Exploring critical technology supply chains, regional ecosystems, and manufacturing dynamism @CMU EPP | UC Berkeley MS in CEE | SRI International
Joined July 2015
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We need better operational intelligence about US manufacturing (mfg). The current mfg information environment is opaque, preventing network formation. To solve this problem, I'm introducing the Manufacturing Intelligence Platform, a centralized location for data about US mfg.
This is not true. Arizona has a rich and underappreciated microelectronics ecosystem that has been growing since around 1950 with the arrival of Motorola. This includes both upstream and downstream suppliers and customers, not to mention the technician pipeline established by ASU
It also gets the Apple story wrong. The right version of that history is that Apple—and Foxconn—tapped into existing manufacturing capabilities in China. Before Apple, China already had a massive network of component producers and an incredibly skilled labor force. Apple repurposed and added some of these capabilities to iPhone production on top of that baseline. Apple should get the credit for jump starting handset production in China, but the spillover story is in the other direction as well. Apple went to China because of China’s existing general manufacturing capabilities in the first place and it was able to retool and upgrade these existing capabilities for its own production. That is not Arizona story at all.
Nikhil O'Sheal retweeted
Nearly everyone in the West focuses on China's Five Year Plans as the reasons for its manufacturing success, concluding that more central economic planning is needed.
This is the exactly WRONG lesson. The country's success comes because its cities all compete with each other intensely, as something akin to vertically integrated corporations that are completely obsessed with local economic growth.
Its incredible manufacturing industry is based on local clusters that local govts nurture and invest in, and collect a lot of the returns from through property fees and taxes. These govts are *much* closer to local needs than Western local govts are, and can focus on speed of building and iteration above all, which are critical for manufacturing.
*This* is why local government matters in Britain and America, where it is almost completely broken and dysfunctional. Where local spillovers matter, as in manufacturing, you need some kind of entity that can internalise the positive externalities of economic activity. China is proof that with the right incentives and tax powers, local governments can become machines for economic growth, intervening and clearing the way for development.
China has become the most important manufacturing economy in the world because it is a continent-sized Silicon Valley.
worksinprogress.co/issue/chi…
Every Chinese city govt acts as a VC firm trying to create clusters in its region, because it has both the means and incentive to do so.
Local govts generate their revenues, nearly all of which they keep, from selling leases on land and from stakes they have taken in local companies, which together allow them to capture economic spillovers.
Chinese officials have their entire careers graded and determined by how much growth they have been able to create in the areas they run. Career progression is determined according to a great tournament that pits official against official and gives promotions to whoever has grown their region the most. If they don’t reach a certain stage by a certain age they are blocked from promotion forever.
This is why so many economic clusters have centred on Chinese cities, for high- and low-tech products alike. Shaodong makes 70% of the entire world's cigarette lighters; Danyang makes half of the world's spectacle lenses; Zheng'an makes 1/7 of the world's guitars; Datang a third of its socks.
Whereas many of the West’s most important city governments capture only a small amount of the spillovers from successful clusters, and thus have very little reason to foster them, in China, they get a huge amount of the upside and can re-invest it in further growth. This also gives them a great incentive to solve problems for companies, like when Shanghai's govt got Tesla's factory there built even faster than Elon himself had expected (and twice as fast as his Fremont, CA factory).
But this is not some exotic 'oriental' innovation – this is how America used to do things when it grew fastest, in the 1950s, 1960s, and early 1970s. Catching up with China on advanced manufacturing does not require a wise and strategic approach, let alone authoritarianism or the end of democracy. It may just mean fixing city government.
This is why I care so much about local in Britain and America: if we give our own local governments the same incentives and means to grow, the crazily dysfunctional entities we have become used to may be transformed into corporation-like bodies that are ruthlessly focused on making their cities rich, safe and prosperous.
Read more in Works in Progress worksinprogress.co/issue/chi…
Thriving component businesses will enable technological giants but also enable entrepreneurship and experimenters. Ecosystems flourish with a healthy stream of inputs and nutrients that can be combined into thousands of different flowers
Imagine hanging out with 5-15 of your closest friends and running a mostly automated machine shop, making critical parts for your community and country. An American dream
We need to get the shops with 10-19 employees in a position where they can produce 3x-5x their current output without requiring a corresponding increase in headcount.
Many of these shops supply OEMs & make key parts/ components that go into bigger things/ equipment.
Over the next 5-10 years, the bigger companies/ OEM’s will increase their domestic production output. That means they’ll need more of the parts/ components to assemble the finished goods.
I expect ~80% of the shops with <10 employees will disappear over the next decade. Few are willing or able to make the drastic transformation that will be required to compete & succeed in a world with widespread production automation.
The work from the 80% closing & the increased demand needs somewhere to go. Highly automated shops with 10-19 employees that employ technologies & systems built around the decades of human knowledge, will be able to ship 3x-5x what they do now. And they will do so without the administrative bloat, bureaucracy & analysis paralysis that companies with 100-150 people experience.
We need to give the shops in the 10-19 employee range, this coalition of willing, driven, & obsessed manufacturers, more support.
(Note, I’m specifically not talking about defense suppliers)
Nikhil O'Sheal retweeted
We need to get the shops with 10-19 employees in a position where they can produce 3x-5x their current output without requiring a corresponding increase in headcount.
Many of these shops supply OEMs & make key parts/ components that go into bigger things/ equipment.
Over the next 5-10 years, the bigger companies/ OEM’s will increase their domestic production output. That means they’ll need more of the parts/ components to assemble the finished goods.
I expect ~80% of the shops with <10 employees will disappear over the next decade. Few are willing or able to make the drastic transformation that will be required to compete & succeed in a world with widespread production automation.
The work from the 80% closing & the increased demand needs somewhere to go. Highly automated shops with 10-19 employees that employ technologies & systems built around the decades of human knowledge, will be able to ship 3x-5x what they do now. And they will do so without the administrative bloat, bureaucracy & analysis paralysis that companies with 100-150 people experience.
We need to give the shops in the 10-19 employee range, this coalition of willing, driven, & obsessed manufacturers, more support.
(Note, I’m specifically not talking about defense suppliers)
America has 16,876 machine shops.
83% employ fewer than 20 people. Just nine employ more than 500.
New defense companies are moving from prototypes to mass production, and every missile, drone, ship, and rocket they ultimately produce needs to run through one of these small shops.
That friction is a national security liability.
Connor Love and Collen Larson on the next generation of American manufacturing that gets built by smoothing it: a16z.news/p/the-case-for-the…
Find your local machine and metal shop! Order parts! Build!
See usamachineshops.com and manf.us to start
We are now entering into an era where any product can be created exactly to a consumer's preferences & needs.
I vibe-fabricated a dog door with a wifi-controlled lock, perfectly to the specifications & design of my house.
I know nothing about metal fabrication or electrical engineering.
It's now getting manufactured and delivered in 2 weeks -- for almost the same cost if I bought a mass-produced item off-the-shelf.
Re-industrialization requires new capital models to work. Super excited to see this announcement and to have played even a small part in getting it off the ground.
crainsdetroit.com/manufactur…
The direction of our research about scaling US drone manufacturing agrees with Parth here. There are two things that need to happen at the beginning to surge and scale: predictable demand for end products & subsidies and support for components and inputs
“Import scaled production process knowledge (hardest to do)”
Production process knowledge is not the hardest step to do. It’s not even hard at all. Drone motors are not a complicated product.
No amount of process knowledge will address the capex problem, you gotta actually innovate for that. Otherwise you’re just outsourcing with extra steps.
Congrats to Nikhil G. on this!
It's been fun working with this team to rethink how America refines, recylces, and processes critical metals. Excitingly, the first micro refinery is already operational, helping recycle metals from e-waste right now!!
@DetermMaterials was named one of the top 12 deeptech companies by @deepchecksvc, out of 500+ submissions!
Thanks to @JacobJacksonVC and the Deep Checks team for the recognition.
Nikhil O'Sheal retweeted
Imagine how good it feels to be a border collie whose job it is to run down huge black bears with all your homies. Ive never felt envy for a dog before
Nikhil O'Sheal retweeted
The BOM is where national strategy becomes physical. The goal is not a Made in America slogan.
The goal is: Anything you need to build, you can get here by Thursday.
For the past year we've been exploring the bottlenecks to scaling the US drone industry (thanks @NAIA foundation!) Along the way, we built a component database to track commercial off the shelf components offered by different countries, and compare their price and performance
Can also most likely make these types of drones without having to rely on electric motor supply chains that depend more heavily on rare earths
I have been dreaming of a machine and machine tool startup for the last 6 years and have so many thoughts about how to make something exciting and novel work (mostly on the financing side)
Ok Factorio nerds. Reindustrializing is cool and all. But where's the startup that's supplying all this custom fabrication/assembly tooling? Surely it's a lot of very standard motions (linear movement, insertion of a part, rotation, etc..) just with custom part holding.
I am aware of the massive simplification I am making, but it doesn't make sense that everyone figures this stuff out from scratch every time
This is how innovation and progress accelerates. This attitude was core to the DNA of Bell Labs and the pinnacle of American science and technology. Very exciting to see this re-emerge
By VC standards we should either "conquer the world or die in a fire" and neither of these are spiritually compelling for me. I never wanted a company I just wanted a home. At this point we have a large and loyal paid community, we build tons of features for them (I think we did >30 releases this year) and they're pretty happy. We have enough revenue to fund tons of crazy R&D and our models are still the best by the metrics we care about (how the images look and how fun it is to make things). We have a huge backlog of exciting things to make our models way better. Zero risk. We did all this with no investors. Honestly, it feels like we are successful. The next metric of success I think about most about is now that we have "all I ever wanted" in terms of a big well funded R&D lab with cool people free to work on whatever we want... Can we now build something that would make baby David proud? And can we tell bold stories about a human future that people want to be a part of? I think we can.
Nikhil O'Sheal retweeted
By VC standards we should either "conquer the world or die in a fire" and neither of these are spiritually compelling for me. I never wanted a company I just wanted a home. At this point we have a large and loyal paid community, we build tons of features for them (I think we did >30 releases this year) and they're pretty happy. We have enough revenue to fund tons of crazy R&D and our models are still the best by the metrics we care about (how the images look and how fun it is to make things). We have a huge backlog of exciting things to make our models way better. Zero risk. We did all this with no investors. Honestly, it feels like we are successful. The next metric of success I think about most about is now that we have "all I ever wanted" in terms of a big well funded R&D lab with cool people free to work on whatever we want... Can we now build something that would make baby David proud? And can we tell bold stories about a human future that people want to be a part of? I think we can.