Run from failure. Point new direction. Set indicators. Succeed.
How a small company from eastern Poland became a leader in the AM services market
3D printing services are theoretically one of the easiest things you can do in the broad field of manufacturing. All you have to do is buy a 3D printer — with today’s prices, you can buy even five right away! — get some 3D printing materials, and voila! Start taking orders!
Customers learn about your existence, send you files, you price them, make the parts, and deliver them. Then you issue invoices, customers pay you, and you live in prosperity.
The catch is that this idealistic vision ends right at the beginning, i.e., when you buy the 3D printers and stock up to the ceiling with materials.
When you try to enter the market, you find that there are dozens or even hundreds of local companies just like yours, all equipped with identical 3D printers. There are far fewer customers for the services than you initially thought, and there is fierce competition for each and everyone of them.
And the only way you can stand out is by offering the lowest price.
But that is the road to self-destruction. And usually young entrepreneurs discover this when it’s already too late. There’s no money at all or too little to survive on. Debts pile up (because of the bank loan for the 3D printers, the rental of production space, taxes, and social insurance…).
Eventually, a difficult and harsh decision is made to close the business. It’s great if it’s done after 4–6 months — very bad if after 3–4 years…
Jarek Kozak is someone who has gone through this entire journey. Except for the debts — he fortunately avoided those. But the rest was textbook. Moreover, he went through it at the very beginning of the 3D printing industry in Poland. Funny thing… He was one of the first in general and one of the first to fail.
However, it is fair to point out two things:
when he started this business with two colleagues, he was just 21 years old and still in college
it was the year 2012… he was a true pioneer; there was no one who could tell him he was making a mistake.
Later, however, he used his experiences to create another company — Technology Applied — the second largest 3D printing service provider in Poland and the largest with Polish capital (the largest in terms of size is the Polish branch of Materialise — the Belgian giant in the global AM market).
Jarek Kozak is my dear friend, whom I have known for at least 8 years. I think we must have met earlier — in the second half of 2013, but we have consciously been friends since 2016.
Jarek is the person who made me understand that 3D printing services are not for me. Not because I was bad at it — I just know I will never be as good at it as he is. And I never wanted to be just another…
Some time ago, we recorded a video together — it was supposed to be the first episode of a podcast, where two guys who have been in the 3D printing industry for over a decade talk about how tough it is. But while editing the finished material, I decided that this format made no sense…
Today, everyone is a podcaster. Making a podcast is like writing an email or sending a text message. So I did this — I transcribed it. I turned the interview into a nice article.
But first — who was I even talking to?
Technology Applied is the largest Polish company providing 3D printing services.
It was founded in 2015 in Białystok by Jarosław Kozak, who has been associated with the AM industry since 2012. The core of the company consists of specialists with comparable experience in the additive manufacturing sector (including one of the colleagues with whom he founded the first failed business in 2012).
Technology Applied uses systems such as SLS from the German EOS, MJF from the American HP, and industrial SLA 3D printers from the Italian DWS Systems. They also have machines for automated post-processing by German DyeMansion and their own painting shop for finished 3D prints.
From the very beginning, Technology Applied was established to serve industrial clients. The company primarily provides short and medium series of parts made from PA12 and derivative materials.
So we talked. I won’t publish my questions or side thoughts — it’s enough that I’m writing this text. Let Jarek remain the author of the thoughts. Especially since they are quite interesting and smart.
We talked about his failed beginnings, how he later developed Technology Applied, the pitfalls of EU grants. How to run a healthy business, and how to walk away from a failing one. We also briefly discussed Zortrax… It’s still the most important and well-known Polish company in the 3D printing industry. It’s a pity we had to talk about them.
Anyway, Ladies and Gentelman! I present you Jarek Kozak of Technology Applied…
Success born from failure
Before Technology Applied, there was failure. Although I personally don’t consider it a failure because it shaped who I am.
I started a company with two friends, and it was a real roller coaster — a combination of a lack of business experience and a series of bad choices. And we had to dig ourselves out of it because we took out a bank loan. That’s where I learned everything. It was my school of life.
It was a company providing 3D printing services, based in Warsaw (capital of Poland). I don’t want to mention its name because it still exists and does something entirely different now. It was sold, and someone else built something new out of it.
At the beginning, we had no idea what the company should specifically do? We knew nothing about 3D printing, except that we liked it a lot. We touched a few 3D printed parts and were greatly impressed by them.
YouTube and a certain salesman guided us. YouTube said that 3D printing was cool, and the salesman promised us wonders. We decided that we would just buy a 3D printer from him and start printing things.
We would go to people and say:
Listen, we have this great machine and awesome technology — we can make something for you!
And people would really need and order these things.
So first, we chose the wrong technology, which was unsuitable for anything in the manufacturing industry. It was sold to us as something that performed real wonders, but in reality, it did what it did.
It was a gypsum powder 3D printer. And it 3D printed in full color (CJP technology from ZCorporation / 3D Systems).
Today, I think it was mainly our fault because we could have done more research. Who needs 3D prints made of gypsum? Almost no one. Yet we thought that color 3D printing is important. And we thought that because we hadn’t conducted any market research beforehand.
It turned out that no one cared about color, and gypsum parts have no mechanical properties, so they are practically useless. Fortunately, we discovered the market for 3D printed architectural models.
The 3D printer produced ready-made, colorful models in ~20 hours, and indeed, architectural or construction companies participating in tenders could receive a model faster than by traditional methods. And at a marginal cost.
But it barely made sense business-wise. How many such architectural models do people need? Our income from 3D printing was just enough to pay off the loan installment and buy hot dogs at the gas station.
In our defense I must say, that my friends and I were halfway through our studies — we were only 21 years old. I even hold a bit of a grudge against our parents for not stopping us from taking those loans.
But well — it happened.
Later, when I was founding Technology Applied, I sold that 3D printer to a company involved in manufacturing medical devices. And there, it turned out that 3D printing with gypsum was continuously used. The company printed bones on it, which were easier to drill, compared to eg. plastics. And a gypsum 3D print resembles a bone more closely.
We didn’t have this knowledge before — and even if we had, as a service company, we wouldn’t have done it anyway. The machine was bought by a medical company, which does a hundred other things. For them, it’s just an addition to their offering. But for us, it would have been our entire offering. Therefore, it would have been difficult to make that business work.
So I was done with that.
After that, I got in my car and drove to Białystok (eastern Poland, near the Belarus border) to start the business anew. And that’s how Technology Applied was born.
I chose Białystok because of EU grants (eastern Poland gets high and very preferential EU subsidies not available in other parts of the country). Now, those opportunities are dwindling, and we manage on our own, but at that moment, it was crucial.
The choices were Lublin, Warmia and Mazury, or Podkarpacie. I ended up in Białystok due to the low costs of running a business. Nothing was holding me back, so I could go anywhere.
The first machine wasn’t bought with EU grants but from savings and again a bit on credit. No one would give a grant to a business that only existed on paper — something had to be started first.
The company opened in 2015, next year we installed our first industrial SLS 3D printer, and received the first EU grant in 2018. We operated almost two years without any grants.
Currently, we have a total of eight industrial AM machines based on SLS, MJF, SLA, and FDM technologies. We have the automated post-processing system from DyeMansion for cleaning, polishing, and chemical vapouring with biocompatibility certifications.
We have pressure dyeing, our own painting facility, a large production hall, software for automatic pricing, and a sizable sales team. We are in the process of building a sales office in Wrocław (southwestern Poland).
Compared to other companies in Poland, we are certainly the largest. But to be precise — we are the largest Polish 3D printing company with Polish capital.
There are bigger 3D printing companies than us located in Poland (like the mentioned Materialise), but I don’t know if they are growing as dynamically as we are?
But without the grants, it would be a much smaller and much slower-growing business. I wouldn’t be in this position — maybe I’d be halfway to where I am now?
The legend of free EU money
EU grants sound great because someone subsidizes you.
Hooray, free money!
People treat grants somewhat like winning the lottery, thinking they’re getting money for nothing.
But that’s not true — EU grants come with a host of complications that don’t arise when you’re spending your own cash. The responsibility of taking a grant is significant and burdensome, especially for small companies.
In Poland, we still have a post-Soviet bureaucratic mentality. It’s like we take grants and the authorities try to catch us out. Yes, they don’t help us — they catch us for what they think we did wrong. And we have to defend ourselves against this. I don’t know? Maybe bureaucrats get a success fee for catching companies…?
When taking an EU grant, the first thing to consider is whether we can afford it? This is because it requires a 30%-40%-50% own contribution. Companies often take large grants thinking it’s free money, so they should grab whatever it takes.
But then the percentage of their own contribution becomes larger and more burdensome. Most don’t have the necessary funds, so they need to take a bank loan. As a result, they end up with a loan for their own contribution on one side and a grant, which is usually a reimbursement, on the other.
This means they have to spend the money first and then get it back from the authority, provided everything is in order.
There are many ways to stumble and many regulations that can lead to having to return the money to the authority or having the grant reduced by certain non-qualifying costs.
Not to mention the simplest issues, such as a project needing to be completed by the end of the year, but the supplier delays the delivery of machines. And we face a serious problem.
Another issue is when people take R&D grants just to buy machines. They present some research in their reports, but it’s just a cover to buy equipment. It doesn’t work that way — there are people in the offices who monitor this.
So, first, you must be honest, and second, you must be prepared for every eventuality.
My motto is: take grants only to the extent you can afford in case of a catastrophe. And a catastrophe is when you have to pay for everything yourself.
I’m not talking about physically having that money — because if we had it, we wouldn’t take the grant — but about the potential credit burden on the company if we had to cover the entire cost without the subsidy.
In other words, when taking a grant, we start from a high-risk state and assess if we can afford it. We have never taken a huge grant. Our grants have always been ones we could manage. They are getting bigger as we grow, but I’ve never gone all-in.
How to run a business and when to quit it?
Running any business requires the awareness that sooner or later, you may face financial problems. These problems can vary in nature; for example, they can result from investments, leading to debt initially, but then a return on investment.
Let’s not kid ourselves — Technology Applied also had joyful years and dismal years. This was due to the market situation, decisions made, and various other reasons.
In business, you can be in it and not earn money. A critical element of running a business is the time parameter. You can be a startup your entire life, and struggle your entire life, and never make a profit.
This is a type of trap that people fall into. They start a business with a lot of faith and hope that it will succeed. The further they go, the harder it is to give up, because that faith and hope persist.
You can spend 10–15 years like this, or even your entire professional life, without achieving any meaningful results, just living on hope.
I am pragmatic by nature. I don’t rely on hopes, but on indicators. In my business, I try to set these indicators in a way that makes them measurable. They tell me whether I am achieving success or not.
Indicators vary. For me, the most important is the growth in the company’s value, which I measure by the assets owned. Financial flows and revenue growth are also important. Based on these indicators, I determine whether I am successful?
If someone doesn’t set indicators but just says:
Okay, I’ll do 3D printing or run a kebab stand, or whatever…
and then just does it without measuring or checking, they don’t know if their work is yielding any results.
It’s hard to evaluate oneself. This evaluation is purely emotional and depends on many factors, including the great hope that exists at the beginning.
Moreover, people overestimate having their own business and feel it must succeed at all costs. In the United States, it doesn’t work that way. If people run a business that doesn’t succeed, it’s even considered acceptable to close it.
In Poland, bankruptcy is seen as a tragedy and the end of the world. People feel inferior after that. I don’t understand this at all.
YOU MUST RUN! Escape from businesses that don’t work!
Because there’s that time parameter, which isn’t worth wasting. Our professional life generally lasts 30–40 years. So why spend 20% of that life on an initiative that doesn’t yield any results, only building frustration?
You can do different things. I advise people who aren’t earning from their businesses to seriously reconsider.
People are often afraid. We are divided into employees and entrepreneurs. Employees are afraid to start their own business, and entrepreneurs are afraid to become employees.
I know or knew many 3D printing businesses where, if the people running them considered what their life would be like as employees, they would find they have better security, more free time, and earn more as employees than in their own business.
But indicators alone are not enough for business success. I set a development vector for myself. I determined the direction I was heading and took careful steps.
There were times when other companies earned much more than Technology Applied and took higher risks to reach a higher level.
But the faster you run, the more often you stumble.
I go slow. Everyone knows I’m in no hurry.
I measure indicators, diversify with side businesses, and am not afraid to seize opportunities. I try to make the most of the opportunities that come my way, but not all of them.
To clarify — it’s not that I must take every opportunity I see. Instead, I work very thoroughly on the opportunities I decide to pursue.
I’ve invested a lot in training and understanding market aspects. I try not to act blindly. When we enter a new market, we conduct analyses, check who’s already there, their prices, what they do, their marketing strategies. Where do we fit in, and what can we achieve there?
Such analyses cost between 10k and 50k EUR. But such analysis is definitely better than failure after investing funds. I genuinely take small, firm steps.
I move in the right direction, measure indicators, and don’t rely on my emotions. And this might be my recipe for success.
However, it would be a lie to say it’s all based on my wisdom. We live in a world where doing everything right only increases the probability of success.
You can do everything right and still fail. Doing things foolishly increases the likelihood of failure.
The world we live in is not simple. It’s not binary:
If you do as Jarek does, you will succeed in business.
Or
If I write some guide for entrepreneurs on running a 3D printing business, it will always be successful.
No.
It’s a mix of knowledge, growth, good decisions. But also just pure luck.
3D printing services — how to do it right?
Money is like a river. To be able to bathe in this river, it needs to flow. In Poland, compared to Western Europe or the United States, we have a mere stream… The industry in Poland largely works for external industries. This means we are suppliers of components and parts.
As Polish manufacturers, we produce few complete, ready-made devices. Consequently, we are positioned somewhere at the bottom of the European food chain.
I’m not saying this is a bad strategy because China, from being the world’s factory, is now advancing to create its own competencies and solutions, and they are doing it masterfully.
But for us, it seems that even if we produced our own products, there might not be enough buyers for them?
I don’t want to be so low in the food chain of this system, so I go where the stream of money is large and where one can bathe in it — to the West.
Exports make up 30% of my orders, but… Often, we establish collaborations with foreign companies that already have subsidiaries in Poland. To avoid complex international operations, they order parts through these subsidiaries. So, in reality, our export rate is around 60%.
But how to calculate the costs of 3D printing services?
One must approach this comprehensively.
I bought a machine — great! Now I can make money with it!
But how will its depreciation look? When will it wear out and how much will a new machine cost? How much do I need to save to maintain business continuity and buy a new machine after the current one wears out?
How much does electricity cost? How much does the material cost? How much does labor cost?
Meanwhile, people often calculate 3D printing services based on the material used or the time required for the 3D print.
They don’t keep statistics on how many prints fail? This should be included in the margin. If I have a 10% failure rate, I add +10% material for losses to the base material. The same applies to additional time.
A separate issue is valuing one’s own work time. Small entrepreneurs, often working alone, very frequently do not include themselves in the company’s cost calculations. On the principle of “I can work for free for now.” And this “for free” is the misfortune that unfolds because you can’t run a business to work for free.
If running own business does not satisfy you, then go get a job. It will be nice and comfortable there. As an entrepreneur, you don’t have 26 days of vacation. A workweek lasts 7 days.
I don’t want to discourage people from entrepreneurship, but I want to encourage them to be real in their calculations.
The Zortrax thing…
Brief introduction: Zortrax is a Polish company from the 3D printing industry, which has achieved the greatest success in the world. In the years 2015–2017 it was one of the absolute global leaders in the manufacturing of desktop 3D printers. It set trends — others tried to catch up.
But after 2020 the company fell into increasing financial trouble. The culmination was May 2024, when it entered the restructuring process.
Zortrax should not be a company experiencing such a sinusoidal pattern. It is a company with a very narrow scope of activity — it knows what it does, it builds 3D printers. They should sell these machines, generate revenue from those sales, profit from the revenue, and distribute dividends from the profits.
The matter is as simple as a hammer, and there’s not much more to say. Zortrax should be selling its machines and making a profit from it, but this is not evident from the financial documents.
I wasn’t on the company’s board, so I can’t assess what happened there. But from an external observer’s perspective, somewhere along the line, the work was not done properly.
When you get an opportunity like the one Zortrax had, at the point it was in, most likely someone did not take full advantage of that opportunity.
I wonder if this is a characteristic of the low-budget 3D printer market, where there is constant rotation? It’s not just Zortrax that has been at the top and is no longer there; there is always some rotation.
And it’s not a rotation where we see three main players rotating on the podium, but rather a company on the podium that later goes bankrupt, disappears, or restructures. Maybe this is a market characteristic? I don’t know?
If it is a market characteristic, we should consider how to build a second leg. If we operate in an uncertain market and succeed, we should not just sit and be happy with where we are but do something further.
Since the market is uncertain, we will likely find ourselves in a different place after some time — maybe at the bottom. We need to build a backup simultaneously. Some derivative activity would allow us to do both stably.
We could shrink when the economy, market, or circumstances make high-risk business unviable and expand this business again when we are back on track.
Meanwhile, we should have a business that works all the time. This wasn’t done there. There’s some chaos, and I can’t assess this chaos. But you can see it in the financial documents.
The interview was conducted live on May 18, 2024.
The article was originally published on Medium on July 16, 2024.
Initially…..a very interesting beginning… Started to go down a compelling path…..but got sidetracked multiple times….and did not conclude well. I would have liked to have seen numbers (actual dollar amounts) associated with the startups, expansions, the failures, and what amounts should have been set aside for future expansions, endeavors and growth. What’s the “next step”??