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Ideas Roundtable: Advancing the Conversation Around Topics that Shape Our Lives
Content provided by GE
Ideas Roundtable: Advancing the Conversation Around Topics that Shape Our Lives

Why the Software Industry Can Create Manufacturing Jobs in the United States


The manufacturing industry in the United States continues to be challenged in its quest to reignite growth, and there will always be obstacles that it will face because of the mature ecosystems and lower labor costs in places like Asia. 

There are areas of opportunity for US manufacturing though. 

As the Founder and CEO of TechStars, the #1 startup accelerator in the world, we receive thousands of applications from aspiring entrepreneurs for our five programs in top startup locations around the United States. The sectors I focus on are primarily:

  • Internet applications
  • Software

Typically I deal with people who make bits and ship them over the internet, but we do see startups with some kind of hardware component from time to time.

When we do get proposals from businesses with hardware or physical products, we find ourselves working with these startups to:

  1. Simplify their hardware
  2. Move more of the magic into software where it can be more easily maintained and upgraded over time.

We want the software to be the most important piece of the solution, and for there to be only small hardware requirements - maybe a handful of sensors that can be changed remotely.

Sure, a lot of manufacturing is happening offshore, but often startups will make small volume production runs in the US before sending them to China to scale manufacturing. So there are definitely opportunities for manufacturing companies here in the United States to focus on helping startups or increase their speed to market by providing small volume prototyping and production services - enabling quick, successive design modifications and optimizations. 

We love boxes full of air, or balls full of air. One example of the kinds of things I'm talking about is embodied in one of our investments, a company called Orbotix that makes an intuitive entertainment device called Sphero. 

President Obama recently came to Boulder and during his visit took one for a spin. Sphero is a robotic ball that's controlled by a tablet or smartphone. The great thing they've done with this product is that they've designed it not just for one hard-wired purpose, but instead they've designed it as a platform that they (or potentially other people) can build a variety of different applications for. This allows a range of fun experiences (and potential revenue streams) to be created.

If we look at the way the Xbox Kinect was hacked and how Microsoft had to react to that, and ultimately embrace it, I think what we are seeing is a new world where device designers must think out ahead of time whether they should design in the ability to repurpose the hardware component. 

There are a lot of other great examples out there too, like a researcher who hacked the Nintendo Wii remote to create a variety of simple solutions that cost much less than purpose built solutions- like an interactive white board.

So, while there are opportunities to create some manufacturing growth in the United States by focusing on quick prototyping and limited production runs for startups and new product launches and going concerns, there is an even larger software opportunity for the overall economy in the United States. 

If we continue getting smarter about shifting more of the value in solutions into software that our startups and existing companies create, we can create more software development jobs here and fewer manufacturing jobs elsewhere. 

To learn more about the state of innovation around the world, explore the above Innovation Barometer 2012 data visualization »

David Cohen - David Cohen is the founder and CEO of TechStars, a mentorship-driven seed stage investment program for Internet startups. David is an active startup advocate, advisor, board member, and technology advisor who comments on these topics on his blog at You can find David on Twitter @davidcohen.

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