Building the 21st Century Car

PopTech recently caught up with Jay Rogers to find out what the co-founder of Local Motors (LM) has been up to since he enthralled the PopTech audience in 2009.

While stationed in Iraq on early 2005, the former U.S. Marine got the idea to make the world a better place – by building on his lifelong passion for cars. For Rogers, that has meant reinvigorating the relationship between Americans and their vehicles, from the way that they are designed and manufactured to the way that they are sold and serviced. LM bills itself as a next generation car company. It might sound counter-intuitive, but Rogers believes that tapping into the core aspects of American car culture promises to drive innovations in fuel efficiency in an industry that currently accounts for 40% of the oil consumption in the U.S.

Rally Fighter Showroom

I’d like to begin by asking you how you see LM in relation to the automobile industry. It strikes me that the business is not just tapping into the do-it-yourself energies, but also, potentially, transforming the entire business of cars in the United States. Is this part of LM’s mission?

If I could have done what I wanted to do, which is changing fuel consumption, by doing something that was not so transformative, I would have done that. But that wasn’t an option. It would have involved working closely with the currently entrenched players in different parts of the chain. The very nature of the industry is keeping it in stasis. The laws that surround cars today make people risk adverse. And it’s not to say that the laws are wrong, but they don’t have a connection to car manufacturers anymore. The scale of making cars needs to be so big that their incentive is to build a lot of the same car. If they don’t, they’re going to lose money. Dealers own where the customers interact with the cars. They also have their own way of doing things. Just because you change the way you make a car, it doesn’t mean they’re going to change the way they service it.

The bottom line is that I looked at that and realized that at every step along the way, it was going to be too difficult to get things to change. I believe that there had to be a better way to do it. And the way to do it was to start with small capital and do one unit at a time. Not one car, but one small micro-factory profitable in and of itself.

In fact, your first micro-factory officially opens outside Phoenix, Arizona at the end of July, to build the Rally Fighter?

Indeed. We are America’s first retail automotive manufacturing environment. Manufacturing, sales, and service all happen together. When you talk to people who are investing in you, it’s, “Tell me about the car.” They always want to know about the car, the car, the car. It’s really a struggle to get people to focus on the process. They see big money, and big warnings. So it’s a big milestone that we’ve gotten people [investors] to realize that it’s not just selling a car, which is sexy, but about being able to guarantee a place to build it.

When will the first LM Rally Fighter be ready to be picked up?

We’re looking at the end of summer.

Congratulations! That’s a big accomplishment. I’d also like to ask you about your focus on incentives – contests – that foster community. Can you tell me more about that?

For us, the focus has been on personalization. By going small in setting up these micro-factories, we realized that we had the opportunity to answer customers’ desires more rapidly because we were decreasing capital intensity and therefore the standardization of the completed car. That means you could go smaller volume. That’s magic in the industry because the more different you can make cars, the more happy customers are. That’s not a guess, that’s borne out in the marketplace. The fastest growing (sector) has been after market items. What that says is that people want to make their cars personal. They want to make their cars different.

If you can hold open competitions, you can really get at what people want in a more natural way. It’s not a top-down way. Competitions are a bit like reality shows and American Idol is the pinnacle of that. Instead of saying, “I know who a great artist is, I’m going to go out and run a competition and source great artists. The people are actually going to be voting on whether they’re great or not.

Part of the magic is that we are able to guide the process, and that we were actually creating stars, while letting people vote on what they wanted. That’s really the benefit of “co-creation,” or crowdsourcing a car.

Your contests “co-design” cars for different environments, for Alaskan extremes, the streets of Chicago, and the desert Southwest. Why focus on geographic locations?

We get a lot of questions about this. The truth is that we live in a geographic world. People ascribe value to where they are. Robin Chase (who founded the successful car sharing business Zipcar) and I have had some really interesting discussions on it. Zip Car’s great, but it’s about car-sharing because it says that I’d really like to get people out of owning their own transportation and just live within a city and just use it to get around. It’s not really good for driving across the country.

For me, changing car culture means that it’s localized, but not constrained. Which allows us to design cars geographically, but also psycho-geographically. Which is to say, you might live in New York and have a car from Manhattan. But it’s also to say, “You live in a metropolis, so let’s design a car for a metropolis.”

The theme at the PopTech conference this fall focuses on innovation, failure, and breakthroughs, and on the relationship between these ideas. How do you think you think about failure and innovation in terms of LM?

That’s a great theme. The way I reflect on it, for us, where we might have had failure and then unexpected breakthroughs, two come to mind.

When starting a company, you don’t count on a global recession. The other part about it was, when you start a manufacturing business in the face of two decades of internet-based software concerns, you are almost shouting into the wind because a lot of people don’t believe in manufacturing anymore from an investment perspective. So the thing is we had to get creative, and make milestones to convince people that what we were doing was right. That is an unexpected breakthrough. We were already starting with a low-capital methodology, and now we had to take a low-capital methodology and break it up into even smaller bite-sized chunks. It was just frustrating. We had to reach much deeper than I ever thought we would in terms of fighting our way out.

The second thing I’d say is the importance of the design community. When we started, we wanted to revolutionize cars but didn’t know how timely and important the co-creation would have been to the whole business. From the point of view of selling cars, we get a lot of people who are interested in co-creation, without the benefit traditional automobile advertising. We weren’t getting any breaks at DuPont Registry or Motor Trend [both publications for car aficionados], yet once we tapped into a design methodology, we started getting attention from Wired and Popular Science and suddenly we’re a story. Who should read those, but people who love cars. That was an unexpected breakthrough on something that was part of our business but that we weren’t expecting to be so vital.

Thanks Jay. Good luck on your first micro-factory, and on going into production with the Rally Fighter. We’re looking forwarding to seeing what’s next for Local Motors.

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