Space-age product brightens future for Laser Design

From: Yakov Horenstein (
Date: Fri Jun 26 1998 - 10:27:12 EEST

Space-age product brightens future for Laser Design // After nearly $5 million
                    in losses since 1987, profitability near

                      (Twin Cities Star-Tribune; 06/22/98)

     What we've got here, fellow techno-ninnies, is another blip in the
Youngblood Bewilderment Index, that celebrated mathematical measure of the
accelerating flow of high-tech news that increasingly perplexes Luddites
like Your Friendly Neighborhood Business Columnist.

This time (Sigh!) it's a Bloomington company called Laser Design Inc.
(LDI), which manufactures something called three-dimensional laser
digitizing systems.

I'm bothering you with these arcane details this morning because LDI has
come up with a product called the Rapid Profile Sensor, a space-age piece
of equipment that can scan highly complex, three-dimensional models and in
a matter of minutes transfer all that geometric data into the computer.

It is, in short, a key development for the process of computer-aided design
and manufacture (CAD/CAM), particularly in the high-potential arena of
high-speed electronic inspection to verify the accuracy of product
specifications from the prototype to the production stage.

Better yet, it appears that the Rapid Profile Sensor has brought LDI to the
verge of profitability after more than 10 years of struggle and $5 million
in losses.

The question for co-founders Marty Schuster, 46, and Mike Marshall, 38,
however, is what makes them think they can compete effectively in an
estimated $1.5 billion market for which a half-dozen other, larger
companies are battling. For an answer, they refer the interrogator to Don
McDowell, manager of engineering computer technologies at Motorola Inc.

McDowell said his company studied most of the handful of so-called laser
digitizing systems on the market and concluded that LDI's is "by far the
most cost-efficient available."

In fact, he thought Schuster was being unduly modest with his assertion
that "there are systems that are faster, others that are more accurate and
still others that are cheaper than ours, but none that combine all three
{factors} as well as we do."

McDowell's version: "Theirs is as fast as anything on the market, the
accuracy is pretty darned good and the price is by far the best."

Motorola buys 2 systems

The upshot: Motorola recently bought two LDI systems at a cost of $85,000
to $90,000 apiece. Motorola isn't the only well-known name on the client
list: Customers have included Xerox, Nike, Samsung, Baxter Health Care and
Callaway Golf.

In simple terms, what LDI's equipment does is scan the dimensions of a
complex geometric shape and transfer that data into a computer, where the
company's proprietary software translates the mountain of information into
easily usable form.

Since 1990, LDI has been selling a slower system that included a laser
sensor made by another company and was used in the product-design process.
But that market, which generated an average of about $1.8 million in sales
over a six-year period, was deemed too small to produce the revenues
necessary to yield a consistent profit, said Schuster, LDI's chairman and

What was needed to cross that coveted break-even line was enough speed to
make LDI's equipment useful in the larger tooling, engineering and
manufacturing market, he said.

LDI's entry in that sweepstakes, introduced late in 1996, is the new Rapid
Profile Sensor, which not only increases the speed and accuracy of the
scanning process, but is used in a system that typically sells for $50,000
to $150,000 - less than half the cost of the company's earlier models.

Given that combination of speed and cost-efficiency, the Rapid Profile
Senor was recognized in May as the technology innovation of the year by
Minnesota Technology Inc., the non-profit promoter of Minnesota
manufacturing jobs.

More important, the "exponentially larger opportunity" offered by the
inspection and verification market, as Schuster put it, gave a much needed
jump- start to sales.

Revenues, which had fallen to a five-year low of $1.2 million in 1996, more
than doubled in 1997, to $2.8 million, Schuster said. And sales in the
first half of 1998 point toward revenues of $3.3 million this year, which
promises the company's first profit.

Did not come easily

It has not come easily, however: A hardnosed cost-cutting program that
slashed manufacturing costs by 30 percent and employment by about 40
percent was necessary to bring the break-even point within reach this year.

Now Schuster is seeking $1 million in private placements to carry the
company into 1999, after which another $3 million will be required to
finance anticipated growth, he said.

Schuster, the sales and marketing expert, and Marshall, the engineering
guru, met in the mid-1980s when they were working for a software company
that specialized in CAD/CAM products.

"Whenever we did a demonstration, some moldmaker would come in with a
three-dimensional part or product and ask for CAD/CAM help in making a
mold," Schuster said.

Alas, about the only way to transfer three-dimensional data into a computer
at the time was with something called a "coordinate measuring machine,"
which required tedious manual measurements that could take three to five
days for just a small, albeit complex model.

Intent on finding a faster alternative, Schuster and Marshall raised
$500,000 in 1987 to start the company, hired a trio of engineers and began
developing a laser scanning system using a laser sensor made by CyberOptics
Corp. in Golden Valley.

The first product, which cut the time involved with scanning product
dimensions into the computer from days to four to eight hours, was shipped
in 1991 to Karsten Manufacturing for use in designing new models of its
Ping golf clubs.

It took a couple years of losses, however, to convince the partners that
the design market was too small to sustain the company.

Work on the Rapid Profile Sensor began in 1994, when LDI acquired a set of
patents from a small company in Redmond, Wash. It took nearly three years
and $1.5 million to bring that product to market.

For more information about the rp-ml, see

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