Friday, July 31, 2009

Support from the community

Tonight I called Filski, one of our community members who recently won the Engineering Competition, to congratulate him on his win.























(Filski's winning entry)

We got to talking as often happens in these calls and he said something that floored me.

I will paraphrase as I did not record,

"Jay, how do you guys keep your investors happy in such a dour economic time? I mean the global car industry is in meltdown and you guys are charging forward into the void. Whatever you do, please know that I go on every day (sometimes several times during a day) to see the updates and am completely amazed to see you pressing forward with every part of the Rally Fighter. It is so uplifting to know there are folks out there such as yourselves that care about cars and design and transformation. I just think it is awesome and I want you to know that you have a world of people pulling for you."

'nough said. I will sleep well tonight.

Filski, we are here to get the job done, don't worry we got your back.

Thursday, July 30, 2009

A special open letter to the Community

This communiqué, we sent out tonight at the end of the first ever engineering competition.

>>>>>>

To one of the select Charter Engineers,

You are the first great example of the brilliance to come from our community of engineers. As we have gained powerful engineering insights from people in our community during Rally Fighter development, we have begun to understand what you and the community are capable of. As far as we're concerned, you are capable of tackling any challenge; especially if you work together with other like-minded folks.

This also represents a first of many others to come - chassis data was made available and you turned out in numbers to make it into something that it was not before, but rather something with functional and aesthetic design that it could be in the future.

I am thrilled to see that we had 12 feasible Light Bar designs in this first engineering competition. You are all finalists, and should be proud. Some community members did not make the cut to the final 12, as they were unable to meet the competition criteria. You should be proud of what you have accomplished.

Tomorrow morning at 10am (est, -4 UTC) we will announce the winner of our Light Bar Engineering Competition. Join us as we celebrate this first major accomplishment from our Engineering community.

Very Respectfully,
Jay

>>>>>>>

Wednesday, July 29, 2009

Guest Blog: The problem with cars and sustainable design

When I think of the term, "sustainable design," I immediately picture the pyramids. Still drop-dead gorgeous, the Gyza pyramids were perfectly constructed for the purpose of honouring the dead, and display an intrinsic harmony between form and function. And they're still standing without electricity, water, or the Internet, over 4500 years after being constructed.

Oh, and people still debate whether or not they were built by aliens. Or Transformers.

With vehicles, I wager that we haven't yet created such timeless, sustainable design.

As I mentioned above, design is both form and function. Sure, a Ferrari 250 California is beautiful, so is a Voisin C27 Aerosport, and countless others. Problem is, their function is directly related to gasoline to keep them going into the future. Otherwise, they become very beautiful paperweights — but not cars.

IPods are beautiful objects, but without future support from Apple — or a steady supply of power — they become form without function.

Personal mobility is already a huge issue on this planet — and an issue that changes almost across borders. In the US, it's about meeting ever-more-stringent safety and emissions standards, while keeping costs low for the consumer. In China, to contrast, the issue is in meeting an incredible demand for cars, and the socioeconomic implications that ride along with that.

A well-designed car for American consumers probably isn't going to be celebrated in China, and vice versa. But auto manufacturers know this, and spend billions of dollars tailoring vehicles to suit specific markets the world over.

Problem? A well-designed vehicle — in America, China, or wherever — isn't going anywhere without oil.

And that's why open-source design can transform the well-designed vehicles of today into sustainable ones for tomorrow.

Kudos to Local Motors here in America and Riversimple in Europe, and a few other startups that recognize that sustainable vehicle design isn't just about the looks, the powertrain, or using recycled materials. Sustainable design is about creating a consumer product that can be adapted over time to fit different needs and different fuels.

Making vehicle plans available to consumers means that with a little skill, time, and money, Local Motors vehicles can more easily be adapted to different powertrains, fuel sources, and environments. Sure, Ferraris will remain beautiful, but what happens if the oil dries up in a hundred years? Do you think collectors will rip out the engines and install battery packs and electric motors? Ha! They'll be all form and no function. 

Anyway, I look forward to the next 50 years of the automobile. Vehicles may not be as beautiful as the ones we've loved in the first 100, but you can bet they'll be more sustainable.

>>>>>
I want to thank Michael for writing this impassioned blog.
 
Michael Banovsky is an award-winning automotive journalist, blogger, and photographer, based outside Toronto, Canada. He contributes to vLane.com, actively Twitters attwitter.com/michaelbanovsky, and runs his own website at banovsky.com. When not writing, he's guarding precious cables around the apartment from his kitten, Arcee, jogging, reading, or drinking coffee to put him to sleep.

Tuesday, July 28, 2009

Where does car body design transcend?

Recently the world witnessed the introduction of the Stile Bertone designed Mantide supercar atop the Corvette ZR-1 Chassis and running gear.

Jason Castriota and his creative team at Bertone arguably created a visual masterpiece with the body - or a disastrous dustbuster-looking shape in some people's minds - but how ever the opinions may vary, they are nothing short of intense.

I think that is a win. A win for Jason. A win for Bertone. A win for design.

...and sadly, probably a loss for Corvette. There is a palpable feel that whether you like the Mantide or not, that the ZR-1 is a "bargain". It is a "special performer" but one that is quietly looked upon as an unobjectionable shape... something that "Thank goodness, at least is not making a statement."

What a shame!


















(http://cache.jalopnik.com/)

Despite all of the claims to the contrary, the biggest issue here is that the ZR-1 is a remarkable piece of engineering, but somehow the body does not/or should not reflect the value inherent in that chassis. Maybe that is why the combination of the Mantide body and and the ZR-1 chassis has garnered $2MM instead of the standard $104K.

If it weren't clear enough, I walked into the Hertz rental car area today and what should I see but the following picture:


















Call this "prestige" or paint it yellow and hope for the best, these cars are what renters are looking for. If the Mantide were made in this quantity and placed in such a line, I am quite certain that its value would be impacted...Isn't that therefore, what the Mantide tries to avoid with its scarcity.

Wednesday, July 22, 2009

The end of a festering problem is always messy

The pre-existing US auto industry has proven unsustainable in the recent market conditions. Fact.

So Bankruptcy has taken hold and GM and Chrysler are working their way through the destruction of all shareholder value, most bond value, and the value of many other stakeholders in order to make it out to the promised land of a rejuvenated business with a vastly lightened load.

And as many of us have heard, one of those stakeholders which was crammed down during this process was the dealership network. Mass closings are being enforced, franchiser liability for dealer contracts was thrown out the window, relatively small wind-down payments were made, and a secretive "arbitrary" process ensued to choose which dealers went to the chopping block.

And now... no surprise the Auto Dealer Economic Rights Restoration Act has reared its head. As the WSJ reported today, the White House is gearing up for a massive fight with Congressional legislators whose (formerly) wealthy and (formerly) bloated dealer constituencies have stirred the hornets nest declaring that they were treated unjustly and want to be reinstated.

The White House thinks of it as "meddling" with its golden plan to "restructure" the industry. True. But that is what you get for steamrolling.

The dealers consider it a restoration of their legal rights. True. But that is what you get for hitching your wagon to a tired horse.

In fact, the dealers are really only asking to be allowed to compete in the market to see which dealers die-off naturally, instead of being subjected to an artificially random closure slate.

Yuk. Messy. Predictably Ugly. The end of a festering problem.

In fact, it doesn't really matter who is right in this penultimate death-rattle. The point is that the size of the industry in its pre-existing configuration was unsustainable. It was unprofitable. It was not going to survive in a capitalist system.

I regret the time wasted and the dollars spent fighting this case, because it will undoubtedly be a Pyrrhic victory.

But can we really expect anything more from a compassionate Congress that has been well-funded by both a dealership club and an OEM dynasty?

After all, I was walking across the very same Capitol Hill today on which this battle is being fought and as I walked behind the Capital Building, I was struck by an automotive image.

No less than 26 black Chevy/GM Suburbans parked around the perimeter! How can you let the dealers or the OEM go away when they drive you to work every day? Really.

Friday, July 17, 2009

Where is the soul of the car industry? Joe vs Michelle

This in from the Boston Globe a couple of days ago:
















(Globe Staff Photo / Jonathan Wiggs)

Although her father, Joe Gildea, 62, has dreamt about Cadillacs since he was 14 and now collects them, Michelle Gildea, 20-something, said she's happy getting from Point A to Point B in her hand-me-down Camry and more interested in her BlackBerry than cars. Are cars dead to the young generation?
Hold the phone.

While all the fighting has been going on about gas, electric, consumption, anthropogenic global warming, and particulate emissions, who is minding the store?!

Could this be true? Is there an explanation?

Could it be:
Old guard (cars) vs. New guard (electronic gadgets) - (What this article suggests)

Or Maybe it is:
Male (interested in cars) vs. Female (not interested in cars)
More financially secure (expressive car owner) vs. less financially secure (can't own an expressive car),
Freedom device in the 50's (the Car) vs. Freedom device in 2009 (the internet enabled phone), or
Some other reason, such as "pure chance"?

You can parse through this graph to try to divine a trend, but I think it is hard. Both segments young and old, have compressed from '05-'08.
















Nonetheless, just because we cannot isolate the trend, the questions are compelling. I for one think that there is a HUGE grain (aka boulder-sized) of truth in this article's observation and what is going on between Joe and Michelle. Yes, they may be the worst stereo-typical examples, and sure there are auto-focused youth hotbeds like Scion and the Fast and Furious franchise to cling to, but deep down, over the last 5 decades, the auto industry has lost a vital connection with the youth.























(www.grumps-garage.com/images)

















(IMDB: He's just not that into you)

Does this mean that auto company's should pack it in? Trade their fender presses for iphone housing injection molders?

Not in my estimation, BUT current automakers need to take a long hard, customer facing look at their entire business and Fix It or they will lose Michelle for ever, and not even own a fender press worth trading in.

Apologies in advance to those terminally addicted to the old way of doing business, but I care too much about this industry not to call a spade a spade.

Thursday, July 16, 2009

Another milestone - 7/15/09

Let's just say that we crossed a major milestone today!

4 years ago LM was a glimmer.

2 years ago we spent the first investor dollar.

Today we harvested the first cash!

I am so happy. I almost cannot believe it.

Much work to go to convert these deposits to sales, and we will care for our cutomers with ZEAL, but this is a day to celebrate.

Join us in raising a glass. It is a great day.



















(www.history.navy.mil)

Wednesday, July 15, 2009

Do we have a say as customers in the new GM?

As GM customers, when it comes to new product, will we be “talked at” or “listened to”?

The early indications of what is going on at GM sound like a lop-sided parent-child conversation:

When you fill out a Christmas wish list, would you prefer your parents fill it out instead and sign your name?

Maybe they should blow out your birthday candles?
Strip the petals off of your daisy?
Blow the spores off of your wish flower?
Make a wish on your shooting star?

No, No, No, and No.

You didn’t like it when your parents didn’t listen, and you shouldn’t now when your companies don’t either.

Since we are all small owners of the largest percentage of GM stock now (61%), we have a duty to ask and to examine our Company’s way forward. Asking these questions is especially important now that the Government appointed car czar, Steve Rattner, has vacated his post leaving former steelworker union advocate, Ron Bloom, in charge of government oversight.

The bankruptcy may have been record quick, but we all should care more about the eventual results and the ultimate change and not the overall speed of bankruptcy.

Last Friday, Fritz Henderson, long time CFO, employee of GM, and new CEO of GM, laid out his focus on us – his customers,

“Going forward, I have three priorities for the new GM: customers, cars and culture. I list “customers” first because they are our top priority… we’re going to be obsessed with it – because if we don’t get this right, we don’t get to do anything else. It’s that simple.“ (GM FastLane Blogs, July 10th)

He then gave us a clear indication how his organization was ramping up to “serve” customers by choosing, making, and selling great products to us while listening to our complaints.

On serving customers: Henderson said, "Today marks a new beginning for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers." He also promised a pilot program to be able to buy cars on eBay. (Friday Morning Press Conference, July 10th)

On listening to complaints: The automaker is launching a "Tell Fritz" Web site to allow owners and the public to share their concerns with senior management, and Henderson plans to go out on the road every month.

On personnel changes to carry out this focus: The following new appointments have been made with four long-time insiders:

Bob Lutz, Vice Chairman responsible for all creative elements of products and customer relationships (This now includes Marketing)
Tom Stephens, Vice Chairman, Product Development, (Lutz’ old job)
Ed Welburn, Vice President of Design, (same job as before)

These three (above) will work together to guide all creative aspects of design. GM's brands, marketing, advertising, and communications will report to Lutz for consistent messaging and results. Lutz will report to Henderson.

Mark LaNeve, Vice President Sales and Service (Same job but no longer includes Marketing)

In summary, the total change to focus on customers boils down to these stark elements:

1) Make shopping and buying easier through a bid on-line (eBay) process – long overdue, not really any different for customers who can already do this on eBay Motors, at CarMax, AutoNation, and a host of other sites.

2) Make Service better – not clear how yet.

3) Let Bob, Tom, and Ed design the cars and let Mark sell them – These same 4 have been doing that for the last 10 years.

4) Launch a Tell Fritz website – Good, but a standard corporate feedback channel that is focused too narrowly on complaints.

5) Get Fritz and management on the road to hear concerns – Same as 4.

So how will the new GM hear customers?
Where is the new listening apparatus?
Who has come in to bring the fresh blood?

Like readers of this Vision blog, the VLane blog, attendees of twitter #carchat, and devotees of so many other forums, I want to talk cars, all the time, every hour, of every day. I don’t want a meager on-line chat with Bob Lutz, and I don’t want a job in his organization. I want a robust 21st century, customer-driven, OPEN, organization, whose organic makeup is consistently infused with my blood. You can still make the cars and make decisions, but at least use my energy in the process. That would be fresh. That would be new. That would be American. I am one of an army of CUSTOMERS. I have daily opinions that will make the GM product better, but the Company needs to know how to listen to me instead of talking at me.

Let’s think about it:

Will I give you an idea you can't make? >> Doubt it. You’re pretty good at making stuff, so let’s talk.
Will I give you ideas that are too expensive to implement? >> Doubt it. When you consider the cost of OnStar, employee healthcare, and the Volt, most of my ideas are cheap.
Will I tell you that someone else is already doing it better? >> Hope so. We should all be so lucky to have such early warning networks.
Or are my ideas so patently uninformed, that engaging me is futile? >> It’s beginning to smell that way now, and if you cannot break free of this belief, you will lose me forever.

Resetting this balance is the critical, time-sensitive challenge in GM’s bid to re-focus on customers.

As Fritz closed on Friday, “"We recognize that we've been given a rare second chance at GM, and we are very grateful for that.”

You have, and it is rare, and unfortunately it appears that you are losing the battle already.

Here is GM’s “re-opening” Press Conference (embedded below) and July 10th press release for you to read for yourself.












Friday, July 10, 2009

GM to exit bankruptcy - but no move for Lutz

Today at 9am EDT, it is expected that GM will sell all of it's assets
to a new GM erasing a substantial portion of it's debt and setting the
stage for a smaller better capitalized company to go forward. Though
the models will be fewer the business is not substantially different.

In perhaps the most outward sign of this business as usual, Bob Lutz,
former head of Global Product Development, has announced that instead
of retiring, he will re-up as head of Global Product Development.

It is not that I don't respect Maximum Bob, in fact I do, but why he
would not share his skills with one of the more forward thinking
Companies when he had the clear opportunity to break free, is a mystery.

Thursday, July 9, 2009

1930 - When design ruled and American cars were to be admired

Today I fell in love with another car. Here is a taste:



















My 1994 former Viper RT/10, My 1971 280SL, the Bugatti Type 57 Atalante, the Ford GTX-1, the Lambo LM002, these have been some of the members of my fantasy garage...to which today I added another member.

452 cubic inches (7.2 liters), V16, powered, 1930 Cadillac Roadster.

A "Playboy's Car" in the Truest sense.

Turned polished dash, dual vacuum-assist fuel pumps, Golf Bag cubby, oak canopy struts, Running board puddle lamps, Triple fender steps, porcelain hood emblem, Rumble seat that could seat an elephant, articulating front lamps, and dashboard lights of stainless bullets. These are just a few of the elegant features.

But it is perhaps the body work and fenders that go on for MILES that made me fall hardest. This is a car who is from an era when design was alive and American cars truly were at their zenith. There was, at the time, nothing that an automotive connoisseur could have desired more. No excuses, no embellishments, this was the pinnacle.

We have lost that in this country - it is almost too obvious to even point that out - but one visit to a car like this, and I am doubly determined to bring it back responsibly.

A recent friend of mine, bought this in Florida several years ago and has had it lovingly restored.












































































And if seeing is not believing, then perhaps you will get the vibe when it is cranked over! It has been said that the only thing you should hear when a Cadillac V16 is running is the sound of the fan blowing air into the carburetor air horns. Judge for yourself...



video

Tuesday, July 7, 2009

Gut in my throat...with excitement and anticipation - an entrepreneur's note

In the last week, this is the third time that I as the CEO of Local Motors have had my gut in my throat, bound up with anticipation.

The first was when we spent the first dollar of investor capital. At that moment, I knew in my gut that I was committed. It was great and scary all at once. I was alive with anticipation.

When it is your money, it is always easier to spend, but when the fiduciary responsibility steps in, you are bound to a higher standard, and you KNOW it.

The second time was when we declared a winner in our first design competition and I had to call the guy in Australia, tell him, and hope that he would be satisfied with the contract of several thousand dollars in exchange for a limited - but meaningful - set of rights to his precious design.

We were setting the market clearing price for distributed car design in this transaction. It had never been done in this way, and many people tried to convince us that it couldn't be done. If it couldn't be done, then we would not have succeeded. We did it.

Each of these two memories came rushing back this week during a third and equally momentous event. On July 15th, we launch the "Buy Button" that changes the face of American Automotive and takes Local Motors to the next level: we elevate from planting and watering to harvesting value...we start selling product. In advance of that event we have begun to receive a great deal more attention and several customers have begun to express their intent to place a deposit. Today I was explaining to a future customer the path that the purchase will take for his owning a Rally Fighter, and it suddenly hit me full force that I was having a third moment. I have always dreamed of making cars, but somehow the enormity of being responsible for placing such a complex and magnificent product in the market struck me with a great dose of sobering introspection.

We are ready no doubt, or perhaps I should say "you are never ready" but we have prepared fully. In any case, we are up to the challenge and look forward to seeing our charter customers drive away.

That will likely be a fourth moment in time for me.

I am honored to be able to be involved in such a Company and to feel so alive. I worry some times that I will never have such feelings again in a Company...at least not for a long time. So, time to savor.

Monday, July 6, 2009

Rearranging the Deckchairs


www.liverpoolmuseums.org.uk

For the last 10 months the global automotive industry has been in a nosedive. Interestingly throughout the hubbub, the crew of the greater OEM family has been working hard to rearrange the deckchairs while many of the rest of the hijacked passengers have looked on in amazement. I think that we are all supposed to believe that this reshuffling is a signal of value-added and refreshing change, but I would submit a different take. Let's recap the scorecard.

Fiat has taken hold of Chrysler.
Tata has burdened itself with both Jaguar and Land Rover (now JLR)
Magna has taken on Vauxhall and Opel
Penske has absorbed the weight of Saturn
Sichuan Tengzhong Heavy Industries is trying desperately to win approval for its bid to buy Hummer
Koenigsegg has stolen the defeat of Saab from the jaws of victory
Prodrive has hold of Aston Martin
and on and on

But under the surface is there really any magic going on? Penske is trimming and hoping to wait out the storm, Magna cannot sell into the US, Fiat won't dare put any money into Chrysler, Tata must raise 1BN GBP before September, etc etc. and for what? If there are innovative plans going on under the surface of any of the mergers, those ideas are so distant and hidden that no one is privy to their impending attack on the status quo.

I sadly believe that inertia is at work, and we are idly watching as deckchairs are being rearranged in grim resignation with those farther aft holding a hand out to those closer to the water, only ignoring the fact that the whole ship is headed to Davey Jones.


(www.scholarsandrogues.com)


- Unsustainable US Oil end use.
- Strategic dependency on foreign petroleum.
- Global balance of power hinged on places like Russia, Venezuala, Nigeria, Iraq, Iran.
- Petroleum based externalities (CO2, NOx, particulate emissions).

To name a few, these disadvantages of the old-school car economy are gasps of a dying breath and harbingers of worse things to come.

It is important to remember that there was a day when the status quo was made routine, before which customers searched for a new way of doing business. The "service station", the "dealership", the "OEM", the "Tier 1 supplier"... These were not preordained entities with some inalienable right to exist. By force of habit we permit them to ride on even if their original intended purpose is long gone from the executive summary of their pitch deck.

Just look at Baltimore in 1910. A population of 550,000 and yet there were 17 American Car Companies all doing business in the heart of the city! Seventeen. Hup, Lozier, Paige, Ford, REO, Pierce-Arrow, Poehlmann, Trumbull, Oldsmobile, Beehler & Ogden, Cacteccar, Marmon, Nash, Auburn, Maryland, Lambert, and Babcock. The industry was in explosion and many prized segments were up for grabs. Coachbuilders, bicycle factories, light machinery, home delivery, luxury purveyors, all were positioning to get into the limelight. The GM and Fords of the day were the Ohio Carriage Manufacturing Company run by H.C Phelps and the Durant-Dort Carriage Company of Willy Durant. In 100 years most of these names are a distant memory.


(Mt. Royal Dealerships, Baltimore, MD circa 1910, Kilduffs.com)

If we had to start again, given the building blocks we have at hand? We probably would use many of the pieces that currently exist, but changing an owner and trying to rebuild the ship to look the same, is destined to fail. Think about personal transportation; where vehicles come from; and how they make it into your home and heart.

Friday, July 3, 2009

Happy Birthday America! From the Whole Team at LM

Wednesday, July 1, 2009

Andy Grove - Intel Maven and 1997 Man of the Year may have made his finest commentary yet - A New Vision for Cars


















(Andy Grove, image: portfolio.com)

Speaking across a flurry of forums (magazines, conferences, interviews, etc.), Grove's message is simple and compelling....AND tailored to LM. He is touting the shift to electric cars in this country, but perhaps even more appropriately is his forecast of the method of adoption....

This passage from the Associated Press 7/1/08 and a talk reiterated at Stanford Graduate School of Business just yesterday, both make a clear statement of his bias.

Grove says the fledgling plug-in hybrid movement offers parallels to the Homebrew Computer Club from the mid-1970s that helped electronic hobbyists in Northern California set the stage for personal computers. Plug-in hybrid conversion shops could spread the technology in similar ways.

"The personal computer ... went to individuals first before it went to corporations. The conversion goes to individuals," Grove said. "Electric cars ... the corporations are sitting, wishing this whole friggin' thing to go away. Which is exactly what the computer companies' attitude was to personal computers."

Unfortunately on the opposite side, the intransigence perpetuates. Listen to the big auto industry's attempt to coopt this revolution.

Automakers have urged the government to provide more consumer tax incentives and research aid to develop advanced batteries, but they have questioned efforts to retrofit the vehicles.

Any changes to the engine would void the warranty, and the alterations could undermine the vehicle's reliability and safety functions, automakers say.

"We strongly discourage consumers from retrofitting vehicles," said GM spokesman Greg Martin.


Who will win? the homebrew car modifier who doesn't take no for an answer? or the big company who only gives no for an answer? I am most tempted to trust the mind that brought us Intel.