The Most Successful 3D Printing Startup In The US | Max Lobovsky, Formlabs

31:16But people who want to understand, like, how can I be most valuable here? What needs to be done? How can I adapt? I've got my skills that I'm great at, but, oh, this problem needs something else. So, like, classic example, like, lots of great engineers, like, want to go to CAD or code, like, as their home base for solving something. But a lot of problems engineering are best solved with a telephone, like call a supplier or call an expert or something like that. Well, but the man with a hammer syndrome? Yes, exactly. But like the smarter you are, the more you like you think, oh, this is not a hammer.

31:57I have like the ultimate tool here. But actually, the most capable people recognize like there's almost like a different tool for every scenario. and you need to personally, like the hard part is being personally flexible because like maybe you're that introverted engineer and the telephone doesn't come so naturally. It's not even on your like checklist of things that you do in your head. But it's the single most powerful tool or like email or chat or whatever. It's the single most powerful tool because that's how you access all other humans and human capabilities in the world. uh and um so but yeah just generally like being flexible about the way you work and what you see like restricting your ego a little bit about who you should be and what you should do like there's this thing about you know the ceo should also be the janitor and and that that kind of thing like yeah i really believe that if you're just if you're capable and then you're really dedicate yourself to like what's the best way i can be useful now and then do whatever it takes to do that, that that's unstoppable.

33:02Would have been the moments where you felt like you were being the janitor. I am probably not actually a good janitor because my desk. So it's a little bit more like a, you should all, you should be the janitor, but I'm going to be orchestrator. Let me think of what I am. I need a better euphemism than the janitor. I mean, one good example that I still do regularly is be a customer support agent and try to get involved directly with customers, even like maybe less fun cases and help them out and go through that. That's a really good one where it helps you learn what needs to be done. I kind of get the vibe that, you know, Napoleon, when he was like fighting a battle, he had a much better idea than like his opponents of what the battlefield looked like and where to position troops and what to kind of like tackle to be, you know, find a great competitive advantage.

34:04How do you kind of think about that in positioning the company so that you can win? I think about I think about that a lot. And like I try to meet as many leaders of either competitors or like other similar companies as I can to gain their perspective. That's why I loved your interview with Jim Belosick at Send Cut Send because they're doing awesome stuff in the digital fabrication world. and I think of it as like a it's like a shortcut because like here's like a capable person who has spent their whole career gaining a bunch of knowledge from a different perspective with different access to different things and whatever and like you can pretty quickly just absorb all the learning that they've got yeah so I think that's that's a really valuable thing and then And like with your direct competitors, definitely that idea that like you should know, not just you should know the battlefield better than they do.

35:03Like I think you should know what they're doing better than they do and like understand why they're doing it differently than you. Because usually there's some things you should actually learn. Like even if you think they're doing it wrong, like understanding how they got to that place, there's probably some things you're missing. What wrong assumptions they were making or. Yeah. Yeah. Yeah. Yeah. I know there's this this line that I love, which is like never interrupt your enemy when they are making a mistake. Yeah. I think that's a Sun Tzu. Yeah. Yeah. Art of War. It's a good one. Can you walk me through the different like iterations of your supply chain and how that's worked throughout the years as you've been kind of building all the different products?

35:49Yeah. So, yeah, there's been a lot of iterations in supply chain. The Form 1 was built with a contract manufacturer in San Diego, then the Form 2 in Hungary. Form 3 and onwards, hardware products have been contract manufacturers in China and Guangdong. The materials, we started working with a contract manufacturer, or they call it a toll manufacturer in the materials world. And then eventually we became a large customer of theirs, and we saw enough reasons that made sense to own it ourselves, so we acquired them. um so we own a chemical plant in ohio um lately we've been moving some hardware manufacturing to vietnam to deal with tariffs and things like that um and and then with each like product generation there's usually like different um key components that we have to dive deep into so i talked about developing galvanometers that's been like one manufacturing challenge Form 4 and 4L use an LCD instead of Galvo's to create the optical image.

36:56And so we had to custom fabricate LCDs, and that's like a totally different world and become experts in that. Well, I wouldn't say we're experts, but... Proficient. Yeah. That's really scary, but maybe kind of fun. Why scary? Because the LCDs are the single most expensive things that we've bought. It's basically like a million dollars each time you want to make a new LCD. And so that's, we're not used to that level of commitment for a single part. There's a lot of key like polymer, like the resin tanks in stereolithography have these special polymer films that we've had to invest in. Um, actually the, hopefully the sound won't come in here, but the milling machine right now is, is machining a special, uh, tool for, um, special kind of precision tool for some of the plastic parts that we make.

37:58When I was doing some research, I was very surprised by like the lack of cash. Like you guys haven't raised a huge amount of money, you know, up until like 2021 when SoftBank came in and stuff. But like prior to that, do you think that the constraints of not having huge amounts of cash was positive or what impact that had? Yeah, absolutely. I think that if you're building a hardware product company like this, and especially one where we don't just manufacture stuff, we manufacture stuff for manufacturers. Like the whole game of manufacturing is about cost. If we don't have cost discipline deeply ingrained in the company, not going to make it in this field.

38:44And you talked about like Tesla versus all the other new EV companies. It's like a great example. You can just see it in the money they're spending and raising. Like car manufacturers are, you know, great gross margin for a car manufacturer is 25%. Like you have to, you have to. If you're like an absolute killer and have lots and lots of optimization over years. Yeah. So you have to have that like throughout the company. So, yeah, we've had that. And I think we've raised too much money. I mean, we raised$250 million. We could have done this for sure, much less the second time around if I got a chance.

39:24Why did you decide to go out and raise that money instead of not doing that? The decision to raise money and spend money should be completely independent decisions. Unfortunately, even disciplined companies fail to keep them separated, but they're not really directly connected at all. So raising money generally, when the valuation is high and people are interested, raise some money. It's like catnip a little bit. Yeah. I mean, I'm glad we raised a bunch of money in 2021 because nobody's excited about 3D printing today. It's not a hot field, at least for Silicon Valley venture capital types. But that's fine.

40:06We're profitable and growing and don't need the money. How early into the journey did you become profitable? We haven't been consistently profitable until the last couple years. But since Kickstarter, since the 12th month, most of the money we've spent has come from customers. or yeah. So, so we've been, we're steadily burning money, but we were, but I think we had that discipline that like mostly we're going to, you know, live off the revenue that we make. You could see the inflection of the J curve. Yeah. And I think we were always thought it was, it always ended up being a little further than, than we thought.

40:49I mean, and we should have just forced it to be sooner. Honestly, If we just constrained ourselves and said we're going to do it, I think we could have spent$100 million less on sales and marketing in the last six or seven years and gotten the exact same result that we did. On the kind of like being frugal aspect, what kind of tilted your hand into deciding to spend the money in the first place if you could have done it on way less money? Had you done it a different way? Well, we didn't think we were just blowing the money. We thought that, okay, like we went through a couple cycles of like, okay, now we made it with this product generation.

41:30And like, we just need to turn the crank on sales and marketing and scale it up. And, you know, on some level that may be true. Like if you're not spending any money on that and you haven't done the basics, but where we were, it was not good ROI. Yeah. I know, Jim, we mentioned this briefly before things started rolling on the fund coupons, where he kind of lubricates his business with$100 bills just to kind of reinforce good behavior and behavior that he likes. Has there been anything like that with your company on kind of like doing a nice thing for a supplier or something like that? um where for our uh uh for our chinese suppliers we make um actually i think we do it for all our global suppliers but started in china we make a um uh the chinese uh zodiac animal like we make like a 3d printed and painted statue every year of that uh of that for that year and send that out to all the key suppliers.

42:36I think key supplier relationships, we have like a supplier summit every year. We bring them together. We do have like awards for the best ones. And we have some that we've worked with since the beginning. There's some like a CNC shop in China. It's like a one owner, like 15 machine shop that we've worked with for since the beginning of the company he texts me regularly and um that's been a good good partnership earlier this year when things kind of got a little on the tariff side um i imagine if you're shipping to like 100 plus countries um and you have operations all over the world uh that would have had a massive impact on your company and like planning or trying to plan for a few years yeah uh what impact did that have it definitely was very disruptive within the walls of Formlabs there.

43:34Like operations team had to drop a lot of what they're doing for an extended period. And basically we were having like weekly meetings for a few months of just like, what's the latest thing that Trump tweeted? Okay. What are we doing about it? Do you have like a screen that's just like a new tweet? Yeah. It was very hard to even track what the hell is going on. It was like, well, this is the impact of the announcements from the week before. But this week, do they override those ones or really, really disruptive? It hasn't been as – once we worked through it all and we did make a variety of changes, like hasn't dramatically increased our costs in part because we are so international and we manufacture in the US and different places.

44:17So like the amount of trade we have going in through any one country pair is not that big. A little bit of reflexivity. Yeah, but one thing I think that's really not like a story that's not well told there is I'm pretty sure tariffs have helped Chinese companies over American companies on net. Because within given product categories, things are pretty much all made in the same place. So like Apple makes their phones in the same place that Huawei makes their phones. And that's true in like all categories. But oftentimes there is a U.S. brand and a Chinese brand. And where there is that competition in a lot of categories, the Chinese companies, they're basically, compared to American companies, they're essentially always faster.

45:04So if you throw a change at them, if you throw a change at an American company, a Chinese company, that's just going to help the Chinese company because they're going to adapt faster. So if they need to reroute their supply chain or change things, the Chinese companies are all moving faster. And I really think they're like actually gaining ground, not necessarily from tariffs specifically, but through like disruptive policy. Yeah. Yeah. I mean, I imagine within the case of like Apple, you know, if they are designing California and then manufactured in China, you know, if Huawei is just built in China, designed in China, they can just go to their factory and make changes immediately.

45:39Whereas Apple has a lot more like time. Inertia. Yeah. When a problem is thrown at you, what is your typical like mental model for how to deal with it and like come up to speed and make the right call even on a new kind of like area of the map? I think I talked about probably two most important principles. One is focus on the problem and not the solution. So spend some time understanding what is the problem because it almost never comes stated correctly. Like someone will say we're having a problem with this supplier or whatever, but like they actually mean the product is too expensive to manufacture.

46:17And like maybe there's a different way to address that problem. So like start with understanding what's the actual root problem. Not usually by the time someone's asked you, they've already kind of formulated in the form of what they think the solution is. and the other one is basically be lazy and learn as much from what other people have done as possible like you're there's very few totally unique problems in the world and um uh and so you don't need to figure it out from scratch and if you can i i spend a lot of time trying to figure out what's like the right analogy like whenever we're trying to develop a new part of our business say like how do we sell our products in japan or something we spend a lot of time with like what companies are doing something similar to what we do and how do they do it and like here's maybe three options and you can you can do that across almost every every type of problem you want to solve what's been the biggest uh moment where you felt like you were being lazy and kind of just trying to adopt something and it like rapidly you know speeded up some process um i'm struggling to think of a good example, but there's a fun quote from a German general from the interwar period who has this theory on his officers.

47:38He says there's four types of officers, basically lazy versus smart, sorry, lazy versus hardworking and smart versus dumb and the four combinations. And he said that the smart and hardworking ones, they're your general HQ staff. It's good. The lazy and stupid ones, that's most of what you have, and they're going to do some kind of job. And then the lazy and hardworking, those are the most dangerous. You have to get rid of them because they're going to muck things up. They're going to do lots of stuff, and it's not good. Yeah. Yeah. And then he says that lazy and smart are suited for the highest leadership.

48:22And I don't think he's using the word like lazy as in like doesn't want to work. But lazy as in you're careful about how you spend your time. And I think that that is a good trait for leaders is that you spend – you make sure that each thing you're spending time on is really worth doing. and not necessarily jump on every single thing that could be done. Should we talk about Ukraine stuff? Should we get that in? What's going on in Ukraine? What's going on in Ukraine? So people use 3D printers for all sorts of stuff, including aerospace stuff. And lately they've been using it a lot for making drones.

49:04And we've got Western companies like Lockheed and Enderil who use a bunch of our products. but in the last year or so we also have a lot of users in Ukraine and today like every drone that you see in Ukraine is covered in imprinted parts. There's a really huge volume of it and and then I'm I was born in New Jersey but my parents both grew up in Ukraine and uh so i wanna i'm gonna go in a few weeks to ukraine for the first time kind of a combination of personal trip um hope to do some philanthropy as well and then like basically supporting encouraging usage of 3d printing in ukraine and it's there's crazy things like the two things our printers get used for there is drones and like prosthetics so literally the same technology is like blowing people up and then also repairing them.

50:03How do you feel about that on that kind of? I wouldn't, I don't think I would ever make my career about making weapons. Although I think that's a perfectly reasonable thing to do. Or let me revise that. I'm glad that I live in a peaceful time in the United States. And I don't think that's like the most important thing that I could do. But I definitely support Ukraine defending itself. And then our products get used in all sorts of different ways and we don't really take a position on that. It's literally everything from dentists to people making sex toys to people making drones. That's 3D printing.

50:49I know I think most people that go into Ukraine or at least people that I know are flying to Poland and then have to take a long train ride. into Ukraine. You're going to have to do that? Yeah, fly to Poland and take like 13-hour overnight train to Kiev. And then I'll also go to Lviv. I'm going to go with my father. He grew up in Lviv. What trips have you taken over the past 14 years that have had the most meaningful impact on you? Probably to China. China is where our hardware products are made. China is the global leader in plastics manufacturing. And you could call what we do 3D printing or you could call it plastics manufacturing.

51:33And China will be the global leader in essentially every field of technology in the coming years. So it's really important and inspirational to see that. I've been going for, I guess, first time in 2014, and I've been to most of the major cities. And even in that period of time to see the amount of development and to see a society that's organized very differently and not always in the way I would prefer it, but in a way that does seem to be for like the impact I want to make on the world, which is making it easier for people to make things and encouraging more problem solving in the physical world and all that, like China's doing that a lot better than the U S is doing that.

52:28So it's kind of like tied to my, my mission with form labs, like pretty closely. Do you think, do you think on the China kind of being the leader and all like making things uh is that a reversible trend or do you just kind of see it as like an unstoppable wave and the best thing to do is lean in history repeats itself and there have been many transitions of global leaders and um yeah i think it's pretty clear that we are uh at the end of pax americana as some people call it i don't think that means the united states is done or like it's over it's over yeah it's not over yeah these choices take a long time um uh and then like you know the last great empire was the united kingdom like they're still around it's smaller but like people are doing things there um i do think it's sad i would i i would wish um the american empire will continue longer um but uh but like that's that's such a a big scale development like that's beyond that's beyond anything that that i can make a difference in um and and by the one basic thing people about this like or seem to be missing it's just like literal just population if you have a country that's as hard-working and entrepreneurial and smart but they have four times more people than you there's like not a lot you're fighting a real uphill battle there which is why any realistic like option for the u.s to be part of an alternative view of the future is going to be more than just the u.s there's no u.s going it alone like basically we need a billion people working together um if we if we wanted to have a a you know a power that can um Basically, if you want to have a complete tech stack, I'll just put it in technology terms, forget about the politics.

54:34If you want to have a complete tech stack in the modern world, as our tech stack gets taller and taller and taller, and you need more and more components adding it up to it, think about how much goes into a jet engine, like thousands of companies contributing amazing pieces of technology or into, say, their microchip. Today, to maintain a full, complete tech stack now requires like a billion people. That's what's happened. It didn't used to. It used to maybe only take 100 million. Now it takes a billion. The things are way more complex today. There's too many things to do. We can't all do them inside one country.

55:08Interesting. If you had to be teleported back to any point in history, to either a company or becoming a general of an army, who would that person be that you would like to trade places with? I don't have an exact answer to that question, but I am really fascinated with Bell Labs. I grew up in New Jersey in New Providence, which is next to where Bell Labs was headquartered in Murray Hill. And my mom worked at Bell Labs and was kind of in its well into its declining years. But that place is just amazing. Like literally a couple of campuses in New Jersey invented half of all modern computing and telecommunications, like a few thousand people.

55:51And they're punching a little bit above their weight. Yeah, punching way above their weight. And that's, I would love to be part of creating something even like a fraction as important as that. There's a great book, Idea Factory, about the history that I recommend for anyone who's interested in that. What did you take from that? I think a couple of things that are really interesting about Bell Labs. Like they were probably now it's becoming a bit more common with big tech companies, but they were, I think, one of the first places that recognize like, yeah, you can just like assemble super smart people.

56:36Like you have to go and find them hiding in their holes in different like university groups. But like if you just bring very smart people together from a bunch of different fields and put them like together, like you can make amazing things happen. and there wasn't that was not like a history of doing that in basically anywhere in any any form in the world um and and then in terms of like what it creates what it takes to create a new bell labs which i would love to yeah again make something even close to that there's two things you need i think the the thing that everyone talks about is you need a super profitable monopoly that spends out billions and billions of dollars every year, like AT &T or maybe like Google.

57:20But I think what Google and Microsoft and other modern attempts at Bell Labs have missed is the other key thing that AT &T had, which is an extremely diverse problem space. So AT &T had to do everything. They literally had to make the telephone handsets to the switching equipment to telephone poles. Like they had to figure out how to make a telephone pole that lasts 50 years. They had to figure out all the infrastructure and all the pieces and parts that go into it. And so many different domains. And that goes well with more open-ended long-term research. Because the problem that Google has is like, if they just want to invent things, they don't have any expertise.

58:03This goes back to that problem versus solutions thing. Like they're just throwing solutions at the wall. They don't have any expertise in the problems. whereas AT &T had this rich space of problems where like you could ask some people just like invent random stuff and then AT &T can like look at their list of problems and be like yeah I think we could use that to like put satellites in space and send uh you know phone calls through them uh and that made it like I think it it was a better match for open-ended um development so foreign labs I don't have the path for how we're going to make a super profitable monopoly still working on that path.

58:40But at least we have a very rich problem space that I think can consume like lots of different types of invention. If you're trying to recreate the modern day Bell Labs inside of this company and you don't have the monopoly yet, what is your thought process for doing that? I don't think we're really into the making Bell Labs phase yet. Like we need to make a whole lot more money before we can really take that on. I do think we're assembling people like that. But today we're much more focused on how do we make a product that we can sell a few years from now that we're going to deliver to a lot of people and they're going to get a lot of value from.

59:19And, you know, there's some open-ended invention there, but it's a different type of work. So I think we're going to keep working on getting great at that. And then maybe slowly add in more of, you know, more, I mean, we are slowly adding in more and more long-term projects and things like that. Do you think of this as kind of your last company? It doesn't feel good to think about anything as my last anything at this stage in life. But I don't like, I think regularly everyone should do this in a career. You should like consider what you're doing and think about, is this the best thing you could be doing or is there a better thing you could be doing by your own, whatever your metric is.

1:00:03And yeah. I keep coming back to yes for Formlabs, but I don't know if that will always be true. And there are, Formlabs can be a lot of things for me. There's a lot of different interests in technology and making, but not everything. I really like airplanes. I would love to somehow work on airplanes in some form, maybe someday. Work with Boom or Astra Mechanica or something like that? Yeah, well, yeah, there's a few parts of flight I'm interested in. Like one specific thing I've been thinking about for a long time is a couple of companies have tried is a transportation solution between ocean cargo and air freight.

1:00:51Like they vary widely in speed and cost, like 30 times in speed and 10 times in cost. Like, is there no way to like have something somewhere in the middle? and there's these like airships and ground effect aircraft and things like that that might be solutions to that problem. And then eVTOL is very interesting. I think it's still a ways away from, you know, a flying car. But like, I do think we're on a trajectory towards flying car. One of the things that I kind of love from Steve Jobs is he said, I think in his speech at like Stanford, the commencement speech, he was talking about like every day he wakes up and he looks himself in the mirror and he would ask himself if today, you know, if the thing that I'm doing today was like the last thing that I was going to be doing, you know, am I happy with what I'm doing today?

1:01:45and if there's like too many days in a row where the answer is no I'm not enjoying this and there's not like a clear path to getting to the thing where I do enjoy then he kind of like changes direction has there ever been a moment you know you've been at this for 14 years it's in around a moment during that time where you kind of had that same situation where you decided at one point or another to change direction yeah I mean there are there's definitely been times where I've been less, less committed and, you know, thinking about other things. And it's, I think that like day to day enjoyment of what I've been doing is like always okay.

1:02:28But I'm more just like worry, like, is this the most impactful thing I can be doing? Like there's so many big problems to, to work on and should I be working on a bigger one? It's kind of like the lazy thing again. And like, is this like, is this really what I should be getting out of bed for? Or is there like something even bigger to get out of bed for? And how did you decide like that it was when you were going through that thought process? I think you have to consider alternatives. So you do like, you know, I do pay attention to lots of other interesting developments in the world. And I don't know, I don't have like a perfect rubric for it.

1:03:06But I was just in San Francisco this past weekend, and that's always like a good way to spend a weekend in San Francisco. And you'll talk to 100 people with 100 huge ideas. So it's like a good way to quickly run through like, maybe I would do that one. I'm not interested in those ones. Do that. Go to San Francisco every few months. And if you come back still committed to what you're doing, then you're probably doing it right. Amazing. Yeah. All right. Final question. uh what's the hardest thing you've overcome learning to be a team player it's not the not the words that i want um what do you mean by that i've always liked to be on a team like i've always liked team sports um but i've never had to do something where i have to be so open about everything that I'm doing and thinking.

1:04:08And that actually really doesn't come naturally to me. That like part of my job is sharing my personal motivation for what we're doing and my enthusiasm for what we're doing and my dreams about where this can go. And I'm not like opposed to sharing things, but like that becoming like part of your job, like that's been a weird, that's been difficult for me to learn to do that well. How did you like kind of figure out over time that that was something that you needed to be doing when it wasn't something natural? I mean, as you get into a bigger organization, there's like a basic sort of like Dunbar number kind of limit thing where like, if you've got 20 people, you probably talk to every one of them once a week or something.

1:05:17And so they have that connection. They just know intuitively what you're going after and why you're doing it. But once you get to a larger organization or a larger customer base, or you have to start communicating in like a more of a broadcast fashion. And you just see this like, it's just sort of like math. Like if you want to impact that number of people, like you have to start broadcasting. And I don't know, I really, this is much better for me when I'm talking to someone and like, I can kind of think about what they're thinking about and like you can interact but when you just have to like share without any feedback so hard yeah you're just throwing you're throwing the why out into the abyss and hoping yeah and like where why is there no response like it's like i mean social media i don't you don't do it i i've been trying a little bit but i really don't get like i i don't understand like and how people do it and just like keep throwing things out there and just like seeing what sticks and you know