Hardware

GE's FirstBuild: Can a big company harness startup mojo on the backs of upstart entrepreneurs?

General Electric is looking to students, entrepreneurs, and makers to co-create the products of the future. We look at what it means for the contributors.

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FirstBuild will be in a warehouse on the University of Louisville campus.
 Image: Colin West McDonald/CNET

In true startup fashion, an empty warehouse will be the first home for FirstBuild, the latest beacon of hope in GE's US manufacturing rebound. This cinderblock building has sat empty for years on the northeast corner of the University of Louisville campus in Louisville, Kentucky, ignored by passersby and rarely used by students or faculty.

But on one brisk, sunny April morning, the building pulsed with new energy. Excitement buzzed surrounding a big launch that attracted local entrepreneurs, C-level executives, and New York globe trotters.

They were all there for one thing. They wanted to see if GE had figured out how to make a big company act like a startup. With FirstBuild, one of America's most iconic companies launched a "microfactory" in partnership with the university and the open source hardware platform Local Motors. The first goal is to allow students, engineers, and the larger community to co-create the next generation of smart appliances.

But more than that -- and the reason it matters for entrepreneurs in this city and around the world -- is the larger implications of this project. If GE harnesses the power of local talent, and empowers people with the resources to scale their projects, it can start a movement.

The elephant in the room is compensation. How will these entrepreneurs be paid for their contributions to FirstBuild projects, and will they make enough money off of the successful ones to make it worth their time?

The answer remains vague at this point. Executives from GE and Local Motors said FirstBuild will have a similar model as Quirky, the crowdsourced invention platform and GE's other partner in this game. People work on a design on their own time, a community votes, and the winner is paid royalties if the prototype is scaled and manufactured. GE has already used crowdsourcing for a couple of its engineering projects, and the winners were paid a fraction of what the company gains from the idea.

So the question that GE must answer still hangs in the air. Will FirstBuild be equitable for entrepreneurs and engineers, and will they reap enough benefits from working so diligently to create products for this corporation? For now, it looks like FirstBuild will appeal to engineering students and upstart entrepreneurs looking to establish credibility and catch their big break.

The startup mentality

"The first lesson we learned was don't just talk about it, meet about it, think about it -- just go do it," said Venkat Venkatakrishnan, GE Appliances Innovation Leader. "It's something we don't do very well. We tend to we evaluate all the risks look at everything...the local startup community goes and builds something, does something, and figures out the rest."

GE has already partnered with Quirky, a crowdsourcing platform for inventions, which picks products to manufacture based on community popularity.

Local Motors has a similar platform as Quirky, though the startup focuses on vehicles. Participants pitch ideas, the community votes on the favorites, and the winner is manufactured and put on the market. The designer is paid royalties, gains recognition and credibility. Rogers strongly advocates for this model, and said it has the potential to change the global economy.

But this movement isn't about creating jobs, per se. It's about passion, Rogers said.

"I don't think this replaces your job -- FirstBuild, Local Motors, any of them -- I think it is mobility for transition, so if you don't like job you're in and want credibility on resume, you can say, 'I've made a product and I have royalties on that product,'" he said. "There is no greater credibility for you getting a different job to go somewhere else."

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FirstBuild will open this summer.
 Colin West McDonald/CNET

That need for credibility is why FirstBuild was created. It is the brainchild of Venkatakrishnan, who, along with other GE executives, has spoken with entrepreneurs around the area to gain insight.

GE was particularly curious about LVL1, Louisville's independent open hackerspace.

"They were very impressed with the atmosphere on innovation and 'play' we've managed to cultivate, and wanted to bottle some of it up and take it back to GE," said Brad Luyster, president of LVL1.

So how are these innovators paid at FirstBuild? No matter how important passion is, money is what it all boils down to. Entrepreneurs -- even student ones -- don't want to work for a corporation for no compensation.

Rogers described it as similar to Local Motors' system. When FirstBuild runs challenges, the prize is paid out to the community, who created the guidelines in the first place. That way, he said, people know what's going to happen if they contribute an exorbitant amount of time to these projects.

"It's not just about money, it's about recognition, about seeing products getting made, seeing from other engineers what's good and not good about your idea," Rogers said. "That giveback is the most important piece, getting the reward of community before royalty gets paid."

GE used this model when they held the jet engine bracket contest. The winner received $7,000 in prize money, and seven other winners divided up another $20,000. The invention, however, will save GE millions of dollars in the long-term.

"Collaborative examples discussed during the entrepreneur open-house seemed to imply that GE has traditionally favored an IP licensing model, but FirstBuild may be an attempt to change that," Luyster said.

Using the knowledge of University of Louisville engineering students is also part of this plan.

"This location makes it convenient for students to participate in our makerspace," said Chip Blankenship, GE Appliances President and CEO.

Students are a large part of the target participants for this project, and GE already has a strong relationship with the university. When it is finished in about three years, the full-fledged FirstBuild building will be behind the Speed School of Engineering, where there is already a 3D printing lab. However, when GE finalized its agreement with the university earlier this year, it wanted to get started as soon as possible, which is why they are in the temporary warehouse location.

Tapping into the startup community

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Local Motors CEO Jay Rogers spoke at the FirstBuild launch this week.
 Image: Colin West McDonald/CNET

Chris Bailey, a local entrepreneur, had an idea for an appliance: an alarm clock that doubles as a coffee maker. He built a prototype a year or so ago, but wasn't sure where to go from there. So he put the project aside.

When FirstBuild opens in a few months, he will submit that idea. "Hopefully, FirstBuild can bring that to market," Bailey said.

This is what FirstBuild is meant for. Finding the people to help catalyze progress on startups in the city so they can be scaled. For entrepreneurs like Bailey, finding engineers to work with has been the most difficult part of the process.

"If we can train and engage...those people in Louisville, I think it's huge and it will help startups like me and other startups in the community," Bailey added.

Venkatakrishnan said he wants FirstBuild to become a hub, much like LVL1 has been for the city.

But this is for a business, so if it's done right, the maker movement in Louisville has a path to grow. So far, in Louisville, there aren't a ton of hardware startups, so FirstBuild has the opportunity to make a splash in the space. And, of course, this could be a model for other cities that are trying to grow their startup communities as well.

"Hopefully this will change, as entrepreneurs see the growing land-rush on hardware in general, and IoT devices in particular, and hopefully FirstBuild is able to position itself as a facilitator of this ecosystem," Luyster said. "If not, LVL1 will still be here, helping anyone itch whatever creative or entrepreneurial scratch they might have."

That seems to be the key here. The community driving this innovation is tight-knit. If GE doesn't deliver enough value to entrepreneurs, then the entrepreneurs will stick with the hacker spaces and startup incubators.

Also see

About

Lyndsey Gilpin is a Staff Writer for TechRepublic. She covers sustainability, tech leadership, 3D printing, and social entrepreneurship. She's co-author of the upcoming book, Follow the Geeks.

6 comments
eHealthy_Dee
eHealthy_Dee

These young entrepreneurs will live to regret associating with GE unless they don't really care about what they are working on, don't think it's attractive enough for serious later investment, nor their intellectual property. I speak from experience having worked for a company with a going product and multiple patents that was acquired at Series C stage by them. GE plays the hardest of hardball, and the small early investors in the company were zeroed out...it all wound up in court. All for a category GE flirted with and then dumped into a JV with another big company. The JV still hasn't figured out the tech nor a business model which works for their size, and is now on their second CEO after swelling to an unsupportable size, now shrinking to survive after burning through millions. 


Other commenters have already pinpointed the ROI for GE on the jet engine mount and on this whole scheme. It's big bucks for them, maybe a credit for the developers. Such a sham and a cheat.

JimTheEngineer
JimTheEngineer

The video would have been clearer without the "White Papers, Webcasts, and Downloads" in front of it.

Is there a way to move that to the back?

inet32
inet32

It seems like a big company with lots of money trying to get stuff for free from a bunch of little struggling individuals with no money.

Ric_Shanahan
Ric_Shanahan

In light of the inevitable end of the line for IPv4 addresses, we have an opportunity to gently introduce IPv6 to the world around GE, whatever the product. And we will look good doing it! In a world where every device has (or will have) its own IP address, IPv6 will eliminate a slew of problems, at least during our lifetimes.

http://www.networkworld.com/news/2007/102607-arguments-ipv4-ipv6.html

NickNielsen
NickNielsen moderator

There are indeed rewards beyond the financial, but GE can screw the pooch badly here by not compensating well relative to their gains.  According to the article, GE will save millions on the results of the jet engine bracket contest for an investment of $27k in prize money.  Human nature being what it is, all it will take is one or two more results like that for the entrepreneurs and engineers to start thinking they might be better off somewhere else.


Maybe GE's senior leadership should consider taking a cut in the rate of increase of their paychecks.

garycoryer
garycoryer

This doesn't seem to make any economic sense at all for the innovators. Anytime someone starts trying to pass off recognition versus economic reward all I can think of are plastic sports trophy's.

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