By Eric Peterson | Sep 24, 2019
3D-printing prototype and production services
Industry: Contract Manufacturing
Products: 3D-printing prototyping and production
Stump got a lesson in product manufacturability when he teamed with inventor Jeff Bollengier on the CaliBowl, featuring an undercut on its edge that allows dipper to better deposit salsa or guacamole on their chips.
Stump and Bollengier brought the design to a contract manufacturer who told them, "You can't manufacture this product. You need to go redesign it so it's manufacturable through injection molding," Stump says.
While the duo later sold CaliBowl, the lesson underpins FATHOM today. "With 3D printing, you can make the shapes that you can't make otherwise," says Stump. The challenge is "trying to get engineers and designers to think differently."
Stump says he grew up in a family of engineers and worked for a Silicon Valley printed circuit board manufacturer before moving into CAD software sales. "I did really well," he says. "I had a passion for it."
The experience led him to dive into product development, product lifecycle management, and "how to virtually prototype something before going into the physical world."
Stump and co-founder Michelle Mihevc originally launched FATHOM as a reseller of PolyJet printers from Objet Technologies, which merged with Stratasys in 2012. "2008 was a very challenging year to start a business, but it was probably good for us," says Stump, noting that the business model involved finding companies who wanted a 3D printer and use them as a demo center for other potential customers. "We tried to keep overhead really low."
In 2012, the company pivoted from reselling to prototyping and contract manufacturing when it opened its first production center in Oakland. "The service-based business model made sense," says Stump, who went full-time with FATHOM with the pivot.
The manufacturing model is not about 3D printing alone. The company also offers urethane casting, CNC machining, and other contract services. "We started in 3D printing and brought in traditional manufacturing, not vice versa," says Stump. "Our lens is very different. . . . We really focus on a hybridized approach."
FATHOM regularly machines 3D-printed parts, he notes. In other cases, FATHOM prints fixtures for use in post-machining processes. "We use additive and subtractive together to accomplish a goal for our customers."
Paralleling Stump's experience with the CaliBowl, the focus is squarely on product functionality, not manufacturability. An example: An unnamed customer was having flow issues with a traditionally manufactured pump housing. "By being able to print a complex shape, there was a lot of efficiencies gained," Stump explains. "We still leveraged machining on these parts."
From 2012 to 2016, FATHOM "was all about prototyping," he says. "In the last three years, we've really started to see the transition from prototyping to manufacturing."
The company has worked with more than 4,000 customers to date. "The sweet spot is companies that are $50 million to $500 million a year in sales," says Stump. Top industries include consumer goods, consumer electronics, and medical devices, and electric vehicles are coming on strong.
One unnamed customer was looking at a delay in tooling for injection molding, so it turned to FATHOM to bridge the gap.
The company opened a Seattle facility in 2013. Employing about a dozen, the 5,000-square-foot location in the Wallingford neighborhood was a response to Emerald City customers: "They really like having a localized prototyping center."
FATHOM also offers managed services where employees work at customer locations to oversee 3D-printing operations.
In 2018, the company divested its reseller business. "We saw the need to have focus," says Stump. "The challenge is you have sales folks out there selling both [services and printers]."
Since the move into contract manufacturing, FATHOM has "invested heavily back into the business," Stump adds, as it made the Inc. 500|5000 list of the country's fastest-growing companies every year since 2013. "We're growing 30 to 40 percent year over year," says Stump, forecasting a similar number for 2019. "We'll be around $25 million in sales this year. Our goal is to be $100 million [in 2023]." Prototyping still accounts for most of the sales, he notes, "but the growth of additive production is outpacing prototyping."
With Wohlers Associates forecasting additive manufacturing to grow from $15.8 billion in 2020 to $35.6 billion in 2024, Stump sees potential for an economy-wide paradigm shift catalyzed by cooperation. "The opportunity's there if you look at these numbers Wohlers and Gartner puts out," he says. "This market is so big, we try to be colleagues with our competitors. We have to help each other to drive the entire industry."
Challenges: "As a private company that doesn't have outside investors in a very capital-intensive industry, how do we maintain these huge growth number?" muses Stump, noting that FATHOM has been profitable since its founding.
"Since we're private and not outside-funded, we have to remain profitable."
Opportunities: Aerospace. The industry's low-volume, high-mix production needs "makes a ton of sense" with 3D printing, says Stump. "I think our biggest growth area for producing parts is aerospace," he notes. "Same with automotive. . . . It's a big game, but a longer game."
Needs: "Capital," says Stump. "We will definitely take on some outside investment soon. We tried to hold off as long as we could." In order to quadruple sales to $100 million, he says outside funding a necessity, but there's more to it than money: "Getting capital isn't a challenge. Getting the right kind of capital is a challenge."
With the growth comes a need for more employees and larger facilities. FATHOM's Bay Area location "is a huge asset -- and it's a huge challenge," says Stump. "It's not finding the great talent, because the great talent is here. It's how do we afford the great talent?"
With sky-high real estate prices, he adds, "We have no choice but to scale outside of California." He says FATHOM will open a large production facility in a yet-to-be-determined location by early 2021.