Balanced Scorecard

To do or not to do: Stratasys considers
HP’s partnership offer
Robert F. Gallagher, Rosemond Desir and Lumina S. Albert
Only the paranoid survive and now is a good time to be paranoid […]. (Scott Crump, Founder and
CEO of Stratasys)
Introduction
Scott Crump was deep in thought that morning. This was not an easy decision to make. The
company that he and his wife, Lisa had co-founded was at a crossroads. It was 14 years since
Stratasys, a company that developed and sold 3D printers had become a publicly traded
company, raising $5.7m through its initial public offerings in late 1994. Crump who was widely
recognized as the inventor of key technology in 3D printing had always dreamed of a 3D printer
being on the desk of every engineer. Stratasys had pioneered the creation of the first 3D printers
in the industry and attracted resellers who prophesized the virtues of the technology and shared
Crump’s vision for 3D printers. Now a Fortune 50 company was at his doorstep with the potential
to make that dream come true. It was August 2008 when Hewlett-Packard (HP) approached
Stratasys with a proposal to enter into an original equipment manufacturer (OEM) agreement
whereby future 3D printers produced by Stratasys would be made for and sold exclusively
through HP. Stratasys would be required to exit any territories covered under the agreement so
as not to compete with the HP 3D printers produced through this alliance. Crump wondered if he
should recommend to his board that they partner with HP or that they continue going it alone.
From a financial standpoint, Stratasys was doing exceptionally well at the time of the offer from
HP. From 1995 through 2008, before the effects of the 2008 financial crisis, Stratasys
experienced a sales compound average growth rate (CAGR) of 21.2 percent (growing from
$10.2 to $124.5m) and a net income CAGR of 31.8 percent (growing from $0.371 to $13.615m
prior to the 2008 recession). The company had over $60m in net working capital and no
long-term debt at the end of 2008. Crump knew financially the company did not need to partner
with HP, but he loved the idea of the technology he invented becoming a standard method for
creating parts. “I always dreamed 3D printing could be as common in the office as 2D printers.
Perhaps, this is the catalyst for 3D printing to become mainstream,” he reflected, “If all goes well,
a partnership with HP could help us become a $500 million revenue company.”