One DotCom Idea That Paid Off

Fortunes were lost in the dotcom bust 14 years ago as not-so-savvy investor felt there would be a rush to buy plastics and other products on Internet marketplaces. There were some winners where real efficiencies were created in the engineering and purchasing processes.

Larry Lukis, an entrepreneur and computer geek in the Minneapolis area, started a company called Protomold because he was stunned at how difficult it was to get fast delivery on short-run injection molded parts.

His idea was a good one.

Proprietary technology automates much of the skilled labor conventionally required to quote and manufacture low-volume custom parts, including the often time-consuming steps of design submission, manufacturability analysis and feedback, quotation, order submission, mold design, tool path generation, mold or part manufacture, and production management, as stated in the company’s most recent 10-K.

The service was expanded to CNC machining, sales offices opened in Europe and Japan, the name was changed to Proto Labs, and the company went public in 2012 in an investment that turned out better than the Facebook IPO. Not bad for the injection molding industry, which generally has been a really tough business.

Proto Labs reported revenues of $163 million in 2013.

Stock prices have been on a roll again recently as the company continues to get good press and seems to have been swept up in the general euphoria surrounding the 3D printing industry.

The hype continues to grow for Proto Labs, and as I’ve written before, seems a bit overplayed.

A recent article in a Minneapolis newspaper quotes company executives saying they feel that Proto Labs will become a $1 billion company. A promotional article in the Motley Fool discloses that the writer as well as Motley Fool itself owns stock in Proto Labs.

In its 10-K, Proto Labs says its research has been focusing on expanding its product line to thixomolding, a liquid magnesium molding process that has been a slow starter; metal

Arburg FreeFormer may challenge the Proto Labs business model. (Arburg)

Arburg FreeFormer may challenge the Proto Labs business model. (Arburg)

injection molding, an important but still niche technology; and liquid silicone rubber molding, which has more potential. There are also plans to expand foreign sales.

It’s hard to see how those processes could get Proto Labs anything close to a billion dollar company.

It’s easy to see lots of potential obstacles in the company’s way. The 3D printing industry itself wants to move into the same space. 3D Systems claims it has developed a machine that rivals injection molding. Molding machine builder Arburg made a big splash at K2013 with the announcement of its Freeformer, an additive manufacturing machine designed for molders who want to better serve the short run market. The FreeFormer does not have the design constraints of the aluminum molds used by Proto Labs.

Big companies prefer to keep product development in-house and far away from the Internet and third parties like Proto Labs. As 3D printers improve, they will upgrade their in-house capabilities. And some day, injection molders will wake up and make a better play in this game.

 

 

 

 

 

 

About Doug Smock

Former Chief Editor at Plastics World and Senior Technical Editor Design News

Additive manufacturing, Injection Molding, North America, Prototyping ,

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