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Zach Kaplan: Manufacturing for a Small Planet

By Zach Kaplan October 14, 2013

We're moving from a world where there were approximately 2,000 important manufacturers for consumer goods to a world where there will be 2,000,000.

The third industrial revolution is in full swing. And as the CEO of Inventables, I have a front row seat.

The first industrial revolution is easiest to understand by thinking of Eli Whitney and the cotton gin. It was all about economic growth driven by transforming human labor to machine labor.

The second industrial revolution is easiest to understand by thinking of Henry Ford and the assembly line. Henry pithily summed this up when he told customers they could choose any color for the Model T – as long as it was black. The assembly line made it efficient to get a single product out to the masses.

The third industrial revolution– characterized by the digitization of work and manufacturing – is about the conversion from analog tools to digital tools. The computer has been critical in this transformation, and after decades of work, we now have low-cost digital manufacturing tools that plug into the computer. Digital manufacturing tools take files designed on a computer and render them in physical form either by cutting them out with a laser cutter, vinyl cutter or mill, or growing them layer by layer as is the case with a 3D printer.

During the second industrial revolution, it often took years to get from an idea to a finished product. Today, moving from idea to finished product can take mere hours. Digital manufacturing tools don’t have expensive set-up costs, the tool works by taking data from the computer to produce the part. This means the same machines can produce two completely different parts one after another. At Inventables we believe this – coupled with the fact that digital manufacturing tools that can make consumer products start at $650 – are igniting this revolution.

Long Tail Manufacturing
We also believe this movement will be the primary driver of growth in our economy over the next decade. We see this happening because these digital tools give rise to a set of goods and services that were not economically viable before. We consider these new markets to be long-tail manufacturing. Chris Anderson, former editor of WIRED magazine, popularized the concept of the “long tail” in the context of the music industry and TV businesses. The concept refers the graph of the sales of the products in these categories, which looks like a long tail. The days of “big hits” are over and the magnitude of the hits we have are much smaller. We came from a world where there were three major TV networks. The hit TV show “I Love Lucy,” drew 44 million viewers in the episode where Lucy gave birth to Little Ricky. Today we have hundreds of TV stations and millions of videos on YouTube. There is no “one” show or song that captures the attention of the majority of consumers at any given time. The Internet and low-cost availability of computers, mobile phones and tablet computers have made it possible for content creators to make niche content that reaches very small but passionate audiences.

This same phenomenon is starting to happen with physical goods. We’re moving from a world where there were approximately 2,000 important manufacturers for consumer goods to a world where there will be 2,000,000. But these manufacturers look different. They don’t have massive factories and long assembly lines. They don’t make the same product for a year, lay off workers for retooling, and then make a new product. These new manufacturers use digital manufacturing tools and often make different products for different customers in the same day. Many of them start from their houses or garages and eventually expand into a proper office or lab-style environment.

Three Steps Toward Success
Thinking of becoming a small manufacturer? Here are three things to keep in mind to be successful:

1. This is not your father’s manufacturing. The second industrial revolution was about hits. It was about the assembly line. It was about making one product for the masses – the beige effect. The third industrial revolution is about long-tail manufacturing. The idea is applicable to digital manufacturing as well because there are no set-up costs and complexity comes free. Successful digital manufacturers focus on serving niches.

2. Build a community first. If you’re building your product before your community, you’re doing it all wrong. Small niches are about cultivating raving fans. If you don’t have confidence that the products on your website will appeal to your fans, then you don’t have a community. Think of yourself as a rock band, not as a factory.

3. Cash flow immediately. The successful stories I hear from digital manufacturers often start when they have another job. These people become creative with how they access digital manufacturing machines. Sometimes they are able to do work on a machine at their employer during off hours or downtime. Sometimes they go to a local lab, like the GE Garage, Harold Washington Library, MakerHaus, TechShop or AS220. When that is not possible, they send out their designs to another local laser cutter so they can pick up the parts without having to pay shipping. Or they finance a low-cost machine for under $100 a month. Digital manufacturing businesses should be profitable from day one.

At Inventables, we believe the world is at the beginning of a new renaissance. We see power in product development shifting from major corporations to individual designers and entrepreneurs. The availability of low-cost manufacturing tools and cheap distribution on Internet sites continue to level the playing field. Small teams can now make one-of-a-kind high-value products that major corporations can’t justify making because they aren’t for the masses.

In an increasingly expanding and globalized world, manufacturing is “getting small” and becoming nimble owing to this new wave of digital makers. Long-tail manufacturing with a focus on fans instead of form and function – it’s a tale of success and innovation and it’s only just begun.

Zach Kaplan is the CEO of Inventables, an online hardware store for designers.