"Three years ago, out on a run, I started thinking about how cheap gyroscope sensors were getting. What could you do with them? For starters, I realized, you could turn a radio-controlled model airplane into an autonomous unmanned aerial vehicle, or drone. It turned out that there were plenty of commercial autopilot units you could buy, all based on this principle, but the more I looked into them, the worse they appeared. They were expensive ($800 to $5,000), hard to use, and proprietary. It was clear that this was a market desperate for competition and democratization — Moore’s law was at work, making all the components dirt cheap. The hardware for a good autopilot shouldn’t cost more than $300, even including a healthy profit. Everything else was intellectual property, and it seemed the time had come to open that up, trading high margins for open innovation. To pursue this project, I started DIY Drones, a community site, and found and began working with some kindred spirits, led by Jordi Muñoz, then a 21-year-old high school graduate from Mexico living in Riverside, California. Muñoz was self-taught — with world-class skills in embedded electronics and aeronautics. Jordi turned me on to Arduino, and together we designed an autonomous blimp controller and then an aircraft autopilot board. We designed the boards the way all electronics tinkerers do, with parts bought from online shops, wired together on prototyping breadboards. Once it worked on the breadboard, we laid out the schematic diagrams with CadSoft Eagle and started designing it as a custom printed circuit board (PCB). Each time we had a design that looked good onscreen, we’d upload it to a commercial PCB fab, and a couple of weeks later, samples would arrive at our door. We’d solder on the components, try them out, and then fix our errors and otherwise make improvements for the next version. Eventually, we had a design we were happy with. How to commercialize it? We could do it ourselves, getting our PCB fab house to solder on the components, too, but we thought it might be better to partner with a retailer. The one that seemed culturally matched was SparkFun, which designs, makes, and sells electronics for the growing open source hardware community. The SparkFun operation is in a newish two-story building in an office park outside Boulder, Colorado. The first floor is larger than three basketball courts, with racks of circuit boards waiting to be sold, packed, and shipped on one side and some machines attended by a few technicians on the other. The first two machines are pick-and-place robots, which are available used for less than $5,000. They position tiny electronic components in exactly the right spot on a PCB. Once each batch of boards is done, technicians place them on a conveyor belt that goes into another machine, which is basically just a heater. Called a reflow oven, it cements the parts into place, essentially accomplishing what a worker could do with a soldering iron but with unmatched precision and speed. The PCBs arrive from SparkFun’s partner firm in China, which makes millions of them using automated etching, drilling, and cutting machines. At volume, they cost a few cents each. That’s it. With these elements you can make the basics of everything from a cell phone to a robot (structural elements, such as the case, can be made in low volume with a CNC machine or injection-molded if you need to do it cheaper at higher volume). You can sell these components as kits or find some college students on craigslist to spend a weekend assembling them for you. (I conscript my kids to assemble our blimps. They rotate roles, coveting the quality assurance task where they check the others’ work.) SparkFun makes, stocks, and sells our autopilot and a few other products that we designed; we get to spend our time working on R&D and bear no inventory risk. Some products we wanted to make were too time-intensive for SparkFun, so we made them ourselves. Now, in a rented Los Angeles garage, we have our own mini SparkFun. Rather than a pick-and-place robot, we have a kid with sharp eyes and a steady hand, and for a reflow oven we use what is basically a modified toaster oven. We can do scores of boards per day this way; when demand outstrips production, we’ll upgrade to a small pick-and-place robot. Every day our Web site takes orders and prints out the shipping labels. Muñoz or one of his workers heat-seals the products in protective electrostatic bags and puts them in shipping envelopes. The retail day ends at 3:30 pm with a run to the post office and UPS to send everything off. In our first year, we’ll do about $250,000 in revenue, with demand rising fast and a lot of products in the pipeline. With luck, we’ll be a million-dollar business by the third year, which would put us solidly in the ranks of millions of similarly successful US companies. We are just a tiny gear in the economic engine driving the US — on the face of it, this doesn’t seem like a world- changing economic model. But the difference between this kind of small business and the dry cleaners and corner shops that make up the majority of micro-enterprise in the country is that we’re global and high tech. Two-thirds of our sales come from outside the US, and our products compete at the low end with defense contractors like Lockheed Martin and Boeing. Although we don’t employ many people or make much money, our basic model is to lower the cost of technology by a factor of 10 (mostly by not charging for intellectual property). The effect is felt primarily by consumers; when you take an order of magnitude out of pricing in any market, you can radically reshape it, bringing in more and different customers. Lowering costs is a way to democratize technology, too. Although it’s shrinking, America’s manufacturing economy is still the world’s largest. But China’s growing production sector is predicted to take the number one spot in 2015, according to IHS Global Insight, an economic-forecasting firm. Not all US manufacturing is shrinking, however — just the large part. A Pease Group survey of small manufacturers (less than $25 million in annual sales) shows that most expect to grow this year, many by double digits. Indeed, analysts expect almost all new manufacturing jobs in the US will come from small companies. Ones just like ours."