Hardi Meybaum (32) is just one example of a new generation of Estonian entrepreneurs – thinking out-of-the-box, having an innovative mindset and most important – actually being successful.
Soon after graduating from the Tallinn University of Technology, he established a company called GrabCAD, relocated to Boston to continue its development there, raised tens of millions of dollars of venture capital money and finally sold the company – allegedly for USD100 million – to the world’s largest 3D printing company Stratasys. Nowadays, Hardi is working at Stratasys and heads GrabCAD development there.
For those of you not familiar with GrabCAD, the easiest way to describe it is to say it is a collaboration platform that brings together some 1.8 million engineers (that’s greater than the population of Estonia, incidentally) and presents them with the tools to collaborate on both open and private projects. GrabCAD’s clients include such august institutions as NASA and General Electric, among others.
We asked Hardi about what has been happening with GrabCAD lately.
Tell us, what has been happening with GrabCAD during the five months since you sold the company to Stratasys?
For one thing, we just announced that GrabCad Workbench is now free for all users. This is really great and positive news for our customers, because prior to that you needed to pay USD70 per user, per month, in subscription fees. But that system is no more, and every designer, engineer and manufacturer can now start using GrabCAD for free.
Looking at the bigger picture, our team has multiplied in size, and although we do everything as we used to do before, we do it much faster now. We have launched a couple of very interesting challenges in recent weeks; one of them was initiated by NASA and another by General Electric.
What does it mean when you say that you’ve launched a NASA challenge?
Our concept incorporates a challenge-oriented environment, where different companies can ask for our users to come up with their solutions for design problems posed. We have nearly two million users, who can all contribute to solving these challenges. Over the last couple of years we have launched many such challenges.
Now NASA has approached us and asked for help regarding a specific detail in the space station. Our users have already provided them with nearly 500 designs!
How does it work? Did NASA find you or the other way round?
We have never had a classical outbound sales team – usually people approach us and sign up without us directly talking with them.
With larger customers it is sometimes necessary to talk a couple of times on the phone and agree on the details, before they sign up. It is very similar with the challenges. Companies contact us and then we help them set up the challenge.
You stated that the Workbench is now available for free. What is the business logic behind that? On the surface it seems you could potentially lose revenue by following this step.
That’s true, but this is part of the charm in being part of a large corporation. GrabCAD’s vision has always been to reach every engineer’s desk. We have effectively achieved this goal through our community.
We have 1.8 million users now, as I said. The other part of our vision is that every engineer will store their files on our Workbench. The hefty price that we used to charge made this difficult to achieve. But now that we made it free, potentially everyone can access the Workbench. In the future we plan to combine the Workbench with Stratasys’ products and see how such synergy will work out. But today we keep focusing on developing a really good product.
There is also another huge difference between being an independent company as against being part of a large corporation.
As a startup we used to operate in an 18-month cycle. Startups have to raise new venture capital on average every 18 months until one day you’d ideally make an IPO and then get to factor public money raised on the stock exchange into the equation.
This means that as a startup you keep working on short-term goals only. Now we can look considerably further up the road and make decisions that will affect the company maybe as far ahead as five or six years from now.
Tell us a bit about the deal with Stratasys. Why did you decide to sell GrabCAD?
There had been interest to buy us since basically day 1. GrabCAD’s community has always been neutral towards different software producers. We are almost like the “Switzerland” of companies in that sense!
It doesn’t matter what kind of software you use or in which industry you work in – there’s always a place for you in GrabCAD.
Now, if we had sold to a strictly CAD company, we would have lost that neutrality. For this reason I was never really interested to sell GrabCAD to a pure software company. But ever since we first met with Stratasys, we understood that we shared very similar visions.
This was a really cool thing to discover. GrabCAD’s main vision was to help our clients get their products to the market faster. So was Stratasys’. Their 3D printing is neutral in exactly the same way as we are.
How did you and Stratasys find each other?
A year before our deal, Stratasys bought a company named MakerBot. MakerBot has sold the highest number of 3D printer units worldwide, although Stratasys’ revenue has been larger. As it happened, the founder and CEO of MakerBot went on to become a really good friend of mine when I built GrabCAD.
So a little after the MakerBot deal I was having dinner with him and he said “you know, Hardi, I think you should also sell to Stratasys, so we can work together”. He introduced me to the right people, we had negotiations for six months and then concluded the deal.
Can you tell us how many interested parties you effectively snubbed before you made the deal with Stratays? From what I understand, it wasn’t the pricetag Stratays offered but more its overriding philosophy that you found appealing?
That was exactly the case. So I have never really worried about what would happen with GrabCAD since the Stratays takeover.
The question had always been more whether to sell at all. But we have been lucky to have attracted a lot of users and attention since the very beginnings of GrabCAD.
So, while I can’t give you a precise figure, I can say that there were plenty of meetings with people interested in buying us up. In the end, though, it is one thing to meet and talk, but another thing to actually reach a deal. Only that matters.
It has been reported that the deal with Stratasys came to a cool USD100 million. Is this true?
Sorry, but I can’t comment on the specifics of the deal.
After selling GrabCAD you didn’t leave, but instead were retained by Stratasys. How do you see your own future at the company?
To be honest, I don’t set long range plans for myself. As long as it is still interesting to me, I’ll stay. And so far it has been really interesting!
But still, how can you motivate yourself now that you don’t own the company anymore?
I like new challenges. As long as I have them and I still feel like I’m learning something new, then I don’t mind if the company no longer belongs to me. Stratasys’ turnover was around USD780 million last year and it keeps growing by 35 per cent a year! That is an amazing statistic!
Furthermore, the entire market sector is growing by an estimated 35-40 per cent a year. It doesn’t happen too often that someone can work for a market leading company in a field that itself is growing at an incredible pace, AND you can affect the company’s direction every day!
This on its own thrills me and that’s the reason why I’m staying here for the meantime.
What will be the relationship between GrabCad/Stratasys and your native Estonia?
We are still hiring in Estonia, and even faster than before. Estonia is, and will be, a very important place for both GrabCAD and Stratasys. We are very positive about the different projects regarding our Estonian office.
Could you elaborate on that? Do I understand correctly you correct that it’s not only GrabCAD that’s expanding in Estonia, but also some of Stratasys’ other activities?
Yes. An important change that has already taken place is that GrabCAD’s team is nowadays also Stratasys’ development team. We have already integrated the software development teams and our engineers work for both GrabCAD and Stratasys in Tallinn as well as in our other offices in other countries.
Your Tallinn office is a close neighbour with another Estonian-born startup that is making headlines around the world – TransferWise. Both of you are expanding. Is there a hiring war going on?
I don’t believe in doing that. I think that the time when people joined software development companies purely because of the money are long gone. There must be something really wrong when a person chooses between us and TransferWise based solely on the wage we offer. We are just such different companies, with radically different engineering challenges.
Still, are there enough people to hire? There is yourselves, then TransferWise, then there are other local IT-companies and startups, finally the Russian IT-giant, Acronis, is establishing its development centre in Tallinn.
True, in an ideal world we would like to hire faster. There is a need for significantly more people with a technical background in Estonia. But at GrabCAD we are used to such an environment. We are also competing for IT talent in Boston, which is a ten times crazier scene than Estonia’s.
In other words, there are a lot more IT people in Boston, but the competition to hire is also much higher. Or take Cambridge, England, which is a well-known development hub for lots of large companies solving extremely challenging engineering problems. We are used to competing for the best talents and we have always been able to hire exactly the people we want.
What are your own plans regarding Estonia? Are you thinking of giving something back to the community here after your deal with Stratasys?
Yes, I am thinking about that a lot. As a matter of fact I’m set to launch a project in Estonia, probably in April this year. Without giving too much away, I can say it is connected with education, and the goal is to help provoke interest in a technical education amongst young people. I know I am being vague, and I must apologise but I’m not in a position to give more detail than that just yet. There are still a lot of ‘Is’ to dot and ‘Ts’ to cross before I can go public with the plan, so please sit tight!
Can you at least drop a couple of hints?
(Laughs) I really wouldn’t like to say anything more yet. Let’s wait for the public launch, then we can talk again!
How often do you come to Tallinn these days?
Over the last five months there have been just two weeks when I haven’t had to get on a plane to somewhere. As a result I unfortunately haven’t been able to visit Estonia for a while. But I plan to stay in Estonia for three months this summer. And that’s something I haven’t been able to do for the last five years!
How will you find the time for that now?
Well, instead of Boston being my adopted hometown and Boston Logan airport my home airport, it will be Tallinn and Lennart Meri airport instead. I will still have to travel a lot, though.
GrabCAD came about through the use of tech accelerators, but as I’ve gathered from talking with various people, you yourself are quite critical of accelerators. Why is that?
I am critical of certain accelerators and also perhaps of certain companies joining accelerators. Some companies, because of their nature, simply shouldn’t join accelerators and others should at least ask themselves which is the best accelerator to join. Actually that said I just made my first ever investment – and it was into an accelerator – Bolt.
Bolt is a Boston and San Francisco-based hardware accelerator. Bolt doesn’t teach you how to build a team, because you can find advice on that online or simply ask your investors. Instead it provides you with space where you can build your prototype, and then help find the best manufacturer in China, that can make you as many as 100,000 of your first units.
I like such types of accelerators, because they give you a very clear idea of what you can expect from them.
Then there are accelerators that offer you the same know-how that you can also find online. So if you have a startup that’s already making some money and you can find a seed investment on your own, you really don’t need an accelerator in fact.
Do you mean that some accelerators have basically turned into chatrooms?
Yes, exactly! Problem number one is that they’re completely overhyped. People tend to think that if you join an accelerator, miracles will start to happen. That is simply not the case. The company still belongs to you and it is you and you alone who has to fight for it and push it further.
Problem number two is that people tend to think that once you get into an accelerator, you’ve made it – you’re successful! That is not a good indicator of success though. Real success is when you find clients who love your product, who are prepared to pay for it, not to mention when you see consistent, month-on-month growth.
So with your views on accelerators in mind, do you have regrets about entering accelerators with GrabCAD?
I do regret entering Seedcamp [a popular London-based accelerator]. When you join an accelerator, you lose a significant part of your share of the company. So you have to calculate things carefully, to be sure the accelerator is giving you enough value in exchange.
We definitely didn’t gain enough from our participation in Seedcamp. In Techstars [GrabCADd entered Techstars Boston in 2011], however, the share was 50/50. They didn’t directly give us much new, but membership did help our brand development.
Thanks to Techstars we weren’t just an Estonian company in the US any more. Back in those days, being an Estonian startup didn’t mean nearly as much as it does now. Furthermore, being part of Techstars made investors fight over us, because they knew that we were likely to be exposed to plenty of investors at the Demoday.
In other words, everyone was afraid that they’d lose out on their chance to invest in us.
Is being an Estonian startup really a brand of its own nowadays or does hype also come into play?
Estonia is fast turning into a place that people know all about. One of our investors has compared Estonian startups with Swiss Army knives ‒ because they guarantee quality. I agree with him and this is also an image that is taking shape in Silicon Valley, as well as Boston and New York.
When an Estonian founder is able to enter the US market and make appointments with VCs, that’s impressive on its own. Second, Estonians have a tendency to over-engineer their products, in my view. What I mean is, first we make the perfect product and only then do we start thinking about selling it.
The approach in Silicon Valley is completely the other way round. When you add the eEstonian concept and the PR that president Toomas Hendrik Ilves brings to the Estonian IT-brand into the mix, we end up with a very good result.
What more can we do here to improve our brand even further?
The next step should be to take a deeper look inside. Estonia reminds me somewhat of a peacock. If you take a close look at it, you can see that it is a really small bird. Its body is often little more than the size of a man’s fist, but when it spreads its wings it gives the impression of being a big, powerful bird.
Similarly, Estonia appears to be a major dynamic IT-focussed country boasting lots of startups, but in actual fact we have had just a few real success stories to our name so far. So we must do everything we can to ensure we get more GrabCADs and TransferWises in the future.
Do you plan to cast your eye around as a potential investor yourself now?
I do indeed. I have just invested in a Boston-based startup Dunwello. Dunwello is a community for professionals inside existing organisations. They occupy the gap between Linkedin recommendations and Yelp. The community is definitely ahead of the curve, but I believe in the vision and the team.
I plan to invest more in the future as well. Investing is a great way to give back what you’ve learned and help other starting businesses into the bargain. This also helps you to get to know new industries. I have experience in production, design and engineering, but it’s really cool to be learning about other industries now.
So is investing into a business a method of education or, alternatively, a charity?
I hope it’s not entirely a charity! I do plan to get a return from my investments! But I don’t do it just for the money, but more to educate myself and help young entrepreneurs as well.
You’ve also published a book. How was that even possible with all your work in developing GrabCAD?
Yes, the name of the book is “The Art of Product Design – Changing How Things Get Made”.
The cool thing about the book is that it was published by Wiley, which is the number one business books publisher in the US. We noticed that the internet had transformed a lot of different industries. For instance, we don’t need walk-in travel agents any more, we can order taxis with an app etc.
This effect was spreading to the production industry as well. This is also the reason we created GrabCAD. We saw that there were a few hundred companies that were approaching production in a new way.
As it turned out, they were all clients of GrabCAD! So with the book we wanted to inspire the other 99.99% of companies also to do things in a new, more creative and more efficient way.
Writing a book isn’t exactly the easiest thing I’ve done in my life. And writing a book at the same time as running a fast-growing company is really difficult. Luckily we had a great research team and we expressed our vision and story through our clients. In fact, the second part of the book is about our vision on how to move on in the future.
And how has the book been doing?
Very well, thanks. It has fulfilled all of its goals, in fact. I still receive emails from people saying telling me the book was exactly the thing they needed to inject new breath into their work.
It has also gained a lot of attention for GrabCAD. We’ve been invited to attend many conferences, whereas we couldn’t have got an entrée to them without having published the book.
What do you plan to do after GrabCAD?
I probably won’t work out my entire career down to retirement at Stratasys. When it’s time to move on, I will be sure to let you know!
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