The CAD Insider

Onshape Not Making a Profit Is Crazy. Like a Fox

For the first few years of Amazon.com’s existence, it mostly sold books. Although it was successful in muscling into the book market, putting regular bookstores out of business, Americans were at the same time losing interest in reading books. Amazon was suffering staggering losses. By any conventional rules of business focusing on profit, the collapse of online company was inevitable. How could Jeff Bezos, Amazon CEO, keep his job after squandering so much investor money?

Bezos was not interested in making a profit. Not much. Not right away. Was he crazy? By his reckoning, Amazon was not just going to sell books. Books were the gateway drug. While selling books, Amazon worked out all the kinks in online selling and delivery. From buying books to buying videos, games, electronics, clothes… What can’t they sell?

Amazon was all about changing the way America shopped. A nation new to online shopping, once afraid to give credit card information online, got to trust Amazon. Today, it makes billions of dollars and is projected to have half of all online retail sales in 2017. Amazon has even started entering people’s houses to leave packages.

Jeff Bezos, Amazon CEO, left, kept making his online store bigger and more convenient until America realized Amazon was the way to shop. Jon Hirschtick, Onshape CEO, keeps making Onshape more capable while he waits for CAD users to realize that CAD, too, can be online and more convenient. (Images courtesy of their Twitter pages.)

In our business, Amazon has a parallel in Onshape. Here was this CAD program you could use just by setting up a free account. There wasn’t even anything to download. You could work with others, share and collaborate by sending someone a URL. It all worked over the Internet and on any mobile device. It was fast enough, certainly faster than you expected from a program operating over the air instead of a CPU and local hard drive. Sure, it couldn’t do everything your old workhorse of a CAD program could do, but you’d keep it around as a companion CAD program. It was cute how you could show off your work on an iPhone. How cool is that, kids?

Over time, Onshape, the cute and easy CAD program, was becoming more powerful. Every three weeks new features and capabilities were introduced. Surprise, you could do real work on it. Maybe parking your models and sharing them with this cloud business wasn’t so bad after all. At times it proved to be downright handy. Instead of working from the office, you could work anywhere. Wherever you were, there was your model–the latest one. How convenient.

“For three quarters of our users, Onshape is the primary CAD system,” said Jon Hirschtick, Onshape CEO.

So, it’s happening. CAD user habits are changing, just like shoppers’ habits. A user base once afraid of the Internet who fretted about files being in the cloud and getting into the wrong hands, and were convinced the speed and power they needed was only possible with a hulking workstation and their CAD program, the last bastion of ancient software practices—locked in the office, expensive, hard to teach, tough to maintain—while everything else they used was an app on their smartphone, have begun to embrace Onshape.

Damn. Maybe it was never about being a “companion” CAD program happy to coexist in the shadow of workhorses. While engineers got more used to working online and with online tools, they were only going to eventually progress to expect the same of their CAD programs.

Hirschtick is flattered at being compared to Bezos, now the richest person in the world, but he shrugs it off. Maybe changing the habits of engineers doesn’t compare to changing how we shop. But when you are telling the grand kids about the good old days, when you used Microsoft Windows, workstations sat on desks, every year you had to shut down while the IT guys installed the upgrades and you had to pay thousands of dollars for your design software... you can think of Hirschtick.

Facing the Storm as Autodesk Stock Plunges

Autodesk’s stock looks like it fell off the edge. Share prices were down 20% this morning. This after the recent Q3 announcement that the company lost $120 million.

You’ll be feeling bad if you are invested in Autodesk. You’ll be feeling worse if you were one of the 1150 Autodeskers being laid off. They were told last week.

One of them tries to put a brave face. She’s doing fine, she says. She is lifting her spirits with a friend over a salad at a trendy Hayes St. eatery in San Francsico. “But did they have to do it right before Christmas?”

Captain Andrew at the Wheel

The third quarter of FY2018 was like many before it. It was the 10th straight quarter of losses for Autodesk after their dramatic change of business model, from perpetual to term-licensing. But for some reason (was it the layoff?), it triggered the storm.

In the fierceness of a storm, it is hard to keep in mind that calmer waters, a better world, awaits on the other side.

I imagine Carl Bass, CEO of Autodesk until June of this year, hearing Andrew Anagnost’s calls to turn the ship this way or that, finally saying here “You take the wheel’ and stepping aside.

Upon taking the wheel as the new CEO, Andrew has sailed full into the storm. Resolute at the helm, he is clear in his direction. There may be some damage, but the path to take is clear. There is no time to waste, no sugar with the medicine. Users have to wake up and face the storm. Resellers, too. Employees who enjoyed jobs chasing dreams, who forgot their mission, those who grumble on the new direction… over the side they go.

Through the ship is being battered, it hasn’t sprung a leak. The user base is still the biggest paying CAD userbase in the world. Some of the users may be grumbling (they always do) but there is no indication of becoming a mass migration. Autodesk applications are still gold, the currency of the industries they serve, tried and true. User data is safe. The applications keep getting better and no other CAD company has been shown more ability to keep up with fast moving technology. Users understand that Autodesk will be there for them, supplying current needs and needs they have yet to realize. Try as they might, no company has been able to erode Autodesk’s market dominance in a significant way. The foreign firms that have long claimed they can do the same for less are plucking the few users who have jumped off the ship, mad they no longer had a cabin in perpetuity. Bigger CAD firms that have had to realize they can’t lure away Autodesk users, and can only, at best, grow their business alongside.