The Illusion of Permanence, SHPWQ

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“Show me the incentive, and I will show you the outcome.” -Charlie Munger.  

Dear Gentle Readers,

A few months ago, I enjoyed visiting Portugal, a country with a rich history, culture, and lovely people, but it is currently plagued with American tourists. I was also fortunate to have local friends, including Dr. Rui Coelho, owner of BoneEasy.  As I was climbing the hills from one castle to the next, marveling at the one-time powerful and wealthy country, I couldn’t help but wonder how such an amazing country, democratic and all, is considered one of the poorest in Western Europe. Portugal had a glorious past as the most powerful and wealthiest country in the world, conquering remote lands and exerting cultural influences on the Far East. According to Wikipedia, during the 15th and 16th centuries, “Portugal led the Age of Discovery and established one of the longest-lived maritime and commercial empires, becoming one of the main economic and political powers of the time.”   

Nothing is permanent, and this pattern of dominance to decline is a recurring theme in human history. Human perception is often limiting because we only live at most slightly more than a century, and twenty years could feel like “forever”. From the ancient Greeks and Roman Empire to many colonizing countries in modern history, the rise and fall of power almost follows Newtonian law—or it feels like that. What’s interesting is that the reasons behind the “falls” are often a lot more complex to dissect than the “rises.” In medicine, doctors call this kind of disease “multifactorial” and then treat only the symptoms, not the cause. 

Some would hope that we can learn from history and avoid the “fall,” but I think a better way to digest lousy news and remain as the offensive player is to learn how to “rise” from the “fall” if the fall is inevitable. 

There has been some “bad” news from the AM industry in the last few months and in rapid succession. I will only focus on one today as I don’t want too many enemies in a single newsletter. LOL. The negative media coverage overshadows a lot of the industry's good news, including the fact that the US economy is recovering and small caps are coming back. Negativity spreads naturally quicker, and the media knows it, as I mentioned before in another newsletter. Possibly, the “winter” is here, killing off what is vulnerable and preparing for a “spring.”

RIP Shapeways: SHPWQ Files Bankruptcy

It is a little mean for me to talk about this news because many feel sad and nostalgic about this company. After almost twenty years of being a leader in rapid prototyping and the maker movement, Shapeways once showed us how 3D printing can transform the world of creativity. Here is one fan’s quick take analysis. The 3D Printing Industry’s analysis is also worth a read.

After a glance at the information available to the public, here are a few main clues on why this happened, but I am sure the insiders would have a hundred others:  

1. Premature public offering via SPAC. As Munger’s famous quote on incentives, “Show me the incentive, and I will show you the outcome.” SPAC is a vehicle that allows companies to raise money from the public (i.e., IPO) with less stringent requirements, including the ability to overpromise to investors. I think the pandemic is an excellent demonstration on why SPAC has not been a “popular” IPO pathway for companies. Guess what…because those SPAC companies were long dead before we got to them. 
2. Product market fit. A company's growth requires a sizable and stable market. As several articles pointed out, the IPO projected 90+% annual growth rate is astronomical even for the best in the 3D printing industry. Not only was there no growth in sales, but there was also negative operating income and a negative profitability trend. 
3. Lowering Net Asset Turnover. Even more concerning, there was a negative trend in the asset turnover ratio, which is equal to “net sales divided by a company's total or average assets. A company with a high asset turnover ratio operates more efficiently than competitors with a lower ratio.”[Reference] This is particularly important to a service provider with heavy CapEx. There are several interpretations for a lowering asset turnover ratio. A. The company is not an efficient operator. B. The assets are “overvalued”. C. The company paid more than they should for the “assets”. D. Shrinking market. Or E. All of above.  

[image below is a screenshot from Morningstar]

While this is an uncomfortable moment in our industry and an awkward conversation, the above screenshot of the financial/income statement can, unfortunately, be applied to several industry leaders. Shapeways management is perhaps simply average, and they have tried their best to preserve the company. I have no doubt that their statements about Shapeways employees' fighting spirits and technical talents are exemplary. However, those employees are probably going to do much better elsewhere and may one day become co-founders of a Pitch3D company.

¡Adiós!  3DHEALS Instagram Account:

In other minor company news, 3DHEALS Insta got shut down by Meta without an apparent reason. (Trust me, we followed all the rules.) After three years of hard work and discovering many incredible makers and companies through the platform, particularly small startups, we have gathered more than 10K followers. It was a small number to some, but the passion and focus were worthwhile and enjoyable. Overnight, these are gone, including our photos, videos, and data, and our Instagram page now flashes error messages. Unfortunately, our request to reinstate the account has been met with silence.

All after I posted this photo with Rui Coelho in Portugal (see below). Go figure!

While we are not giving up on Instagram entirely (and those of you who work there, please help), this unfortunate event has motivated us to direct our attention to our YouTube channel, where we create new content regularly. 

Finally, I have splurged on a few podcasts lately while traveling and want to share these with everyone (see below).  Want to find a good mentor (and turn them off anytime you want)? Podcasts and books are the way to go.  

See you this Thursday, 

 Jenny Chen, M.D.

Events/Community 🗓️

Up Next (8/1/2024): 3D-Printed Orthopedic Implants Don't miss this rare occasion to engage directly with world-class material, clinical, and regulatory experts in orthopedic implants, where 3D printing has undoubtedly carved out a solid ground. 

Now On-Demand: Point-Of-Care 3D Printing. This event recording is free to the public until next Thursday, August 1st. Here is my summary of the event on LinkedIn. Our intern extraordinaire, @Peter Hsu, also wrote a piece about this event. After August 1st, you can find the full recording on the 3dheals.com website for a small fee. Frankly, if you are in the business of selling 3D printing or technologies to hospitals anywhere, you should bookmark this event.

Mark your calendar:   

Advancing AR/VR in Medicine (8/15/24)

3DHEALS Biomaterials 2024 (9/5/24)

Check out the rest of the 2024 3DHEALS events calendar. 

Podcast("The Lattice"): If you are an auditory learner, you can now find recordings of some of the latest virtual events. We are working on a series of new podcasts as well. Stay tuned.

Partner Event: The Symposium on 3D Printing for Life Sciences (3DP Basel) and the European Healthcare Forum for Additive Manufacturing (EHFAM) will occur on September 6-7, 2024, in Basel, Switzerland. This two-day event will bring together leading experts, researchers, and industry professionals to explore the transformative potential of additive manufacturing (AM) in European healthcare. 

Want to get our updates more promptly? Here is our subscription link.

News & Thoughts

This list is slightly shorter than usual, but I promise we will make up for it in the next edition.

Stratasys has announced the launch of its new J5 Digital Anatomy 3D printer for the medical market at 2024 RAPID+TCT.  The new machine offers haptic feedback by incorporating biomechanically accurate 3D-printed anatomical models. Sidenote: If you quickly search on social media about news from 2024 TCT-RAPID, you can see a handful of companies and individuals. Smaller companies, especially medical ones, are relatively muted. We need to change that. The 80/20 rule is evident, with 80% being silent or invisible.

CO-AM Platform Connects BMI, Toolkit3D, and Extol to Enable Mass-Personalized O&P Medical Products Materialise's supply chain software CO-AM is gaining some positive momentum, based on its latest financials. 

First patient enrolled in landmark clinical study to assess 3D printed models for orthopedic tumor removal. Interesting clinical trial to follow up on. In addition to comparing 3D printed models to CT/MR, I also have the following questions about the surgical outcomes and tools we use: 

1. How much time does a surgeon spend on pre-surgical planning, with whatever technologies they use?
2. Will 3D software surgical planning replace the costly anatomical models? Or significantly decrease its overall market size. 
3. Will other technologies complement existing 3D printed models, such as AR/VR? 

Check out our recent virtual events, 3D printing at the point of care and AR/VR, where we discuss honestly and ask challenging questions. 

3D Printed Medical Devices: Regulatory Standards and Technological Advancements in the USA, Canada, and Singapore-A Cross-National Study This is a good-enough paper (with occasional typos) summarizing the regulatory landscape on 3D printed medical devices in the US, EU, and Singapore. That said, the paper’s title is misleading as there is little discussion on 3D-printed pharmaceuticals. 

3D drug printers could help personalize medications in the future Yes, hand over those chocolate 3D-printed pills, please. The latest publication on how point-of-care 3D-printed drugs could work. Here is the published paper by Dr. Forbes.

3D printing could revolutionize treatment for cataracts and other eye conditions. The New manufacturing process ensures new designs. Most of our readers are not at the age of getting cataract surgery, but many will eventually. What happened to Verily’s promised smart lens? The publication is here. For those who are willing to dig deeper into a new meniscus-based 3D printing, the publication is here.

Formlabs Acquires Micronics to Further Advance Accessible SLS 3D Printing 2019 Spectra, 2024 Micronics. Slow and steady. Not SPACing. =)

Nano Dimension is buying Desktop Metal for $135 million to $183 million. Okay, let me rewind. NanoDimension wanted to acquire Stratasys and was rejected. 3D Systems then offered to acquire Stratasys, also rejected. Then Stratasys offered to acquire Desktop Metal, which was rejected by 79% of Stratasys shareholders (at that time, the offer deal size was 1.8 B). Nano Dimension is in the process of buying Desktop Metal. The deal will be finalized in Q4. What's your bet on the season finale?   

Podcast🤓

I found several high-quality podcasts that could help our Tribe build companies and improve our understanding of the world. Some of these may already be in your queue. 

1. Dan Carlin's Hardcore History podcast. There are plenty of free episodes to get you started. Some people complain about its length, but I found it a perfect motivation to walk my dog longer. A good storyteller is essential when talking about history.

2. Acquired podcast. I repeat this recommendation in my newsletters because the creators are not only investors but also put an insane amount of time and care into their podcasts. I have found value while listening to them. Their format is conversational, with personal opinions, but not self-serving as some others. No one is trying to get you to buy a Bitcoin or (SPAC) stock. Lately, I have enjoyed their Costco and Starbucks episodes. 

3. Founders. This was recommended to me a while back, and I am slowly warming up to it. David Senra covers an incredible number of biographies, and the ROI of knowing more about Jeff Bezos or Napoleon in 1 to 2 hours is very high. Not to mention, David also points out the best book to read about an individual among often 20-30 choices. The approachable style is also better for me than Blinkist.

4. Invest Like The Best by Colossus. This is one of an extensive portfolio of investing podcasts, and I found it intimidating at first. But after some digging, you can find quite a few interviews with household names, VCs, and CEOs.  Do you have a great podcast to suggest to our Tribe? Write to me.