Back in March, we wrote about GE and small-batch carmaker Local Motors' plan to establish an open-source cocreation community called FirstBuild. At a press conference this morning here in Louisville, Ky., GE and Local Motors unveiled the University of Louisville building that will serve as FirstBuild's design lab, microfactory, and retail storefront.
Local Motors is best known for its $99,900 microfactory-made Rally Fighter luxury racer, while GE's operation here in Louisville is primarily focused on large-scale appliance manufacturing. A shared initiative between the two may seem counterintuitive, but GE is making a clear effort to move toward a new brand of R&D; one that emphasizes open collaboration and that lets it develop and release new products like a smaller, more nimble company.
GE's partnership with open-source invention engine Quirky operates in similar fashion. GE provided Quirky with a collection of patents to develop its library and in turn, Quirky puts a GE logo on whatever inventions make it to market from that shared patent cache. The earliest products from the duo -- a plastic carton that lets you know if your eggs have gone bad, a four-outlet power strip, and an environmental sensor -- were all a bit underwhelming and much too far on the specialty side of things to insight mass interest. Then, within a week, Quirky announced a smart air conditioner with broad appeal and GE announced its collaboration with Local Motors on FirstBuild.
While both Local Motors and Quirky offer small-batch, open-source-style design and manufacturing, Local Motors' capability is to design much larger products for small run distribution. Quirky is more interested in scaling-up product designs for mass retail distribution right out of the gate. FirstBuild will follow the former model, using Local Motors' fast-paced manufacturing platform to design, test, and produce prototypes quickly.
Prior to the press conference, we sat down with Kevin Nolan, vice president of global technology, Venkat Venkatakrishnan, FirstBuild's lead facilitator, and Kim Freeman, manager of global public relations to talk more about FirstBuild and why its business model is an important piece for the future of GE's appliance manufacturing business.
Kevin: What FirstBuild is really about is about making things. There's a business model that Local Motors has that was very interesting to us, but what's different on this is that it's not a partnership with Local Motors, it's really Local Motors helping us build out a different business model that we're calling FirstBuild. And FirstBuild is really focused on innovation and making.
We have a lot of engineers, we have a lot of manufacturing that's located here in Louisville, so we thought it made a lot of sense to build that capability out here in Louisville near these facilities, because what we really want is to drive more innovative products into our manufacturing facilities and to our customers in the end.
FirstBuild is a nice way to experiment and to try things and work with a global audience to see if we have good innovation, something that's really going to hit, and when we do we can bring it back and we can manufacture it. Every startup wants to scale up, right, and typically startups have this real struggle about how they scale up, but we've got that scale-up already figured out. I mean, it's sitting right here. We want to get that front-end startup attached to a facility like this.
CNET: What kinds of things will FirstBuild allow you to do that you might not necessarily be able to do here starting off with that big scale?
Kevin: When you think about making, let's say a new dishwasher, we think in the millions. But when we think FirstBuild we're thinking tens, hundreds, thousands. Just as the number is an order of magnitude smaller, the speed can be an order of magnitude faster. And so what it does allow us to do, is to change very quickly, experiment quickly and really see if we have something that's got real good consumer demand.
CNET: How do you think these changes will benefit the consumer ultimately? Do you think that will really change the landscape?
Kevin: I think you're going to see in the future as this happens much more customized products, much more flexible manufacturing will come out of it and products that are much more suited to individuals than mass production. Some of this is going to put stress on the system. How can you be real flexible? That's what lean manufacturing is about, how you can have a big facility but have a lot of flexibility into it. There are some needs that everyone wants and that's when you get really high-volume, but there are other ones that are more nichey that we need to explore.
CNET: What kind of customizations can you do with FirstBuild that you wouldn't be able to do otherwise?
Kevin: I think that's what we're going to find out. If we really knew, we'd already do it, so some of this is really a discovery and I think there's a lot of unknowns of exactly what things are going to be, but that's part of the fun of it is to go find that out.
Kim: If you think about retooling one of these factories that are huge and the expense is incredible and timely. If you can remove that piece from it then their guys can be more creative, they can take more risk. Hey, let's try this and see if it works where if we're going to move something into one of these factories, we've got to be pretty sure that it's going to work.
Kevin: In some ways, we want to be able to fail more. It's how are we able to fail and not have dire consequences. Now, we want to succeed more than we fail, but we know we've got to be able to do both.
What we like about FirstBuild is it really is a product development model. It's not just giving us an idea and we'll work on it. It's really about how do we as engineers develop products differently and through a global community and then also, how do we manufacture?
CNET: If you had the opportunity to make an appliance with some feature that you wouldn't really blow up to scale here, what would it be?
Kevin: Pizza's a good thing. Some people are just crazy about making the perfect pizza. Some people go to different restaurants because they've got a certain type of pizza oven. So, how can we get that kind of performance in a home oven? I mean we can cook pizza OK, but is it the same as restaurant-grade. If you go on the Web there's a cult following over some outdoor pizza ovens, so I think it would be fun to do stuff like that.
Kim: We've identified our first challenge, which is indoor grilling. There are challenges with cooktops that have the grills in them, they have to be ventilated, well there are challenges that come with that and not just GE but across the industry we really haven't mastered that and so that's going to be their first challenge.
Venkat: When the FirstBuild Web site opens up there are three categories. One is Ideas. Anybody who has an idea can come there and post their idea. The second is Projects. If an idea has enough traction, and it's well defined, and we see that there is a big demand in the consumer community then we would make that a project. That means we will have the community working with the ideas and well as internal employees with domain knowledge. Then they would get together on a project and start actively designing and making it and we will throw open on the Web site so people can see it made.
The third is Challenges, like what Kim mentioned with the indoor grill. For ideas where we see there is potential, it becomes a challenge. We want to engage everyone in how you find a creative solution for something like like indoor grilling. We would say, hey, we've got this issue, we see a market, how would you partner with us to do that? So it would go both ways.
CNET: How do you manage the need to iterate on ideas quickly versus the time involved? I don't know how many design years or research years would be involved in coming up with an indoor grill. How many is GE willing to put into it?
Kevin: Speed is a definite part of the model, because if you want to work on something you want to see things move quickly, so that's why this whole make aspect of it is there. We want to go from idea to make almost immediately.
Kim: Didn't they design that Rally Fighter in like six weeks? [Ed. We believe it was 18 months. Getting confirmation from Local Motors]. That's the kind of speed we're looking at.
Venkat: That's what impressed us with Local Motors, right. If a guy walking down the street has a bright idea on a refrigerator and he could implement it then we need to find other jobs because it's not as easy. But even if you have the brightest idea, to make it work you need years of domain knowledge, how to fit it in, how to manufacture, and how to scale it up. It's really important to get the bright ideas, but you also have the domain knowledge. That's what gives you speed. If you have a lot of good ideas, but you don't have the domain knowledge on how to meet regulations, how to make it safe, then you can't make it happen.
Kevin: So, say I had the bright idea to cook the perfect pizza in your oven. It's a good idea, but now what is it? How do I make that oven? We can do a lot to help make that a reality. We're good at that. Why this is different and what's neat here is it's about us engineering things and if you're interested in indoor grilling it will be neat, working with GE engineers and GE engineers getting the opportunity to work with other engineers. It's a lot of what we're used to doing, but we're doing it in a very open fashion, which is different. Usually all of this development is done behind closed walls.
CNET: Will the whole process be open outside the walls of FirstBuild?
Kevin: When the facility is up and running it will be open to the public.
Venkat: You can actually go there and see what is being produced. It will be an open facility.
CNET: When will that be up?
CNET: What's the long-term intellectual-property (IP) relationship between GE and Local Motors and anybody wanting to contribute?
Kevin: I think one of the first things is that we want to make sure that people get compensated for their contributions, so that's part of what that model is. IP's a part of it.
Venkat: Anyone's idea that we take to the market, we will compensate them. The degree of compensation will depend on the idea and how novel it is. If it's something they can be patented, it will have a different value than if it's a design rendering. We'll work product by product, idea by idea.
CNET:Quirky has a pretty established method of determining who along the chain gets a piece.
Kevin: Theirs is a revenue-based model.
CNET: Do you guys intend to be as open as that?
Kevin: We think Local Motors has kind of figured out how to do that on the creation side of it, so we're basically taking that model that they've figured out. Their software suite has that kind of tracking and transparency that we like.
Venkat: It is more complex than just having to compensate for the idea. It's the idea, the design, how do you make it, how do you put it together? So, that is something we have to work through. Who is the lead originator of the idea? Who are the contributors, plus we will have GE employees involved.
Kevin: But the fundamental is we want people to have fun and to enjoy it, and for contributions they should get compensated.
CNET: Why now? Why is now the right time for this sort of open collaboration?
Kevin: You know, I think it's interesting like Jay Rogers, you know, the CEO of Local Motors, you know there's a lot of them...academics that believe that if Henry Ford was here today he wouldn't have built the kind of company he did at the time. So, I think there's a big movement on the way you do product development, the way you do manufacturing because of the Internet, because the availability needs to change, so how do we experiment around it?
Venkat: Every city had motor clubs or model aircraft clubs, but today you can actually connect people to collaborate on designing something. That didn't exist 10 years ago; you couldn't do it.
CNET: Who has the final say when it's time to bring a product from FirstBuild to market?
Venkat: When it sells and when we think there's a market and potential to make money.
Kevin: It's ultimately the consumers that have the final say, right?
CNET: But someone has to make it available to purchase.
Kevin: There's a couple things. One is there are community managers in FirstBuild that make the decisions. But a lot of that is based on what they see from an interest level in the community. I'd say the community is going to be the one that kind of really in the end dictates where things go and we've got to be willing to follow the community's interest. But the final say will be the folks inside FirstBuild.
CNET: And will FirstBuild be in charge of doing their own marketing, distribution, all that stuff?
CNET: Kim, on the way in here you mentioned the Samsung factor.
Kim: You're talking about speed-to-market.
CNET: Right, and the idea that the fast turnover in their electronics business has bled over into other product categories, like appliances, which they tend to to market sooner. That's what GE has in mind with this partnership?
Kevin: I think we don't have that in mind; we're going to be much quicker.
Kim: FirstBuild is a piece of that. You've also heard us talking about FastWorks, which is an internal term for basically how do we lean out the whole process and get things to market quicker. And then there is like Quirky where there may be opportunities for us to get other consumer goods to market quicker. It's really all of this stuff kind of working together. They're also going to be working with the University of Louisville on a lot of advanced manufacturing. We have a rapid prototyping center here and we've been able to cut out about 80 percent of the design process from prototyping to design parts to test and we're not making tools for every part, for every iteration. So it's condensing the time, it's all that stuff working together.
Kevin: Kim raises some good points. "Why is this happening here?" Can it really compete with the West Coast, East Coast. I think we've got a couple of things -- one thing is we've got more manufacturing here; I mean if you look at Louisville with the Fords, the GEs, we are a manufacturing center. We've got great capability with University of Louisville, probably one of the best rapid prototyping centers in the country.
We also have a great maker community. I think Louisville's got some very unique things that others don't have. Chefs, restaurants. We have a lot of things here that are really unique that you couldn't find in a lot of other areas. It's nice because it's convenient, it's close to us. You put in a lot of factors and there's reasons why this can be a leader in this maker movement.
Kim: I think Mayor [Greg] Fischer is incredibly supportive and he has an innovation leader, [Director of Economic Growth & Innovation] Ted Smith, assigned to help advance Louisville. They work really closely with them, so it's just a lot converging now. It's exciting.
Kevin: A lot of good startups, a lot of good people.