disastrous. Of the public companies in 3D printing there is not a single one that is profitable (EBITDA %, last 12 months)!
In fact, finding a profitable 3D printing company is extremely difficult. We are fortunate to be a standard stop for companies when they are thinking about getting acquired, so over the years we have seen a few dozen private companies and we know of <5 total companies that were ever profitable on an EBITDA basis.
Obviously not sustainable
Based on what we saw, my estimate is that the current 3D printing companies have around a cumulative -30% EBITDA margin. So what will happen next? My two cents:
If these predictions come true, the industry will jump from -30% to +15% EBITDA margin.
Financial games will not solve the problem
What will not help — companies that are individually wildly unprofitable merging to find “synergies”. Unfortunately this is what we see in the market primarily today, instead of the path that seems to be the more obvious one: create more value for your customers.
Companies need to focus on building products that people actually want to buy and can get value out of in the near term. Not over-hyped technologies that are years away from wide adoption, but the products that deliver obvious value (great price-performance ratio) today. This is what has driven every industrial technology boom in the past (cars, phones, computers, EVs…).
Creating value and the DNA of building
Formlabs is a product company — we make leaps in performance and ease of use that delight our customers. We need strong builders to achieve this on our journey to create more value for our customers. It’s not enough to build a single good product, my job as a leader of Formlabs is to create the team and the culture (Formlabs DNA) that can continuously create these products.
On the backdrop of all of this is why I am so excited to share that we are acquiring Micronics today. If you don’t know, Micronics is a tiny startup (literally two guys still at university) that has proven that making a <$10k SLS 3D printer is possible, by building a prototype and raising about $1.3M on Kickstarter. We are acquiring them because we (Formlabs + Micronics) want to bring more accessible, powerful SLS printers to the market and we believe we can get there together faster.
Today Formlabs ships more than 50% of all SLS units in the world. While I am proud of this achievement anyone studying the history of any technology-driven industry knows that success brings more competition, and in turn even higher need to accelerate.
What makes us so excited about Henry and Luke is that they embody the very people we make our products for. They live in the “flow of making” (Henry literally has a CNC machine in his dorm room) and the only limitation to what they are able to make is the limitations of the tools that they are using. It’s a huge inspiration for me to see what they have built under 2 years (and a healthy kick in the pants to remember that we can’t slow down).
It makes me happy to see that 12 years in we are still singularly, maniacally invested in making better products (in stark contrast with the dysfunctional part of our industry).
Formlings if you are still reading — let’s focus on:
- Building amazing products that bring obvious value to our customers
- Ignoring the noise in the market
- Finding opportunities (hire great people, educate customers) while the industry kicks its training wheels off.
Let’s get back to building!
[2] — based on Wohlers Associates report and Context 3D report
