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For Sullivan, 3D is next big thing

April 27, 2016

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Source3 CEO and founder Patrick Sullivan at the company’s offices in Midtown Manhattan.
PHOTO: PETER MCDERMOTT
 

 

By Peter McDermott

[email protected]

According to one perspective, Patrick Sullivan is at the coalface of the new industrial revolution.

The alternative view is cautious about such claims; nonetheless, most observers would agree that if past performance is the judge, then the only way is up for the Bronx-born son of immigrants.

So far, according to some estimates, the companies Sullivan has built and managed have generated billions of dollars in revenue.

The entrepreneur’s last venture, RightsFlow, was acquired by Google in 2011. He and several other “Googlers” parted company with that tech giant in 2014 to form Source3, which is now applying the same business model that made RightsFlow a hot commodity.

Source3 is involved with the brave new world of digital manufacturing. To tell that story, one might begin with a Xerox copier.

“Instead of prints of paper,” Sullivan said. “You get prints of goods.”

And, instead of in a factory in Chicago or in China, it’s done in one locally, or at a nearby UPS or Kinko’s, or even at home.

“Although it is still a relatively young technology,” a writer for the Economist commented in 2012, “most people probably already own something that was made with the help of a 3D printer. It might be a pair of shoes, printed in solid form as a design prototype before being produced in bulk. It could be a hearing aid, individually tailored to the shape of the user’s ear. Or it could be a piece of jewelry, cast from a mold made by a 3D printer or produced directly using a growing number of printable materials.”

Sullivan’s RightsFlow was a technology-enabled licensing and royalty service provider for artists, record labels, distributors, and online music services in the YouTube, iTunes and Spotify era.

“At the time of the acquisition, we were licensing around 28 million sound recordings, which meant billions of transactions monthly,” he said. “So there was a lot of data moving and our systems were able to map that to the copyright owners and make payments and checks to them.”

But as part of Google, RightsFlow was integral to YouTube’s music monetization, allowing for a substantial expansion of scale.

RightsFlow “solved the pain and challenge of licensing” for YouTube, and now Source3 is planning to do the same in the world of 3D printing.

Investor Bob Greene of Contour Venture Partners has declared himself a “big fan” of Source3, which he said is a “really terrific” company.

Of Sullivan, Greene said, “He’s a good strategist and a forward thinker. He has intelligence, charisma and leadership abilities.”

Source3 recently announced a licensing agreement with a very high-profile institution, the U.S. Army, to allow 3D-printed personalized ornaments for service members, family and friends.

“They’re innovators,” Sullivan said of the army.

Likewise, the world’s tech giants as well as many leading investors are on board with 3D printing. The Source3 CEO believes the challenge now is to convince more brands and copyright holders that this is the way the world is going, that the technology will change their business and, as happened with RightsFlow, “show them where the money and the value comes from.”

Sullivan is a much in-demand business speaker, including for his alma mater New York University and Google. And he’s a serial entrepreneur involved with a number of startups, including in the role of investor with ROAM and RentHackr and as founder of VanHam Ventures.

“Patrick is a very experienced entrepreneur. In our business, that’s a big plus,” Greene said.

“He’s enjoyable to be with,” he added, “and all other things being equal, that helps.”

 

Bronx beginnings

Whichever of his projects he’s talking about, Sullivan exudes enthusiasm.

“I was born hustling,” he said, with a laugh. “I took a lemonade stand seriously. I took cash on both sides of the street, both corners,” the Source3 founder and CEO remembered. “I’d have a team of people selling lemonade and we’d take the money and go celebrate.”

Next came a cleaning job and washing windows, and, by age 13, he was working in a beer distributor’s.

Sullivan believes he inherited his grandfather’s entrepreneurial gene. Frank Donagher owned a shop and pub in Ballyshannon, Co. Donegal.

His discipline, though, he attributes mainly to his father, Patrick J. Sullivan, a native of Castletownbere, Co. Cork. The former building superintendent and his wife Angela Sullivan still live in the Bronx, where they raised their three sons.

“I was always doing my own thing since I was younger, and trying to figure things out and make my way,” said Patrick Sullivan Jr., who lives in Manhattan with his wife Chastity and their 5-year-old twin boys.

“Then in 1997, I got a scholarship – a pretty significant scholarship, a teaching fellowship,” he said.

He was a conferred with a Master’s in Music Business at NYU and taught courses on the music industry through 2000 and, did the same as an adjunct professor at Hunter College from 2003 through 2010.

His break in the corporate world came in 1999 when he was hired as a business analyst for Harry Fox Agency.

“Then my career took off,” he recalled.

Sullivan considers himself fortunate to have been with companies – Harry Fox Agency, the Orchard, eMusic and the National Music Publishers’ Association – that he could learn from and also enjoy.

“I always say, ‘I never worked a day in my life,’” he said.

Sullivan went for broke just as the country and the world headed for recession. He used his personal savings and zero-interest credit cards to help start RightsFlow and to keep it going in the initial stages.

He told the story at a recent Midtown Manhattan event hosted by Silley Circuits, a networking group for tech startups. He and fellow guest speaker John Mack, advisor and former CEO of Morgan Stanley, offered guidance and took questions from aspiring young entrepreneurs. Sullivan told one audience member that it wasn’t the business idea that was important so much as its execution.

“The best ideas are often the simplest,” Sullivan told the Echo a few days later. “I’ve learned in time that execution is critical in business, by having a team of people, and a process in place around the team of people to enable the technology to execute the business.”

He added: “The key to being an entrepreneur is perseverance, not being the smartest person, [but] being able to adapt to change, not sticking to one strategy.

“Surrounding yourself with people who are smarter than you, so you can bounce ideas off them,” he added.’

“Maybe this isn’t working, move to the next idea, until we get the strategy right,” Sullivan said.

His entrepreneur’s checklist is: “1. Identify a problem. 2. Create some technology that can solve the problem. 3. Figure out how you can make money and 4. And figure out the total addressable market.”

If the total addressable market is just a few of your friends, then it’s a not a good business proposition, he suggested.

 

Attracting talent

When Google was taking over RightsFlow, it had 52 people on its acquisition team. Sullivan was impressed and continued to be in his three years there as strategic partner development manager. “They’re smart and they were very good to me,” he said.

He brought with him six Google staffers and recently recruited a seventh.

“His ability to attract talented people from other attractive opportunities is a very positive sign,” Contour Venture Partners’ Greene said.

Sullivan had been looking for the next big thing as an entrepreneur. He found it in an “industrial revolution, not only in information exchange, but [also] production and manufacturing.”

At the most basic level, it is “digital inventory management,” which cuts back on shelf space.

“We take that product that would go on the shelves, and just give you the design print rights,” Sullivan said, “to enable people to access it and print it, so you don’t need to put it on the shelves you don’t need to house the inventory.”

The Bronx native added: “Just imagine a world where you’re sending a file to print. You can send a part of say an Anderson window part that broke or a knob that broke on your General Electric stove or something that broke on your Samsung TV. You know that you can’t get it, or if you did you have to go through the manufacturer. There’s no simple way to get it locally.

“So what if you could search a database of designs through Source3 or a similar company,” he explained, “and you say ‘that’s the design, that’s the part’ and you send it to your local UPS or Kinko’s  and within an hour it’s printed and manufactured and you just go down to pay your $5 and you have that part.”

The replacement side of the equation will ultimately involve much cheaper prosthetics for limbs. But the other that intrigues Sullivan is the creative.

“Mickey Mouse, Batman, Star Wars, Coca Cola. You just can’t print that. You need the rights to it,” he said. “The country is based on copyright protection. If there was no Disney protection we wouldn’t see those great movies.”

But when licensing issues are resolved, then there will be great potential for personalized and customized products.

“It’s a lot like what YouTube did with video creators – it enabled people to become creative with intellectual property,” he said, “Or their own [work] becomes intellectual property.

“It enables people to become makers and creators,” Sullivan said.

For a moment, he reflected about things that were unimaginable 10 or 12 years ago that are now commonplace – what’s viewable on phones, for example.

“It’s Moore’s Law,” he said. “It doubles every two years.”

In his Steve Jobs biography, Walter Isaacson explains the origin of the concept: “In 1965, Gordon Moore drew a graph of speed of integrated circuits, based on the number of transistors that could be placed on a chip, and showed that it doubled about every two years.”

Isaacson continues: “Moore’s Law has held generally true to this day, and its reliable projection of performance to price allowed two generations of young entrepreneurs, including Steve Jobs and Bill Gates, to create cost projections for their forward-leaning products.”

The “wow” factor alone, just to be part of it, makes it exciting for Sullivan to be involved with something like 3D printing and technological change generally.

“The risk for the investor is: when will the consumer use it,” he said.

But it’s certainly not an “if” anymore.

This article was written as part of the Business Reporting Fellowship of the Center for Community and Ethnic Media and funded by a grant from News Corp. 

 

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