The Makers movement is here to stay. As I chronicled in an earlier article, several factors have enabled this trend to approach a major inflection point and rapidly approach a mass-market audience, much like how the transition from Apple's (Nasdaq: AAPL ) relatively niche Apple 2 brought about the Macintosh, which helped usher personal computing to the mass market.
I recently had the opportunity to sit down with a major proponent of the Makers movement, Chris Anderson, editor-in-chief of Wired magazine. He isn't only a long time authority on and observer of some of the most transformative trends in technology (and a best-selling author several times over, to boot), but he also knows a thing or two about the Makers movement. He's founded two companies that embrace this trend: 3D Robotics and DIY Drones. He plans one day to quit his day job at Wired to assume the CEO role at the latter.
In my last article, Chris explained the particulars of the Makers movement -- the "what" and "why now" questions for our readers. However, the "who" question matters just as much to us Foolish investors. During our conversation at Wired magazine and the Marriott's Culturazzi event at the Union Square Marriott in San Francisco, Chris specifically mentioned two stocks he thinks have the potential to disrupt and tap into the massive growth this movement promises.
... from an investment strategy, you're asking a winners and losers questions. Obviously the public markets are very limited. There are two companies that are public that I've mentioned as winners. Autodesk (Nasdaq: ADSK ) is by far my favorite pick on this one. They created ... an extremely expensive set of professional design tools like AutoCAD, and that's been the core of their business, selling $5000 licenses and things like that. But under their CEO Carl Bass they're pivoting toward the Maker movement. They're recognizing that their new market is going to be the consumer, everyday people rather than just serious professional. ...
... And they've released a series of free apps and programs that all fall under the name of 123D Catch, which is a 3-D scanning app that comes on your iPad or iPhone, where you use the camera and it's just [a product] where you take pictures and upload them to the cloud that you can turn them into a polygon that you can then print. They have 123D Design, which is a CAD program any child can use. It does things for laser printing and other applications. So that's one company that's doing things beautifully. ...
... 123Design is available on PC, Mac, iPad, and the Web. And it turns out it has different features for each one, so I figured that out. ...
... The other company I mentioned is 3D Systems (NYSE: DDD ) ... And those are two companies that part of what we call "Big Make," which are sort of these industrial giants that are assembling a vertical chain that goes from design tools to hardware to even services that let you send your designs to the cloud and have them create something for you. So these "make chains," those are two of them, and those are the only public ones. There are some other private ones, Dessault out of France.
However, in assessing the companies this trend will likely disrupt, Chris gave a rather unexpected answer.
But for losers, if you'd have asked me, if this were 1995 and the web was taking off and you'd said who were the winners and who were the losers, I would have probably said, "Oh, traditional media is going to die." And I would have been mostly wrong. And obviously newspapers, especially some regional newspapers, are struggling but the main newspapers are not. Television's fine. Google's (Nasdaq: GOOG ) YouTube didn't kill Hollywood. And it created an entirely new class of media of which you [The Motley Fool] are one. So it basically grows the pie.
So are there clear winners from this massive trend? Absolutely. However the same might not be the case for those on the losing end of the rise of such things as open-source hardware and 3-D printing. At 31.5 times its earnings and with an average expected long-term growth rate of nearly 13%, Autodesk appears substantially cheaper than 3D Systems. Of course, 3D Systems has scorched the market this year, gaining well over 200% so far in 2012. However, at 63.3 times its most recent earnings, it's a stock that's priced for perfection.
Make sure to check back for my next installation of my conversation with Chris Anderson, in which we discuss other investment themes in tech where he sees opportunity.