Thursday, February 14, 2013

The Thrill of Ownership

Desktop 3D Printers from Stratasys
Desktop 3D Printers from Stratasys
For me, it started with Stratasys, the 3D printer company. I had been researching additive manufacturing tools for building a new product and had even visited the Stratasys headquarters to see the machines in operation. Ultimately, we selected an Objet printer for the project and our new product was not successful.

Statasys remained intriguing however.  This was a mostly unknown technology that seemed like it could change the world.  So after carefully research and consideration, I took some of our savings out of some slow growing mutual funds and purchased a portion of the company.

Since that purchase, the company has grown, added new printers, introduced new modeling materials and made several acquisitions.  As an owner, it has been thrilling to watch.

There is an important psychological difference between buying stock and purchasing part of a company, even if the actual financial transaction is exactly the same. Often, buying stocks is similar to a poker game; you try to guess what the other stock buyers are thinking and whether investor sentiment will push the stock price up. In purchasing a company, the focus is on the intrinsic value of the company, the suitability of the products for the marketplace and the skill the management team has in operating the company.

As an owner, I have a responsibility to understand the marketplace and know the strengths and weaknesses of our products compared to those of our competitors. I need to pay attention to revenues and margins.  I need to watch cash flows just like any other business owner. For me, this is both exciting and good practice for the assessments that I have to make regularly for my employer.

Since that initial investment, I have purchased a few other companies. Ownership is a lot more challenging and rewarding than following the daily fluctuations in an index fund. Instead of watching the game, you are in the game.

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