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November 8, 2016
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MakeTime Restructures Manufacturing RFQs

Lexington startup successfully building an automated market for machine shops and customers

By Michael Agin

entrepreneurship

Chase Southard, vice president of engineering, works on website coding at MakeTime’s Lexington headquarters for the on-demand manufacturing platform that connects buyers of small-batch jobs with idle machine shop capacity.

Lexington-based digital startup MakeTime is getting real-world traction taking on “one of the world’s greatest problems” – one that bogs down industrial innovation itself – by successfully tapping its roots in the rural economy of Henderson, Ky., where hard work and a “bootstrap” mentality is how families survive.

“The economic cycle was up and down. It was always successful, but never easy,” said CEO Drura Parrish, now 40 with a wife and two young daughters. “I always joked that living in this kind of world, you grow up in a Cadillac one week and barefoot the next. It just never sat right with me. In Henderson, if you laid off one person, it was like 50 percent of the population. It was hard watching things change, particularly in the 1980s.”

From the 1970s until he left in 1994 as one of the first college-bound members of his family, Parrish observed his grandfather – “a bootstrap guy” – and his father build a substantial Henderson manufacturing company from the ground up. The result, Scott Industries LLC, does custom fabricating of fiberglass and foam insulation products.

Additionally, he observed how machine shops in the area struggled to fill the time on their machines.

In 2014, those experiences sprouted into MakeTime, an on-demand manufacturing platform that may help propel a U.S. industrial revolution and “re-shoring” of millions of jobs. MakeTime qualifies and connects buyers of small-batch machining jobs, such as a company developing a product, with idle machine shop capacity.

“It always stuck in my mind that there were tons of things that needed to be made in the world,” Parrish said, “but where I grew up there were so many machine shops … that were kind of quiet.”

Years of experience after leaving Henderson reinforced what he had seen in Kentucky. He attended DePaul University in Chicago for a psychology degree, then the world-renowned Savannah (Ga.) College of Art and Design. In Los Angeles, while earning a second master’s degree in architecture at the Southern California Institute of Architecture (SCI-Arc), Parrish worked in business development for a 3D printing company. He saw a variety of shops using computer numerically controlled (CNC) machines to make urethane-casting molds or various parts going into automobile or aerospace vehicles.

Yet, even on the vibrant West Coast, the shops did not have enough work – their machines were running only at 70 percent of their capacity. Owners had invested hundreds of thousands of dollars for computerized, robotic machining devices such as mills, lathes, lasers, waterjets and Swiss lathes, but they were turned off 30 percent of the time.

Meanwhile, Parrish regularly encountered innovators and designers of new industrial and mechanical devices who needed machining. Typically they had “very little connection to machine shops to make these things,” he said. “It struck me as odd, and it struck the very same chord from where I grew up.”

After accepting an opportunity to teach at SCI-Arc, Parrish learned more about design-based entrepreneurship and how one person’s ideas equal jobs. And this led him to begin focusing his academic and work time on The Problem:

“There are a lot of people wanting to make things, and then there are a lot of people who make things, and the two people don’t know how to get together. It’s a problem I’m obsessed with still.”

Have you heard of the internet?

He also began testing his solution: Convince machine shop owners to let him buy the idle time on their CNC machines at a fair price and finding customers who had something they needed made. Parrish earned a middleman cut when a match was made.

Initially, customers often were artists who needed metal cut and shaped or plastic molded into parts for artworks. Others, though, were innovators needing small-batch production of a prototype part for new products. Parrish was building a network of suppliers and purchasers.

Around 2006, Parrish returned to the commonwealth to become an instructor for the College of Design at the University of Kentucky, and “to carry on with solving The Problem.” He continued to buy idle machine time, selling to anyone needing parts built, and incorporated as Parrish Production. He also co-founded Land of Tomorrow, which exhibited and sold goods produced by Parrish Production for artists and designers.

Around 2013, Parrish recalls, the chairman of one company he was working with jokingly “…asked had I ever heard of the internet?”

“I was, like, ‘Got it!’ ” said Parrish, who had been executing the machine-time middleman role manually. “It totally clicked. I set out to put this on the web.”

MakeTime emerged as a startup business plan for an online marketplace to pitch to investors. The initial funding of about $1.25 million soon came from private sources and from Kentucky Science and Technology Corp.

In June 2015, KSTC invested further, along with Palo Alto, Calif.-based Almaz Capital, for a total of $2.65 million. Then in May 2016, an additional $8 million came through the Boulder, Colo.-based Foundry Group with follow-on participation from Almaz Capital and KSTC.

“A couple of funding rounds and 55 people later, we are solving one of the world’s greatest problems, which is the speed of innovation, right here in Kentucky.”

MakeTime today

An operational MakeTime is completing its second year. After achieving key business goals, such as proof of concept, revenues and developing the web-based marketplace, the firm is working to “scale” and building a larger market. Its office in a simple building on High Street in Lexington has 43 employees. Another 12 software developers are based in the Ukraine.

Locating operations in Kentucky was a strategic decision because 30 percent of U.S. manufacturing is within a four-hour radius of the city. Major automotive and aerospace manufacturers are near, although MakeTime has clients nationwide. Its two-sided online platform at maketime.io is free to join.

One side is the “Suppliers” – machine shops and factories – who post available production hours to make parts on CNC machines. Suppliers go through a rigorous qualification from MakeTime.

The other side are “Purchasers” – manufacturers and designers of parts – who upload the specifications for parts they need. MakeTime examines the parts to ensure they meet specifications of Design for Manufacturing (DFM) standards. MakeTime’s engineers also look for possible cost savings in the design.

As of late October, about 600 suppliers and 700 purchasers were signed up.

The web screens clients view to upload their data and see the process of selling their machine time or ordering the part look very much like shopping views offered by Amazon.com.

“We are trying to make ordering CNC parts as easy as going online and ordering a pair of socks,” said Todd Pritts, chief product officer.

It is a major change from the traditional, time-consuming Request for Quote (RFQ) process, used by Purchasers to get bids from Suppliers and set a final price.

According to Pritts, another revolutionary change in the process is pricing. MakeTime offers a fair market price to both sides within 24 hours.

“Our platform essentially kills the RFQ,” Pritts said. “We use data to produce fair market pricing.”

MakeTime has thousands of machines on its platform now, he said, and its data science team analyzes how shops operate their machines, what costs they pay for operating the different types of machines, and what they charge for using them. The same data analysis is going on for the manufacturers. MakeTime has developed a complex pricing algorithm.

The company has identified about 130 economic indicators that affect prices: everything from changing gasoline prices to fluctuating metals costs to a hurricane shutting down East Coast ports.

Another major MakeTime benefit, said Director of Marketing Kasey Hall-Murphy, is eliminating the weeks involved in the clunky RFP process. According to MakeTime, its unique fulfillment process cuts production time up to 75 percent compared to traditional supply chain management.

“We are looking at doing production in a matter of days versus a matter of months,” Hall-Murphy said.

The number of machine hours offered by Suppliers varies every day, but on one late October day, 180,000 machine hours were for sale. Suppliers range from mom-and-pop shops with one to three types of devices, to major oil and gas machine-shop operations with 20 or more CNC technologies.

Purchasers, 60 percent of whom are repeat customers, have uploaded thousands of parts into their “libraries.” Signups grew 45 percent last quarter, said Hall-Murphy.

Purchasers include VEGA Americas Inc. of Cincinnati, which is a global manufacturer of process instrumentation with products that include sensors for measurement of level, point level and pressure.

VEGA is an “exciting story for us,” Hall-Murphy said. “Within 10 days of signing up in our platform, we were able to place 27 different prototype parts, which is insane, even for us.”

When MakeTime achieves a “match” between the two parties, it earns a 15-20 percent commission. The average transaction is about $5,000 in revenue. The company earned about $2 million in gross transactions in its first year, and is on pace to surpass that amount in 2016.

Beyond price setting, MakeTime’s platform offers other services such as:

• Distributing a parts order to one or more suppliers.

• Monitoring the part’s production and taking quick steps to keep on-time delivery.

• Guaranteeing quality (every order is backed by a surety bond to ensure quality).

• Showing online to all parties what the progress is on each order.

• Delivering the parts.

• Making re-ordering of parts simple.

Growing a startup in the Bluegrass

MakeTime has proven the concept and the product market fit, Parrish said; the next challenge is “how to build a technology company in the Bluegrass.” It was a very involved process to recruit the core team to Kentucky, and building its team continues to be a challenge.

In the Midwest and the South, in general, “the term startup is a very suspicious term,” Parrish said. “The risk and reward is not as clear as it is on the Coast.” It is a different proposition than going to work for a Fortune 100 company.

“We’ve been unbelievably fortunate in the team that we built,” Parrish said. “You get a type of workforce that is scrappier, more amenable to moving with the market, and less dogmatic – people who, like my parents and grandparents, were entrepreneurial, meaning farmers or some kind of trade, so they understand what it means to make a dollar. Funding, taking venture capital, is not taken for granted. It’s seen as essential to grow exponentially and to maintain capital efficiency. So it has been a wonderful, unique experience.”

But the MakeTime team believes they are enabling an industrial revolution.

“This is the thing that I really pride our company on,” Parrish said. “We are tackling, literally, the largest chunk of our GDP (gross domestic product) in the United States, which is durable goods. You’re not going to solve that problem with an ice pick or a safety pin; you’re going to solve that with some heavy-duty equipment in terms of thinking. That requires a flexible, amazing kind of mind, which is the type of people we have hired.”

They are creating a robust software tool that eliminates the menial work of getting a part into production, freeing up the industrial product manufacturer to “spend more time thinking about the next gear that is going to revolutionize battery-powered forklifts, or whatever it is. It is all about speed.”

“We don’t want to just be a successful company. We want to change an industry that has needed to be changed for quite some time,” Pritts said.

U.S. manufacturing is not declining but getting smarter, he said, and MakeTime is helping to replace “outdated ways in which we do the work. As this starts to shift, and we start to share more resources across a larger environment, we are going to see some big numbers. We are going to see some turnarounds very quickly.”


Michael Agin is a correspondent for The Lane ReportHe can be reached at [email protected].

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