One wintery morning in 2011, Marc Roth awoke after a rough night in a homeless shelter in San Francisco. When he spotted a business card for TechShop in the shelter’s garbage bin, it seemed like a sign. Intrigued, he fished it out, and eventually spent a lot of time at the shop, learning to use tools and make things.
Roth is now running a funded hardware startup, and is one of TechShop’s greatest successes.
Stories like these have caught the attention of the higher ups, most notably Nancy Pelosi, representative for California’s 12th district and the Minority Leader of the United States House of Representatives.
This week, Pelosi met with TechShop’s spiky white-haired chief executive Mark Hatch, representatives from crowdfunding platforms like Indiegogo, and a small group of hardware entrepreneurs. Most of the entrepreneurs were still in the early stages of growing their business, although TechShop has spawned some household names, including Square. (Square’s founders made the initial prototypes for their card reader at TechShop.)
On Wednesday, Pelosi participated in a roundtable discussion after touring the premises, which have ballooned. TechShop is a 17,000 square feet warehouse, which can house hundreds of would-be makers, including veterans, students and young professionals.
TechShop, located in the heart of San Francisco’s financial district, is now a mecca for tinkerers and hobbyists. It offers an impressive array of machine tools — laser cutters, waterjets and 3D printers — and office space. Members pay approximately $125 a month to participate in classes and use these tools.
Made in the USA
“This is a remarkable thing in commerce,” said Pelosi. The career politician was particularly struck by the banners at TechShop, which proudly displayed slogans like “Made in America.”
Hatch and many of his fellow makers at TechShop manufacture their products in California or neighboring states, rather than China. They aren’t shipping products en masse, so it’s the more affordable option.
“Access to the equipment we had within TechShop gave us the vision to say we can do small-scale production here, and keep the business in San Francisco,” Craig Dalton of Dodocase, which sells hand-crafted iPad cases, told Pelosi.
Some of the makers at the roundtable spoke up about how Indiegogo, Kickstarter and other crowdfunding sites have helped them manufacture products in the USA. For one thing, the market can speak. Makers can ask donors how much they’re willing to pay for a product, and set the price accordingly. Often it’s a far higher price than the entrepreneur expected.
In the past, makers and their venture capital investors have erred on the side of caution and deliberately kept prices extremely low. This has typically left them with no other option but to manufacture abroad. As it turns out, customers are often willing to pay a bit extra for quality, especially for products that are manufactured locally.
Moreover, TechShop equips makers with the skills to carry on a conversation with potential manufacturers. The goal is to lower the knowledge barrier, so entrepreneurs can explain exactly what they want in a discussion with a contract manufacturer.
Pelosi stressed that it’s not “protectionist” to favor homegrown products. “Manufacturing is part of R&D — actually it is R&D, it’s how you learn,” she said. Pelosi referred to recent commentary in Bloomberg, which details how the “scaling” process (growing a manufacturing business) is no longer happening in the U.S.
“Originally we would be inventing in the garage, and scaling up would happen in the U.S., and that would create jobs here, and then at some point, some of it would move offshore,” Pelosi said. “Now people are going straight from garage to offshore, and that middle piece has been missing.”
Pelosi concluded that the author of the Bloomberg piece, former Intel CEO Andy Grove, should consider paying TechShop a visit.
Inspiring young makers
Another theme that was consistently discussed during the roundtable: STEM education, which stands for science, technology, engineering and math. Pelosi seemed intrigued by efforts to transport the maker movement to schools — and more specifically, to inspire young girls to love science and math.
Hatch is highly optimistic about the rise of robotics workshops and classes at local schools. In a recent interview with Popular Mechanics, he touched on how the Maker Movement is finally reaching a broader demographic: “I’m particularly encouraged that we’re seeing more children — in junior high and high school — and more women. When we first started, it was about 95 percent men, typically in their mid-20s to mid-50s range.” Now, Hatch estimates that about 30 percent of TechShop’s members are women.
The roundtable of entrepreneurs was a (likely intentionally) diverse group. Among them were Andrew Rutter of 3D printing company Type A Machines, a British transplant with a background in theater; and Laura Bruland, a former barista who founded a company that sells artsy jewelry made out of recycled books.
Pelosi seemed receptive to the notion that hardware isn’t all that tricky to master. Bruland said she only completed one class before starting Yes and Yes Designs. It’s a skill-set that could certainly trickle down to a younger generation.
Before taking off, Pelosi promised Hatch that she would put him in touch with George Miller, the U.S. Representative for California’s 11th congressional district, who previously served as chairman of the Education and Labor Committee. “Sometimes schools aren’t as receptive,” said Pelosi. “I really hope this works.”
Veteran support and homelessness
Roth’s incredible turnaround tale wasn’t lost on Pelosi. After the roundtable discussion, we spoke one-on-one about her plans to stimulate job creation for veterans, many of whom are currently homeless.
“One of our objective is to work with both veterans and the homeless, and turn them into entrepreneurs,” said Hatch. (Hatch hadn’t realized that Roth had been homeless until he read the story in VentureBeat.) That point wasn’t lost on Pelosi, who noted that people from all walks of life could walk in and take a class. All that is needed is about $100 for a membership and a willingness to work.
The vets training program consists of a partnership with Department of VA, GE and TechShop to provide 3,000 one-year memberships to veterans.
Pelosi’s visit wasn’t all fun and games: It gave makers the opportunity to discuss recent policy that might cripple their small businesses. Hatch is particularly concerned about the Securities and Exchange Commission’s proposed rules for regulating equity-based crowdfunding under the JOBS Act, given that thousands of makers are turning to Kickstarter and Indiegogo for startup capital.
Pelosi didn’t address this policy issue head on, but she did offer to help Hatch get in touch with the right people at the Veterans Administration (the VA is a notoriously messy bureaucratic organization). “I think it would be a huge opportunity for veterans to pick up some quick skills that they might be able to use somewhere else,” Hatch told her.
Pelosi concluded that TechShop and the maker movement is important, because it offers anyone an opportunity and narrows “the distance between an idea and selling.”
She explained, “That gap has always been the problem, unless you have very deep pockets. With TechShop you don’t need to raise capital for offshore production. It’s remarkable.”