May 04, 2011
Another One Bites the Dust: think3 Declares Bankruptcy
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Jeff Rowe - Managing Editor

by Jeff Rowe - Contributing Editor
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By way of a cryptic “Important Notice,” on April 14, 2011 think3 was officially declared bankrupt by a court in Bologna, Italy. Another one bites the dust, ending one of the most enigmatic sagas I have ever witnessed in the MCAD industry.

It’s demise was not that the company produced bad products. Rather, I feel it was the lack of focus and perpetual management turnover that was its ultimate undoing. No big surprise there. It had developed some very innovative technologies, features, and capabilities that included advanced surfacing and even voice commands. On the negative side, though, think3 attempted to go up against the likes of Autodesk and SolidWorks in the machine design space (with thinkdesign), and Alias in the industrial design space (with thinkiD) – and failed. Also, think3 tried to enter the PDM and other MCAD-related spaces with little or no market strategy, presence, or penetration.

think3 did actually play a prominent role in industrial design for a few years, but primarily in education that really didn’t translate into many commercial seats after graduation. Because of the UI, relative ease of use, and ability to generate surfaces, I always felt that the company would have been better served (and maybe ultimately survived) if it had stuck with the ID space. However, bigger brains prevailed, and they felt the ID market to small to focus on, and felt they were destined for bigger (and more competitive) markets. But more about that later.

Before coming the North America think3 was quite popular in Italy, central Europe, and Asia. The first time I spent time with thinkdesign (about 10-11 years ago) I distinctly remember how different and easier the UI was for design work. At the time I was impressed with how easy it was to work with both solids and surfaces in a hybrid environment.

While it was quite capable for certain types of design, it also had some problematic issues with handling large assemblies, as well as limited interoperability. Counter to what the company claimed, this latter issue prevented wide adoption by organizations using other MCAD systems.

I’d seen a lot of good people come and go from think3 over the years. After a while of witnessing the perpetual turnover, you start to see the writing on the wall. The nomadic nature of the company also didn’t help. I started following the company in the US when it was headquartered in Santa Clara, California, then moved its HQ to Cincinnati, OH, to I don’t know where from there. I was also most familiar with the company during Joe Costello’s tenure as CEO.

Before coming to think3Joe Costello was a very prominent person in the electronic design automation (EDA) industry. He was president and COO of SDA Systems from 1987–1988 and CEO of Cadence Design Systems, which became the largest EDA company under his tenure, from 1988–1997.

Joe Costello was on a mission when he arrived at think3, but then again, he always was. His assignment at think3, however, proved to be his most challenging – challenging self-proclaimed “upstart” company think3, which had approximately zero share of the mechanical CAD market, against SolidWorks, CATIA, and Pro/ENGINEER. A tall order, but Costello proclaimed he could accomplish great things in the MCAD market. His marketing skill, combined with his dramatic presence, earned him a reputation as one of the computer industry’s best salesmen. Would it work in the MCAD market?

Costello joined the company in 1998 after high-profile stints at Oracle and at Cadence Design Systems, which, thanks to his leadership climbed from its deathbed to the pinnacle of the microchip design market as a billion-dollar enterprise. Now, Costello was hoping to work the same magic with think3. Unfortunately, it never happened . . .

Back then, he said, “A year ago we scaled back our sales and telemarketing operations in North America because the sales model we implemented in 2000 simply wasn’t working,” Costello says. “Back then we thought we could create a sort of grassroots revolution, using telemarketing and our website to grab engineers, hoping to sow seats. We did manage to sell about 400 seats of thinkdesign in one quarter alone. But it was rare that we could sell two to four seats and then build that up to 50 seats. It’s no longer a bottom-up market. We found out that there’s not much chance to build the kind of scalable business we had envisioned.” This proved to be true.

Version 6.0 version of thinkdesign, released in 2000, was aimed at the industrial design market because that sector reflected the program’s strength at the time. “We decided to go after that market, but even if our grassroots revolution had worked, the industrial design market is probably only about 15% of the total MCAD market – not enough to sustain us.” True enough; it wasn’t.

By the end of October 2001 think3 had laid off most of its sales and marketing staff. The company was losing money - but only in North America. In Italy, where think3 was founded, its system of direct sales/VARs was a success. At least in relative terms.

By the summer of 2002 think3 boasted a revamped management team (again)- including former PTC senior VP Scott Rudy, heading up worldwide sales – and $10 million in additional capital from the venture firm New Enterprise Associates. The funding came on the heels of winning several major new customers. These customers came from the sector think3 was now aggressively going after – machine design – the most competitive MCAD market segment.

Specifically, think3 targeted mid-sized manufacturers, those with revenues between $50 million and $1 billion (the same market Autodesk, SolidWorks, and others were also pursuing). “This group is the largest and also the most neglected segment because the higher-end MCAD companies go after the bigger fish,” Costello says. “This mid-sized range is also the domain of 2D CAD, which plays to our strength, since thinkdesign is a 3D system embedded with a 2D core.” Was he thinking that no other competitor had thought of this strategy?

Costello explained that the latest release of thinkdesign, version 8.0, was made to order for the machine design customer. “It’s got everything you need for sheet metal, large assemblies and it’s 3D. There is a large, untouched market within this mid-sized niche – perhaps 40% or more of the mechanical design market itself. So that’s what we’re going after now.” Again, a little late to the party.

Whereas thinkdesign sold as a subscription package for $1,995 per user and ran on Windows PCs, the more established players such as Dassault Systemes, and PTC had more expensive offerings, but well-established sales teams. In addition, those programs are difficult to learn and require significant investments in extensive training whereas think3's software can be learned relatively quickly over the Web, according to Costello. The subscription model and Web-based training were innovative for the time, but to compare thinkdesign with CATIA and Pro/ENGINEER was quite a stretch.

In addition to their expense and high learning curve, those high-end rivals possess another disadvantage: lack of 2D to 3D compatibility. “think3 is built on a single system that embeds a 2D core within 3D. thinkdesign can operate in 2D mode – that’s instant payback. This is especially useful in the area of machine design, where there are so many existing legacy drawings and so much of that is used over and over.” Again, just about every competing MCAD system had these capabilities and had quite a head start in the marketplace.

According to Costello, think3 offered another advantage – an integrated Product Data Management (PDM) program called thinkteam, that captured, organized, automated, and shared engineering product information, including standard components, documents, part numbers, bills of materials and active projects. thinkteam was available as a standalone product or could be integrated into thinkdesign or into Microsoft Office. thinkteam was an example of how the company was trying to be all things to all customers and the result was a product line that became diluted with diminishing direction (and return).

In 2001, the company brought in about $15 million in revenue. The next year, Costello had a goal of earning $27 to 30 million, thanks to new accounts from such customers as U.S. Filter, Buell Motorcycle and Boeing, one of the world's biggest CAD users, primarily using CATIA. The entrée into Boeing was a good start, but the company would never disclose how many seats were actually installed.

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-- Jeff Rowe, Contributing Editor.

Review Article
  • Nainar May 05, 2011
    Reviewed by 'nainar Arumuga'
    While your articles covers chronology of events happened in the last decade or so about Think3, the focus is more on not touching anything controversial.Think3 did make more than the $15 million your quoting, but being a private company never declared it. 2009 had been a tough year and the company did go through tough times, but there existed a customer base, some of them actually software product companies. The reason Think3 went bankrupt is not because they did not have assets, but the assets were transferred to another company in dubious ways which is why the Courts of Italy have taken cognisance and reversed the decisions. The truth behind the bankruptcy will come out in the open soon. Most of the mainstream media and social media have stayed away from finding what happened, for the fear of repercussions till one blogger stood up to present the story and provided a platform for Think3 customers also to express their views unitedly. MCADCafe should provide such forums but unfortunately that was not the case but this article providing one side of the story.

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