Cloud Manufacturing Filling in the Startup Puzzle

David Wagner, Managing Editor | 5/21/2014 | 13 comments

David Wagner

E2 has long trumpeted the days when 3D printers would sit on our desks and print prototypes, consumer goods, and even body parts right from our desk, but a new cloud manufacturing company is taking this concept to new levels. Factorli, a startup with funding from Zappos CEO, Tony Hsieh, among others, is a cloud-based factory aimed at small companies that hope to stay fabless but still build products in large numbers.

Fabless manufacturing has been around for some time, but usually it requires extremely large product runs and long term partnerships with factories that require long re-tooling windows. Factorli is aimed at product runs in the hundreds or thousands. Using the cloud, product specs are submitted and the factory can use a combination of software and robots to turn out small runs of products efficiently and at a competitive price to other outsourcing options. In a way, it is the Threadless of factories. Instead of pumping out t-shirts on demand in order sizes around the size of a company softball team, it is creating widgets.

What that means is that they are the missing piece of the Kickstarter puzzle. Kickstarter has made it relatively easy for a company with a good idea to get funding for a small manufacturing run, but it was harder to build them in a timely and cost-efficient manner even with money in hand. And Factorli will allow the company to scale and grow until they grow to the level where a larger manufacturer is more appropriate.

Up to this point, manufacturing has been rather slow to adopt the cloud for manufacturing operations, according to this article, because of a fear of uptime. But uptime, despite a few high-profile hiccups, is one of the cloud's strengths.

The other issue is security of intellectual property. This is not so easily remedied. Regardless of whether you feel a cloud is more secure than your in-house data, the fact is you are uploading your designs onto someone else's computers. This is not something large-scale manufacturers will take lightly.

However, the issue is different with smaller companies and those choosing to go fabless. Cloud or no, those choosing to outsource their manufacturing are, by definition, trusting their IP and data to a partner. And the hurdle for smaller companies to gather funds to design and prototype a product is lower than when they also have to find a way to build it for themselves. Factorli, with its Las Vegas location, will also earn some points for being outside China, which has a reputation (founded or unfounded) for misappropriating intellectual property from partners.

In the end, this is the large-scale equivalent to the 3D printer on the desk. A single person can design, prototype, market, fundraise, and manufacturer from the same computer, and have 10,000 copies of the product made and shipped from Nevada with not much more effort than it takes to order a custom t-shirt.

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