While capitalist systems are, in theory, open to any entrepreneur with an idea for a better mousetrap, most investors are pragmatists. They aren’t likely to pony up for a garage tinkerer with a way to build passenger jets better than Boeing’s or supercomputers better than Cray’s. The reality, in other words, is that certain high-tech industries are essentially closed to small businesses—and that includes the American automobile industry, as the litany of failed rebel carmakers, from Tucker to Delorean, attests.
So how were Jay Rogers and his nine employees at Local Motors, a tiny startup in Wareham, MA, able to raise $4 million to test the idea that car design can be crowdsourced to Web-based communities and that consumers will want $50,000 “mass-customized” vehicles built in small batches at a network of micro-factories?
It wasn’t because of Detroit’s recent travails—Local Motors collected its two investment rounds well before the Big Three started passing the hat in Washington. More likely, it was because of Rogers’ impressive resume—Princeton undergrad, investment analyst, startup entrepreneur in China, Marine company commander in Iraq, Harvard MBA—and his passionate intensity when it comes to talking about cars. And not just about car design (though he loves his classic 1971 Mercedes 280SL) but about the auto industry’s carbon footprint, and what you might call its geopolitical footprint.
“Being on the ground in Iraq showed me that the war is really about our reliance on Middle East oil,” Rogers told me after a whirlwind tour of the startup’s headquarters yesterday. (I had scheduled the visit immediately after learning about Local Motors from the company’s unusual presentation at the December 9 Web Innovators Group meeting.) “The problem of oil end-use is absolutely being missed here,” he says. “We were helping the Iraqis to rebuild their oil ministry, but thinking deeper, thinking to myself as a businessman and an entrepreneur, I would have liked to just shut this whole apparatus down. Friends of mine had been killed. Global warming was weighing heavily on my mind. I really had a moment of ‘What should I be doing with the rest of my life? What can I do to make a difference?'”
His musings took him back to his love of cars—which could well be genetic, considering that he’s the grandson of Ralph Rogers, who helped develop the United States’ first diesel passenger car and took over the famous Indian Motorycle Manufacturing Company in Springfield, MA, in 1945. (The elder Rogers went on to chair PBS and co-found the Children’s Television Workshop.) After the Marines, Jay Rogers, who’s now 35, briefly considered starting a company to build cars powered by hydrogen fuel cells. “But making a bet on the science was not going to be a sure-fire way to change things,” he says. He wanted to make cars that people could actually buy, and soon.
“I looked at the supply chain and I saw that there are people who make great engines, great batteries, great lightweight materials—but the people who make cars can’t use them, because they’ve gotten stuck in their enormous apparatus.” For Ford, Chrysler, and GM (and, to be fair, for Toyota, Honda, and BMW too), bringing out a new car model is a five-to-seven-year process that can cost a billion dollars or more. Which means as much as the Big Three might want to respond to consumers’ changing tastes—their newfound disdain for trucks and SUVs, for example—they simply can’t, in any reasonable amount of time. It also means that bailout or no, any serious contribution Detroit can make to scaling back the nation’s petroleum consumption is likely half a decade away.
“I want to change how the system itself works,” Rogers says. “So I thought, maybe we’ll just make a system.”
The system Rogers and his colleagues have built so far is 50 percent Web 2.0 social community and 50 percent rapid-prototyping workshop. The first half of Rogers’ big idea is to
