Stratasys Acquiring MakerBot | Hacker News Reader

Stratasys Acquiring MakerBot

techcrunch.com

119 pointscoloneltcb40 comments

I think what Makerbot had, and others don't have, is a product as opposed to a hack. I love the RepRap, it's cooler than cool, but my Dad would never buy one. The Replicator 2 is a refinement over four years of iterative offerings which each informed on the next iteration. From the initial 'cupcake' (which I help beta test the build instructions on) to the Replicator to the Replicator II, each step along the way has explored materials vs handling vs control schemes vs build flow. I'm sure a few have shown up at Stratsys' customers where they give an engineer one to 'punch out' the basic concept they are working on before sending it to the expensive machine. They have also made good strides in reliability and repeatability.

In Q1 they had more revenue than all of 2012 according to some stories. So Stratasys, the current leader in 3D printers had a choice, buy them or kill them. It's pretty clear Makerbot wasn't going away.

Killing them would involve coming out with something to compete with them. That would cost, conservatively, in a company like Stratsys, about $50M and 24 months. Maybe 12 if they did the 'crack team in an off site location without interruptions and poaching.' Let's be optimistic and say there is a 50/50 chance of hitting a product that is competitive with the product that Makerbot will announce in 2015. How big will Makerbot be? 2x, 4x, or 10x their current size? If the competitive product fails what will it cost to acquire Makerbot? $1B? $2B? Will it even be possible?

Looking at it from a pure engineering play it makes little sense, after all Stratsys could use the RepRap stuff and make their own RepRap clone right? But that only validates the market which invariably favors the market leader, in this case Makerbot.

So if you think 3D printing is going to be 'the big thing' in manufacturing going forward you're kind of stuck. Stratasys had to buy Makebot or risk losing to them.

I got to live through a very similar situation at Sun. When it got big enough DEC had a problem, do they buy the upcoming workstation vendor which was using commodity Microprocessors or try to kill it? DEC chose poorly and paid for it with their own existence which let Sun move into that spot until it died. I remember reading a great article when Sun posted a $1B in annual revenue and an analyst wrote "What would DEC do with a billion dollars?" Talking about the lost revenue because DEC was avoiding open systems and commodity hardware like the plague.

Trying to guess the future is hard, very hard, but I don't doubt for a moment that Stratsys has always had the goal that if one of these hobbyist 3D printing companies threatened to break out they would buy them before they couldn't afford it. Makerbot triggered that particular outcome by building a successful product.

What sort of IP does MakerBot have? Its a reprap (fully opensource) that needs slightly-less-constant maintenance, and they've iterated on the extruder about 10 times. There's also some software.

If $400,000,000 (possibly $600,000,000) isn't a big enough budget to develop a low end 3D printer, what are the development budgets of their industrial grade printers?

IP isn't the only kind of value. MakerBot has a pouplar hardware product in active production, which represents a pretty big investment that can't be easily reproduced (or Stratasys, which makes its own hardware, would probably done so). They have a very strong brand, including the Thingiverse site. These are things that drive Replicator sales in the future. And Stratasys (correctly) views them as someone they'd rather acquire now than in three years.

That said: yes, the MakerBot really is just a refined RepRap. There's not much really of unique value there, technologically, beyond the aforementioned high expense of "refining" a hardware product.

They are also getting the branding and employees, which I would imagine are where most of the worth is.

Also, the MakerBot Replicator 2, which has sold more units than all previous models combined, is mostly not at all opensource.

it's definitely not a talent acquisition. most of the valuable employees left in the past few years.

Do you have a lot of knowledge of their team's background and what Stratasys wanted from this deal? Without a clear definition of what's valuable here that's a sweeping judgement.

it is quasi-public knowledge that Makerbot has been hemorrhaging engineers for the past few years, and continues to suffer a high turnover rate due to a toxic work environment. you're right, i have firsthand knowledge about what exactly Stratasys wanted from this deal, but what i do know is that it doesn't make very much sense to acquire the company for its engineering team.

I assume you meant "I don't have firsthand knowledge"

thanks that is what i meant.

I happen to have first hand knowledge that two extremely good engineers fucked off when things started going closed and ugly and immoral.

MakerBot have at least some patents, including a patent on a conveyor system for automated building.

Which never worked correctly, and was silently scrapped.

Yeah, though if someone else does manage to come up with one that works it'd let Stratasys sue them and probably even buy it off them in bankrupcy.

First off, it was $200M cash and $400 newly issued stock. They'll have to get the shareholders to approve, but seeing as they're pretty well up in after-hours, I don't think that will be a problem.

Also they had a $10M round just recently, so those investors are going to want to cash out.

After that, theres rumors that their last year broke $70M in revenues (after $10M in revenues the year before), and they're not really slowing down.

So, all things considered its a high price, but I dont think $200M cash isn't too much to fork over.

The big question will be how they handle it. Will they start persuing all the other (much smaller) 3D printing companies for infringement? Will they just give makerbot more resources and freedom and tell them to keep doing their thing? Will they make their (professional) CAD software compatible with Makerbots printers and software, allowing a clean upgrade path between low-end and high-end printers? We'll see, but apparently Stratasys has high hopes for what they can do with it.

Isn't it a 200M earn out after 12 or 18 months and 400M in stock right away? 200M cash is likely more money than Stratasys has on hand right now given their balance sheet.

Original MakerBot was a pretty good example of Open Source HW. Replicator 2 steered away from that. I wonder what will happen now?

Has anyone heard if they will take the tech back towards open or move in a closed direction? I don't know much about Statasys but I'm guessing they are a closed company and their machines aren't open sourced?

Statasys is the company that unilaterally suspended a leasing contract for one of their more professional targeted printers after the leaser used it to print lower receivers and other various gun parts.

I'm not too sure they are up to par with the freedoms open source is meant to afford.

That's the first thing that came to mind for me too.

Some discussion about that here, but no speculation http://fabbaloo.com/blog/2013/6/19/breaking-stratasys-acquir...

Is there an expert here that can explain this valuation? They only sold 22k 3D printer and they don't really innovate agains't open-source 3D printer.

Sorry, I'm no expert but it seems there's a huge future and a heck of a lot of excitement around 3D printing. Supposedly they've sold 22,000 printers and a deal for $403 million is the equivalent of $18k per unit sold. Given units sell for about $2k, this seems to be a deal focusing heavily on the technology, future and potential rather than the business fundamentals (but, as always, a disclaimer.. I could be wrong ;-)).

It must be for the brand, because Stratasys already has the technology to make 3D printers. It's also defensive, because it's an all stock deal, so the acquired team has to stay at Stratasys for a while (and not be/work for the competition) to make this worth their while.

edit: actually I forgot to do the math. if they sold $44M of stuff already, 10x that for an obviously growing business is a pretty typical exit

Consider also, that Stratasys had no answer to their biggest competitor's (3DSystems) consumer line that's been going gangbusters (Cubify).

I can imagine a world where $403M worth of stock is a good trade for a well-known name, a product line with a large customer base, and profitable consumer sub-unit to compete your biggest competitor, who has the same when you don't.

They sold $22MM worth of 3D printers in the last 9 months (3 quarters) - nearly matching their revenue over the previous 3 years, are a household name in the industry, and led by a "rockstar" in the 3d printing world.

So, sounds a lot like "hockeystick" and "hot property" in the software world, no?

They sold for about a 10x multiple of annual revenue. That's not atypical for a startup that's growing quickly.

Staples is selling a 3d printer.

My guess is that Stratasys needs something on the low end, and quickly to insure that they still exist in a few years.

Wow. This is more than 2x my most optimistic estimates when I first heard the rumors, but I was banking on a larger cash component. I'm in agreement with other posters here who have suggested the purchase is for the brand name and I want to add that control of Thingiverse is no small matter either.

I am no expert but I believe Stratasys paid for the brand and community. MakerBot is the most well-known 3D printer out there but not the cheapest or most well-designed (in the prosumer category). My guess is that the infusion of cash will help MakerBot manufacture more printers at cheaper costs and, thus, enable them to target additional market segments (beyond the prosumer category, where they already face competition from Form1 labs).

Also, Bre Pettis has a lot of supporters who'll stand by him no matter how self-serving his actions. For example, people supported him using his blog to to publicly humiliate newbies to Open Hardware for not opening up their derivatives of his designs sufficiently. The same people later insisted there's nothing wrong with him closing off his derivatives of other's designs and that anyone who complains about this is hostile and inflammatory, even comparing them to terrorists - because of course, holding someone to the same standard they hold others to is far less inflammatory than calling someone a terrorist fundamentalist. I am sadly not kidding.

Edit: I wouldn't even be surprised if Stratasys managed to get away with patent lawsuits against open 3D printer manufacturers with him on board.

I just hope (selfishly) that this doesn't impact their release of the Digitizer (which I'm currently super excited about).

Well this is exciting. I suppose we'll see a much larger lineup of affordable desktop printers with better technology as well, in larger markets.

I've heard of a lot of problems with the replicators, yet they're still incredibly popular, so hopefully we'll see all those issues ironed out.

Congrats to both companies!

great, now printer materials will cost a fortune.

Why is that? Makerbots use the same material as Printrbots, RepRaps, etc... It is available from multiple retailers.

Who is buying the 11,000 3d printers?

grats :)

Sounds like an acqhire to me.

If an acqhire, it's not for the engineering team. As addressed above, it's more likely for the brand recognition - given how finely tuned their propaganda machine is, they may be worth it.

It is certainly not for the engineering. I purchased a Makerbot and was horrified at what passed for engineering in the design of their product. They claim some absurd accuracy in the Z axis, when on my machine (Thing O matic) the Z axis carrier would flex a 1/4 inch while printing. How can you have .00? accuracy when the whole platform flexes .250?

That is basically my experience with them as well. I've assembled or performed significant maintenance on every printer model they've put out, except maybe the replicator 1, and I've never been impressed. Their extruders are especially nightmarish, even in comparison to the standard reprap setup.

I've also had the pleasure of looking at disassembled Stratasys machines, and the design and workmanship are pretty impressive.

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