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AU Day Three: Manufacturing is about to reverse itself

I went to this session this morning on a whim. Expecting marking jargon and handwaving, I was surprised to be greeted by a panel of four people making their living by exploiting new manufacturing methods. They discussed the major trends, the limitations of patents, and where it might go. Transcript below. 
 
Austin Carr, a senior writer from Fast Company gets up to introduce the session. Theme for today is the disruption and democratisation of the manufacturing market. For a long time Apple and Sony were the only ones that could be in the manufacturing market. This model is flipping on its head thanks to rapid prototyping, and crowd funding platforms like Kickstarter. Four speakers join him: Aaron Davies, Oculus VR; Alice Taylor, MakieLab; Nelson Zhang, Warehouse; Jay Rogers, Local Motors.
 
Austin: What has changed about the industry that has enabled you to start these companies?
Alice: Price and quality. Ten years ago this would have been impossible for any company without a lot of money. Our first prototype cost 120 euros. 
Aaron: Smart phone advances – cheap, affordable, high quality components. Combined with 3d printing to quickly prototype ideas. 
 
Austin: Will designed in American and built in China be the paradigm going forward?
Nelson: Manufacturing will stay in China for at least the next ten years, but what will change is that it will be much more assessable to smaller companies. Incubators starting to help connect designers to places like Foxcon.
Jay: I disagree. Making large things overseas is a bad proposition. Local manufacturing has a bright future. If you can make an object more simple you can make it locally much more easily. Taking weight and complexity out of the car to help this. You can’t have a world where things are made in one place and things are used in another place. You will go into a world where no one has control over what is made. 
 
Austin: When is all of this going to take off, it always feels like it’s just ahead of us?
Alice: It’s like the early days of the web. Every one can see the potential, everyone know its coming, but it’s not here. We are the point where it is no longer a fantasy but prices are still hard at the moment. Margins are low because of the manufacturing prices.
 
Austin: What industries are going to be disrupted in the next year or two?
Jay: Any industry with lots of customers and lots of solvers (opposite of space shuttle). But to disrupt an industry is not the holy grail. There is a lot of manufacturing that needs to happen and that doesn’t necessarily take away from what already exists. 
Aaron: There is a software component to design and there is a hardware component to design. I expect creation tools will transfer casual making like Minecraft into something more productive. 
Alice: If big companies don’t move they will turn into something like Nokia. If you look at how fast Maker Fair has grown, every major company needs to be looking at it. 
 
Austin: How did you get started, what was the challenge? 
Alice: The main challenge was money. Half of my job is raising money. 
Nelson: I started in China, and the maker movement in China really started in 2010. Because manufacturing is in China, if you are based there you can really quickly get something made and iterate. This wasn’t available in America. 3d printers are one example of making this easier. But this needs to happen for other things like electronics. A desktop circuit printer. 
 
Austin: Advice do you have for young people coming up?
Aaron: The connection to the community is absolutely vital. Lots of great ideas come out of the community and they will surface good stuff. 
Jay: Never stop making. If you don’t live next to the machine you won’t iterate and you won’t make. You should always know what the machine can do. You must learn what the machines can do. 
 
Austin: In software software there is a trend towards small teams making huge companies like Instragram. Are we at that stage in manufacturing?
Alice: The margins on digital stuff isn’t the same as physical stuff. 
Nelson: There are always going to be cost. The business model is going to be make stuff and give it in exchange for cash. 
Alice: We are making stuff on demand, so that is new. 
Jay: Silicon Valley VCs are chasing white whales looking for huge exits. But for entrepreneurs they might be able to skip the VCs and get funded by their customers.
 
Austin: What are the keys to getting funded by Kickstarter?
Aaron: I think ours came down to some promise of achieving the holodeck. The reduction in component prices meant it could be sold for $300, which wasn’t a huge risk for people. This price point is important.
Alice: We used a traditional VC. Three years ago Kickstarter suited add-ons for Apple but not dolls. Today you need a really good video, someone famous, and a really good mockup. There is also a random factor. 
 
Austin: To Apple, design is about having a point of view. They direct the product, they tell the customer the best way. But now this is flipping on the head by giving power to consumers. How to do you balance these two competing paradigms?
Jay: We crowd source all our designs. That doesn’t mean it’s design by committee. You are not trying to cobble ideas together, you are trying to give the next Steve Jobs a platform to bring an idea to market. 
Alice: I don’t know how you combine a single vision and leadership with constant feedback from customers. It’s a hard problem.
Nelson: Our philosophy is to get as much data as possible and work from there. Most important thing is understanding who your users are. 
Jay: There is no single answer. You have people who have a vision like Steve Jobs, or you can be constantly testing. They are all just ways to come to the best idea that is out there.
Aaron: There are a bunch of companies putting out expected products. Apple will put out a new phone next year. The maker movement might not produce something that competes with Apple, but they might be willing to tradeoff things like time or unexpected products.
 
Austin: What will the world look like in five or ten years?
Aaron: The future will be a perpetuation of what we have now.
Jay: I bet on optimism and action every day.  Why now? Because of the internet, we are transferring data and then able to make it instantly.
Nelson: Identify matters. For wareables it will be about self-expression. It’s not going to be a world designed by tyrannical individuals. Everyone is going to be a designer, maker, and consumer.
Alice: Machines are a distributed manufacturing network – like the internet. Once the network is up, it’s just going to grow. Patents are about to expire, which will make some machines cheaper. It will become completely normalised, it will just be there and assessable. 
 
Question from the floor: What are you selling: the process or the product?
Alice: The process is part of the product, they are completely intertwined. 
Jay: Starting out we thought the process would be more important. But now we have come to realise, like Alice, that they are completely intertwined. 
 
Question from the floor: The materials are still really expensive. Is anyone thinking about how to reduce the price?
Alice: It comes back to the patents. You buy our machine and you have to use our material or it will void your warranty. There is no market for 3rd party materials because people are terrified of breaking their machines. Once the patents come down there is a potential for a significant reduction. 
 
Austin: Two take aways: the world will soon be 3d printed; patents suck. 
 
- Daniel Davis of CASE