CEO Vicki Holt Aims to Take Proto Labs to $1B. Here's How
The only thing slowing down Proto Labs’ bid to become a $1B technology company just may be the time it takes for its customers to catch up. Since its inception in 1999, the provider of rapid manufacturing (and inspection services now) of low-volume 3-D printed, CNC-machined and injection-molded custom parts for prototyping and short-run production, has leveraged the power of digital information.
Vicki Holt has been CEO and President since 2014, having previously served in executive roles in the chemical industry.
IndustryWeek spoke to Holt about Proto Labs’ quest to become a $1B company and her vision for the future.
IndustryWeek: What is going to be your biggest challenge in reaching $1B in sales?
Holt: In order for us to succeed as a digital business, our customers need to be digital too. Our model isn’t conducive to paper in the system. We’re fortunate that we started out that way, but it’s really challenging for traditional customers that have decades of experience doing things in a 2D world. They aren’t going to change overnight, so we see it’s our job to help get them thinking about where they can be digital and to overcome those cultural barriers.
We are a technology company, but you know technology changes. What we were doing online—for example e-commerce, in the early 2000's has totally changed. So we have to continue to invest in our technology to ensure that we can continue to scale and stay ahead of the competition--and keep growing.
IndustryWeek: What exactly do you mean by being “digital?”
Holt: When we talk about being digital we talk about what we call the “digital thread,” which starts right from the point that the CAD drawing for a part is uploaded. Our software analyzes the 3D-part information to determine its manufacturability—if necessary we will propose revisions to the design so that it can actually be produced as designed—and send back an interactive quote to the customer. The part data and order information then flow right into our scheduling system and on through to the finished product. It’s essential that we maintain the digital thread throughout the entire process, as our customers want their parts in very short lead times, and we could not offer the rapid turnaround if we were filling out 16 pages of paperwork and managing islands of data maintained at different points in the process.
IndustryWeek: What types of companies are grasping the digital thread methodology and the benefits of rapid manufacturing?
Holt: I think the companies that truly get it are the ones that know they are in a race to stay competitive every single day, and that they have the leadership and a culture that understands and is willing to question existing paradigms. They understand that hardware and software have to work together in ways that are unprecedented today and they also recognize the strategic advantage in taking six months of lead time out of their time to market.
IndustryWeek: Proto Labs recently announced the opening of a metrology lab and is now able to offer enhanced digital inspection reporting on manufactured parts as service. It seems like such an obvious bundling of services, I have to ask ‘Why didn’t you do this earlier?”
Holt: In part, we had to wait for the technology to catch up so that we could provide this service at scale. We are the first company to be using the inspection equipment in this way. And frankly it was our customers who were saying they wanted us to be able to offer more of a total solution. It’s taking the digital thread one step further in that now we are engaging with the supply chain, which means we must position it in a language that supply chain and procurement professionals understand. It’s about reduced inventory and the ability to respond to unpredictable demands in your supply chain.
IndustryWeek: How do you stay competitive in producing only at low volumes?
Holt: We have 18 locations around the world, and our sweet spot is 10K parts or less, although we have customers who have used us for orders much larger than that, especially when their traditional suppliers drop the ball. When you look at our revenue by service, we are about 60% injection molding, 30% CNC machining and 10% 3D printing. Within the injection molding service, about half the revenue is from production parts and half is from tooling. Therefore, almost a third of our revenue is production parts. A big advantage is that we make all of our own tooling, which is really cost effective for us because we have automated the process with software and taken out all of that non-recurring front-end engineering.
IndustryWeek: What keeps you up at night?
Holt: In order to make sure that we can continue to grow, we have got to attract and retain the right talent. Our workforce has grown from 750 to 1750 just since 2014. Today we have more software professionals than we have manufacturing engineers, and as a result we have to compete with the likes of Amazon, Google and Facebook for that talent. We know that in order to attract talent we have to be a great place to work and I am proud to say that we have made progress with the next-generation workforce.
