Seven Sketchy 3D Printing Business Practices
There are some practices that are just not good.
Over the many years I’ve been following 3D printing I’ve found the majority of participants to be upstanding citizens and business operators, but occasionally I encounter organizations and people that step over the line, at least in my opinion.
They may not be breaking laws, but the ethics of some practices don’t feel right. Here I’m listing seven business practices I’ve seen in 3D printing that usually produce negative results and lower company reputations.
Many 3D printing service bureaus offer powder-based 3D prints made on large-scale commercial equipment. Typically these machines are used to produce high-resolution, strong nylon parts for requestors who otherwise don’t have access to the expensive equipment.
The SLS machines operate by flashing a high power laser against a flat bed of fine nylon powder. The powder also acts as a support material, as it surrounds the part during printing. Any unused powder can be reused.
One key operating feature of these machines is the requirements for using fresh powder. Some equipment manufacturers strongly recommend a maximum ratio of 50% reused powder, with the remainder being “fresh” powder. This is to ensure part quality.
However, some unscrupulous 3D print services may bend that rule and tip the ratio in favor of reused powder in order to save money. The part requestors may receive parts of lesser quality as a result.
Stock Price Maneuvers
This doesn’t happen so often lately, but during the 3D print craze of 2010-2014 some larger 3D print companies were strongly buying many other smaller players. Normally this isn’t an issue as it can be a very strategic thing to acquire a company. This may be done for growing customer lists, adding complementary technologies or acquiring important content.
But in at least one case a public company was repeatedly buying smaller 3D print operations, usually because they were under threat of failure. If they had publicly failed, then the buying company’s stock price may have been affected by growing fears of the viability of the technology.
But by acquiring the company before it failed, the bad news was squashed, and stock prices continued to rise. The acquisition cost was sometimes financed by ongoing growth of the stock price, so there was little actual cost to the move.
Eventually this system collapsed and with it went the high stock prices of all 3D printer companies.
Lowball Product Price
Often done in crowdfunding campaign launches, startup companies sometimes lowball their product price to attract more orders. There is some sense in this as buyers tend to prefer lower-priced options.
However, this is a bad practice because the set price can sometimes be lower than break-even level for the product. The resulting situation is one where the startup company is unable to figure out how to actually manufacture and deliver an astounding number of units, and even worse, they’re losing money on each one.
It’s a trap far too many startups fall into, yet it’s easy to avoid if you have any proper management skills.
Proprietary Materials Pricing
Many 3D printers can use what’s known as “open materials”, where any technically-suitable third party material can be employed. However, there are some machines that technically require only manufacturer-certified proprietary materials.
While some scoff at proprietary materials as if they are evil, there is some sense in doing so: the manufacturer can very finely tune the print parameters because they know with absolute certainty the properties of the materials going through the machine. Thus, proprietary materials should equal good quality results.
However, some companies view the proprietary scenario as monopolistic and raise prices exorbitantly, attempting to maximize the revenue obtained from captive clients. That’s not helpful.
Some inexpensive desktop machines are produced in fully open source mode. That is to say, their design plans are publicly available and it is possible for anyone to attempt to make the same machine. This is how open source works, with the idea that any improvements can contribute back to the original design and everyone benefits.
This approach was taken by many 3D printer startups years ago - and is still done by some. However, it puts these companies into a sometimes challenging position, as overseas manufacturers are able to duplicate the machine and offer it at lower cost.
This scenario caused MakerBot to switch from open source designs to closed source years ago, as they were suffering from competition from inexpensive clones.
That’s entirely legal as the originating company did indeed publish the plans. However, what’s unethical is that some of the clones can be made with low-quality components.
This results in a machine that’s seen publicly as “equivalent” to the original, yet actually is not due to the poor build quality.
Sure, this could be a “buyer beware” situation, but it seems to me that it is unethical to ride on the popularity of one machine while delivering something quite different.
Construction 3D Printing
The technology of construction 3D printing is still largely under development. There are several instances of concrete extruders being used to relatively quickly produce walls and foundations of houses. These are not completed structures, in spite of countless news reports declaring “A home 3D printed in 24 hours!” The fact is that these structures still require plumbing, insulation, windows, HVAC, electrical, surface finishings, flooring, doors, etc. In other words, literally everything aside from the concrete.
Nevertheless, I still encourage those working in the space to continue developing the technology so that at some future point we may indeed have a home 3D printed in 24 hours. We’re just nowhere near that now.
The officials in Dubai don’t seem to understand this, as I repeatedly see arrangements between that region and some construction 3D printing companies. The technology is not yet ready for large-scale use, yet deals are being made. It seems to me that in some cases the construction 3D printer companies are taking advantage of unknowing buyers.
The Chief Financial Officer of any company is a critical role, as they control the flow of cash inside and outside the company. Thus a CEO should spend considerable effort to find the right person to do that job.
Unfortunately, I’ve seen a few examples in the 3D printing world where this was not the case. In one situation, the inexperienced CFO “borrowed” most of the cash to build a house, hoping to sell it at a profit and “put the money back”. That did not turn out well.
More recently another case involving a 3D printer startup with a questionable CFO choice caused the failure of the company entirely.
In both cases the losers were not just the clients hoping to buy the equipment, but more seriously the investors in the companies, who lost everything.
Choosing a bad CFO is not a good business practice.
And there you have seven sketchy business practices in the 3D printing industry. Did I miss some? No doubt!