[MUSIC] In this video we are speaking to Zach Sheldon who is a partner at Lux Capital and he will give us a slightly different prospective as an investor in firms that are building 3D printer software or hardware platforms. And that gives us an industry view on what has been happening over the last 10 or 15 years in this space. So we'll talk about some trends in the hardware, the software, and finally on the content side of there. So content refers to the 3D designs that we are finding on platforms such as Thingiverse or YouImagine. And that content library is growing exponentially everyday in fact. So let's hear from Zach. >> I'm Zack Schildhorn, I'm a partner with Lux Capital. We're a venture capital firm based in New York and Silicon Valley with $700 million under management. And we focused exclusively on futuristic science and technology companies. So if it sounds like science fiction, we're probably invested. Our companies are doing everything from nuclear waste cleanup to 3D printing, surgical robotics, space communications, launching satellites, driving autonomous vehicles. It's all very exciting stuff. [SOUND] This is a space that I've personally been passionate about for a long time. I have a background in material science and so sort of had a natural affinity for this idea that you could start manipulating matter in a new way. And started focusing on the sector, probably over five years ago. We made our first investment in 2012 in company called Shapeways, that's now quite a significant 3D printing market place and platform, that lets anybody make anything in a lot of different materials and they do it all with the highest end equipment so you don't have to have anything at home. That was our first investment we've subsequently made two more investments directly in 3D printing companies, and other investments generally in the 3D ecosystem. The other investments in 3D printing are one called Sols Systems, also headquartered here in New York City. And Sols is focused on a very vertical application of 3D printing. They're using scanning and printing technology to make customized footwear with a broader vision to make really customized anything for anybody. And it's a very cool and exciting company that's here in New York and then another reason investment that we haven't disclosed as much about but is, I would say, on very much the cutting edge of what is possible is a company called Desktop Metal. And Desktop Metal in broad strokes is working on making it possible to print the highest performance metal parts directly in a desktop office environment. [SOUND] As an investor, we're always trying to figure out how we can best allocate our capital. And we have millions of dollars to put to work and we don't want to lose it. So, what's really important before we start making investments and just cool sounding ideas or great technologies is understanding what's happening in a market place, in an industry. And within 3D printing we spent about a year analyzing the whole space. Looking at every start-up. Looking at big companies. Looking at how companies were using the technology, what we thought was going to happen. And one of the first things we really focused on were the technology trends. How did we think this was going to evolve. And When you think about 3D printing there are really two important aspects, just like printing a document on your computer. You need to have the digital file that you're going to print and then you need to have the printer itself that makes it come out. So if you think about it in terms of content creation and then production, those are sort of the two absolutely necessary ingredients to be able to have a functioning ecosystem. So we focused on that and we tried to understand what was happening in each of those categories. On the printer side it was quite obvious what used to be these very expensive isolated machines only used in research labs of the top 500 companies. We're slowly, but in some cases very quickly, getting out into the world and becoming accessible to anyone at much lower prices. So with the launch of things like Maker Bot that came out of some open source university projects. All of a sudden you have, for just a few thousand dollars, a capability that was once tens of thousands of dollars in the hands of very few. And of course as a result you start seeing many go into the field and that creates competitive pressure. Now you have 15 companies all trying to make desktop 3D printers. You have the big companies that's saying, what's going on here? We need to start lowering our prices. We need to start coming up with better machines so that we don't get our business ripped out from under our feet. And that competitive dynamic and that new entrance brought new capital in and new ideas and I would say just generally much more momentum around the technology for the actual printers. So you saw new materials coming to market at much faster pace. You saw prices dropping, you saw new capabilities coming to bare. You saw the machines getting Faster, people focused on making them easier to use. And for us, as an investment firm we said this is great for the industry, really hard to pick a winner. So as a firm we decided we're probably not going to place our bets early on on actual 3D printer technology unless it's something that is so revolutionary. But let's focus on how people are going to use this technology. So that was our investment bent and what we saw happening on the hardware side. On the content creation side, so the files that were going to be printed. And you had a sort of similar dynamic taking place, where what used to these very, expensive, isolated, esoteric, types of software packages. Where all of a sudden, these capabilities were becoming available to everybody. So something that used to maybe cost $5,000 for a single software license for a CAD-trained engineer at a large engineering company. Now some of those capabilities were started to get released in free or open source programs. Sometimes, not even based on computer but on the web. And then finally, we saw actually another hardware technology coming to bare and coming down in cost and that is in the form of 3D sensors. And instead of having a straight 2D camera imagine having a 3D camera that actually captures the depth data about a scene or an object, and that lets you all of a sudden capture content that's in he real world. And very easily turn it into something that can be manipulated in an existing program or printed directly. And so we say all of these things as similar trends of going from what used to be very expensive and complex to becoming much easier and more accessible to everybody. And we thought that was a really good sign for what thee future of the industry could hold. [SOUND] So I think one common misconception that a lot of people had and continue to have about 3D printing is that this is a manufacturing technology that's going to replace everything. It's not true, in fact 3D printing today is still in most cases much more expensive than traditional manufacturing methods. And there's a challenge in 3D printing, as objects grow in size t hey become exponentially more expensive to produce. So why would anybody use this technology if it's more expensive and really hard to make bigger size things? You know what, what we realized, and I think what people often miss about 3D printing is it's not about replacing what you can make already but about making things that were never possible before. And what this means is that because of the technology, you can produce geometries that you could never manufacture another way. So imagine a device that has incredibly intricate internal structure, almost like a seashell or something like that, like a very organic shape. That would be almost impossible to produce through traditional manufacturing methods so it's an advantage of the technology. And another advantage is that you don't have the same loss of scale that you see in traditional manufacturing because there's no tooling, because everything is digital. You can produce just one of something and it's the same cost as producing hundreds or thousands of something. Or you could produce many iterations of a similar thing without incurring any additional expense. So when you're thinking about it from a business perspective, the question always has to be, how can I exploit these unique capabilities of being able to create on parallel the geometries and also to produce things on demand to help my business case? And if you look at how real businesses are using this technology today you'll see that almost all of them flow in to those Used cases. So let's start with the aerospace which is been one of the earliest adopters in military in aerospace companies for 3D printing technology. Boeing has leverage 3D printing to make over 20,000 parts. That are now flying on FAT and fighter jets. Now what's interesting about these parts, some of the early parts that they started making with these convoluted air ducts. So trying to get air to flow around the really tight spaces of a cock pit to cool critical equipment. These weren't for structural parts, the plane wasn't going to fall apart if the part failed, but they had to have a very unique shape that is hard to manufacture. And in fact by using 3D printing, they were able to not only cut out a lot of manufacturing steps but also reduce the weight of the part. And for anyone that knows anything about aerospace, the more weight you can reduce, you get dramatic fuel savings, which saves on costs tremendously over time. So that's a huge deal. And by using 3D printing, I think they were able to take 32 different components, add the 787 Dreamliner. And use those in 3D printing to save weight, so it's a really big change for them in terms of weight saving and the ability to reduce manufacturing steps. Also let's say you have a part that does fail or you need to replace. Instead of needing to hold hundreds of them or thousands of them in inventory in a warehouse somewhere all of a sudden, you can just print one up and have it shipped out to the site. So there are a lot of advantages in aerospace. I'll move on to some other examples sort of in the medical space and taking advantage as 3D printing. Most in ear hearing aids so kind of like these ear buds the custom fit inside people's ears. The shells for those hearing aids are 3D printed. And the reason is, is because everybody has a different ear canal on the inside, just like everybody has a different fingerprint, everyone's ear canal on the inside is different. And in order to make a part that fits in there perfectly it has to be unique for every person. So you could either have a craftsman hand carve a custom ear mold for every person or you can take a digital scan and then 3D print the part perfectly in the ideal material. And so that's exactly what they do. And 90% of all in-the-ear hearing aids are already 3D printed today. [MUSIC]
