Ask around about what’s happening with the increasingly talked-about technology called 3-D printing and you’ll hear a barrage of comments that sound like something Isaac Asimov would say: “Did you know you can print canoes?” “They’re printing cars!” “Did you hear about the human heart they made?” “There’s a printer making edible food.” They can sound straight out of sci-fi, but they’re often true.

Three-dimensional printing has been around for more than 20 years, but recent advancements have made it easier than ever to use, as inventors look for ways to print more than just the highly durable plastic parts and trinkets in use today. In the near future, food, electrically conductive materials and composites stronger than steel will be able to be printed out in layers, allowing just about anyone anywhere to make a variety of products, ranging from hearing aids and electronic components to a beef tenderloin, medium-rare.

A lot of this will be possible thanks to Stratasys, an Eden Prairie company with more than 1,800 employees, considered to be the market leader in 3-D printing. It was one of the first to develop the capacity to print objects back in 1992, to serve primarily industrial clients who required rapid prototypes.

Since then, the $5 billion (market capitalization) company has quietly improved its technology, acquired or merged with other companies, and positioned itself so that today it’s at the forefront of a culture-shifting moment that will change the way we work and live.

And to think it all began with a frog.

The technology that drives Stratasys is fused-deposition modeling (FDM), an additive layering process that transforms consumable materials (such as liquid plastic) into specific objects, directed by a computer-aided design (CAD) file. The printer uses a hot-glue arm attached to a robotic arm and extrudes plastic. It was invented 26 years ago by Stratasys founder and CEO Scott Crump, an engineer who had been working in the semiconductor industry. At the time, he was just looking for a way to entertain his 2-year-old.

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Client Autodesk used Stratasys technology to print a full-scale aircraft engine model.

“I wanted to make her a froggy, so I used a glue gun loaded with a mixture of polyethylene and candle wax,” he explains. “The frog was layered. What came out looked more like Lincoln Logs, but in building those up, I could build up a frog.

“After that I just kept playing around with it. I mixed things up in our pots and pans, but our food started to taste a little weird, so I moved into the garage. One weekend I put $300 into it. As time went on my wife said, ‘You know, we’re $10,000 into this. We either have to start a business or you have to stop this nasty habit.’ ”

The start-up process might have been nasty, but Crump was familiar with how it would play out from his father, who had co-founded 10 companies, including Benson Optical. His dad became an early investor in his new venture.

Scott Crump knew he needed others. He also needed a name. A meticulous, deliberate man, he didn’t rush this step. He considered more than 2,000 possibilities before choosing Stratasys, which he liked since it used the word “stratify,” which refers to layers.

Next, the pitch—not easy. If people today are murky about what 3-D printing is, back then it was totally foreign. Crump got a lot of blank stares and not a lot of checks.

“We took it out to 75 venture capitalists and met with 20 of them,” he says. “It was a hard sell, which I can understand, as we had no employees, no product and no market. We finally connected with a group in Boston called Battery Ventures. In 1990 it committed to $1.2 million, which was enough to get products to market, but not break even. I thought it would take $90,000 to get cash-flow positive, but it took $30 million. Most executives get fired over that,” he says, laughing.

As he is his own boss, however, he decided not to fire himself, and business grew, thanks to early adopters such 3M, Biomet and General Motors, which started using Stratasys for low-volume prototyping and parts manufacturing. It gained a foothold in a variety of industrial spaces, including aerospace, med-tech and automotive. And in 1994 the company conducted an IPO, selling 1.38 million shares of stock at $5 per share, netting it $5.7 million.

What evolved has become a wildly profitable business model (see “Printing Out Money” on page two). Stratasys manufactures orders for industrial parts on its Eden Prairie campus, home to 85 3-D printers, which Crump refers to as systems. From order to delivery usually takes five to seven days. (Stratasys also has manufacturing facilities in six other locations around the world, including Belgium, Turkey and Australia.)

Then there’s selling 3-D printing systems to clients—and these are not products you’ll find in the Best Buy. High-end systems that can produce the largest parts go for $400,000; the most popular retails for $200,000.

Then a client can return to Stratasys to handle overflow needs, so it’s back to producing parts, and perhaps up-selling systems.

In 2013 the RedEye facility at the Eden Prairie campus built about 6,100 parts per month, 200 per day. It has about 85 printers staffed by two or three operators.

None of this takes a lot of manpower to pull off. Once the parameters of the files get set, it’s pretty much automated. The systems run 24/7.

Stratasys is now valued at $5 billion, after a series of high-profile deals in recent years. And despite its competitors, particularly 3D Systems of South Carolina, it has the biggest market share.

Not that Crump is satisfied. In fact, he doesn’t think his company’s sales approach is quite right.

“It’s broken,” he says candidly. “Right now our incentive program is either for systems and not parts, or parts and not systems. They call that a false incentive. We do have our best-in-class incentive for systems, but because it’s so good, we don’t sell parts. The reason that’s important is 42 percent of the industry is in parts manufacturing [see “Printing Out Money”], so if we don’t play in parts, we’re not going to sell systems. But we want to do systems.”

Still, the company does quite well. And amazingly, the real growth markets have not yet been tapped: hobbyists, and consumers—people like you and me.

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Visual artists such as Neri Oxman use 3-D printing in their work.

A 3-D printer in every home

Crump is fond of comparing the narrative of 3-D printing to the trajectory of personal computers. “If you start a technology, an application, a platform and a product, which is what we have, it takes a long time,” he says. “It was the same with computers. You start with awareness and build from there.”

Crump has been thinking hard about consumers lately, thanks to his company’s purchase of MakerBot in June 2013.

MakerBot was founded by Bre Pettis in 2009 with a mission to bring 3-D printers into the home. Pettis succeeded in making the machines smaller and more affordable, all the way down to where now a Replicator Mini costs $1,375, about the same as a Mac laptop.

“It’s a perfect fit for us to work with Stratasys, as they’re doing their work at the enterprise level and we’re doing it at the level of individual empowerment,” Pettis says from his office in Brooklyn, New York. “And I feel like we’re just getting started, even though Stratasys has been doing this for 25 years.”

In terms of consumer awareness, Crump thinks the technology is at the equivalent stage of personal computers in the early 1980s. Pettis thinks it’s further along.

“In 1981 my family had an Apple II-plus,” he says. “We were the first people on the block to get one; all the people on my block came over to play Breakout. I think in computer years we’re in 1985—we’ve had our Mac moment. It’s to the point now where everybody knows somebody who has one of these things.”

That may be overstating things. But it’s safe to say most people have at least heard of 3-D printing technology. And the implications for society could be startling—some observers are talking about a revolution.

The third industrial revolution will be 3-D-printed

Tom Fisher is the dean of the College of Design at the University of Minnesota, with a wall full of academic credits and a list of articles that could fill a bookcase. When he writes, national media take notice. And lately he’s been writing about 3-D printing.

“An industrial revolution is marked when people start making things differently,” Fisher says. “The digital revolution started this and was a nice prelude, but it wasn’t enough, because we were still mass-producing things in the old way, just making it more efficient through digital means. With 3-D printing we can make new products. It will be a revolution of mass-customization.”

It’s sort of the Burger King ethos: Have it your way. Clothes, toys, desserts, jewelry, and on and on. It will be disruptive to many industries, Fisher says. Design, for one.

In the second Industrial Revolution, large capital-intense companies mass-produced products, with big fleets of designers behind those products, he says, “whether it was Apple computers or General Motors or whatever. Designers designed lots of products,” he says. “This would change that.”.

What’s more, retail is likely to be profoundly affected. A certain retailer with a bull’s-eye for a logo, for example, might do well to take heed.

“This is potentially disruptive technology to Target. Instead of going to a large big-box store to buy cheap, mass-produced goods, you can download the file and make it yourself,” he says. “To me, a key turning point was when Stratasys 3-D-printed a car. That was very symbolic.”

Hip or hype?

Today roughly half of Stratasys’ business is in the United States. A quarter is in Europe, and the figure is growing. Those are its primary markets. Asia is third on the list, with China alone making up 6 to 8 percent of global sales. The region is obviously the big market waiting to be tapped, but has its skeptics, namely Terry Gou, president of the Taiwan-based Foxconn Technology Group, one of the world’s largest electronics manufacturers. A year ago, Gou, addressing a 2012 prediction in the Economist, told Taiwan media that the advances in 3-D printing did not mean the advent of a third industrial revolution—and if it did he’d start writing his last name backwards.

Gauntlet thrown. Crump has made it his mission to ensure that Gou one day goes by Uog.

“The reality is people are using these systems already. We’ve gone past awareness into actual use,” says Crump. “We’re manufacturing MakerBot printers, manufacturing in fairly large scale. For the prosumer — who are the hobbyists, the makers — there’s already really good traction.”

Crump has also been looking to history for guidance on how to move forward.

“I read three volumes of Edison. Was he hyping before he finished the invention of the light bulb? Yeah, he was. He had the vision but he had not invented it yet. But he had to have money, so he raised the money,” he says. “The only difference between someone who is hyping something and then fails, and a visionary is does the light turn on?”

Will Hewlett-Packard Jump In?

In 3-D printing circles, Hewlett-Packard is the elephant in the room. HP has the resources to change the playing field and it’s been making noises like it’s coming in. In a recent meeting with shareholders, HP president and CEO Meg Whitman said the company is “hot on the case of 3-D printing.” The company had a 2010 agreement with Stratasys to market HP-branded 3-D printers, but the deal dissolved in 2012. More recently, HP has provided inkjet print heads to Z Corp., a 3-D printing company now owned by 3D Systems, Stratasys’ main competitor. At the meeting Whitman mentioned how long it takes a 3-D printer to make an object—a couple hours at the fastest—and implied that HP has an improved offering in the making, promising a “big technology announcement” in June.

Melba Kurman studies the industry closely. She co-wrote the best-selling book Fabricated: The New World of 3D Printing. While she’s certainly an acolyte of the technology, she thinks the consumer angle is overcooked.

“The period we’re in right now is as if someone had invented the iPod but no one had figured out how to sell music,” she says. “The devices and the hardware are maturing rapidly, getting better, smaller, cheaper, faster, but there are these limitations. For now, the consumer market for 3-D printing is 98 percent plastic, ranging from sophisticated polymers, many of them patented, to the low-grade plastic you’ll find in a MakerBot. I think the challenge is what do you want to make out of plastic?”

But will those materials challenges be overcome? “It’s only a matter of time,” she says.

Her co-author, Hod Lipson, agrees and expands. “Two big things are going to happen. The growing gap between manufacturing and design tools will shorten. Right now 3-D printing is outpacing the ability of CAD software. You can print just about anything in terms of shape but you can’t design any [and every] shape. The design tools need to catch up.

“The second issue is multimaterial printing, which is a bit like the transition from black-and-white to color TV. When 3-D printing is available in more kinds of materials things will really take off, and Stratasys is the leader in multimaterial printing,” he says. And that’s where the future is.

Crump agrees. “Someday in the future you will start seeing an output of a full, true color part. When’s that going to happen? I don’t know. Hopefully we’re leading it. That’s in our future. What that does is it creates whole new applications that you don’t know about, which will be driven not by us, but by the customer.”

But clearly, color outputs aren’t the end game. Neither is a MakerBot in every home, really. The revolution will come if Stratasys figures out a way to print a fully finished electronic project, with circuitry already in place, no assembly required, at the touch of a button. That could end manufacturing as we know it. Crump believes it’s coming.

“It’s a little hard to visualize pushing a button and getting a whole product right now because it’s a plastic product,” he says. “But in the future it could be plastic and metal, it could be digital plastic, it could be rubbery, or it could be electronic. There’s no technical reason why you can’t print electronics. There’s a financial question as to whether you can make a business today doing that, but if you take it over the next 10 or 20 years, many products in low volume will be push-button. Right now you build a part and someone takes it out and adds it to the assembly. But that’s only because we’re in an engineering environment. There’s no reason why it can’t be a continuous flow.”

And that would change everything.

For now, for us, how will we know when the technology really finds a foothold? Fisher offers a clue.

“When they put the first MakerBot into a Starbucks,” he says, “you’ll know it’s arrived.”
 

Is the Twin Cities Region the Next Silicon Valley?

The implications of 3-D technology could make Minnesota another high-tech hub. “We’ve been talking with Stratasys about an innovation district right next to campus here,” says Tom Fisher, dean of the College of Design at the University of Minnesota. He envisions “hubs of large 3-D printers for start-up companies that really can’t afford the technology themselves.”

But he anticipates more than just an innovation district with rooms of machines—he sees a radical restructuring of how the Twin Cities organizes itself for work and play. Millennials, he points out, blur these lines already; they don’t see the need to work in a suburb but drive into a city to shop. In a “maker” economy, they’ll do it in all in their own neighborhood—likely a city, likely Minneapolis.

“I look at something like [the collaborative workspace] CoCo in downtown Minneapolis as a great example of the maker economy taking root. I expect more of these cooperative efforts to grow, and to grow around 3-D printing,” Fisher says. “Companies are going to have to adjust to be more like these maker companies to get talent.”

But do we really have the talent pool to flourish not just as a regional hotbed but as the center of the 3-D printing universe? Melba Kurman, author of Fabricated: The New World of 3D Printing, thinks so. “[The number] of college-educated people [in the Twin Cities] is the highest in the nation,” she says. “I think Minnesota is particularly poised to become a hub for high-skilled manufacturing and technology.”

Stratasys CEO Scott Crump agrees.

“Absolutely. The vast majority of our engineering team, innovators, and refiners are Minnesotans. We have plenty of talent here.”

And if it all gels, well, the Twin Cities could find itself with a new identity as an especially in-demand place to live and work.

“I think the Twin Cities are at the same place where Detroit was in 1905,” says Fisher. “This technology could have as big an impact in the Twin Cities as Ford and General Motors had on Detroit for 100 years.”


For more information on Stratasys, go to page two and read "Stratasys Timeline," "Unlimited Applications," "Printing Money" and more.

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