It seems a foregone conclusion that 3D printing will change the world. It’s already revolutionized prototyping, and we’re now getting a glimpse of the technology’s potential in mass customization, medicine and home use. It’s easy to imagine a future where everything is bespoke: even items mass manufactured in China will be complemented with 3D printed customization in stores. Once printers become commonplace in the home, one can conceive printing custom glasses and plates for a dinner party. In medicine, hospitals are already printing structural body components. In labs they are working on printing out organs, though it will be a while before this becomes commonplace.
As 3D printers are following (a somewhat slower) Moore’s law in terms of improvements (finer resolution, multi-material printing, etc.) and cost decreases, we can foresee a day where they will be common in the home. So far, no killer application has been invented for them, but one seems bound to come. Toy printing is already a large category as kids’ appetite for custom toys seems infinite.
Given that global world product is $72 trillion in 2012 nominal dollars, and that industry represents 30% of that, a whopping $22 trillion dollars of economic output faces revolution. I have considered what part I should be taking in this revolution and so far have come up short. Each time I considered an investment thesis, I discarded it.
Here are some of the options my team and I considered:
1. Invest in the printer makers:
We had the opportunity to invest in Makerbot reasonably early on. We passed on the investment because hardware manufacturing is capital intensive. We also felt it would ultimately be low margin as many deep pocketed players would enter the market, not least of which will probably be HP, whenever the market becomes big enough.
Also given the speed at which the technology is evolving, if you miss one of the development / upgrade cycles, you might be out of the game completely. This happened in other hardware manufacturing industries. In video games it looks like the Wii U’s misfire might mark the end of Nintendo as a console marker (as previously happened to Sega and others in the gaming market). A similar development is occurring in cell phone and television manufacturing.
Given MakerBot’s recent acquisition for over $400 million by Read More →