Entrepreneurial opportunities from 3D printing

This week has been my week for 3D printing in Europe. I gave a talk on the industry’s history at a workshop in Germany on the business of 3D printing on Tuesday, and listened to a number of other academics talk about their own research. On Thursday, I visited Materialise, a (soon to be public) 3D printing service bureau in Belgium. On Friday, I interviewed one of the founders of Ultimaker, a Dutch startup and a leading maker of consumer 3D printers.

In my talk, I said the flurry of consumer 3D printing startups since 2005 can be attributed to

• The “maker” movement, which began with Make magazine in 2005
• Open design communities (as that term is defined by Christina Raasch), notably the RepRap project; and
• The 2006 expiration of a key 3D printing patent.

The first created both a market and a pool of potential entrepreneurs, while the latter two reduced the entry barriers for those entrepreneurs. Together, this brought dozens of new entrants into making 3D printers in the past decade.

From my interviews (including the two this week), it is clear that 3D printing has had a transformative impact on the entrepreneurial careers of engineers and other technical entrepreneurs. When they learn about 3D printing, they drop everything and try to figure out how to make a career out of working in the industry — usually by making a better mousetrap. (Obviously not everyone who learns of 3D printing does this — but the entrepreneurs are the ones who do so.)

This reminds me a lot of my earlier research on mobile apps and open source software, what I witnessed in internet services (Web 1.0) and the PC revolution, and what I read about the airplane and the automobile. An exciting, high-growth technology attracts hundreds of entrepreneurs, many with more technical than business acumen. The lucky ones ride the growth rocket to make multimillion dollar companies, while others crash and burn.

If (as we all expect) there are scale economies, then the excess entry by firms will bring a dramatic shakeout. In another 10 years, there will be 5-10 major personal 3D printer makers — some of which will have been bought by the existing industrial makers (as Stratasys did with Makerbot) or other companies (HP, IBM, GE, etc.)

On the other hand, many of these companies will survive (or profitably exit) by migrating to niches within the product category, or upstream or downstream (or laterally) to other parts of the value network.

For example, the co-host of our workshop, Frank Piller, showed a plastic model mini-me that was scanned, hand-edited, and then printed in color. At €995 per model, it’s not a high-volume growth business, but it is a way to build resources and capabilities to pursue other opportunities.

This is an exciting time for these entrepreneurs, and for those (like me) studying such entrepreneurs. It will be also an exciting time for engineers to join the industry, just as it was 20 years ago for Internet services or 30+ years ago for personal computing.

The multi-dimensional 3D printing revolution

At @KeckGrad today, our graduate students are doing their year-end project presentations. In watching the presentation by mechanical engineering students gave me insight into how 3D printing is going to change entrepreneurship.

There are at least three different dimensions of how 3D printing is creating entrepreneurial opportunities. In each case, there are parallels between personal computers almost 40 years ago — and smartphones today — and how they gradually displaced mainframe computers. This is a classic Clay Christensen “disruptive innovation”.

Some of the emphasis on the impact of 3D printing has focused on the 3D printing companies. In fact, Scott Shane published a 2000 research paper on how a variety of companies licensed the original 3D printing technology from MIT. This has been the subject of news has also been on some of the larger and more successful 3D printer manufacturers, whether public companies such as Stratasys or 3D Systems or startups such as Shapeways.

A second opportunity — the one that captures the attention of the popular press — is the print-on-demand business.This nicely fits the mass customization vision of Silicon Valley marketing guru Regis McKenna and German innovation scholar Frank Piller. An example of this is Layer By Layer (@LayerByLayer3D) a company formed by Harvey Mudd students who are graduating next week, who proposed to custom-print iPhone cases.

An advantage of the 3D printing model is easier customization and lower setup costs. However, for now it’s slower and more expensive per unit, and has limitations in product reliability.

However, at the KGI presentation today, I saw a third category of opportunity. This seems like a much broader and more immediate application of 3D printing: changing the process of industrial design.

Among our Team Masters Projects, a team of KGI and Harvey Mudd students spent the academic year to create a mechanism for evenly coating seeds. As in previous projects, they used SolidWorks to design the mechanical components, and had some bent or machined metal components.

However, it became obvious to the team that the default prototype fabrication approach is the 3D printer. The students created two seed picking components that could be sized and shaped to fit whatever requirements they had. Once they had the design, they set the printer going and hard their part ready in the morning.

This reminds me of my first computer experience (pre-PC), when computing job turn-arounds took 10 minutes to several hours. To improve on batch computing, we eventually obtained timesharing — quick but expensive — and then desktop personal computing and handheld computing. Over time, as computing became quicker and cheaper, it allowed computing to permeate and enable every aspect of engineering, science, business and government.

So if 3D printing becomes cheap, ubiquitous and quick, what will that do to physical design? The marginal cost may not become as low as software products, but it will certainly close the gap and thus converge the innovation processes between physical and intangible goods.