The Proto Labs Cool Idea! Award is an international competition created to assist emerging inventors with turning their concepts into reality.
It started back in 2011 as an experiment and has since reached over $850k in prizes over the last four years of operation.
No actual money is exchanged, rather services and publicity are the gain for winners of this award contest. A most recent example is Hush Technology who picked up production services from Proto valued between
$12k-$15k for their new wireless smart earphones.
23 different products have tapped Proto Labs over the years, which awards 6-8 annually with a slice of the $250k budget. An average award is around $20k-$30k, with a high score of $80k that went to Everpurse in July 2013, reflecting a majority of the products that fall into the connected device genre of tech.
“Why not create a contest to help get all these ideas into the market faster?” Program Manager Sarah Ekenberg says of the genesis. “Naturally when you’re giving away services towards something that is notoriously expenseive to produce, people are going to express interest.”
The give to get formula
Ekenberg says the entrepreneurs, upstarts and DIY hackers are a small but growing market for their quick turn molding and manufacturing business. With materials numbering in the hundreds between Proto Labs three unique services in low to mid volumes (1 – 10,000 units), it’s a more flexible and affordable route for the nascent product developer.
“It’s really a marketing program for us,” She says without hesitation, “We want to align our name with these great ideas and highlight inventors around the world. Of course we welcome winners to work with us longer term after we’ve established the relationship.”
She notes that roughly half of those winners have proceeded to engage with Proto following the award, and although the ROI isn’t exactly a science, the team is compelled to carryon into the foreseeable future. In other words, it’s working for the inventors and working for Proto — a balance to be proud of.
Most of the contests applicants come from San Francisco, followed by New York and Chicago. Ekenberg estimates that maybe 5% of applications come from their own backyard where the firm is headquartered in the Minnesota suburb of Maple Plain.
“Outside the top three, we’ve noticed no difference between Minnesota and anywhere else,” she concludes. In March 2013, low-tech toymakers Dan and Jessica Friedman earned an Award and their place as the only Minnesota winners to date.
One focus in the years ahead is on international expansion, deriving more applicants from the EU region where ideas are equally abundant and the market is ripe, but the manufacturing nuances vary country to country.
“If we were to do something uniquely favorable to one geography over another, it would change the whole dynamics of the Award competition,” Ekenberg realizes, adding “It’s something to consider.”
Long on charity, short on reinvestment
On top of the resources allocated towards the Cool Idea! Award, Ekenberg mentioned that the company donates a similar amount, around $250k a year, to various STEM related nonprofits through foundational outreach.
In the realm of corporate social responsibility (CSR), Proto’s generososity meets marketing is a standout, more than most tech companies offer. But as cool as this really is, what about taking it to the next level via corporate venture arm?
When analyzing the market from a business perspective, one of the key missing ingredients in Minnesota is the actual reinvestment and deliberate flow of capital from the growing and established tech companies into the emerging.
“It’s actually not something we’ve considered,” Ekenberg says point blank. “It would be great to partner with some specialized firms, but we want to stick to what we know and do best — the manufacturing.”
Reinvestment of capital is a cornerstone of a prosperous business community, whereas handouts act as more of crutch. There are fundamental differences between the two approaches, and as an intimate observer of this particular market relative to others — Minnesota has lots of room to grow in this aspect.
Imagine for a moment: what could happen if Proto Labs applied 10% or $50k of their charity to a real competition backed by the same money they are essentially giving away. They would certainly reap plenty of brand buzz and demonstrate the same type of support while awarding cash for equity.
Beyond Proto, perhaps some of our state’s larger tech companies would better discover new products and the people behind them before they start thinking of moving out of state for greener pastures. Those investing companies could gain diversity, hedge risk, identify top talent and achieve some arbitrage in terms of R&D spending. Maybe they don’t incorporate their investments into their strategy but do develop and nurture a portfolio that spawns sister companies.
In a realistic sense, the established corporate class could avoid becoming a thing of the past as many have in recent years. This pain may not be as acute for Proto Labs, which is experiencing record revenues, but who’s to say where things stand 5-10 years from now? Every company can benefit from expanding their pipelines and insights into what’s next while increasing their show of support for the local tech industry.
This challenge represents a timely opportunity for our tech companies to reconsider their charitable spending in a way that still accomplishes marketing objectives while simultaneously supporting the entrepreneurs by aligning respective business interests long term.
“As someone responsible for marketing and partnerships, it’s something we’re open to exploring,” Ekenberg concludes. Those reading may wish to reach out and pitch Proto on the concept and capitalize on the opportunity at stake.
Such an effort may or may not be in the cards for Proto Labs, and it’s important to remember that no one owes anything to anyone in the world of startup investing. However, a first mover in the space will be poised to reap a multitude of benefits — the least of which is increasing their chances of longevity by intimately connecting with Minnesota’s entrepreneurial movement.