Early in 2021, Protolabs announced the acquisition of online manufacturing platform, 3D Hubs, now just called Hubs. Get the backstory on the landmark merger of these two international manufacturers and find out how combining a service bureau and a supplier distribution network will forever change how manufacturing is done worldwide. Guests: Rob Bodor, Protolabs CEO, and Bram de Swart, HUBS CEO and co-founder.
Additional Links
> 3D Hubs Acquisition Blog Post
Steve Konick: Hi and welcome to The Digital Thread, Protolabs podcast that looks at new trends in manufacturing technologies and strategies, cool products and companies that are pushing boundaries with innovative ideas. Along the way will also give you some design tips to improve how you and your manufacturer work together.
Rob Bodor: Manufacturing is an amazing industry, and being on the digital forefront of that industry is really exciting.
Steve Konick: I'm your host, Steve Konick, thanks for giving us a listen. At the start of 2021, Protolabs acquired the online manufacturing platform, 3DHubs. That created the world's most comprehensive digital manufacturing offering. The two companies complement each other because they both offer 3D printing, injection molding, CNC machining, and sheet metal fabrication services. But each puts a different spin on it. And that's what we're going to chat about today. Joining us to talk about the acquisition are the CEOs of both companies, Rob Bodor from Protolabs and Bram de Zwart, the co-founder of 3DHubs. So welcome to The Digital Thread, everyone.
Rob Bodor: Thanks, Steve. Good to be here.
Bram de Zwart: Thanks, Steve.
Steve Konick: Rob, Protolabs has grown over the past two decades by expanding our in-house capabilities, but it's also grown through acquisitions. There was Fineline and Rapid, and now 3DHubs. Can you talk about that acquisition history and how it's improved the customer experience?
Rob Bodor: Sure, Steve. Yeah, you know, it's been a great, great growth journey for Protolabs. I reflect back on when I joined about eight-and-a-half years ago and the company’s tripled in size in that time through a combination of our organic growth and the acquisitions that you mentioned. And, you know, as I think about it, I mean, over the last two decades, we've really grown by expanding our capabilities, always with a focus around the customer and the customer's needs. So, when we started out two decades ago, we were making injection molds. Then we expanded to CNC machining and then later we added 3D printing and sheet metal, as you mentioned. We saw the needs that the customers had for these additional services, and that's really what drove us to add them. And whether we've done this organically or through acquisitions, we've continued to improve the customer experience by broadening our offering, bringing more and more capabilities and services to customers through our digital manufacturing model. And so, we're really excited to join with 3DHubs and continue that expansion. Their premium manufacturing partner network brings a lot of exciting capabilities to our customers. And so, we're really excited to continue our integration and get those in front of our combined customers as soon as possible.
Steve Konick: Bram, what about the history of 3DHubs? How does your company's story and model fit into Protolabs?
Bram de Zwart: Yeah, so my co-founders and I, we have engineering backgrounds, so we have been printing and CNC-machining parts for 20 years. And at a certain point, I think it was 10, 15 years ago, we came to the realization that 3D printing and general automation and manufacturing could lead to a future of decentralization. And because you're reducing the labor components, you've reduced economies of scale. So, it could lead to a future where you're not making millions of identical products. On the other side of the planet, shipping all that inventory around the world. But instead, you could make parts and products when and where they are needed. So, eliminating waste from long distance transportation, from inventory and from overproduction. So, that decentralized manufacturing future was on our mind already for a long time, something that we were very excited about. And it was now almost 10 years ago when you started seeing online marketplaces come up, such as Uber, Airbnb. And for us, that was a magical moment because we realized, OK, through an online marketplace model, we could accelerate that decentralized manufacturing future. So that was something we really wanted to pursue. Well, my co-founder, Brian and I, we were looking at 3D Systems, so we had a lot of experience, mainly with 3D printing and especially desktop 3D printing. We started this online marketplace and we allowed anyone with a desktop 3D printer to sign up and offer their printing services to people in their neighborhoods. We quickly became the world's largest doing that. We had 30,000 3D printer owners signed up and 10,000 monthly orders, which half actually was picked up locally by the customer at the printer owner. So, there was no UPS needed. It was all hyperlocal, but then around 2018, we came to the realization that the markets for desktop 3D printing weren’t that large. We actually made a pivot. Then we start focusing fully on the B2B segment, started adding industrial area printing, CNC machining, injection molding, sheet metal fabrication. Yeah, still with it a marketplace concept, still with the same vision that manufacturing is going to be decentralized, but now taking the B2B route and that was very successful. So since then, we've grown at a very, very fast pace.
Steve Konick: Starting off small and building, building, building, that's a familiar story. Now, Rob, Protolabs has been known as the manufacturer that you chose if you really wanted speed, if that was really crucial to you. And that's not the same model as 3DHubs. Can you both touch on that a little bit?
Rob Bodor: Yeah, sure. Well, so first of all, 3DHubs, I think, does a great job with being very responsive to customer needs, but yes, certainly they play in a somewhat different part of the market than we have traditionally played in. And that's part of the attraction. I think the 3DHubs is highly complementary to Protolabs in several ways. First 3DHubs brings with their premium manufacturing partner network a broad set of capabilities that allow us to serve customers beyond our Protolabs historical envelope with in-house capabilities. So think about things like certain secondary operations, really tight tolerances, large parts, things like that, which are very exciting and will certainly serve our customer needs well and we're excited to bring to them. Secondly, 3DHubs expands the range of lead times and pricing options that we can offer our customers. So together they really complement one another and combined have this really industry-leading speed and reliability with a broad range of capabilities and needs to serve our customers for whatever needs they have. And we're excited because we believe that this will really allow us to be kind of the go-to manufacturer of digital custom parts online.
Bram de Zwart: I think Rob summarized it already quite nicely. I do think it's, you know, nice to mention that both Protolabs and 3DHubs do speed up the pre-manufacturing steps, right? So, the price calculation, the DFM design for manufacturability analysis, these are things we do, instant, or near instant, that can really save a lot of time in manufacturing compared to the traditional way of outsourcing, using email, phone calls, fax, even in some countries you can easily spend weeks and then send email back and forth to even get a quote. And that is something that we can do in seconds to hours, depending on the project.
Rob Bodor: Yeah, I would add that 3DHubs has some really great technology for instant pricing and instant quoting. I think to Bram's point it definitely helps customers. But furthermore, 3DHubs facilitates and simplifies the whole work of validating and identifying and finding, you know, sourcing partners. Manufacturing can be a difficult industry to navigate, right? To find a qualified contract manufacturer has never been a simple process. And so the 3DHubs network and the quality guarantees around that that 3DHubs brings really speeds up that whole process for customers.
Steve Konick: Well, when customers turn to each company, soon to be one company, officially, it's usually for what types of engineering or supply chain use cases. And let's start with Rob on this one.
Rob Bodor: Remember, I would say that as a result of the digital thread that we've developed and how we reinvented manufacturing, Protolabs can make customers parts and ship them in as little as one day or in fact, even the same day, in the case of our CNC service. So, we're extremely responsive to customer needs. And historically, customers have come to Protolabs for several use cases where our end-to-end digital manufacturing process is really uniquely suited to serve them. The first of those is when they need to accelerate their innovation or reduce their design risk, right? So, they're prototyping. They're developing new products, working to innovate, and they need to get parts in the real process very quickly so that they can validate their designs. Customers use us for that a lot. We see it particularly even more so in regulated industries. Think about medical devices, aerospace, automotive, where design risk is high and they're going to want to iterate their designs multiple times, really validate and improve them before they commit to production. So that's really the first use case. The second is where they need to manage demand volatility, either because the product is new or because the market is volatile. So, things like when they're ramping up demand from post-launch bridge tooling in the case of injection molding, certainly if they have a line down situation or end-of-life application, those are all times when demand is volatile and you need a responsive supplier who can bring value. But the other one is around production, especially when they need to produce kind of low- to mid-volumes and they don't want to have big minimum order quantity kinds of commitments in those cases because we can be the cost effective, lowest total cost of ownership in those scenarios, as well. So, there's quite a number of use cases where customers come to us and it's helped fuel our growth and we're happy to be there.
Steve Konick: And Bram, on your side?
Bram de Zwart: Yeah, I think there's definitely overlap in our use cases and types of customers. As we mentioned before, I think we do serve often different needs within those customers. But I think really something in common is indeed serving prototypes up to low-volume, mid-volume production. And I think in general, just personally as an engineer, I'm just really excited to see all the innovation that we're supporting through our platform, that we have parts in the International Space Station and quantum computers and exoskeleton self-driving cars, jetpacks. Being an engineer, that's just super exciting that we can enable that and we can allow engineers and companies to get to market faster with better products through the service that we're offering.
Steve Konick: We intimated earlier about the digital thread. We didn't use the phrase at all, but we kind of talked about it. Digital manufacturing and automation really are at the core of both of your organizations. So, tell me what it means to each of you. Why is it so important?
Bram de Zwart: Well, I believe the digitalization and automation in manufacturing, as I mentioned earlier, I think will really lead, first of all, to a more efficient and sustainable model for manufacturing. Right where this really facilitates a manufacturing model, where parts are made and distributed in an on-demand fashion. So, making these parts when and where they're needed is really eliminating waste, as I said, from transportation and overproduction. So that's the first part that you can enable to digitization and especially an online platform. Because you can smartly route these custom orders to a facility nearby, the customer that has the right capabilities and capacity to make those parts. I think, secondly, it also benefits the customer, right, engineers and the designers. Because of the digitization of 3DHubs, we're automating all these manufacturing steps. We're doing that in seconds instead of weeks, and that allows them to get parts into production much faster. And this means they can iterate fast on their design which means they can get to market faster and they can get the revenue faster. So, I think it benefits, first of all, the planet to have more efficient and sustainable model for manufacturing. And secondly, it benefits the customers, the designers, engineers, as they can get their products to market faster.
Rob Bodor: You know, as we think about digitalization of manufacturing and the digital thread, kind of think about it in two stages, the front end being the e-commerce experience, which allows customers to get access to manufacturing, get their parts quoted, start to add value and get answers right away, which we've touched on already. And then on the back end, right? Reinventing the manufacturing process itself as parts goes through the value chain in the factory. I’ll take those kind of one by one. So a digital e-commerce-based front end, I think is really critical for the customer to be able to engage quickly and easily and get the kind of design for manufacturability feedback and the quote quickly. So that they can know, hey, is my part as I designed it manufacturable? And what's it going to cost me to get it? How long is that going to take, right? That's what they can start to do, their planning work. And this is an exciting time. I am old enough to remember—and it actually wasn't even that long ago—where all of this stuff happened by sending out RFQs to a half a dozen contract manufacturers that were already in your approved network. But you didn't know how long it was going to take for them to even respond with a quote. Sometimes that took weeks and then you didn't know when they'd be ready to take your order. And that could be weeks or months before they could even start work. And that's what you had to send it out to, half a dozen or more of the manufacturers in your network just to get reliable response from somebody, you know. And then once they did that, then they would start to talk to you about your design and the design tradeoffs. And I mean, I personally had those conversations in, you know, in kind of a grungy front room in one of my supplier’s buildings, right? And that forced us oftentimes to go very locally, not necessarily because those were the right suppliers, but because they were the nearby suppliers. And having that local connection, given the nature of the interactions, you know, was important at that time. And so, by digitizing the front end and the work that our companies had done, we've been able to open that up much more broadly. In the case of Protolabs, we operate entirely in region. But again, in the U.S., you don't have to just use the local suppliers so that you can drive to you know, we can service customers anywhere in the U.S. or in Europe or Japan in those cases. And 3DHubs has really opened up the world for manufacturing in a very smooth and easy way. So that's the front end. Now, if you think about the back end. You know, what we've done is really instituted this digital thread to run through every step of the process from end to end, starting with, you know, the RFQ, the upload, the quote generation as 3DHubs has done, as well. And then all the way through manufacturing, every step of the manufacturing process and quality control and shipping. At Protolabs, our digital automation actually includes creating a digital twin of the finished part. We do that as part of the quote. We virtually manufactured the part before we even put it to the customer, which ensures that every step of the subsequent process we know will work. And the customer is seeing that digital twin and they're proving that digital twin of the finished part as part of the quote. So that really ties off quality in a way that is very robust and that didn't exist before.
Steve Konick: Now, I can hear the excitement from both of you when you talk about manufacturing, in general. So, what is it that really intrigues you about this business and gets you out of bed every morning?
Oh, wow. Lots. Manufacturing is one of the key drivers of a healthy economy. It employs many people from all walks of life. It is a highly technical field. It's in evolution right now, which is really exciting to be a part of, and you know, we make physical things that make the world better for partners historically and medical devices is our number one industry, right. But a quarter of our business is medical devices. So, we're helping companies innovate their products and that directly impacts the health of people. And then in addition, we make all kinds of really cool products, right? And we help shoot things into space and that manufacturing is an amazing industry, and being on the digital forefront of that industry is really exciting. And every day is new and interesting and challenging. I think we should all feel very blessed to be able to be a part of.
Bram de Zwart: Yeah, to me, I think it's what I'm personally very excited about is working at the intersection of manufacturing, hardware and software. I think software is just an exciting industry. I think manufacturing is a very exciting industry. And I think manufacturing, even though it's one of the largest industries in the world, hasn't been touched by software as much as many other industries, which are much smaller sites. And so, I think it's you know, it's relatively a blue ocean. There's still a lot of opportunity to innovate, to automate, to make manufacturing become more efficient. Protolabs and 3DHubs are really at the forefront. We're pioneering that space. And how can you not enjoy being a pioneer at something? And I think that that's something that gets me out of bed—being at the intersection of manufacturing and software.
Steve Konick: What do the next 12 months hold for Protolabs and 3DHubs and for our customers as well?
Rob Bodor: Well, maybe I'll start with that one. You know, listen, I think this is a really exciting time for manufacturing. Digitalization of manufacturing is well under way and I think we're really proud to be leading in this transformation. The pandemic, I think, has caused companies to adopt digitalization in manufacturing more. It's accelerated that adoption. And so, this is an important platform. And as we continue to integrate our two companies and our offerings, I think customers will be able to look forward to a much broader selection of options and capabilities to meet their needs with speed and reliability. We look forward to a really strengthening economy in 2021, as well, and we're excited to be a part of that and support customers as they grow this year and beyond.
Bram de Zwart: From a 3DHubs perspective. I'm just very excited about how we can serve our customers better, first of all, with faster lead times, for example, over time, but also how we can drive more volume through our manufacturing partners as we try to serve the Protolabs customers better, as well. So, I see a lot of synergies and we should start seeing the first effect of that for our users this year.
Steve Konick: That's this edition of The Digital Thread, I want to thank our guests, Rob Bodor from Protolabs and Bram de Zwart from 3DHubs for hanging out with us. Don't forget to subscribe to future Digital Thread podcast through one of our host sites, Apple, Google, or Spotify, or you can listen on our website. The Digital Thread is produced by Protolabs, an international manufacturing company with locations across North America, Europe, and Japan.