Tag Archives: Life in General

This category is for items that pertain to real life (you know that thing we’re supposed to get that doesn’t involved being in front of a monitor 24×7?)

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Personal Manufacturing and the changing world of Capital

There was a pretty lively discussion on one of the mailing lists I’m on and I got a bit carried away with one of my responses.  So of course, after I did all that writing I didn’t want to see it go to waste, and here it is!

This post is in response to a reference to http://www.nytimes.com/2014/03/16/opinion/sunday/the-rise-of-anti-capitalism.html (Paywalled NYT link, limited free access)

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Here’s the issue I have with the article.  It’s all about torturing the facts until they support your own arguments or just over simplifying things until you can’t recognize the arguments any more.  The whole concept of “Zero Incremental Cost” is just right enough to seem interesting but once you look at it, it’s a completely different concept than he’s basing his argument on.  Let me explain.

What he’s talking about is that automated manufacturing processes means that once you have the plans for something, it’s basically machine time, energy, and materials to make another one.  This is the big lightbulb going off moment that happens when I give people something off my 3D printer – first people tell me “I don’t want to take your <item>.”  My response “Oh, I’ll just print another” allows them to see – I just go in and push the button and another appears!  So Zero Incremental Cost – things just appear now in the economy and we all move to a commune and grow our collective garden with our printed shovels and spades, right?  Not so fast.

It turns out that each item done with a 3D Printer or a CNC Mill or an Automated Router will cost MORE than one created by traditional methods.  That’s right – it’s more expensive to 3D print an item than to make one in the way that all that stuff on the retail shelves today are made. (Talking same to same – remember, current personal automated manufacturing is limited in materials and complexity as well.)

So what’s the big deal then?  If it’s always more expensive to make one yourself than to get one-off the production line, doesn’t that mean that mean that this whole Maker/3D Printer/etc movement is doomed to failure as it’ll always be undercut by traditional manufacturing?  Nope – the differentiator is that my item is higher cost (maybe twice the price) but all I have to pay for is that one item.  That production line item is so cheap because all the design and setup costs were amortized over a production run of 10’s of thousands, or more!  So in order to get that individual cost down to half the cost of one-off my personal 3D Printer, I’d have to buy 10K.  (There’s a scene in Batman Begins where Alfred mentions they have to order 10K Batman helmets – the joys of being a multi-billionaire.)  With my Personal 3D printer each item is more expensive, but I only pay for the ones I need.

And this is where the whole Anti-Capitalism happens.  And why it’s not Communism.  And why it’s another layer rather than killing Capitalism.

If you have a market for 10-100K of an item, you’re going to use traditional manufacturing processes – the cost savings means you’ll end up paying maybe half what you would with more “cottage” production processes, and that’s going to be a big chuck of change.  Unfortunately you must have a LOT of money to save that much money – you have to buy that production run of 10-100K up front – which means you need capital to cover your inventory.  So Mr Banker loans it to you and takes his cut say 5% as interest.  You’re happy with that, you’re still saving 45% after paying the interest.  So you know you have at least a 45% margin over my personal production system, time to head down to the Ferrari dealership and see what the latest model is!

Except what happens if your market is 5K and your minimum run is 10K?  Well, you can expect there will be a “Long Tail” need and warehouse the other 5K – but now you’re running at a loss short-term (remember your Banker takes his 5%, so you’re not breaking even at this point) and now you have to warehouse that second half while you find buyers for them.  So not only are you holding inventory, that inventory is costing you money the longer it sits.  Then there’s insurance, shrinkage (things falling off the back of trucks), samples…. The list goes on, the longer you hold that inventory the more costs happen and generally the less you’ll take for them just to get rid of them.  This is the fun of automotive parts and why there’s such a big industry for them (and why a gas cap for your K-Car costs $100 when the car itself may not be worth that.)

But if you start from the ground up – you pick up your $1-3K 3D printer and you need an item, you make it.  It costs you twice what it would be to get it made in a production line, but you don’t have to do that.  You’ve filled your need with that one (or two, or a dozen) items.  Which means even though you’re paying more per item, you’re only paying for those items as you need them and you’re also able to customize each of those items for your task, so you may actually be able to get better value from them.  And thus the anti-Capitalism part – you don’t need that loan on the 10-100K product run.  You may need a loan on that $1-3K printer (or maybe more if your business expands and others want you to make stuff for them) but that 5% is going to be MUCH smaller.

So now you see that the personal manufacturing revolution is simply about taking “just in time” to the next logical level.  And the lowered infrastructure and skills costs that have been happening are actually helping drive down the need for Big Capital, just like Cloud is driving down the cost of doing a software startup.  You just don’t need to build a production line or Data Center until you’re pretty sure you have the market to support it.  And if you have a market to support your business, then those deals you do make with Big Capital are going to be much less like the Silicon Valley VC world and more like a traditional business loan or investment.

Generation Gap

OK, been quiet for just TOO long.  Wanted to post a quick observation to break the silence.  I’m an old Geek.  (If you’ve met me you know I can’t lie about that.)  But I do try to keep up with ideas (and hopefully get ahead of a few.)  But something’s been bothering me and it’s a very SOCIAL not Technical thing.

I’m still used to having my username assigned. 

Gen Today is used to generating their own username.

THIS IS KEY.

If you’re a corporation – you’re used to on-boarding people (Spellchecker wanted the hyphen, I’ve never seen it in real life) and part of that process is generating a user ID that more than likely permeates through the organization.  Sometimes two or three or a dozen.  You expect people to have this as their primary, most of their waking life identity.  Their identity is key to their day job, and anything they do outside of that MUST be separate.

If you’re an independent you expect to have control over your ID and anything that may be pre-generated becomes a task and something that you’re just going to have to deal with, but like waste disposal, do it as quickly and efficiently as you can to get back to the real stuff.  If you don’t have this – unfortunately you don’t really succeed as an independent, you end up on someone’s staff.

If you’re of my generation – your “True Name” may be  something supplemented an alias you don’t hang your hat on in public.  It’s your RPG/Shadow/Ghost name.  “Mr Slippery” isn’t a name for someone that has an office address.  Something you say what you think with (hopefully) little hope of reprisal.  If you don’t have one then traditionally you may have been a “Lurker.”  Someone that hears much, says little and stays in the wings of the theater. 

But that’s changing.  More startup companies and business are identifying either both online and offline as the same thing, or identifying with their online identity first.  You can pick your friends, but you can’t pick your given name, so to some extent that’s not as surprising as it might be. 

I find this VERY interesting. 

New Location

You may notice something new as check your feed or visit my blog.  I’ve been doing some renovation and changes to get ready for the new year.  It seems about this time every year I look at the site and really want to do something new with it.  New version of the software, new type of operations, it’s always something.

Well this year, I’ve decided to really push things.  I’m going to continue learning about SEO and what that means from a content and development side.  But not just that, I’m running in a hosted environment now as well – I’ve worked for a very long time with a server of my own (physical or virtual) and I really thought I’d like to learn about the environment that most users and developers work in. 

This site is the result of the intersection of both of those pushes.  And as a side effect, I’ll get to learn a good bit about PHP under IIS 7 as well, and how this world compares to my more familiar world of SharePoint and capabilities that I’ve been using so long. 

It’s a grand experiment, you’ll probably see me break some things, do some flubs, trip up on some items, but I’m going into this with the same attitude that I generally do with cooking.  If you already know how it’s going to turn out, then what’s the use of doing it?