Twin City Plaza is an L-shaped strip mall that straddles the Cambridge-Somerville line. If you’ve driven the elevated McGrath Highway, you’ve likely buzzed past its roofline.
On the first floor, you’ll find a Dunkin’, a Marshalls, and a Dollar Tree. On the second level is Formlabs, a 3-D printing startup that generates $100 million in annual revenue, and which many people expect will one day be publicly-traded. The company’s venture capital backers already believe Formlabs is worth more than $1 billion — though it doesn’t mark its 10th birthday until this fall.
I went to meet CEO Max Lobovsky at his office, mainly because I wanted to see what Formlabs has done with the place. The prior tenant had been another startup founded by MIT grads who were enchanted by the potential of new technology. That company was iRobot, now based in Bedford, which has built and sold more robots than anyone else in the world — most of them disc-shaped vacuum cleaners.
Colin Angle, iRobot’s CEO, likes to reminisce about the company’s humble origins above the strip mall. The high ceilings gave his colleagues building robots plenty of room to bring heavy equipment in and out.
Weirdly, the space remained vacant for about 13 years after iRobot moved out. Formlabs has spiffed it up a bit, but it’s still utilitarian enough that the company can bring in wooden forklift pallets stacked with its 3-D printers and stash them in the cafeteria. A display shelf features a set of items that were made with the company’s printers, from building models to vases to molecular models to characters from “Star Wars.”
Formlabs’ printers contain a laser, its light directed by mirrors, and a pool of light-sensitive resin that hardens when exposed to the laser’s light. Unlike a sculptor who chisels away the pieces of marble that he or she doesn’t want to be part of the finished object, the Formlabs laser essentially tells the liquid resin which parts of it needs to turn into the object. The detail it can produce is dazzling — designs and layers that you couldn’t possibly chisel or cast.
As Formlabs has evolved, it has added a range of materials that can be used in its printers, many of them durable enough that they can be part of finished objects that go out into the world — like customized dentures and medical implants — and not just prototypes. Making denture parts and surgical guides for dentists accounts for about 25 percent of Formlabs’ sales, Lobovsky says.
And Formlabs has always targeted a sweet spot in the market: good enough quality for professional designers to have it on their desk, at a price that isn’t prohibitive ― $3,500 for the low-end model.
After some delays, in January, Formlabs began shipping another kind of 3-D printer, which uses a laser to fuse together a polymer powder, which can produce stronger objects. This one costs $18,500, but it competes with more complex systems priced at $100,000 or more, Lobovsky says. (Other startups around the world are also working to bring the price of this kind of printer into the sub-$20,000 range.) Formlabs’ new printer, the Fuse 1, is made in China, but when I visited the company had an early batch of them in the office for quality checks.
In 2020, as the coronavirus spread, some people who use Formlabs printers in research hospitals experimented with using them to make test swabs, which were in short supply in some places. Surprisingly, they found that printing a textured pattern on the end of a long swab worked just as well for gathering a sample from the inside of a patient’s nose as did a swab with cotton flocking on the end.
Lobovsky says Formlabs had “lots of conversations about supplying tens of millions of swabs to the federal government,” but the discussions got caught up in red tape at the Food and Drug Administration, and “it ultimately didn’t happen.”
But by the company’s estimate, more than 20 million swabs have been printed on its machines, largely in Canada, Spain, and Singapore. “In those places, we were especially meaningful to the supply of swabs,” Lobovsky says. “We were doing anything anyone asked us to do, when it came to COVID response.”
For Formlabs, it felt as though “our business has been fairly COVID-proof,” Lobovsky says. “We had companies buying printers to send home with their engineers,” so they could continue developing products while working remotely. And 2021 “will be a huge year for revenue growth,” Lobovsky predicts, in part because of the new Fuse 1 product. “We grew in 2020, but it was slower.”
Throughout the last year, Lobovsky says, many of the people who work to engineer the company’s products have been coming into the office, while most people working on sales, marketing, and support tasks have not. Lobovsky says not having daily interactions at the watercooler “does break down trust between people, and leaders aren’t getting face time together. I believe that aggressive, Type A people need trust to work together as a team.”
The company has about 600 employees, at two sites in Somerville, an office in North Carolina, and offices in Germany, Hungary, Japan, and Singapore. It expects to add about 70 positions in Massachusetts this year.
Before I met Lobovsky at the mall, another local 3-D printing company, Desktop Metal, had become publicly traded through an entity called a SPAC, a “blank check” company that raises money, goes public, and then acquires a private company. After I met with him, another local maker of 3-D printers, Markforged, had announced it would take that same route to the public markets. It’s seen by some as a shortcut to a public stock listing, but there’s also concern that it may result in a whole class of companies going public prematurely, before they’ve built durable businesses.
Lobovsky says he has been taking lots of calls from executives at these SPAC entities who are sniffing around Formlabs as a potential acquisition. “You have companies that are pre-revenue, or have shrinking revenue, going public this way,” he said in late January. “It’s remarkable to have companies valued at 100 times revenue.”
By late March, Lobovsky told had me that his opinion about going public via a SPAC, compared with the old-fashioned way, hadn’t changed much, but he was reluctant to say anything that would one day force him to “eat my words” if the company took that path to the public market.
“The amount of cheap capital flowing right now is huge,” he says. “So we have to pay attention to them, and evaluate all the options.”
But the flock of companies going public without reliable revenue — or any revenue — reminds Lobovsky of the dot-com mania of 1999 and 2000. At the time, his mother worked for Bell Labs in New Jersey, the famed research group that was then part of Lucent Technologies, a maker of telecommunications network equipment. She lost her job in the aftermath of the Nasdaq crash. Lobovsky was only 13, but it made a big impression. He wants to build a company that endures.
The former CEO of Z Corp., Marina Hatsopoulos, has been following Formlabs since its earliest days. (Another MIT spinout from an earlier era — the mid-1990s — Z Corp. was one of the earliest makers of 3-D printers, which then cost $60,000. ) ”As for future challenges,” Hatsopoulos notes, “there is a lot of investment in 3-D printing, and a phenomenal amount of competition from very well-funded, experienced companies.”
Hatsopoulos says she considered putting money into Formlabs in its earliest days, but didn’t.
“I was wrong in underestimating Max,” she writes via e-mail. “Still kicking myself!”
Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.
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