Inside Aleph Objects: After The LulzBot Layoffs

By on October 16th, 2019 in Corporate

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 Possibly the last assembled TAZ Pro and TAZ Workhorse 3D printers on the Aleph Objects production line [Image: Former LulzBot Employee] Possibly the last assembled TAZ Pro and TAZ Workhorse 3D printers on the Aleph Objects production line [Image: Former LulzBot Employee]

What’s happening at Aleph Objects following massive staff reductions and operational “streamlining”? We talk to those inside.

Last week we were hit with news the industry hated to hear: LulzBot was in decline. The rumor mill swirled, powered by social media, as reports began to trickle out. Layoffs had happened. Mass layoffs had happened. The company was shutting down completely.

Each of these statements has had varying levels of veracity, and we’ve been digging in and speaking to those directly impacted to find out which reports we could substantiate.

LulzBot Shutdown?

First, the big one: is Aleph Objects shutting down?

The company’s only direct public statement so far says no, they’re “streamlining” operations, but currently remaining up and running. The brief statement, issued on Friday, indicates leaner, but ongoing, production and servicing.

Aleph Objects’ storied Founder and Owner, Jeff Moe, confirmed to the Loveland Reporter Herald that 91 of 113 employees had been laid off, leaving just 22 individuals in place. Cash flow is the only reason cited for the severe staff reduction.

But a reduction isn’t an end.

Until or unless it is.

We’ve received strong indications that that article didn’t provide the full story; a now-former employee shares:

“I just read that Loveland Herald article. It is far from what’s really happening. My best guess is that telling people the company is about to close would seriously undermine their ability to liquidate inventory and/or sell the company. The small remaining crew left is helping liquidate inventory and supporting existing customers.”

According to this source — who substantiated this by supplying a company email — Aleph Objects will cease operations entirely after October 31.

The decision, per this email, was made as of October 9. All business following that date has continued with the aim to sell off remaining inventory.

This is the only verifiable account of a specific date we’ve seen, but it does track with additional information gleaned from other sources.

Layoffs And Lawsuit

The 91 terminations weren’t the full story of layoffs; we’ve been informed that staff reduction began about three weeks ago. Most of these earlier reductions were apparently in temporary employees working on the production line — approximately 15 individuals.

Per Colorado employment law, any employer with more than 100 employees undergoing such a massive reduction in force (more than 50% at a single site) is required to file a notice under the WARN (Worker Adjustment and Retraining Notification) Act.

Aleph Objects did not do so, as a former employee who checked records at the Colorado Labor Board told us.

A former employee filed a class-action lawsuit on Monday against the company, BizWest reports (sorry about the paywall).

While Moe told BizWest as of their publication on Monday that he was as yet unaware of the suit, he did disclose some details that seem to support the above-noted cessation date:

“Moe said Aleph doesn’t have a specific deadline for finding a buyer or investor, but the company’s timeline is ‘measured in days and weeks rather than months and years’.”

Of course that does contradict the reported definitive end-of-month deadline — but the 31st is also only days (15) or weeks (2) away.

The lawsuit angle adds another reminder as well of something much more important than the departure of a well-known company from the industry: real people lost their jobs with no warning (or WARNing, as it were).

Inside Aleph

What has it been like working at Aleph Objects?

Since our piece was published last week, we’ve been hearing from more previous employees, both those caught under the layoff axe and those who left prior to these events. Our sincere thanks to those who have reached out to give their inside looks. Again, we’re keeping all of these sources anonymous; all have shown themselves to have been real employees, and their separately-heard stories have all lined up in many details.

As we noted last week, some employees who departed some time ago reported having seen “the writing on the wall” in terms of operations, and were not surprised at these latest turns of events.

“The layoffs were announced last Wednesday at 3 pm. All of the employees were told to meet in front of the building and [CEO] Grant Flaharty broke the news. Not much else happened from my perspective. I assumed it was happening soon…” one employee caught in the layoffs told us of their experience.

“From what I was told Aleph will keep about a dozen employees around to shut down production and perform necessary functions until the end of the month. After that, the powers that be will attempt to sell the company. I don’t know how many employees we had in total, but my best guess is between 100 and 120. Up until a week or two ago, we had a good amount of temps on the production line and they were all let go.”

Focusing primarily on the business and strategic decisions that led to the current situation, one former employee laid out the issues at hand quite neatly, explaining:

“The recent cash flow issues the owner is claiming are absolutely nothing new,” they said, citing a few examples, among them:

  • “Profit margins per unit were extremely low when sold direct, let alone after shares with distributors. There were times that a sale was profit negative after a discount…

  • The extreme dedication to open source was costly. If a quality open source solution for any particular need did not exist but a closed source version did, (things like ERP, etc), management would rather invest time and resources into developing and/or improving an open source alternative. This commitment was also the reason the company didn’t utilize Instagram.

The lack of IP, copyright, etc. render it a less-than-desirable purchase for a new owner, which is why I highly doubt the claims that they are negotiating new ownership prospects.”

These last points are potentially troubling for potential buyers; LulzBot has very famously been among the loudest prop
onents of the open source movement.

We’re informed that this impacted every aspect of operations — you might be familiar with their open source hardware, software, and even materials, but the ethos extended even more deeply. R&D efforts had to find workarounds for any activity that might not include open source options, another former employee told us, going so far as to avoid use of Windows or Mac OS to test software, or include WiFi connectivity on their machines.

And now it may well impact buyout potential. The LulzBot brand has been particularly strong in desktop 3D printing for some years now — but all of the source files are available online. It does sound as though the company is looking for a buyer, but any potential buyer or investor will likely have one major question: what exactly would they be buying?

Aleph Objects does have significant production capabilities, including about “$5 million in finished goods and raw materials,” as Moe told the Reporter Herald. So there is physical production and product, as well as a strong branding and well-known positioning — certainly nothing to sneeze at in this industry.

What’s Next?

When it comes to looking ahead here, the crystal ball is a bit murky.

Those who lost their jobs are filing unemployment, perhaps getting involved in the ongoing class-action suit, and are starting their job seeking. (Note to the industry: dozens of passionate and experienced individuals are newly available for hire!)

Inside indications from our sources suggest that Aleph Objects will be shutting down.

Operations may be bought, which would certainly be interesting. It would be lovely to see a lifeline for the LulzBot brand — but all fronts have been quiet when it comes to interested parties.

As for Aleph’s leadership, Moe already started a new company about a year ago: Fork Sand. It has the same business address as Aleph Objects HQ and seems to also be dedicated to open source hardware and software solutions. It is described as “a free Software, Open Source Hardware company developing Secure computing devices that guard users’ privacy.”

And for desktop 3D printing?

Here at least we know something: the industry is not wanting for competition or options.

If this is goodbye, LulzBot, for us it’s a very fond farewell.

By Sarah Goehrke

Sarah Goehrke is a Special Correspondent for Fabbaloo, via a partnership with Additive Integrity LLC. Focused on the 3D printing industry since 2014, she strives to bring grounded and on-the-ground insights to the 3D printing industry. Sarah served as Fabbaloo's Managing Editor from 2018-2021 and remains active in the industry through Women in 3D Printing and other work.