Juxi's log

In a long, thoughful and exciting piece entitled "In the Next Industrial Revolution, Atoms Are the New Bits," Wired's editor-in-chief Chris Anderson describes the way that networks, 3D printers, and other technologies are reinventing business, from garage hackers to Chinese knock-off factories. Chris's most provocative thesis, a recapitulation of Bill Joy's argument: "working within a company often imposes higher transaction costs than running a project online. Why turn to the person who happens to be in the next cubicle when it's just as easy to turn to an online community member from a global marketplace of talent?"

It's fascinating to see this essentially anti-corporate position emerge from a former Economist editor who now runs a major Conde-Nast publication. It's one of the things I like best about Chris's work: he's multidimensional and willing to challenge all sorts of received wisdom.

One place he doesn't go here is what corporate giants will do in the face of this sort of "creative destruction" -- are they going to roll over and play dead, or will they fight back with the indiscriminate savagery of a cornered record executive?

Alibaba's chair, Jack Ma, calls this "C to B" -- consumer to business. It's a new avenue of trade and one ideally suited for the micro-entrepreneur of the DIY movement. "If we can encourage companies to do more small, cross-border transactions, the profits can be higher, because they are unique, non-commodity goods," Ma says. Since its founding in 1999, Alibaba has become a $12 billion company with 45 million registered users worldwide. Its $1.7 billion initial public offering on the Hong Kong Stock Exchange in 2007 was the biggest tech debut since Google. Over the past three years, Ma says, more than 1.1 million jobs have been created in China by companies doing ecommerce across Alibaba's platforms.

This trend is playing out in many countries, but it's happening fastest in China. One reason is the same cultural dynamism that led to the rise of shanzhai industries. The term shanzhai, which derives from the Chinese word for bandit, usually refers to the thriving business of making knockoffs of electronic products, or as Shanzai.com more generously puts it, "a vendor, who operates a business without observing the traditional rules or practices often resulting in innovative and unusual products or business models." But those same vendors are increasingly driving the manufacturing side of the maker revolution by being fast and flexible enough to work with micro-entrepreneurs. The rise of shanzhai business practices "suggests a new approach to economic recovery as well, one based on small companies well networked with each other," observes Tom Igoe, a core developer of the open source Arduino computing platform. "What happens when that approach hits the manufacturing world? We're about to find out."

In the Next Industrial Revolution, Atoms Are the New Bits

(Photo: Leon Chew, Wired)