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The best offense is a strong Defense for Velo3D’s CEO, Brad Kreger

After regrouping, the American metal PBF hardware company is once again on the offensive, targeting growth with new customers.

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Brad Kreger joined Velo3D in December 2022 as the Executive Vice President of Operations. He was tasked with transforming the company’s operations and consolidating processes after a period of rapid – perhaps even too rapid – expansion. He brought along the experience he gained during his time at Thermo Fisher Scientific (and its subsidiary Affymetrix), and Fluidigm Corporation, where his responsibilities included taking startups and young organizations that had been acquired and bringing them through the industrialization curve.

The best offense is a strong Defense for Velo3D's CEO, Brad Kreger as the American metal PBF hardware company is once again on the offensive
Brad Kreger, CEO, Velo3D.

Exactly a year later, with the company struggling to keep up with its growth and the stock price crashing, Velo3D’s founder, Benny Buller, stepped down as CEO (he remains a member of the Board of Directors) and Mr. Kreger was named CEO. Among his many responsibilities, he found time to answer VoxelMatters’ questions about his strategy to turn the company around, reassure investors, and “attack” the next phase of massive AM growth. And Defense, intended as military AM applications, is a key part of this “offensive”.

“When Benny [Buller, Velo 3D’s Founder and former CEO] brought me in, the company had gone through a stage of really dramatic growth,” Kreger tells VoxelMatters, “and the result of that was we grew faster than our ability to put processes, systems, and infrastructure in place. The consequences of that materialized in 2023 in the form of product quality and reliability issues. So the first thing we focused on was getting the supply chain stabilized to then move on to implementing a quality assurance department.” That was rapidly carried out to stabilize operations, but its effects were not immediate.

Improving machine and human processes

As he stepped into the CEO role, Kreger’s focus shifted towards addressing two major challenges. The first is ensuring product reliability and addressing the quality issues experienced in the latter part of 2023. The second is commercial execution. “As we came around the corner from selling to early adopters to the early majority, we found we didn’t have the commercial discipline and skill set to make that shift, from a technology sell to a value sell.”

Kreger expanded the quality organization by 40 percent, which is now bringing a payoff in terms of significant reductions in installation times. “We’re seeing that field issue resolutions are occurring in about half the time that they did before. So we’ve reduced those downtime intervals by about 50 percent,” Kreger says. But how do you rapidly and effectively address quality issues in a Velo3D printer – one of the most complex and advanced metal 3D printing machines ever built?”It was never an issue of the quality of the parts printer,” Kreger clarifies. “It’s about the overall reliability of the system, which consists of several different elements. In some cases, it simply comes down to ensuring better training for the customer. In other cases, it’s a matter of a learning curve in terms of our own preventative maintenance protocols.” The XC platform was launched in 2022. It’s a new design, and as you’re working through its operational life, you find that certain mechanical components may have a shorter life cycle than you had anticipated.”

The best offense is a strong Defense for Velo3D's CEO, Brad Kreger as the American metal PBF hardware company is once again on the offensive
Velo3D’s Sapphire XC.

Those who are familiar with additive manufacturing know that even the most advanced machines are still in an early stage of technological evolution and such issues may arise. However, Velo3D’s stated goal – and the reason why a Velo3D machine has a high price tag – is that the company promises to eliminate much of the guesswork in terms of part repeatability. It makes sense that such operational setbacks may have also set back many adopters.

Mr. Kreger confirms. “What we were seeing is customers who had bought systems and were ready to buy another system were having issues and decided to pause their investment.” That was rapidly turned around. “More than 50 percent of the bookings we received in the last 6 weeks were from repeat customers. They’re now seeing their systems as reliable again, and they’re ready to place orders for the next system.”

The best offense is a strong Defense for Velo3D's CEO, Brad Kreger as the American metal PBF hardware company is once again on the offensive
Michelle Sidwell, EVP of Sales, Velo3D.

Setting sights on the right target

This helped Velo3D regain strength on the commercial front, but it was not enough. That’s where the new EVP of Sales, Michelle Sidwell, came in. “What she brought was real rigor and discipline around value selling, processes, and training,” Kreger explains. “And it’s paying off in terms of the quality of the opportunities we’re now cultivating.”

Like many 3D printing companies, Velo3D often found itself chasing after the wrong customers, following up on a very lengthy sales cycle only to find out that the company was no longer interested or could not secure the necessary funding. “That has entirely reversed now,” Kreger says, pointing out that, “of the 6 opportunities that Michelle’s team pursued in December, they closed 5. We’re doing a much better job of finding the right customers, making sure there’s the right value proposition, and ensuring they have the necessary funding lined up. We’ve brought in over $12 million in bookings in the last six weeks and we see many opportunities ahead.”Many opportunities now arise from the Defense segment. Kreger’s execution strategy will continue to focus on the areas where Velo3D has succeeded, such as Space and Energy applications, aiming to ensure multiple system installations. However, as he explains to VoxelMatters, “We’re expanding into Defense. It’s a newer area for us, but one that we’re uniquely suited to serve. In the first half of 2023, over a third of our new customers and revenue came from the defense sector. It’s a very different value proposition.”

One of the reasons why Velo3D expects success in the defense sector is that they are the only truly domestic supplier of L-PBF systems. 3D Systems’ metal PBF machines, on the other hand, are manufactured in Europe. While alliances are strong and in place, it’s always beneficial to have a domestic company for the production of top-secret and strategically advanced parts for any nation’s arsenal. This feedback is also received from European companies.

“We recently obtained STIG (Security Technical Implementation Guides) certification from the DoD, a critical cybersecurity standard needed to operate in this space,” Kreger reveals. “Our technology aligns well with the DoD’s objective, which is the ability to print spare parts for aging infrastructure. They want to be able to create a design file and print it on different printers in various locations on demand.”

The best offense is a strong Defense for Velo3D's CEO, Brad Kreger as the American metal PBF hardware company is once again on the offensive
Kratos acquired a Velo3D Sapphire system in the beginning of 2024.

Being the only truly domestic manufacturer of metal PBF machines is undoubtedly a significant advantage, but what does it mean in terms of the supply chain? Kreger acknowledges that many components of Velo3D systems are produced by manufacturers in low-cost regions to optimize costs. However, he also emphasizes that the initial contract manufacturers and suppliers are all centered around the Bay Area, and they continue to be a resource in case of necessity.

In addition to defense, Velo3D is also experiencing traction in the avionics and automotive sectors. In these industries, the dynamics are based on a longer time horizon. However, as Kreger explains, “The scale and magnitude they discuss is mind-boggling.” He reveals that at least one major engine supplier to Boeing and Airbus plans to install hundreds of printers. This kind of business diversification is necessary, but it also needs to be kept under control to prevent dilution. “Diversification of the customer base is helpful in a capital equipment business,” Kreger explains. “In the space sector, companies tend to make large investments and then quiet down as they build up to full capacity. So you can have a period of a year and a half where a particular customer isn’t buying because they’re going through this development cycle. Having a portfolio of customers with different buying cycles adds linearity and makes us more operationally efficient and effective.”

Pointing the nose back up again

The hope is that this newfound stability, along with an aggressive commercial strategy, will lead to more sales and a rapid turnaround in the financial analysts’ outlook. The Velo 3D stock is currently trading at an all-time low, but Kreger believes the company is “radically undervalued”. “I don’t think you should solely drive the company to grow the stock price; I do think it is important to return shareholder value.”

“Last year, we communicated signals that were confusing to investors,” Kreger says. “As a publicly traded company, there are certain things we can and can’t communicate. When you go through a realignment and decide to pivot and change your strategy, it can be confusing and cause anxiety in the market. What we are doing now is sending very clear signals: there is a demand, we have the right product. There is a market here, and we’re positioned to execute on it. If we can become cost-neutral and profitable by the end of the year, that will translate to an appreciation in stock market value.”

While some have predicted doom for Metal AM, considering the poor financial performances of some companies in this space in 2023, VoxelMatters is convinced that the mid-and long-term prospects are excellent, as we reported in VoxelMatters’ latest Metal AM Market 2023 study. Kreger agrees. “I think we’re at a really interesting point in the industry. There has been some disappointment in the industry over the last couple of years as people realized AM couldn’t solve every initial challenge they imagined. But as much as that sounds negative, the real upside is that users of AM now have a much better understanding of where additive manufacturing makes sense and where it adds a lot of value.”

Along with a significant increase in the adoption rate of additive manufacturing, driven by a better overall understanding of the technology, Kreger also expects to see a bifurcation, with certain larger organizations maturing and accelerating their use of AM, while smaller manufacturers and players will continue to struggle a little bit with the adoption curve. The main idea here is that you need to reach a certain critical mass to invest in AM successfully.

For Velo3D, entering the Defense sector is the initial move towards reclaiming the metal AM market.

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Davide Sher

Since 2002, Davide has built up extensive experience as a technology journalist, market analyst and consultant for the additive manufacturing industry. Born in Milan, Italy, he spent 12 years in the United States, where he completed his studies at SUNY USB. As a journalist covering the tech and videogame industry for over 10 years, he began covering the AM industry in 2013, first as an international journalist and subsequently as a market analyst, focusing on the additive manufacturing industry and relative vertical markets. In 2016 he co-founded London-based VoxelMatters. Today the company publishes the leading news and insights websites VoxelMatters.com and Replicatore.it, as well as VoxelMatters Directory, the largest global directory of companies in the additive manufacturing industry.

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