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Democratizing manufacturing

2 Sep

Ponoko is part of a wider DIY product movement which includes companies like 3D printing service Shapeways or T-shirt maker Threadless where users design and manufacture their own products. This democratization of manufacturing parallels the user-generated content explosion unleashed by content-sharing sites like YouTube. Ponoko users have made 60,000 items to date covering everything from steam-punk couture to furniture.

via Make your own gadget with Ponoko and SparkFun | VentureBeat.

This is probably the most exciting and least reported development in our society.  For the first time, everyone has access to the means of production.  What still remains (and may never change) is the ability to get people to see what you have created.  This is quite possibly the biggest opportunity for empty retail spaces.  What I imagine is small storefronts where independent owners select the best of these products, display them, and sell them to the customer.

This brings the idea of a boutique to an entirely new level, especially if our newest designers give boutiques a commission for what they sell.  Indeed, if I was a designer that used Ponoko to manufacture my products, I would gladly give a boutique a 25 or 30% commission to display my products so that I could actually market and distribute my creations.

This is the only way I can see to practically market these tens of thousands of new items that are being created every day.  Despite its efforts, Etsy still needs an editor or someone that suggests and helps people choose products.  60,000 variations on a wallet is too much for anyone to wade through.  But style-conscious folks should be able to help me make this choice and they should be compensated by the manufacturer / designer for doing so.

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AIG, Counterparties, and the ensuing discontent

16 Mar

The “swift and certain” collapse of the financial system just netted $36 billion for German and French banks, via the American taxpayer and the government bailout of AIG.

For those that do not know, AIG spent the last five years writing insurance contracts that would pay out in the event of a devaluation of mortgage backed securities.  Now that these “baked” securities are worthless, AIG is on the line for hundreds of billions and maybe even trillions of dollars.   The American government seems to think that the entire financial system is on the line and so they have decided to effectively guarantee the counterparties on these insurance contracts.

This guarantee means that my taxpayer dollars (and yours) just sent $36 billion to French and German banks.  We also sent over $40 billion to Goldman Sachs.

To put that in context, the stimulus bill included only $27.5 billion for highway construction.  It’s not the bailing out of foreign banks that bothers me but the idea that people who made bad bets don’t pay for them.  If I buy stocks and my 401K decreases by 50%, there is no federal government to pay the difference.

If the government can’t afford to “bail” out students who are now defaulting in droves on their student loans, why can it afford to spend hundreds of billions and maybe trillions of dollars to subsidize the poor investment choices of the likes of Goldman Sachs?

Discontent is simmering in this country and it’s about to start boiling.

An Update on Scarcity

27 Dec

The low cost of production of everything has created a situation where anyone can produce anything. Limitations of capital exist today but this is a recent phenomenon. Technology is still cheap and readily available. The cost of raw materials has even dropped.  The proliferation of production has left us with too much of everything.

Several years ago, Seth Godin wrote a post arguing that there was a scarcity shortage. As an example, he cited the problems faced by mortgage brokers.

“Twenty years ago, most mortgages were written by the local bank. Those banks planted the seeds of their obsolescence when they eliminated judgment from the writing of mortgages….Today, there are an infinite number of brokers to choose from, all offering essentially the same service. The result is that there is no scarcity, and no profit.

The true scarcity in this industry and in most others, as Seth noted, is good judgment. We were once able to measure good judgment by profits or stock performance or sales numbers. Those metrics, at least for now, are out the window.

How do we measure good judgment to make sure that it’s not as scarce as it has been? Do we change the way we reward ourselves, our employees, and our managers? I think in order to do any of these things we must realize that profits are not as easily created or as easily replaced as the $30 DVD player we buy on Black Friday.

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