Local Motor : Designed by the Crowd, Built by the customer
Jay Rogers scurried through the hallway at Local Motors (LM) Wareham, Massachusetts corporate headquarters as he coordinated with employees about the day’s hectic schedule of events. Fortunately, the hallway was only about 15 feet long and included just three offices. LM’s 3,000 – square-foot office and garage space seemed a humble place from which major innovations impacting the automotive sector – one of the world’s largest industries – might emerge.
But sometimes, small can be beautiful. Especially when the giants are stumbling.
As Rogers returned to his office, he picked up a sheaf of printouts. The first sheets included articles about General Motors’ emergence from bankruptcy. On that very morning, GM’s CEO Fritz Henderson announced the finalized structure of the deal that would make the governments of the United States and Canada, along with automotive labor unions, the primary owners of what had until recently been the world’s largest corporation. The phrase ‘’leaner and meaner ‘’ seemed to be a rallying cry as GM executive and government officials alike expressed their goals for the still deeply troubled company. ‘’It is a new era, and everyone associated with company must realize this and be prepared to change, and fast, “ Henderson said (see Exhibit 1 for U.S. auto industry statistics)
Rogers wondered whether GM and other major automakers around the world could ever truly change enough to embrace the kind of product and service model he envisioned for his company. Local motors planned on using online talent and customer communities to develop new car designs and regional “microfactories”in which the buyers of these new cars would participate in assembling them. LM’s strategy and business model bore no resemblance to the typical car industry – or even to the models of other upstarts in a topsy-turvy auto sector. That might have been why Local Motors was attracting so much attention. Rogers’s second set of printouts dealt with that days visit by a creew from The NewsHour with Jim Lehrer, a nightly national broadcast on PBS. The NewsHour would be discussing the potential for nascent firms sush as LM to transform the American auto landscape.
Unfortunately, Rogers’s third set of printouts dealt with matters much less grand, though still of great import to LM. One of the company’s key engineers had sent a series of e-mails informing Rogers of his intention to take up to a month away from work to undergo surgery. Because Rogers knew the engineer’s absence would make it impossible to roll out LM’s first model, ‘’The Rally Fighter, “on time , he had been pleading with him to delay the surgery .’’I don’t know if Local motors will be here in a few months to pay for my coverage, ’’replied the engineer.
Indeed ,LM’s cash would be running short in a few months and follow-on fundraising efforts were taking more and more of Roger’s time; he was considering pursuing very non-traditional resource for financing . Additional funds were needed soon to build the company’s first microfactories and execute the marketing plan, Even as film crews set up the lights for that night’s hight-profile broadcast ,Rogers wondered how long he could keep the lights on at Local Motors.