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The driving force behind all of these novel collaborative structures, self-organizing or otherwise, is an entirely new kind of value proposition, what technology expert and author Joshua Klein calls
reputation economics.
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The idea here is twofold. It starts with the fact that some two billion of us now have online reputations. Whether it's your seller rating on eBay, or the content on your Facebook page, or your Klout score (Klout uses social media analytics to rank its users according to online social influence), people know far more about each other than ever before. And these reputations matter. A series of powerful blog posts can get you everything from a date for Friday night to an invitation to speak at a conference. People get jobs because of their
StackOverflow.com
experience (a website that lets techies comment on one another's questions and vote up the best answers) and TopCoder scores (TopCoder runs online computer programming competitions). In other words, our online reputations have real-world consequences.

Moreover, these reputations allow all sorts of entirely beneficial but—the key point—not always financial exchanges. “Because we can now get context-relevant information about anyone else in the world,” explains Joshua Klein, “we can decide, dynamically and personally, how to exchange with them in a way most beneficial to both parties. Essentially, this underpins everything that makes every community with an online component work, which these days is most of them.”
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But the interesting bit is that we can now take this one step further. Imagine a local baking club that's getting into carbon dioxide infusions for their whipped-cream cupcakes. One day one of the club members decides they need a more industrial-strength infusion machine. A few minutes later she's looking at the website of a guy halfway across the country who claims to be making a device that perfectly fits the bill—but he's got only a couple of prototypes and doesn't seem interested in sharing.

“Used to be,” continues Klein, “you'd try to figure out what he was doing from papers he may have written or a newspaper report, or maybe you'd write a letter and beg for more info. But now you can learn all about this guy. Figure out he's really into Bavarian folk music. Bavarian folk music? No kidding, your lead baker's wife's mother's aunt
is from Bavaria. Turns out her nephew back home is a big deal in folk music. Would this guy making industrial-scale cupcake infusers be interested in an introduction, maybe for a trial of his device? That sort of thing just wouldn't have been possible ten years ago. Now it's as ordinary as breathing.”

By fundamentally altering the value proposition, reputation economics further accelerates the rate of innovation both in DIY and exponential communities. This means that communities don't grind to a halt when money is not readily available. In fact, often just the opposite is true. Mutually beneficial nonfinancial trades can actually be better—that is to say, add more value—for the participants involved than a plain old currency exchange. There's less friction, so people are often more motivated to make such trades. As a result, the accelerated rate of innovation that results from the removal of geographic barriers is itself accelerated, allowing entrepreneurs to go from A to B far faster than ever before.

Or as Gina Bianchini explains: “I've been around DIY communities my entire career, and these continue to surprise me, to startle me. Once a community gets going, it starts generating absolutely mind-blowing ideas of its own. Directions you would have never considered, never even imagined. This happens so regularly you can almost count on it. I think this is the reason DIY communities are such a powerful tool for tackling bold challenges. You can go big because you don't need to know how to pull something off ahead of time. The community shapes the path and accelerates the process. It's a shocking amount of leverage.”
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In early 2007, while working toward his PhD in astrophysics at Oxford, Kevin Schawinski was hunting blue ellipticals in the Sloan Digital Sky Survey data. A blue elliptical is a transitional galaxy, possibly the missing link between a galaxy engaged in active star formation
and one long dead. The Sloan Survey, meanwhile, is one of the more ambitious endeavors in the history of astronomy. Imaging almost a quarter of the sky and containing ten times the data of any previous effort, Sloan's goal was to give us a large-scale view of the universe—what the
New York Times
once called “a census of the heavens”
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—in the hopes of revealing its structural framework. Thus, unlike pre-Sloan astronomers, Schawinski didn't have just a few thousand photographs to work with—he had nearly a million. Unfortunately, at the time, our best computer algorithms couldn't spot blue ellipticals. Only the human eye was capable of that feat. In other words, Schawinski had his work cut out for him.

Ten hours a day for five days straight is what it took him to sort through 50,000 images, but that was the end of the line. “It was as far as I was willing to go,” Schawinski explains. “And we extracted some really interesting science and published a bunch of papers from what I had analyzed, but whenever we talked about what else we could do we came back to ‘wouldn't it be amazing to sort the whole million.' ”
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Then Schawinski went out for a beer with fellow Oxford astronomer Chris Lintott and together they stumbled upon the idea of putting the images on a website. “We thought that there might be a few people out there—like, maybe, two or three really dedicated amateur astronomers—who would be willing to help us,” says Schawinski. “With this method, by doing a back-of-the-envelope calculation, we thought it would take about five years for every one of those million galaxies to be classified once.”

With the help of some friends, and just two weeks after they shared that beer, this idea became Galaxy Zoo, one of the very first citizen-science websites to appear online.
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As far as telling people about the website, well, they commemorated its appearance with nothing more than a short press release. Then they waited—but not for long.

Within a few hours, people were classifying more galaxies than Schawinski had done in a week. Within twenty-four hours, they were classifying nearly 70,000 galaxies an hour. “What we
realized very quickly was there was this huge demand among people to get involved in this. At first we were kind of puzzled by why people would want to go to a website and classify galaxies in such huge numbers. Then we realized we'd hit upon an unmet need—people want to do this. They wanted to contribute. In fact, we teamed up with some social scientists and found that the number one reason why people do Galaxy Zoo is the desire to contribute to actual science. They want to do something that's useful.”

A lot of people had this want. Schawinski and his colleagues had hit on a massively transformative purpose. The first iteration of Galaxy Zoo (they're now up to version five) drew 150,000 participants classifying—wait for it—50 million galaxies. Subsequent versions pulled in over 250,000 participants and pushed the total over 60 million. And then Galaxy Zoo became a smorgasbord of citizen-science projects, now hosted at Zooniverse. Want to explore the surface of the Moon? Join Planetary Resources and NASA to find near-Earth-approaching asteroids for potential mining? Model climate change through the centuries using historic ship's logs? Help researchers understand whale communications? All of these choices are now in the offing.

And that's important. What Schawinski and his cohorts had accidentally stumbled upon is what I call the Law of Niches, the idea, quite simply, that you are not alone. This is one of the most telling features of the web—the somewhat humbling fact that no matter what oddball notion you're deeply passionate about, well, there are plenty of folks who share the same passion. “The ability for entrepreneurs to nimbly find and serve niche interests—and to produce platforms that allow those groups to address their needs en masse—is better than ever before,” explains Joshua Klein. “It used to be that start-ups would have to compete with an established industry vertical—say, automotive parts. But I've got a friend who is building his entire business around Prius owners who want to hack their cars' electrical system to make them even more fuel efficient. That's a pretty small subculture, but today it's more than enough to build a business upon.”

John “Jay” Rogers grew up loving cars. He also loved motorcycles. This was something of a family trait. His grandfather, Ralph Rogers, was the last owner of the legendary Indian Motorcycle company and the first distributor of the Cummins Engine on the East Coast. Growing up, Rogers always assumed he'd pursue a career in automotive design, but when he got to college, he discovered there was no place in the traditional university system for car designers, so he set aside his childhood passion and graduated from Princeton with a degree in international affairs and public policy (and a minor in art).

Rogers took a job with a medical start-up, spending three years in China before switching to a career as a financial analyst. That career came with an offer to go to business school, and he was accepted at Stanford. During a celebration dinner, a colleague asked Rogers what he really wanted to do with his life. “I told him I wanted to build something tangible,” says Rogers, “to actually lead people. My friend asked me if I knew how to lead, if I actually have any real leadership experience. When I said no, he suggested I join the military.”
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Which is exactly what Rogers did.

At age twenty-six, he gave up his position at Stanford and became a Marine, signing up in 1999 and serving six and half years, including a tour in the Pacific and another in Iraq. In 2004, on his second tour, Rogers brought along a copy of
Winning the Oil Endgame
, visionary environmentalist Amory Lovins's book about how society can wean itself from fossil fuel dependence. The book was a turning point. He read it right around the time two of his closest friends were killed in combat. The combination made him realize that what he really wanted to do with his life was ensure that no one else ever died for oil. Since 71 percent of the fossil fuels imported by America becomes the gasoline that powers our cars and light trucks, he figured that the best way he could accomplish his goal was to build an entirely new
kind of environmentally friendly car.

Rogers knew he needed more business savvy than he had to pull off this dream, so he left the military and went back to school for an MBA at Harvard. It was there he heard a presentation on Threadless, the previously mentioned open-source T-shirt company. He was stunned by the power of crowdsourcing. Certainly, building cars was far more difficult than designing T-shirts, but Rogers also knew that the talent he needed was readily available. In another example of the Law of Niches, Rogers realized he wasn't the only kid who grew up fantasizing about designing cars only to later realize this was a very rare job. “Only 12 to 20 percent of the industrial designers who specialize in transportation end up working in the field,” Rogers explains. “And that doesn't include all the people who wanted to build cars but didn't become industrial designers. Or couldn't become industrial designers. There is this huge pent-up need in people to create cars, this very frustrated passion.”

The result of this MTP became Local Motors, the world's first open-sourced car company to reach production.
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Able to design and build cars five times faster and with a hundred times less capital than traditional manufacturing companies, Local Motors is something of a modern wonder. Not only did they figure out how to accelerate and demonetize automotive production, they did so at a time when unemployment in Detroit—thanks to the slow death of the American auto industry—was hovering at 23 percent.
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Think about this for a moment. Throughout the book, we've been talking about how small teams can now accomplish what once only large corporations or governments could do. Well, if you exclude Elon Musk's Tesla, America hasn't seen a new car company succeed in thirty plus years. And in the past seven years, the government has spent tens of billions bailing out the Big Three. In other words, Local Motors isn't just doing what large companies and government could do; they're doing what these institutions could not—helping to save the automotive industry.

So what did they do? Simple. Local Motors figured out how to design and build cars collectively, through an incredibly robust DIY
community. Today they host design competitions on their website, targeting very specific regional markets (off-road vehicles for the Sonoran Desert, incredibly fuel-efficient vehicles for California's high-traffic freeways). The contests aggregate car concepts from a worldwide assortment of designers, engineers, and enthusiasts. Then the community votes up their favorites, and Local Motors helps brings the winning car into existence.

Critically, Local Motors keeps their community involved at every step. After that first design contest, Local Motors organizes additional design/build competitions around vents and interiors and other key features. They also leverage mass production, allowing their community to vote up their favorite off-the-shelf parts for inclusion in the vehicle. For example, the first car Local Motors released, the 2009 Rally Fighter—an off-road (yet street legal) desert racer—has Mazda Miata door handles and Honda Civic taillights. The company then releases the final design under a Creative Commons license so community members can continue to enhance the work and, for those entrepreneurially inclined, develop specialized parts to sell to the community. Lastly, to take possession of a car, customers must actually participate in the assembly process, cobuilding the finished product at a Local Motors build facility, aka a microfactory.