Jim Carr: Welcome to MakingChips. We believe that manufacturing is challenging, but if you are connected to a community of leaders, you can elevate your skills, solve your problems, and grow your business. I'm your host, Jim Carr, and I'm joined in the studio with my cohost Jason "J.Z." Zanger. How you doing, bud?
Jason Zenger: I'm doing great, Jim, how are you?
Jim Carr: I'm well, it's good to see you back from vacation. We're here at MXD, formerly DMDII. It's always good to be at home in our studio here at MXD and we've got a great show lined up for today and I'm looking forward to equipping and inspiring more manufacturing leaders.
Jason Zenger: Yeah, and I'm finally well rested.
Jim Carr: Good. I'm glad to hear that.
Jason Zenger: I had a vacation that I needed, which was disconnected. I saw about, I don't know, 30 text messages, group texts from you all and I just ignored them all. Didn't read them while I was on vacation.
Jim Carr: Well, I kind of figured that. So I was avoiding texting or emailing you during that time and I liked your cutesy email response to-
Jason Zenger: Oh, you like that? What did it say? I don't remember.
Jim Carr: Well, it said something about how you needed a much, much needed rest.
Jason Zenger: Yes.
Jim Carr: And that you would not return any emails until you got back. So good for you. That's great. I'm glad you could do that. I could not do that. I don't think I could just be that disconnected for any amount of time.
Jason Zenger: This is only the second time that I've done it because normally I'd be like you, where I just do like a little bit of work in the morning while my wife's sleeping or, or something like that, which I know you have typically done in the past, but I just, I really needed to disconnect and I've got to be honest with you. I think that it helps to revitalize and maybe stir up some creativity and even problem solving skills when you can rest your brain like that. I think being in drive constantly is tough. It's tough on your brain.
Jim Carr: I agree.
Jason Zenger: So maybe you should try it.
Jim Carr: I will think about it, how about that?
Jason Zenger: Maybe just two day, two or three days.
Jim Carr: I would be happy to try that. I would be happy to try that. But anyway, Jason, before we get into the episode, you know, it was really impactful when we had Paul [Van Meter 00:02:11] on the show a few weeks ago and he talked about franchising our manufacturing companies. It's-
Jason Zenger: Processes.
Jim Carr: Yeah, it's quite a concept, and the more I think about it and the more I tried to adapt those processes into Carr Machine & Tool, I think of how important it is to actually have written processes, have a succinct procedure that we follow every day, no matter how simple we may think it is. If we can set up processes within our businesses that are very repeatable and guidelined and succinct again, I really think that that will create a lot less stress-
Jason Zenger: Well, it's the only way to grow.
Jim Carr: And a lot more throughput on your business. Absolutely.
Jason Zenger: Yeah. You can't grow without that. I mean there's no way that you can just do everything off the cuff-
Jim Carr: You can't.
Jason Zenger: When you have a growing company. And so that's what it's all about.
Jim Carr: And you know what I always say, and I say this to my team every week at our production meeting, I'm like, one person cannot run this business. I need every single one of you sitting at this table today. You all have your unique skillsets. They're all valuable to the operation of this company and when everyone is in the mode, that's when we have the best throughput at the end of the day. So everyone has a skill, everyone has a process and if everyone stays within those parameters, that's when we're going to have the best bang.
Jason Zenger: Yeah, I agree with you.
Jim Carr: That's when we have the most success.
Jason Zenger: And you know, as my company, as we've grown from like 12 to now, almost 50 people, those things have gotten a little out of hand and we're, actually, just our ownership and leadership is going to be having a day and we're going to really take a step back and say, are we really set up with those right people doing the right things like you just said, because I think we've gotten a little out of hand as we've grown and I don't think that we're ... I think we need to be set up differently in the future during this different stage in our business growth.
Jim Carr: Yeah, just pull it back just a little bit. Just a little bit.
Jason Zenger: If you recall, I know you're reading your first book ever. You're reading-
Jim Carr: I'm done. I finished it.
Jason Zenger: Hey, hey, high five.
Jim Carr: I know.
Jason Zenger: Bam.
Jim Carr: No, seriously. That was a big thing for me.
Jason Zenger: I'm very proud, Jim, I'm, you know-
Jim Carr: I know you are. I know.
Jason Zenger: I'm very proud of you. It's been several years. I've been hounding you and hounding you and hounding you to read a book, and you finally read a book. Only took you like, what, like six or seven years of us knowing each other for you to read that book.
Jim Carr: I know, but it only took me like ... couple months we got it done, but we did it as a team and it was very impactful. I have to tell you and the Metal Working Nation. If you're going to read a book, read Traction. If you're a small business, if you're a business owner, it doesn't have to even be a small business.
Jason Zenger: Yeah.
Jim Carr: It has been life changing for me and my and my business.
Jason Zenger: That's great.
Jim Carr: Well, our business, because it's not my business, it's everybody that works at Carr's business.
Jason Zenger: Well don't forget, I have two thoughts as far as this goes. Don't forget you made a promise to another gentleman to read a book, too.
Jim Carr: I did, I did.
Jason Zenger: So you got to read that book. So that's the first one.
Jim Carr: Okay, okay.
Jason Zenger: And then the second thing is, I don't know if you remember. In Traction they talked about FBA, which is followed by all. Which ... that's their terminology to say, okay, we need to set up processes and everybody in the company needs to follow those processes. Do you recall that in the book? FBA?
Jim Carr: No.
Jason Zenger: No?
Jim Carr: That's another acronym.
Jason Zenger: That's another acronym.
Jim Carr: It's another acronym and we are going to be talking about a new acronym today.
Jason Zenger: Yeah, because we're talking about SAAS and MAAS and FBA and all that kind of ... we're going to come out with the MakingChips guide to acronyms eventually.
Jim Carr: Okay, you can write it. So, you want to tell the Metal Working Nation about this new acronym that we're going to introduce today? Actually our guest is going to actually tell us about-
Jason Zenger: Well SAAS is a term, S-A-A-S, that's been around a long time. It's-
Jim Carr: I thought it was only one A. It's S-A-A-
Jason Zenger: No, software as a service. Essentially, this came out when, really, the notion of having software through a web browser really started to take off. So when companies started to realize that they could deploy software instead of on somebody's computer through a browser and they were able to, instead of selling a license one time, they could sell it on a monthly reoccurring revenue stream. And that's really the future direction of where software is going.
Jim Carr: Oh, totally.
Jason Zenger: You bought software for your ERP system that's like that. I just bought software ERP that's going to allow that too, and now we're going to be talking about manufacturing as a service or MAAS.
Jim Carr: M-A-A-S.
Jason Zenger: Correct.
Jim Carr: Yes.
Jason Zenger: And essentially, there's a lot of companies out there that have taken over that acronym SAAS and they've put their spin on it like we're going to talk about today.
Jim Carr: Yeah, well, I look forward to interviewing our repeat guest today and discussing MAAS with him. But before we get there, there's always a couple of things we want to talk about. What's keeping you awake at night? Well, you've been sleeping because you've been on vacation. I unfortunately have not, but I've been awake at night. I was up today at 3:00 AM but that's okay. But what's keeping you away before I start crying to the community.
Jason Zenger: Yeah, I mean, honestly, what's keeping me awake at night is just that my body's sore. I was trying to pretend that a- what are they called?
Jim Carr: And you're a young guy.
Jason Zenger: What do they call it? Like a vaqueros, a Mexican cowboy. So, I was riding a horse on the beach.
Jim Carr: A vaqueros.
Jason Zenger: Okay, whatever.
Jim Carr: A vaqueros.
Jason Zenger: And then I was also mountain biking in Mexico. So you know, I'm just a little sore.
Jim Carr: Oh, I'm sorry. I don't feel bad for you, but I'm sorry.
Jason Zenger: What about you? What's keeping you up at night?
Jim Carr: Well, right now what's keeping me awake is deliveries. You know, we're really busy. Not that we have a delivery problem, but we've got to stay on top of our deliveries, and that's something that I wake up and think about in the course of the night. And just keeping those spindles running the throughput of all the work in the shop is really important to me because that's another process that's an efficiency that we have to-
Jason Zenger: Yeah, if you're not making chips, you're not making money. What do they also say-
Jim Carr: I've heard that before?
Jason Zenger: If the spindle's not turning, you're not earning, or something like that.
Jim Carr: That's somebody else's tagline, not ours.
Jason Zenger: No, it's just a tagline. I mean, it's not like we made up ... I think the Metal Working Nation knows we didn't make up the term.
Jim Carr: We didn't?
Jason Zenger: If you're not making chips.
Jim Carr: We're trademarking it.
Jason Zenger: Yeah, it's ours now.
Jim Carr: It's ours now. But anyway, so that's what's keeping me awake. But it's kind of interesting and funny that those things that are keeping me awake at night right now are ... the solution is going to be helpful ... is our guest today because they are helping me increase our throughput in a way.
Jason Zenger: Keep the spindle turning.
Jim Carr: And keep the spindles running and keep the delivery schedules on task. I think that's the most important thing.
Jason Zenger: So what do we got for manufacturing news?
Jim Carr: So when I was looking for this article, Nick always says pick something that's timely and relevant and actually, May was not a good month for manufacturers. It was down.
Jason Zenger: I felt it.
Jim Carr: You did?
Jason Zenger: Yeah.
Jim Carr: Oh seriously?
Jason Zenger: Yeah. I mean we can kind of tell because we've got thousands of customers. We can kind of tell the general pace of where manufacturing is at, yeah, absolutely.
Jim Carr: No kidding. So, it was kind of interesting.
Jason Zenger: I know you just got a huge order in May, so you didn't really get affected by that.
Jim Carr: No, and we're trying to diversify so we're not affected by the economy. But anyway, regardless of that, I didn't want to talk about that. I wanted to talk about something positive. And this particular article is about the fourth Industrial Revolution, which I thought was kind of interesting.
Jason Zenger: Yeah. The first Industrial Revolution used water and steam power to mechanize production. The second used electric power to create mass production.
Jim Carr: Right.
Jason Zenger: The third used electronics and information technology to automate production. Now a fourth Industrial Revolution is building on the third where the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that are blurring the lines between the physical, digital, and biological spheres.
Jim Carr: Yeah. So I thought that was really cool. And they're talking about manufacturing in New York. They're saying it's op. They're saying that they're ready to move into the next thing, and that everybody from our industry sector better start seizing these new technologies to really get this fourth Industrial Revolution off the ground and really ... and make it happen.
Jason Zenger: You know, what the fifth Industrial Revolution is?
Jim Carr: I don't, please-
Jason Zenger: It's going to be where robots are manufacturing robots kind of like Star Wars. I'm calling it out right now.
Jim Carr: Okay.
Jason Zenger: I don't think anybody's talking about it, but I am.
Jim Carr: I guess more importantly they talk about the Brooklyn Navy Yard where, it says, where the authors of this piece are designing and building and advanced vertically integrated flagship factory. It has big on the fourth Industrial Revolution. I just thought that was an interesting article about newer processes that we all need to start implementing, and it kind of aligns with our guest today and the processes and MAAS.
Jason Zenger: Well, so, instead of delaying any longer, Jim, shall we introduce our guest?
Jim Carr: I think we should.
Jason Zenger: Today we brought back and accomplished guest to the show to share with us all the new things going on at his company. He was a guest from the past. If you go to makingchips.com/122 you can listen to his original episode. We have on the show today, Michael Dickson. Michael is the VP of the partner network at Xometry and has been with the company practically since the beginning. His tenure at Xometry has spanned across multiple strategic and tactical functions and he loves helping manufacturers grow their businesses through the Xometry platform. Welcome to the show, Michael.
Michael Dickson: Great to be back. Thanks for having me again.
Jim Carr: It was September, 2017.
Michael Dickson: I know.
Jim Carr: When we were out in Fort Wayne at GT Automation.
Michael Dickson: It feels like yesterday.
Jim Carr: It does, you know, seriously. It does feel like yesterday. Thank you for reiterating that. But no, it's good to have you back. I know we've been talking a lot and I think that there's a lot of good information that we'd like to share with the Metal Working Nation today to really equip them and inspire them to do things differently in their companies.
Jason Zenger: Yeah, absolutely. And I would encourage everybody to go back to that episode 122, but for those manufacturing leaders who are not familiar with the Xometry platform, can you just give us a short summary of what Xometry is all about?
Michael Dickson: Sure, absolutely. So Xometry is the country's largest custom manufacturing on demand platform and we're headquartered both in Maryland, just outside of Washington, D.C. and we also have a new headquarters in Kentucky, which we can talk a little bit more later. So we were founded in 2014 and we've grown quickly since then and we make custom parts for over 16,000 customers now spanning CNC machining, sheet metal fabrication, 3D printing, injection molding, urethane casting, and our customers include NASA, GE, Dell, some of the biggest organizations in the world. And you know, some of those names I just mentioned, including Dell, BMW, and GE are also our customers as well as some of our investors. And we're really proud of that fact.
Michael Dickson: So, there are really three things that make the Xometry platform. First is our instant quoting engine. So customers as well as, and we'll talk a little bit about manufacturers, can come onto the site, including yourself, Jim.
Jim Carr: Right.
Michael Dickson: To get a quote. And so we will give you ... you upload your 3D CAD file and you can get instant prices, lead times. You get design feedback and place your order right there and we will get your parts back to you with the highest quality quickly.
Michael Dickson: The second is our partner network. We're a network platform, kind of like, you know, Uber and Airbnb. I think we'll talk a little bit about the MAAS model. And so, you know, a partner is made up of thousands of partners across the country and it gives us unlimited capacity, but also we have just a broad base of capabilities that we can serve our customers.
Michael Dickson: And we'll talk about ... I think we talked about the technology and how it helps us do that for our partners. There's no RF queuing or bidding, you know, we really, we present those prices and those lead times. So if you have the open machine, you can grab the work and we'll email you a PO right away and you can get to work. And you know, just kind of how we do things quickly through technology.
Michael Dickson: And the third piece is we launched in January Xometry Supply. So really to support our partners as well as customers and others. But it's an online e-commerce storefront that sells materials, tooling and supplies. So we want to do everything we can to help our partners do the jobs better and cheaper. So we created this new offering.
Jim Carr: First of all, I want to first talk about the instant quoting because that is just ... that is so robust and so innovative and MAAS, for the acronym MAAS. So let's say I've got a part. I do, and we've been talking lately with Xometry. Let's say I've got this part that I do not have capacity in my shop to do. It's due in a few weeks. I'm looking out into the shop. All my machines are running. I don't see any let up in the next few weeks and I've got a hot customer that is calling me about this job and I'm panicking. So what do I do? I just, I grab the STEP file, upload it right to the, to the portal. And in a matter of ... literally instantaneously I can get a quote back and a delivery.
Michael Dickson: That's right.
Jim Carr: A price and delivery.
Michael Dickson: Yeah. And you know, you talk about in a matter of weeks and so we can deliver parts in a matter of days as well.
Jim Carr: Right, I know that.
Michael Dickson: So, it's as simple ass you described it, Jim. You know, you upload your 3D CAD file and it can be a solid part file, a STEP file or an STL if it's for 3D printing. It's as simple as you know, you select your process material. So, if it is a machine part or 3D printing, and the system will even update as you're modifying these selections. So exactly, it'll give you a lead time, it'll give you the price, and it gives you the option. We've even expanded some of the offerings to do things like part marking as well as we've expanded our finishing offerings.
Michael Dickson: But one of the also thing we're excited about too is inspections. So you know, customer quality is one of the most important things. So gives you the option to choose. I just want to see either standard inspection or you can have dimensional reports. We even do FAI source inspection, you name it. So we really are about quality here at Xometry, so we offer that directly to customers as well. And peace of mind, right? You want to make sure that part's good. You're bringing it back to ... you're going to put you, you're going to eventually present it back to the customer..
Jim Carr: My name is ultimately is going to be on that part. So at the end of the day, you're a representative, you're an arm of my company because you're actually making the part for me. And then of course in the simplest of terms I can pay with a credit card, right?
Michael Dickson: Yep, absolutely. So-
Jim Carr: So, you make it really easy to do business.
Michael Dickson: So, exactly, and if it's a small order, maybe something simple that, yeah, you just want to check out with a credit card or it's maybe a slightly larger order that's part of a bigger work package for you. We also offer terms, so you know if that's something you're interested in, you can work with one of our account managers and we can get you set up on that as well. So you can, once you're set up for terms, you can also check out with a PO directly on the site.
Jim Carr: Okay, and what about material certs, Michael? No problem.
Michael Dickson: No problem.
Jim Carr: DFARs no problem.
Michael Dickson: No problem. Yeah, if it is an ITAR certified, or, you know, for an export control job that you need ITAR certification, all on the website. You can specify that. We will handle all those files appropriately and only make sure that there ... we work with partners that are ITAR registered in order to produce those parts.
Jim Carr: Fabulous. Fabulous. So I realized that once you upload any of those numerous CAD files that are available, when do we have to send the PDF in? Because obviously when you upload a CAD file, it doesn't show whole tolerances. It doesn't show custom threads.
Michael Dickson: Exactly.
Jim Carr: Those type of things. So at what point do we need to upload a PDF and do a little bit deeper dive into the coding process?
Michael Dickson: Sure, yeah. So anytime that you upload or, sorry, when you select either two point threads or a specific tolerance, anything that's not captured within the CAD file-
Jim Carr: Right.
Michael Dickson: The system will prompt you to add a drawing. And at that point ... that way our manufacturers know. We capture all the information in the quote itself and through the website, but then there's the company documentation to go with it, so.
Jim Carr: Right. So when you see a 3D model, do you just automatically assume everything is plus or minus-
Michael Dickson: Five.
Jim Carr: Five thousands, okay. That's what I thought. Very interesting.
Jason Zenger: So, Jim, you know, we end MakingChips with our mantra. If you're not making chips, you're not making money.
Jim Carr: Yes we do.
Jason Zenger: And you know what? If you take too long to be making those chips, you know what happens? You lose money.
Jim Carr: You lose money. There's no accountability and there's no data.
Jason Zenger: So how do we solve that?
Jim Carr: Well, I'll tell you what we're doing now that we've converted and we're using ProShop ERP. It's a Cloud-based ERP system. So all of our employees, you know, there's kiosks throughout my shop. Everyone has access to the database of the flow of work through our shop and everyone time tracks against work orders that they're on.
Jim Carr: Every week, Ryan and I, our operations manager, get together. We look, we say, "Ah, Jason, he's not at 85% ... he's not at 85% efficiency."
Jason Zenger: He's walking slow, he's taking too many smoke breaks. Must be another Jason, because I know that's not me.
Jim Carr: Well, no, I had to use you. I didn't want to throw anybody else under the bus. But at the end of the day, ProShop is great because it's hard data and numbers and information that we can look at every week and try and get that efficiency to about 85%, meaning everybody that's clocked into a work order, or clocked in, has to have 85% of time tracking against a work order. So go to ProShop ERP, set up a demo, and Paul will be happy to talk to you.
Jason Zenger: So, so let's take a little bit of a step back and talk about this whole industry in general. And I don't mean the manufacturing-
Jim Carr: Manufacturing as a service?
Jason Zenger: Yeah, I'm talking about the whole as a service industry. So like one of the things that we always hear about on the news, like, these new companies come out and they're like, "Oh, we're the Uber of this or we're the Airbnb of that." And a lot of times what they're talking about is that Uber talks about how they're the biggest, say, taxi company, but they don't own any cars, and Airbnb is the biggest lodging company, but they don't actually own any buildings or houses or anything like that. Is that essentially the type of model that you're going after where you guys want to be the largest manufacturing portal but you don't actually own any of the machines?
Michael Dickson: That is exactly the model that we built. We do have some internal manufacturing capabilities in Maryland, but our goal is to really leverage the capacity of the U.S. That's where we started as a manufacturer, but we've expanded with this network model.
Michael Dickson: So, a great example is I was actually visiting a shop here yesterday here in [Chicago land 00:00:20:20] area and this is a sheet metal fabrication shop founded in the late eighties and as they grew they started to take on different types of work and some assembly work that required some machine parts. So they decided to buy three CNC machines. They've got two mills and a lathe now and now some of that work has gone away. And so they're looking to us and they said, "Well look, we've really developed this core competency now in CNC, even though, you know, sheet metal has always been our bread and butter." But their customer base doesn't necessarily know them for this capability. You know, it's really something that they haven't advertised. It's just kind of been an auxiliary piece of their business.
Michael Dickson: So now they're leveraging our platform to take on CNC work so they don't have to go out, do the sales and marketing for those jobs. They just log to the portal and they'll be able to see it. But I would say too, you know, had we been around when they made this transition and this is the manufacturing as a service, they would not have had to buy those machines.
Michael Dickson: Exactly to your point, Jim, that you can just go to the website, you maybe you're exploring this expansion. We have lots of partners who reach out about this too. They're interested in 3D printing or other new manufacturing services and whether or not they should be offering to those customers, but at the end of the day they could and they could just leverage the capacity in those who have built those competencies over the years.
Michael Dickson: And to Jim's point, put his name on it and offer those services to his company, or, sorry, to his customers. But at the end of the day, he's not the one manufacturing the parts. He's the one sort of coordinating it for his customers.
Jim Carr: So, how does this change the manufacturing industry? Is that essentially making it more efficient? How else do you see this making the manufacturing industry different in the future?
Michael Dickson: Yeah, I think there's efficiencies and I think also ... one of the things we think about, too, is quality and making sure that the right parts get to the right partners, right? So we're leveraging the technology and we're ... the more our partners interact with us on the platform, we learn more about them, more about the parts that they would prefer to take. And so that way we can get the right parts to the right partner.
Michael Dickson: So it's, it's efficiency in the sense that hey, there's open capacity across this number of machines and then we find the right partner to do it as opposed to maybe a customer sends out some RFQs to their existing supply base, but they don't really understand the capabilities of those different suppliers.
Michael Dickson: And maybe this one just has an open machine and they go after that job and present a good price, but they don't actually know whether or not that partner's the best suited to do that job. So our system allows, sort of, creates those efficiencies and allows for a better product consistently.
Jim Carr: Here's my, my own answer. Michael might have his own, but so often the OEMs send out quote packages to us. So I get a quote package and 85 to 92% might be something that is exactly what we do at Carr Machine & Tool, but there's going to be some sheet metal fabrication. There's going to be some turning. There might even be some Swiss parts that are inside the package.
Jim Carr: Everyone wants ease of doing business nowadays. Nobody wants to split up packages or anything else, so I can take that package from my OEM, which is got 85 to 90% of precision machining, which is exactly the right fit for Carr, but that other eight to 10% might be turning, might be sheet metal fabrication, might be Swiss, might be something that we can't do.
Michael Dickson: Right, and maybe they want the whole assembly and they like the way you package it, and everything like that.
Jim Carr: Right, and I vetted out Xometry already and there are partners that I know that their work is going to be good. It's a Carr quality product. It's our partner company, it's our partner machine shop. And that's where the secret is because let me tell you, all the people that are in procurement and engineering, they want to work with somebody that's really easy to do business with-
Michael Dickson: And somebody that they trust.
Jim Carr: And something somebody that they know and trust. Exactly. People do business with people that they know and trust. But Michael, before we move on to the next thing, there was ... there's a couple of other questions I have for you. What about special finishes like electroless nickel, anodized, all the different colors of anodizing, conversion chrome, masking. You have resources for all that.
Michael Dickson: We do, exactly, and those you can even specify on the quote site itself as well. So for all the anodized, you mentioned electroless nickel, and then if you need something that's more custom or say like a specific mill spec, or I was talking to you the other day about, you know this phosphoric anodized that-
Jim Carr: Yeah, I've never heard of that.
Michael Dickson: Never heard of it, and so customer requests it. So there is a way to specify a custom finish if you don't see it in the dropdown. And then we have a team of applications engineers that can review that and sort of work with a quote and make sure that it's something that we can fulfill. And typically we can, but it may just take longer than the instant quote for us to confirm that we can do it.
Jim Carr: Gotcha. I don't know if you answered this question already to Jason, but first article inspection reports, no problem at all because you know a lot of customers require that nowadays, especially on our end. And how are they generated internally? So is your partner company fulfilling the first article inspection report or is there a generic inspection report that Xometry has? How does that work?
Michael Dickson: So I guess it's both. Our partners are vetted out and are able to fill out our inspection reports, but then we are also AS91 certified. We just got that this spring. So you know, we can do the specific AS9100 first articles, which I'm sure you're familiar with as well.
Jim Carr: Sure.
Michael Dickson: And so it can be a mix. I mean we have all those capabilities in our facility in Maryland, you know, we have a CMM and full inspection capabilities there. So if that is required we can fulfill it there.
Jim Carr: Okay.
Michael Dickson: But we also have a nice volume of partners that can do that for us as well.
Jim Carr: So let's, let's talk about the other major unit, which is the partner network, about the U.S. machine shops around the entire country that are doing business for Xometry. Where are you at with those right now? How many partner shops are you utilizing across the country?
Michael Dickson: Yeah, so we're currently at about 3,000 partners-
Jim Carr: Wow.
Michael Dickson: And they're not all making parts for us at a given time, but this is kind of our ecosystem of partners. So they're either interacting with, again, our Xometry supply site or making parts for us or ordering parts from us as well. So we have about 3,000 manufacturing partners in our ecosystem.
Jim Carr: And how are your partners vetted out, Michael? I mean, what is the process? So let's say I've never done anything for Xometry before.
Michael Dickson: Yep.
Jim Carr: And I raise my hand and say, "Hey, I'm a machine shop. We're a little slow right now. We'd like to be part of your partner network. We'd like to start making parts for you." What is the first step?
Michael Dickson: So the first step is to go to the website, which is work.xometry.com and you know, create an account with us.
Jim Carr: Work.xometry.com. Gotcha.
Michael Dickson: Yes, and so that will sort of kick off the process. You create an account and at that point our partner success will reach out and work with you to learn more about your shop and understand a little bit more about your capabilities. And then we have various steps in the process of filling out documentation and then filling out the account profile.
Michael Dickson: But then there is sort of a testing period where you do have to make a test part for us as well as there's an onboarding period where you can take on some work, but it's usually ... it's the smaller, lower value jobs. I mean, I actually wouldn't say that, but you're in sort of a trial onboarding period and once you've sort of proved yourself out with the first number of jobs, then we'll open you up to the broader network.
Jim Carr: Do those shops need to be ... have credentialing AS, ISO?
Michael Dickson: It's not required, though more than welcome, and you know, one of our biggest needs right now-
Jim Carr: It is not required though.
Michael Dickson: It's not required.
Jim Carr: Okay.
Michael Dickson: Because not all our customers require that we do, you know, our customers span from Fortune 500 companies to small, medium sized businesses that aren't necessarily requiring AS9100, but our biggest need right now, and I think, again, you've experienced this, is that the aerospace and defense industry has been rocking over these last, call it, 12, 18 months if not a little bit longer. So ITAR registered shops are the most in demand shops for us right now.
Jim Carr: Very interesting.
Jason Zenger: Michael, so I'm trying to get into the mind of your, your AI and how the software works. So essentially you upload the part, does the software analyze the part and say based on the number of holes, based on this amount of milling, this amount of turning, whatever it is, it's going to take this many hours and then you have some kind of like shop rate that you apply against that. Is that, does that sound like how it works or, or is that too simplified?
Michael Dickson: No, it's not too simplified. I mean, we certainly started off that way because as I said, we were a machine shop ourselves and how we started and so that's how we started gathering the data. But we've sort of transitioned over the last couple of years to more of a market based model. So we actually, and this kind of goes to the manufacturing as a service where we're taking, I would say yes in the front end we are doing sort of a geometric footprint of the part. So we are analyzing features from holes and material removal, things like that.
Michael Dickson: But we're mapping up against all of the data that we have from our partners. So as they interact with us and tell us, yes I can do that part or no, that price isn't right or no, that lead time's not correct or yes I can do it. We're taking all those data points and this is, you know, hundreds of thousands if not millions of data points now, as we've grown and progressed, and we've built some models that essentially will predict what the price is, and it's more of a ... it's a neural network based process, which is way over my head. If you want another technical term.
Jim Carr: It's not that easy because ... here's the first thing you have to think of. So there's always the quantity, size, tolerance, and material. So let me tell you. Something that is going to be in titanium-
Michael Dickson: And the number of operations.
Jim Carr: Well, sophistication level is always a huge thing, but a part that's in 6061 aluminum is not going to be priced the same as something as Inconel or titanium. I mean, there's a huge difference ... or 17-4 stainless steel, or 300 series stainless steel, or any high carbon pre-hardened material that's really tough to machine. I'm sure the algorithms that are in your quoting system are pretty complex.
Michael Dickson: Exactly, they're taking all of that into into account-
Jim Carr: You have to.
Michael Dickson: As well as what our partner network, what the system believes they'll be able to do it in the timeframe and for the price.
Jason Zenger: Yeah, I mean like I kind of think about this. The real estate industry kind of popped into my head. So I bought and sold a house about a year or so ago and people say, "Oh, I can't sell my house." And it's like, well you can sell your house. It just, it's a matter of what price you can sell your house at, and when you put your house on the market and it doesn't sell, well, that's the marketplace telling you that you're priced too high. Or if it sells in a day, that's the marketplace telling you that, well, you might be priced too low and I imagine that your software works in much that same way that if you put ... if it calculates a price of $10,000 and nobody is taking that, that means that it should have been priced at 12,000 or 13,000 or, or something like that. Is that ... is that come into into effect?
Michael Dickson: Yeah, that's exactly it. I mean, our head of data science says it all the time. He says the price is the price that a partner will take it for.
Jason Zenger: It's kind of like your house is worth what somebody's going to buy it for, not what you would think it is.
Michael Dickson: And that has a lot of factors. Not only is it physically the part, the material, the complexity of it, but it's also what machines are available, who's available. So there's a lot of, a lot of that's really dynamic in the algorithms and so yes it's ... there are a lot of things going on and it's really about finding the right partner to do it at the right price.
Jason Zenger: Yeah, I imagine that when the economy cools off a little bit, you're going to see more partners come on to the network and the prices are going to go down. And when the economy heats up, you might have some trouble getting people to take those jobs at the prices that you present to them. I mean this is just simple economics we're talking about here.
Michael Dickson: I was going to say, there's definitely supply and demand at work here. I mean, just this year, I mean, so January was a little bit slow and we saw a lot of partners return to the platform and that was interesting. And fortunately for us, you know the work was there. We actually, January was actually a good month for us on the sales side. And so it was a great, it was interesting to watch like it was the activity and all of that. So the models are constantly sort of learning from all this data that it's pulling in based on activity on the platform.
Jason Zenger: So many, many years ago, because I remember Jim, you and I talked about this.
Jim Carr: If you're reading my mind and you're going to ask the same question that was I was going to-
Jason Zenger: Yeah, so many, many years ago, and we've talked about this, we talked about this whole mfg.com site and you know, I know you-
Jim Carr: I'm a naysayer, man.
Jason Zenger: Yeah, I mean you talked about it, you're like reverse auction. It's not good. It's not good for the industry, it's not good for the partnership. Where do you see Xometry be... because Xometry is not a reverse auction. Where do you see Xometry being different and why is it better than a reverse auction?
Michael Dickson: I think the primary reason is that we do not charge our partners to be on the platform. So the difference there in that model was mfg.com charged the fee and it was in the thousands of dollars and then you're right, it was reverse auction. So, and they had opened it up to manufacturers across the world. And so there wasn't good sourcing, they weren't putting the right opportunities. It was kind of like open it up to everybody.
Jim Carr: The trust wasn't there.
Michael Dickson: It wasn't. So the differences, you know, we present the price, there's a way to interact with the job board. If you know, again, maybe that lead time isn't quite right for you and maybe a few more days and you are interested in the work, but you can provide that feedback. And then if, to your point, if we can't find ... it's constantly looking for the right person to do it and we may come back to you. So that's the benefit is that there's transparency there. You know that it's an order. You're not, you know ... these are orders that we've secured from our customers. So if the price is right and you can do the work, then the work is yours. As simple as that.
Jim Carr: You know what else is really cool too. I was talking to Aaron and I believe you were on the call the other day too, Michael. You know how when you're using YouTube and YouTube kind of tracks your history, knows, you know, I'm a baby boomer, so it kind of knows that I'm watching videos or whatever content back from the eighties or or Spotify, you know, Xometry will start directing quotes to you based on your history. So if I'm not touching anything, if I'm not quoting anything in Swiss, sheet metal, turning, and I'm really focusing on the high precision, high value three and four axis precision machining, Xometry will start to learn how I'm engaging with them and it'll automatically start pumping. Is that right?
Michael Dickson: No, that's exactly right.
Jim Carr: That is awesome.
Michael Dickson: So, we just launched a new feature called a recommendation score and it's exactly that. It's like a Netflix, you know when you log in and you're looking at something and the first thing you see is like right there at the top, it's like, hey, this is something we think you'd like 99% match or a 98 whatever. So we've started to do exactly that where we're highlighting based on, you know, if you've done turning work before and then we're not gonna lift milling, you know, we're not going to write a 100% recommendation score for a mill job. You know, that's just not what you've shown us that you can do. So we've seen pretty good success with that and partners are engaged, and it encourages more interaction with the platform and we're seeing that and it's, again, it's helping us find the right partners to do the right jobs.
Jason Zenger: So one of the things that I'm excited about this industry is that I feel like in the future, this industry is going to be more entrepreneurial. We had episode 182 with Brandon [Kane 00:34:27] Who's an entrepreneur in our industry. And I just see, I see this happening more and more and more where people are going to be opening up small businesses and being in manufacturing. And I see, you know, Xometry as a platform that's going to help to facilitate a lot of those startup costs for that person to get up and going.
Michael Dickson: Yeah, no, that's right. I mean I've got a ... we have many great examples of that, but one specifically I'm thinking about is there's a shop that's in our network that's in the Detroit area and you know, they built molds for ... to ... as a supplier into the automotive industry. And that's just dried up. A lot of that mold making has gone overseas, but these are phenomenal machinists, and they make just really great parts.
Michael Dickson: And so we also have, part of the way we managed the network is our partner success score. So there's transparency on how they're doing from a quality and on time delivery as well as kind of their engagement with the platform. And these guys almost have a perfect score. And so when we talk to them like, why are you guys so good? And just say that they have that history but that with their mold making, and they're very technical, but a lot of their business dried up. So they came to the Xometry platform and now they're back to growing their business again because they've leveraged the Xometry platform to do so.
Jim Carr: So lastly, you guys just raised $50 million in funding. That's pretty huge. How does that set you up for the future? Does that change your vision? Is this thing going to be way bigger than what you thought it was originally going to be?
Michael Dickson: Well, we hope so, certainly, that it's going to be way bigger than we than we originally thought, but we always thought it was ... we had potential here and that we had a good idea. So yeah, it really is allowing us to, to really invest and double down in the business, both on the software side as well as supporting our partners on the supply side and expanding all of those, those businesses. So no, the vision stays the same, which is to leverage the U.S. manufacturing capabilities.
Michael Dickson: Definitely to, I think as I mentioned before, you know, help them be more efficient and not just for work that they do for us, but for their own, and we talk about process, you know, if it's using our site to quote and price check for jobs that they're doing, maybe they're not sure. It's just a job that they haven't seen before. They think they can do it, but they were not sure they, you know, in terms of quoting.
Michael Dickson: So you can do sort of a level check there or in the supplies business. So tooling materials, you know, we're really hyper focused on making ... leveraging the capabilities of the network and also passing on to the small and medium shops that maybe don't necessarily have the scale. So we can sort of bring in all of our shops, create that scale and those benefits and then pass them all along back to them. So it's not just for our work, but it's for all the work that they do.
Jason Zenger: So Michael, this has been great and we actually have something for the Metal Working Nation.
Michael Dickson: Pretty cool.
Jason Zenger: Yeah, we created an offer code chips50, C-H-I-P-S five zero, for $50 off a $100 or more through July 15th.
Jim Carr: That's on Xometry.com.
Michael Dickson: Yeah, no, we'd love for the listeners to check us out, see what ... how ... the breadth of our offerings, and the service, and hopefully we can win some people over.
Jim Carr: And if anybody wants to connect with you on Linkedin, can they have the autonomy to do that?
Michael Dickson: Oh, absolutely.
Jim Carr: It's Michael Dixon, D-I-C-K-S-O-N. He'll be happy to answer any questions for you. Again, it's Xometry, that's X-O-M-E-T-R-Y.com and don't forget about the chips50 for $50 off your first order of $100 or more. I will tell you that I have been engaging with Xometry now for a few years and it has been an awesome experience. They're very receptive and they do get back with you and they do communicate.
Jason Zenger: Yeah, so I would just say as a takeaway for the Metal Working Nation, just try it out. You know, it doesn't hurt to try and check out the platform and use that offer code to a kind of kickoff your first experience with them.
Jim Carr: Because at the end of the day, if you're not making chips-
Jason Zenger: You're not making money. Bam.
Jim Carr: Bam.
Speaker 4: As always, thank you for listening to the MakingChips podcast. You need to increase the speed and feed of your business. If you're not elevating your manufacturing leadership, you're going to get left behind. The Metal Working Nation is committed to a new way to stay ahead of the competition. We have more content to help you make and elevate makingchips.com. Gain access to exclusive content as well as videos, blogs, show notes, and more resources designed to equip and inspire you. We'll see you next time.
Jim Carr: I did not put makeup on, no.
Jason Zenger: Are you sure?
Jim Carr: I wore my contact lenses today, so.
Jason Zenger: It looks like you-
Jim Carr: I didn't-
Jason Zenger: It looks like you have a little makeup on.
Jim Carr: No, no makeup here, no makeup here.
Jason Zenger: No powder?
Jim Carr: I know you can ... you've got a nice tan from Mexico, but no, no makeup.