Just Make It: The Evolution of Manufacturing

Kirkpatrick: You know, manufacturing used to be the domain of big companies, but it really isn’t quite that simple anymore. And I love CEOs of big companies who come to the stage with a t-shirt like that and—
Bass: I got dressed up to come here, too.
Kirkpatrick: You did, really?
Bass: I did.
Kirkpatrick: What do you wear, your underwear at the office? [LAUGHTER]
Bass: You should see me in my shop.
Kirkpatrick: Really? Oh yeah, well you’re a shop guy. We’ll get to that in a second, actually. I like that. But, so we’re talking about the shape of manufacturing and how it’s changing. Technologies like 3D printing—you know, everything from satellite components to shoes are being made with 3D printing. But when you look at the big picture, and you’re a software company that basically builds design software, in its essence, right? That’s the main thing you do at Autodesk?
Bass: Yes, absolutely.
Kirkpatrick: So when you look from that vantage at what’s happening with making things and manufacturing, what’s the summary point you would make to sort of start this big picture conversation?
Bass: The biggest thing that’s changed is not only have computers changed how you design and engineer stuff, but they’ve totally changed how we’re making stuff. So the bigger point about 3D printing isn’t the 3D printer. We can talk as much as you want about 3D printing, but you finally have taken the power of a microprocessor and now applied it to a manufacturing process. And if you look across the spectrum of really interesting things that are here and on the near horizon, it is all about being driven by microprocessors. If you look at manufacturing in future, it’s just like your previous guest said, I think the future is biological.
Kirkpatrick: We’ll get to that in a minute. That’s very good.
Bass: I knew that was a tease.
Kirkpatrick: No, I like that. But be a little bit more specific about where processing will affect manufacturing in the future, beyond 3D printing. What’s a way that it might do that that we’re not thinking about?
Bass: I mean, the way to think about it is, if you think about the Industrial Revolution, what came about as a result of the Industrial Revolution, we were able to make really high-quality things at reasonable prices, if we made a gazillion. It turns out, with the advent of computing in there, we can now do that exact same thing, but you don’t need to make a gazillion. You can do this on one or two, and so you can make custom and bespoke stuff in ways that were never possible. We don’t need to make a million plastic widgets in order to get that economy of scale. You know, the 3D printer is as happy making one as 1,000.
Kirkpatrick: So does that mean economies of scale go away and we don’t have some products that benefit from that? Is everything moving to this model?
Bass: No. Absolutely not. It will still be—the best thing to do will be to make plastic widgets that cost two cents. Probably plastic-injection molding in low-cost labor markets will still be the way of certain products, but it’s opening up a whole new area of products that were never possible before. You couldn’t do custom products at an affordable scale.
Kirkpatrick: To ask a contrary question to the one I just asked, which sort of presumes that 3D printing is here—I mean, I was at a session at the Aspen Ideas Festival this summer where people in the audience were asking, “What is this thing called 3D printing?” So it isn’t so established yet, right? You talk about it like it’s kind of a given, but how soon will it really be a given, where we’re seeing mass influence of 3D printing across our lives? Because it hasn’t happened yet.
Bass: Right. Okay, so I’m a predictor. My first 3D printer I saw 25 years ago, so I’m a little jaded—
Kirkpatrick: Well, it’s been around for a while, yes. But it was super-expensive.
Bass: It’s been around—yes, and it didn’t work really well. It still doesn’t work really well. So I’ve seen it since the ’80s. That’s when it was really invented. One the other hand, I was just doing an interview and one of the tech guys, he said, “Oh, 3D printing, let me show you these new headphones.” So these were custom headphones. He took a picture of his ear with an iPhone and two days later he said he got these ones delivered and they fit perfectly.
Kirkpatrick: Right.
Bass: So it is starting to go mainstream in some ways. It’s not totally mainstream, but it’s definitely getting there. And then—I mean, there are a couple things to think about 3D printing that are interesting. One is, you know, on the good side, and why it’s going to continue to evolve, the shape of something you’re going to print, the complexity of form doesn’t matter. The 3D printer will print the most complex thing, and you don’t need any particular craftsmanship to do it. So you don’t need a lot of capital-intensive equipment, and you don’t need huge manual skills. You can make a 3D model on a computer and you can produce it, and I can send that file around the world, or to outer space, or to the bottom of the ocean, and we can make the exact same part anywhere. And that has huge possibilities.
Kirkpatrick: Okay, but, you know, I want to get a little more into like how you’re thinking, as the CEO of Autodesk, which is a multi-billion-dollar company that builds software for designing buildings and cars and all kinds of things, how far—I mean, how much of what you’re doing is going to continue to be implemented in traditional manufacturing and how much of the use of your software is going to result in outputs in 3D printing or other radically new types of fabrication?
Bass: You know, I think the history of us humans as toolmakers is that we will continue to evolve and add to it. So I don’t think some of the things that we do now will go away, but if you look at the future, there is no doubt that, you know, additive manufacturing, the general category of 3D printing; subtractive, these very high-precision machine tools; robotic assembly and manufacturing; and then bio and nano will be the tools of the future. At a certain point it will still be driven by the same underlying factors that have always driven it: what’s the cost, what’s the reliability, how much up front versus how much on a run-rate basis. So you’ll have the same things, but we’re really just adding to our toolkit this whole range of possibilities that were never even imaginable before.
Kirkpatrick: Okay. Well, since you’ve mentioned bio twice, we’ll go there now. So why is Autodesk getting into bio? I know you have a whole new division, you’ve hired some smart people—some of whom have spoken at Techonomy events. Tell us about that.
Bass: So I think it’s—so one of the limitations of 3D printing, and we’ll approach it from that thing. One of the limitations of 3D printing is that things go up as a cube power, so it goes up as a power of three. So if I want something that’s twice as big, it takes eight times as long. If I want something three times as big, it takes 64 times as long. So fundamentally, you will always be fighting that—and just like in computing, there will be breakthroughs and there will be things we can do in parallel, but fundamentally, you always will be fighting the power of three. Biological processes are one of those things that get around that, and we are harnessing the tools to actually be able to grow things differently. I mean if you think about it—
Kirkpatrick: Not just food though?
Bass: Not just food. Well, because we can 3D print DNA and manipulate DNA—and people are 3D printing DNA. You can mail-order DNA. You think about it, you know, the Ebola virus that everybody is talking about—you just mentioned Larry in that context—it’s 2,000 bits of information. You think of a tree, something like an oak tree, and it’s a megabit of information, relatively small amounts of information that we need to manipulate to get outcomes that we know of.
Kirkpatrick: So are you—what are you doing with this right now at Autodesk?
Bass: So what we’re doing is we’re saying—just like we’re doing with 3D printing, our customers are interested in making things: cars and planes and the infrastructure of the future. And what we’re looking at is saying what lessons can we bring from what we’ve learned in helping people design in the inert world and bring that to the biological world? So for example, we’re working with a group at Harvard that’s doing nanoscale robots for drug delivery.
Kirkpatrick: And you’re providing the software that allows them to do that now?
Bass: Yes. And you still need to design this thing. So, okay, I have an idea, I have a robot—and whether the robot is a robot like this or a nanoscale robot, somebody has to design that mechanism. And we’re giving them the software tools that help them design that.
Kirkpatrick: One other thing—I want to just switch to another thing. You yourself are a maker and a craftsman, and I think it’s interesting that you are, as the CEO of Autodesk—and I’d love to just quickly take a divergence to show some slides that you brought that show some stuff you’ve made, right?
Bass: Okay, sure.
Kirkpatrick: Could you just quickly walk us through those? Can we get those slides up? We don’t have to spend too much time, but I think you should just quickly show—
Bass: You can quickly flip through. So I’ve built a lot of boats, both traditional—
Kirkpatrick: You built all of this stuff we’re seeing?
Bass: Yes.
Kirkpatrick: Entirely yourself?
Bass: Yes. Well, that other boat I worked with a friend on. This I worked with a friend on. It’s either me or one or two others.
Kirkpatrick: What is that?
Bass: That’s a bench that I carved out of black granite.
Kirkpatrick: You carved that out of black granite? Wow. So you have some kind of—
Bass: That’s what I told you, I got way dressed up for this.
Kirkpatrick: Yeah, wow.
Bass: You should see what you look like after carving black granite.
Kirkpatrick: Is that a table? A stool?
Bass: Yeah, it’s actually my—it’s a table, and it’s made out of concrete and mahogany.
Kirkpatrick: Wow.
Bass: And so, yeah, I spend a fair amount of time—
Kirkpatrick: Okay, what’s this?
Bass: This is a table. It doesn’t have the top on it, and it’s a table that I’ve just carved using—this is one of the first ones I’ve done with CNC machinery. So this is computer—
Kirkpatrick: CNC, computer-controlled?
Bass: Computer-controlled machinery.
Kirkpatrick: Which of course was controlled by software from Autodesk?
Bass: Right, exactly.
Kirkpatrick: And this? That’s beautiful.
Bass: Thank you. It’s a—this is a—there’s a whole series of these. I tend to make them and they’re a little bit like rabbits, you know, they end up all over the place. I have dozens of these things. This first one I made by making a wood version of it and then I cast it in bronze.
Kirkpatrick: That’s a vase, or…?
Bass: Yes. Yeah, so it’s like this big, you know, but you could kill someone. It probably weighs like 10 pounds. Oh, this is a series of 3D-printed speakers I made.
Kirkpatrick: You really run the gamut. You know, that’s quite a range—where do you have time to do that?
Bass: Well, I was going to say, a lot of these things are relatively small. The boats I built—I mean, some of that work goes back 30 years. I don’t have that much time, so I tend to do design experiments now. I think of them as relatively small, because I do have a full-time job.
Kirkpatrick: Quickly, how does that alter the way you think?
Bass: Oh, this one is totally cool. This is my son and I. We built an electric go-kart last year. So this has got a 20-horsepower electric motor. It goes like 55 miles an hour. And it’s about two inches off the ground.
Kirkpatrick: How old is your son?
Bass: We started it when he was 15, we finished when he was 16.
Kirkpatrick: Okay. If there’s any more, let’s quickly go through them. Oh, there you are as a young craftsman.
Bass: Yes.
Kirkpatrick: Okay. Nice.
Bass: So some traditional—that’s from way, way back.
Kirkpatrick: I have to say, among other reasons why I like this, at Techonomy we’re always trying to celebrate the intersection of the arts and business and technology, and this is one way of doing that. But how—and to continue on that theme, how does the fact that you do that affect the way you think about being CEO of Autodesk?
Bass: Yeah. I mean, I hope in some ways—I mean, I think many people could do this. Everyone who was the CEO before me didn’t do this, and I’m sure the people after me won’t, but what I hope it does is gives me a greater appreciation and empathy for what all of our customers are doing. You know, the most fortunate part of my job is I get to work with the most incredible and creative people, you know, whether it’s the people making films like “Avatar” and “Lord of the Rings” or people who are designing buildings around the world, or all the car designers. And so in just a small way, I hope it gives me an appreciation of what they try to do for their job. For me it’s fun, but for them, this is what they do every day.
Kirkpatrick: We’re going to bring up a couple of other experts in this field of how making things and manufacturing is changing, but before we do that, I wanted to ask you about—you know, you’ve talked about robots. There’s an awful lot of automation happening in your world, in the making of things, and it’s already come up in our discussions here and in other events we’ve done repeatedly: What’s happening with jobs? Is there a future for the middleclass? What’s your thought on that?
Bass: I’m not overly optimistic. So I think you should be certain that lots of what are traditionally middleclass jobs are going away. Various forms of automation are eliminating those jobs. You know, you start with factories and they’ve been hollowed out of people. You think about driverless cars in the context of most of the people in this room will end up having driverless cars, but that is tens of thousands of jobs that provide livings for people that will not be there in the future. And so in my mind there is no doubt the people with the skills who can design and build those things, there’s a future for them. I think there’s a much more serious conversation that needs to happen about what happens in society. You know, what happens when the robots take our jobs? What are we all going to do?
Kirkpatrick: Okay, but what about the possibility that more people could do stuff like what you showed us in your slides?
Bass: I think that would be great. One of my ideas, that’s only half facetious, is that we should tax robots instead of people. Seriously. That if you think about it, if I as a factory owner want to put in more robots, you should be taxing the capacity, you know, the output that I produce, rather than the individual people. Because what you actually have to do in some way is figure out how do we pay for the infrastructure and everything else that supports this? So I don’t think the individual problems there—as a matter of fact, I think it’s Keynes who in the ’30s wrote this paper and he was lamenting what was going to happen to his grandchildren, because the availability of capital and the efficiency at which we were going be able to do stuff, there would be no jobs for his kids, and that’s not turned out to be true. So on one hand, I would say, look, as long as we can keep inventing jobs in front of the jobs we’re eliminating—you know, he didn’t imagine in 1939 there would be a job of a Web programmer or a data scientist. So if we can keep inventing jobs ahead of those, that’s great, but we need to have an education system that supports those kind of jobs. Right now I think we’re teaching kids in schools for jobs that don’t exist, for a future that doesn’t exist. You know, the idea that the schools were taking people from agrarian to factory is a future that doesn’t exists for them, and things like the education system need to change.
Kirkpatrick: Okay. Let’s bring Liam and Marleen onstage to join us, two more people who are real expert at this concept of how manufacturing and making things is changing, to just continue the conversation. Marleen is a co-founder of Shapeways, which is a company that is a remote fulfiller of 3D printing designs. So maybe you can describe it more accurately in just a second. Liam Casey is the founder and CEO of PCH, which is kind of an astonishing company that’s an enabler of the creation and manufacturing of the work of other companies, and is quite innovative in the way it’s operating right now at substantial scale.
But Marleen, quickly talk about what it is that Shapeways makes possible, and any thoughts you’ve had on what we’ve said so far.
Vogelaar: Well, Shapeways is a company, it’s basically a 3D printing service for consumers, and it’s also a marketplace. So designers can go to Shapeways and earn money and support their own living by putting their product designs online with Shapeways and selling them. And then Shapeways takes care of manufacturing, distribution, customer service, supply chain, all of that. Yeah, so that’s what Shapeways does.
Kirkpatrick: Did we leave anything out in what we were discussing about 3D printing that you would want us to urgently not lose?
Vogelaar: Well, I was very much in sync and agreeing with what Carl had to say about it. Complexity doesn’t matter. 3D machines are great but they’re not fantastic yet. What’s great about 3D printing—the magic of 3D printing for me is in what you can do with it and the things that you can make with it. It’s not in the technology itself, because actually, it’s not—a 3D printer is not that complicated, nor that reliable yet. So that technology still has to evolve a lot faster, if you ask me.
Kirkpatrick: So Liam, talk about what PCH does and any observations based on what you’ve heard in this session, or frankly, anything else today—or yesterday.
Casey: Great. Great. I’m delighted to be here. So PCH, we’re a product innovation company. We take ideas from concept all the way through to consumers, so somebody will come to us with an idea for a product, we’ll take it all the way through the development stage, all the way through the manufacturing, the packaging, and the logistics. We ship it direct to consumers’ homes. We think about the—our last mile is often 8,000 miles, so the logistics part is important, but also the whole engineering and development at the start of the process.
One of the things where we see 3D printing being really important is that—back around 2007 we worked on a product called Chumby—not sure, does anyone here remember Chumby? Some—yeah, so we built the Chumby. And I remember, for me that was an amazing opportunity, because we’d worked for all the big tech companies up to that, and then Bunnie Huang and Steve came in and they started talking about this beanbag that had a screen on it that had touchscreen, had Wi-Fi, had Bluetooth, and we actually built it for them. But that was when we saw a change, where we saw more entrepreneurs coming to us and engineers coming to us with ideas for products. And what was happening was they had access to 3D printing, they had access to Arduino and Linux. These were the new fabrics of technology that we saw emerging that really got us interested in how do we work with more of these engineers, because with these new tools, it’s—we saw a renaissance in prototyping, and a renaissance in prototyping is driving a renaissance in hardware, and it’s really fostering a whole lot of innovation like we haven’t seen before. And then like 2008, when engineers were being let go from companies, they were actually going into their garages and starting to work with these tools—
Kirkpatrick: These software engineers that were moving into hardware.
Casey: Yes, absolutely. And they were trying to do it themselves, and then they were coming to us with great ideas. We set up PCH Access, which is an accelerator to help them scale. We actually then set up a formal program called Highway1, where we take in applicants—and again, in there we have a lab where they have access to all these tools, including 3D printing, and it helps them come up with samples. And in hardware, the moment of truth, one of the most important moments is where you actually give the creator that first prototype, that first sample—and just try and take it off them. And it doesn’t work. They just really want to hold onto it. And that’s where the creativity happens. That’s where that moment of magic is that’s so important in building hardware.
Kirkpatrick: But what you do is a big picture example of this world of empowerment that we’re living through, where you actually have an incubator where you help people who just really have an idea. You help them create the actual prototype, then you help them find a place to manufacture it, help them manufacture it, help them deliver it. I mean, you really essentially help people create the entire product process, even the whole company process, inside your company, which is quite a striking set of capabilities inside a company. Just talk about how you see the landscape shifting, in terms of how quickly we will see new ideas come to fruition as a result of the existence of that kind of system.
Casey: Well, what we see at the moment is—I mean we’re seeing new companies every day, and new ideas every day, where people come to us with great ideas and it’s a question of how do we filter them, how do we pick the right ones? And, you know, at the end of the day, for us, we move 10 million parts a day right across our network. So for us, we know we can make this stuff—we make a lot of products. The hard thing is still the distribution and the selling. You can make all these products, but if you can’t get real partnerships in the distribution or in the selling, you’re going to have problems. And that’s the big part that needs to be disrupted.
It’s interesting, if I sit with an entrepreneur in Silicon Valley, it’s quite likely they’ll want to make an accessory. If I sit with an entrepreneur in China, it’s very likely they’ll want to make a device. And when I tell people back here in Silicon Valley about this, they’ll tell me, “Well, we need to bring back manufacturing.” And I tell them really fast, “It’s got nothing to do with manufacturing. It’s got everything to do with distribution. It’s got everything to do with the contracts that the big box retailers put in front of the startups.” When you look at these contracts—we just saw one recently where it had three months of inventory in the channel and it had consigned inventory in the stores and in the distribution centers, and then it had 90-day payment terms. There is no way that you will convince anyone in Sand Hill Road to fund a contract like that, and that’s what we’re trying to change.
We did it with Radio Shack recently, where we took—we went to Radio Shack and we said, “If you want us to provide great products and great entrepreneurs to give them a platform, what we will do is we will ship the product directly from our production lines in China—we’ll ship directly to stores, we’ll ship once a week.” And they agreed to it and we actually, we reengineered their supply chain. Where they had three months of channel inventory, we have taken that down to six days. Now, you wipe out a huge amount of risk when you do that.
The next thing we said was that, “For these startups, we want you to give them 14-day payment terms, instead of 90,” and they agreed to it. We then said, “Okay, no consigned inventory, no right to return.” And Joe and the team were actually very good, and now we actually have great startups—littleBits from New York is shipping products into the Radio Shack stores every week. We ship into 4,200 stores, and some stores we’re going once a week and other stores we’re going twice a week.
That’s what’s going to really create a fantastic ecosystem of hardware startups in Silicon Valley. Because, when you look at other parts of the world where they don’t have these contracts—the contracts we’ve seen here are hugely onerous and make it very challenging for a startup. What we want to do is we want to try and convince the VCs in Silicon Valley and give them a safe way to invest in some of the startups.
Kirkpatrick: Okay, so here we have the software to design things more efficiently and more quickly and in a more interesting way, your manufacturing system that effectively cuts through a lot of the obstacles that especially smaller entities and individuals have faced in the past, and, Marleen, you really actually created—you are also fabricating things, helping people manufacture things. And I know you’re very interested in the environmental impact and implications of this new world that’s coming into being. Could you talk a little bit about that?
Vogelaar: Well, if you look at it from a grander scale, you know, you see an interesting evolution, what Carl just talked about. Everything—you know, to be able to make one thing, you have to make 100,000 of them. But if you look at the ecological impact of us, you know, moving everything towards China, where for instance, you know, in a couple of jeans, one in eight children are born with a tumor, whether benign or non-benign, I mean, that’s a huge impact. One in eight children being born with a tumor, just because the water is so polluted because of the dyeing of jeans.
Kirkpatrick: In an area where they make jeans in China?
Vogelaar: In an area that’s like the capital of the world of jeans. So by shifting all of that production of the whole world in the direction of China, we’ve created a system where the ecological impact is not visible to us over here, but is not great for the people over there. We’ve created a system with a very complex supply chain that can take very long, if you don’t use Liam. And we’ve created a system where you cannot have something that is special, bespoke to you, or customized. And what you now see, is that with the rise of 3D printing—but actually also with other technologies—basically machines and technologies are getting smarter, and we can use those machines and those new technologies like 3D printing to make things—so to cut out that long supply chain and cut out the negative cost and impact on the environment, but also create something that’s actually a bespoke or personalized to the customer’s desires, with a much shorter lead time. And you can do that with smart technologies, you can actually do that locally, at home. And just by doing it locally, we will start to reduce, of course, the whole footprint.
But that doesn’t work for every technology, but there’s—next to 3D printing, in clothing, even in circuit boards and stuff, there are technologies out there that can do that on a competitive level. I don’t think like nano—you know, like building a chip will always happen in a foundry that’s super huge.
Kirkpatrick: But a phrase that emerged on this stage a few minutes ago, farm to table—you could actually say we’re seeing an era of farm to table manufacturing, in effect.
Vogelaar: Yes.
Kirkpatrick: And you were also making the point on the phone that that will satisfy a fundamental need of the consumer these days to know more, right?
Vogelaar: Yes. I mean you see that everywhere around you. I mean people are way more interested in not only what they’re eating, but how what they’re eating is made. And the same thing, like people are way more interested in clothing that they wear, the products that they use, how they are made now. And you see, you know, it’s completely different than 10, 15 years ago. And I think, you know, that will continue to evolve and will change the type of demand people have. I mean Whole Foods has just launched a new strategy about, I don’t know, what is it about? Not so much about organic food, but like that they’re very conscious and—what is it—that they’re extremely conscious about how they do business. And that marketing is supposedly helping them increase their sales numbers again.
Kirkpatrick: The consciousness could really apply across the board to almost everything we consume. I mean, let’s hear—anybody in the audience have comments or questions? Okay, Jody. I know Jody’s first name—please get the mic over here. I want her to identify herself, of course, then I know her last name, too.
Westby: I’m Jody Westby. So I’ve really been worried at the deplorable state of our tech trade schools. And so manufacturing was the great avenue for a whole swath of our workforce, that are still doing these stupid grocery cashier, auto mechanic type training things. So what can you suggest about how we could—what are your ideas for how we could upgrade tech training so that they could be more prepared for this new wave of manufacturing in the U.S.?
Kirkpatrick: That’s a Carl question.
Bass: Yes, so I think it’s a great question. So first of all, I think it’s true, this idea of vocational training—I mean, the first thing you have to do is not make it for the dumb kids. There are plenty of people who find making things interesting that aren’t the dumb kids. You know, when we were growing up, either you go to college or you can become an auto mechanic. By the way, auto mechanic takes a fair amount of skill to actually be good at. We’ve got to change that. We’ve got to modernize it for the kinds of things that people are doing. All design and all fabrication is becoming digital, so this is computer training, it’s learning how to model in 3D, it’s learning how to fabricate in 3D. That’s another important part.
It’s also, it’s not just the dumb kids, it’s also the girls. Remember, we had to segregate them too, because the girls had to go learn how to cook and sew. So the first thing is there’s lots of people who are there. We have to also realize that there’s a future in this and that it’s an exciting future. One of the things that we just did, and it’s probably the thing I’m most proud of this year, we decided to take all of the software that we have, so every professional product, and we made it free to every student, faculty member, and school around the world. And so—
Kirkpatrick: Wow. Every product?
Bass: Every product. So all someone does is go to our website and they get a three-year license. And it’s every product. And what’s interesting to me about it is the number of people who are not coming from the United States who are accessing this.
So—and the first thing that happened from our point of view is that the number of people downloading the software went up by more than an order of magnitude. The second thing that happened was when you look at it, it’s China, it’s Brazil, it’s the Middle East, it’s Russia, it’s India. It’s exciting to see where people have this desire to do it. I mean there’s been more software downloaded in Africa than products that we’ve sold in our entire history. So there’s this incredible desire, but I think along with it, what’s really needed is the curriculum. Because we see a lot of teachers who get excited about this, and they have some of the tools, you know, they have low-cost electronics, Arduinos. They now have access to even crowd-funding, you know, if these ideas become great. They have free software from us. But the teacher—think of the teacher in North Dakota. She wakes up and says, “I really want to change the industrial arts program, I want to have an engineering program in the school,” and there still needs to be curriculum and materials. There’s great access to info, but it’s not as structured.
So I think it requires a complete rethinking. But, you know, as I said to you in the first part, I think we need to rethink the academic part as well as we need to rethink the part that is so-called vocational.
Kirkpatrick: Did you have something you wanted to say?
Casey: No, I think just one thing I would like to add to what I said earlier about the whole like trying to get distribution changed. Because you want to build great companies here. When I look at China is building companies Xiaomi, which is roughly a $50 billion valuation now as a 3-year-old startup, I can’t convince somebody in Silicon Valley to take a risk and build a phone. We can build it, but I can’t get an entrepreneur who has the ambition to build it.
Kirkpatrick: But there’s scores building it in China. I mean, scores of new companies doing it.
Casey: Exactly. And that’s where if we fix distribution, then you will get—the creativity and the innovation in Silicon Valley is so much better.
Kirkpatrick: Is that partly because in Silicon Valley they don’t even realize that people like you exist, and that people—that it’s so—I mean it can’t be so fundamentally different for the Chinese. It’s just they’re closer to the location where the fabrication happens, so they understand it more intuitively, is that it?
Casey: I think it’s because the risk—there’s too much risk for a venture capitalist to invest in a hardware startup like this here.
Kirkpatrick: Okay.
Vogelaar: Yes, well, they’re not familiar with it, and there’s a lot of money that has to go into it, more than if you just are a startup that’s just a couple of servers and people with brains.
Kirkpatrick: Right. It’s amazing, some of the things that are happening with new phones in China. Please identify yourself.
Elkehag: Hello, my name is Elin Elkehag, I come from Vinna Ventures. I actually had a hardware startup by myself earlier, and I totally agree with your issue. It’s not the design, it’s not actually the technical production; it’s the logistics, it’s the communication, it’s the cultural understanding, and other things that are the complicated part. So to that point is, do you see a future where we’re not dependent on Shenzhen and Taiwan and other—like it’s a few small hubs where we produce a lot of these things? Can we bring back manufacturing closer to Mexico, U.S.A., or somewhere else, where we’re not dependent on China, for logistics reasons, for—
Kirkpatrick: He has a huge operation in Shenzhen. It just happened. Okay, go ahead, Liam.
Casey: It’s a great question. I think that in the hardware world, time is often the number one currency, dollar a second. So speed to market is number one, and in our world, that’s so important. And if I move production here, which I could set up a facility here and I could probably make a product here. The problem I would have is the access to raw materials, the lead times for the raw materials will extend the production time. That’s why the ecosystem of raw materials that’s based in Shenzhen plus the skilled workforce that’s there at the moment, that’s why it’s one of the locations to use.
And also, I mean we operate on the basis that we’re three hours from all the factories we work with, we’re three days from 90 percent of the consumers on the planet that buy products. And if you can send an astronaut to the International Space Center in six hours, you don’t need distribution centers around the world to hold your products. Products should never stop moving.
We ship orders of one. Every product we make, we ship orders of one, and we move about 10 million parts a day. So it’s very possible to do it now. We also work on the basis that we’re replacing inventory with data, because, again, when I go around the U.S. and I look at warehouses, or in Europe, when I look at warehouses full of inventory that’s never sold, the energy that’s being wasted to put that there, to make it, to transport it, to put it there, to store it, and then to destroy it is huge. If you can cut out that, you’ll actually save a huge amount of energy.
Bass: Let me just add one thing. I think Shenzhen will continue to exist, but I also think there are stories that are equally good of manufacturing being re-shored or happening in other places. I went to this company, they make very high-precision CNC machines. It’s a Japanese company, they just opened a factory in Davis, California, and they are making an entire line of machinery in Davis, and they’re doing it with about 100 workers in a totally automated plant. So it’s a lights-out factory, and so I think there’s as many stories as that, that will be complementary to the stuff that’s going on in China. And I think we need to reimagine why would a Chinese company that makes the finest machine tools in the world decide to set up in the Central Valley?
Kirkpatrick: It’s a really great conversation that we really should continue, but we have to wrap this up. I’m so happy that we got to some of those points though. Carl, thank you so much for being here. Thank you, Marleen. Thank you, Liam.