Larry Lukis And Brad Cleveland
PROTO LABS INC.
Headquarters: Maple Plain
Revenues: $100 million
Ticker: PRLB (NYSE)
What it does: Manufactures rapid-turnaround injection-molded and CNC-machined parts and prototypes
Proto Labs was born out of frustration. Larry Lukis, a serial entrepreneur and inventor, had to wait weeks to get injection-molded parts for the laser printers he developed. At the time, it also took plenty of money to get those parts. Lukis believed that there had to be a better way.
There was, and he found one. Founder and Chairman Lukis created software to automate the process for injection-molded parts, then launched the Protomold Company in 1999 as a manufacturer of those parts. Soon, companies in numerous industries, including medical devices, appliances, vehicles, and electronics, found that Protomold could create prototypes and parts for them fast and precisely.
Proto Labs (the company’s name since 2009) has been growing steadily ever since. Its initial public offering in February generated $79.1 million. The company had trodden a well-worn path of expansion, broadening its services into computer- numerical-controlled (CNC) machining and its capabilities to more than 30 different materials. Proto Labs also expanded globally, opening locations in England in 2005 and Japan in 2009.
Proto Labs paved its path to success by shaking up the prototyping industry with its software, and it continues to give the company a competitive advantage. So far, no other business has removed human operators from the prototyping process by automating the machines, CEO Brad Cleveland says. Instead, most focus on improving software for machinists.
“Our software allows us to feed in a customer’s CAD [computer-aided design] drawing of a part, and the software will spit out commands to the machine to create the part,” says Cleveland, who joined the company in 2001 after answering Lukis’ newspaper want ad for a CEO. “It happens automatically. It lets us be cost-effective in low volumes and very fast because we don’t have to take the time for a person to sit down and program the machine.”
Proto Labs has two other important advantages: It runs its software on hundreds of computers at once, and that makes its systems extremely fast. Operations run seamlessly because it’s all linked to the manufacturing facility right next door. Proto Labs often can go from an uploaded design, generate a quote, and manufacture an item in one business day. Competitors typically require several days just to generate a quote, Proto Lab leaders says.
The company has logged 50 percent revenue increases in each of the past two years. “We have tens of thousands of customers, and they are all special, but none of them is critical to our business,” Cleveland says. “That’s really been the case from the very beginning.”
When Brian Smith, president of Private Capital Management in Eagan, first invested in Proto Labs (then still Protomold) in 2005, the company had $10 million in revenue and 20 employees. Today, it has more than 600 employees and $100 million in revenue, and Lukis and Cleveland believe that the business is just getting started.
“Brad and Larry are smart, hard-working, and totally honest,” says Smith, who’s now a member of the Proto Labs board. His firm invested because “there aren’t that many companies that have good people, an excellent value proposition, the ability to execute, and a good market opportunity . . . . They had a great vision and a great idea and they executed extremely well.”
Cleveland plans to continue growing Proto Labs by adding more manufacturing processes and deepening its capabilities for ever-more complicated parts. It also will add materials and eventually expand into other geographic areas. The IPO will help Proto Labs gain visibility with potential new clients, Cleveland says, while also giving the company options for acquisitions to gain capacity or new technology.