Saturday, December 13, 2014

The Reindustrialization of America

Society is undergoing a process of reindustrialization. Unlike the previous century of industrialization, which produced most of the basic tools and features of our daily lives, the current reindustrialization is less about inventing new categories and more about rethinking how things are done from a new perspective. [1]

At a basic level, the first three-quarters of the 20th century produced the inventions that solved the biggest problems in Maslow's hierarchy. Our physical needs, more or less, feel met. We have basic utilities (electricity, indoor plumbing); transportation (airplane, automobile); basic communication (telephone, radio); food preservation (refrigeration; vacuum sealing); means of entertainment (Internet, television); temperature control (A/C, reliable indoor heat), etc. We took the basic items (e.g. cars) and added on new features (e.g. automatic gear shifting, windshield wipers). That's not to say that there aren't wholly new categories left to invent (space travel and health care seem particularly promising areas for this) – but mostly we feel pretty satisfied, at least on the physical/feature level.

Starting with Generation X the physical trappings of our lives, of our parents lives, began to feel excessive. We began to feel a little embarrassed, even, by material wealth. We began moving back to the urban core, to smaller living spaces, to carless lifestyles. The financial crisis of 2008 and the Great Recession that followed only accelerated our shift in values and cemented this attitude in our traumatized brains.

Our generation's discontent lies deeper (or higher if you're using Maslow as your reference). We've seen unchecked industrialism and consumerism destroy the environment and exploit weaker populations. We've been alienated by maddening bureaucracies representing the pinnacle of cost cutting and reengineering. We believe in capitalism and entrepreneurship as the only way forward, but we're hungry for authentic experiences, for self-actualization, for connection. The financial crisis of 2008 and the Great Recession that followed only accelerated this, and left many individuals with more time than money and an inclination to start producing things with their own hands.

The result is a slow-but-steady rethinking of the production of all of our goods and experiences. There's a craft economy that's sometimes a caricature of itself but that's growing into a massive portion of the overall economy. You name it, there's an artisanal version of it: handmade chocolate, heirloom pork, Jersey tomatoes; organic soaps; even rethinking the brand and chemicals used in condoms to be more female-friendly. Craft beer is closing in on 20% of the overall beer market and other categories can't be too far behind. 

Nowhere do you see this more clearly than in the grocery store. In my neighborhood in Brooklyn, where Whole Foods just opened its largest store in the country, there is a Key Foods that is much closer to us. My wife and I sometimes go there out of convenience, but every time we are surprised by how little we can find that is appealing to us. It's a very strange feeling, to realize that these are many of the same foods that you ate growing up, or even a decade ago, but they're just no longer appetizing. Another friend's wife has said she doesn't like any of the grocery stores in her neighborhood; she only buys her produce at the farmers' market.

How does this apply to tech? If the craft economy is the rethinking of the products in our lives, the "Web 2.0" startups are the rethinking of the services. It’s not enough for them to innovate in the distribution and efficiency (information management) of their chosen vertical. They have to integrate personality into their products and focus on experience as much as functionality. You see this in AirBNB's new "Belong Anywhere" brand. It's tricky for a multi-billion dollar company to be local, but by being simply a conduit between you and your host, the effect is complete. You see it in the friendly, personalized face of companies like Paintzen and Homejoy, for painting or cleaning your home. 

Every area of the economy, every type of production or service, is ripe for being reinvented this way. If it hasn't been done yet, it's just a matter of time. The more intellectually challenging question is, what happens when the most ambitious of the small producers start to grow? Will their social consciousness scale with them or will they become as faceless, bureaucratic, and polluting as the old behemoths of commerce? How they handle their success will determine whether they as companies and the movement they are part of will be sustainable or merely a fad.

[1] 3D printing and the internet/mobile/ubiquitous computing are exceptions to this, and in fact are enablers of this reindustrialization, but that's a topic for another post.

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