Recently, Velo3D’s new CEO, Brad Kreger, discussed the company’s evolution, struggles, and strategic redirections under his supervision. Coming from a capital equipment manufacturing background and proven expertise in propelling startups to industrial scale, Kreger joined Velo3D during its fast growth phase. It called for improvements in manufacturing methods, quality management systems, and business approaches to maintain expansion and tackle product reliability problems. He initially took on the role of Executive Vice President of Operations in December 2022.
Becoming CEO, Kreger was named interim in December 2023 when the announcement came that Benny Buller, the founder, would resign as per the board’s request following a prolonged phase where Velo’s share price persisted below a dollar.
Under Kreger’s early leadership, Velo3D has conducted extensive operational changes to augment product quality and fine-tune its commercial performance. Notably, Kreger emphasized an emphasis on “quality enhancements, winning in manufacturing processes,” and a notable increase in its “quality organization” staff by 40% in the last quarter to support this direction. This concentration on quality has been matched by initiatives to enhance customer service, as shown by a 45% decrease in time to resolve customer issues and enhancements in installation times.
Commercially, the appointment of Michelle Sidwell as EVP of Sales in September 2023 signaled a strategic turn towards a value-driven sales methodology, deviating from an engineering-driven approach. This change has brought about a more disciplined and ROI-focused customer engagement tactic, yielding $12 million in bookings in the last part of the year and a substantial amount of repeat customers, demonstrating the effectiveness of Velo3D’s improved customer satisfaction and retention policies.
Kreger candidly acknowledged the pressures of 2023, attributing them to rapid growth and the need for better commercial execution. He stated, “2023 was a challenging time for us. We faced a lot of issues and challenges as a company.” He emphasized the transition from early adopters to a broader customer base necessitated a change in selling strategy, which was not fully anticipated.
Looking ahead, Kreger outlined a commitment to financial sustainability, with aggressive cost management measures leading to a 40% reduction in operating expenses. These measures and strategic leadership appointments have positioned Velo3D toward cash flow neutrality by the end of Q2’24. “We expect to be EBITDA positive by year-end,” said Kreger.
Read more in our Executive Interview series with 3D printing industry leaders.
Forget Transformers; what about the Rise of the Share Price?
In spite of what seems like a promising outlook, Velo’s share price remains stagnant. Why does Kreger believe the market doesn’t quite get it yet? “I believe we’ve been sending mixed signals,” Kreger confessed, emphasizing the difficulties that come with investor communication when you’re a publicly-traded entity like Velo3D. Kreger recognised the company’s previous communication errors alongside the trials of presenting a comprehensive image to investors, pointing to regulatory constraints and market responses to financial disclosures.
Kreger went on to discuss the discrepancy between how the market sees their situation and what the reality within the company is, especially when things like the potential default was announced, causing market worry. However, he explained how the situation was resolved when the lender re-invested, showing their faith in the prospects of Velo3D. “Our lender… invested 5 million dollars again, showing their confidence in us,” Kreger said, hinting at a misalignment between the way the market sees things and the true state of the company’s operations.
When asked about what the market misconstrues about Velo3D, Kreger argued for the necessity of clearer communication regarding the company’s growth, market chances, and execution talent. He put emphasis on cleverly voicing a sustainable, profitable image to the investors, stating that better communication could align market perceptions with the strategic direction of the company.
Kreger also delved into the intrinsic challenges within the additive manufacturing sector, highlighting a common misconception about the ease of transitioning to 3D printing from traditional manufacturing methods. He argued that the initial belief—that objects could simply be transferred from conventional machining to 3D printing with ease—has proven overly simplistic. “I think that promise of 3D printing being something you just take what you machine before and you shove it in a 3D printer, and it just magically comes out is a bit proved out to not really be the truth,” he observed, underscoring the complexity and nuanced understanding required for effective additive manufacturing.
The conversation further explored the disparities in adoption success among Velo3D’s clientele, attributing variations to the level of engineering expertise and infrastructure available to different users. Kreger noted that while sophisticated clients with engineering teams thrive, others, such as machine shops lacking the necessary talent and support, face difficulties. This divergence underscores the essential ecosystem and learning curve associated with adopting more efficient, albeit complex, production processes in 3D printing. Kreger’s insights into Velo3D’s strategic direction and the additive manufacturing landscape at large reveal a cautious optimism, tempered by a realistic acknowledgment of the challenges and complexities inherent in the industry’s evolution.
Optimism for the Primes? Affirmation of key verticals
Kreger delved into the company’s approach towards capturing specific market segments and the reevaluation of its potential markets. The company’s strategic alignment with sectors where its technology and capabilities can have the greatest impact was underscored by Kreger, solidifying Velo3D’s robust presence in the space sector and signalling greater attention towards defence, energy, and possible ventures into the automobile and avionic sectors.
Traditional segments have seen the company’s fruitful efforts, as Kreger noted, “We persistently excel in the space sector.” This signifies the sustained success in a sector that has been crucial to Velo3D’s client base. However, Kreger laid particular emphasis on the expansion into the defence sector since it offers a unique value proposition as compared to other sectors. He outlined, “Predominantly on our radar is defence… the requirement from the government constitutes robust supply chain, digital supply, a switchable output, a completely domestic supply, and a fully dependent supply chain.”
He shed light on Velo3D’s strategic vantage points when appealing to the defence sector, which includes being the exclusive domestic manufacturer of its kind, achieving significant cybersecurity compliance with the earning ofSTIG (Security Technical Implementation Guides) compliance, coupled with offering unique capabilities like the ‘golden print file’ for print file portability. This allows the defence sector to manufacture parts with confidence at different locations, ensuring uniformity and less dependence on a constant supply chain.
Stepping out of defence, Kreger also analyzed the opportunities in automotive and avionic sectors, indicating varying scales and timeframes for adoption. He then discussed major suppliers in these sectors and the considerable scale opportunities, “talking to the third largest supplier of engines to Boeing and Airbus… they have a larger timeline, but their conversations also revolved around an astronomical scale.” This astronomical scale implies “tens to hundreds of systems”.
Discussing the prominent uses for additive in aerospace, Kreger emphasizes hypersonics and turbine engine production as sectors where AM is making notable progress. “Hypersonics is definitely a key area. It’s difficult to overlook that,” Kreger stated, highlighting the importance of this novel technology. He further explained the transformative potential of AM in turbine engine production, drawing attention to the flexibility it provides in design optimization, contrasting strikingly with traditional, laborious casting supply chain procedures: “every time they introduce any type of design optimization, the repercussion to that casting, supply chain extends for years and is extremely challenging.”
In this strategic reevaluation, Velo3D is not only reinforcing its position in existing sectors but is also targeting immediate expansion areas such as defense, with Kreger naming it as “an immediate aspect… a genuine, one of the high growth areas for us.” This focused tactic, along with the company’s technological advantages and compliance accomplishments, equips Velo3D to capitalize on upcoming opportunities across its specified verticals, forging a path for persistent growth and market infiltration.
Kreger’s leadership style
Besides technical dialogues, Kreger also shared observations on his leadership approach, which is based in servant leadership, a strategy that prioritizes the organization’s objectives ahead of a leader’s personal needs and desires. He advocates for nurture of high-quality talent, provision of a conducive infrastructure, and endowment of the liberty to innovate within that arrangement. “If you nurture highly skilled talent, you supply them a suitable framework and environment to work in, the liberty to operate within it. You can accomplish truly remarkable feats,” Kreger stated. This strategy accentuates the significance of identifying one’s abilities and limitations, associating oneself with competent individuals, and empowering a high-performance team to achieve goals beyond an isolated leader’s capacity.
“Why did the 3D printer go to therapy? Because it had too many layers of unresolved issues!”
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