After the merger, with a market valuation of $3 billion, dual headquarters at strategic locations in the U.S. and Israel and a mature infrastructure for sales and distribution filling in those 6,000 miles between, the new Stratasys might be the big player the industry has been waiting for.
A Deal of Two Giants
Reis has no plans to integrate the technology teams of the two sides of the company, which he said represents about 2/3 of the total employees.
"The story behind this merger is growth and sustained growth," he said. "The technologies are very different. It did not make sense on day one to try and integrate the R&D teams and the operations teams."
Rather, "The focus on the merger, from the point of view of activity, is around sales, marketing, finance, customer support and IT. And it's being done on a worldwide basis," he explained.
This is an absolutely genius move.
Objet and Stratasys, as Reis pointed out, have unique, distinct technologies. The former uses an inkjet style printing system (imagine the same inkjet printer under your desk running in three dimensions instead of just two) that allows machines to work with multiple print heads, employing multiple materials simultaneously. This results in a 3-D object printed with high accuracy, high resolution at a very high rate of speed, which is most suitable for early design phases in the concept modeling process.
Stratasys, on the other hand, uses the fused deposition modeling (FDM) process to build up finishes pieces out of layers of molten polymers -- a process proven ideal for functional and direct digital manufacturing.
With such disparate (and complimentary) technologies that have so much history behind them, there is no strategic advantage to mucking up the process with complicated integration efforts. Instead, Reis is focusing on tapping into the infrastructures both companies have already founded.
"Stratasys is an American-based company which operates out of the U.S. with the main market in the U.S.," Reis explained. "Objet is based in Israel and there is no market in Israel, so for us everything has been abroad. Over the years we have built a very massive infrastructure out of the U.S. in Asia and a very large infrastructure in Europe."
In this case, merging the two companies means, more than anything else, merging the distribution infrastructure of each, thus creating one monster hybrid system that will double the size of its reseller networker by allowing the sales force to cross sell and up sell between the technologies.
And all that without investing a dime.
With all of the advantage and all of that business gain with so little cost, this new mega-company is freed to unleash a mountain R&D cash into the field.
"I believe and both of the directors believe that the larger company, at the end of the day, will be able to allocate more money to R&D," Reis explained. "It will have to spend less money on marketing, it will have to spend less money on G&A, there will be efficiencies that will enable us to increase research and come up with products to suit our customers' needs."
Even before the merger, percentagewise both companies were a couple of the highest spenders on R&D, he noted. And combined, the company is positioned to unload an unprecedented amount of money into innovation -- about 12% of total sales -- into creating new processes and new products that will help propel the industry into the next phase of development.
To help ensure the lasting change, the company has shifted its most powerful agent of innovation to a role where he can cause all the more disruption -- former Stratasys CEO and new chairman, Scott Crump.
