Chris Anderson on Makers and Manufacturing
Dec 10 2012

Chris Anderson, author of Makers: The New Industrial Revolution, talks with EconTalk host Russ Roberts about his new book--the story of how technology is transforming the manufacturing business. Anderson argues that the plummeting prices of 3D printers and other tabletop design and manufacturing tools allows for individuals to enter manufacturing and for manufacturing to become customized in a way that was unimaginable until recently. Anderson explores how social networking interacts with this technology to create a new world of crowd-sourced design and production.

Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Dec 10 2012 at 10:11am

Ugh, Anderson can’t put three sentences together without dropping eye-rollingly vapid technojargon. He’d get his ideas across better if he dropped the Wired style sheet and talked like a normal human being.

Brad Reali
Dec 10 2012 at 1:08pm

@ Drobviousso

What is the difference from “techno jargon” vs all the “econo-jargon?” that is used almost ever podcast? The “normal human being” does not know what econometrics is or does. Same coin, different side.

I did like the idea that his kids would not have to have the skill to use the tech, only the idea. I rather like the thought that people don’t have to waste their time on learning new things to implement the idea, but instead can keep innovating.

Dec 10 2012 at 2:37pm

Another terrific podcast, and a useful reminder that while our world is full of risks, technological progress is an inexorable force humming along in the background.

Brad Hutchings
Dec 10 2012 at 2:49pm

The discussion of the Pebble smart watch was interesting. By far, the best smart watch platform to appear over the past year and a half was WIMM, with their WIMM One. They were selling it for $200 on Amazon, it ran a scaled down Android, and you could write apps for it the same way you write Android apps. I ported a procrastinator clock I’d written for Android phones to the watch in a long evening over a few glasses of wine. I then took spare time over a couple of weeks and made a Christmas countdown theme watchface. The platform was very accessible.

Unfortunately, I feel that WIMM, well-funded by Foxconn, ran into the buzzsaw of unrealized hype from the Pebble and various other crowd-source attempts. Developers felt that a completely open platform, yet to be delivered and now late, was better than a very open platform that was shipping and affordable. WIMM got acquired or something this summer, and is no longer selling its smart watch module to the public.

I’m all for open platforms and crowd-sourcing, but right now, we just don’t have a good understanding of what these models will deliver, and when more conventional funding and development models might still yield more desirable products.

Dec 11 2012 at 10:27am

Drobviusso, it’s not so much the technojargon as the frequent use of the phrases ‘kind of’ and ‘sort of’ as in:
And we kind of constructed a Lego autopilot. And we put it in the plane. And it kind of flew. And today that Lego drone, or Lego unmanned aerial vehicle (UAV) is actually in the Lego museum in Billund, Denmark, as the world’s first UAV. The kids lost interest like 10 minutes later and I went down the rabbit hole. And just sort of said: Well, if I can do this, there’s something fascinating going on here.

Steve Sedio
Dec 11 2012 at 11:54am

The key point to this podcast is the huge reduction development time and equipment cost, thus start up costs, resulting in significantly reduced risk.

3D printing allows rapid prototyping, and low cost, single part fabrication for validation.

MEMs components combined with “hobbyist” grade development tools, allowed Chris to build a drone, easily programmed for customer demand (he may not like the term mass customization, but in deed that is what he has).

He found a need for low cost drones, and filled it.

He was able to grow his business because automation, being available in a wide range of steps, allowed cost savings at many stages, not just at large volume.

Risk, like interest rates, determine when a business is viable. Chris took a path with little risk, he was profitable even at low volume (and more profitable as he reaches material price breaks and lower equipment thru-put costs).

Technology makes that path is available for many. In 2003, my son became the high speed internet provider in our rural community because licence free radio’s were available. Better equipment, at 15% of the cost is available today.

I see Chris’s story becoming more frequent in the future.

In 100 years or less, we will own a product like a “replicator” from Star Trek, where the individual can build anything they want (including another replicator). Obsurd? You can already buy 3D printer products – buy, download and run the program, and you get a product.

Mort Dubois
Dec 11 2012 at 7:44pm

This was interesting, but I think that calling it a “New Industrial Revolution” is absurd – something like “A New Phenomenon with Some Interesting Implications” would be more like it. As one who owns and runs a factory producing real products, I find that Andersons’s idea that widespread 3D printers will make everyone a manufacturer is misguided, and doesn’t take into account what manufacturers are actually doing. To produce a commercially viable product, someone must perform these functions: design it, test it, design the manufacturing steps required to produce it, produce it, communicate its availability to potential customers, complete a transaction with those customers, deliver the item to the customers, provide warranty service when things go wrong, and administer all of these process and the people who perform them. Crowdsourcing and 3D printing are alternate means of performing the design and fabrication function, and might have some effect on the logistics function, but it’s not at all clear to me that they are superior to our current methods for any but the simplest products. More thoughts:

• Manufacturing can be divided into two classes. First there is the fundamental transformation of natural materials into more useful forms (for instance, turning iron ore into steel) and second there is the assembly of pre made components into more complex assemblies (like the Lego kits that Anderson mentions, or his drones.) 3D printing won’t have much effect on the first class, and that’s a very large proportion of all manufacturing. And it can only have a limited effect on the second class. 3D printing cannot replace all other fabrication methods, and to laud it as transformational doesn’t take into account products which rely upon materials which can’t be fed through an nozzle, or products which need to be assembled using complex processes (gluing, welding) or products which need polishing or finishing to bring them to an appearance that is appealing to customers.

• It’s hard to see how items of any complexity could be designed and built. Russ nailed it with his question about customizing a refrigerator, or car. Crowdsourcing and 3D printing do not solve that problem. Modern manufactured goods are incredibly sophisticated, and rely upon highly developed materials and processes that produce them. Crowdsourced design will have a very hard time catching up in most cases.

• In real life, there’s a valuable feedback loop established when the designers, customers, and production managers are in close and constant contact, so that the designer can understand the true nature of whatever is being produced. This loop becomes more important as the product becomes more complex. There are aspects of product design that can only be learned on the factory floor, and other aspects that can only be learned by constant interactions with users over an extended period of time. Traditional industrial organization provides those loops, and we have achieved manufacturing miracles as a result.

• It’s hard for me to see why decoupling design and skill are likely to lead to manufacturing advances. There’s a good reason why we don’t have lots of titanium coffee cups.

• It seems to me that crowd sourcing design might have the same effect on designers that the internet has had on newspaper reporters – you get more news, and there is greater diversity, but the quality goes down and the need for curators becomes more important. It remains to be seen what happens to product design when designers don’t have a financial stake in the outcome. Maybe we will be blessed with the new classes of objects that Anderson predicts, and maybe we will get to experience our own version of Mao’s Great Leap Forward – a factory in every back yard that doesn’t actually produce much of value.

If we are looking for historical precedents for 3D printers, I think the example of the desktop printer is instructive It has given us new capabilities, but who looks forward to printing these days? I’m amazed if it actually works. Most of us use it, but we hardly take pride in its output, considered as physical objects. To what extent has the widespread adoption of this device made us better authors, graphic designers, or publishers?

As always, a provocative podcast. Thank you!

Dec 11 2012 at 9:16pm

“Yes. So, I’m a huge fan of Kickstarter. I am not, I would say, a fan of the equity-based model of crowd funding, where rather than pre-order a product you are actually investing in a company. I’m not saying it’s not going to work. It just feels fraught and the potential for fraud is much higher than it is with Kickstarter.”

I would add that it also frees the entrepreneur to launch multiple product lines at once and be able to shift between lines of production if necessary. This is a better option than being accountable to shareholders when the business’s health may require them to make dramatic changes (e.g. a shareholder may object to your change in the product line because he “bought stock in an X company, not a Y company!”).

Justin P
Dec 14 2012 at 11:43am

Pretty interesting podcast. I think the biggest bang for the buck will be for the future generation. I don’t see any second industrial revolution but just a good learning tool for kids.
As for crowdsource funding…I remain skeptical. Wisdom of the crowds is still up in the air. It would be interesting to follow that Pebble watch and see how it actually fares rather that what people think it could be.

Dec 15 2012 at 10:12am

“This is a better option than being accountable to shareholders when the business’s health may require them to make dramatic changes” -Rick

I’m guessing most such investments will be on the order of <$100 and most people will view the investment about how they view dropping $100 on lottery tickets, so I doubt shareholders will have enough at stake to hold someone too accountable. I also wouldn't underestimate the emergent order of what folks might be investing in. Paul Graham, of Y Combinator, said on this very podcast a while ago that he places as much, if not more, emphasis on investing in the person and their adaptability and persistence because he understands that the product that eventually hits may not be the product they started out with. I think it is very possible that crowd-source investors would quickly evolve avenues to do the very same.

Dec 15 2012 at 1:24pm

It is hard to understand 3D printing. If you need to make prototypes and models, it may be a big help, but it also may require lots of practice and time to get right.

I don’t expect very many people to have this technology available to them. The home PC and inkjet printer were able to replace typewriters, newspapers, letters, games, music, and movies – everyday items. Yet if someone literally gave me a 3D printer, I wouldn’t have any idea what to do with it, let alone be able to implement it into a business plan. It is so nice to hear that schools and kids may have access, but in my experience the education system can’t keep up.

It seems claims of a “revolution” that reflect the PC/internet revolution are made with the same frequency that claims of a “bubble” in another financial market are made. Recency bias applies; we have been through a series of rapid changes of great significance, and this is very rare.

But if there were still a room full of artists making new episodes of Gumby out of clay, I suspect that 3D printers would indeed transform the room: perhaps half would be laid off and the other half would be hunched over a computer monitor.

Dec 16 2012 at 9:12pm

[sorry for commenting then disappearing. Had the flu]

The problem isn’t the technojargon. The problem is the eye-rollingly vapid technojargon.

I’ll just grab one example

It’s basically a little computer that interfaces very easily with the outside world sensors and servos and things like that. It’s called ‘physical computing.’

No, it is not. It is only called ‘physical computing’ by a very small sliver of people who think it’s a new idea that hasn’t been around for a century. People who do this kind of thing seriously call it sensing and control. Wired does some good reporting from time to time, but it and it’s writers are too caught up in their juvenile infatuation with a world that doesn’t exist outside of William Gibson’s head.

Dec 19 2012 at 4:42am

This podcast reminds me of a ted talk i heard a few months ago about arduino and their application

Jacoline Loewen
Dec 24 2012 at 9:34am

Anderson gave a powerful description of how mucking around leads to greater things. Terrific podcast about doing what interests you and taking risks to create a business. The partnership story is an example if serendipity that turns into smart strategy. Good to hear about the choice of China and then Mexico.
Russ, you always ask the best questions.
It would be interesting to do a podcast in crowd-funding.

David R
Jan 4 2013 at 10:46am

Russ- interesting chat, but where’s the Econ??

How about:

– Chris, what is fundamentally different between this and, say, the machine manufacture of nails which allowed people to design and build more customised houses in the 19th C?, with a boom in the sale of house designs which could be customized by the user? And why is it that mass produced housing still won out (Check out down town Palo Alto ‘Eichler’s’ for evidence)?
– Chris, isn’t all this stuff just the product of mass production of components, with ‘Moore’s Law’ primarily being driven by the mass production of larger and larger higher quality chips in bigger and bigger (and more expensive) high capital factories? In the scheme of things aren’t you just a larger scale tinkerer?
– Henry Ford started in a garage, and produced three models within three years (not yet the Model T), so what’s so fast about your Drone factory? Henry’s first innovation was to assemble from other people’s manufactured parts (sounds familiar)… but the economics of mass production (copied from the Chicago meat dis-assembly factories) proved too attractive, and then he full integrated his supply chain backwards in the direction of Just in Time (ore to steel to parts to cars… all Model T). Modern supply chains are still backward integrated to try to achieve JIT- but communications makes them specialised (Coate?)
– Chris, where’s the evidence that variety is really valuable vs low cost mass production of features not available?- what share of the Smartphone market is the iPhone?, what share of the online search market is Google?- both benefit from mass production economics (of server farms, servers, touch screens, chip sets etc.)
– Chris, is globalisation really about cheap labour?, Chinese labour was cheap before 1970 but surely what changed the world was literacy (before openness, and after containerisation and communications)- just as it did for Henry Ford, you can’t run a factory with folk who can’t read instructions (which is why Silicon Valley has had factories whose main language was Vietnamese, to accommodate the workforce). Wont the ‘next wave’ of globalisation will be about the next layer of education- degreed engineers, computer scientists etc. but still price matters.

(BTW: In the future factories will comprise one man, a dog and a Makerbot- the man is there to feed the dog and the dog is there to bite the man if he tries to touch the Makerbot -no, its not my original quote).

More econ, less chat, please Russ

About this week's guest: About ideas and people mentioned in this podcast:

Podcast Episode Highlights
0:33Intro. [Recording date: December 4, 2012.] Russ: We're going to talk about your new book, Makers, and the essence of this book is that desktop, or maybe tabletop, manufacturing has the potential to change manufacturing the way desktop publishing has changed the printing and publishing business. Is that a fair summary? Guest: Yeah. It's certainly that sort of democratization trend that's driving it. I think of it as more than just desktop publishing. That certainly is a good analogy, but this is potentially bigger. The personal computer put the word 'personal' in front of an existing technology--previously had been industrial and mainframe. Democratized it and gave us all the power tool. Then the web did the same thing for communications and publishing and broadcast. And now a series of not just desktop manufacturing tools, like 3-Dimensional [3D] printers, but also design tools. Sort of analogous to the desktop publishing software is Computer Assisted Design [CAD] software, that now is cheap and easy and widespread. And then finally the notion of cloud manufacturing. In the same way that the cloud has given us all access to industrial grade computer facilities--thank you, Google--industrial grade manufacturing is equally a click away. So, those three things together add up to a democratization of manufacturing that could have, I think, potentially bigger effects than the computer democratization did. Russ: So, talk about what that technology is like for a maker, someone who wants to fabricate something in their own house. Because I think most of us--not most of us--almost all of us still think of do-it-yourself manufacturing or home manufacturing as something you do in your garage, in which maybe you've got a bandsaw or a table saw, you are doing some kind of, maybe, home project. But you are talking about a world--it has a science fiction aspect to it, but it's now. Guest: Yeah. Well, the big change in the last 5 years, the tinkering, which was traditionally exactly as you say, bandsaws in garages and such, has become digital. And it's become digital in two important ways. One is a set of industrial technologies called Rapid Prototyping Technologies--3D printing, Computer Numerical Control [CNC] machines. 3D printing is a kind of way to add material and build up a structure, a physical object, layer by layer. CNC Machines are subtractive technology--they use a grinder to, computer controlled technology, a machine to cut away materials, leaving a physical object. And then things like Laser Cutting, which cuts 2-Dimensional [2D] objects. Those things, which have been in industry for decades, have suddenly become affordable and easy to use for consumers. So, you can buy one now for $1000 or $2000, and they are easy to use. My children have one. A lot of schools are starting to get one. So that's a little bit like what happened with the laser printer in 1985, that a previously industrial, professional printing technology became desktop. And anybody could do it. The second thing is that these, the design tools, the software that you use to design things that can be output on these devices, called 'computer-aided design' or CAD: traditionally these things have been expensive professional tools, like AutoCAD and others cost $6000 a seat, take years of training to learn. Now they are free and on the web. You can go to sites like TinkerCad just in your browser and use it on any computer and it looks like a game, almost. It looks like MindCraft or some other easy design game. And yet at the core it's a sophisticated CAD tool. So, this is basically lowering the barriers to entry to the designing of things. And those two things have become digital. Ideas, rather than being sketched on paper are now being screened. And once they are on screen, they can easily be fabricated--turned and made real without any particular machine skills or even particular fancy tools. Just with a box that looks somewhere between a toaster and a microwave oven that you can buy now and plug in like your own inkjet printer. And out of it will, quite magically, come a physical object that you invented. Russ: Let's talk about those, and before I do, I just want to mention: a number of listeners have noticed that they've heard me typing in the background as I'm interviewing my guests and have presumed that I'm sending emails to my wife, or writing my next blog post. I'm just taking notes on the podcast, folks. For example, I'm taking notes of links I want to add or what my next question is. So, don't be alarmed. Chris, I am paying attention to you. If you hear the clicking of keys-- Guest: I didn't notice-- Russ: Not to worry.
5:33Russ: Let's talk about this technology in a little more detail. Because the only time I've seen anything like it is the time I was in a design shop, which has a massive--tens of thousands of dollars--version of these things that would take up the size of maybe half a bedroom. These are smaller. But what do you get out of them? In my mind, when you say a 3D printer, I just get like a cardboard thing that comes out of this that's been layered up? Or is it like a clay model, that you think of when you think of someone designing a car that they've sculpted out of clay or something like that? But it's not. So talk about what comes out of it. What's the output? Guest: Yeah. Well, it depends on which kind you get. The one I'm looking at right now is--we have a series of MakerBots. And a MakerBot is, costs about--I think it costs about now $2100. There are smaller ones, which cost about $1200 dollars. All of that class of 3D printer, which are somewhere between toaster and microwave oven sized, output basically plastic. Acrylonitrile, butadiene, and styrene [ABS] plastic or another kind of starch-based material called polylactic acid [PLA], which is I think based on corn. It's biodegradable. But anyway, it feels like plastic. It tends to be one or two colors, depending on which machine you have, and although it's quite good quality, if you look very closely you can see lines in it. It doesn't have a polished surface. Because it's actually built up in layers. But that plastic, once you bring it out--basically, it's a prototyping tool. So, sometimes what you want is in fact a plastic. So, my children, for example, will use the MakerBot to make dollhouse furniture, which they download from sites like Thingiverse for free. And then they print out the dollhouse furniture and then they paint it. My boys print out Warhammer figures for their board game; my friends print out maybe jewelry items or little prototypes of the jewelry items. And in those cases they are pretty happy with the plastic because they ultimately want the ultimate product to be plastic or because it's good enough as a prototyping tool. What's cool, though, is that that very same file that you designed on the web or with pretty software, you can upload it to services like Shapeways and they can be printed in anything--stainless steel, silver, titanium, glasses, resins of all sorts. You can make really beautiful jewelry or mechanical gears, things like that. A friend of mine is doing an entire silverware set, all 3D printed and uploaded to Shapeways. So, the home technology tends to be plastic, but the same design file sent to a service bureau on the web can be produced in any substance. Russ: And so, that silverware, for example--two questions. The device that you are accessing via software when you are to order, say, the silverware--what does that cost? What's the capital investment? And then, secondly, what does the silverware end up costing you? Obviously they are related. Guest: Yeah. So Shapeways is the company; it has those big, industrial machines that you were talking about before. The ones that cost $80,000. But you don't care about that, because all you know is that the silverware is going to cost $140[?]-- Russ: You're renting it. Guest: Exactly. Actually, it's a combination of the time and the materials. You charge on cubic inch basis, so it's really the volume. There are two reasons. One is that the raw materials have a certain cost. And the other is that 3D printers tend to be relatively slow. And so the time it spends to print something is relative to the amount of material it has to lay down. And when I say 'slow' I mean on the order of 20 minutes, you know, to print something. Russ: So, is that 20 minutes per fork? Guest: Uh, yeah, 20 minutes per fork is about right. It sort of depends on the material. Sometimes there are multiple layers; they'll print out in one material and then put it through a heating process to melt it and so it flows properly. It really depends on the material.
9:53Russ: So this is pretty cool. It allows you to design your own silverware, and that's lovely. I'm not interested in that, personally; my wife might be, but I'm not. Or make my own dollhouse furniture--I don't have a dollhouse; my kids don't, either. Other than that kind of what you might think of as a novelty application--it's fun to make your own stuff, it's fun to choose; there's a little bit of customization here--what's the potential for this that makes it possible for you to think of it as a third industrial revolution? Which is how you describe it. Guest: Yeah. We've just been talking about one of a whole class of desktop or digital manufacturing tools. In fact, you know, we don't use any of these tools. I have a company. As a matter of fact, I have a company. You introduced me as the editor of Wired; but today is in fact my last day as the editor of Wired I am leaving to become Chief Executive Officer (CEO) of my robotics company, DIY Robotics--we make drones. And we use all these--three years ago I was a dad messing around with my kids, with Lego and other kinds of gadgetry, doing things like that. And now we have quite a big, multimillion robotics company with two factories. All because these tools were available to us. I knew nothing about manufacturing. I knew nothing about robotics. I knew nothing about drones. I knew nothing about electronics. But in 3 years we've managed to build two factories, big pick-and-place [?] lines, basically state-of-the-art electronics--simply because this stuff has become so accessible that even I could do it. Russ: Well, I need to take a second here and first of all make a note to myself to sell my stock in Wired Magazine, now that I know you are leaving. Although it's probably not inside information, so it's probably already in the price of the stock-- Guest: Privately held. Russ: I'm slightly alarmed and I'm disappointed, but I'm excited for you. Why don't you tell that full story, though, about how fooling around with your kids and trying to be a geeky dad, you ended up starting a company? I mean, as I'm reading the book, I'm thinking: Yeah, he's Editor of Wired, he's interested in this toy that's nice. And all of a sudden, you've got a factory. So, talk about how that happened. Guest: Well, I've got to say that I didn't set out to write the book, and it certainly isn't an act of journalism. I set out to do cool things with my kids and it kind of spiraled wildly out of control. Basically, I'm always looking--years ago I started a site called GeekDad, which is all about looking for scientific projects to do with your kids that are fun for you and for them, as opposed to just one. And in the course of it I consistently fail--I have 5 children, from age 4 to 15--and I consistently fail to get them interested in science and technology. But I'm not giving up. And almost 5 years ago, we were given a Lego Mindstorms kit; and Lego Mindstorms is their kind of Lego robotics kit. And it came into the office for review. And there's also a Lego airplane, which came into the office for review. And I thought: This is going to be awesome. On Saturday people will build a robot; on Sunday, we'll fly a plane. Something--one of these two things--is going to interest the kids. So, on Saturday we sat down and we opened the kit; and they like Lego. We set up the robot as instructed; and it has a little 3-wheel rover thing; programmed it; and after a full morning's work, turned it on. And it rolls forward until it sees the wall and then backs away. And the kids just sort of stared at me, like: You've got to be kidding. You know, I've seen Transformers. That's not a robot. Where are the lasers? Where are the rockets? Why isn't it three stories tall? So, Hollywood and Third Generation (3G) has basically ruined robotics for children. It's hard to compete with that. So, that was a disappointment. And then the next day we took the airplane out into the field and I crashed into a tree. And if that weren't humiliating enough, I climbed up the tree. So, basically, a geek dad's failure. And I had to bribe them with ice cream to ever make them go out with me again. And I was thinking about how that weekend could have gone so badly wrong. You know--the robotics wasn't cool enough; and I sucked at flying the plane. And I thought: You know what would be a cooler use of robotics? To fly the plane better than me. And I was thinking about the sensors that came in that Lego kit. There's the gyro sensor--these are basically little plastic bricks but inside them are chips. Gyro sensor, gyrometer--which measures gravity--a compass sensor, Blue Tooth--which can connect Global Positioning System (GPS)--an arm[?] processor like on a cell phone. And I realized that basically these are essentially elements of an autopilot, that can fly a plane. So, I brought them all together and got the kids together for one last, little go. And we kind of constructed a Lego autopilot. And we put it in the plane. And it kind of flew. And today that Lego drone, or Lego unmanned aerial vehicle (UAV) is actually in the Lego museum in Billund, Denmark, as the world's first UAV. The kids lost interest like 10 minutes later and I went down the rabbit hole. And just sort of said: Well, if I can do this, there's something fascinating going on here. And although I didn't realize it at the time, what I'd stumbled on was the fact that the Smart Phone revolution is not just a revolution in smart phones but also in all the components that go into smart phones. And inside your iPhone or Android are all those things I was talking about. You know, tiny MEM sensors--MEM stands for microelectronic mechanical devices. But basically sensors like gyros and accelerometers and compasses, that used to be mechanical and cost tens of thousands of dollars, and, you know, weigh tens of pounds, are now all integrated into tiny little chips that you can buy for a few dollars. Moore's Law is accelerating at a pace we've never seen in history before, inside smart phones. The processors themselves are basically supercomputers; and what's going on with the cameras, wireless, GPS, wireless memory--all those components, which are exciting enough inside your pocket, are even more exciting when you think of the applications outside of the smart phones. Robotics is one of them. And I just happened to stumble on this at the very moment that those components were becoming available on the open market. So that led to an amazing journey of discovery, a website, a social community called Where we all started collectively figuring this stuff out. Then a company to make these, called 3D-Robotics. And today we have two factories, one in San Diego, one in Tijuana; 45 employees; just raised a $45 million dollar capital round; and we put more drones in the air every year than the entire U.S. military fleet. And this is like, literally, 4 and a half years after playing around with my children.
16:53Russ: Now, it's a great story. If it had happened 50 years ago, or 30 years ago, a person--and you talk about this in the book--you have an idea. You are an inventor. But the next leap from inventor to entrepreneur, 50 years ago, 30 years ago, was very difficult. What people typically did was license their idea or their prototype to a large factory. And that's not what you did. So, give us some of the steps of how this maker-revolution, this desktop revolution interfaced with your desire to make better drones that would be powered by robots. Guest: Yeah, exactly. So, as you say, the old model was that you could invent, but you couldn't manufacture. If you didn't own a factory. And it was pretty hard to own a factory. So you had to patent and license. In our model, what we did is we basically--you know, much as the web lowered the barrier to entry to, much as computing and the web lowered the barrier to software, to computation, to communication, to broadcast, etc.--and with Youtube we are all basically competing with the television studios--this, similar technologies have made it easier to manufacture. So in our case what we did--we do electronics, by and large. And autopilot is basically electronics. We started with something called Arduino, which is an open hardware processing board. It's basically a little computer that interfaces very easily with the outside world sensors and servos and things like that. It's called 'physical computing.' This used to be really hard, and Arduino made it really easy. And then the board costs like $30 bucks, and you can make things work in the real world by writing programs. So, we built on the Arduino platform, which meant a lot of the hard work of basic electronics was already done. As I say, those components, that have completely enabled what we do, are now available to anybody. You can now buy them from Radio Shack. We buy them from electronics distributors, but those distributors used to only serve other companies, B-to-B services now how consumer sides as well. Russ: B-to-B being business-to-business. Guest: Yes. Now they are B-to-C, business-to-consumer. And then finally, getting something like a circuit board made, you used to have to, you know, etch your way, acid, and it was a horrible thing. Now you go to services online and you download free software that design, you design your circuit board and it's simply a matter of dragging together wires and components and kind of the schematic that you want and you push a couple of buttons, and it goes off to the service, and professional circuit boards arrive at your doorstep. And then can just go to, click on a couple of other buttons and they'll attach other components for you. And so all these things that used to be hard, you know, real industrial manufacturing stuff, is basically been turned into a web service, in the same way that, you know, that publishing a photo album, which used to be hard, is now something you can do on Shutterfly or other services like that. You know, manufacturing has simply become a matter of point, click, and enter your credit card number.
20:18Russ: Now, that's if you want one. If I want a photobook, I go to my photo site. I'm using, not Shutterfly, a different one. And I get a nice book in the mail, and it's beautiful. It's unbelievable that it can be, that I can get a 20-page book for $50 bucks with glossy photographs. And that was impossible--it would have been hard to do, impossible, on my own--in any sense of my own, 25 years ago. But you are running a factory. So, you have now moved away from this customized thing into mass manufacturing, correct? Guest: Exactly. So you start with one at a time or a few at a time. That's called the prototyping phase. Our next phase was we would go to the same services but we would just type in bigger numbers: I'd like 1000 or 5000. You get better pricing. But the lead times can be a little long. What we discovered with that sort of virtual manufacturing process is it's got three major disadvantages. Number one is the economies of scale really drive you to large orders--thousands--you end up with a lot of your capital tied up in those big batches, batch oriented production. Number two, it takes a long time. These are often done in China, so you wait weeks if not longer. Number three, if there's a mistake, if you've made a mistake, you are screwed. All that money just wiped away. And fourth--this is the worst, the most pernicious problem: let's say they are all great and you now have 5000 of something. You are basically disincentivized to innovate until all 5000 are sold. Because you've got to draw down your inventory before you can make a new product. And so it just freezes innovation. So what we learned, in step 3--step 1 was prototype, step 2 was outsource. Step 3 was Just in Time production. And Just in Time means building your own factory, shortening your supply chain and doing it yourself, in small batches, so that you can test, modify, and innovate as quickly as you'd like. We thought that was hard, too. And we started on our kitchen table with soldering irons, like everybody else. Then my partner, Jordi Muñoz, and we may come back to him, he went on e-Bay and he found something called a Pick and Place machine, which is basically an electronics manufacturing robot. He found a used one for $3000, and he downloaded the instruction manual from Google, and then he found a better one. Then we got in touch with the manufacturer. And today we've got like 4 of them. These are 4-headed Pick-and-Place machines, which are pretty much state of the art; pretty much robots as far as the eye can see in these factories. That's a slight exaggeration. But there's lines of them. Our first one cost $3000, and our latest ones cost $100,000. But the fact that we were able to start easy and build to the point that we're now buying hundred thousand dollar industrial machines pretty much on cash flow basis, just three years after we were on a kitchen table. Russ: Now, part of the way you've gotten your cash flow to be so friendly, meaning you have enough money that you can buy those machines without taking out a huge loan or convincing somebody that you're going to be profitable in the future or giving up an equity share in the company-- Guest: We are profitable now. And we do have a loan in the sense that we are getting a rotating line of credit from a bank, which is just kind of a normal way of running a business. Russ: But part of the way you were able to do that, which you talk about in the book, is the role that a social community played, social networking played in designing the product, correct? So talk about the role that plays in these types of startups. Guest: Yeah. So, one of the things that characterizes the Maker movement--I've described the Maker movement as basically the digitization of tinkering. But there's another element, which is the web of generation. And it brings with it web culture and web conventions and also web innovation models. I would reduce those to a basic rule where there is presumptive sharing. It defaults--things default to things shared. If you do something video it, post it on Youtube. If you post it on Youtube, share it. That sort of thing. That simple default of sharing actually ends up creating not only communities, but it ends up avoiding the biggest problem with innovating, which is reinventing the wheel. The problem with all those tinkerers, my grandfather and others, is they were working on their own in garages and didn't have an easy way to communicate, and so they were constantly starting from scratch. One of the great things about the web is that there's no point in starting from scratch. A quick search will reveal what the current state of the art is on anything. That's done. And you have access to that. Your challenge is to do something above and beyond that. To add to the corpus of knowledge that's already out there. And as a result the innovation, which is been in parallel wheel-spinning for so long, has now become additive. And commentorial. We build on each other's work. That web innovation model, doing things in communities, together, sharing files, and operating around open platforms applied to manufacturing is the real game changer. For us it was the platform we were built on; we've now moved on to other platforms as well. The community we built at DIYdrones basically serves as a distributed R&D company; we're an open source company, open source software and hardware. And what that means is that we put out basic platforms, basic codes, and people scratch their own itch. One of the great things about open source is you don't have to reinvent the wheel; and if you want one more feature, rather than having to build everything up that feature and then the feature, you can just hack the feature onto the existing code. And because of the way our license is structured and the sort of social compact of our community is structured, if you add a feature, you are encouraged to share it. And if it's good and people like it, then we'll integrate it into the main code. And now everybody has it. And when you think about that, if you have thousands of users and 10% of them, or even 1% of them choose to add a feature that's missing, then you end up with an innovation model that adds features faster than any one set of employee engineers could do on their own. Or at least not affordably. And the fact that it's all free is the big difference.
27:10Russ: Yeah, that's a bonus. And of course, a lot of times people want features on their phone, their computer, their car that I don't want. But some of what you are talking about allows for personalization, customization that would have been unimaginable 5, 10 years ago. So talk about how this potential for personalization, customization ties in with your work in The Long Tail, how those dovetail, if I may use a bad phrase. Guest: Yeah. Well the long tail, just to remind people is: is there a life beyond the blockbuster. It's what's happened, especially in the digital world in the last decade or so, as we went from limited distribution capacity to unlimited distribution capacity. So, as music went from being transmitted as a physical object in stores to a digital object in databases, suddenly we had no limits to shelf space. And the economics of distributed something no longer required mass excess--it was scale agnostic, to use the technical term. But the point is the marketplace had as much room for the niches as it did for the blockbusters. That created, in digital culture, an explosion of choice; and we now have, anything you could want is out there. Music, film, games, texting, and beyond. So that's what digital did to distribution. But physical has always been more constrained, in the sense that there's real costs associated with physical production. What we're seeing here, now, is that increasingly objects can take on the characteristics of digital objects. So, let me just give you an example. I have a coffee cup in front of me. Right now, if you want to buy that coffee cup, you can probably go to Crate and Barrel or whatever, to Ikea, and buy it. It was probably mass produced. There are some real costs associated with its production and transportation and storing, and all that's reflected in both the choice and the price of that coffee cup. But now I want to take up my phone. I'm pretending I've got an iPhone in front of me. Actually, I've got an Android. I'll take an iTablet. I really do have an iPad. I'll pick up my iPad and open up an application, a free App called 123DCatch. It comes from Autodesk. And this App is a reality capture app. It's basically a 3D scanner. And I'm going to go click, click, click, click, click around the coffee cup, and take a bunch of pictures, and then send those pictures to the cloud, and just pushing a button, and a couple of minutes later down will come a 3D design. It's basically been scanned. And digitized. And now that physical object, those atoms, have taken on the characteristics of digits. Now it's a digital object. And now I can upload it to a service; I can distribute it; I can copy it an infinite number of times. Now it's really easy to modify--you just bring it into one of those CAD programs we were talking about earlier and I'll make it longer, or I'll change the material it's made out of or I'll put a cool design on it. And now, if I want to return it back into atoms I can do so on my local 3D printer if I want it made out of plastic. Maybe I don't want to drink coffee out of that one. Or I'll send it to Shapeways and have it be made out of an even better material than it currently is--I want it made out of stainless steel or out of titanium. And so now it has basically taken on the ability to do--when Apple released the iPod, they had a motto: rip, mix, burn. And 'rip' was to take a physical object and make it yours, make it digital. 'Mix' was to change it. And 'burn' was to bring it back to atoms, to put it back on a CD, to burn a CD, essentially to manufacture your own music. Or modified music. Well, Autodesk, with their combination of apps, like 123DCatch, has a motto called 'rip, mod, make.' And it's the exact same thing. You digitize an object, you modify it, and then you fabricate it, you make it real again. And these web innovation characteristics, this ability for anybody to create their own culture, to modify culture, to personalize culture, which was so powerful in the digital space over the last 20 years is extending to physical stuff. Russ: And the cost of that is a huge part of it, the fact that it's so--if I said to you, again, 10, 20 years ago: Let's make a--we've got a coffee cup and it's made out of some ceramic material; I'd like to know what a stainless steel coffee cup would taste like, feel like, hold like. So I'm going to go make one. It would cost you, I don't know--hundreds, thousands of dollars? Guest: Oh, at least. The old model, you'd have to get a mold made and work with pros and they won't work on a scale of one. Thousands. Russ: They'd laugh at you. Maybe your uncle would do it for you. What you're talking about now is done at--we can talk about the car example in a minute, but it's a fraction of what you'd imagine it would be. Which allows you to customize if you really like it your way. Guest: Yeah. And that's exactly--one of the risks that a lot of these examples seem a little trivial. Coffee cups and such. But I kind of live on both ends of the spectrum. The reality is that the tools that Maker movement have allowed me to create an aerospace company, which is proper manufacturing. They've also allowed my children to personalize their dollhouse furniture. And I can't tell you which of those is more important. I think in some sense my children is more important, because my children and any other child who grows up with a 3D printer and CAD tools--and I think increasingly that will be put into schools. What they've learned is perhaps more important, which is they've learned that they have the power to make stuff. That anything, any idea they have can be made real through a relatively simple screen process which they are already familiar with, through video games. I used to have ideas. But I didn't have any way to make them real because I didn't have machine skills. I didn't know how to work a metal lathe, to say nothing of access to a metal lathe. The fact that you've taken that skill requirement out of the equation, it's simply a matter of--a word processor, you go to the File menu, you pick Print, and something kind of magical happens: bits on your screen turn into atoms of ink on paper. A complex computation process, fonts, PostScript, rasters, vectors, all sorts of scaling; you don't need to know anything about it. All you need to know is you click that button and out comes the paper with text on it. To take manufacturing, and if you go to any one of the CAD tools I've described, rather than 'Print' they have 'Make.' And you just click on that button, and it walks you through this little quick Wizard, a little bit like a printer dialogue, that walks you through some 2D versus 3D, material selection, strength, weight, cost considerations; do you want to do it locally, do you want to do it in the cloud. And you click, click, click, click and then you press okay. And out it comes. As a physical object. All that complexity abstracted away. I think if anything the big transformation is that kids--a generation is going to grow up thinking that making stuff is as simple as publishing a blog. And increasingly it will be. Russ: Yeah, that's very cool. By the way, I want to make it clear: your drones, your factory--you said you are running an aerospace company. They are not armed--is that correct? Guest: Not all aerospace companies make weapons. No, ours are not armed. Ours are small and they weigh less than 4 pounds. They tend to be about 3 feet in size. They have cameras; they are designed for things like Hollywood, agriculture, search and rescue, things like that; a lot of action sports--they get used for that. They cost like $600, not $6 million. And they are very much designed for the civilian drone market, which is just now emerging. We very explicitly avoid the military market. Russ: I hear you.
35:29Russ: Now, you mentioned earlier that your two factories--where are they, again? Guest: San Diego and Tijuana. Russ: Now, why did you not build--everybody thinks that all the factories in the world are moving to China. But you did not put your factories there. Why? And I know from talking to you that that's something of a trend. Manufacturing is still being done here, but some of it's even coming back. Talk about why you did that. Guest: So, we started in China. That's where you go to have electronics made--Shenzhen, Guangdong Province in particular, is where your iPhones are made. There's really an extraordinary concentration of manufacturers and supply chains out there. So we did start there. What we discovered were those three things I described earlier, four things--the cost, delays, inflexibility of a long supply chain. So, we wanted to bring it back. We wanted to shorten our supply chain, so, mostly we could be more innovative. The most important thing is that we wanted to be able to change the designs every day if necessary. Sometimes in big ways, sometimes just changing one component if there's another one easier to source. And short supply chains were the only way to do it. Time is a killer. Money was never a problem for us. Time is a problem. And when you look at the difference between kind of maker-movement companies and when you think of maker-movement companies, your listeners may not have anything to visualize. Think of KickStarter. Or Etsy. If you've ever bought something from Kickstarter, a physical product, that is really an example of the maker-movement industrializing. That's the venture capital arm of the maker-movement, if you will. Or just the financing arm. So, when you look at them, what is their key differentiator? That they move fast. They can move faster than traditional companies, the smaller teams are more nimble, etc. But if you have 3-month delays in your supply chain, that pretty much kills your speed. So, we wanted to move it back. But how? I mentioned I started this community, DIYdrones, to kind of share my ignorance and go on this journey of discovery together. And one of the first people that kind of came on the community was this guy who was flying a helicopter with a Wii controller that he'd hacked, a processing board. And he posted it, his code, and he posted his Youtube video--that's kind of essential to prove credibility. And his name was Jordi Muñoz, and he seemed to be the smartest guy out there. He knew everything, discovering new stuff; and he had these kind of animal instincts for where technology was going. So, I got in touch with him; we did some projects together. Came time to start the company--3DRobotics--so that people could, wouldn't have to just download the files, could actually sell them to be made, I decided to start it with him. And at that point I said: Tell me a little something about yourself. Turned out that when I'd met him, he was a Tijuana teenager, a 19-year old high school graduate in Tijuana, never in college. And today, he's been the CEO of 3DRobotics and is now President and has helped build a multi-million dollar robotics company. And everyone thinks: Oh, the Editor-in-Chief of Wired magazine starts a robotics company with a Tijuana teenager; I bet Chris taught Jordi a lot. And the reality is just the opposite. What I learned was first the--he's a web native, so he taught me the power of open platforms. Second was that he was the one who discovered that manufacturing was easy. And he was the one who bought the used pick-and-place machine on e-Bay and built something. I would go down there to San Diego; first I was in the garage, the next time was in a commercial space; the next time was in a big commercial space. There's like these scores of people wearing like our t-shirts, who have like titles, and like roles and responsibilities and are running this manufacturing operation. And I was like: How does this happen? And the answer is: he just did it. But the third thing, and this is the important one, to get back to your question, is that you may think that his being a Tijuana teenager was a bug, but in fact it was a huge feature. Because I, like a lot of Americans had suffered from the prejudice that Tijuana was drug cartels and cheap tequila. And what he knew is that Tijuana is the shin's end of North America, a city twice the size of San Diego with the most sophisticated electronics in North America. So, your flat screen TVs, your Samsungs and Panasonics and Sharps. If you've got a Jawbone UP exercise track, that was made in Tijuana, like a lot of high tech medical devices are all made down there. So, I would not have had the courage to put a factory in Tijuana. He as a Tijuana native, realized that not only was it safe and you know high-tech and cheap, but those essential manufacturing skills--the engineering skills at running big factories, which was lost in the United States--are still there in Mexico. And in fact, we don't just get cheaper engineers, we get better engineers there.
40:45Russ: So, some might think that that bodes well for the future of manufacturing jobs in the United States, or at least on this side of the Pacific. But as you point out in the book, productivity here, the ability to produce with a lot of people, continues to grow because of the application of robots to the production process. So, the people, as I think listeners to this program know and certainly as your book points out, manufacturing is very alive and well in the United States. We are the leading manufacturing in the world. We just don't employ as many people in it as we used to, and that has political implications and human implications for certain people of certain skill levels. Do you think those jobs are coming back? The factories might, but do you think the jobs are? Guest: Not those jobs. These sort of classic factory job from the 1960s, that kind of union, well-paid, route to the middle class job--those are probably not coming back. What might come back are the ones we have personal experience in, which is, call it more the Silicon Valley model or the small, medium size business. So, I know everyone says small, medium sized business is the answer in the America economy. But they forget that most of these small, medium-sized businesses are like pizza places and dry cleaners, little service businesses. They don't really have global or even national reach. They are local service businesses. The Silicon Valley model is small, medium-sized businesses that are global from the start and aspire to be big businesses some day. And I think that a manufacturing model of entrepreneurships and startups built around that sort of Silicon Valley startup model is a more exciting, but different, view of what manufacturing can be. When you look at those Kickstarter--my favorite Kickstarter out there, everybody's: the Pebble Smartwatch, in Palo Alto, launched on the same day as Sony. And they just blew Sony away. Because they were more, they were aligned with the weave of the web. They were social, they had better technology. They were moving faster, they marketed better. It was just cooler. That, and to think, in the old days, four kids in Palo Alto couldn't compete with Sony because they didn't have access to that manufacturing technology. Even if they had the idea, they just couldn't make it. Now they can. And that's what the democratization of manufacturing allows, is that, fundamentally the ideas and the enterprise become the dominant trait of success rather than simply access to the means of production. Ownership of the means of production, to use a Marxian phrase. Russ: But there's a cautionary postscript to that story. And I wanted to bring it up later, so let's talk about it now. Kickstarter is this wonderful way that you can raise money without having to sell your soul, or at least ownership of your company. You go to the web, you raise money from people who want to buy your product; so, you sort of get your orders in advance, essentially; you use those orders to fabricate the item. The downside of that, in this case, is that the Pebble Smartwatch was supposed to have launched in September. As far as I can tell, it's not out yet, and the blog hasn't been updated since September or August. And the pressure that investors put on a startup to work day and night, 80 hours a week, is different when your investors want to buy your product you hope. So, it's a different set of incentives, I suspect. Guest: Well, I'll argue with this. I don't know if I'm with you on this one. Russ: There's not that much to argue about. I'm just making the observation--there are a lot of great products that get delayed that much that have nothing to do with the source of their funding. I don't want to suggest that this is a definitive thing. Tell me why it's irrelevant. Guest: The investment level for Kickstarters is much lower than the world of entrepreneurship as a whole. Pebble's going to be a few months late. But even a few months late is still going to be years faster than Sony's development cycle. Pebble--by the way, their last blog post was 6 days ago--and it had 156 comments. Russ: Good. I must have been on the dead site, the wrong place. Guest: You ought to go to the Kickstarter site itself, where the posts are. Startups are hard. Entrepreneurship is hard. The failure rate is--more than half of these companies are expected to die. The reality is the Kickstarter model actually has a lower risk factor because of its process. The reason companies die is, yeah, sure sometimes it's failure to execute. But sometimes it's just a bad idea. Or they misjudged the market. The great thing about Kickstarter is that these risks, those two last ones, automatically is part of the process. If it's a bad idea, it's not going to hit its funding threshold. And if you've misjudged the market, you are also not going to hit your funding threshold. If there is no market. And so those two kind of cradle death risks for startups are essentially reduced or de-risks by Kickstarter's let's say market-testing model of getting people to actually vote with their wallets. Russ: Yeah. I agree with that. Guest: Before a product comes into fruition. Russ: It's an incredible thing. And the ability of this kind of funding with social networking doing your research for you, your focus groups, and do it better than all those things do, I think is really important. Guest: Yes. So, I'm a huge fan of Kickstarter. I am not, I would say, a fan of the equity-based model of crowd funding, where rather than pre-order a product you are actually investing in a company. I'm not saying it's not going to work. It just feels fraught and the potential for fraud is much higher than it is with Kickstarter.
46:50Russ: Coming back to the employment issue and the small and medium sized business issue: I interviewed Adam Davidson a while back and you mentioned him also. What we talked about was how the manufacturing jobs that do stay here in the United States tend of course to be highly technological. And he talked about how skilled they are. They are not somebody standing in assembly line like Charlie Chaplin in Modern Times turning a wrench three times every 5 seconds. So, it's people applying calculus and other things to very small tolerances of machining to produce very precise products. Does the web digital revolution you are talking about in manufacturing threaten the stability of those employment possibilities? It seems to me they will eventually. Guest: Yeah; there's always a dislocation whenever you bring technology into any workplace. When I look at our 45 employees, about 10 of them are on the engineering side. Another 10 of them are basically operating robots, one way or the other. But the other, call it 25, are actually doing the same job they always would have been doing. They are working in the shipping department, customer service department. They are doing quality assurance, or re-work, which is basically they are looking at products by hand, looking to see if they are broken; they've got soldering irons in their hand; they are kind of bent over a desk wearing a smock. So I think about half of our jobs are very new jobs, very white collar, very knowledgeable kind of jobs. And the other half are traditional jobs. But the point is that we created all 45 of these jobs in North America, where they previously would have been in China. So you could say that not all 45 are traditional manufacturing jobs, although half are. But the point is that these are new jobs and some of them are paid better than those old manufacturing jobs would have been. I think what would be really interesting--robots, to look at jobs in placement and displacement--is the Rethink Robotics Baxter--Rodney Brooks, one of the gods in the robotics industry. This is a torso-sized robot with two arms and kind of a screen for a face. And it comes on a wheeled pedestal that's pretty much the size of a chair. And it's designed to do sort of low-skilled hand assembly jobs, like putting cupcakes in boxes. There's something really cool about the fact that it's on a wheeled pedestal because basically you walk up to somebody in a factory who is putting cupcakes in boxes and you pat them on the shoulder and you sort of wheel their chair aside by two feet. You wheel Baxter in at exactly their spot, pick someone exactly their height, and then you pay them for the next hour to stand behind Baxter, put their arms around him, hold Baxter's arms, and show Baxter how to do their job. The way you would show a child how to do it. And then Baxter learns by doing. And then the hour's over; you thank them, give them their last paycheck, and that's the end. And Baxter cost $22,000 all told, which is like half the price of a worker per year, when you include all the benefits. Russ: And you can keep the factory at a different temperature and you can turn the lights off because Baxter doesn't care. Guest: And Baxter will run 3 shifts a day; and Baxter's not unionized; and Baxter doesn't take breaks and doesn't have health insurance. Etc. And oh, by the way, Baxter can learn any job you teach it. So, I think that's cool, because I think those are kind of crappy jobs; but then again, it's not me losing my job. So I have mixed feels. I pull back. Russ: Well, it's like EasyPass. It's great that I don't have to stop to take the coin out of my pocket. It's great that it in theory could be cheap. But the people who collect the money at the tolls don't have a job any more. There's fewer of them. And that's called progress usually, but you do have to find something for those folks to do. Excuse me--they have to find something for themselves to do. What usually happens in markets is that new opportunities get created for these people. When you are in a recession like we are now, or near recession, it's hard to imagine that happening. I think people are very afraid of that kind of progress. Guest: Yeah. You'll know the answer to this: What happened to the typing pool? Where did they go? Russ: I don't know. It's a good question. You mean people who used to--well, my Dad, who is 82, and I know many people over the age of 70 who this is true for--he still writes. He never got into the habit of using a keyboard, never was much of a typist. And he still writes what he writes--he writes stories and he writes them by hand on yellow pads with a thing called a pencil. And then he has a thing called a secretary. And that person types up his stories for him. And the advantage of the digital world for him is that if he decides to change the story, it's easy. Unlike the old days. I remember when Gary Becker, my adviser in graduate school wrote a book, and Myrna Hieke, his secretary typed it up, with a zillion equations and when things went wrong, it's kind of a nightmare. And then you get a Selectric, and that helps, but the digitization's a wonderful thing even for those folks. But the fact is is that there used to be a lot more people doing that process of converting pencil scribblings into printed words. And I think they went to college--they didn't go to college before; a lot of them started going to college and getting different skills; they became nurses and teachers and football players. Who knows? They did all the things that they--they went to Hollywood. They became graphic designers, things that the modern job descriptions that have expanded while things like telephone operators, typing pool, toll booth operators, machine operators--all those jobs are gone. And again, when you are not in a recession, there's those jobs plus more have been created because of population increase. We just get into a very dark mood; and some would argue that the recession is the fact that we can't find those people jobs, they are structural problems. I'm not persuaded by that. It may be true. In the past it's worked well. Guest: I don't have an answer to America's employment questions long term. We definitely do see widening labor inequality. And it's not just true to America. Automation is coming everywhere. Even China. China is not as controversial because they have a demographic picture because of the one-child policy, they actually are very closed to their population and they are not going to have to create quite as many jobs in the next 10 years, so automation is not so risky. But in other countries, automation is truly disruptive. It is great for the consumer in that you get better products cheaper. It's great for producers--you can make better products cheaper. But at least in terms of the direct production of the goods, it needs fewer people. And that is the reversal of globalization. It's driven entirely by whittling down the labor arbitrage calculus which drove globalization for the first 100 years. Now globalization goes closer to markets where the political risk is the lowest, where the ideas are the best, but less and less where the labor is cheapest. Russ: Yeah. That's a great point.
54:31Russ: Let's talk about the scope of this and its big potential. There's a lot of romance in the book, and I think the phenomenon you are talking about deserves a lot of romance. It is potentially--we are on the cusp of an extraordinary thing. I think most people listening here with children probably don't have a maker-bot in their house, or a 3D printer. I don't. So my kids have missed the revolution. They'll get it maybe in college or later, or their kids will. But what's the potential for this beyond just the novelty of it? So, we talked about this before but let's go a little deeper. So, for example, in the old days--meaning 5 or 6 years ago--there was this thought that a bookstore would just be a place where your book would get printed on demand and it would look just as good as a real book. And now I think that vision--there are still some places that actually do that. But basically, it comes onto my iPad and it's even better. It's quicker, it's cheaper. I can annotate it, look up words, etc. I think we've just scratched the surface on what that's going to allow people to do in communicating ideas digitally. I don't think we've done a very good job of that yet, but it will get better. But let's say I want a refrigerator with a different--I don't want an ice maker; I want the microwave oven on the outside of the refrigerator. I want the kind of customization--say, in my car, I don't like the way the console looks; I want it in a different place; I want my air conditioning to have a different set of intensity than the average person. So, I want my car to be designed a certain way, built a certain way, just in time. In theory these kinds of improvements allow the assembly of a customized set of features like that, and to transform not just things like sprinkler heads, sprinkler systems that you talk about in the book, or dollhouse furniture, a coffee cup. Those are all nice, and I agree with you that the emotional, spiritual, intellectual transformation of individuals into being in control of their own destiny may be more important than having the coffee cup look like what you want. It's a kind of a cool thing where we used to be outsourcing everything outside of our own house and now we'll get to have it inside our house and be in control of it. There's something beautiful about that. But what's the potential of this to really transform the physical economy? The big parts of the economy--the car, the refrigerator, my washing machine, house construction, what a hospital looks like, etc.? Guest: It's a great question. It is the question. If I'm going to justify the subtitle, The New Industrial Revolution, I've got to move the needle for the economy as a whole. And I think what I have here really more than anything else is historical analogy. And maybe you'll be convinced by it; maybe you won't. But let's look at 1977. It's the Homebrew Computing Club, a bunch of hobbyists messing around here in California--Steve Jobs, Steve Wozniak are members of that club. It becomes clear that a chip--I think it wasn't until 1988, I could be wrong--that is a computer was available for purchase and anybody could buy it. And they came up with the Apple II. And for people who are excited about the very notion of owning their own computer, this is incredibly exciting. And people bought it. Russ: Not very many, though. Guest: If you asked them what it was for--and remember, it started with the Apple II, but there were a whole bunch of others. There was the Commodore 64 and things like that. If you ask people why a parent should buy their child a home computer, or why anybody should buy a home computer, nobody had a really good answer other than: You can program it. And maybe it was like: You can program it in color. And that was considered sufficient at that time, and it was exciting enough, but it didn't move the needle. And then what happened is that the users--not the traditional users of computers, which were big companies and universities and governments, found what we now know as 'killer apps'. They discovered--they invented--things like the spreadsheet and you know, the web. And video games and email and all that. And then, come 1984, when the Macintosh comes out, the point is now clear what a computer is for and why you might want one. And then you can make a much more plausible argument about how it was going to change the economy. Russ: In 1984, the computer, we knew what it was for. It was for writing 12-page papers, sequentially. I had one, and you could write a 12-page paper. But if you wanted to write a 24-page paper, you had to divide it in two. So, it's come a long way. Guest: The first Macintosh was perhaps more mind-blowing in concept than reality. But still, I think at that point computers were less about programming and more about utility. They were business tools. The IBM PC had been out for some time; spreadsheet was already out; it was taking over in offices. In that case it was a lot less about how is the computer more amazing and more like: Now I can do something I've dreamed of, more easily. It was all about the function. So, I think we're right in between those two. What we've seen is that a formerly industrial technology--manufacturing--is now available to everybody. Initially we are just doing the same things other people did, but maybe a little faster and maybe a little more customized. By the way, I'm not a big fan of mass customization as an industrial force. I think it's a great cultural force. But I'm not arguing the book is about the book being mass customization. I think that's a cultural side of it. What I'm hoping for, if the historical analogy plays out, is that maybe tomorrow, by this new class of many manufactures, is not the same products or slightly new products, but entirely new classes of products. In the same way that we got the web. Oh, everyone says: You can make your own newspaper. Or: You can have a different newspaper. And it kind of seemed to remixing traditional media. And only later did people realize that we were creating our own forms of media. And that YouTube was not just Hollywood, remixed. And that blogs were not just newspapers, republished, or at least the best of them weren't. And that Twitter and Facebook weren't entirely new classes of media. My assumption is that, you know, the world changes, not when new people are deployed but when regular people use those new technologies to do something new. The power of democratization is in the people, not the technology. And I think what we've done is a necessary first step. We've democratized the tools of production for manufacturing. What is the next step is figure out a newly empowered class of producers, makes the traditional manufacturers never thought of. And I think of it as the sort of market of 10,000. Think of it as 10,000 is like an interesting number. Because it's too small for mass production and it's too large for the individual. The Long Tail of content, of digital content, was all about things that started in the 10,000 or some of them never even got to to the 10,000, but some of those 10,000 turned into the next 10 million. Ended up influencing digital culture. And the question is: What is those markets of digital and physical objects that don't exist because of supply chains and distribution changes don't have room for them or don't have a place for them or never thought of them? And then that will exist because someone just does it because they can? Russ: Well, I look forward to watching it with you. There's something there. And you might be absolutely right. It's going to be fun to see. Guest: And indeed. Can I leave your listeners with a little homework assignment? Russ: Sure. Guest: If you have children, middle school or high school age, and if you remember what happened when your parents brought home that home computer, and it changed your life or your family's life and all that: Think of this as maybe that moment for 3D printers. You can buy something like a 3D systems cubed for $300 or maybe a replicator to make it for about $2100, about the same as that home computer was for your parents. And a kid who grows up in a 3D printer in their home is a kid who has got a sense of the potential greater than the generations that preceded them. I'm doing that with my kids, and I'm just seeing that can--what it does to a kid to make them think they can make anything. It's a wonderful thing, and I hope that someday they'll remember. They were that generation, that they grew up with that 3D printer. And I think that that technology was now such--easy enough and cheap enough and just sort of reliable enough that I can now safely recommend that this holiday season if you have kids, consider it.

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