The layoffs were not enough. Ponoko was booking only a few thousand dollars a month in revenue. "We'd been telling our story, but it was to the wrong kinds of people," ten Have says. He stopped doing interviews with reporters and pitching VCs. "We had this whole list of people" -- customers who had created accounts, most of whom hadn't bought anything -- "and we said, 'Right, hang on.' Let's get them excited. Let's call them up on the phone and say, 'What do you think?" Ten Have started paying attention to mentions of his company on designers' blogs. Whenever someone wrote about Ponoko, he would send an e-mail or give a call. If the blogger wrote about Ponoko again, he would send a coupon. "We'd been talking to The New York Times and venture capitalists -- you know, important people," he says. "But for us they weren't important people. The movers and shakers were the people who were using Ponoko."
Those conversations with customers led to some good ideas. Designers liked the company but were wary of the high laser cutting fees. So Ponoko offered a subscription service designed to give discounts to loyal customers. For as little as $22 a month, designers pay half the standard rates for laser cutting time and shipping. (The cost of making a Bloom Lamp fell from $60 to $39.) The result was that the company developed a reliable revenue stream -- there are now several hundred such subscribers -- and that the laser cutters got busier. From June 2008 to June 2009, revenue increased tenfold, as the average sale increased from $65 to $85, despite the 50 percent discounts.
Meanwhile, ten Have and Elley looked for partners. Last December, they began talking with Ted Hall, the founder of ShopBot, about creating a network of independent woodworkers who would use ShopBot routers to do manufacturing for Ponoko. Around the same time, they started negotiating with TechShop, an upstart chain of machine shops whose management was interested in experimenting with distributed manufacturing. "We realized that there were all these people talking about the things that we'd been thinking about for two years," ten Have says. "It was one of those 'holy shit' moments."
Earlier this year, ten Have created a website designed to recruit owners of ShopBot tools to join his manufacturing network, and he quickly signed up more than 30 woodworking businesses across the U.S. When the system goes live this fall, Ponoko will take a percentage of the transactions, and woodworkers will get access to a pool of new customers. The housing bust has been disastrous for many of ShopBot's customers, and Hall hopes that by offering his customers a way to make some extra cash, he will be able to sell more woodcutting machines.
TechShop, too, sees Ponoko as a means to increase revenue. Right now, the company gets most of its sales from selling memberships (TechShop works on the health-club model, with table saws and press drills instead of weight machines), but CEO Mark Hatch says he expects to make more money eventually by offering à-la-carte digital manufacturing services, both to walk-in customers and to customers executing designs through the Ponoko system. "Ponoko has people designing these wicked things online, and we can make them, box them, and ship them to the customers," he says. "It's a new world."
One of the most prolific Ponoko designers is a 33-year-old Canadian named Jon Cantin. He's not a professional, but over the past year he has uploaded 241 intricate designs to Ponoko's website under the handle WoodMarvels. There are bird feeders, birdhouses, toy dinosaurs, business card holders, and a toy castle that takes up 9 square feet and sells for $250. Cantin lives in South Korea right now, but he tries to go to a new country every three months, paying his bills by teaching English and selling wooden toys on Ponoko.
Cantin started selling the toys after reading a blog post about Ponoko. "I'd always wanted to be in woodworking," he says. "Since I can't bring a wood shop and a bunch of plywood with me around the world, this is the closest thing." (To make sure his designs work, Cantin has Ponoko ship them to his tester -- an 11-year-old nephew back home in Ontario.) His sales have tripled this year, but he admits that he still doesn't sell many items -- "When the economy is in the garbage, people don't want to pay hundreds of dollars for a wooden castle," he says. But Cantin is quick to add that immediate sales are not the point. He's trying to assemble a massive inventory of wooden designs and believes that business will pick up as Ponoko opens additional manufacturing hubs and as shipping costs fall.
To be sure, there are designers making money with the service. In July, a photo frame created on Ponoko by a British designer named Chris Jackson landed on the shelves of some Urban Outfitters stores, and other designs have made it into boutiques in the U.S. and Asia. A start-up called Nervous System pulled in $25,000 in its first year in business selling necklaces and pendants made with Ponoko. "When we started, it was hard to find manufacturers," says co-founder Jesse Louis-Rosenberg, who says that most of the companies that he talked to required a minimum payment for every design. "Ponoko is great to work with. They're flexible, they're easy, and they're cheap."
Back in Wellington, ten Have confesses that he hasn't made anything for himself in a long time. "I remember right when we started the company, I made a circle that said End-to-End Test," he says. "But other than that it's kind of become a blur."
In fact, though ten Have has spent hundreds of hours in front of a laser cutter, he says he rarely has time to think about what people are making. When he runs the machine, he thinks about getting the cutting done, not what's being cut.
As we look at a piece of white acrylic that has been spit off the laser cutter, I ask him what he thinks it is. There are two mysterious trapezoidal shapes waiting to be popped out of a square piece of plastic.
"No idea," he says with quick certainty. "You give people this tool, and it's like, 'Be creative!' Sometimes I know what they're making, and other times it's mystifying."
He thinks for a second, and then adds, "But that's part of the pleasure."
Max Chafkin is Inc.'s senior writer.
