Oct 23, 2012 7:17 AM

The Makers: hobbyists are going to beat the industrial giants

This article was taken from the October 2012 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by <span class="s1">subscribing online.

The great inventor/businessmen of the industrial revolution, such as James Watt and Matthew Boulton of steam-engine fame, were not just smart, they were also privileged. Most were either born into the ruling class or lucky enough to be apprenticed to one of the elite. For most of history since then, entrepreneurship has meant either setting up a corner grocery shop or some other sort of modest local business, or, more rarely, a total pie-in-the-sky crapshoot around an idea that was more likely to bring ruination than riches.

Today, we are spoilt by the easy pickings of the web. Any kid with an idea and a laptop can create the seeds of a world-changing company -- just look at Mark Zuckerberg and Facebook or any one of thousands of other web startups hoping to follow his path. Sure, they may fail, but the cost is measured in overdue credit-card payments, not lifelong disgrace and a pauper's prison.

The beauty of the web is that it democratised both the tools of invention and of production. Anyone with an idea for a service can turn it into a product with some software code . These days it hardly even requires much programming skill, and what you need you can learn online -- no patent required. Then, with a keystroke, you can "ship it" to a global market of billions of people.

Maybe lots of people will notice and like it or maybe they won't. Maybe there will be a business model attached or maybe there won't. Maybe riches lie at the end of this rainbow, or maybe they don't. But the point is that the path from "inventor" to "entrepreneur" is so foreshortened it hardly exists at all any more.

Indeed, startup factories such as Y Combinator now coin entrepreneurs first and ideas later. Their "startup schools" admit smart young people on the basis of little more than a PowerPoint presentation. Once admitted, the would-be entrepreneurs are given spending money, whiteboards and desk space and told to dream up something worth funding in three weeks.

Most do, which says as much about the web's ankle-high barriers to entry as it does about the genius of the participants. Over the past six years, Y Combinator has funded 300 such companies, with such names as Loopt, Wufoo, Xobni, Heroku, Heyzap and Bump. Incredibly, some of them (such as Dropbox, reddit and Airbnb) are now worth billions of dollars.

But that is the world of bits, those elemental units of the digital world. The web age has liberated bits; they are cheaply created and travel cheaply, too. This is fantastic; the weightless economics of bits has reshaped everything from culture to economics. It is perhaps the defining characteristic of the 21st century (I've written a couple books on that, too). Bits have changed the world.

We, however, live mostly in the world of atoms, also known as the Real World of Places and Stuff. As huge as information industries have become, they're still a sideshow in the world economy. To put a ballpark figure on it, the digital economy, broadly defined, represents $20 trillion (£13 trillion) of revenues, according to Citi-bank and Oxford Economics. The economy beyond the web, by the same estimate, is about $130 trillion (£84 trillion). In short, the world of atoms is at least five times larger than the world of bits.

We've seen what the web's model of democratised innovation has done to spur entrepreneurship and economic growth.

Just imagine what a similar model could do in the larger economy of real stuff. More to the point, there's no need to imagine -- it's already starting to happen. There are thousands of entrepreneurs emerging today from the maker movement who are <span class="s3">industrialising the DIY spirit.

In the web age, the DIY punk movement's co-opting of the means of production turned into normal people using desktop publishing, then websites, then blogs and now social media.

Indie-pressed vinyl became YouTube music videos. Four-track tape recorders became Pro Tools and iPad music apps. Garage bands became Apple's GarageBand.

The digital revolution has now reached the workshop, the lair of Real Stuff, and there it may have its greatest impact yet. Not just the workshops themselves, but more through what can be done in the physical world by regular people with extraordinary tools.

We are all makers. We are born makers (just watch a child's fascination with drawing, blocks, Lego, or crafts) and many of us retain that love in our hobbies and passions. These projects represent the ideas and dreams of millions of people. Most never leave the home, and that's probably no bad thing. But one of the most profound shifts of the web age is that there is a new default of sharing online. If you do something, video it. If you video something, post it. If you post something, promote it to your friends. Projects, shared online, become inspiration for others and opportunities for collaboration.

Individual makers, globally connected this way, become a movement.

Millions of DIYers, once working alone, suddenly start working together.

Thus ideas, shared, turn into bigger ideas. Projects, shared, become group projects and more ambitious than any one person would attempt alone. And those projects can become the seeds of products, movements, even industries. The simple act of "making in public" can become the engine of innovation, even if that was not the intent. It is simply what ideas do: spread when shared.

We've seen this play out on the web many times. The first generation of Silicon Valley giants got their start in a garage, but they took decades to get big. Now companies start in dorm rooms and get big before their founders can graduate.

You know why: computers amplify human potential; they not only give people the power to create but can also spread their ideas quickly, creating communities, markets, even movements.

Now the same is happening with physical stuff. Despite our fascination with screens, we still live in the real world. It's the food we eat, the clothes we wear and the cars we drive. Our cities and gardens; our offices and our backyards. That's all atoms, not bits.

This construction -- "atoms" vs "bits" -- has its derivations in the work of a number of thinkers from the MIT Media Lab, starting with its founder, Nicholas Negroponte, and today most prominently with Neil Gershenfeld and the MIT Center for Bits and Atoms. It is shorthand for the distinction between software and hardware, or information technology and Everything Else. Today the two are increasingly blurring as more everyday objects contain electronics and are connected to other objects, the so-called "Internet of Things". That's part of what we'll be talking about here. But even more so, we'll look at how it's changing manufacturing, otherwise known as the Engine of the World Economy.

The idea of a "factory" is changing.

Just as the web democratised innovation in bits, a new class of "rapid prototyping" technologies, from 3D printers to laser cutters, is democratising innovation in atoms.

The history of the past two decades online is one of an extraordinary explosion of innovation and entrepreneurship. It's now time to apply that to the real world, with far greater consequences.

We need this. Much of the west is in the midst of a jobs crisis. Much of what economic growth the developed world can summon these days comes from improving productivity, which is driven by getting more output per worker.

That's great, but the economic consequence is that if you can do the same or more work with fewer employees, you should. Companies tend to rebound after recessions, but this time job creation is not recovering apace. Productivity is climbing, but millions remain unemployed.

Much of the reason for this is that manufacturing, the big employer of the 20th century (and the path to the middle class for entire generations), is no longer creating net new jobs in the west. Although factory output is still rising in countries such as the United States and Germany, factory jobs as a percentage of overall workforce are at all-time lows. Partly this is due to automation, and partly this is due to global competition driving out smaller factories.

Automation is here to stay -- it's the only way large-scale manufacturing can work in rich countries.

But what can change is the role of the smaller companies. Just as startups are the driver of innovation in the technology world and the underground is the driver of new culture, so too can the energy and creativity of entrepreneurs and individual innovators reinvent manufacturing, and create jobs along the way.

Small business has been the biggest source of new jobs in America; in the UK, there are some 4.5 million small-to-medium businesses, which, according to a 2012 Department for Business, Innovation and Skills report, contributed some 44 per cent to new job creation in 2010 (new startups contributed 33 per cent). But too few of them are innovative and too many are strictly local -- dry cleaners, corner groceries and the like, all of which are hard to grow. The great opportunity in the new maker movement is the ability to be both small and global.

Both high tech and low cost. Starting small but getting big. And most of all, creating the sort of products that the world wants, but doesn't know it yet, because they didn't fit neatly into the mass economics of the old model.

As Cory Doctorow imagined it a few years ago in his great sci-fi book also called Makers: "The days of companies with names such as 'General Electric' and

'General Mills' and 'General Motors' are over. The money on the table is like krill: a billion little entrepreneurial opportunities that can be discovered and exploited by smart, creative people."

Welcome to the New Industrial Revolution

What kind of economic future does the rise of the maker movement predict? Is it one where western countries regain their lost manufacturing might, but, rather than with a few big industrial giants, they spawn thousands of small, niche-market firms?

Call this option one: the commercial web model, one defined by low barriers to entry, rapid innovation and intense entrepreneurship. Is this the future of manufacturing, too?

Or is it one more like option two: the status quo, where the world's biggest factories remain in Asia, and western firms focus only on high-end products where costs matter less than quality and market insights?

Or option three: the real web, where the majority of content created is by amateurs, without any intention of creating a business or making money at all? This is a future where the maker movement is more about making stuff for our own use than building businesses. It is one that hews even closer to the original ideals of the Homebrew Computer Club and the Whole Earth Catalog. The idea, then, was not to create big companies but rather to free ourselves from big companies. Every time I download a design from the web and print out a 3D object on my MakerBot without going to a store or engaging in any commercial transaction, I wonder how long before more of the world of atoms becomes free, like most of the world of bits already has.

Take for instance Open Source Ecology, which is an online community creating a "Global Village Construction Set". These are open-source designs for the 50 machines necessary to "build a small civilisation with modern comforts", ranging from a small sawmill to a micro-combine for harvesting. This harkens back to the Israeli kibbutz model of self-sufficiency. Of course, we're not all going to grow our own food or easily give up our shopping malls. But in a future where things can be fabricated on demand, as opposed to manufactured, shipped, stored and sold, you can see the opportunity for an industrial economy that is less driven by commercial interests and more by social ones.

Which one of these manufacturing futures is most likely for the west?

My money is on option one: something closer to today's commercial web -- ever-accelerating entrepreneurship and innovation with ever-dropping barriers to entry. In this future, the pendulum of manufacturing will swing back to nimble developed countries, despite relatively expensive labour. Globalisation and communications flattened the world once, drawing manufacturing to low-cost labour in the developing world in a process observed in the early 19th century by David Ricardo (of Ricardian economics), as the triumph of "comparative advantage".

Now we are flattening it again, but along a different dimension. Thanks to automation, labour costs are a small and shrinking fraction of the cost of making something. For electronics, they can be just a few per cent.

At that point, other factors, from transportation costs to time, start to matter more.

For products that can be made robotically, the economic calculus of "labour arbitrage" becomes less important. Even Chinese firms are moving towards more robotic production, to insulate firms from rising salaries and to avoid the labour-condition controversies that have dogged Foxconn and Apple in recent years.

Not everything can be automated, of course, and there is a still a lot of handwork in your iPad. But industrial robots are getting cheaper and better all the time, while humans are getting more expensive.

So the decision on where to make things is becoming less about salaries. Yet China still has a sizeable advantage in everything from electronics to toys and textiles. Why? Peerless supply chains. Although we do our assembly nearer home, the components still come from China and we either have to wait for them or stockpile more than we need at any one time, costing us money and limiting our flexibility. In Shenzhen, where all these parts are made, you can order what you need from a neighbouring supplier and have it delivered in a few hours. In the US and Europe, we need weeks of advance notice.

At this point, you can start to see the shape of the 21st-century manufacturing economy.

On the product-development side, the maker movement tilts the balance towards the cultures with the best innovation model, not the cheapest labour. Societies that embrace "co-creation" or community-based development win. They are unbeatable for finding and harnessing talent and motivated people in any domain. Look for those countries where the most vibrant web communities flourish and the most innovative web companies grow. Those are the values that predict success in any 21st-century market.

On the manufacturing side, the spread and sophistication of automation will increasingly level the playing field between east and west, as will the growing direct and indirect costs of long and brittle supply chains. Every time the price of fuel goes up, so does the price of sending a container from China. Volcanoes in Iceland and pirates off the coast of Somalia -- these are all risk factors in a global supply chain and all arguments for making goods closer to their point of consumption. We live in an increasingly unpredictable world, and everything from political uncertainly to currency fluctuations can erase the cost advantages of offshoring in a flash.

But don't think that this means a return to the glory days of the mills in Manchester or the factories of the West Midlands. Instead, it predicts that the web model really will hold sway: a fully distributed digital marketplace where good ideas can come from anywhere and take the world by storm. Think more the rise of Angry Birds(created in Finland) than domination by the traditional manufacturing centres and companies of the 20th century.

General Motors and General Electric aren't disappearing, but then again neither did AT&T and BT as the web arose. As with the Long Tail, the new era will not mark the end of the blockbuster, but the end of the monopoly of the blockbuster. So too for manufacturing. What we will see is simply more. More innovation, in more places, from more people, focused on more narrow niches. Collectively, all these new producers will reinvent the industrial economy, often with just a few thousand units at a time - but exactly the right products for an increasingly discriminating consumer. For every Foxconn with half a million employees making mass-market goods, there will be thousands of new companies with just a few niches. Together they will reshape the world of making.

Welcome to the Long Tail of Things.

Chris Anderson is editor-in-chief of US Wired*. This is an extract from his book* Makers: The New Industrial Revolution(Random House Business Books, £20).

All models appearing in the gallery were made by Kyle Bean

How to become a digital maker: A guide to the 21st-century workshop

1. Getting started with CAD Why? All digital design revolves around software. Whether you're downloading designs or creating them from scratch, you'll typically need to use some sort of desktop authoring program.

Think of computer-aided design, or CAD, as the word processor of fabrication. CAD programs range from the free and relatively easy Google SketchUp to pro packages such as SolidWorks and AutoCAD used by engineers and architects.

Recommended 2D drawing programs:

Free: Inkscape (Windows and Mac)

Paid: Adobe Illustrator (Win/Mac)

2. Getting started with 3D scanning Why? 3D scanners can digitise the world faster than you can with CAD software. It is typically done with a special scanner or just many shots from a regular camera, stitched together with software.

It's still fairly specialised, but some day soon 3D scanners will be as ubiquitous as the 2D flatbed scanner that's probably built into your current desktop all-in-one paper printer today.