In today’s episode, Tom and Tracy Hazzard talk about the opportunity cost of 3D printing. They go through their own genesis story with 3D printing and how they saw that not buying a 3D printer would cost them a great opportunity. They also go into how 3D printing changes your production process, your design process and it’s helping you with your business that not doing it really is a missed opportunity. Tom and Tracy also discuss how a leap of faith is needed but you have to think about the opportunities that you would be missing if you don’t start now.
3D Print Opportunity Cost
We’re going to talk today about the opportunity cost of 3D printing. Yesterday’s podcast got us thinking really about the opportunity cost that we went through when we decided whether or not we were going to 3D print it all. We sat there and Tom wanted a 3D printer really badly. Tom didn’t really care about the opportunity cost, he didn’t care about the financial consequences. He just wanted it. We’re going to tell the story again. For those of you who’ve been a long time listener, you can tune out for two minutes. I’m going to tell the story again because we have a lot of new listeners. It’s been a long time since perhaps we told our genesis story of how we started 3D printing. We’re going to quickly go over it.
I was very, very pregnant and very, very pissed off. I was pregnant with my third daughter. I was very, very pissed off because we had a client who didn’t pay us. We were very cranky because we were flying on an airplane all the way across the country for a very freezing cold Thanksgiving with our family back east. Tom kept pulling out the Make Magazine and he was all excited about the latest 3D printers, “We should buy one for our business.” I was like, “We just got stiffed $40,000.” There was no way I was buying a $4000 printer. He kept up at it. He kept saying, “We should do it. We should do it.”
What he sold me on was what I would call the opportunity cost. The fact that we believe strongly in our business and skill building and being ahead of innovation and understanding innovation and how it’s applied for our clients. If we don’t try this, we’re missing the opportunity. That’s how he sold me on it because I kept pushing back saying, “What are we going to use it for? What are we going to make with it? Our clients don’t need this type of prototyping. It’s not a service we are going to provide today.” When you look at it from that, you miss the opportunity of it.
The opportunity being, we’re doing this every day now, is that we have clients who are developing products. The old way of developing product is you draw it on paper or you draw it in CAD in the computer and you think you understand three dimensionally what it is and how it’s going to look and how it’s going to feel. But until you physically have it, there’s something missing and oftentimes, when you finally get something in 3D, let’s say you had a model maker build it or you sent it out or whatever, you get it back and it’s not what you expected and you end up making changes. We very quickly, we print things here in our office and experience something, “That really wasn’t what I thought it was going to be.” You have this quick iterative process that speeds us up.
I’m impressed with the fact that we are actively using it with clients. I certainly didn’t expect us to be, but our client base diversified to smaller products, which most of them were very large in the past. At the time at which we were evaluating it, the opportunity, we just didn’t have a lot of smaller products we were doing for clients. They were ingredients in a bigger product we might have used it for. But we are doing that because it’s diversified so much for us. But I say still, we probably don’t use it more than 10% of the time with our clients. I think not a high part of the overall services that we provide have to do with 3D printing at this point. Even still analyzing it, you would be like, “Do we really need a 3D print tech in our office? Do we need a 3D printer?” All of those things, you may still say that the cost benefit analysis would come out saying, “No, it’s not.”
But you’re disregarding again the opportunity cost of how it’s changing your process, speeding things up, things that may not be completely measurable and tangible. Not diving in and buying a 3D printer, that’s why it came to my mind again yesterday when we were talking about the cheap 3D printers, is that not doing anything just because of costs seems the wrong thing when there are so many cheap 3D printer options out there. In buying one at that rate, you’re starting and you’re evaluating that opportunity for yourself and you’re starting to see whether or not those intangibles are making sense for your business, for your personal growth, for your skill building.
For us, because it was four years ago, we were evaluating our business and what we’re going to do going forward. Of course, once I convinced Tracy, we saw 3D printing as a big opportunity and we didn’t want to be behind the curve. We wanted to be on the front side of that curve. That doesn’t mean that today it’s not worth doing if you’re new to 3D printing. I think it’s even more worth doing because I think there’s a lot of more proof of application in various areas. There’s proof of people using it in areas that have made it more tangible and are making it more competitive in terms of if you’re in that marketplace and you’re competing against them. They’re utilizing it, it’s speeding up their process, it’s helping them. I do think there’s even more tangible and applied reasons to buy one today.
Including what we’re seeing as actual FFF 3D printed end use consumer products, which I think a few years ago a lot more people would’ve scoffed at the idea of that because, “They’re just prototypes or they’re just little plastic things.” You have what’s going on with the bespoke designs with Lowe’s when they’re doing things that are 3D printed end use products. What we’re actually doing with some of our clients and making 3D print end use products in short initial product runs that are sold on Amazon so they can test the design before they spend tooling dollars and make sure that, as you always say, the dogs will eat the dog food before you go and spend a whole lot of money.
Then you go as far up as Wiivv Wearables and Feetz and are making actual end product. I saw a thing about Feetz, I think it was Long Beach or something like that. They were in Long Beach, DSW, The Shoe Warehouse, doing a popup shop. There’s a really good example of retail integration too. In our marketplace, had we seen that four years ago, I would’ve absolutely gone, “We’re doing it.” There would’ve been no question in the operation cost.
I really want to talk about this because it also reminded me of a conversation I had, I guess it would’ve been a year ago. Walter O’Brien, if you’ve ever seen this TV show Scorpion. I’m a big fan, I like the show. Scorpion is about an elite, very smart, high IQ, very, very high IQ individuals who are teamed up to solved problems. A lot of them are like world saving, of course on the show and actually in real life. It’s based on true story, based on a real man, Walter O’Brien, who I met. He has a 194 IQ, which is just incredible. There’s a tale in there about IQ versus EQ. That’s what he talked about at this conference that I met him at and was able to interview him personally about. But I think you would not believe that the man has low EQ. EQ is emotional quotient, IQ is your intelligence quotient.
When someone has a high EQ, less of their brain is working on that relationship and emotion, their communication skills. But it can be learned is what he’s proven, that you can be trained to be more connective. It is an actually very efficient way. High EQ people do better in the world, because relationships power a lot of what happens in the world today. Developing those skills are extremely important to high IQ people. That’s what he does within his organization for all of his people. They have what they call super nannies, Katharine McPhee. She plays the super nanny on the TV show Scorpion. Which is basically that she helps them communicate better because otherwise, a lot of people would stop communicating with these people that are so in the weeds of the math and the tech and the science, in their high IQ. Because it’s efficient, how to be more efficient in getting accomplished what you want to accomplish.
I was really nervous. That was probably the most nervous I’ve ever been interviewing anyone in my entire life. Even more than interviewing John Travolta, John Travolta was totally different. Interviewing Walter O’Brien, I was nervous because I was like, “This is intimidating. I think I’m a smart person, but this is a really smart person. How do I ask questions that don’t sound stupid?” That was very intimidating to me as I’m preparing for this, which I only had ten minutes to prepare to talk to him too. When I was interviewing John Travolta, I had two days. They told me earlier, the day before I was going to interview him the other night. I had almost two days to prepare. But I didn’t have a lot of time so I had to come up with my question off the cuff.
Finally, at the very end of the whole question and answer, which was really about the design process and how to stay ahead of innovation and curve of innovation, how do you know something is worthwhile doing. As we were talking about it, I said to him, “In your analysis of everything that you’ve gone through and done, what would you say is the most common problem that people have and the reason why things aren’t successful?” I mentioned to him that I had done some study of reports out there in Entrepreneur Magazine, Inc Magazine, Fortune, those type of level, Harvard Business Review, and analyzed what they said the failure for startups were. Whether it was money, team, market, product, a whole bunch of things like that. What I learned was that product market fit was the biggest problem. It’s 54% of the problem is product market fit. Either you had the right product but the wrong market or you had the wrong market but the right product. The fit didn’t match.
This is what I say to him and he said, “Actually, I believe that it’s timing and it has to do with opportunity cost.” For most people, they take too long to get to market because they don’t tangibly analyze the opportunity cost, they miss the proper calculations. Because the things that we sometimes see as intangible are actually measurable in terms of like they would be able to figure out how to measure them. We think of them as somewhat intangible, but there’s a cost of not doing something that may make you fail at a higher rate than anything else. Then the other flip side of that is people jumping in too soon. They’re too soon for it. Had we dove in four years ago and went whole hog to a 3D print business, we might have been successful but likely for the market that we wanted to be in was too soon.
We knew that, we tested it. We anticipated it would be a risk and we were testing out product market fit because that’s what I know how to do, that’s what we do in our business every day, it’s why we have a better hit ratio than anyone else in the design area for consumer products. It’s because we’re always testing out whether or not it’s a fit for the market that we’re going after. When we see that it’s not, we have time to make adjustments to make it fit and/or we have time to kill it and do something new because of what we learned. We fail fast if we fail. We have removed a lot of that opportunity cost analysis problem from the market fit standpoint, but it doesn’t mean that we aren’t sitting behind too long.
His voice has been in my head a lot in the last couple of months, that we are going to miss our opportunity in 3D printing retail if we don’t do something soon, if we don’t jump into the big plan that we want to do. Because it’s timed now. Because there’s enough of these applications happening in the world, there’s enough of the Feetz and the Wiivv’s successes. There’s just been so much going on in retail world, like with Lowe’s and other places that are enough success indicators that we should be doing something. It’s in my head that that opportunity cost and that timing requires a leap of faith sometimes.
I’m sure it requires a leap of faith because nobody has a complete crystal ball to be able to tell, but as creative people, we do have a vision, we always are creating new things. We are less risk averse than a lot of business people who might be more conservative where they want to know, “There’s an absolute market for that out there. You can know that the dogs will eat the dog food.” You may have to take a leap. It makes it tough. There’s an opportunity cost to doing it too soon and there’s an opportunity cost to waiting too long. It costs you your opportunity.
I just sit there think about that from a small standpoint. I want you all to think about that. If you are listening to this podcast and you’ve been listening for some time and you’re not getting on a CAD program and you’re not buying a 3D printer and you’re not trying this out for yourself, I think you’re missing an opportunity. I believe you’re missing an opportunity. Now is the time. This is a good time to be doing it. The cost of 3D printers are coming down. You don’t have to buy one as cheap as the one we referred to yesterday. You don’t have to buy that, you can still buy ones that are very, very reliable for a few hundred dollars and that are not kits an be really worthwhile and be printing and trying this out and deciding, is this a future for you? I just wrote an article within the last week for Inc, for my column there. It was really about the fact that the job right now in demand already are designers.
We’ve seen this for a few years. We’ve known this was coming in this area. We had a little bit of insight from a client, CEO of his company. Unfortunately, he passed away. That’s coming up on three years ago. Such a shame because he was a really, really good man and incredibly smart business person, very successful. He was at this high level corporate meeting in New York where a bunch of marketing companies were brought in to say what the future of their businesses was going to be. It’s one of these high level conferences or something and special speakers who really were providing some insight into the future. The companies attending were all more traditional manufacturing companies.
What they were told is, “All you traditional manufacturing companies are going to have to reinvent yourselves because in the coming years,” at that time, this was probably four years ago, they were saying that it was fifteen years in the future. But I remember when we spoke with Ken, this gentleman’s name is Ken, he actually speculated that it wasn’t even going to be fifteen years off, that it was more like ten years at the time. Which would only be five or six years from now that so many more actual consumer products are going to be on demand 3D printed locally. A lot of companies are invested heavily in manufacturing equivalent or factories in Asia or their business model is built around importing products. There’s going to be a major shift.
Now, there will always be some products that’ll still be imported like that. One example that we know a lot about is furniture. If you’re going to build physical furniture especially out of materials like wood and things, you’re going to have a high labor cost of manufacture and that’s probably still going to be done somewhere overseas and imported for the most part. There’s always exceptions, but for the most part. But for smaller consumer products and certain materials that certain consumer products are made of, there’s going to be a lot more of that done in the US and locally all around the world. There’s going to be a bigger shift to local manufacturing.
There is already a bigger shift of what we call last mile delivery. In other words, you see that there’s Amazon warehouses popping up everywhere, Walmart is doing the same thing. You’re within so many miles of these stores in which they have the ability to deliver from there. That they’ve distributed their warehousing across, localized their warehousing. Distribution of retail is changing right before our eyes right now, manufacturing of it is changing. The big point of this is that what Ken told us from these conferences, these marketing groups, were saying there’s going to be a huge demand in the future for designers and engineers because you’re going to have this really huge increase in local manufacturing, you’re lowering the barrier to entry for smaller companies on smaller budgets who are going to be able to produce their own products because the cost of doing that with on demand 3D printing is less and you don’t have to tool as much. Engineers and designers are going to be the growth jobs and in high demand.
I’m happy about that because then designers will really get paid more what they deserve I think. Because when there’s high demand and low supply, which there is at this point, prices will go up and pay will go up, which is desperately needed right now because it’s not cost effective. It’s not effective to be a designer in a Fiverr world. We have an upcoming interview in a week or two with someone from CEL Corporation who makes a different kind of 3D printer. This is going to be a very exciting interview not just about the 3D printer, but what we talk about way beyond that. He agrees. He has a lot of experience, he’s knee deep in this industry and has been for a number of years and he actually agrees with us on this point. That’ll be a lot of fun.
I just really wanted everyone to be thinking about that opportunity cost. Whether it’s a student opportunity cost for your career in the future, it’s your opportunity cost of having one in your households, you’re exposing your family, it’s your job as a teacher to be exposing it and presenting the opportunities of the future to your students, it’s a business and you got to analyze the opportunity cost of being on the edge of innovation, on the wave of innovation at this point because it’s not an edge anymore, that’s what we’re seeing very clearly. Thinking about all those things and thinking about not missing that opportunity cost, we’re way passed it being experimental. We’re four years passed it being experimental. I think you have to think about can you afford the opportunity cost or can you not afford the opportunity lost?
That’s what we’ve been thinking about and we thought we’d present our thoughts to you and share that with you. We will have posts on 3D Start Point Facebook page and other places on social media. Thanks for listening, everybody. We’ll be back tomorrow with another great interview episode. This has been Tom and Tracy on the WTFFF 3D Printing Podcast.
- Wiivv Wearables
- Tracy’s Inc article on John Travolta
- Tracy’s Inc article on Walter O’Brien
- Cheap 3D Printers
- Tracy’s Inc article – Best Places For Designers To Learn Business Skills
Listen | Download | View
Hear the episode of the WTFFF?! Podcast by using the player above OR click to download any episode.
Help Us Help You!
Have some feedback? Leave a comment below. We will read and respond
Please also review us on iTunes and share via the social media of your choice.