3D Medical : The Additive Manufacturing Company That Doesn’t Add Up

Additive manufacturing (“3D printing”) is kind of a big deal, and additive manufacturing is a particularly big deal for Australian innovators because it is probably the technology that is going to underpin the way that our ideas and inventions are disseminated around the globe in the future. We don’t have the “factory” end of manufacturing in Australia but with this kind of technology, we don’t ever need to have it. We can focus on building the high-value, intellectually rich and – incidentally – environmentally pristine part of the manufacturing supply chain. Anyone else that wants access to a great design can crank a unit out once they’ve paid a royalty. Forget the politicians wringing their hands about the lack of a “manufacturing” industry because in the 4th Industrial revolution, 90% of the value of manufacturing isn’t in a production line, it’s in brilliant designers and engineers using high-performance computing, working within interdisciplinary teams.

And in Australia, we have that design and engineering talent in spades.

I’ve really enjoyed watching world-class firms like Amaero Engineering (a Monash spin-out) master the material science, robotics and laser systems to be able to print incredible objects out of durable materials like titanium alloys. In fact, as I sit and write this article, I am toying with a truly beautiful and aesthetic titanium object d’art printed using Amaero laser sintering technology (akin to the feature image). I’ve somewhat less enjoyed learning about 3D Medical (ASX : 3DM), not because it hasn’t made some fairly interesting new headlines lately, but because the company – once again – seems to be related to the usual shonky and questionable dealings that seems to be so prevalent in the ASX health tech sector. I’ve started on a number of occasions to write a post on 3DM but it usually ends of in a frustrated combination of “this sucks” and “so what?”.

That was until last week.

What triggered my interest was actually the humdrum announcement that Jenni Pilcher was appointed as “Global CFO and CEO Australian Operations” for 3DM. So what, you may say? Indeed – well, it’s not really that exciting except for the fact that I personally don’t believe that a combined CEO/CFO role makes sense in any organisation with credible corporate governance and the announcement made my nose wrinkle. But hey, that’s just me. What is marginally more interesting is that Ken Poutakidis is both a corporate advisor to 3D Medical and a non-executive director and adviser to Alchemia (ASX : ACL), Jenni’s previous employer. He is also one of Conidi’s bulldogs, so I suppose it’s reasonable to infer that this is a “trusted” appointment to 3DM. I started doing a little sniffing around and found this incredible ABC report on “3D Group” (it turns out, a related company, at many levels). Honestly, it’s an astonishing story and worth three minutes of your time to listen. Coincidental to the ABC report, an impressive article published on a 3D Printing Industry forum in the US pretty much spells out in gratuitous detail how Jason Simpson, founder of 3D Group got vigorously and completely shafted by John Conidi (Capitol Health, ASX : CAJ).

I’ve now had a chance to reach out to Jason and have checked out quite a bit of the background documentation. It would appear, in a nutshell, that Conidi and his colleagues essentially engineered the “bankruptcy” (“voluntary administration”) of Jason’s company in order to take control of it and squeeze him out in the process of the Oz Brewing reverse merger with 333D. People that I’ve talked to in the Australian 3D printing community that know Jason, describe him as an incredibly honest, “engineering-type” who would have perhaps been naively oblivious to the fact that he was getting screwed, pretty much until it was too late. My understanding is that he has completely wiped out his personal financial resources on lawyers fighting for his rights, and is currently on the dole.

What a shitty ending for an Australian innovator and entrepreneur. But sadly, not all that uncommon either. Perhaps Kate Carnell has a bigger task ahead of her than she realises.

Taking a step back and looking objectively at CAJ, which until recently had a vastly over-inflated valuation, 3D printing as a “vision” for a future high-value growth engine is a really smart idea. There is no doubt that the type of radiology/imaging that CAJ excels at is the natural service and customer (physician) nexus for a medical 3D printing business, there are just very obvious synergies. There is also no doubt that surgeons want better 3D planning models and there will absolutely come a time when bone and cartilage will be routinely replaced by parts that are cranked out of additive manufacturing systems, parts that will be frankly better than their biological precursors. When this happens, major players in the radiology space may have some interesting business model advantages because they will control the acquisition and dissemination of the 3D data that will drive that medical manufacturing revolution.

But getting a technologically sophisticated additive manufacturing business of the ground is hard enough without this kind of disgraceful shenanigans. I truly hope that – for once – ASIC gets its teeth out and bites a few people on the ass, because our sector badly needs this kind of behaviour eliminated. My sympathies to Jason and his family, and a thank you to his friend and colleague Scott Phillips who has shared a few comments as a guest poster.

Truly awful.

[Addition : 01/02/2016, 10pm. A number of readers have emailed/SMSd me to inform me that I have must have made a mistake and somehow confused 3D Medical with 3D Group (i.e. 333D). I wish to make it clear that I consider the companies to be fully entwined in terms of shareholding, governance, advisory and even cross-linked business/SLA agreements. Therefore I absolutely consider 3D Medical to be a compromised entity with respect to the matter of 333D, hence my choice of title. Thank you for reading.].


Feature image : Amaero Engineering, a quality Australian additive manufacturing startup worth keeping an eye on…

 

3 thoughts on “3D Medical : The Additive Manufacturing Company That Doesn’t Add Up

  1. Pingback: The Long Tail

  2. Pingback: 3D Printing Industry’s Hype Hangover Gets Aussie Coverage | The Reality™ Institute

  3. The Gilded Chain of Investment – YPO Style

    I thought this may be of interest. It’s about my experience dealing as an entrepreneur/inventor with a certain prevailing culture of investment, in particular, the culture that prevails within the YPO (Young Presidents Organisation). It is a culture that is not serving us well and requires a light shone upon it.
    I am an entrepreneur and inventor of Intellectual Property that has resulted in fully granted patents here and internationally.

    The IP is useful, tangible and practical and pertains to manufacturing. My story relates to how the opportunities contained within that IP is in danger of being squandered due to the hidden agenda, control and collegiate self-­‐ serving culture of members of the YPO (Young Presidents Organisation) that have invested in it.

    Their modus operandi is simple enough. Allow the entrepreneur/inventor to assume responsibility whilst the investors determine the direction and strategy of the enterprise. This is made possible by the investors ensuring they control the money, the board and its shareholders. The board and shareholders are stacked with YPO co-­‐ members and friends that are there not to serve the best interest of the company, but to assist the interests and ambitions of their colleague and friend.
    The modern investment culture and its values, as practiced and encouraged in such associations as the YPO, is like later day buccaneers sworn to uphold the code of the initiated. These raiders of ideas, these plunders of human effort are like burglars breaking into a safe. The culture teaches and encourages the thinking that the entrepreneur/inventor/innovator is a problem that stands in the way of ultimate commercial success, a problem to be managed and controlled in order to steer an outcome of maximum return on investment with a minimum of personal risk and exposure. This approach is reckless without courage, greedy without vision, insight or meaning and flies in the face of what builds and nurtures successful, sustainable business opportunities. It’s cost and negative impact on the economy as a whole is considerable.

    In the words of one unaligned, non-­‐YPO shareholder,”…accepting and recognising that we have shareholders who seem to be a collegiate feel-­‐good self-­‐congratulatory group of YPO types or others who have advanced through other form of organisations that result in establishing the common bond of collegiality to mask incompetence and give mutual support. However, the group need to be aware of reality and the real reason the company is in its current financial predicament. It is due to the
    incompetence, inexperience and complete lack of managerial ability of ****** … ” (the principle YPO investor).

    “… His performance from day one upon examination proves him to be manifestly incompetent. He acts as defacto Executive Chairman but when asked an unpleasant question, he quickly hides behind the fact that ****** is CEO…”

    I suggest that if we are to realise the Prime Minister’s vision of growing new and innovative enterprises in this country, we need to have a long hard look at the culture that determines and oversees the all important funding that is required to fuel it. I would argue that there is as much importance in the quality and culture of investment and its practitioners as the ideas, inventions and innovations they seek to fund. It is unfair to expect our entrepreneurs/inventors, who often risk so much personally, to place there lives and ideas in the hands of an often second rate investment culture.

    Discussion around values and culture of investment is long overdue and needs to rank high in the national debate of our economy and its future.

    Like

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