Markforged CEO on product roadmap after $2.1B SPAC deal

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with Markforged President & CEO, Shai Terem, and One CEO & Co-Founder, Kevin Hartz, about their blank-check deal and outlook for Markforged.

Video Transcript


JULIE HYMAN: You're watching "Yahoo Finance Live." I'm Julie Hyman. We are going to talk another SPAC deal right now. Markforged, which is a 3D printer maker, has agreed to merge with One, which is cofound-- which was founded by Kevin Hartz, the co-founder of Eventbrite, in a deal valued at $2.1 billion in combined equity. Kevin Hartz is joining us right now-- again, he's the One CEO and co-founder-- as is Shai Terem who is the Markforged president and CEO.

And Shai, I do want to start with you because it seems as though 3D printers have been around for a while now, but it still seems like for manufacturing applications we're still relatively early in the cycle. One of the things that has perhaps meant not broader adoption has been cost for manufacturers. So talk to me about your printers and what the cost basis is for your customers.

SHAI TEREM: Perfect. Thank you very much for inviting us. So I would say Markforged in the last few years already been helping manufacturers reduce the cost with stuff which much-- might not be as sexy, like MRO-- maintenance, replacement, and operation-- but it's actually happened in real time today. For example, I'm not sure if you saw, but Frito-Lay is a very strong partner with Markforged. They started with us by replacing parts in their operation, like, a year ago. And parts that used to cost about $550 to machine now cost about $12 to print. So in one year they moved from one solution in one manufacturing facility to 35 manufacturing facilities all over the Americas, and now they're expanded even further. Again, mainly because of the cost reduction in the manufacturing for.

BRIAN SOZZI: Kevin, is part of the attractiveness of this model for you that we might soon be getting an infrastructure plan and we're going to need stuff like this.

KEVIN HARTZ: Well, we are looking broadly in the innovation economy with our SPAC. And what we found was a company that's having a profound impact on manufacturing. We think this area has not quite yet been really made aware of but is doing really amazing things. When Shai just pointed out the cost savings, there's also the time savings of really getting a part made right inside the factory. So if you fast forward into the future you can imagine a world where 3D printers print the parts and the end product come out the other end. And that's a massive innovation. That's a massive change in manufacturing and that's why we're here today.

MYLES UDLAND: Shai, it's Myles here. I want to ask a little bit about the business and kind of your guys' life cycle. You know, revenue doubled in 2018. You're looking at something around $70 million in revenue in 2020. And I'm curious, why go public now and why go the SPAC route and what you guys had sort of thought about at this moment of the next growth lever to pull from a financing and funding standpoint?

SHAI TEREM: Yeah. So Markforged is on a journey. We are on a journey from 10,000 happy customers today to over 100,000 in the next five years. And since we have the ability to listen and ask our customers today, what do you need in order to kind of push this envelope further, we were able to develop a very aggressive and strong product roadmap that we believe can help our customers to do more and more in the manufacturing floor. Going for this transaction now will help us to accelerate this product development and accelerate our brand awareness, and with that, help us grow faster into the future.

JULIE HYMAN: Kevin, I'm also curious. You know, as this is a manufacturing client, as far as I know your background is not in that area, right? Eventbrite, PayPal, et cetera. Your background is mostly online. So I'm curious what-- because I know you looked at a lot of different companies. There are a lot of different companies looking for SPAC capital right now. What drew you to this particular play given that it's not necessarily what you have done before? Or maybe that's why.

KEVIN HARTZ: Well, I'm really looking-- we're really searching for companies that can have a profound impact and change the world. PayPal, Airbnb, Pinterest. These were all businesses that I was a seed investor in and had the good fortune to be involved in and watch from the front row. And what Markforged shares in common is an incredible vision about how to transform manufacturing, one of the last bastions not transformed by technology. And at the end of the day, it's great teams, competitive advantage, and massive markets. And that's exactly what you have here, whether it's pure digital or whether it's a 3D printing business.

BRIAN SOZZI: Shai, so the business in 2019 had $73 million in sales. Last year, $70 million in sales. Looks to be a little bit impact from the COVID-19 pandemic. Have you seen the return of sales growth in the early going here in 2021?

SHAI TEREM: Sure. So yes, definitely we saw an impact from the pandemic in 2020. But while most of the other companies in the space went down in revenue and got a significant hit in the margins, we were able to keep the topline flat, more or less, and increase the margins materially and build the right skeleton into profitable growth into the future. Going out of the pandemic, we already see the increase in the demand, and especially now when everyone feels the pain of the supply chain and everyone feels the impact that we can have in their manufacturing floor, when a $20,000 solution that can really help them reduce the cost and have the parts when they need them, we see the demand increasing and we believe 2021 would be better than 2020 for sure.

MYLES UDLAND: And, you know, Kevin, I just wanted to follow up a little bit kind of in the direction of Julie's question here. Just, look. You guys have a great slide in the presentation about your portfolio of businesses you've been involved with over the last couple of decades. And I'm curious from your vantage point, you know, how you see the cycles playing out. Like are we at the beginning of a new one? Where did we-- what did we learn from the last decade? Because it charts nicely through that "software is eating everything" kind of theme. And now it feels, to me at least, like there is something different happening here as it comes to investing opportunities and where economic growth goes from here.

KEVIN HARTZ: Well, in the late '90s and with the first dotcom bubble, you had Webvan, which, you know, today translates to InstaCart. You had which today translates to Chewy. So it's-- really, it took 20 years for a lot of these businesses, a lot of these models to really come to fruition and they're happening now. In terms of my macro view of where we are in the cycle, I could just say that we're 10 years closer to a bubble burst. But I can't give any kind of inclination of when that happens.

JULIE HYMAN: Timing is always the hardest part, isn't it? Shai Terem, thank you so much for being here. Markforged president and CEO. And Kevin Hart, One CEO and co-founder thank you so much gentlemen for being here and hope to keep in touch as the deal progresses and close.