August 4, 2016

Formlabs $35 Million Financing

We just led a $35 million financing at Formlabs. In case you were wondering, lasers are super cool.

In 2010, when we invested in MakerBot, the maker movement was just beginning. While 3D printing technology had been around for 30 years, there were no desktop 3D printers. The concept of using an additive process for 3D printing, where you built up a 3D object from continuous extrusion of a material such as ABS or PLA (plastics) was well understood. But this technology had not been brought to the desktop at a $2,000 price point. MakerBot did that and created an entirely new market segment within the 3D printing industry.

Last year we invested in Glowforge, a company playing into the same trend that made MakerBot successful but in an inverse way. Instead of an additive process, Glowforge uses a subtractive process to create objects. Glowforge has a product that uses lasers to perform the subtractive process. In the same way that MakerBot completely disrupted the 3D additive manufacturing industry, we believe that Glowforge can completely disrupt the 3D subtractive manufacturing industry. Last week we announced that we led a $22 million financing for Glowforge.

In 2011, at about the same time that MakerBot was starting to scale, another new company – Formlabs – was founded with the vision of also creating a desktop 3D printer. However, unlike the technology that MakerBot used which was called FDM (Fused Deposition Modeling), Formlabs used a technology called SLA (Stereolithography) which has many advantages over FDM, but is more complicated to implement. As a result, it took Formlabs longer to get their product into the market.

In the fall of 2012, Formlabs did a $2.95 million Kickstarter campaign. In the early summer of 2013, around the time Stratasys acquired MakerBot, Formlabs started shipping their Form 1 printer. By the end of 2015, Formlabs shipped their Form 2 printer, which is a spectacular product.

While we knew Formlabs because of our MakerBot investment, we didn’t meet Max until after Stratasys had acquired MakerBot. I knew Max from a distance because we were both in the Netflix documentary Print the Legend. Even though there are many cringe-worthy moments, it’s a powerful story about the creation and emergence of MakerBot, Formlabs, and desktop 3D printing.

In 2014 Max hunted me down at a talk I did in Boston hosted by Katie Rae and Reed Sturtevant with my uncle Charlie about his book The Calloway Way: Results and Integrity. We talked for a little while and he made a powerful impression on me that I tucked away deep inside my brain.

This spring, Max and his cofounder Natan Linder reached out to me about having Foundry Group lead a financing. The company had only raised one major round of $19 million, led by Barry Schuler at DFJ Growth. Barry had a long history with 3D printing and he had put in a term sheet to lead the round Makerbot was considering. When Stratasys acquired the company, Barry invested in Formlabs. I’m on the board of littleBits with Barry and have loved working with him so between Barry’s encouragement, Max’s direct approach, and my love of lasers, we dug into Formlabs.

In the past two years, 3D printing has gone through the classic Gartner Hype Cycle bottoming out in the trough of disillusionment.

At this point, we think there is an enormous void for a new market leader as we move into the slope of enlightenment. We are honored to get another shot at this with our investment in Formlabs.

Oh – and lasers are super cool.

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August 3, 2016

Reason for Reform: Join the Movement for Immigration Reform

As an investor, I’m always looking for the next great American company. Who will create tomorrow’s Twitter, Facebook, or Google?

Today it is just as likely to be someone born in Beijing or Jaipur as it is to be someone from Boston or Boulder. In 2016, you no longer have to be in Silicon Valley to launch a successful startup. Colorado is home to many.

However, national borders do still matter and our current immigration system unfortunately isn’t designed to allow anyone looking to create the next Fitbit the ability to easily do so in America. As a result, we lose out to other countries as non-US founders start their ventures to countries like Canada, Chile, or Singapore instead of the US, often because it’s impossible for them to get appropriate visas to create their companies while living in the US.

That’s why I’m spreading the word about the Partnership for a New American Economy’s Reason for Reform campaign, which calls on business leaders, entrepreneurs, students, and others from across the US to tell Congress why America needs immigration reform by recording a short video clip from their cell phones or computers, giving their “reason for reform.”

Check out Reason for Reform here and submit your own video.

Coinciding with the launch of this campaign, Partnership for a New American Economy has marked today as a National Day of Action and is holding events in all 50 states and in Washington, DC to call attention to the economic contributions of immigrants in America. The day will also include the release of new state-specific research. You can check out your state’s report here.

Immigrants have historically been an entrepreneurial bunch. Today, immigrants represent more than 10 percent of Colorado’s entrepreneurs. In 2014, their businesses contributed more than $560 million in revenue to Colorado’s economy. Of the nine Colorado-based companies that appear on the Fortune 500 list, a third of them were founded by immigrants or their children. These three firms alone provide 53,000 jobs and generate more than $20 billion in revenue each year.

Providing sufficient staffing for these companies is another hurdle. Today in Colorado, there are 15 unfilled jobs for every one unemployed STEM worker. While we should certainly be investing in our own STEM education, we should take advantage of the thousands of international students who come here to study and are ready to fill these gaps immediately upon graduation. A new Colorado report released today by the Partnership for a New American Economy (PNAE) calculates that 27.5 percent of all students earning STEM-related PhDs in Colorado are from other countries. Many of these students want to stay to further the research they started in their programs and build companies from their findings. Almost 1,000 jobs could be created for American workers if even half of the 740 graduate students on temporary visas in Colorado were allowed to stay upon completion of their programs.

America’s future as the global leader in innovation remains in the balance until our immigration system is fixed. A large portion of a reform package should focus on updating our system to better reflect the business landscape and market realities of the 21st Century.

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August 1, 2016

Glowforge’s $22 Million Financing

We just led a $22 million financing in Glowforge. I’ll start with the punchline – lasers are super cool.

When we led a $9 million financing in Glowforge a little over a year ago, we were excited about the potential to do to the subtractive 3D printing world what we did with MakerBot in the additive / FDM 3D printing world. We were also fired up by the beautiful and practical stuff that the team made us to show what the product could do.

In June 2015, Glowforge had a prototype and a plan. A few months later, Glowforge ran a 30-day crowdfunding campaign, which ended up raising $27.9 million and is still the #1 30-day crowdfunding campaign ever.

By the time the 30 days were over, it was unambiguous that we had found the ever-elusive product market fit. We knew that all kinds of designers, crafters, artists, and makers wanted a 3D laser printer in their home. The feedback around what we were doing was incredible and awesome. Oh – and lasers are super cool.

It has been less than nine months since the pre-order campaign and I’ve seen the product and the company move at a lightning quick pace. In Q2 they brought a full beta unit to our office in Boulder and it blew our mind.

My partner Ryan’s son Quinn (who is 12) was in the office so we sat him down in front of the Glowforge, gave him an iPad with the Glowforge software on it, and he went to town making stuff in our conference room. After 30 minutes the grin on my face was so huge I had to go sit quietly in my office for a few minutes to calm down.

Units are now coming off our US manufacturing lines and we are starting to get them into beta user’s hands each week. We are trickling them out slowly to make sure that we’ve got the manufacturing process nailed for the hardware. The software is continually improving, so a short passage of time as we dial in the manufacturing before scaling just results in an even better end product.

Dan Shapiro (the CEO) and his team is obsessed about having the highest quality possible product. While they didn’t need any additional money at this point, they were willing to let us do a financing to have major cash on the balance sheet that would allow them to weather any challenges. Given the extreme demand we had from the pre-order campaign, we are expecting this to accelerate once we start shipping, so it made sense to raise more money right now to support growth so the company could focus 100% of it’s energy on customers and product.

We proactively offered to lead a financing rather than have Dan and team run around few a few months. As part of our overall strategy, we have long described ourselves as syndication agnostic. We are happy to invest with others, but we are also happy to lead rounds ourselves in companies we’ve already invested in. At Glowforge, we already had a great partner with True Ventures and were able to agree on terms with Dan and his team that allowed us to quickly do a round.

As Glowforge printers make their way out into the world, I’m super excited to see what people do with them. Oh, and lasers are super cool.

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July 31, 2016

Reflecting on July 2016 from Adelaide

I’m sitting in a hotel room on the other side of the planet from where I’m usually hanging out. I just got back from a super run (4.5 miles in 45 minutes – nothing like sea level and flat to speed things up), am drinking some Mount Franklin bottled water, and reflecting on what was an intense month.

While I live a busy life, the pace ebbs and flows. The last 30 days were particularly busy, with a handful of deals (yeah – that’s foreshadowing for some announcements coming up), a final draft of the next version of Venture Deals (with Jas0n), lots of other typical stuff, and a colonoscopy. This would have been plenty except it was against the backdrop of the RNC and DNC circuses along with the amplification of what was already an emotionally complex presidential election cycle.

While I’ve had plenty of ups and downs, dealt with my share of failure, and struggled through emotionally difficult periods, I’m fundamentally an optimist. As I sit here in Adelaide, I feel incredibly fortunate to be alive in 2016. On Friday afternoon, I got in my car, made a bunch of phone calls on the drive from Keystone to DIA, got on a plane, took an Ambien, and woke up in Sydney. It’s not quite time travel, but it’s pretty fucking close.

As I was running on the river through downtown Adelaide, I mostly people watched as my mind wandered. There was a football game starting so there was a crowd at two segments of my loop. I could have been anywhere – I just happened to be here. It made me smile.

For a few weeks in July I fought with my emotions around the election. I vacillated from trying to ignore it to paying too much attention to it. I have clear opinions about it and a general ability to filter out the noise, but I found myself being drawn into it as though I was watching a slow motion multi-car pileup that never ends.

In the past few days, I came to terms with my emotions around everything. If you’ve read my last few posts, you can probably infer the internal conversation I’ve been having with myself. Fortunately, I spent the last week with Amy so I got a chance to work through some if it in conversations with her.

As I sit here getting ready for an interesting and stimulating week in Adelaide, I’m ready for August.

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July 29, 2016

Your Truth vs. The Truth

I’ve been thinking about what “truth” means lately. With almost no effort I can find contradictory articles, thoughts, perspectives, statements, and opinions on almost everything being discussed today. I’m sure our election cycle is amplifying this, but I see this in a bunch of stuff I’m reading about tech as well.

As someone who views independent critical thinking as extremely important, this dynamic is perplexing to me. A few months ago I wrote a post about TruthRank vs. PageRank. It started me down a path where I began separating types of truth. Specifically, I’ve begun referring to “your truth” vs. “the truth.”

When I say “your truth” I’m not referring to opinions. I’m referring to your deeply held beliefs. Your truth is the set of ideas that forms the basis of your view of the world. It requires a huge act of will and introspection for you to change your truth.

To understand this better, I’d like to use a classic example from tech – that of Steve Ballmer’s view of the iPhone, and subsequently his approach to the mobile business.

Let’s set the stage with a classic interview with Ballmer at the time the iPhone is announced in 2007.

Now, let’s look at Ballmer’s reflections about this in 2014.

As part of this arc, Ballmer’s big solve was to move Microsoft from a software only company to software+services and then software+devices. For many years, Microsoft was disdainful of Apple’s tightly coupled hardware+software business. In a final thrust of reactionary behavior, Microsoft bought Nokia in 2014 for $7.2 billion and then wrote off $7.6 billion a little over a year later.

Ballmer had “his truth.” It was stronger than an opinion. It shaped his entire view of the world. He held on to it for seven years (or probably longer).

And, at least in the case of mobile, it was completely wrong. It was not “the truth.”

I see this in all aspects of the world. It’s noisiest in politics right now, but it’s prevalent through all aspects of society. I’m running into it constantly in business and technology – both at a macro level (about the industry) and a micro level (within a company).

In the same way it’s different than an opinion (which can be wrong and/or invalidated over time), it’s different than strategy. I’ve always felt that a strategy was the framework for executing your truth. Strategies evolve and opinions change but your truth doesn’t.

And herein lies the problem. I’m seeing people hold onto their truth for much too long. They hold on too tightly. They turn an opinion into their truth. They extrapolate their truth from a small number of data points. The generalize one experience to create their truth. They react emotionally to something that they disagree with and anchor on their truth. They justify their behavior by holding onto their truth.

In many of these situations, individual critical thinking goes out the window. The internal biasing behavior of your truth dominates. You stop being able to listen to other perspectives, to process them, to think about them, and to evolve your opinion. Instead of deeply held beliefs, you end up with a shallow and self-justifying perspective that you hold on to endlessly rather than think hard about what is actually going on.

I embrace the idea of seeking the truth. I love the construct of deeply held beliefs as a framework for it. I challenge everyone to think harder about what the truth actually is, rather than just hold on to your truth to justify your perspective. Remember, the truth is out there.

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