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Source of book image: http://img2.imagesbn.com/p/9781400067053_p0_v1_s260x420.JPG

(p. 20) The obvious audience for Rosen's book consists of those who hunger to know what it took to go from Heron of Alexandria's toy engine, created in the first century A.D., to practical and brawny beasts like George and Robert Stephenson's Rocket, which kicked off the age of steam locomotion in 1829. But Rosen is aiming for more than a fan club of steam geeks. The "most powerful idea" of his title is not an early locomotive: "The Industrial Revolution was, first and foremost, a revolution in invention," he writes, "a radical transformation in the process of invention itself." The road to Rocket was built with hundreds of innovations large and small that helped drain the mines, run the mills, and move coal and then people over rails.

. . .

Underlying it all, Rosen argues, was the recognition that ideas themselves have economic value, which is to say, this book isn't just gearhead wonkery, it's legal wonkery too. Abraham Lincoln, wondering why Heron's steam engine languished, claimed that the patent system "added the fuel of interest to the fire of genius." Rosen agrees, offering a forceful argument in the debate, which has gone on for centuries, over whether patents promote innovation or retard it.

Those who believe passionately, as Thomas Jefferson did, that inventions "cannot, in nature, be a subject of property," are unlikely to be convinced. Those who agree with the inventors James Watt and Richard Arkwright, who wrote in a manuscript that "an engineer's life without patent is not worthwhile," will cheer. Either way, Rosen's presentation of this highly intellectual debate will reward even those readers who never wondered how the up-and-down chugging of a piston is converted into consistent rotary motion.

For the full review, see:

JOHN SCHWARTZ. "Steam-Driven Dreams." The New York Times (Sun., August 29, 2010): 20.

(Note: ellipsis added; italicized words in original.)

(Note: the online version of the review has the date August 26, 2010.)

The book under review, is:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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I believe that Moore's Law remained true for a long time, not because it was inevitable, but because an exemplary company worked very hard and effectively to make it true.

(p. 159) In brief, Moore's Law predicts that computing chips will shrink by half in size and cost every 18 to 24 months. For the past 50 years it has been astoundingly correct.

It has been steady and true, but does Moore's Law reveal an imperative in the technium? In other words is Moore's Law in some way inevitable? The answer is pivotal for civilization for several reasons. First, Moore's Law represents the acceleration in computer technology, which is accelerating everything else. Faster jet engines don't lead to higher corn yields, nor do better lasers lead to faster drug discoveries, but faster computer chips lead to all of these. These days all technology follows computer technology. Second, finding inevitability in one key area of technology suggests invariance and directionality may be found in the
rest of the technium.

Source:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

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(p. 67) Our present economic migration from a material-based industry to a knowledge economy of intangible goods (such as software, design, and media products) is just the latest in a steady move toward the immaterial. (Not that material processing has let up, just that intangible processing is now more economically valuable.) Richard Fisher, president of the Federal Reserve Bank of Dallas, says, "Data from nearly all parts of the world show us that consumers tend to spend relatively less on goods and more on services as their incomes rise. . . . Once people have met their basic needs, they tend to want medical care, transportation and communication, information, recreation, entertainment, financial and legal advice, and the like." The disembodiment of value (more value, less mass) is a steady trend in the technium. In six years the average weight per dollar of U.S. exports (the most valuable things the U.S. produces) (p. 68) dropped by half. Today, 40 percent of U.S. exports are services (intangibles) rather than manufactured goods (atoms). We are steadily substituting intangible design, flexibility, innovation, and smartness for rigid, heavy atoms. In a very real sense our entry into a service- and idea-based economy is a continuation of a trend that began at the big bang.

Source:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

(Note: ellipsis in original; a graph is omitted that appears in the middle of the paragraph quoted above.)

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"Tom Morse, left, and his father, Burr, at work on their maple farm in Vermont." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 11) Scientists say the tapping season -- the narrow window of freezing nights and daytime temperatures over 40 degrees needed to convert starch to sugar and get sap flowing -- is on average five days shorter than it was 50 years ago. But technology developed over the past decade and improved in recent years offers maple farmers like Mr. Morse a way to offset the effects of climate change with high-tech tactics that are far from natural.

Today, five miles of pressurized blue tubing spider webs down the hillside at Morse Farm, pulling sap from thousands of trees and spitting it into tubs like an immense, inverse IV machine. Modern vacuum pumps are powerful enough to suck the air out of a stainless steel dairy tank and implode it, and they help producers pull in twice as much sap as before.

"You can make it run when nature wouldn't have it run," Mr. Morse said.

His greatest secret weapon is a reverse-osmosis machine that concentrates the sap by pulling it through sensitive membranes, greatly increasing the sugar content before it even hits the boiler. The $8,000 instrument with buttons and dials looks like it belongs in a Jetsons-era laboratory more than in a Vermont sugarhouse. But it saves more fuel and money than every other innovation combined. With it Mr. Morse can process sap into syrup in 30 minutes, something that used to take two hours.

. . .

The biggest United States maple farmers have expanded their production acreage and are tapping more trees than ever before: the total was 5.5 million taps last year, compared with slightly over 4 million taps 10 years earlier.

As a result, United States maple syrup production hit a new high in 2011. In Vermont, the top-producing state, sap yield per tap has risen over the past decade.

For the full story, see:

JULIA SCOTT. "Maple Syrup: Old-Fashioned Product, Newfangled Means of Production." The New York Times, First Section (Sun., March 31, 2013): 11.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 30, 2013, and has the title "High-Tech Means of Production Belies Nostalgic Image of Maple Syrup.")

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Source of book image: http://thesocietypages.org/cyborgology/files/2012/02/kevin-kelly-book_rdax_620x349-300x285.jpg

Kevin Kelly's book has received a lot of attention, sometimes in conjunction with Steven Johnson's Where Good Ideas Come From, with which it shares some themes. I found the Kelly book valuable, but frustrating.

The valuable part includes the discussion of the benefits of technology, and the chapter detailing Amish attitudes and practices related to technology. On the latter, for instance, I learned that the Amish do not categorically reject new technology, but believe that it should be adopted more slowly, after long community deliberation.

What frustrated me most about the book is that it argues that technology has a life of its own and that technological progress is predetermined and inevitable. (I believe that technological progress depends on enlightened government policies and active entrepreneurial initiative, neither of which is inevitable.)

In the next several weeks, I will be quoting some of the more important or thought-provoking passages in the book.

The reference for Kelly's book, is:

Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

The Johnson book mentioned above, is:

Johnson, Steven. Where Good Ideas Come From: The Natural History of Innovation. New York: Riverhead Books, 2010.

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"Above, Robert Tinker, the chief executive of MobileIron, at its offices in Mountain View, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B2) "There are disruptions everywhere," said Robert Tinker, the chief executive of MobileIron, which makes software for companies to manage smartphones and tablets. "Mobile disrupts personal computers, a market worth billions. Cloud disrupts computer servers and data storage, billions of dollars more. Social may be one of those rare things that is totally new."

Relative to the size of the markets that mobile devices, cloud computing and social media are toppling, he says, the valuations are reasonable.

But most of these chief executives are also veterans of the Internet bubble of the late '90s, and confess to worries that maybe things are not so different this time. Mr. Tinker, 43, drives a 1995 Ford Explorer that has logged 265,000 miles.

"If somebody comes to a job interview here in a $100,000 car, I know he's not hungry," he said. "The reality is, I've taken $94 million in investors' money, and we haven't gone public yet. I feel that responsibility every day."

For the full story, see:

QUENTIN HARDY. "A Billion-Dollar Club, and Not So Exclusive." The New York Times (Weds., February 5, 2013): B1 & B2.

(Note: the online version of the story has the date February 4, 2013.)

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"Shown in 1960, the eight engineers who founded Fairchild Semiconductor and revolutionized world technology in "Silicon Valley," an "American Experience" documentary, . . . ." Source of caption and photo: online version of the NYT review quoted and cited below.

(p. C4) "Silicon Valley" is a deceptively grand title for the new "American Experience" documentary Tuesday night on PBS. "Fairchild Semiconductor" would be more accurate.

. . .

One startling image shows a handwritten list of the many corporations that declined to bankroll the eight pioneers before Fairchild Camera and Instrument said yes. If any of them had possessed more foresight, the silicon chip might have belonged to National Cash Register, Motorola, Philco, BorgWarner, Chrysler, General Mills or United Shoe.

For the full review, see:

MIKE HALE. "Men Who Took Silicon to Silicon Valley." The New York Times (Tues., February 5, 2013): C4.

(Note: ellipses in caption, and in quoted passage, added.)

(Note: the online version of the review has the date February 4, 2013.)

The "Silicon Valley" program first aired on PBS on 2/5/13 and can be viewed at:

http://video.pbs.org/video/2332168287

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"Phil Libin, chief of Evernote, at its headquarters in Redwood City, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- The number of privately held Silicon Valley start-ups that are worth more than $1 billion shocks even the executives running those companies.

"I thought we were special," said Phil Libin, chief executive of Evernote, an online consumer service for storing clippings, photos and bits of information as he counted his $1 billion-plus peers.

He started Evernote in 2008 on the eve of the recession and built it methodically. "A lot of us didn't set out to have a big valuation, we're just trying to build something that lasts," Mr. Libin said. "There is no safe industry anymore, even here."

. . .

(p. B2) Silicon Valley entrepreneurs contend that the price spiral is not a sign of another tech bubble. The high prices are reasonable, they say, because innovations like smartphones and cloud computing will remake a technology industry that is already worth hundreds of billions of dollars.

. . .

The founders of the highly valued companies are old enough to remember past busts, and many shun the bubble lifestyle of fast cars and fancy parties.

Mr. Libin, who said he grew up on food stamps as the son of Russian immigrants in the Bronx, became a millionaire when he sold his first company, Engine5, to Vignette in 2000.

"The company I sold to, there were purple Lamborghinis in the garage. I got into watches," he said. "Maybe a half-dozen, nothing over $10,000, but I needed this glass and leather watch winder."

Evernote started as the financial crisis hit. "One night I was almost busted again," he said, "and there was that watch winder on the shelf, mocking me."

"Every job out there is insecure now," he said. "People sell 10 percent of their stock, and they have an incentive to make the other 90 percent worth more. They are still working, but not worrying about what will happen to their home or their kids."

For the full story, see:

QUENTIN HARDY. "A Billion-Dollar Club, and Not So Exclusive." The New York Times (Weds., February 5, 2013): B1 & B2.

(Note: the online version of the story has the date February 4, 2013.)

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The following passage is Steve Jobs speaking, as quoted by Walter Isaacson.

(p. 568) People pay us to integrate things for them, because they don't have the time to think about this stuff 24/7. If you have an extreme passion for producing great products, it pushes you to be integrated, to connect your hardware and your software and content management. You want to break new ground, so you have to do it yourself. If you want to allow your products to be open to other hardware or software, you have to give up some of your vision.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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The following passage is Steve Jobs speaking, as quoted by Walter Isaacson.

(p. 567) Some people say, "Give the customers what they want." But that's not my approach. Our job is to figure out what they're going to want before they do. I think Henry Ford once said, "If I'd asked customers what they wanted, they would have told me, 'A faster horse!'" People don't know what they want until you show it to them. That's why I never rely on market research. Our task is to read things that are not yet on the page.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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(p. A13) Eric Schmidt, executive chairman of Google, gave a remarkable interview this month to The Washington Post. So remarkable that Post editors preceded the transcript with this disclosure: "He had just come from the dentist. And he had a toothache."

Perhaps it was the Novocain talking, but Mr. Schmidt has done us a service. He said in public what most technologists will say only in private. Whatever caused him to speak forthrightly about the disconnects between Silicon Valley and Washington, his comments deserve wider attention.

Mr. Schmidt had just given his first congressional testimony. He was called before the Senate Judiciary Antitrust Subcommittee to answer allegations that Google is a monopolist, a charge the Federal Trade Commission is also investigating.

"So we get hauled in front of the Congress for developing a product that's free, that serves a billion people. OK? I mean, I don't know how to say it any clearer," Mr. Schmidt told the Post. "It's not like we raised prices. We could lower prices from free to . . . lower than free? You see what I'm saying?"

. . .

"Regulation prohibits real innovation, because the regulation essentially defines a path to follow," Mr. Schmidt said. This "by definition has a bias to the current outcome, because it's a path for the current outcome."

. . .

Washington is always slow to recognize technological change, which is why in their time IBM and Microsoft were also investigated after competing technologies had emerged.

Mr. Schmidt recounted a dinner in 1995 featuring a talk by Andy Grove, a founder of Intel: "He says, 'This is easy to understand. High tech runs three times faster than normal businesses. And the government runs three times slower than normal businesses. So we have a nine-times gap.' All of my experiences are consistent with Andy Grove's observation."

Mr. Schmidt explained there was only one way to deal with this nine-times gap, which this column hereby christens "Grove's Law of Government." That is "to make sure that the government does not get in the way and slow things down."

Mr. Schmidt recounted that when Silicon Valley first started playing a large role in the economy in the 1990s, "all of a sudden the politicians showed up. We thought the politicians showed up because they loved us. It's fair to say they loved us for our money."

He contrasted innovation in Silicon Valley with innovation in Washington. "Now there are startups in Washington," he said, "founded by people who were policy makers. . . . They're very clever people, and they've figured out a way in regulation to discriminate, to find a new satellite spectrum or a new frequency or whatever. They immediately hired a whole bunch of lobbyists. They raised some money to do that. And they're trying to innovate through regulation. So that's what passes for innovation in Washington."

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; Google Speaks Truth to Power; About the growing regulatory state, even Google's Eric Schmidt--a big supporter of the Obama administration--now feels the need to tell it like it is." The Wall Street Journal (Mon., October 24, 2011): A13.

(Note: ellipses between paragraphs added; ellipsis internal to Schmidt quote, in original WSJ commentary.)

The original Eric Schmidt interview with the Washington Post, can be read at:

http://articles.washingtonpost.com/2011-10-01/national/35278181_1_google-chairman-eric-schmidt-regulation-disconnects

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(p. A11) . . . in Baltimore, . . . a local entrepreneur, following the logic of need, invested seven years and $30 million developing a robotic system for packaging prescription drugs for long-term patients in nursing homes and hospitals.

In a conversation last year, inventor Michael Bronfein told me if he'd known what it would cost him in time and money, he might never have started. How many entrepreneurs say the same? Probably all of them. But Mr. Bronfein saw a need and the power of technology to meet it, and the result was the Paxit automated medication dispensing system.

He saw workers spending hours under the old system sticking pills in monthly blister packs known as "bingo cards," a process expensive and error-prone. He saw nurses on the receiving end then spending time to pluck the pills out of blister packs and into paper cups, to create the proper daily drug regimen for each patient.

. . .

He followed the economic logic that indicated that all the people involved in the old system were becoming too valuable to have their time wasted by the old system. Backed by his company, Remedi SeniorCare, Paxit--in which a robot packages, labels and dispatches a daily round of medicines for each patient--is spreading across the mid-Atlantic and Midwest and winning plaudits from medical-care providers.

. . .

We need to preserve the incentive for investors to bring us the robots that will make the future bearable, rather than burying entrepreneurs in taxes in a vain attempt to seize the returns of investments before those investments are made.

For the full commentary, see:

Jenkins, HOLMAN W., JR. "BUSINESS WORLD; Robots to the Rescue? The flip side of an entitlements crisis is a labor shortage." The Wall Street Journal (Weds., January 9, 2013): A11.

(Note: ellipses added.)

(Note: the online version of the review has the date January 8, 2013.)

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(p. 531) In theory, you could go to your iPhone or any computer and access all aspects of your digital life. There was, however, a big problem: The service, to use Jobs's terminology, sucked. It was complex, devices didn't sync well, and email and other data got lost randomly in the ether. "Apple's MobileMe Is Far Too Flawed to Be Reliable," was the headline on Walt Mossberg's review in the Wall Street Journal.

Jobs was furious. He gathered the MobileMe team in the auditorium on the Apple campus, stood onstage, and asked, "Can anyone tell me what MobileMe is supposed to do?" After the team members offered their answers, Jobs shot back: "So why the fuck doesn't it do that?" Over the next half hour he continued to berate them. "You've tarnished Apple's reputation," he said. You should hate each other for having let each other down. Mossberg, our friend, is no longer writing good things about us." In front of the whole audience, he got rid of the leader of the MobileMe team and replaced him with Eddy Cue, who oversaw all Internet content at Apple. As Fortune's Adam Lashinsky reported in a dissection of the Apple corporate culture, "Accountability is strictly enforced."

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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"Dr. Robert Langer's research lab is at the forefront of moving academic discoveries into the marketplace." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) HOW do you take particles in a test tube, or components in a tiny chip, and turn them into a $100 million company?

Dr. Robert Langer, 64, knows how. Since the 1980s, his Langer Lab at the Massachusetts Institute of Technology has spun out companies whose products treat cancer, diabetes, heart disease and schizophrenia, among other diseases, and even thicken hair.

The Langer Lab is on the front lines of turning discoveries made in the lab into a range of drugs and drug delivery systems. Without this kind of technology transfer, the thinking goes, scientific discoveries might well sit on the shelf, stifling innovation.

A chemical engineer by training, Dr. Langer has helped start 25 companies and has 811 patents, issued or pending, to his name. More than 250 companies have licensed or sublicensed Langer Lab patents.

Polaris Venture Partners, a Boston venture capital firm, has invested $220 million in 18 Langer Lab-inspired businesses. Combined, these businesses have improved the health of many millions of people, says Terry McGuire, co-founder of Polaris.

. . .

(p. 7) Operating from the sixth floor of the David H. Koch Institute for Integrative Cancer Research on the M.I.T. campus in Cambridge, Mass., Dr. Langer's lab has a research budget of more than $10 million for 2012, coming mostly from federal sources.

. . .

David H. Koch, executive vice president of Koch Industries, the conglomerate based in Wichita, Kan., wrote in an e-mail that "innovation and education have long fueled the world's most powerful economies, so I can't think of a better or more natural synergy than the one between academia and industry." Mr. Koch endowed Dr. Langer's professorship at M.I.T. and is a graduate of the university.

For the full story, see:

HANNAH SELIGSON. "Hatching Ideas, and Companies, by the Dozens at M.I.T." The New York Times, SundayBusiness Section (Sun., November 25, 2012): 1 & 7.

(Note: ellipses added.)

(Note: the online version of the story has the date November 24, 2012.)

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(p. 408) Microsoft was willing to license its Windows Media software and digital rights format to other companies, just as it had licensed out its operating system in the 1980s. Jobs, on the other hand, would not license out Apple's FairPlay to other device makers; it worked only on an iPod. Nor would he allow other online stores to sell songs for use on iPods. A variety of experts said this would eventually cause Apple to lose market share, as it did in the computer wars of the 1980s. "If Apple continues to rely on a proprietary architecture," the Harvard Business School professor Clayton Christensen told Wired, "the iPod will likely become a niche product." (Other than in this case, Christensen was one of the world's most insightful business analysts, and Jobs was deeply (p. 409) influenced by his book The Innovator's Dilemma.) Bill Gates made the same argument. "There's nothing unique about music," he said. "This story has played out on the PC."

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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Is the example sketched below, and in a previous entry, a case of a first mover disadvantage? Or is it simply a case of a lucky or wise bounce-back from a genuine mistake?

(p. 382) . . . [Job's] angry insistence that the iMac get rid of its tray disk drive and use instead a more elegant slot drive meant that it could not include the first CD burners, which were initially made for the tray format. "We kind of missed the boat on that," he recalled. "So we needed to catch up real fast." The mark of an innovative company is not only that it comes up with new ideas first, but also that it knows how to leapfrog when it finds itself behind.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis and bracketed "Job's" added.)

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Isaacson says Jobs wanted two refinements in the iMac. One was new colors. The other is discussed below.

I am not sure what to make of this episode. Is Isaacson suggesting that it was good for Apple that Jobs made a mistake on the type of CD hardware to put in the iMac? That this added constraint "would then force Apple to be imaginative and bold"?

Or is the moral that good people who make a lot of quick decisions, make mistakes, sometimes big mistakes, and that Jobs found a way to bounce back from this one?

(p. 356) There was one other important refinement that Jobs wanted for the iMac: getting rid of that detested CD tray. "I'd seen a slot-load drive on a very high-end Sony stereo," he said, "so I went to the drive manufacturers and got them to do a slot-load drive for us for the version of the iMac we did nine months later." Rubinstein tried to argue him out of the change. He predicted that new drives would come along that could burn music onto CDs rather than merely play them, and they would be available in tray form before they were made to work in slots. "If you go to slots, you will always be behind on the technology," Rubinstein argued.

"I don't care, that's what I want," Jobs snapped back. They were having lunch at a sushi bar in San Francisco, and Jobs insisted that they continue the conversation over a walk. "I want you to do the slot-load drive for me as a personal favor," Jobs asked. Rubinstein agreed, of course, but he turned out to be right. Panasonic came out with a CD drive that could rip and burn music, and it was available first for computers that had old-fashioned tray loaders. The effects of this (p. 357) would ripple over the next few years: It would cause Apple to be slow in catering to users who wanted to rip and burn their own music, but that would then force
Apple to be imaginative and bold in finding a way to leapfrog over its competitors when Jobs finally realized that he had to get into the music market.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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(p. 339) At the January 1998 San Francisco Macworld, Jobs took the stage where Amelio had bombed a year earlier. He sported a full beard and a leather jacket as he touted the new product strategy. And for the first time he ended the presentation with a phrase that he would make his signature coda: "Oh, and one more thing . . ." This time the "one more thing" was "Think Profit." When he said those words, the crowd erupted in applause. After two years of staggering losses, Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal year of 1998, it would turn in a $309 million profit. Jobs was back, and so was Apple.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis in original.)

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"Willis Whitfield with a mobile clean room in the 1960s." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B16) Half a century ago, as a rapidly changing world sought increasingly smaller mechanical and electrical components and more sanitary hospital conditions, one of the biggest obstacles to progress was air, and the dust and germs it contains.

. . .

Then, in 1962, Willis Whitfield invented the clean room.

"People said he was a fraud," recalled Gilbert V. Herrera, the director of microsystems science and technology at Sandia National Laboratories in Albuquerque. "But he turned out to be right."

. . .

His clean rooms blew air in from the ceiling and sucked it out from the floor. Filters scrubbed the air before it entered the room. Gravity helped particles exit. It might not seem like a complicated concept, but no one had tried it before. The process could completely replace the air in the room 10 times a minute.

Particle detectors in Mr. Whitfield's clean rooms started showing numbers so low -- a thousand times lower than other methods -- that some people did not believe the readings, or Mr. Whitfield. He was questioned so much that he began understating the efficiency of his method to keep from shocking people.

"I think Whitfield's wrong," a scientist from Bell Labs finally said at a conference where Mr. Whitfield spoke. "It's actually 10 times better than he's saying."

For the full obituary, see:

WILLIAM YARDLEY. "W. Whitfield, 92, Dies; Built Clean Room." The New York Times (Weds., December 5, 2012): B16.

(Note: ellipses added.)

(Note: the online version of the obituary has the date December 4, 2012, and has the title "Willis Whitfield, Inventor of Clean Room That Purges Tiny Particles, Dies at 92.")

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(p. 339) In his first year back, Jobs laid off more than three thousand people, which salvaged the company's balance sheet. For the fiscal year that ended when Jobs became interim CEO in September 1997, Apple lost $1.04 billion. "We were less than ninety days from being insolvent," he recalled.

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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Source of graphic: online version of the WSJ article quoted and cited below.

(p. A10) This year, researchers in Spain studied more than 200 online retailers and found a handful of examples of price differences--including at Staples within Massachusetts--that appeared to be based on location and other factors. Those findings suggest that Staples' price adjustments have been present at least since this summer.

It is difficult for online shoppers to know why, or even if, they are being offered different deals from other people. Many sites switch prices at lightning speed in response to competitors' offerings and other factors, a practice known as "dynamic pricing." Other sites test different prices but do so without regard to the buyer's characteristics.

To find differences that weren't purely the result of dynamic pricing or randomized tests, the Journal conducted preliminary scans by simulating visits from different computers to a variety of e-commerce sites. If a website showed different prices or offers, the Journal then analyzed the site's computer code and conducted follow-up testing.

The Journal's tests, which were conducted in phases between August and December, indicated that some big-name retailers are experimenting with offering different prices and products to different users.

Some sites, for example, gave discounts based on whether or not a person was using a mobile device. A person searching for hotels from the Web browser of an iPhone or Android phone on travel sites Orbitz and CheapTickets would see discounts of as much as 50% off the list price, Orbitz said.

. . .

At home-improvement site Lowe's Cos., . . . prices depend on location. For example, a refrigerator in the Journal's tests cost $449 in Chicago, Los Angeles and Ashburn, Va., but $499 in seven other test cities. Lowe's said online shoppers receive the lower of the online store price or the price at their local Lowe's store as indicated by their ZIP Code.

Home Depot's website offered price variations that appeared to be based on the nearest brick-and-mortar store as well. A 250-foot spool of electrical wiring fell into six pricing groups, including $70.80 in Ashtabula, Ohio; $72.45 in Erie, Pa.; $75.98 in Olean, N.Y and $77.87 in Monticello, N.Y.

. . .

The differences found on the Staples website presented a complex pricing scheme. The Journal simulated visits to Staples.com from all of the more than 42,000 U.S. ZIP Codes, testing the price of a Swingline stapler 20 times in each. In addition, the Journal tested more than 1,000 different products in 10 selected ZIP Codes, 10 times in each location.

The Journal saw as many as three different prices for individual items. How frequently a simulated visitor saw low and high prices appeared to be tied to the person's ZIP Code. Testing suggested that Staples tries to deduce people's ZIP Codes by looking at their computer's IP address. This can be accurate, but isn't foolproof.

In the Journal's tests, ZIP Codes whose center was farther than 20 miles from a Staples competitor saw higher prices 67% of the time. By contrast, ZIP Codes within 20 miles of a rival saw the high price least often, only 12% of the time.

For the full story, see:

JENNIFER VALENTINO-DEVRIES, JEREMY SINGER-VINE and ASHKAN SOLTANI. "Websites Vary Prices, Deals Based on Users' Information." The Wall Street Journal (Mon., December 24, 2012): A1 & A10.

(Note: ellipses added.)

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"Xerox PARC headquarters." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A11) A telling moment in the presidential race came recently when Barack Obama said: "If you've got a business, you didn't build that. Somebody else made that happen." He justified elevating bureaucrats over entrepreneurs by referring to bridges and roads, adding: "The Internet didn't get invented on its own. Government research created the Internet so that all companies could make money off the Internet."

. . .

Robert Taylor, who ran the ARPA program in the 1960s, sent an email to fellow technologists in 2004 setting the record straight: "The creation of the Arpanet was not motivated by considerations of war. The Arpanet was not an Internet. An Internet is a connection between two or more computer networks."

If the government didn't invent the Internet, who did? Vinton Cerf developed the TCP/IP protocol, the Internet's backbone, and Tim Berners-Lee gets credit for hyperlinks.

But full credit goes to the company where Mr. Taylor worked after leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.

According to a book about Xerox PARC, "Dealers of Lightning" (by Michael Hiltzik), its top researchers realized they couldn't wait for the government to connect different networks, so would have to do it themselves. "We have a more immediate problem than they do," Robert Metcalfe told his colleague John Shoch in 1973. "We have more networks than they do." Mr. Shoch later recalled that ARPA staffers "were working under government funding and university contracts. They had contract administrators . . . and all that slow, lugubrious behavior to contend with."

For the full commentary, see:

Gordon Crovitz. "INFORMATION AGE; Who Really Invented the Internet?" The Wall Street Journal (Mon., July 23, 2012): A11.

(Note: ellipsis between paragraphs was added; ellipsis internal to last paragraph was in original.)

(Note: the online version of the commentary has the date July 22, 2012.)

I read the Hiltzik book several years ago, and my memory of it is not sharp, but I remember thinking that it was a useful book:

Hiltzik, Michael A. Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age. New York: HarperBusiness, 1999.

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(p. 299) . . . Jobs and his family went to Hawaii for Christmas vacation. Larry Ellison was also there, as he had been the year (p. 300) before. "You know, Larry, I think I've found a way for me to get back into Apple and get control of it without you having to buy it," Jobs said as they walked along the shore. Ellison recalled, "He explained his strategy, which was getting Apple to buy NeXT, then he would go on the board and be one step away from being CEO." Ellison thought that Jobs was missing a key point. "But Steve, there's one thing I don't understand," he said. "If we don't buy the company, how can we make any money?" It was a reminder of how different their desires were. Jobs put his hand on Ellison's left shoulder, pulled him so close that their noses almost touched, and said, "Larry, this is why it's really important that I'm your friend. You don't need any more money."

Ellison recalled that his own answer was almost a whine: "Well, I may not need the money, but why should some fund manager at Fidelity get the money? Why should someone else get it? Why shouldn't it be us?"

"I think if I went back to Apple, and I didn't own any of Apple, and you didn't own any of Apple, I'd have the moral high ground," Jobs replied.

"Steve, that's really expensive real estate, this moral high ground," said Ellison. "Look, Steve, you're my best friend, and Apple is your company. I'll do whatever you want."

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)

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The wonderful clip above is from Hans Rosling's TED talk entitled "The Magic Washing Machine."

He clearly and strongly presents his central message that the washing machine has made life better.

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

Source of video clip summary:

http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

The version of the clip above is embedded from YouTube, where it was posted by TED: http://youtu.be/BZoKfap4g4w

It can also be viewed at the TED web site at:

http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

(Note: I am grateful to Robin Kratina for telling me about Rosling's TED talk,)

(Note: I do not agree with Rosling's acceptance of the politically correct consensus view that the response to global warning should mainly be mitigation and green energy---to the extent that a response turns out to be necessary, I mainly support adaptation, as suggested in many previous entries on this blog.)

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(p. 170) After the Macintosh team returned to Bandley 3 that afternoon, a truck pulled into the parking lot and Jobs had them all gather next to it. Inside were a hundred new Macintosh computers, each personalized with a plaque. "Steve presented them one at a time to each team member, with a handshake and a smile, as the rest of us stood around cheering," Hertzfeld recalled. It had been a grueling ride, and many egos had been bruised by Jobs's obnoxious and rough management style. But neither Raskin nor Wozniak nor Sculley nor anyone else at the company could have pulled off the creation of the Macintosh. Nor would it likely have emerged from focus groups and committees. On the day he unveiled the Macintosh, a reporter from Popular Science asked Jobs what type of market research he had done. Jobs responded by scoffing, "Did Alexander Graham Bell do any market research before he invented the telephone?"

Source:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

(Note: italics in original.)

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(p. 234) Melinda Beeuwkes Buntin and David Cutler discuss "The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System." "Two sorts of savings are possible in health care. The first is eliminating waste and inefficiency. The most commonly cited estimate is that 30 percent of the money spent on medical care does not buy care worth its cost. Medicare costs per capita in Minneapolis, for example, are about half those in Miami, yet Miami does not have better health outcomes. International comparisons yield the same conclusion. . . . Second, reform might stimulate cost-reducing innovation instead of the continuous cost increases that accompany current innovation. For nearly 20 years, scholars have argued that generous reimbursement policies for medical care have led to innovations that almost always increase health care costs. Changing that dynamic by investing in research about what works and rewarding health care providers who choose efficient treatments could have a dramatic effect on cost growth. . . . Reducing costs by 30 percent will take time and effort, but it is not inconceivable over the long term. Experience in the health care sector and other industries suggests that cost reductions on the order of 1.5-to-2.0 percentage points per year are within reach."

Buntin and Cutler as quoted in:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Fall 2009): 231-38.

(Note: ellipses in original.)

The Buntin and Cutler report is:

Buntin, Melinda Beeuwkes, and David Cutler. "The Two Trillion Dollar Solution: Saving Money by Modernizing the Health Care System." Washington, D.C.: Center for American Progress, 2009.

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"Stanford R. Ovshinsky and Iris M. Ovshinsky founded Energy Conversion Laboratories in 1960." Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. A23) Stanford R. Ovshinsky, an iconoclastic, largely self-taught and commercially successful scientist who invented the nickel-metal hydride battery and contributed to the development of a host of devices, including solar energy panels, flat-panel displays and rewritable compact discs, died on Wednesday [October 17, 2012] at his home in Bloomfield Hills, Mich. He was 89.

. . .

His ideas drew only scorn and skepticism at first. He was an unknown inventor with unconventional ideas, a man without a college education who made his living designing automation equipment for the automobile industry in Detroit, far from the hotbeds of electronics research like Silicon Valley and Boston.

But Mr. Ovshinsky prevailed. Industry eventually credited him for the principle that small quantities or thin films of amorphous materials exposed to a charge can instantly reorganize their structures into semicrystalline forms capable of carrying significant current.

. . .

In 1960, he and his second wife, the former Iris L. Miroy, founded Energy Conversion Laboratories in Rochester Hills, Mich., to develop practical products from the discovery. It was renamed Energy Conversion Devices four years later.

Energy Conversion Devices and its subsidiaries, spinoff companies and licensees began translating Mr. Ovshinsky's insights into mechanical, electronic and energy devices, among them solar-powered calculators. His nickel-metal battery is used to power hybrid cars and portable electronics, among other things.

He holds patents relating to rewritable optical discs, flat-panel displays and electronic-memory technology. His thin-film solar cells are produced in sheets "by the mile," as he once put it.

. . .

"His incredible curiosity and unbelievable ability to learn sets him apart," Hellmut T. Fritzsche, a longtime friend and consultant, said in an interview in 2005.

For the full obituary, see:

BARNABY J. FEDER. "Stanford R. Ovshinsky Dies at 89, a Self-Taught Maverick in Electronics." The New York Times (Fri., October 19, 2012): A23.

(Note: ellipses and bracketed date added.)

(Note: the online version of the article was dated October 18, 2012.)

(Note: in the first sentence of the print version, "hybrid" was used instead of the correct "hydride.")

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Source of book image: http://www.internetmonk.com/wp-content/uploads/walter-isaacson-steve-jobs1.png

Steve Jobs is one of my favorite examples of what I call the "project entrepreneur." Walter Isaacson has written a fascinating biography of Jobs, full of memorable examples for any student of the innovative entrepreneur.

During the next few weeks, I will occasionally add entries that quote some of the more important or thought-provoking passages.

The book under review is:

Isaacson, Walter. Steve Jobs. New York: Simon & Schuster, 2011.

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(p. 233) John J. Horton surveys "The Condition of the Turking Class: Are Online Employers Fair and Honest?" Amazon Mechanical Turk is a "marketplace for work," as explained at <https://www.mturk.com/mturk/welcome>. Employers post "Human Intelligence Tasks," which can be tasks like writing keywords that accompany photos or writing bogus product reviews, and workers anywhere in the world can sign up to do them. Horton used Mechanical Turk to survey 200 respondents, who were paid 12 cents apiece for responding to a survey. Of the respondents, 111 were Americans, 58 from India, and the others from other countries. When asked what percentage of employers in their home country treat workers honestly and fairly, the average answer was 64 percent; in comparison, when asked what percentage of Mechanical Turk Requestors treated them (p. 234) fairly, the median answer was 69 percent.

Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 2 (Spring 2010): 227-34.

(Note: ellipses in original.)

The published version of the article summarized by Taylor is:

Horton, John J. "The Condition of the Turking Class: Are Online Employers Fair and Honest?" Economics Letters 111, no. 1 (April 2011): 10-12.

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) . . . the post-Civil War industrialization had an important and largely overlooked predecessor in the first decades of the 19th century, when, as Charles Morris writes in "The Dawn of Innovation," "the American penchant for mechanized, large-scale production spread throughout industry, presaging the world's first mass-consumption economy." It is a story well worth telling, and Mr. Morris tells it well.

. . .

Whole industries sprang up as the country's population boomed and spilled over into the Middle West. The rich agricultural lands there produced huge surpluses of grain and meat, especially pork. The city of Cincinnati--whose population grew to 160,000 in 1860, from 2,500 in 1810--became known as "Porkopolis" because of the number of hogs its slaughterhouses processed annually.

Mr. Morris does a particularly good job of explaining the crucial importance of synergy in economic development, how one development leads to another and to increased growth. The lard (or pig fat) from the slaughterhouses, he notes, served as the basis for the country's first chemical industry. Lard had always been used for more than pie crust and frying. It was a principal ingredient in soap, which farm wives made themselves, a disagreeable and even dangerous task thanks to the lye used in the process.

But when lard processing was industrialized to make soap, it led to an array of byproducts such as glycerin, used in tanning and in pharmaceuticals. Stearine, another byproduct, made superior candles. Just in the decade from the mid-1840s to the mid-1850s, Cincinnati soap exports increased 20-fold, as did the export of other lard-based products. Procter & Gamble, founded in Cincinnati in 1837 by an Irish soap maker and an English candle maker who had married sisters, grew into a giant company as the fast-rising middle class sought gentility.

Mr. Morris goes into great detail on the development of interchangeable parts--the system of making the components of a manufactured product so nearly identical that they can be easily substituted and replaced.

For the full review, see:

John Steele Gordon. "BOOKSHELF; The Days Of Porkopolis." The Wall Street Journal (Tues., November 20, 2012): A13.

(Note: ellipses added.)

(Note: the online version of the article was updated November 19, 2012.)

The book under review, is:

Morris, Charles R. The Dawn of Innovation: The First American Industrial Revolution. Philadelphia, PA: PublicAffairs, 2012.

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"EUROPEAN JOURNEY; Thomas Edison, seated center, sent Adelbert Theodor Edward Wangemann, standing behind him, to France in 1889. From there Wangemann traveled to Germany to record recitations and performances." Source of caption and photo: online version of the NYT article quoted and cited below.

Edison is often ridiculed for failing to foresee that playing music would be a major use for his phonograph invention. (Nye 1991, p. 142 approvingly references Hughes 1986, p. 201 on this point.) But if Edison failed to foresee, then why did he assign Wangemann to make the phonograph "a marketable device for listening to music"?

(p. D3) Tucked away for decades in a cabinet in Thomas Edison's laboratory, just behind the cot in which the great inventor napped, a trove of wax cylinder phonograph records has been brought back to life after more than a century of silence.

The cylinders, from 1889 and 1890, include the only known recording of the voice of the powerful chancellor Otto von Bismarck. . . . Other records found in the collection hold musical treasures -- lieder and rhapsodies performed by German and Hungarian singers and pianists at the apex of the Romantic era, including what is thought to be the first recording of a work by Chopin.

. . .

The lid of the box held an important clue. It had been scratched with the words "Wangemann. Edison."

The first name refers to Adelbert Theodor Edward Wangemann, who joined the laboratory in 1888, assigned to transform Edison's newly perfected wax cylinder phonograph into a marketable device for listening to music. Wangemann became expert in such strategies as positioning musicians around the recording horn in a way to maximize sound quality.

In June 1889, Edison sent Wangemann to Europe, initially to ensure that the phonograph at the Paris World's Fair remained in working order. After Paris, Wangemann toured his native Germany, recording musical artists and often visiting the homes of prominent members of society who were fascinated with the talking machine.

Until now, the only available recording from Wangemann's European trip has been a well-known and well-worn cylinder of Brahms playing an excerpt from his first Hungarian Dance. That recording is so damaged "that many listeners can scarcely discern the sound of a piano, which has in turn tarnished the reputations of both Wangemann and the Edison phonograph of the late 1880s," Dr. Feaster said. "These newly unearthed examples vindicate both."

For the full story, see:

RON COWEN. "Restored Edison Records Revive Giants of 19th-Century Germany." The New York Times (Tues., January 31, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the article is dated January 30, 2012.)

"Adelbert Theodor Edward Wangemann used a phonograph to record the voice of Otto von Bismarck." Source of caption and photo: online version of the NYT article quoted and cited above.

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The article quoted below is a useful antidote to those economists who sometimes seem to argue that health gains fully justify the rise in health costs.

(p. 645) In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective "home run" innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g., stents), and (III) "gray area" treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the United States to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.

Source of abstract:

Chandra, Amitabh, and Jonathan Skinner. "Technology Growth and Expenditure Growth in Health Care." Journal of Economic Literature 50, no. 3 (Sept. 2012): 645-80.

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"Eden Full, 20, tested her rotating solar panel in Kenya in 2010." Source of caption and photo: online version of the NYT article quoted and cited below.

(p.1) EDEN FULL should be back at Princeton by now. She should be hustling to class, hitting the books, acing tests. In short, she should be climbing that old-school ladder toward a coveted spot among America's future elite.

She isn't doing any of that. Instead, Ms. Full, as bright and poised and ambitious as the next Ivy Leaguer, has done something extraordinary for a Princetonian: she has dropped out.

It wasn't the exorbitant cost of college. (Princeton, all told, runs nearly $55,000 a year.) She says she simply received a better offer -- and, perhaps, a shot at a better education.

Ms. Full, 20, is part of one of the most unusual experiments in higher education today. It rewards smart young people for not going to college and, instead, diving into the real world of science, technology and business.

The idea isn't nuts. After all, Bill Gates and Steve Jobs dropped out, and they did O.K.

Of course, their kind of success is rare, degree or no degree. Mr. Gates and Mr. Jobs changed the world. Ms. Full wants to, as well, and she's in a hurry. She has built a low-cost solar panel and is starting to test it in Africa.

"I was antsy to get out into the world and execute on my ideas," she says.

At a time when the value of a college degree is being called into question, and when job prospects for many new graduates are grimmer than they've been in years, perhaps it's no surprise to see a not-back-to-school movement spring up. What is surprising is where it's springing up, and who's behind it.

The push, which is luring a handful of select students away from the likes of Princeton, Harvard and M.I.T., is the brainchild of Peter A. Thiel, 44, a billionaire and freethinker with a remarkable record in Sil-(p. 7)icon Valley. Back in 1998, during the dot-com boom, Mr. Thiel gambled on a company that eventually became PayPal, the giant of online payments. More recently, he got in early on a little start-up called Facebook.

Since 2010, he has been bankrolling people under the age of 20 who want to find the next big thing -- provided that they don't look for it in a college classroom. His offer is this: $50,000 a year for two years, few questions asked. Just no college, unless a class is helpful for their Thiel projects.

. . .

Ms. Full is friends with another Thiel fellow, Laura Deming, 18. Ms. Deming is clearly brilliant. When she was 12, her family moved to San Francisco from New Zealand so she could work with Cynthia Kenyon, a molecular biologist who studies aging. When Ms. Deming was 14, the family moved again, this time to the Boston area, so she could study at M.I.T.

"Families of Olympic-caliber athletes make these kinds of sacrifices all the time," says Tabitha Deming, Laura's mother. "When we lived nearby in Boston, we were lucky to see her once a month. She never came home for weekends."

John Deming, Laura's father, graduated from Brandeis University at the age of 35 but says he disdains formal education at every level. His daughter was home-schooled.

"I can't think of a worse environment than school if you want your kids to learn how to make decisions, manage risk and take responsibility for their choices," Mr. Deming, an investor, wrote in an e-mail. "Rather than sending them to school, turn your kids loose on the world. Introduce them to the rigors of reality, the most important of which is earning your own way." He added, "I detest American so-called 'education.' "

His daughter's quest to slow aging was spurred by her maternal grandmother, Bertie Deming, 85, who began having neuromuscular problems a decade ago. Laura, a first-year fellow, now spends her days combing medical journals, seeking a handful of researchers worth venture capital funding, which is a continuation of her earlier work.

"I'm looking for therapies that target aging damage and slow or reverse it," she says. "I've already spent six years on this stuff. So far I've found only a few companies, two or three I'm really bullish on."

For the full story, see:

CAITLIN KELLY. "Drop Out, Dive In, Start Up.." The New York Times, SundayBusiness (Sun., September 16, 2012): 1 & 7.

(Note: ellipsis added.)

(Note: the online version of the article is dated September 15, 2012, and had he title "Forgoing College to Pursue Dreams.")

"Laura Deming, left, at age 6 with her grandmother, whose neuromuscular problems have now inspired Laura to work on anti-aging technology." Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. 122) VANE and MULHEARN: The prize rewards specific discoveries, achievements, or breakthroughs in economic science. Your pioneering contributions have opened up a rich seam of research for others to mine. Does academic knowledge largely progress through the lead taken by a small number of creative innovators?
PHELPS: That's such a good question. It resonates with a subject in the area of innovation theory. The old guys like Arthur Spiethoff thought that progress was due to the great discoveries of the scientists and navigators. Schumpeter (1934) (p. 123) didn't depart altogether from that, he simply said, well, that's right but you've got to have some entrepreneur to actually implement it. But don't think there's much creativity there--everybody knows what's in the air. And it's very rare that anything new really gets created in the course of this development work. But now we don't think about innovation in that way so much. We recognize that once in a while there is a big leap which creates the ground for a surge of innovations to follow. Nowadays we realize that an awful lot of innovation just comes from business people operating at the grass roots having ideas on the basis of what they see around them. Nothing to do with science--it's just creative mankind chipping away at things. I know that the Sens and the Mundells and the Lucases are towering figures, but they couldn't have become so if they hadn't read a lot of papers by, well, pretty average people who are just doing a good job of exploring a question and giving inspiration. I guess the towering figures are people with just a little more drive, a little more imagination, just a little cleverer in putting some things together. In other words, I don't know the answer to the question [laughter].

For the full interview, from which the above is quoted, see:

Vane, Howard R., and Chris Mulhearn, interviewers. "Interview with Edmund S. Phelps." Journal of Economic Perspectives 23, no. 3 (Summer 2009): 109-24.

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(p. 31) We measure the extent to which skilled immigrants increase innovation in the United States. The 2003 National Survey of College Graduates shows that immigrants patent at double the native rate, due to their disproportionately holding science and engineering degrees. Using a 1940-2000 state panel, we show that a 1 percentage point increase in immigrant college graduates' population share increases patents per capita by 9-18 percent. Our instrument for the change in the skilled immigrant share is based on the 1940 distribution across states of immigrants from various source regions and the subsequent national increase in skilled immigration from these regions.

For the full article, from which the above abstract is quoted, see:

Hunt, Jennifer, and Marjolaine Gauthier-Loiselle. "How Much Does Immigration Boost Innovation?" American Economic Journal: Macroeconomics 2, no. 2 (April 2010): 31-56.

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People have a right to be overly-optimistic when they invest their own money in entrepreneurial projects. But governments should be prudent caretakers of the money they have taken from taxpayers. The overly-optimistic bias of subsidy-seeking entrepreneurs weakens the case for government support of entrepreneurial projects.

(p. 259) The optimistic risk taking of entrepreneurs surely contributes to the economic dynamism of a capitalistic society, even if most risk takers end up disappointed. However, Marta Coelho of the London School of Economics has pointed out the difficult policy issues that arise when founders of small businesses ask the government to support them in decisions that are most likely to end badly. Should the government provide loans to would-be entrepreneurs who probably will bankrupt themselves in a few years? Many behavioral economists are comfortable with the "libertarian paternalistic" procedures that help people increase their savings rate beyond what they would do on their own. The question of whether and how government should support small business does not have an equally satisfying answer.

Source:

Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

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"JOHN HENNESSY: 'There's a tsunami coming.' [At left] . . . , John Hennessy & Salman Khan." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. R8) Is there anything to be done about the rising price of higher education? That was the question posed to John Hennessy, president of Stanford University, and Salman Khan, founder of Khan Academy, a nonprofit online-learning organization. They sat down with The Wall Street Journal's Walt Mossberg to discuss how technology might be part of the solution.

Here are edited excerpts of their conversation.

. . .

MR. MOSSBERG: You have a lot of money at Stanford. I've been, until recently, a trustee of Brandeis University. It's a very good university. It charges about what you do. But it doesn't have your money, and there are a lot of colleges like that.

MR. HENNESSY: Agreed, and if you look at the vast majority of colleges in the U.S., there are way too many that are [dependent on tuition to fund their budgets]. That is not sustainable. We have to do something to bend the cost curve, and this is where technology comes in.

MR. KHAN: On the sustainability question, I agree. I think the elites will probably do just fine, but for the bulk of universities, nothing can grow 5% faster than inflation forever. It will just take over the world, and that's what's happening now.

There is a fundamental disconnect happening between the providers of education and the consumers of education. If you ask universities what they are charging the $60,000 for, they'll say, "Look at our research facilities. Look at our faculty. Look at the labs and everything else." And then if you ask the parents and the students why they are taking on $60,000 of debt, they'll say, "Well, I need the credential. I need a job."

So one party thinks they're selling a very kind of an enriching experience, and the other one thinks that they're buying a credential. And if you ask the universities what percentages of your costs are "credentialing," they say oh, maybe 5% to 10%. And so I think there's an opportunity if we could decouple those things--if the credentialing part could happen for significantly less.

MR. MOSSBERG: What do you mean by the credentialing part?

MR. KHAN: If you think about what education is, it's a combination. There's a learning part. You learn accounting, you learn to write better, to think, whatever. Then there is a credentialing part, where I'm going to hand you something that you can go take into the market and signal to people that you know what you're doing.

Right now they're very muddled, but this whole online debate or what's happening now is actually starting to clarify things. At Khan Academy we're 100% focused on the learning side of things. And I think it would be interesting [if credentials could be earned based on what you know and not on where you acquired that knowledge].

For the full interview, see:

Walt Mossberg, interviewer. "Changing the Economics of Education; John Hennessy and Salman Khan on how technology can make the college numbers add up." The Wall Street Journal (Mon., June 4, 2012): R8.

(Note: bracketed words in caption, and ellipses, added; bold and italics in original.)

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(p. B1) Will there be another?

It's a bit absurd to try to identify "the next Steve Jobs." Two decades ago, Mr. Jobs himself wouldn't even have qualified. Exiled from Apple Inc., . . . Mr. Jobs was then hoping to revive his struggling computer maker, NeXT Inc. . . .

But just as Mr. Jobs followed Henry Ford and Thomas Edison, there will some day be another innovator with the vision, drive and disdain of the status quo to spark, and then direct, big changes in how we live.

. . .

"You have to try the unreasonable," says Vinod Khosla, a co-founder of Sun Microsystems Inc., who, as a longtime venture capitalist, has seen thousands of would-be revolutionaries. Two key characteristics, Mr. Khosla says: "unbridled confidence and arrogance."

For the full story, see:

SCOTT THURM and STU WOO. "Who Will Be the 'Next Steve Jobs'?" The Wall Street Journal (Sat., October 8, 2011): B1 & B3.

(Note: ellipses added.)

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"Judge Richard Posner." Source of caption and photo: online version of the WSJ article quoted and cited below.

I am deeply conflicted about patents. On the one hand, property rights are important, both ethically and in terms of economic incentives. On the other hand, patents seem to restrict innovation.

The views of Posner are worth serious consideration. My own current view is that the patent rules need to be reformed and their implementation made more efficient. But I do not think the patent system should be abolished.

(p. B1) While technology companies continue to fight over smartphone patents, one judge has fought his way into the ring.

He is 73-year-old Richard Posner, among the most potent forces on the federal bench and an outspoken critic of the patent system.

Presiding over a lawsuit between Apple Inc. . . . and Google Inc.'s . . . Motorola Mobility in June, he dropped a bombshell, scrapping the entire case and preventing the companies from refiling their claims. The ruling startled the litigants in the case and fueled a national discussion about whether the patent system (p. B5) is broken.

. . .

In the June ruling, explaining why he wouldn't ban Motorola products from the shelves, Judge Posner said: "An injunction that imposes greater costs on the defendant than it confers benefits on the plaintiff reduces net social welfare."

Judge Posner, who declined to be interviewed for this article, has continued to press the issue.

This month, he wrote an essay in the Atlantic headlined, "Why There Are Too Many Patents In America." He said "most industries could get along fine without patent protection" and that the U.S. Patent and Trademark Office has done a woeful job, calling it "understaffed," and "many patent examinations...perfunctory."

He saved ammunition for juries and fellow jurists. "Judges have difficulty understanding modern technology and jurors have even greater difficulty," he wrote. He suggested several reforms to the patent system, including shortening the patent term for inventors in some industries and expanding the authority of the Patent and Trademark Office to try patents cases.

. . .

Judge Posner's intellectual curiosity is well-known and "people assume he has no political ax to grind because he's not trying to advance the fortunes of any particular segment of the economy," said Arthur D. Hellman, a law professor at University of Pittsburgh who studies the judiciary.

Yet his ruling poses a difficult question for the Federal Circuit Court of Appeals, the specialized one that handles intellectual property cases, about whether infringement matters without damages.

Peter Menell, a law professor at UC Berkeley, likened it to the old thought experiment that begins "If a tree falls in the woods." He said: "If there are no damages, do you need to have a trial?"

Juge Posner also rejected Google's bid to block the sale of iPhones that allegedly infringed a so-called "standards-essential patent" owned by Google. Standards-essential patents protect innovations used in technologies that industries collectively agree to use, like Wi-Fi or 3G. A company that holds one of these patents stands to profit enormously, because its competitors have to pay it for licenses to use the technology.

But Judge Posner ruled that holders of such patents aren't entitled to injunctions. Michael Carrier, a law professor at Rutgers University, Camden, said the opinion on standards-essential patents came amid a groundswell of opposition to injunctions for such patents and could put an end to the practice among U.S. federal judges.

For the full story, see:

JOE PALAZZOLO and ASHBY JONES. "Also on Trial: A Judge's Worldview." The Wall Street Journal (Tues., July 24, 2012): B1 & B5.

(Note: all ellipses were added except for the one internal to the quote from Judge Posner's Atlantic blog posting.)

(Note: the online version of the article has the date July 23, 2012 and has the title "Apple and Samsung Patent Suit Puts Judge Posner's Worldview on Trial." The print version of the title could be interpreted as a sub-title of the main title to the accompanying adjacent article. The title of the main article was "Apple v. Samsung; In Silicon Valley, Patents Go on Trial." The last two paragraphs above appear only in the online, but not in the print, version of the article.)

The Atlantic blog posting by Posner can be found at:

Posner, Richard A. "Why There Are Too Many Patents in America." In The Atlantic blog, posted on July 12, 2012 at: http://www.theatlantic.com/business/archive/2012/07/why-there-are-too-many-patents-in-america/259725/.

(Note: the WSJ article above implies that the Posner essay was published in the print version of The Atlantic, but I can only find it in Posner's blog on The Atlantic web site.)

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"Thomas Alva Edison." Source of caption and photo: online version of the NYT article quoted and cited below.

I have not read Stross' books on Jobs and Edison. According to some of the Amazon reviews of the Jobs book, back in 1993 Stross was much more critical of Jobs than he is in the piece below:

(p. 4) I wrote a book about Mr. Jobs in 1993.

. . .

Years later, I wrote a biography of Edison, a person whom Mr. Jobs admired. When you compare the two personalities and their careers, a few similarities emerge immediately. Both had less formal schooling than most of their respective peers. Both possessed the ability to visualize projects on a grand scale. Both followed an inner voice when making decisions. And both had terrific tempers that could make their employees quake.

. . .

Mr. Jobs was the far shrewder businessman, even if he never talked about wealth as a matter of personal interest. When Edison died, he left behind an estate valued at about $12 million, or about $180 million in today's dollars. His friend Henry Ford had once joked that Edison was "the world's greatest inventor and the world's worst businessman." Mr. Jobs was worth a commanding $6.5 billion.

Mr. Jobs was perhaps the most beloved billionaire the world has ever known. Richard Branson's tribute captures the way people felt they could identify with Mr. Jobs's life narrative: "So many people drew courage from Steve and related to his life story: adoptees, college dropouts, struggling entrepreneurs, ousted business leaders figuring out how to make a difference in the world, and people fighting debilitating illness. We have all been there in some way and can see a bit of ourselves in his personal and professional successes and struggles."

For the full commentary, see:

RANDALL STROSS. "The Power of Taking the Big Chance." The New York Times, SundayBusiness Section (Sun., October 9, 2011): 4.

(Note: online version of the commentary is dated October 8, 2011, and has the title "The Wizard and the Mortal: Two Sides of Genius.")

(Note: in the print version, the same title, on the same page, was used as heading for two different articles on Steve Jobs--Lohr's on the left side, and Stross' on the right side.)

Stross' books on Jobs and Edison are:

Stross, Randall E. Steve Jobs & the Next Big Thing. New York: Scribner Publishers, 1993.

Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

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Source of book image: http://yalepress.yale.edu/images/full13/9780300151091.jpg

(p. 1) UNDERNEATH the misery of the Great Depression, the United States economy was quietly making enormous strides during the 1930s. Television and nylon stockings were invented. Refrigerators and washing machines turned into mass-market products. Railroads became faster and roads smoother and wider. As the economic historian Alexander J. Field has said, the 1930s constituted "the most technologically progressive decade of the century."

. . .

(p. 6) The closest thing to a unified explanation for these problems is a mirror image of what made the 1930s so important. Then, the United States was vastly increasing its productive capacity, as Mr. Field argued in his recent book, "A Great Leap Forward." Partly because the Depression was eliminating inefficiencies but mostly because of the emergence of new technologies, the economy was adding muscle and shedding fat. Those changes, combined with the vast industrialization for World War II, made possible the postwar boom.

In recent years, on the other hand, the economy has not done an especially good job of building its productive capacity. Yes, innovations like the iPad and Twitter have altered daily life. And, yes, companies have figured out how to produce just as many goods and services with fewer workers. But the country has not developed any major new industries that employ large and growing numbers of workers.

For the full commentary, see:

DAVID LEONHARDT. "The Depression: If Only Things Were That Good." The New York Times, SundayReview Section (Sun., October 9, 2011): 1 & 6.

(Note: ellipsis added.)

(Note: online version of the commentary is dated October 8, 2011.)

Book discussed:

Field, Alexander J. A Great Leap Forward: 1930s Depression and U.S. Economic Growth, Yale Series in Economic and Financial History. New Haven, CT: Yale University Press, 2011.

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"Start-up BiteHunter launched with three employees. Above, co-founders Gil Harel, left, and Ido Shilon." Source of caption and photo: online version of the WSJ article quoted and cited below.

Lower costs to entry means more start-ups and that means more innovation, ceteris paribus. All good. For the labor market, there will be fewer initial jobs per start-up. But there will be more start-ups, and more opportunity for erstwhile laborers to themselves become entrepreneurs. So maybe still all good.

(p. B5) New businesses are getting off the ground with nearly half as many workers as they did a decade ago, as the spread of online tools and other resources enables start-ups to do more with less.

The change, which began before the recession, may be permanent, according to some analysts.

. . .

Rather than purchasing the tools and manpower needed to run their companies, more small firms are renting, sharing or outsourcing resources, typically through online services, according to Steve King, a partner at Emergent Research, a research and consulting firm for small businesses.

. . .

Last year, Gil Harel launched BiteHunter, a search engine for restaurant discounts, with just three employees. Based in New York, the site used shared screens and other communications tools to work with developers in Russia, Uruguay and Israel.

"Just to build the infrastructure to get a business off the ground used to take a lot of money and people. But things that you couldn't do in the past, you can now do on your own," Mr. Harel says.

For the full story, see:

ANGUS LOTEN. "With New Technology, Start-Ups Go Lean; Web-Based Services Mean Fewer Workers Needed." The Wall Street Journal (Thurs., September 15, 2011): B5.

(Note: ellipses added.)

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(p. B1) In the world of R&D spending, more doesn't necessarily mean better. And R&D may not describe all the innovation that matters.

"I think the numbers are pretty useless," says Michael Schrage, a research fellow at MIT's Sloan School who has studied the subject. "What matters more is the kind of innovator you are. If it were really true that the people who spent the most on R&D were the most successful, we wouldn't be subsidizing General Motors ."

"There's no statistically significant relationship between how much a company spends on R&D and how they perform over time," adds Barry Jaruzelski of Booz & Co. "There's a set of people who just consistently seem to skin the cat better."

. . .

(p. B2) Booz & Co. in 2007 listed the biggest global corporate spenders of R&D. The top 10 were Toyota, Pfizer, Ford, Johnson & Johnson, DaimlerChrysler, General Motors, Microsoft, GlaxoSmithKline, Siemens and IBM.

Then it drew up a second list, a group of companies it called "high-leverage innovators" that returned the best financial performance for every dollar spent on R&D. Booz screened for companies that, over the five previous years, outperformed industry peers across seven measures--including profit, sales growth, and shareholder return--while also spending less on R&D as a percentage of sales than the median in their industries.

No company from the first list made the second list. (Winners included Adidas, Apple, Exxon, Google, Kobe Steel, Samsung and Tenneco.)

That disconnect essentially hasn't changed, says Mr. Jaruzelski. Winning at innovation "is all about talent, process, execution and strategy," he says. "That's given the U.S. a pretty strong advantage over time."

"Technology," he adds, "is not equal to innovation."

For the full commentary, see:

JOHN BUSSEY. "THE BUSINESS; Myths of the Big R&D Budget." The Wall Street Journal (Fri., June 15, 2012): B1-B2.

(Note: ellipsis added.)

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Funding is a key constraint for the innovative project entrepreneur. By "project entrepreneur" I mean the innovator who views money as a means to achieving the project, and not as an end in itself. In this brief clip from Page's 2007 AAAS talk, he discusses how as a 12 year-old reading Tesla's autobiography he almost cried at how Tesla's failure to commercialize his ideas limited his ability to change the world.

The Tesla autobiography is:

Tesla, Nikola. My Inventions: The Autobiography of Nikola Tesla. SoHo Books, 2012.

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"Liz Langer helped John Burks retrieve his keys." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A1) A new crop of websites and smartphone applications are allowing people to farm out chores to a growing army of temporary personal assistants. These micro-employees are taking the division of labor to once-unthinkable extremes.

. . .

(p. A14) Some investors see dollar signs. Zaarly Inc., an online marketplace for micro-labor and goods based in San Francisco, recently raised $14.1 million from Google Inc. GOOG -2.18% investor and venture-capital firm Kleiner Perkins Caufield & Byers. Actor Ashton Kutcher and clothing designer Marc Ecko have also put in money. In October, Hewlett-Packard Chief Executive Meg Whitman joined the company's board.

After launching six months ago, Zaarly is processing more than 1,000 transactions a week for jobs that cost around $50 a pop. Chief Executive and cofounder Bo Fishback, 33, says about half the requests involve tangible goods, and the rest involve some sort of service. One of his favorites: a person who hired someone to buy a Michael Jackson-themed dog costume for a puppy.

Sometimes the situation can be dire. John Burks, a 30-year-old actor who also runs an arts organization in Chicago, accidentally dropped his keys in a sewer during a rainstorm over the summer. To replace all the keys--including ones to his home, office and Mercedes--could cost well over $100.

After Googling "lost keys down sewer" to see what tactics others had used, Mr. Burks thought he could recover his keys with a fishing rod and a magnet, but had neither. His girlfriend at the time knew someone who worked at Zaarly, so he posted the job on its site. Liz Langer, a 27-year-old neuroscience graduate student and top Zaarly "fulfiller," spotted the job and within an hour arrived with the needed tools. Fifteen minutes later, they fished the keys out of the sewer. (Price: $80.)

"It's like stranger than fiction," Mr. Burks says. "I thought there was a very small chance that anything like that can happen."

For the full story, see:

EMILY GLAZER. "Serfing the Web: Sites Let People Farm Out Their Chores; Workers Choose Jobs, Negotiate Wages; Mr. Kutcher, Anonymously, Asks for Coffee." The Wall Street Journal (Mon., November 28, 2011): A1 & A14.

(Note: ellipsis added.)

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Steven Johnson's early The Ghost Map is a wondrous story of a courageous medical entrepreneur who fairly single-handedly changes accepted wisdom on a hugely important issue (what causes disease). Steven Johnson's recent Where Ideas Come From provides a mechanical account that attributes new ideas to the inevitable exploration of "the adjacent possible," leaving little room for the great innovative entrepreneur.

It takes guts to contradict one's most recent book, and to contradict it so eloquently. So please join me in welcoming back the Steven Johnson of The Ghost Map:

(p. C3) In the fall of 1986, during the first week of my freshman year of college, my cousin took me to the university computer store to help me buy my first Macintosh. The Mac platform was two years old at that point, and Apple had just released a new machine called the Mac Plus that featured a then-staggering 1 megabyte of RAM. (In today's mileage, that would be just enough memory to store the first few verses of a Katy Perry song.) But the Mac did not yet offer a hard drive, and so my more tech-savvy cousin told me to buy a 10-pack of floppy disks as well.

I looked at him with astonishment. I was an art kid, not a techie. I needed a computer to write plays and short stories and term papers. The computer was just a tool, nothing more. "Why would I ever need 10 floppy disks?" I asked. "I just need one disk for my Microsoft Word files." My cousin smiled, knowing full well where I was headed. "Just buy the disks. Trust me."

He was right, of course, and to this day whenever I call him up to tell him about my latest computer purchase, with its terabytes of storage and gigabytes of memory, he laughs and says, "Just one disk. That's all I need."

. . .

The genius of famous innovators and CEOs is often exaggerated: Most fortunes are built on good fortune as much as sheer brilliance, and invention is a collaborative art. But there is no contesting the fact of Steve Jobs's genius--just a debate about its defining qualities.

I worry that we miss something in hailing him as either a master salesman or a master designer, though he is clearly both. His real gift, from an early age, has been the ability to see that these two worlds could, and should, productively collide. It isn't just that he made computers cool or put them in pretty boxes. It's that he put those computers in new conceptual boxes. A machine originally designed for processing equations and building bombs turned out to have a wonderful hidden potential: for song, laughter, poetry, community, family.

. . .

When I heard the news that he was stepping down from Apple, the image that flashed in my head was of a kid in a computer store trying to save a few bucks by skimping on floppy disks. I suspect my own story is not so unusual. There is, on the one hand, the simple, factual accounting of it: Steve Jobs persuaded me to buy a lot more than 10 disks over the years. But the other hand is so much more interesting: all the wonderful, unexpected things that he got me to put on those disks.

For the full commentary, see:

STEVEN JOHNSON. "THE GENIUS OF JOBS; Marrying Tech and Art; Steven Johnson on the magic of his first Mac--and how it changed his life." The Wall Street Journal (Sat., August 27, 2011): C3.

(Note: ellipses added.)

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Gary Oldman. Source of photo: online version of the NYT article quoted and cited below.

(p. 2) Gary Oldman is an English actor . . . widely known for his roles as Sirius Black in the "Harry Potter" film series and Jim Gordon in the Batman movies.

. . .

READING Right now I'm reading the Steve Jobs biography by Walter Isaacson. I love when people have a singleness of purpose and don't get dissuaded. I can connect with that. I can recognize it. I think a lot of artists have that. Art and commerce are not particularly happy bedfellows, but he was the exception.

I read quite a lot of biographies. I like nonfiction. The other book I'm carrying around with me at the moment is "River of Shadows: Eadweard Muybridge and the Technological Wild West" by Rebecca Solnit. It deals with the 19th century and the arrival of speed with the coming of the industrial age. We were very much governed by nature before; we were at the mercy of our own speed and horses and the like. It's interesting to think of living at that pace.

For the full interview, see:

KATE MURPHY. "DOWNLOAD; Gary Oldman." The New York Times, SundayReview Section (Sun., February 5, 2012): 2.

(Note: ellipses added; bold in original.)

(Note: online version of the interview is dated February 4, 2012.)

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Source of book image: http://www.abundancethebook.com/wp-content/uploads/2012/01/cover-NYTimes-3d-500.jpg?139d23

(p. 18) in Silicon Valley, where the locals tend to be too busy starting companies to wallow in gloom, Peter Diamandis has stood out as one of the more striking optimists. Several years ago, Diamandis founded the X Prize Foundation, which rewards entrepreneurs with cash for achieving difficult goals, like putting a reusable spaceship into flight on a limited budget. More recently he helped start Singularity University, an academic program that convenes several weeks a year in the Valley and educates business leaders about the "disruptive" -- i.e., phenomenally innovative -- technological changes Diamandis is anticipating. To be sure, Diamandis is both very bright (he studied molecular biology and aerospace engineering at M.I.T. before getting an M.D. at Harvard) and well informed. Moreover, he's not the kind of optimist who will merely see the glass as half full. He'll give you dozens of reasons, some highly technical, why it's half full. Then he'll explain that your cognitive biases are tricking you into seeing the glass of water in a negative light, and cart out the research of acclaimed psychologists like Daniel Kahne­man to prove his point. Finally he may suggest you stop fretting: new technologies will soon fill the glass up anyway. Indeed, they are likely to overfill it.

. . .

(p. 19) Throughout the book Diamandis . . . offers small groups of driven entrepreneurs as a kind of Leatherman solution to the world's problems. It's true that plenty of insurgents are doing impressive things out there -- Elon Musk's Tesla Motors, which helped jump-start the world's electric car industry, is a good example.

. . .

. . . , there's a significant idea embedded within "Abundance": We should remain aware, as writers like Jared Diamond have likewise told us, that societies can choose their own future, and thus their own fate. In that spirit Diamandis and Kotler put forth a range of possible goals we may achieve if we have the imagination and the will. A little optimism wouldn't hurt, either.

For the full review, see:

JON GERTNER. "Plenty to Go Around." The New York Times Book Review (Sun., April 1, 2012): 18 & 19.

(Note: ellipses added.)

(Note: the online version of the review has the date March 30, 2012.)

The book under review is:

Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

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(p. 12) The Ford Focus Electric has a base price of $39,995 -- minus a $7,500 federal tax credit and a $2,500 rebate in California. That puts its tab at $30,000, some $7,000 above the upscale Focus Titanium. I can hear the electric naysayers exclaiming "Aha! You won't make back the savings at the pumps." That's despite $4 gasoline, and the Focus Electric's 110 m.p.g. equivalent rating.

But when buying any new car, especially an innovative model of any kind, emotions, aesthetics and externalities eclipse economics.

For the full story, see:

BRADLEY BERMAN. "BEHIND THE WHEEL; 2012 FORD FOCUS ELECTRIC; The Battery-Driven Car Just Got a Lot More Normal." The New York Times, SportsSunday (Sun., May 6, 2012): 12.

(Note: online version of the story is dated May 4, 2012.)

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(p. B2) First Solar's solar-panel business, which is focused on large solar installations that feed electricity to power companies, is dependent on government subsidies awarded to such developments.

. . .

But some worry that First Solar isn't well positioned for industry trends. The global solar-power market is moving toward rooftop solar-power systems, rather than the large-scale utility power plants where First Solar's products are most effective, said Jesse Pichel, an analyst at Jefferies Group Inc.

"This was a market leader, but its technology is being usurped or surpassed by the Chinese," said Mr. Pichel. "Their product is not competitive in the most economic and sustainable solar market, which is rooftop."

For the full story, see:

CASSANDRA SWEET And RUSSELL GOLD. "First Solar Cuts 2,000 Jobs; Panel Maker Laying Off 30% of Workers, Slashing Production Amid Supply Glut." The Wall Street Journal (Weds., April 18, 2012): B2.

(Note: ellipsis added.)

(Note: online version of the story is dated April 17, 2012.)

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The YouTube video embedded above was from a CBS Evening News broadcast in June 2012. It illustrates the difficulty of the government successfully selecting the technologies, and companies, that will eventually prove successful. (The doctrine that government can and should do such selection is often called "industrial policy.")

The Obama administration has bet billions of tax dollars on lithium ion batteries for electric vehicles that A123 Systems won $249 million of. But as Sharyl Attkisson reports, expensive recalls and other setbacks have put substantial doubt in the company's ability to continue.

The text above, and the embedded video clip were published on YouTube on Jun 17, 2012 by CBSNewsOnline at http://www.youtube.com/watch?v=k4Ugklc0rIo

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(p. 7) . . . is this what an emergent technology looks like before it crosses the valley of death?

"Face it, this is not an easy task," said Brett Smith, assistant research director at the Center for Automotive Research in Ann Arbor, Mich. "You still have an energy storage device that's not ready for prime time. You still have the chicken and egg problem with the charging infrastructure. That's not to say it's not viable over the long run. But the hype is gone and the challenges are still there."

The market for all-electric and plug-in electric cars in the United States is tiny, amounting to fewer than 20,000 sales last year out of total light-vehicle sales of 12.8 million. Even in optimistic forecasts, plug-in vehicles will account for less than 5 percent of the global market by 2025.

For the full commentary, see:

JOHN BRODER. "NEWS ANALYSIS; The Electric Car, Unplugged." The New York Times, SundayReview Section (Sun., March 25, 2012): A8.

(Note: ellipsis added.)

(Note: online version of the commentary is dated March 24, 2012.)

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(p. 94) Western Union's lawyers carne up with a dusty old New York Stale law, dated 1905, that said no one could buy more than 10 percent of a telegraph company chartered in that state without the approval of Albany lawmakers. Hard to believe, but it was right there in black and white and there was no possibility of getting the New York State legislature to understand why it was vital to build digital highways.

Talk about unintended consequences!

(p. 95) Originally, the law was written to stop Western Union from monopolizing the telegram business, but the law backfired and was used by the monopolist for its own protection.

Source:

Wyly, Sam. 1,000 Dollars and an Idea: Entrepreneur to Billionaire. New York: Newmarket Press, 2008.

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'The Falcon 9 rocket seen in a time-exposure photograph during liftoff." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) CAPE CANAVERAL, Fla. -- He does not have the name recognition of some other space entrepreneurs, people like Richard Branson, the founder of the Virgin empire, or Paul Allen of Microsoft fame, or Jeff Bezos, the Amazon.com billionaire.

That will probably change if things keep going his way. Elon Musk, a computer prodigy and serial entrepreneur whose ambitions include solving the world's energy needs and colonizing the solar system, was the man of the hour -- or of 3:44 a.m. Tuesday, Eastern time -- when the rocket ship built by his company, SpaceX, lifted off gracefully in a nighttime launching and arced off in a streak of light amid loud applause.

. . .

If all goes as planned, his unmanned Dragon capsule, lifted into orbit by his Falcon 9 rocket, will berth at the International Space Station on Friday bearing a modest cargo: 162 meal packets (45 of them low-sodium), a laptop computer, a change of clothes for the station astronauts and 15 student experiments.

Far more important than the supplies is the proof of concept. Mr. Musk is trying to show the world that a determined entrepreneur can start a rocket company from scratch and, a decade later, end up doing a job that has until now been the exclusive province of federal governments.

. . .

Just four years ago, SpaceX went through a near-death experience. The first three launchings of the company's small Falcon 1 rocket failed. One more failure, Mr. Musk said, and he would have run out of money. As he went through a divorce from his first wife, with whom he has five sons, he had to borrow money from friends.

The fourth launching succeeded. Late in 2008, NASA awarded SpaceX the cargo contract. The first two Falcon 9 launchings, in 2010, also succeeded.

Early Tuesday morning, the success streak continued. As the countdown clock hit zero, the engines remained ignited. Less than 10 minutes later, the Dragon was in orbit. It then aced several other early tasks like the deployment of solar arrays and navigational sensors and the testing of GPS equipment.

"Anything could have gone wrong," Mr. Musk said. "And everything went right, fortunately."

For the full story, see:

KENNETH CHANG. "Big Day for Entrepreneur Who Promises More." The New York Times (Weds., May 23, 2012): A13.

(Note: ellipses added.)

(Note: the online version of the story is dated May 22, 2012, and has the title "Big Day for a Space Entrepreneur Promising More.")

"Elon Musk." Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. A2) In essence, Justice says that, beginning in 2008, several plankton, in the form of five publishers, conspired against a whale, Amazon, whose monopoly clout had imposed a $9.99 retail price for e-books.

The deal the publishers eventually reached with Apple unfixed the price of e-books by linking their prices to the cover price of the print version. More importantly, publishers could begin to reclaim the right to set e-book retail prices generally.

. . .

Apple, with 15% of the e-book market, is no monopolist. The five publishers, though Justice insists they dominate trade publishing, account for only about half of e-book sales. Crucially for antitrust, the barriers to entry are zilch: Amazon, with 60% market share, could create its own e-book imprint tomorrow and begin bidding for the most popular authors.

. . .

Let's go back to "per se" vs. "rule of reason." Because the 1890 Sherman Act is so sweeping and almost any business arrangement could be read as prohibited, courts understandably evolved a "rule of reason" to distinguish the permissible from the impermissible. Unfortunately, the result has been antitrust as we know it: wild and fluctuating discretion masquerading as law. Retail price maintenance alone has been embraced and dumped so many times by the courts that it must feel like Jennifer Aniston.

"Do no harm" would be a better principle for trustbusters.

For the full commentary, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; Washington vs. Books; What about piracy, low barriers to entry and the fact that literature isn't chopped liver?" The Wall Street Journal (Sat., April 14, 2012): A15.

(Note: the online version of the commentary is dated April 13, 2012.)

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"A computer image shows a rendering of a spacecraft preparing to capture a water-rich, near-Earth asteroid." Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.

(p. B3) SEATTLE--A start-up with high-profile backers on Tuesday unveiled its plan to send robotic spacecraft to remotely mine asteroids, a highly ambitious effort aimed at opening up a new frontier in space exploration.

At an event at the Seattle Museum of Flight, a group that included former National Aeronautics and Space Administration officials unveiled Planetary Resources Inc. and said it is developing a "low-cost" series of spacecraft to prospect and mine "near-Earth" asteroids for water and metals, and thus bring "the natural resources of space within humanity's economic sphere of influence."

The solar system is "full of resources, and we can bring that back to humanity," said Planetary Resources co-founder Peter Diamandis, who helped start the X-Prize competition to spur nongovernmental space flight.

The company said it expects to launch its first spacecraft to low-Earth orbit--between 100 and 1,000 miles above the Earth's surface--within two years, in what would be a prelude to sending spacecraft to prospect and mine asteroids.

The company, which was founded three years ago but remained secret until last week, said it could take a decade to finish prospecting, or identifying the best candidates for mining.

For the full story, see:

AMIR EFRATI. "Asteroid-Mining Strategy Is Outlined by a Start-Up." The Wall Street Journal (Weds., April 25, 2012): B3.

(Note: the online version of the story is dated April 24, 2012, and has the title "Start-Up Outlines Asteroid-Mining Strategy.")

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(p. A21) As a young man, Peter Thiel competed to get into Stanford. Then he competed to get into Stanford Law School. Then he competed to become a clerk for a federal judge. Thiel won all those competitions. But then he competed to get a Supreme Court clerkship.

Thiel lost that one. So instead of being a clerk, he went out and founded PayPal. Then he became an early investor in Facebook and many other celebrated technology firms. Somebody later asked him. "So, aren't you glad you didn't get that Supreme Court clerkship?"

The question got Thiel thinking. His thoughts are now incorporated into a course he is teaching in the Stanford Computer Science Department. (A student named Blake Masters posted outstanding notes online, and Thiel has confirmed their accuracy.)

One of his core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value.

In fact, Thiel argues, we often shouldn't seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it's often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.

Now to be clear: When Thiel is talking about a "monopoly," he isn't talking about the illegal eliminate-your-rivals kind. He's talking about doing something so creative that you establish a distinct market, niche and identity. You've established a creative monopoly and everybody has to come to you if they want that service, at least for a time.

For the full commentary, see:

DAVID BROOKS. "The Creative Monopoly." The Wall Street Journal (Tues., April 24, 2012): A21.

(Note: the online version of the article is dated April 23, 2012.)

The online Peter Thiel notes are at:

http://blakemasters.tumblr.com/post/21169325300/peter-thiels-cs183-startup-class-4-notes-essay

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"Space mining has captivated Hollywood. Director James Cameron is a backer of the new venture." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) A new company backed by two Google Inc. billionaires, film director James Cameron and other space exploration proponents is aiming high in the hunt for natural resources--with mining asteroids the possible target.

The venture, called Planetary Resources Inc., revealed little in a press release this week except to say that it would "overlay two critical sectors--space exploration and natural resources--to add trillions of dollars to the global GDP" and "help ensure humanity's prosperity." The company is formally unveiling its plans at an event . . . in Seattle.

. . .

[The] . . . event is being hosted by Peter H. Diamandis and Eric Anderson, known for their efforts to develop commercial space exploration, and two former NASA officials.

Mr. Diamandis, a driving force behind the Ansari X-Prize competition to spur non-governmental space flight, has long discussed his goal to become an asteroid miner. He contends that such work by space pioneers would lead to a "land rush" by companies to develop lower-cost technology to travel to and extract resources from asteroids.

For the full story, see:

AMIR EFRATI. "A Quixotic Quest to Mine Asteroids." The Wall Street Journal (Sat., April 21, 2012,): B1 & B4.

(Note: ellipses and bracketed word added.)

(Note: the online "updated" version of the article is dated April 23, 2012.)

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"FULL FLEDGED; The production prototype of the Terrafugia Transition, with its wings folded and road-ready." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 13) THE promise of an airplane parked in every driveway, for decades a fantasy of suburban commuters and a staple of men's magazines, resurfaced this month in Manhattan. On display at the New York auto show was the Terrafugia Transition, an airplane with folding wings and a drive system that enabled it to be used on the road.

. . .

But there can be many delays along the road from concept to certification. For instance, government officials and the designers have had to determine which regulations -- aircraft or automotive -- take precedence when the vehicle in question is both.

. . .

In 2010, the $94,000 Maverick, a rudimentary buggy that takes to the air under a powered parachute, earned certification as a light-sport aircraft. Troy Townsend, design manager and chief test pilot for the company, based in Dunnellon, Fla., said he spent spent nearly all of his time over the course of three years working through the bureaucratic snags.

"There was a lot of red tape," Mr. Townsend said. "The certification process went all the way to Oklahoma and Washington, D.C."

For the full story, see:

CHRISTINE NEGRONI. "Before Flying Car Can Take Off, There's a Checklist." The New York Times, SportsSunday Section (Sun., April 29, 2012): 13.

(Note: ellipses added.)

(Note: the online version of the story is dated April 27, 2012.)

Source of table: online version of the NYT article quoted and cited above.

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(p. 257) The increase in computer-animated films . . . marked the dawning of a democratic moment in artistic expression and entrepreneurship. Just as technological developments in digital production were (p. 258) opening the door more widely in live-action filmmaking, technology was making computer animation more accessible every year.

Computer animation was still an art form that required talent and intense Commitment; it wasn't within reach of Everyman. The accessibility of its tools, however, brought new possibilities. Where Pixar's early years had required a succession of wealthy patrons--Alexander Schure, George Lucas, and Steve Jobs--an enterprising artist of the early twenty-first century was not so dependent. The hardware and software of an animator's workstation, once the province of major studios and effects houses, could now be had for the cost of a good used car. As Pixar started its new life as a crown jewel of the Walt Disney Co., it was plausible that it would sooner or later have to jockey release dates with a new kind of rival. Or, rather, it would have to face a rival that looked much the way Pixar itself did thirty years earlier, as a group of men and women in a garage pursuing a dream.

Source:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: ellipsis added.)

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

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The questions and answers in court illustrate how case law would approach the issue of refining and reforming intellectual property issues based on concepts of justice, but also on practical issues. (This is from Disney and Pixar lawyer Steve Marenberg questioning Dick Cook in testimony before Judge Clarence Brimmer, Jr. on November 1, 2001, the day before Monsters, Inc. was scheduled to be released.)

(p. 193) Q : So obviously the delay of the film by injunction or otherwise would affect the first weekend and the ability to gain all of the benefits you've gotten by virtue of the tact that November second is the first weekend?

A : It would be a disaster.

Q : And that would affect, then, not only the theatrical performance of the film, but what other markets in the United Sates?

A : Well, it would completely be a snowball effect in a reverse way in that it would certainly put a damper on all of the home video activities, all the DVD activities; in fact, would influence international because international is greatly influenced on how well it does in the United States, and by taking that away, it would definitely, definitely, have a big, big impact on the success of the film.

And furthermore, going further, is that it would take away any of the other ancillary things that happen, you (p. 194) know, whether it would become a television series, whether or not it becomes a piece of an attraction at the parks, whether it becomes a land at the parks, or any of those kinds of things.

Source:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

(Note: on p. 190 of the book, Price misspells Marenberg's name as "Marenburg.")

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(p. C4) Economic growth is a form of deflation. If the cost of, say, computing power goes down, then the users of computing power acquire more of it for less--and thus attain a higher standard of living. One thing that makes such deflation possible is dematerialization, the reduction in the quantity of stuff needed to produce a product. An iPhone, for example, weighs 1/100th and costs 1/10th as much as an Osborne Executive computer did in 1982, but it has 150 times the processing speed and 100,000 times the memory.

Dematerialization is occurring with all sorts of products. Banking has shrunk to a handful of electrons moving on a cellphone, as have maps, encyclopedias, cameras, books, card games, music, records and letters--none of which now need to occupy physical space of their own. And it's happening to food, too. In recent decades, wheat straw has shrunk as grain production has grown, because breeders have persuaded the plant to devote more of its energy to making the thing that we value most. Future dematerialization includes the possibility of synthetic meat--produced in a lab without brains, legs or guts.

Dematerialization is one of the reasons that Peter Diamandis and Steven Kotler give for the future's being "better than you think" in their new book, "Abundance."

For the full commentary, see:

MATT RIDLEY. "MIND & MATTER; The Future Is So Bright, it's Dematerializing." The Wall Street Journal (Sat., February 25, 2012): C4.

The book mentioned by Ridley is:

Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

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"The car is driven by a computer that steers, starts and stops itself. A 360 degrees laser scanner on top of the car, a GPS system and other sensors monitor the surrounding traffic." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p A13) Expect innovations that change the nature of driving more than anything since the end of the hand-crank engine--so long as the legal and regulatory systems don't strangle new digital technologies before they can roll off the assembly line.

. . .

Mr. Ford outlined a future of what the auto industry calls "semiautonomous driving technology," meaning increasingly self-driving cars. Over the next few years, cars will automatically be able to maintain safe distances, using networks of sensors, V-to-V (vehicle-to-vehicle) communications and real-time tracking of driving conditions fed into each car's navigation system.

This will limit the human error that accounts for 90% of accidents. Radar-based cruise control will stop cars from hitting each other, with cars by 2025 driving themselves in tight formations Mr. Ford describes as "platoons," cutting congestion as the space between cars is reduced safely.

. . .

Over the next decade, cars could finally become true automobiles. Our laws will have to be updated for a new relationship between people and cars, but the benefits will be significant: fewer traffic accidents and fewer gridlocked roads--and, perhaps best of all, young people will be in self-driving cars, not teenager-driven cars.

For the full commentary, see:

L. GORDON CROVITZ. "INFORMATION AGE; The Car of the Future Will Drive You; A truly auto-mobile is coming if liability laws don't stop it." The Wall Street Journal (Mon., March 5, 2012): A13.

(Note: ellipses added.)

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"Scott Aaronson." Source of caption and photo: online version of the NYT commentary quoted and cited below.

(p. D5) When people hear that I work on quantum computing -- one of the most radical proposals for the future of computation -- their first question is usually, "So when can I expect a working quantum computer on my desk?" Often they bring up breathless news reports about commercial quantum computers right around the corner. After I explain the strained relationship between those reports and reality, they ask: "Then when? In 10 years? Twenty?"

Unfortunately, this is sort of like asking Charles Babbage, who drew up the first blueprints for a general-purpose computer in the 1830s, whether his contraption would be hitting store shelves by the 1840s or the 1850s. Could Babbage have foreseen the specific technologies -- the vacuum tube and transistor -- that would make his vision a reality more than a century later? Today's quantum computing researchers are in a similar bind. They have a compelling blueprint for a new type of computer, one that could, in seconds, solve certain problems that would probably take eons for today's fastest supercomputers. But some of the required construction materials don't yet exist.

. . .

While code-breaking understandably grabs the headlines, it's the more humdrum application of quantum computers -- simulating quantum physics and chemistry -- that has the potential to revolutionize fields from nanotechnology to drug design.

. . .

Like fusion power, practical quantum computers are a tantalizing possibility that the 21st century may or may not bring -- depending on the jagged course not only of science and technology, but of politics and economics.

For the full commentary, see:

SCOTT AARONSON. "ESSAY; Quantum Computing Promises New Insights, Not Just Supermachines." The New York Times (Tues., December 6, 2011): D5.

(Note: ellipses added.)

(Note: the online version of the commentary is dated December 5, 2011.)

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"Arvind Jain, a Google engineer, pointed out the loading speed of individual elements of a website on a test application used to check efficiency, at Google offices in Mountain View, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Wait a second.

No, that's too long.

Remember when you were willing to wait a few seconds for a computer to respond to a click on a Web site or a tap on a keyboard? These days, even 400 milliseconds -- literally the blink of an eye -- is too long, as Google engineers have discovered. That barely perceptible delay causes people to search less.

"Subconsciously, you don't like to wait," said Arvind Jain, a Google engineer who is the company's resident speed maestro. "Every millisecond matters."

Google and other tech companies are on a new quest for speed, challenging the likes of Mr. Jain to make fast go faster. The reason is that data-hungry smartphones and tablets are creating frustrating digital traffic jams, as people download maps, video clips of sports highlights, news updates or recommendations for nearby restaurants. The competition to be the quickest is fierce.

People will visit a Web site less often if it is slower than a close competitor by more than 250 milliseconds (a millisecond is a thousandth of a second).

"Two hundred fifty milliseconds, either slower or faster, is close to the magic number now for competitive advantage on the Web," said Harry Shum, a computer scientist and speed specialist at Microsoft.

. . .

(p. A3) The need for speed itself seems to be accelerating. In the early 1960s, the two professors at Dartmouth College who invented the BASIC programming language, John Kemeny and Thomas Kurtz, set up a network in which many students could tap into a single, large computer from keyboard terminals.

"We found," they observed, "that any response time that averages more than 10 seconds destroys the illusion of having one's own computer."

In 2009, a study by Forrester Research found that online shoppers expected pages to load in two seconds or fewer -- and at three seconds, a large share abandon the site. Only three years earlier a similar Forrester study found the average expectations for page load times were four seconds or fewer.

The two-second rule is still often cited as a standard for Web commerce sites. Yet experts in human-computer interaction say that rule is outdated. "The old two-second guideline has long been surpassed on the racetrack of Web expectations," said Eric Horvitz, a scientist at Microsoft's research labs.

For the full story, see:

STEVE LOHR. "For Impatient Web Users, an Eye Blink Is Just Too Long to Wait." The New York Times (Thurs., March 1, 2012): A1 & A3.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 29, 2012.)

Source of graph: online version of the NYT article quoted and cited above.

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Jimbo Wales

Source of photo: online version of the NYT article quoted and cited below.

(p. 2) PHONING: A friend of mine bought me an Ideos phone on the street in Kenya for about $80. This is an Android phone that's a bit smaller than an iPhone, but a lot cheaper. This is really exciting because at that price point, hundreds of thousands and soon millions of smartphones are going to be sold across Africa. The impact for people's access to knowledge in some very difficult places is enormous.

For the full interview, see:

Jimmy Wales as interviewed by KATE MURPHY. "DOWNLOAD; Jimmy Wales." The New York Times, SundayReview (Sun., February 12, 2012): 2.

(Note: the online version of the interview is dated February 11, 2012.)

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Source of graphic: online version of the WSJ article quoted and cited below.

(p. B1) Microsoft Corp. co-founder Paul Allen indicated he is prepared to commit $200 million or more of his wealth to build the world's largest airplane as a mobile platform for launching satellites at low cost, which he believes could transform the space industry.

Announced Tuesday, the novel, high-risk project conceived by renowned aerospace designer Burt Rutan seeks to combine engines, landing gears and other parts removed from old Boeing 747 jets with a newly created composite craft from Mr. Rutan and a powerful rocket to be built by a company run by Internet billionaire and commercial-space pioneer Elon Musk.

Dubbed Stratolaunch and funded by one of Mr. Allen's closely held entities, the venture seeks to meld decades-old airplane technology with cutting-edge booster-rocket designs in an unprecedented way to assemble a hybrid that would offer the first totally privately funded space transportation system.

For the full story, see:

ANDY PASZTOR And DIONNE SEARCEY. "Paul Allen, Supersizing Space Flight; Billionaire's Novel Vision Has Wingspan Wider Than a Football Field, Weighs 1.2 Million Pounds." The Wall Street Journal (Weds., December 5, 2011): B1 & B5.

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(p. 5) The success of Pixar's films had brought him something exceedingly rare in Hollywood: not the house with the obligatory pool in the backyard and the Oscar statuettes on the fireplace mantel, or the country estate, or the vintage Jaguar roadster--although he had all of those things, too. It wasn't that he could afford to indulge his affinity for model railroads by acquiring a full-size 1901 steam locomotive, with plans to run it on the future site of his twenty-thousand-square-foot mansion in Sonoma Valley wine country. (Even Walt Dìsney's backyard train had been a mere one-eighth-scale replica.)

None of these was the truly important fruit of Lasseter's achievements. What success had brought him, most meaningfully, was freedom. Having created a new genre of film with his colleagues at Pixar, he had been able to make the films he wanted to make, and he was coming back to Disney on his own terms.

Source:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

(Note: ellipsis in title was added.)

(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

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Source of book image: http://murraylibrary.org/2011/09/the-pixar-touch-the-making-of-a-company/

Toy Story and Finding Nemo are among my all-time-favorite animated movies. How Pixar developed the technology and the story-telling sense, to make these movies is an enjoyable and edifying read.

Along the way, I learned something about entrepreneurship, creative destruction, and the economics of technology. In the next couple of months I occasionally will quote passages that are memorable examples of broader points or that raise thought-provoking questions about how innovation happens.

Book discussed:

Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.

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(p. 78) The most striking case of technological regress is Tasmania. Isolated on an island at the end of the world, a population of less than 5,000 hunter-gatherers divided into nine tribes did not just stagnate, or fail to progress. They fell steadily and gradually back into a simpler toolkit and lifestyle, purely because they lacked the numbers to sustain their existing technology. Human beings reached Tasmania at least 35,000 years ago while it was still connected to Australia. It remained connected - on and off - until about 10,000 years ago, when the rising seas filled the Bass Strait. Thereafter the Tasmanians were isolated. By the time Europeans first encountered Tasmanian natives, they found them not only to lack many of the skills and tools of their mainland cousins, but to lack many technologies that their own ancestors had once possessed. They had no bone tools of any kind, such as needles and awls, no cold-weather clothing, no fish hooks, no hafted tools, no barbed spears, no fish traps, no spear throwers, no boomerangs. A few of these had been invented on the mainland after the Tasmanians had been isolated from it - the boomerang, for instance - but most had been made and used by the very first Tasmanians. Steadily and inexorably, so the archaeological history tells, these tools and tricks were abandoned. Bone tools, for example, grew simpler and simpler until they were dropped altogether about 3,800 years ago. Without bone tools it became impossible to sew skins into clothes, so even in the bitter winter, the Tasmanians went nearly naked but for seal-fat grease smeared on their skin and wallaby pelts over their shoulders. The first Tasmanians caught and ate plenty of fish, but by the time of Western contact they not only ate no fish (p. 79) and had eaten none for 3,000 years, but they were disgusted to be offered it (though they happily ate shellfish).

The story is not quite that simple, because the Tasmanians did invent a few new things during their isolation. Around 4,000 years ago they came up with a horribly unreliable form of canoe-raft, made of bundles of rushes and either paddled by men or pushed by swimming women (!), which enabled them to reach offshore islets to harvest birds and seals. The raft would become waterlogged and disintegrate or sink after a few hours, so it was no good for re-establishing contact with the mainland. As far as innovation goes, it was so unsatisfactory that it almost counts as an exception to prove the rule. The women also learnt to dive up to twelve feet below the water to prise clams off the rocks with wooden wedges and to grab lobsters. This was dangerous and exhausting work, which they were very skilled at: the men did not take part. So it was not that there was no innovation; it was that regress overwhelmed progress.

The archaeologist who first described the Tasmanian regress, Rhys Jones, called it a case of the 'slow strangulation of the mind', which perhaps understandably enraged some of his academic colleagues. There was nothing wrong with individual Tasmanian brains; there was something wrong with their collective brains. Isolation - self-sufficiency - caused the shrivelling of their technology. Earlier I wrote that division of labour was made possible by technology. But it is more interesting than that. Technology was made possible by division of labour: market exchange calls forth innovation.

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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(p. 113) It was Joseph Schumpeter who pointed out that the competition which keeps a businessman awake at night is not that from his rivals cutting prices, but that of entrepreneurs making (p. 114) his product obsolete. As Kodak and Fuji slugged it out for dominance in the 35mm film industry in the 1990s, digital photography began to extinguish the entire market for analogue film - as analogue records and analogue video cassettes had gone before. Creative destruction, Schumpeter called it. His point was that there is just as much creation going on as destruction - that the growth of digital photography would create as many jobs in the long run as were lost in analogue, or that the savings pocketed by a Wal-Mart customer are soon spent on other things, leading to the opening of new stores to service those new demands. In America, roughly 15 per cent of jobs are destroyed every year; and roughly 15 per cent created.

Source:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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Norman Krim holding some early transistors. He first put transistors into hearing aids. Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. B11) Mr. Krim, who made several breakthroughs in a long career with the Raytheon Company and who had an early hand in the growth of the RadioShack chain, did not invent the transistor. (Three scientists did, in 1947, at Bell Laboratories.)

But he saw the device's potential and persuaded his company to begin manufacturing it on a mass scale, particularly for use in miniaturized hearing aids that he had designed. Like the old tube, a transistor amplifies audio signals.

As Time magazine wrote in 1953: "This little device, a single speck of germanium, is smaller than a paper clip and works perfectly at one-tenth the power needed by the smallest vacuum tube. Today, much of Raytheon's transistor output goes to America's hearing aid industry." (Germanium, a relatively rare metal, was the predecessor to silicon in transistors.)

. . .

Thousands of hearing-disabled people benefited from Mr. Krim's initial use of the transistor in compact hearing aids. But not every transistor Raytheon made was suitable for them, he found.

"When transistors were first being manufactured by Raytheon on a commercial scale, there was a batch called CK722s that were too noisy for use in hearing aids," said Harry Goldstein, an editor at IEEE Spectrum, the magazine of the Institute of Electrical and Electronics Engineers.

So Mr. Krim contacted editors at magazines like Popular Science and Radio Electronics and began marketing the CK722s to hobbyists.

"The result was that a whole generation of aspiring engineers -- kids, really, working in their garages and basements -- got to make all kinds of electronic projects," Mr. Goldstein said, among them transistor radios, guitar amplifiers, code oscillators, Geiger counters and metal detectors. "A lot of them went on to become engineers."

Mr. Ward called Mr. Krim "the father of the CK722."

For the full obituary, see:

DENNIS HEVESI. "Norman Krim, 98, Dies; Championed the Transistor." The New York Times (Weds, December 21, 2011): B11.

(Note: ellipsis added.)

(Note: the online version of the article is dated December 20, 2011 and has the title "Norman Krim, Who Championed the Transistor, Dies at 98.")

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Source of book image: http://1.bp.blogspot.com/_cheRMv1X2oI/TAOvTFTnoeI/AAAAAAAAAgU/WAp7q0I_5mw/s1600/Ridley+Rational+Optimist.jpg

Ridley's book is very well-written, well-argued and well-documented. He takes on all the main arguments against a happy future for humans. I agree with most of what he writes. (One exception is that I think he underestimates the importance of patents in enabling a broader group of inventors to continue inventing.)

In the coming weeks, I will be quoting some of the more memorable, thought-provoking, or useful passages.

Book discussed:

Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.

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(p. F2) . . . solar power, which makes extensive use of robots in fabricating the cells, and has no moving parts to service once it is up and running, may be an odd choice for job creation.

"It's just not that labor-intensive," said Howard Axelrod, an engineer and economist. And as for the jobs it creates, there may be a price elsewhere, Dr. Axelrod said.

. . .

Build enough solar plants and some coal plants will shut down; that would amount to firing Peter to hire Paul.

. . .

And, economists point out, some of the work that renewable energy creates goes to people who already have jobs -- roofers who install the panels or truck drivers who move them around, or steel workers who make towers for new wind machines.

Some of the jobs could eventually go elsewhere. Two years ago, Evergreen Solar, which got $58 million in aid from Massachusetts for a factory in Devens, said it would shift production to China instead.

. . .

The debate is part of a larger discussion of what constitutes a "green" job. In October 2009, Congress gave the Bureau of Labor Statistics a special appropriation to count them.

. . .

"Driving a bus is driving a bus, right?" said Connie Mack, Republican of Florida. Hilda Solis, the secretary of labor, said they were "green buses." But aides later clarified that the bureau counted any bus driving job as green because it preserved natural resources.

None of this suggests that green is bad, just that it is not particularly job-heavy. In December 2010, Susan Combs, the comptroller of Texas, reported that school districts in her state were giving tax abatements to lure new jobs, but had to give $1.6 million for every wind energy job. Manufacturing jobs could be created for $166,000 each.

For the full story, see:

MATTHEW L. WALD. "Solar Power Industry Falls Short of Hopes in Job Creation." The New York Times (Weds., October 26, 2011): F2.

(Note: ellipses added.)

(Note: the online version of the article has the date October 25, 2011.)

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"At Citrix Systems, Berkley Reynolds, left, uses his Alienware laptop, and Alan Meridian, his MacBook Pro, paid for with stipends." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO -- Throughout the information age, the corporate I.T. department has stood at the chokepoint of office technology with a firm hand on what equipment and software employees use in the workplace.

They are now in retreat. Employees are bringing in the technology they use at home and demanding the I.T. department accommodate them. The I.T. department often complies.

Some companies have even surrendered to what is being called the consumerization of I.T. At Kraft Foods, the I.T. department's involvement in choosing technology for employees is limited to handing out a stipend. Employees use the money to buy whatever laptop they want from Best Buy, Amazon.com or the local Apple store.

"We heard from people saying, 'How come I have better equipment at home?' " said Mike Cunningham, chief technology officer for Kraft Foods. "We said, hey, we can address that."

Encouraging employees to buy their own laptops, or bring their mobile phones and iPads from home, is gaining traction in the workplace. A survey published on Thursday by Forrester Research found that 48 percent of information workers buy smartphones for work without considering what their I.T. department supports. By being more flexible, companies are hoping that workers will be more comfortable with their devices and therefore more productive.

"Bring your own device" policies, as they are called, are also shifting the balance of power among electronics makers. Manufacturers good at selling to consumers are increasingly gaining the upper hand, while those focused on bulk corporate sales are slipping.

. . .

(p. B6) Letting workers bring their iPhones and iPads to work can . . . save companies money. In some cases, employees pay for equipment themselves and seek tech help from store staff rather than their company's I.T. department. "You can basically outsource your I.T. department to Apple," said Ben Reitzes, an analyst with Barclays Capital.

A similar B.Y.O.D. program at Citrix Systems, a software maker that also helps its clients implement such programs, saves the company about 20 percent on each laptop over three years. Of the 1,000 or so employees in Citrix's program, 46 percent have bought Mac computers, according to Paul Martine, Citrix's chief information officer. "That was a little bit of a surprise."

For the full story, see:

VERNE G. KOPYTOFF. "More Offices Let Workers Choose Their Own Devices." The New York Times (Fri., September 23, 2011): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the article is dated September 22, 2011.)

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Source of graph: online version of the WSJ article quoted and cited below.

(p. B9) Many companies say innovation is a top priority, but even those who spend the most on research and development can have little to show for it, a new study says.

A report expected to be released Monday by consulting firm Booz & Co., says that few of the biggest R&D spenders crack the top 10 in terms of being considered "innovative" by their peers.

Booz identified 1,000 companies with the biggest 2010 research-and-development budgets and invited 600 executives from those companies to rate which ones they deemed most innovative. The most frequent pick was Apple Inc.--the 70th biggest research-and-development spender--followed by Google Inc. and 3M Co., also not among the top-20 spenders.

For the full story, see:

MELISSA KORN. "Top 'Innovators' Rank Low in R&D Spending." The Wall Street Journal (Mon., OCTOBER 24, 2011): B9.

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"Fairchild Semiconductor's founders in 1988. Victor Grinich (left), Jay Last, Jean Hoerni, Julius Blank, Eugene Kleiner, Sheldon Roberts, Robert N. Noyce (seated, left,) and Gordon E. Moore." Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. B14) Julius Blank, a mechanical engineer who helped start a computer chip company in the 1950s that became a prototype for high-tech start-ups and a training ground for a generation of Silicon Valley entrepreneurs, died on Saturday in Palo Alto, Calif.. He was 86.

. . .

Mr. Blank and his partners -- who included Robert N. Noyce and Gordon E. Moore, the future founders of the Intel Corporation -- began their venture as scientist-entrepreneurs in the wake of a mutiny of sorts against their common previous employer, the Nobel Prize-winning physicist William B. Shockley.

Dr. Shockley, . . . , had recruited the eight scientists from around the country in 1956 to work in his own semiconductor lab in nearby Mountain View, Calif.

The group left en masse the next year because of what its members described as Dr. Shockley's authoritarian management style and their differences with him over his scientific approach. Dr. Shockley called it a betrayal.

Fairchild's founders came to be branded in the lore of Silicon Valley as the "Traitorous Eight." How that happened remains something of a mystery.

. . .

When he left Fairchild in 1969 -- he was the last of the eight founding partners to depart -- Mr. Blank became an investor and consultant to start-up companies and helped found the technology firm Xicor, which was sold in 2004 for $529 million to Intersil.

His former partners, in addition to founding Intel, had started Advanced Micro Devices and National Semiconductor. Mr. Kleiner had founded a venture capital firm that became an early investor in hundreds of technology companies, including Amazon.com, Google and AOL. Still, the greatest pleasure of his working life, Mr. Blank said in a 2008 interview for the archives of the Computer History Museum, a project in Silicon Valley, came with the uncertainty and camaraderie of "the early years, building something from nothing."

Mr. Blank described a moment in the first days of Fairchild, just before production began in its factory built from nothing, when the ducts and plumbing and air-conditioning were set, and the new crystal growers and one-of-a-kind chip making machines were ready to be installed.

"I remember the day we finally got the floor tile laid," he said. "And that night, Noyce and the rest of the guys came out and got barefoot and rolled their pants up and were swabbing the floors. I wish I had a picture of that."

For the full obituary, see:

PAUL VITELLO. "Julius Blank, 86, Dies; Built First Chip Maker." The New York Times (Fri., September 23, 2011): B14.

(Note: ellipses added.)

(Note: the online version of the obituary is dated September 22, 2011 and had the title "Julius Blank, Who Built First Chip Maker, Dies at 86.")

May 2011 photo of Julius Blank. Source of photo: online version of the NYT obituary quoted and cited above.

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(p. 395) Whitney patented his 'gin' (a shortened form of 'engine') and prepared to become stupendously wealthy.

. . .

(p. 396) . . . , the gin truly was a marvel. Whitney and Miller formed a partnership with every expectation of getting rich, but they were disastrous businessmen. For the use of their machine, they demanded a one-third share of any harvest - a proportion that plantation owners and southern legislators alike saw as frankly rapacious. That Whitney and Miller were both Yankees didn't help sentiment either. Stubbornly they refused to modify their demands, convinced that southern growers could not hold out in the face of such a transforming piece of technology. They were right about the irresistibility, but failed to note that the gin was also easily pirated. Any halfway decent carpenter could knock one out in a couple of hours. Soon plantation owners across the south were harvesting cotton with home-made gins. Whitney and Miller filed sixty suits in Georgia and many others elsewhere, but found little sympathy in southern courts. By 1800 - just seven years after the gin's invention - Miller and Catharine Greene were in such desperate straits that they had to sell the plantation.

Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: ellipses added.)

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From archive of the Joy Cardin show:

Wednesday 6/8/2011 7:00 AM

Joy Cardin - 110608B After seven, Joy Cardin asks her guests a weather-related Big Question: "Do we rely too much on air-conditioning?"

Guests:
- Stan Cox, Senior Scientist, The Land Institute. Author, "Losing Our Cool: Uncomfortable Truths About Our Air Conditioned World" Author's blog: http://losingourcool.wordpress.com
- Arthur Diamond, Professor of Economics, University of Nebraska at Omaha. Author, conference paper, "Keeping Our Cool: In Defense of Air Conditioning" (http://artdiamond.com/)

Link to streaming version of debate between Art Diamond and Stan Cox (author Losing Our Cool) on whether air conditioning is good (Diamond) or bad (Cox). Broadcast on Joy Cardin Show on the Wisconsin Public Radio network on Weds., June 8, 2011, from about 7:00 - 7:50 AM: http://wpr.org/webcasting/play-wma.cfm?FileName=jca110608b.wma&pagename=/webcasting/audioarchives_display.cfm

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From 2007 to 2010 Nina V. Fedoroff was the science and technology adviser to Secretary of State Hilary Clinton in the Obama administration. Fedoroff is currently a Professor of Biology at Penn State. The passages quoted below are from her courageous commentary in The New York Times op-ed section:

(p. A21) . . . even as the Obama administration says it wants to stimulate innovation by eliminating unnecessary regulations, the Environmental Protection Agency wants to require even more data on genetically modified crops, which have been improved using technology with great promise and a track record of safety. The process for approving these crops has become so costly and burdensome that it is choking off innovation.

Civilization depends on our expanding ability to produce food efficiently, which has markedly accelerated thanks to science and technology. The use of chemicals for fertilization and for pest and disease control, the induction of beneficial mutations in plants with chemicals or radiation to improve yields, and the mechanization of agriculture have all increased the amount of food that can be grown on each acre of land by as much as 10 times in the last 100 years.

These extraordinary increases must be doubled by 2050 if we are to continue to feed an expanding population. . . .

. . .

Myths about the dire effects of genetically modified foods on health and the environment abound, but they have not held up to scientific scrutiny. And, although many concerns have been expressed about the potential for unexpected consequences, the unexpected effects that have been observed so far have been benign. Contamination by carcinogenic fungal toxins, for example, is as much as 90 percent lower in insect-resistant genetically modified corn than in nonmodified corn. This is because the fungi that make the toxins follow insects boring into the plants. No insect holes, no fungi, no toxins.

. . .

Only big companies can muster the money necessary to navigate the regulatory thicket woven by the government's three oversight agencies: the E.P.A., the Department of Agriculture and the Food and Drug Administration.

. . .

. . . the evidence is in. These crop modification methods are not dangerous. The European Union has spent more than $425 million studying the safety of genetically modified crops over the past 25 years. Its recent, lengthy report on the matter can be summarized in one sentence: Crop modification by molecular methods is no more dangerous than crop modification by other methods. Serious scientific bodies that have analyzed the issue, including the National Academy of Sciences and the British Royal Society, have come to the same conclusion.

For the full commentary, see:

NINA V. FEDOROFF. "Engineering Food for All." The New York Times (Fri., August 19, 2011): A21.

(Note: ellipses added.)

(Note: the online version of the commentary was dated August 18, 2011.)

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Steve Jobs died yesterday (Weds., October 5, 2011).

Jobs was an innovator of my favorite kind, what I call a "project entrepreneur." He showed us what excitement and progress is possible if we preserve the institutions that allow entrepreneurial capitalism to exist.

When he was recruiting John Sculley to leave Pepsi and join Apple, Jobs asked him: "Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?" (p. 90).

Steve Jobs wanted to change the world. He got the job done.

Source of quote of Jobs' question to Sculley:

Sculley, John, and John A. Byrne. Odyssey: Pepsi to Apple. paperback ed. New York: HarperCollins, 1988.

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Government "industrial policy" is likely to fail for many reasons. One is that the government decision makers are unlikely to know which future technologies will turn out to be the best ones. Another reason is that even if they know, government decision makers often decide based on what is politically expedient or what is beneficial to their friends.

Solyndra is a case in point, as Jon Stewart hilariously reveals.

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"ALL ABOARD: The Wasp magazine in 1881 lampooned railroad moguls as having regulators in the palms of their hands." Source of caricature: online version of the WSJ article quoted and cited below.

(p. C8) Mr. Klein has written thoroughly researched and scrupulously objective biographies of the previously much maligned Jay Gould and E.H. Harriman, remaking their public images by presenting them in full. Now he has published the third and final volume of his magisterial history of the Union Pacific railroad, taking the company from 1969 to the present day.

Union Pacific--the only one of the transcontinentals to remain in business under its original name--is now a flourishing business. Thanks to a series of mergers, it is one of the largest railroads in the world, with more than 37,000 miles of track across most of the American West. Thanks to its investment in new technology, it is also among the most efficient.

In 1969, though, the future of American railroading was in doubt as the industry struggled against competition from airplanes, automobiles and trucks--all of which were in effect heavily subsidized through the government's support for airports and the Interstate Highway System.

Another major factor in the decline of the railroads had been the stultifying hand of the Interstate Commerce Commission. The ICC had come into existence in the late 19th century to limit the often high-handed ways of the railroads as they wrestled with the difficult economics of an industry that has very high fixed costs. ( . . . .) But the ICC soon evolved into a cartel mechanism that discouraged innovation and wrapped the railroad industry in a cocoon of stultifying rules.

Mr. Klein notes that in 1975 he wrote a gloomy article about the sad state of an industry with a colorful past: "Unlike many other historical romances," he wrote back then, "the ending did not promise to be a happy one."

Fortunately, a deregulation movement that began under the Carter administration--yes, the Carter administration--limited the power of the ICC and then abolished it altogether. As Mr. Klein shows in the well-written "Union Pacific," the reduction of government interference left capitalism to work its magic and produce--with the help of dedicated and skillful management--the modern, efficient and profitable railroad that is the Union Pacific.

For the full review, see:

JOHN STEELE GORDON. "Tracks Across America." The Wall Street Journal (Sat., JUNE 11, 2011): C8.

(Note: ellipsis added.)

Book reviewed in the part of the review quoted above:

Klein, Maury. Union Pacific: The Reconfiguration: America's Greatest Railroad from 1969 to the Present. New York: Oxford University Press, USA, 2011.

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"Paul Holland and Molly Davis, producers of a new documentary, "Something Ventured," that gives an admiring look at innovators and investors from the past." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) The film, "Something Ventured," is a frankly admiring look at those who went out on a limb to back upstarts like Atari, Cisco Systems, Genentech and Apple.

. . .

But the film's beating heart is captured by Tom Perkins, whose Kleiner Perkins Caufield & Byers company backed the gene-splicing technology of Genentech, among other things. "It's great if you can make money and change the world for the better at the same time," said Mr. Perkins, . . .

Other stars of "Something Ventured" include Nolan Bushnell of Atari; Sandy Lerner of Cisco; Jimmy Treybig of Tandem Computers; and a string of venture capitalists, among them Don Valentine, Dick Kramlich, and Arthur Rock.

Many who appear joined dozens of other business people to finance the picture's roughly $700,000 cost with contributions of a few thousand dollars each, Mr. Holland said.

In becoming involved, several participants said they wanted to rekindle an entrepreneurial spirit that had either waned or changed since the rough-and-tumble years when, by the film's telling, Atari was started with $250 but needed capital to push Pong, and Mr. Bushnell passed up a chance to own a third of Apple, started by his employee Steve Jobs, for $50,000.

. . .

Mr. Valentine, . . . , said entrepreneurship had not ended -- his company was a force behind Google -- but it is less often coming from those born in the United States.

"You don't understand what you have here" is a constant refrain, he said, from Southeast Asian and Indian innovators who are sometimes mystified by an American disdain for its own business culture.

For the full story, see:

MICHAEL CIEPLY . "A Film About Capitalism, and (Surprise) It's a Love Story." The New York Times, Week in Review Section (Sun., March 8, 2011): 8.

(Note: ellipses added.)

(Note: the online version of the story is dated March 7, 2011.)

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The clip above is embedded from You Tube. It was recorded on July 6, 2011 in Mammel Hall, the location of the College of Business at the University of Nebraska at Omaha (UNO). I am grateful to Charley Reed of UNO University Relations for doing a great job of shooting and editing the clip.

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"George Ballas showed off in 1975 the original Weed Eater, a popcorn can rigged up with some wires." Source of caption and photo: online version of the WSJ obituary quoted and cited below.

(p. A5) George Ballas got his big idea after a poisonous snake bit a worker who was trimming his lawn with shears. The idea turned an old popcorn can, some wires and an edger into the Weed Eater.

Mr. Ballas, who died Saturday at age 85, was a dance instructor, developer, inventor and marketer who built hotels, patented an adjustable table and marketed an early portable phone.

. . .

Mr. Ballas said the idea for the Weed Eater came to him while he was in a car wash, contemplating the big rotating bristles that cleaned hard-to-reach corners yet somehow didn't scratch the finish.

Drawing from that inspiration, he rigged up an old popcorn can with some wires and hooked it to a rotating edger, and the first string trimmer was born.

. . .

He hired an engineer to design new models that substituted monofilament fishing line for wire and ran on electricity and gas. He dubbed it "Weed Eater" and held several patents on it.

When Mr. Ballas failed to find a company interested in distributing the device, he decided to sell it himself.

. . .

Mr. Ballas also taught entrepreneurship at Rice University in Houston. He continued to tinker with new inventions, and at one point marketed a football-helmet-sized portable phone that found few takers.

"A Weed Eater," Mr. Ballas told the Houston Chronicle in 1993, "comes along once in a lifetime."

For the full obituary, see:

STEPHEN MILLER. "REMEMBRANCES; Dance Studio Owner Invented Weed Eater." The Wall Street Journal (Thurs., JUNE 30, 2011): A5.

(Note: ellipses added.)

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(p. 123) Gas was particularly popular in America and Britain. By 1850 it was available in most large cities in both countries. Gas remained, however, a (p. 124) middle-class indulgence. The poor couldn't afford it and the rich tended to disdain it, partly because of the cost and disruption of installing it and partly because of the damage it did to paintings and precious fabrics, and partly because when you have servants to do everything for you already there isn't the same urgency to invest in further conveniences. The ironic upshot, as Mark Girouard has noted, is that not only middle-class homes but institutions like lunatic asylums and prisons tended to be better lit - and, come to that, better warmed - long before England's stateliest homes were.

Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

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(p. 112) We forget just how painfully dim the world was before electricity. A candle - a good candle - provides barely a hundredth of the illumination of a single 100-watt light bulb. Open your refrigerator door and you summon forth more light than the total amount enjoyed by most households in the eighteenth century. The world at night for much of history was a very dark place indeed.

Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) At the tail end of the 1990s dot-com boom, Douglas Edwards took a gamble: He left his marketing job at an old-media company, taking a $25,000 salary cut to start work at a small, little-known Internet concern in its second year of operation. That his new employer was losing money and burning through venture capital went without saying. But unlike the footloose 20-somethings who usually populated Silicon Valley start-ups, Mr. Edwards had little margin to bet wrong; he was 41, with a mortgage, three children and a worried wife. He hoped he could get his old job back if the company ran out of money.

. . .

Mr. Edwards came to his job as a subscriber to the conventional wisdom. In an early presentation to cofounder Larry Page and others, Mr. Edwards unwisely declared that only marketing, not technology, could set Google apart. "In a world where all search engines are equal," he asserted, "we'll need to rely on branding to differentiate us from our competitors."

The room became quiet. Then Mr. Page spoke up. "If we can't win on quality," he said, "we shouldn't win at all."

For the full review, see:

DAVID A. PRICE. "BOOKSHELF; How Google Got Going; Branding, shmanding, a marketer was told. 'If we can't win on quality,' Larry Page said, 'we shouldn't win at all.'" The Wall Street Journal (Tues., July 12, 2011): A13.

(Note: ellipsis added.)

Book being reviewed:

Edwards, Douglas. I'm Feeling Lucky: The Confessions of Google Employee Number 59. New York: Houghton Mifflin Harcourt Publishing Co., 2011.

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"Other People's Money" is a short story that appears in Cory Doctorow's short story collection With a Little Help.

(p. C7) Venture capitalists? Forget them, says "Other People's Money." Big money is dumb money. Much easier, says one old-lady manufacturer to a smart young gigafund manager, for her to make and market her own product, and keep the money (just like Mr. Doctorow), than for him to find and fund a hundred products and take a rake-off. He only deals in six-figure multiples, and that's no good: not nimble enough. And he has to get a return on all those billions, poor outdated soul.

For the full review, see:

TOM SHIPPEY. "The Author as Agent of Change; Cory Doctorow has big ideas about the future of technology--and how it can empower writers." The New York Times (Sat., MAY 21, 2011): C7.

The book of short stories is:

Doctorow, Cory. With a Little Help.

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"Peter Thiel." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Parents, do you hope that your children have the chance to become like Peter Thiel, the PayPal co-founder, Facebook investor and hedge fund manager? If so, Mr. Thiel suggests that you encourage them to drop out of school. In fact, he will help by paying them to do it.

On Wednesday, the Thiel Foundation, funded by Mr. Thiel, announced the first group of Thiel Fellows, 24 people under 20 who have agreed to drop out of school in exchange for a $100,000 grant and mentorship to start a tech company.

More than 400 people applied. The winners include Laura Deming, 17, who is developing antiaging therapies; Faheem Zaman, 18, who is building mobile payment systems for developing countries; and John Burnham, 18, who is working on extracting minerals from asteroids and comets.

. . .

Mr. Thiel, a contrarian investor and libertarian known for his controversial views, knows that suggesting that education is not always worth it strikes at the core of many Americans' beliefs. But that is exactly why is he doing it.

"We're not saying that everybody should drop out of college," he said. The fellows agree to stop getting a formal education for two years but can always go back to school. The problem, he said, is that "in our society the default assumption is that everybody has to go to college."

"I believe you have a bubble whenever you have something that's overvalued and intensely believed," Mr. Thiel said. "In education, you have this clear price escalation without incredible improvement in the product. At the same time you have this incredible intensity of belief that this is what people have to do. In that way it seems very similar in some ways to the housing bubble and the tech bubble."

. . .

"What I really liked about this program is it's giving a lot of people who maybe wouldn't get into Harvard an opportunity to participate in something just as selective and just as valuable and just as educational," Mr. Burnham said. "It's giving them that opportunity even though their personalities and characters don't quite fit the academic mold."

His father, Stephen Burnham, said the decision for his son to skip college, at least for now, was uncontroversial.

"There's a lot of other stuff that you get in college and I would say that would be useful for John," he said. "But I would say in four years there's a big opportunity cost there if you could be out starting your career doing something that could change the world."

For the full story, see:

CLAIRE CAIN MILLER. "Changing the World by Dropping Out." The New York Times (Mon., May 30, 2011): B4.

(Note: ellipses added.)

(Note: the online version of the story is dated May 25 (sic), 2011, has the title "Want Success in Silicon Valley? Drop Out of School," and is longer than the published version. Most of what is quoted above appears in both the published and online versions, but some (most notably the paragraph on the education bubble and the quotes from Stephen Burnham) appear only in the online verison.)

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In the passage below from 1984 Orwell presents an underground rebel's account of why the authoritarian socialist dystopia cannot advance in science and technology.

(p. 155) The world of today is a bare, hungry, dilapidated place compared with the world that existed before 1914, and still more so if compared with the imaginary future to which the people of that period looked forward. In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient--a glittering (p. 156) antiseptic world of glass and steel and snow-white concrete--was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happen, partly because of the impoverishment caused by a long series of wars and revolutions, partly because scientific and technical progress depended on the empirical habit of thought, which could not survive in a strictly regimented society.

Source:

Orwell, George. Nineteen Eighty-Four. New York: The New American Library, 1961 [1949].

By Canadian law, 1984 is no longer under copyright. The text has been posted on the following Canadian web site: http://wikilivres.info/wiki/Nineteen_Eighty-Four

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"David Brooks, of Just Bulbs in Manhattan, has a customer who is secretly ordering thousands of incandescent bulbs. "She doesn't want her husband to know," he said." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) BUNNY WILLIAMS, the no-nonsense decorator known for her lush English-style rooms, is laying in light bulbs like canned goods. Incandescent bulbs, that is -- 60 and 75 watters -- because she likes a double-cluster lamp with a high- and a low-watt bulb, one for reading, one for mood.

"Every time I go to Costco, I buy more wattage," Ms. Williams said the other day. She is as green as anybody, she added, but she can't abide the sickly hue of a twisty compact fluorescent bulb, though she's tried warming it up with shade liners in creams and pinks. Nor does she care for the cool blue of an LED.

It should be noted that, like most decorators, Ms. Williams is extremely precise about light. The other day, she reported, she spent six hours fine-tuning the lighting plan of a project, tweaking the mix of ambient, directional and overhead light she had designed, and returning to the house after dusk to add wattage and switch out lamps like a chef adjusting the flavors in a complicated bouillabaisse.

She is aware that there is legislation that is going to affect the manufacture of incandescent bulbs, but she's not clear on the details, and she wants to make sure she has what she needs when she needs it.

. . .

(p. D7) Other hoarders are hiding their behavior. David Brooks, who owns Just Bulbs on East 60th Street, said he has a customer in Tennessee who is buying up 60- and 100-watt soft-pink incandescent bulbs from G.E. and Sylvania for her three houses. Initially, she ordered 432 bulbs for each house, he said. Then she ordered another 1,000.

Mr. Brooks said the customer doesn't want her husband to find out, and wouldn't agree to speak to this reporter. The last order is destined, he said, "for a friend's house that she is helping to redecorate in Alabama. She doesn't want anyone to know her source."

For the full story, see:

PENELOPE GREEN. "Light Bulb Saving Time." The New York Times (Thurs., May 26, 2011): D1 & D7.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 25, 2011.)

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"Ken Olsen, the pioneering founder of DEC, in 1996." Source of caption and photo: online version of the NYT article quoted and cited below.

I believe in The Road Ahead, Bill Gates describes Ken Olsen as one of his boyhood heroes for having created a computer that could compete with the IBM mainframe. His hero failed to prosper when the next big thing came along, the PC. Gates was determined that he would avoid his hero's fate, and so he threw his efforts toward the internet when the internet became the next big thing.

Christensen sometimes uses the fall of minicomputers, like Olsen's Dec, to PCs as a prime example of disruptive innovation, e.g., in his lectures on disruptive innovation available online through Harvard. A nice intro lecture is viewable (but only using Internet Explorer) at: http://gsb.hbs.edu/fss/previews/christensen/start.html

(p. A22) Ken Olsen, who helped reshape the computer industry as a founder of the Digital Equipment Corporation, at one time the world's second-largest computer company, died on Sunday. He was 84.

. . .

Mr. Olsen, who was proclaimed "America's most successful entrepreneur" by Fortune magazine in 1986, built Digital on $70,000 in seed money, founding it with a partner in 1957 in the small Boston suburb of Maynard, Mass. With Mr. Olsen as its chief executive, it grew to employ more than 120,000 people at operations in more than 95 countries, surpassed in size only by I.B.M.

At its peak, in the late 1980s, Digital had $14 billion in sales and ranked among the most profitable companies in the nation.

But its fortunes soon declined after Digital began missing out on some critical market shifts, particularly toward the personal computer. Mr. Olsen was criticized as autocratic and resistant to new trends. "The personal computer will fall flat on its face in business," he said at one point. And in July 1992, the company's board forced him to resign.

For the full obituary, see:

GLENN RIFKIN. "Ken Olsen, Founder of the Digital Equipment Corporation, Dies at 84." The New York Times (Tues., February 8, 2011): A22.

(Note: ellipsis added.)

(Note: the online version of the story is dated February 7, 2011 and has the title "Ken Olsen, Who Built DEC Into a Power, Dies at 84.")

Gates writes in autobiographical mode in the first few chapters of:

Gates, Bill. The Road Ahead. New York: Viking Penguin, 1995.

Christensen's mature account of disruptive innovation is best elaborated in:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

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(p. 8) Saurabh Srivastava, co-founder of the National Association of Software and Service Companies in India, explained that for the first 40 years of Indian independence, entrepreneurs here were looked down upon. India had lost confidence in its ability to compete, so it opted for protectionism. But when the '90s rolled around, and India's government was almost bankrupt, India's technology industry was able to get the government to open up the economy, in part by citing the example of America and Silicon Valley. India has flourished ever since.

"America," said Srivastava, "was the one who said to us: 'You have to go for meritocracy. You don't have to produce everything yourselves. Go for free trade and open markets.' This has been the American national anthem, and we pushed our government to tune in to it. And just when they're beginning to learn how to hum it, you're changing the anthem. ... Our industry was the one pushing our government to open our markets for American imports, 100 percent foreign ownership of companies and tough copyright laws when it wasn't fashionable."

If America turns away from these values, he added, the socialist/protectionists among India's bureaucrats will use it to slow down any further opening of the Indian markets to U.S. exporters.

For the full commentary, see:

THOMAS L. FRIEDMAN. "It's Morning in India." The New York Times, Week in Review Section (Sun., October 31, 2010): 8.

(Note: the online version of the story is dated October 30, 2010.)

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(p. 92) America is a car culture and has been for almost a century, the phrase "traffic jam" dating to 1910, meaning we're stuck with car culture for the time being. In the United States, the number of trips taken on public transportation has since 1998 been rising more rapidly than trips taken in cars. But public transportation nevertheless cannot be a cure-all for traffic congestion, since only a total of 1 percent of all U.S. trips occur on public transit. Double the share, which would require notable effort and capital expense, and it's still only 2 percent. A car culture with a rising population and rising prosperity has little choice but to keep investing in roads and parking.

Source:

Easterbrook, Gregg. The Progress Paradox: How Life Gets Better While People Feel Worse. Paperback ed. New York: Random House, 2004.

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Source of book image: http://www.jetagebook.com/

(p. 30) "Jet Age" is ostensibly about the race between two companies and nations to commercialize a military technology and define a new era of air travel. There's Boeing with its back to the wall and its military contracts drying up, betting everything on passenger jets, pitted against de Havilland and the government-subsidized project meant to reclaim some of Britain's lost glory. . . .

. . .

But the book is really about the risk-taking essential for making any extreme endeavor common­place. "Jet Age" celebrates the managers, pilots, engineers, flight attendants and, yes, even passengers (for without passengers there is no business) who gambled everything so that we might cross oceans and continents in hours rather than days.

It is easy to forget, in this time of overcrowded flights, demoralizing security checks, embattled flight attendants and dwindling service, that risk was once embraced as a necessary, even desirable, part of flying. Quoted in the book, the celebrated aviator Lord Brabazon summed it up in post-accident testimony: "You know, and I know, the cause of this accident. It is due to the adventurous, pioneering spirit of our race. It has been like that in the past, it is like that in the present, and I hope it will be in the future."

For the full review, see:

MICHAEL BELFIORE. "Fatal Flaws." The New York Times Book Review (Sun., February 6, 2011): 30.

(Note: ellipses added.)

(Note: the online version of the article is dated February 4, 2011.)

The book under review is:

Verhovek, Sam Howe. Jet Age: The Comet, the 707, and the Race to Shrink the World. New York: Avery, 2010.

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(p. 300) The other weight problem was the one that licked Trevithick at Penydarren: The tracks on which the locomotive ran were just not able to survive the tonnage traveling over them. Driving a five-ton steam locomotive over rails designed for horse-drawn carts was only slightly more sensible than driving a school bus over a bridge made of wet ice cubes. In both cases, it's a close call whether the vehicle will skid before or after the surface collapses.

. . .

(p. 301) Two years later, Stephenson, in collaboration with the ironmonger William Losh of Newcastle, produced, and in September 1816 jointly patented, a series of' improvements in wheels, suspension, and--most important--the method by which the rails and "chairs" connected one piece of track to another. Stephenson's rails seem mundane next to better-known eureka moments, but as much as any other innovation of the day they underline the importance of such micro-inventions in the making of a revolution. For it was the rails that finally made the entire network of devices--engine, linkage, wheel, and track--work.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

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(p. 367) If one secret to sustaining an inventive culture was making inventors into national heroes, it was a secret that didn't translate well into French. Between 1740 and 1780, the French inclination to reward inventors not by enforcing a natural right but by the grant of pensions and prizes resulted in the award of nearly 7 million livres--approximately $600 million today--to inventors of largely forgot-(p. 268)ten devices, but Claude-François Jouffroy d'Abbans (inventor of one of the first working steamboats), Barthélemy Thimonnier (creator of the first sewing machine), and Airné Argand (a partner of Boulton and friend of Watt whose oil lamp became the world's standard) all died penniless.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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"David Kappos of the Patent Office, with an Edison bulb." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) "There is no company I know of that would have permitted its information technology to get into the state we're in," David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. "If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits."

Once patent applications are in the system, they sit -- for years. The patent office's pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.

The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

For the full story, see:

EDWARD WYATT. "U.S. Sets 21st-Century Goal: Building a Better Patent Office." The New York Times (Mon., February 21, 2011): A1 & A3.

(Note: the online version of the article is dated February 20, 2011.)

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(p. 264) Petra Moser, now a professor at MIT's Sloan School of Management, spent four years examining more than 15,000 different inventions exhibited at nineteenth-century worlds fairs, and their equivalents, and discovered a fact that seems at first glance to discredit the idea that patent protection was essential for innovation: Nations without patent laws were in many cases just as inventive as those with them. Or even more inventive; some of the nations best represented at those industrial fairs actively discouraged the patenting of inventions.

The reason seems to be that whether or not they enforced a patent law, smaller nations or domains, such as the Netherlands and Switzerland, were vulnerable to the theft of their innovations by competitors in larger nations. The bargain of patent protection runs two ways: The state, in return for making an idea public, offers legal recourse to its creator should someone within the state steal the idea. Since making one's invention public in a nation with patent protection offered protection against theft only up to its own borders, only a large nation offered a large enough market to make the deal a good one, and (in Moser's words) the small nations "would have been silly to patent [their] innovations."

This logic inhibited investment in entire categories of innovation. Those nations that relied on secrecy rather than patent tended to specialize in the sort of inventions that cannot be easily reverse--engineered, such as chemicals or dyes.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed word in original.)

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(p. 262) As with Tudor England, government monopoly of patronage meant control. Virtually all copies of the seventeenth--century Chinese encyclopedia, the T'ien Kung K'ai-wu or Exploitation of the Works of Nature, which included illustrations of everything from hydraulics to metallurgy, were destroyed because, according to Joseph Needham, much of the material touched on industries that had been granted monopoly status by the Qing emperors: "The absence of political competition did not mean that technological progress could not take place, but it did mean that one decision-(p. 263)maker [i.e. the Emperor] could deal it a mortal blow." It is therefore no surprise that a high percentage of both the inventions and inventors we associate with China from the time of the Han Dynasty to the Qings were government sponsored and employed.

Another liability of a strong central government is that it is, well, strong. Europe's fragmented system of sovereign states made it possible for innovative minds such as Paracelsus, Leibniz. Rousseau, and Voltaire to "shop" for more congenial places whenever they skated too close to heretical or otherwise challenging notions; in China, one had to travel a thousand miles to a place where the empire's writ ran not.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics and bracketed words in original.)

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Source of book image: http://www.xconomy.com/wordpress/wp-content/images/2008/01/telephone-gambit.jpg

A great and important debate is occurring about the desirability of the patent system. Should it be abolished, or reformed? If The Telephone Gambit book is right, one of the spectacular failures of the system is in the awarding of a patent to Bell for the telephone.

That's a big "if": some of the reviewers on Amazon give reasons for doubting Shulman's story.

I hope to have time to look into this further.

(p. D10) It was a brilliant concept. But was it Bell's? What had happened during his trip to Washington that allowed Bell to abandon the blind alleys he had been exploring and to suddenly, not incrementally, find the technological solution?

The answer to that question is a tale involving high-powered Washington lawyers, political influence, a patent clerk with a booze problem, and improper access to Elisha Gray's patent filing, where Bell found the secret to making the telephone work. Mr. Shulman lays out the evidence -- documentary, scientific, chronological and psychological -- piece by damning piece. He shows most impressively how Bell's subsequent behavior and actions are entirely in keeping with those of a decent and honorable man having to live most of his long life (Bell died in 1924) with the knowledge that behind his fortune and his fame lay a single instance of brazen dishonesty, of intellectual theft.

"The Telephone Gambit" is solid history, and Seth Shulman makes it as much fun to read as an Agatha Christie whodunit by using the techniques of historiography the way Hercule Poirot used his "little gray cells." That's no small accomplishment.

For the full review, see:

JOHN STEELE GORDON. "False Claim, Future Fortune." The Wall Street Journal (Fri., JANUARY 16, 2008): D10.

(Note: ellipsis added.)

The book being reviewed, is:

Shulman, Seth. The Telephone Gambit: Chasing Alexander Graham Bell's Secret. hardback ed. New York: W. W. Norton & Company, 2008.

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(p. R4) To understand the challenges that faced businesses the past 10 years, consider the household names that didn't make it through the decade: Anheuser-Busch, Compaq, Gillette, Enron, Lehman Brothers, Merrill Lynch, WorldCom.

. . .

As the decade rolled on, the Internet came to be known for destroying businesses. It upended decades-old business models in fields such as media, advertising, travel and entertainment, as consumers and advertisers migrated to the digital world.

But that same shift created opportunity. No one epitomized that better than Google Inc. A mere 15 months old at the beginning of the decade, it morphed from a startup technology company into an advertising and media powerhouse and is now plotting a move into communications. There, it will clash with Apple Inc., which was reborn following the return of co-founder Steve Jobs in 1997. Apple's iPod and iTunes reshaped the music industry; its iPhone revolutionized communications by opening itself to independent innovators.

"This is what [Austrian economist Joseph] Schumpeter had in mind with his term 'creative destruction,'" says Paul David, an economic historian at Stanford University. Industrial collapse is a "messy, messy process," Mr. David says. "It's a great drama, and watching it play out in this decade has been very interesting."

For the full story, see:

SCOTT THURM. "Creativity, Meet Destruction; The Decade Rewrote the Corporate Handbook, Thanks to the Web, Globalization and the Collapse of Two Bubbles." The Wall Street Journal (Mon., DECEMBER 21, 2009): R4.

(Note: ellipsis added.)

(Note: the online version of the article is dated DECEMBER 22, 2009.)

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"Steven P. Jobs has played a significant role in a string of successful products at Apple, including the iPad, shown above, which was introduced last year." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) Shortly before the iPad tablet went on sale last year, Steven P. Jobs showed off Apple's latest creation to a small group of journalists. One asked what consumer and market research Apple had done to guide the development of the new product.

"None," Mr. Jobs replied. "It isn't the consumers' job to know what they want."

For years, and across a career, knowing what consumers want has been the self-appointed task of Mr. Jobs, Apple's charismatic co-founder. Though he has not always been right, his string of successes at Apple is uncanny. His biggest user-pleasing hits include the Macintosh, the iMac, iBook, iPod, iPhone and iPad.

But as he takes a medical leave of absence, announced on Monday, the question is: Without him at the helm, can Apple continue its streak of innovation, particularly in an industry where rapid-fire product cycles can make today's leader tomorrow's laggard?

. . .

(p. B4) With the iPad tablet, Apple jump-started a product category. But with the iPod (a music and media player) and iPhone (smartphone), Apple moved into markets with many millions of users using rival products, but he gave consumers a much improved experience.

"These are seeing-around-the-corner innovations," said John Kao, an innovation consultant to corporations and governments. "Steve Jobs is totally tuned into what consumers want. But these are not the kind of breakthroughs that market research, where you are asking people's opinions, really help you make."

Regis McKenna, a Silicon Valley investor and marketing consultant, said employees at Apple stores provide the company with a powerful window into user habits and needs, even if it is not conventional market research.

"Steve visits the Apple store in Palo Alto frequently," said Mr. McKenna, a former consultant to Apple.

. . .

In a conversation years ago, Mr. Jobs said he was disturbed when he heard young entrepreneurs in Silicon Valley use the term "exit strategy" -- a quick, lucrative sale of a start-up. It was a small ambition, Mr. Jobs said, instead of trying to build companies that last for decades, if not a century or more.

That was a sentiment, Mr. Jobs said, that he shared with his sometime luncheon companion, Andrew S. Grove, then the chief executive of Intel.

"There are builders and traders," Mr. Grove said on Tuesday. "Steve Jobs is a builder."

For the full story, see:

STEVE LOHR. "The Missing Tastemaker?" The New York Times (Weds., JANUARY 19, 2011): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the article is dated January 18, 2011 and has the title "Can Apple Find More Hits Without Its Tastemaker?.")

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(p. 233) . . . ; together, Watt and Arkwright wrote a manuscript entitled "Heads of a Bill to explain and amend the laws relative to Letters Patent and grants of privileges for new inventions," essentially a reworking of Coke's Statute of 1623 that had created England's first patent law. In addition to its policy prescriptions, which were largely an unsuccessful argument against the requirement that patent applications be (p. 235) as specific as possible, the manuscript offered a remarkable insight into Watt's perspective on the life of the inventor, who should, in Watt's own (perhaps inadvertently revealing) words, "be considered an Infant, who cannot guard his own Rights":

An engineer's life without patent is not worthwhile . . . few men of ingenuity make fortunes without suffering to think seriously whether the article he manufactures might, or might not, be Improved. The man of ingenuity in order to succeed must seclude himself from Society, he must devote the whole powers of his mind to that one object, he must persevere in spite of the many fruitless experiments he makes, and he must apply money to the expenses of these experiments, which strict Prudence would dedicate to other purposes. By seclusion from the world he becomes ignorant of its manners, and unable to grapple with the more artful tradesman, who has applied the powers of his mind, not to the improvement of the commodity he deals in, but to the means of buying cheap and selling dear, or to the still less laudable purpose of oppressing such ingenious workmen as their ill fate may have thrown into his power.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: the second ellipsis and the italics in original; the first ellipsis added.)

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(p. A5) When it set up its bulb program in 2006, PG&E Corp. thought its customers would buy 53 million compact fluorescent bulbs by 2008. It allotted $92 million for rebates, the most of any utility in the state. Researchers hired by the California Public Utilities Commission concluded earlier this year that fewer bulbs were sold, fewer were screwed in, and they saved less energy than PG&E anticipated.

As a result of these and other adjustments, energy savings attributed to PG&E were pegged at 451.6 million kilowatt hours by regulators, or 73% less than the 1.7 billion kilowatt hours projected by PG&E for the 2006-2008 program.

One hitch was the compact-fluorescent burnout rate. When PG&E began its 2006-2008 program, it figured the useful life of each bulb would be 9.4 years. Now, with experience, it has cut the estimate to 6.3 years, which limits the energy savings. Field tests show higher burnout rates in certain locations, such as bathrooms and in recessed lighting. Turning them on and off a lot also appears to impair longevity.

For the full story, see:

REBECCA SMITH. "The New Light Bulbs Lose a Little Shine; Compact Fluorescent Lamps Burn Out Faster Than Expected, Limiting Energy Savings in California's Efficiency Program." The Wall Street Journal (Weds., JANUARY 19, 2011): A5.

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(p. 223) Though power looms had existed, at least in concept, for centuries (under his sketch for one, Leonardo himself wrote, "This is second only to the printing press in importance; no less useful in its practical application; a lucrative, beautiful, and subtle invention"), there was little interest in them so long as virtually all the available yarn could be turned into cloth in cottages. This fact reinforced the weaver's independence; but it also encouraged another group of innovative types who were getting ready to put spinning itself on an industrial footing.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p. 223) Kay's flying shuttle made it possible for weavers to produce a wider product, which they called "broadloom," but doing so was demanding. Weaving requires that the weft threads be under constant tension in order to make certain that each one is precisely the same length as its predecessor; slack is the enemy of a properly woven cloth. Using a flying shuttle to carry weft threads through the warp made it possible to weave a far wider bolt of cloth, but the required momentum introduced the possibility of a rebound, and thereby a slack thread. Kay's invention still needed a skilled artisan to catch the shuttle and so avoid even the slightest bit of bounce when it was thrown across the loom.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p. D1) Five years ago, Matthew R. Simmons and I bet $5,000. It was a wager about the future of energy supplies -- a Malthusian pessimist versus a Cornucopian optimist -- and now the day of reckoning is nigh: Jan. 1, 2011.

The bet was occasioned by a cover article in August 2005 in The New York Times Magazine titled "The Breaking Point." It featured predictions of soaring oil prices from Mr. Simmons, who was a member of the Council on Foreign Relations, the head of a Houston investment bank specializing in the energy industry, and the author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy."

I called Mr. Simmons to discuss a bet. To his credit -- and unlike some other Malthusians -- he was eager to back his predictions with cash. He expected the price of oil, then about $65 a barrel, to more than triple in the next five years, even after adjusting for inflation. He offered to bet $5,000 that the average price of oil over the course of 2010 would be at least $200 a barrel in 2005 dollars.

I took him up on it, not because I knew much about Saudi oil production or the other "peak oil" arguments that global production was headed downward. I was just following a rule learned from a mentor and a friend, the economist Julian L. Simon.

As the leader of the Cornucopians, the optimists who believed there would always be abundant supplies of energy and other resources, Julian figured that betting was the best way to make his argument. Optimism, he found, didn't make for cover stories and front-page headlines.

. . .

(p. D3) When I found a new bettor in 2005, the first person I told was Julian's widow, Rita Simon, a public affairs professor at American University. She was so happy to see Julian's tradition continue that she wanted to share the bet with me, so we each ended up each putting $2,500 against Mr. Simmons's $5,000.

. . .

The past year the price has rebounded, but the average for 2010 has been just under $80, which is the equivalent of about $71 in 2005 dollars -- a little higher than the $65 at the time of our bet, but far below the $200 threshold set by Mr. Simmons.

What lesson do we draw from this? I'd hoped to let Mr. Simmons give his view, but I'm very sorry to report that he died in August, at the age of 67. The colleagues handling his affairs reviewed the numbers last week and declared that Mr. Simmons's $5,000 should be awarded to me and to Rita Simon on Jan. 1, . . .

For the full commentary, see:

JOHN TIERNEY. "Findings; Economic Optimism? Yes, I'll Take That Bet." The New York Times (Tues., December 28, 2010): D1 & D3.

(Note: ellipses added.)

(Note: the online version of the article is dated December 27, 2010.)

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(p. 187) The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used The Albion Mills, as it would be called, was built on a scale hitherto unimagined. The largest flour mill in London in 1783 used four pairs of grinding stones; Albion was to have thirty, driven by three steam engines, each with a 34-inch cylinder. Within months after its completion, in 1786, those engines were driving mills that produced six thousand bushels of flour every week--which both fed a lot of Londoners and angered a lot of millers.

The Albion Mills was London's first factory, and its first great symbol of industrialization; its construction inaugurated not only great age of steam-driven factories, but also the doomed though poignant resistance to them. That resistance took the shape of direct action--no one knows how the fire that destroyed the Albion Mills in 1791 began, but arson by millers threatened by its success seems likely-- . . .

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

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Source of graph: online version of the WSJ article quoted and cited below.

(p. B1) . . . two academic researchers estimate that Apple Inc.'s iPhone--one of the best-selling U.S. technology products--actually added $1.9 billion to the U.S. trade deficit with China last year.

How is this possible? The researchers say traditional ways of measuring global trade produce the number but fail to reflect the complexities of global commerce where the design, manufacturing and assembly of products often involve several countries.

"A distorted picture" is the result, they say, one that exaggerates trade imbalances between nations.

Trade statistics in both countries consider the iPhone a Chinese export to the U.S., even though it is entirely designed and owned by a U.S. company, and is made largely of parts produced in several Asian and European countries. China's contribution is the last step--assembling and shipping the phones.

So the entire $178.96 estimated wholesale cost of the shipped phone is credited to China, even though the value of the work performed by the Chinese workers at Hon Hai Precision Industry Co. accounts for just 3.6%, or $6.50, of the total, the researchers calculated in a report published this month.

For the full story, see:

ANDREW BATSON. "Not Really 'Made in China'; The iPhone's Complex Supply Chain Highlights Problems With Trade Statistics." The Wall Street Journal (Thurs., December 16, 2010): B1 & B2.

(Note: ellipsis added.)

(Note: the online version of the article is dated DECEMBER 15, 2010nd that were not in the print version.)

The research report breaking down iPhone costs by country is:

Xing, Yuqing, and Neal Detert. "How the Iphone Widens the United States Trade Deficit with the People's Republic of China." ADBI Working Paper Series, no. 257, December 2010.

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"Jonathan Bush, nephew of one former president and cousin of another, built a small medical practice into a national enterprise with nearly 1,200 employees." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B10) In the world of health care innovation, the founder and chief executive of Athenahealth has an outsize name. In part, that's because his name is Jonathan Bush, and he is the nephew of one former president and the cousin of another. But it's also because his company has mastered the intricacies of the doctor-insurer relationship and become a player in the emerging medical records industry.

Based in Watertown, Mass., Athenahealth offers a suite of administrative services for medical practices. It collects payments from insurers and patients, and it manages electronic health records and patient communication systems. All of this is done remotely through the Internet -- or "in the cloud," as Mr. Bush puts it. Doctors don't have to install or manage software or pay licensing fees; instead, Athenahealth keeps a percentage of the revenue.

. . .

Q. What's going on in the health care industry to deliver that kind of growth to you?

A. We are a disruptive technology. We are the only cloud-based service in an industry segment full of sclerotic, enormous, personality-free corporations that have been in business making 90 percent margins doing nothing for decades and decades.

Q. What keeps other companies from building cloud-based systems?

A. For software companies, the biggest barrier to entry is that they give up their business model. Those companies would get hammered on Wall Street if they started selling a service that they have to deliver at a loss for five years. In terms of new entrants, there are two things that we've done that would take a good decade to replicate. One, we've built out the health care Internet. We've been building connections into insurance companies and laboratories and hospital medical records for years and years and years.

And the other barrier to entry is that rules engine. Every time a doctor anywhere in the country gets a claim denied, we have analysts ask the Five Whys. When we get to root cause, we write a new rule into Athenanet and from that day on, no other doctor gets that particular denial from that particular insurance company ever again. We now know of 40 million ways that a doctor can have a claim denied in the United States. The average practice has to rework about 35 percent of their claims, and we only have to rework about 5 percent of ours.

Q. What's the prognosis for bill collecting under health care reform?

A. Well, there's going to be new connectors and a whole series of new insurance products that will be managed by the states' health insurance commissioners. And the law provides for every state to do all of these its own way, so they will have their own rules and regulations, and each state will do it differently. That sounds like springtime in Complexity Land.

Q. What do you think will happen to the total cost of health care under reform?

A. Oh, it's going to go through the roof! It's widely accepted that this is not a cost-reform bill -- it's an access bill. It's in fact a cost-expansion bill.

For the full story, see:

ROBB MANDELBAUM. "Views of Health Care Economics From a C.E.O. Named Bush." The New York Times (Thurs., September 9, 2010): B10.

(Note: ellipsis added.)

(Note: the online version of the article has the date September 8, 2010.)

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(p. 124) . . . , the eighteenth-century Swiss mathematician Daniel Bernoulli,'' who coined the term "human capital," explained why innovation has always been a more attractive occupation to have-nots than to haves: not only do small successes seem larger, but they have considerably less to lose.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

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(p. 121) In 1930, Joseph Rossman, who had served for decades as an examiner in the U.S. Patent Office, polled more than seven hundred patentees. producing a remarkable picture of the mind of the inventor. Some of the results were predictable; the three biggest motivators were "love of inventing," "desire to improve." and "financial gain," the ranking for each of which was statistically identical. and each at least twice as important as those appearing (p. 122) down the list, such as "desire to achieve," "prestige," or "altruism" (and certainly not the old saw, "laziness," which was named roughly one-thirtieth as frequently as "financial gain"). A century after Rocket, the world of technology had changed immensely: electric power, automobiles, telephones. But the motivations of individual inventors were indistinguishable from those inaugurated by the Industrial Revolution.

. . .

In the same vein, Rossman's survey revealed that the greatest obstacle perceived by his patentee universe was not lack of knowledge, legal difficulties, lack of time, or even prejudice against the innovation under consideration. Overwhelmingly, the largest obstacle faced by early twentieth-century inventors (and, almost certainly, their ancestors in the eighteenth century) was "lack of capital." Inventors need investors.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: ellipsis added.)

Posted by Art Diamond at 1:01 AM | Permalink | Comments (0)

In my seminar on the Economics of Technology on Tuesday night (11/30/10), Gauri presented some interesting information on intellectual property. At one point she summarized that the lag in processing patents is about three years, but it takes, on average, only about 18 hours to process a patent once the processing has begun.

Later in the seminar, we talked about a brief article by Amar Bhidé on whether large economic stimulus programs have worked in the past, and will work in the present. Bhidé was skeptical, and I am too.

But it occurred to me that one modest economic stimulus expenditure might help. Why not make the highest stimulus spending priority to hire and train enough patent examiners to reduce the patent lag from three years to, say, three weeks?

The Bhidé article mentioned above is:

Bhidé, Amar. "Don't Believe the Stimulus Scaremongers." Wall Street Journal, (Tues., February 17, 2009): A15.

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"When Britain Ruled The Skies: A De Havilland Comet under construction in Belfast in 1954." Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. C8) Frank Whittle, the brilliant British military pilot and engineer who began patenting jet designs in 1930, struggled for years to get funding and time to pursue his idea. Even after World War II, when a competing Nazi design showed what fighter jets could achieve in battle, U.S. airlines were slow to see jets' potential for passenger travel.

It took another Brit, airplane designer Geoffrey de Havilland, to awaken postwar America's aviation behemoths. While Lockheed and Douglas were still churning out rumbling, low-flying propeller planes, De Havilland's jet-powered Comet began breaking records in 1952. Only after seeing Comets scorch the stratosphere at 500 miles an hour did Howard Hughes want jetliners for TWA and Juan Trippe get interested for Pan Am.

Among American plane makers, it was a military contractor that had struggled in the prewar passenger-plane market--Boeing--that first took up the jetliner challenge. In retrospect, the outcome seems obvious. The Boeing 707 inspired the term "jet set." Boeing's iconic 747 "Jumbo Jet" opened jet-setting to the masses.

But in 1952, that outcome was far from obvious. Mr. Verhovek zeroes in on the mid-1950s, when Comets first seemed to own the world and then started plunging from the sky in pieces. The Comet's fatal design flaw--the result of an insufficient appreciation of the danger of metal fatigue--holds resonance today as both Boeing and Airbus struggle to master the next generation of jetliner materials, composites of carbon fiber and plastic.

. . .

Although "Jet Age" inevitably centers on technology, Mr. Verhovek wisely focuses as well on the outsize personalities behind world-changing innovations. There's Mr. De Havilland, a manic depressive who was so dedicated to aviation that he kept going after two of his three sons died testing his planes. Mr. Whittle, we learn, sniffed Benzedrine to stay awake, popped tranquilizers to sleep and shriveled to just 127 pounds while developing the jet engine. And Boeing chief executive Bill Allen, a meticulous lawyer, bet the company on passenger jets when not a single U.S. airline wanted one.

For the full review, see:

DANIEL MICHAELS. "Shrinking the World; How jetliners commercialized air travel--stewardesses and all." The Wall Street Journal (Sat., October 9, 2010): C8.

(Note: ellipsis added.)

The book under review is:

Verhovek, Sam Howe. Jet Age: The Comet, the 707, and the Race to Shrink the World. New York: Avery, 2010.

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William Rosen discusses the genesis and significance of the world's first patent law:

(p. 52) The Statute became law in 1624. The immediate impact was barely noticeable, like a pebble rolling down a gradual slope at the top of a snow-covered mountain. For decades, fewer than six patents were awarded annually, though still more in Britain than anywhere else. It was seventy-five years after the Statute was first drafted, on Monday, July 25, 1698, before an anonymous clerk in the employ of the Great Seal Patent Office on Southampton Row, three blocks from the present--day site of the British Museum, granted patent number 356: Thomas Savery's "new Invention for Raiseing of Water and occasioning Motion to all Sorts of Mill Work by the lmpellent Force of Fire."

Both the case law and the legislation under which the application was granted had been written by Edward Coke. Both were imperfect, as indeed was Savery's own engine. The law was vague enough (and Savery's grant wide-ranging enough; it essentially covered all ways for "Raiseing of Water" by fire) that Thomas Newcomen was compelled to form a partnership with a man whose machine scarcely resembled his own. But it is not too much to claim that Coke's pen had as decisive an impact on the evolution of steam power as any of Newcomen's tools. Though he spent most of his life as something of a sycophant to Elizabeth and James, Coke's philosophical and temperamental affinity for ordinary Englishmen, particularly the nation's artisans, compelled him to act, time and again, in their interests even when, as with his advocacy of the 1628 Petition of Right (an inspiration for the U.S. Bill of Rights) it landed him in the King's prisons. He became the greatest advocate for England's craftsmen, secure in the belief that they, not her landed gentry or her merchants, were the nation's source of prosperity. By understanding that it was England's duty, and--perhaps even more important--in England's interest, to promote the creative labors of her creative laborers, he anticipated an economic philosophy far more modern than he probably understood, and if he grew rich in the service of the nation, he also, with his creation of the world's first durable patent law, returned the favor.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics in original.)

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(p. D3) An operation commonly performed to remove brain tumors from the pituitary glands of humans is now available to dogs, thanks to a collaboration between a neurosurgeon and some veterinarians in Los Angeles. And that is turning out to be good for humans.

So far, nine dogs and one cat that otherwise would have died have been treated successfully.

. . .

What Dr. Mamelak has gained from teaching the procedure to veterinarians is access to tissue samples from the treated dogs. That's significant because Cushing's afflicts only one in a million humans, making it a difficult disease to study. By contrast, it afflicts about 100,000 dogs a year in the United States. The canine tissue samples are enabling him and his colleagues to develop drugs to one day treat Cushing's disease in both humans and dogs.

"We have a full loop," he said. "We're using a human procedure in animals, and using their tissue to study the disease."

For the full story, see:

SINDYA N. BHANOO. "Observatory; They Fetch, They Roll Over, They Aid Tumor Research." The New York Times, Science Times Section (Tues., October 26, 2010): D3.

(Note: ellipsIs added.)

(Note: the online version of the article is dated October 22 (sic), 2010.)

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(p. 50) . . . Coke, who had . . . been made Lord Chief Justice of' England, drafted the 1623 "Act concerning Monopolies and Dispensations with penall Lawes and the Forfeyture thereof," or, as it has become known, the Statute on Monopolies. The Act was designed to promote the interests of artisans, and eliminate all traces of monopolies.

With a single, and critical, exception. Section 6 of the Statute, which forbade every other form of monopoly, carved out one area in which an exclusive franchise could still be granted: Patents could still be awarded to the person who introduced the invention to the realm--to the "first and true inventor."

This was a very big deal indeed, though not because it represented the first time inventors received patents. The Venetian Republic was offering some form of patent protection by 1471, and in 1593, the Netherlands' States-General awarded a patent to Mathys Siverts, for a new (and unnamed) navigational instrument. And, of course, Englishmen like John of Utynam had been receiving patents for inventions ever since Henry VI. The difference between Coke's statute and the customs in place before and elsewhere is that it was a law, with all that implied for its durability and its enforceability. Once only inventors could receive patents, the world started to change.

Source:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

(Note: italics in original; ellipses added.)

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Source of book image:
http://ecx.images-amazon.com/images/I/51E2APGW55L._SS500_.jpg

(p. 241) In May of the following year [i.e., in May 1851] Gorrie obtained a patent for the first ice-making machine.

. . .

But he was unable to find adequate backing, and in 1855 he died, a broken and dispirited man.

Source:

Burke, James. Connections. New York, NY: Little, Brown, and Co., 1978.

(Note: ellipsis and bracketed information added.)

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Source of book image: online version of the WSJ review quoted and cited below.

Steven Johnson's The Ghost Map is one of my favorite books. I also enjoyed his The Invention of Air. I have not yet read his Where Good Ideas Come From. Based on the review quoted below, I do not expect to be as enthused about the new book.

I have read elsewhere that Johnson criticizes patents. If all would-be innovators were independently wealthy then innovation without patents might work. But William Rosen in The Most Powerful Idea in the World has recently shown that patents financed a key group of craftsmen who otherwise would not have been able to create the steam engines that powered the industrial revolution.

The issues are difficult and important---I will write more in a month or two after I have had a chance to read Johnson's book.

(p. A21) Mr. Johnson thinks that the adjacent possible explains why cities foster much more innovation than small towns: Cities abound with serendipitous connections. Industries, he says, may tend to cluster for the same reason. A lone company in the middle of nowhere has only the mental resources of its employees to fall back on. When there are hundreds of companies around, with workers more likely to change jobs, ideas can cross-fertilize.

The author outlines other factors that make innovation work: the tolerance of failure, as in Thomas Edison's inexorable process-of-elimination approach to finding a workable light-bulb filament; the way that ideas from one field can be transformed in another; and the power of information platforms to connect disparate data and research. "Where Good Ideas Come From" is filled with fascinating, if sometimes tangential, anecdotes from the history of entrepreneurship and scientific discovery. The result is that the book often seems less a grand theory of innovation than a collection of stories and theories about creativity that Steven Johnson happens to find interesting.

It turns out that Mr. Johnson himself has a big idea, but it's not a particularly incisive one: He proposes that competition and market forces are less important to innovation than openness and inspiration. The book includes a list of history's most important innovations and divides them along two axes: whether the inventor was working alone or in a network; and whether he was working for a market reward or for some other reason. Market-led innovations, it turns out, are in the minority.

For the full review, see:

MEGAN MCARDLE. "Serendipitous Connections; Innovation occurs when ideas from different people bang against each other." The Wall Street Journal (Tues., OCTOBER 5, 2010): A21.

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(p. 2) In general, life is better than it ever has been, and if you think that, in the past, there was some golden age of pleasure and plenty to which you would, if you were able, transport yourself, let me say one single word: "dentistry."

Source:

O'Rourke, P. J. All the Trouble in the World: The Lighter Side of Overpopulation, Famine, Ecological Disaster, Ethnic Hatred, Plague, and Poverty. paperback ed. New York: Atlantic Monthly Press, 1994.

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Source of book image: http://ffbsccn.files.wordpress.com/2010/07/the-most-powerful-idea-in-the-world.jpg

The range of William Rosen's fascinating and useful book is very broad indeed. He is interested in THE question: why did the singular improvement in living standards known as the industrial revolution happen where and when it did?

The question is not just of historical interest---if we can figure out what caused the improvement then and there, we have a better shot at continuing to improve in the here and now.

I especially enjoyed and learned from William Rosen's discussion, examples and quotations on the difficult issue of whether patents are on balance a good or bad institution.

Deirdre McCloskey taught me that the most important part of a sentence is the last word, and the most important part of a paragraph is the last sentence, and the most important part of a chapter is the last paragraph.

Here are the last couple of sentences of Rosen's book:

(p. 324) Incised in the stone over the Herbert C. Hoover Building's north entrance is the legend that, with Lincoln's characteristic brevity, sums up the single most important idea in the world:

THE PATENT SYSTEM ADDED

THE FUEL OF INTEREST

TO THE FIRE OF GENIUS

In the next few weeks I will occasionally quote a few of the more illuminating passages from Rosen's well-written account.

Book discussed:

Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

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(p. A18) . . . government attempts to rejuvenate regional economies have a mixed track record, in the U.K. and elsewhere.

Stuart S. Rosenthal, an economics professor at Syracuse University, remembers driving through Virginia in 1997 and seeing a sign saying, "You are entering southwest Virginia's high tech corner."

"And all I could see was cows and farms," he said. Recent employment data shows that aside from one pocket, little has changed.

For the full story, see:

ALISTAIR MACDONALD. "U-Turn in the U.K.: Big Spending Cuts." The Wall Street Journal (Fri., OCTOBER 15, 2010): A18.

(Note: ellipsis added.)

(Note: the online version of the article is dated October 14, 2010.)

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Jeff Bezos. Source of photo: online version of the NYT article quoted and cited below.

(p. 18) You're a longtime science buff who studied electrical engineering and computer science at Princeton. Why did you want to be a bookseller in the first place?
You have to go back in time to 1994, and there's something very unusual about the book category. There are more items in the book category than there are items in any other product category. One of the things it was obvious you could do with an online store is have a much more complete selection.

Initially, Amazon sold books exclusively, but it has since expanded into a retail omnivore that sells basketballs and vacuum cleaners and hamster food and everything under the sun. What is your goal, exactly?
We want to have earth's biggest selection. Earth's biggest river, earth's biggest selection.

For the full interview, see:

DEBORAH SOLOMON. "QUESTIONS FOR Jeffrey P. Bezos; Book Learning." The New York Times, Magazine Section (Sun., December 6, 2009): 18.

(Note: bold in original, to indicate questions by Deborah Solomon.)

(Note: the online version of the interview is dated December 2, 2009.)


.

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(p. 293) If you could easily predict the future, inventing things would be a lot easier! Predicting the future is difficult even if you're involved with products that are guiding computers, the way we were at Apple.

When I was at Apple in the l970s and 1980s, we would always try to look ahead and see where things were going. It was actually easy to see a year or two ahead, because we were the ones building the products and had all these contacts at other companies. But beyond that, it was tough to see. The only thing we could absolutely rely upon had to do with Moore's Law--the now-famous rule in electronics (named for Intel founder Gordon Moore) that says that every eighteen months you can pack twice the number of transistors on a chip.

That meant computers could keep getting smaller and cheaper. We saw that. But we had a hard time imagining what kinds of applications could take advantage of all this power. We didn't expect high-speed modems. We didn't expect computers to have large amounts of hard-disk storage built in. We didn't see the Internet growing out of the ARPANET and becoming accessible to everyone. Or digital cameras. We didn't see any of that. We really could only see what was right in front of us, a year or two out, max.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 196) After Commodore turned us down, we went over to Al Alcorn's house. He was one of the founders of Atari with Nolan Bushnell, and he was the one who'd hired Steve to do video games there two years before.

Now, I knew Al knew me. He knew I had designed Breakout, the one-player version of Pong. I remember that when we went to his house I was so impressed because he had one of the earliest color projection TVs. Man, in 1976, he would have been among the first people to have one. That was cool.

But he told us later that Atari was too busy with the video game market to do a computer project.

A few days after that, venture capitalists Steve had contacted started to come by. One of them was Don Valentine at Sequoia. He kind of pooh-poohed the way we talked about it.

He said, "What's the market?"

"About a million," I told him.

"How do you know?"

I told him the ham radio market had one million users, and this could be at least that big.

Well, he turned us down, but he did get us in touch with a guy named Mike Markkula. He was only thirty, he told us, but already retired from Intel. He was into gadgets, he told us. Maybe Mike would know what to do with us.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. 184) After we started selling the boards to Paul Terrell--working day and night to get them to him on time--we had profits like I never imagined. Suddenly our little business was making more than I was making at HP. That wasn't very much, admittedly. But still, it was a lot. We were building the boxes for $220 and selling them wholesale to Paul Terrell for $500.

And, of course, we didn't need a ton of money to operate. I had a day job, so I looked at it as, Hey, cool. Extra money for pizza! As for Steve, he was living at home. I was twenty-five and he was only twenty-one at the time, so what expenses could we have, really? Apple didn't have to make that much to sustain itself and be ongoing. We weren't paying ourselves salaries or paying rent, after all. We didn't have any patents to pay for. Or lawyers. It was a small-time business, and we weren't worried that much about anything.

My dad, watching this, pointed out that we weren't actually making money because we weren't paying ourselves anything. But we didn't care, we were having too much fun.

But note, only several pages later:

(p. 194) Like I said before, we needed money. Steve knew it and I knew it.

So by that summer of 1976, we started talking to potential money people about Apple, showing them the Apple II working in color in Steve's garage.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. A1) As unlikely as it would seem against this backdrop, manufacturers who want to expand find that hiring is not always easy. During the recession, domestic manufacturers appear to have accelerated the long-term move (p. A3) toward greater automation, laying off more of their lowest-skilled workers and replacing them with cheaper labor abroad.

Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker.

Makers of innovative products like advanced medical devices and wind turbines are among those growing quickly and looking to hire, and they too need higher skills.

. . .

Manufacturers who profess to being shorthanded say they have retooled the way they make products, calling for higher-skilled employees. "It's not just what is being made," said David Autor, an economist at the Massachusetts Institute of Technology, "but to the degree that you make it at all, you make it differently."

In a survey last year of 779 industrial companies by the National Association of Manufacturers, the Manufacturing Institute and Deloitte, the accounting and consulting firm, 32 percent of companies reported "moderate to serious" skills shortages. Sixty-three percent of life science companies, and 45 percent of energy firms cited such shortages.

For the full story, see:

MOTOKO RICH. "Jobs Go Begging as Gap is Exposed in Worker Skills." The New York Times (Fri., July 1, 2010): A1 & A3.

(Note: ellipsis added.)

(Note: the online version of the article is dated July 1, 2010 and has the title "Factory Jobs Return, but Employers Find Skills Shortage.")

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Wozniak tells the story of how he offered to develop the PC within HP, but HP turned him down. The story seems highly compatible with the account of disruptive innovations given by Clayton Christensen.

Another aspect of the story is worth highlighting. Sometimes it is alleged, as e.g., with the Tucker auto story, that large incumbent corporations suppress innovations. But in this case, although HP did not want to develop the PC themselves, they did not try to keep Wozniak and Jobs from developing it on their own.

(p. 175) Before the partnership agreement was even inked, I realized something and told Steve. Because I worked at HP, I told him, everything I'd designed during the term of my employment contract belonged to HP.

Whether that upset Steve or not, I couldn't tell. But it didn't matter to me if he was upset about it. I believed it was my duty to tell HP about what I had designed while working for them. That was the right thing and the ethical thing. Plus, I really loved that company and I really did believe this was a product they should do. I knew that a guy named Miles Judd, three levels above me in the company structure, had managed an engineering group at an HP division in Colorado Springs that had developed a desktop computer.

It wasn't like ours at all--it was aimed at scientists and engineers and it was really expensive--but it was programmable in BASIC.

I told my boss, Pete Dickinson, that I had designed an inexpensive desktop computer that could sell for under $800 and could run BASIC. He agreed to set up a meeting so I could talk Miles.

(p. 176) I remember going into the big conference room to meet Pete, his boss, Ed Heinsen, and Ed's boss, Miles. I made my presentation and showed them my design.

"Okay," Miles said after thinking about it for a couple of minutes. "There's a problem you'll have when you say you have output to a TV. What happens if it doesn't look right on every TV? I mean, is it an RCA TV a Sears TV or an HP product that's at fault?"

HP keeps a close eye on quality control, he told me. If HP couldn't control what TV the customer was using, how could it make sure the customer had a good experience? More to the point, the division didn't have the people or money to do a project like mine. So he turned it down.

I was disappointed, but I left it at that. Now I was free to enter into the Apple partnership with Steve and Ron. I kept my job, but after that I was officially moonlighting. Everybody I worked with knew about the computer board we were going to sell.

Over the next few months, Miles would keep coming up to me. He knew about BASIC-programmable computers because of his division out in Colorado, and even though they didn't want my design, he said he was intrigued by the idea of having a machine so cheap that anyone could own one and program it. He kept telling me he'd been losing sleep ever since he heard the idea.

But looking back, I see he was right. How could HP do it? It couldn't. This was nowhere near a complete and finished scientific engineer's product. Everybody saw that smaller, cheaper computers were going to be a coming thing, but HP couldn't justify it as a product. Not yet. Even if they had agreed, I see now that HP would've done it wrong anyway. I mean, when they finally did it in 1979, they did it wrong. That machine went nowhere.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

The main Christensen book is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

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(p. A22) Smarter computing technology, experts say, ought to make the most skilled workers -- in science, the arts and business -- even more productive and prosperous by freeing them from routine tasks. Their prosperity translates to spending that creates jobs in stores, schools, gyms, construction and elsewhere.

Artificial intelligence, experts say, should also generate new jobs even as it displaces others. The smart machines of the future will need programming, servicing and upgrading -- work done, perhaps, by a new class of digital technicians. The intelligent machines, experts add, will be specialists in a field, like the medical assistant project at Microsoft. They must be tailored with specialized software, perhaps igniting a new industry for artificial intelligence applications.

Of course, no one really knows just what artificial intelligence will mean for jobs and the economy, but the technology is marching ahead. "Its potential is far greater than simply substituting technology for human labor," said Erik Brynjolfsson, an economist at the M.I.T Sloan School of Management.

For the full story, see:

STEVE LOHR. "Jobs Created and Displaced." The New York Times (Fri., June 25, 2010): A22.

(Note: the date of the online version of the article was June 24, 2010.)

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Source of graph: online version of the WSJ article quoted and cited below.

The MediaTek example briefly mentioned below, seems a promising fit with Christensen's theory of disruptive innovators.

(p. B7) TAIPEI--A little-known Taiwanese chip-design company is making waves in the cellphone business, grabbing market share from larger U.S. rivals and helping drive down phone prices for consumers.

. . .

While MediaTek isn't known for cutting-edge innovation, it has been able to apply the nimble, cost-cutting approach of Taiwan's contract manufacturers to the business of designing semiconductors, in which engineers use advanced software to lay out the microscopic circuits that make gadgets like cellphones function.

"MediaTek has brought down the cost significantly," says Jessica Chang, an analyst at Credit Suisse Group AG, who says mobile-phone makers are increasingly drawn to MediaTek's products because of their functionality and low cost.

For the full story, see

TING-I TSAI. "Taiwan Chip Firm Shakes Up Cellphone Business." The Wall Street Journal (Mon., APRIL 19, 2010): B7.

(Note: ellipsis added.)

On Christensen's theories, see:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

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"Robert Deluce set up Porter Airlines at Billy Bishop Toronto City Airport in October 2006." Source of caption and photo: online version of the WSJ article quoted and cited below.

Clayton Christensen explains why upstart entrepreneurs who move up-market to serve under-served customers, will almost always lose to motivated incumbents.

Apparently Robert Deluce has not read Christensen.

(p. B8) TORONTO--As a teenager, Robert Deluce learned to fly at this city's small airport just outside the downtown on a Lake Ontario island.

Lately, the 59-year-old airline entrepreneur has been giving his own brand of flying lessons there in a dogfight with larger competitors over a lucrative flying niche: the high-margin business traveler.

n 2005, Mr. Deluce bought the airport's ramshackle terminal and later kicked out an Air Canada regional partner named Jazz Air. Then, he set up Porter Airlines, which has become a hit with business fliers for its top-notch service and convenient location, a one-minute ferry ride from the downtown waterfront. Earlier this month, closely held Porter opened the first phase of a gleaming, 150,000-square-foot terminal that eventually will house two passenger lounges and 10 aircraft gates.

. . .

The new carrier's mascot is a raccoon. "He's mischievous and determined and pretty much always achieves his desired goal," said Mr. Deluce, chuckling over breakfast at a Toronto hotel. "Air Canada and Jazz probably think he's over-mischievous."

. . .

In recent years, Toronto's waterfront has been revitalized, with high-rise condos and parks replacing grain elevators and industrial warehouses. Air Canada's partner Jazz and a predecessor, which had been flying to and from the downtown airport for years, reduced service even as the redevelopment was progressing. The airport's traffic waned to 25,000 fliers in 2005 from 400,000 a year in the late 1980s.

Smelling opportunity, Mr. Deluce pounced, acquiring the old terminal and evicting Jazz. He raised C$126 million in start-up capital and placed a US$500 million order for 20 Canadian-built turboprop aircraft. With 70 seats, they are perfectly sized for the airport's short, 4,000-foot runway. Porter took wing in October 2006.

His aggressive tactics as CEO have earned him both criticism and grudging respect. Brian Iler, chairman of CommunityAir, a Toronto citizens advocacy group that wants the airport shut because of noise issues and other concerns, gives Mr. Deluce his due. "Everything he has done, he's managed to turn things his way," Mr. Iler says. "It's an amazing run of luck."

. . .

Porter now flies to four U.S. destinations and seven other cities in Eastern Canada, with an eighth coming this month. It had its first month of profitability in June 2007 and paid out to its employee profit-sharing plan that year and in 2008, Mr. Deluce says. He won't say whether Porter was profitable in 2009.

The new airline has attracted a following for its downtown location, competitive fares, leather seats with generous legroom and complimentary beer, wine and snacks. Female flight attendants wear retro pillbox hats and peplum jackets.

Christopher Sears, vice president of research for Montreal-based brokerage firm MacDougall, MacDougall & MacTier Inc., said he has flown Porter 30 to 40 times between Montreal and Toronto. Once he arrives in Toronto, he grabs a free shuttle to a hotel two blocks from his firm's Toronto office.

"Porter has built up a lot of goodwill with me," he says, vowing to stick with the company even if rivals break into the downtown airport.

For the full story, see

SUSAN CAREY. "Tiny Airline Flies Circles Around Its Rivals; Top-Notch Service, Proximity to Downtown Toronto Make Porter a Hit With High-Margin Business Travelers." The Wall Street Journal (Weds., MARCH 17, 2010): B8.

(Note: ellipses added.)

(Note: the online version of the article has the slightly different title "Tiny Airline Flies Circles Around Rivals; Top-Notch Service, Proximity to Downtown Toronto Makes Porter a Hit With High-Margin Business Travelers.")

On Christensen's theories, see:

Christensen, Clayton M., and Michael E. Raynor. The Innovator's Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Source of graph: online version of the WSJ article quoted and cited above.

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(p. 160) My style with projects has always been to spend a lot of time getting ready to build it. Now that I saw my own computer could be a reality, I started collecting information on all the components and chips that might apply to a computer design.

I would drive to work in the morning--sometimes as early as 6:30 a.m.--and there, alone in the early morning, I would quickly read over engineering magazines and chip manuals. I'd study the specifications and timing diagrams of the chips I was interested in, like the $40 Motorola 6800 Myron had told me about. All the while, I'd be preparing the design in my head.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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(p. B4) Government financing is not the best method to prod companies to be creative, said Edmund S. Phelps Jr., a professor of economics at Columbia University who won the Nobel Prize in 2006. But he said it could work.

He spoke at the forum about dwindling innovation in the United States economy. China, India and Brazil are catching up with innovative output, he said, but not Russia.

A high-technology start-up, he said, inherently runs more risk if it can present its product to only one potential buyer -- the government -- rather than to a range of customers, some of whom may want the product, he said.

"If Russian politicians see that their own prosperity, and that of their people, lies in a more arms-length relationship between the government and business, that would open a lot of possibilities," he said.

For the full story, see:

ANDREW E. KRAMER. "Russia Plans to Promote Technology Innovations." The Wall Street Journal (Mon., February 4, 2010): B4.

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(p. 147) The whole thing used forty-five chips, and Steve paid me half the seven hundred bucks he said they paid him for it. (They were paying us based on how few chips I could do it. in.) Later I found out he got paid a bit (p. 148) more for it--like a few thousand dollars--than he said at the time, but we were kids, you know. He got paid one amount, and told me he got paid another. He wasn't honest with me, and I was hurt. But I didn't make a big deal about it or anything.

Ethics always mattered to me, and I still don't really understand why he would've gotten paid one thing and told me he'd gotten paid another. But, you know, people are different. And in no way do I regret the experience at Atari with Steve Jobs. He was my best friend and I still feel extremely linked with him. I wish him well. And it was a great project that was so fun. Anyway, in the long run of money--Steve and I ended up getting very comfortable money-wise from our work founding Apple just a few years later--it certainly didn't add up to much.

Steve and I were the best of friends for a very, very long time. We had the same goals for a while. They jelled perfectly at forming Apple. But we were always different people, different people right from the start.

You know, it's strange, hut right around the time I started working on what later became the Apple I board, this idea popped into my mind about two guys who die on the same day. One guy is really successful, and he's spending all his time running companies, managing them, making sure they are profitable, and making sales goals all the time. And the other guy, all he does is lounge around, doesn't have much money, really likes to tell jokes and follow gadgets and technology and other things he finds interesting in the world, and he just spends his life laughing.

In my head, the guy who'd rather laugh than control things is going to be the one who has the happier life. That's just my opinion. I figure happiness is the most important thing in life, just how much you laugh. The guy whose head kind of floats, he's so happy. That's who I am, who I want to be and have always wanted to be.

(p. 149) And that's why I never let stuff like what happened with Breakout bother me. Though you can disagree--you can even split from a relationship--you don't have to hold it against the other. You're just different. That's the best way to live life and be happy

And I figured this all out even before Steve and I started Apple.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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During the dot.com era one of the rationalizations for dot.com firms to be losing money was that they had to be the 'first mover' that would grab the demand-side economies of scale arising from network effects.

For a variety of reasons, including the clarity of hindsight, the current consensus if that profitability is always worth worrying about, and being first is far from a guarantee of success.

On the other hand, if the authors quoted below are correct that everyone should be a "fast follower," then who will ever make the first move?

Maybe the problem lies in the metrics of success. Maybe the main measure of success lies in moving an important project forward, rather than being the one who ends up best positioned to monetize the advance?

So, for example, maybe those who built Netscape should be proud of what they did, even though Internet Explorer ended up dominating the market.

(I use "maybe" a lot above, not out of some rhetorical pose of modesty, but because these are issues that I am really grappling with.)

(p. R4) One of the fiercest rivalries in the information-technology world has long been over platforms--products that link users in networks, like iTunes for online music or Windows for computer operating systems. It's often a winner-take-all business; platform leaders can earn huge profits as they tend to dominate markets with few serious competitors.

A myth, however, has attached itself to the history of platforms: that each platform's originator has the best chance of dominating its market for years to come.

The truth is, that is rarely the case.

Instead of there being an advantage to being first, we found the opposite to be true. Most owners of leading IT platforms today did not create the markets they now rule. In almost all of the industries we studied, the current platform leaders introduced their products after a different company had already established the market with a platform of its own.

Out of the 15 platform industries that we studied, 14 of the current leaders began as followers in a market created by a competitor's platform. In only one market, for integrated business software, was the original platform creator still the leader--SAP AG. Five were fast followers, which we define as the second, third or fourth company to enter a market. The other nine were later followers.

For the full commentary, see:

GEZINUS J. HIDDING, JEFFREY R. WILLIAMS And JOHN J. SVIOKLA. "Technology; The IT Platform Principle: The First Shall Not Be First ." The Wall Street Journal (Mon., January 25, 2010): R4.

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Source of graph: scanned from the print version of the WSJ article quoted and cited below.

(p. A8) The crop-biotechnology industry, growing frustrated as it watches the approval time for new seeds almost double under the Obama administration, is pressuring Washington to clear inventions more quickly.

The logjam at the U.S. Department of Agriculture, which must clear genetically modified seeds, is slowing the launch of products that could give farmers more alternatives to seeds from crop biotech giant Monsanto Co.

Also, some biotech-industry executives worry the delays signal that the Obama administration, which has painted itself as pro-biotech, is gearing up for a far tougher analysis of the potential environmental impact of these crops, which could make it harder for inventions to reach the marketplace.

On average, a genetically modified seed takes 1,188 days to pass federal scrutiny, almost twice as long as in 2008, the last year of the Bush administration, according to the Biotechnology Industry Organization, a Washington, D.C., trade group.

"There is concern we might see other countries move ahead of the U.S.," said Sharon Bomer Lauritsen, executive vice president of food and agriculture at BIO, who added that the delays "might stifle investment in what has been a very dynamic part of the U.S. economy." BIO's members include hundreds of companies such as DuPont Co., Syngenta AG and Monsanto, as well as academic institutions.

For the full story, see:

SCOTT KILMAN. "Biotech Firms Seek Speedier Reviews of Seeds; Approval Time for Genetically Modified Crops Doubles under Obama as Some Fear Tougher Stance; Feds Blame Logjam." The Wall Street Journal (Weds., April 28, 2010): A8.

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(p. 127) I think most people with day jobs like to do something totally different when they get home. Some people like to come home and watch TV. But my thing was electronics projects. It was my passion and it was my pastime.

Working on projects was something I did on my own time to reward myself, even though I wasn't getting rewarded on the outside, with money or other visible signs of success.

Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

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"The Molycorp Minerals rare earth mine in Mountain Pass, Calif." Source of caption and photo: online version of the NYT article quoted and cited below.

If the government does not interfere with the price system, then the prospect of higher prices will provide private companies and entrepreneurs the incentive to take risks to provide us with what we need. In the article quoted below, the example is rare earth minerals that are used in high technology products.

(p. B1) On a high plateau where burros and jackrabbits wander an hour's drive southwest of Las Vegas, a 400-foot-deep chasm hewn from volcanic rock sits at the center of an international policy debate.

The chasm, in Mountain Pass, Calif., used to be the world's main mine for rare earth elements -- minerals crucial to military hardware and the latest wind turbines and hybrid gasoline-electric cars. Molycorp Minerals, which owns the mine, announced on Monday that it had registered with the Securities and Exchange Commission for an initial public offering to help raise the nearly $500 million needed to reopen and expand the mine.

Molycorp is making a big bet that its mine -- once the world leader in production of rare earth elements, but now a rusting relic -- can be made competitive again. Global demand is surging for the minerals. And customers, particularly the American military, are seeking alternatives to China, which now mines 97 percent of the world's rare earth elements.

As part of reopening the mine, Molycorp plans to increase its capacity to mine and refine neodymium for rare earth magnets, which are extremely lightweight and are used in many high-tech applications. It will also resume bulk production of lower-value rare earth elements like cerium, used in industrial processes like polishing glass and water filtration.

For the full story, see:

KEITH BRADSHER. "A Mine Owner's Risky Bet on Rare Minerals." The New York Times (Thur., April 22, 2010): B1 & B4.

(Note: italics in original; ellipses added.)

(Note: the online version of the review is dated April 21, 2010 and has the title "Challenging China in Rare Earth Mining.")

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"Buying on Day 1: Sayuri Watanabe came from Japan to be among the first to get an iPad last month at the Apple store in downtown San Francisco." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) WHY would anyone rush to buy a product knowing full well that it would be cheaper -- and probably better -- in a matter of months?

Hundreds of thousands of iPad buyers did just that last month. Steven P. Jobs, Apple's chief executive, crowed that in the first 28 days on the market, Apple sold one million iPads. He found it remarkable that buyers snatched up this new slate computer at twice the fervid pace of the first iPhone.

But what is truly remarkable about this surge in consumption is that early adopters -- those who simply have to own a new gadget right away -- cheerfully exhibited what might seem to be irrational behavior. These ardent consumers will stand in long lines, if that's what it takes, to get an overpriced gadget ahead of everyone else they know.

A tough lesson about buying early could have been learned by the iPhone's first buyers back in 2007. Those early adopters paid $600 for a phone. Two months later, Apple dropped the price to $400. Then, in June 2009, it introduced a better version, with twice the storage, for $200, one-third the original's price.

. . .

Dan Ariely, a professor of behavioral economics at Duke University and the author of a new book, "The Upside of Irrationality," has studied why earlier adopters do what they do. "It's not about the cost-benefit analysis," he says. And rarely is it a successful calculation of higher productivity, though many a person has tried to justify purchases of expensive toys that way.

It can be more about cementing one's identity. Although people who want to be first with a product aren't making a direct calculation -- "I'd pay $100 for my ego" -- they may derive value from showing off a new product or being perceived as being at technology's forefront.

"I realized years ago that I derive great pleasure from buying a new gadget," said Professor Ariely. "I bought a Segway."

And public awareness may matter. Professor Ariely says the behavior is akin to how we can be more willing to do something good if the public knows about it.

. . .

But even if you would never be the first in your neighborhood to buy a gadget, don't scorn the early adopters. They are working for you. "They, in a sense, provide valuable services to other consumers by their willingness to serve as a guinea pig," said Jay Pil Choi, a professor of economics at Michigan State University, who wrote a much-quoted paper on herd behavior and the "penguin effect."

. . .

HE described early adopters as pioneers. "If all consumers are striving for value and take the approach of 'wait and see,'" he said, "the new products will never be able to take off or take much longer to succeed in the marketplace."

He added, "Their early purchase allows the firms to go down the learning curve and enables a lower price for other consumers."

For the full commentary, see:

DAMON DARLIN. "Everybody's Business; Applause, Please, for Early Adopters." The New York Times, SundayBusiness Section (Sun., MAY 9, 2010): 6.

(Note: ellipses added.)

(Note: the online version of the article is dated May 7, 2010.)

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"Some of the more than 500,000 plants at Backyard Farms at its Maine greenhouse." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) AN icy mixture of rain and sleet fell on the glass roof of Greenhouse Two at Backyard Farms here, but as its big blue door slid open and the warm, green, celery smell of tomato plants wafted out, it was summer.

When it was built three years ago, the company's first 24-acre greenhouse in Madison was already the largest building in Maine. This second connected greenhouse, completed last year, brought the total area under glass to some 42 acres, or roughly the size of 32 football fields. Even in the depths of winter, a million tomatoes ripen indoors to harvest each week, snipped from their vines by workers in T-shirts and shorts.

. . .

Once, if you wanted tomatoes out of season, you mainly had to settle for hard pink ones picked green in the fields of Florida or Mexico and shipped by truck. Commercial greenhouses could do better, but they were a niche market.

Backed by consumer demand for fresh tomatoes year round, the indoor acreage devoted to growing tomatoes has become nearly six times as large since the early 1990s, said Roberta Cook, a marketing economist who helped write what many in the industry consider to be the definitive report on greenhouse tomatoes in 2005.

Those tough pink ones are still good and cheap enough for most fast food restaurants and the food service industry, which buy about half the fresh tomatoes sold in the United States. But with shoppers willing to pay a pre-(p. D5)mium -- even $4 to $5 a pound -- for red vine-ripened ones with more flavor, greenhouse tomatoes now represent more than half of every dollar spent on fresh tomatoes in American supermarkets, according to figures from the Perishables Group, a market research firm in Chicago.

. . .

Advances in genetics have allowed breeders to cross-pollinate precisely for control over specific attributes like size, color, disease resistance, firmness for shipping and levels of acids and sugars, the balance of which accounts for the bulk of a tomato's flavor. Too little sugar turns fruit tart. Too little acid turns it bland. Too little of both leaves tomatoes with little flavor.

As tomatoes ripen on the vine they develop more of those sugars and acids and other flavor elements. But most of the major farms growing tomatoes that are sold fresh year round are in areas where the climate is more hospitable to varieties best picked green.

By creating their own climate -- whether in Arizona, Maine or Canada -- greenhouses allow growers to pick and ship tomatoes only when they're ripe.

For the full story, see:

CHRIS LADD. "Endless Summer, Even in Maine." The New York Times (Weds., March 31, 2010): D1 & D5.

(Note: ellipses added.)

(Note: the online version of the article is dated March 30, 2010, and has the title "Giant Greenhouses Mean Flavorful Tomatoes All Year.")

"Even as snow falls outside, workers harvest tomatoes year-round at Backyard Farms in Madison, Maine. About 200 of them tend a half-million plants under 42 acres of glass, roughly the same amount of floorspace as in the Chrysler Building." Source of caption and photo: online version of the NYT article quoted and cited above.

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(p. 108) Noted Yale law professor Yochai Benkler has a theory. In a widely circulated and famous essay on the Internet called "Coase's Penguin," he offered his thinking on why people participate in efforts such as Linux and other "free" projects. There was already a culture, before Wikipedia, of folks donating their time, effort, and skills to the collective good for no monetary gain or immediate compensation. Benkler observed this part of the hacker ethos and was curious to know what the common thread was.

He dubbed it "commons-based peer production." It's a fancy moniker for the phenomenon of people working together toward the same end--creating computer code or content that is free to be copied, distributed, used, and modified by others.

Benkler believes the Internet and the "free culture" movement have allowed individuals to connect and combine their efforts in ways unprecedented in history. The legal academic is not shy to combine scholarship outside his area of training by drawing on economics, sociology, and technology to form his theory.

According to Benkler, if monetary rewards and the creation of corporate firms have been the accepted driving force for human innovation and progress, there has to be something else driving volunteers in Linux, Wikipedia, and other "free" projects that have become so pervasive and monumental in the digital age.

He asserts the motivation comes from two main things other than money: the "socio-psychological" reward of interacting with others, and the "hedonic" personal gratification of the task.

Wikipedia's magic occurs when these two things come together. One person's personal affection and indulgence---mapmaking, grammar checking, baseball statistics, history of stamps---easily finds a home in Wikipedia's amalgam of topics, where it also feeds into and inspires activities by others.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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"GAME CHANGER? After months of anticipation, Apple unveiled its iPad tablet computer last week." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) The more, the better. That's the fashionable recipe for nurturing new ideas these days. It emphasizes a kind of Internet-era egalitarianism that celebrates the "wisdom of the crowd" and "open innovation." Assemble all the contributions in the digital suggestion box, we're told in books and academic research, and the result will be collective intelligence.

Yet Apple, a creativity factory meticulously built by Steven P. Jobs since he returned to the company in 1997, suggests another innovation formula -- one more elitist and individual.

This approach is reflected in the company's latest potentially game-changing gadget, the iPad tablet, unveiled last week. It may succeed or stumble but it clearly carries the taste and perspective of Mr. Jobs and seems stamped by the company's earlier marketing motto: Think Different.

. . .

(p. 6) Great products, according to Mr. Jobs, are triumphs of "taste." And taste, he explains, is a byproduct of study, observation and being steeped in the culture of the past and present, of "trying to expose yourself to the best things humans have done and then bring those things into what you are doing."

His is not a product-design philosophy steered by committee or determined by market research. The Jobs formula, say colleagues, relies heavily on tenacity, patience, belief and instinct. He gets deeply involved in hardware and software design choices, which await his personal nod or veto. Mr. Jobs, of course, is one member of a large team at Apple, even if he is the leader. Indeed, he has often described his role as a team leader. In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better. Their contributions, he adds, are the raw material of "aha" products, which make users rethink their notions of, say, a music player or cellphone.

"Real innovation in technology involves a leap ahead, anticipating needs that no one really knew they had and then delivering capabilities that redefine product categories," said David B. Yoffie, a professor at the Harvard Business School. "That's what Steve Jobs has done."

For the full commentary, see:

STEVE LOHR. "The Apple in His Eye." The New York Times, Week in Review Section (Sun., MARCH 4, 2010): 1 & 6.

(Note: ellipsis added.)

(Note: the online version of the article is dated January 29, 2010 and had the title "Steve Jobs and the Economics of Elitism.")

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(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let's import them. More precisely, let's import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their "Startup Visa Act" would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.

. . .

Here's a way to improve on the Kerry-Lugar plan. Create a true "job creator's visa," one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.

. . .

Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs' visa that couldn't let in the future Sergey Brin?

For the full commentary, see:

ROBERT E. LITAN. "Visas for the Next Sergey Brin; To create more jobs, let's import more employers." The Wall Street Journal (Mon., MARCH 8, 2010): A19.

(Note: ellipses added.)

(Note: the online version of the article is dated MARCH 7, 2010.)

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(p. 67) Adams did something unexpected for the academic community, but common in open source culture--release early and release often. Within weeks of its launch, one of the biggest annoyances of Wikipedia was resolved directly by the software's author. It was not because of monetary compensation or any formal request, but simply because the author was interested in solving it on his own time, and sharing it with others. It was the hacker ethos, and it had crossed from the domain of tech programmers into the world of encyclopedias.

Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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". . . apparently a photo that was snapped from the iPhone as Ballmer brandished it above his head." Source of caption and photo: http://www.gearfuse.com/ballmer-lashes-out-at-microsoft-employed-iphone-user-threatens-to-smash-iphone/

(p. A1) REDMOND, Wash.--Microsoft Corp. employees are passionate users of the latest tech toys. But there is one gadget love that many at the company dare not name: the iPhone.

The iPhone is made, of course, by Microsoft's longtime rival, Apple Inc. The device's success is a nagging reminder for Microsoft executives of how the company's own efforts to compete in the mobile business have fallen short in recent years. What is especially painful is that many of Microsoft's own employees are nuts for the device.

The perils of being an iPhone user at Microsoft were on display last September. At an all- company meeting in a Seattle sports stadium, one hapless employee used his iPhone to snap photos of Microsoft Chief Executive Steve Ballmer. Mr. Ballmer snatched the iPhone out of the employee's hands, placed it on the ground and pretended to stomp on it in front of thousands of Microsoft workers, according to people present.

. . .

Nearly 10,000 iPhone users were accessing the Microsoft employee email system last year, say two people who heard the estimates from senior Microsoft executives. That figure equals about 10% of the company's glo-(p. A10)bal work force.

Employees at Apple, in contrast, appear to be more devoted to the company's own mobile phone. Several people who work at the company or deal regularly with employees there say they can't recall seeing Apple workers with mobile phones other than the iPhone in recent memory.

For the full story, see:

NICK WINGFIELD. "Forbidden Fruit: Microsoft Workers Hide Their iPhones; Steve Ballmer Sours on Apple Product; Work for Ford, Drive a Ford." The Wall Street Journal (Sat., MARCH 13, 2010): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the article had the date MARCH 12, 2010.)

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"Co-founder Sergey Brin has been active in Google's dealings with China." Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A8) As a boy growing up in the Soviet Union, Sergey Brin witnessed the consequences of censorship. Now the Google Inc. co-founder is drawing on that experience in shaping the company's showdown with the Chinese government.

Mr. Brin has long been Google's moral compass on China-related issues, say people familiar with the matter. He expressed the greatest concern among decision makers, they say, about the compromises Google made when it launched its Chinese-language search engine, Google.cn, in 2006. He is now the guiding force behind Google's decision to stop filtering search results in China, say people familiar with the decision.

. . .

The move is the clearest manifestation yet of a tension that has always existed at Google.

The Internet company, on one hand, is analytical: It built its core search business on algorithms that determine the relevance of Web sites and has tried to apply quantitative analysis to traditionally subjective parts of a business, such as hiring decisions. On the other hand, Mr. Brin and co-founder Larry Page have passionately touted Google's ability to spread democracy through access to information, and adopted the unofficial and now-famous motto, "Don't Be Evil."

"At its best, Google is data-driven with an ethical trump card," said Larry Brilliant, who headed up the company's philanthropic efforts until 2009. Always it was the founders, Messrs. Brin and Page, who could play that card, he added.

For the full story, see:

BEN WORTHEN. "Soviet-Born Brin Has Shaped Google's Stand." The Wall Street Journal (Sat., MARCH 13, 2010): A8.

(Note: ellipsis added.)

(Note: the online version of the article had the date MARCH 12, 2010 and has the slightly longer title "Soviet-Born Brin Has Shaped Google's Stand on China.")

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"Nathan Myhrvold, chief of Intellectual Ventures, says patent holders are being treated unfairly." Source of caption and photo: online version of the NYT article quoted and cited below.

When Nathan Myhrvold was at Microsoft, he helped Bill Gates write The Road Ahead, a well-written book full of realistically optimistic speculation, forecast and analysis.

Besides his main initiative, discussed below, he has recently been in the news due to his bold and controversial suggestion for how to cheaply solve global warming.

(p. B1) BELLEVUE, Wash. -- Nathan Myhrvold wants to shake up the marketplace for ideas. His mission and the activities of the company he heads, Intellectual Ventures, a secretive $5 billion investment firm that has scooped up 30,000 patents, inspire admiration and angst.

Admirers of Mr. Myhrvold, the scientist who led Microsoft's technology development in the 1990s, see an innovator seeking to elevate the economic role and financial rewards for inventors whose patented ideas are often used without compensation by big technology companies. His detractors see a cynical operator deploying his bulging patent trove as a powerful bargaining chip, along with the implied threat of costly litigation, to prod high-tech companies to pay him lucrative fees. They call his company "Intellectual Vultures."

White hat or black hat, Intellectual Ventures is growing rapidly and becoming a major force in the marketplace for intellectual capital. Its rise comes as Congress is considering legislation, championed by large technology companies, that would make it more difficult for patent holders to win large damage awards in court -- changes that Mr. Myhrvold has opposed in Congressional testimony and that his company has lobbied against.

. . .

(p. B10) The issues surrounding Intellectual Ventures, viewed broadly, are the ground rules and incentives for innovation. "How this plays out will be crucial to the American economy," said Josh Lerner, an economist and patent expert at the Harvard Business School.

Mr. Myhrvold certainly thinks so. He says he is trying to build a robust, efficient market for "invention capital," much as private equity and venture capital developed in recent decades. "They started from nothing, were deeply misunderstood and were trashed by people threatened by new business models," he said in his offices here.

Mr. Myhrvold presents his case at length in a 7,000-word article published on Thursday in the Harvard Business Review. "If we and firms like us succeed," he writes, "the invention capital system will turbocharge technological progress, create many more new businesses, and change the world for the better."

In the article and in conversation, Mr. Myhrvold describes the patent world as a vastly underdeveloped market, starved for private capital and too dependent on federal financing for universities and government agencies, which is mainly aimed at scientific discovery anyway. Eventually, he foresees patents being valued as a separate asset class, like real estate or securities.

His antagonists, he says, are the "cozy oligarchy" of big technology companies like I.B.M., Hewlett-Packard and others that typically reach cross-licensing agreements with each other, and then refuse to deal with or acknowledge the work of inventors or smaller companies.

. . .

Mr. Myhrvold personifies the term polymath. He is a prolific patent producer himself, with more than 100 held or applied for. He earned his Ph.D. in physics from Princeton and did postdoctorate research on quantum field theory under Stephen Hawking, before founding a start-up that Microsoft acquired.

He is an accomplished French chef, who has also won a national barbecue contest in Tennessee. He is an avid wildlife photographer, and he has dabbled in paleontology, working on research projects digging for dinosaur remains in the Rockies.

For the full story, see:

STEVE LOHR. "Turning Patents Into 'Invention Capital'." The New York Times (Thur., February 18, 2010): B1 & B10.

(Note: ellipses added.)

(Note: the online version of the article is dated February 17, 2010.)

The Bill Gates book is:

Gates, Bill. The Road Ahead. New York: Viking Penguin, 1995.

Myhrvold's Harvard Business Review essay is:

Myhrvold, Nathan. "The Big Idea: Funding Eureka!" Harvard Business Review 88, no. 2 (March 2010): 40-50.

"Nathan Myhrvold with a machine that freeze-dries food. Intellectual Ventures so far has paid $315 million to individual inventors." Source of caption and photo: online version of the NYT article quoted and cited above.

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Source of book image: http://kellylowenstein.files.wordpress.com/2009/04/wikipedia-revolution1.jpg

Wikipedia is a very unexpected and disruptive institution. Amateurs have produced an encyclopedia that is bigger, deeper, more up-to-date, and arguably of at least equal accuracy, with the best professional encyclopedias, such as Britannica.

I learned a lot from Lih's book. For instance I did not know that the founders of Wikipedia were admirers of Ayn Rand. And I did not know that the Oxford English Dictionary was constructed mainly by volunteer amateurs.

I also did not know anything about the information technology precursors and the back-history of the institutions that helped Wikipedia to work.

I learned much about the background, values, and choices of Wikipedia entrepreneur "Jimbo" Wales. (Jimbo Wales seems not to be perfect, but on balance to be one of the 'good guys' in the world---one of those entrepreneurs who can be admired for something beyond their particular entrepreneurial innovation.)

Lih's book also does a good job of sketching the problems and tensions within Wikipedia.

I believe that Wikipedia is a key step in the development of faster and better institutions of knowledge generation and communication. I also believe that substantial further improvements can and will be made.

Most importantly, I think that you can only go so far with volunteers--ways must be found to reward and compensate.

In the meantime, much can be learned from Lih. In the next few weeks, I will be quoting a few passages that I found especially illuminating.

Book discussed:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.

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"An unoccupied office building in San Jose, Calif., in December. Many tech firms are hiring engineers abroad to do their work." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) SAN FRANCISCO -- Silicon Valley's economy is sputtering and risks permanently stalling, according to an annual report by a group of researchers in the region.

Part of the toll on Silicon Valley has resulted from the recession. The region, the center of the global technology industry, lost 90,000 jobs from the second quarter of 2008 to the second quarter of 2009. Unemployment is higher than national levels and the worst in the region since 2005, when technology companies were still recovering from the dot-com implosion.

The drop in the number of midlevel jobs -- the engineers who drive much of the Valley's growth -- has been sharpest. And when companies do hire, they are cautiously hiring independent contractors instead of regular employees, and are hiring abroad, according to the "2010 Index of Silicon Valley" report, which was produced by the Joint Venture: Silicon Valley Network and the Silicon Valley Community Foundation, two local nonprofit groups.

Other economic indicators are also gloomy, the report found.

"We show no evidence that the recovery has arrived," said Russell Hancock, chief executive of Joint Venture.

For the full story, see:

CLAIRE CAIN MILLER. "Report Warns Silicon Valley Could Lose Its Edge." The New York Times (Thurs., February 11, 2010): B3.

Note: The online version of the article is dated February 10, 2010, and has the title "Report Warns Silicon Valley Could Lose Its Edge.")

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Rita Gunther McGrath is a member of the faculty of the Columbia Business School. Source of photo: online version of the WSJ article quoted and cited below.

(p. R2) BUSINESS INSIGHT: You and Prof. Ian C. MacMillan of the Wharton School of the University of Pennsylvania wrote a book called "Discovery-Driven Growth." What is discovery-driven growth?

DR. MCGRATH: Discovery-driven growth is a way of planning to grow that doesn't require a lot of analytical information at the outset. It recognizes that many of the data that you need to make decisions don't exist at the time that you have to make the decisions. It's a plan to learn.

I think we all live with a conceptual overhang from an industrial era when things were more predictable. You had big production runs. At least if you were an American company, you had a lot of markets with very little competition, and what competition there was was more or less predictable. In many businesses you could use the past as an adequate guide to what the future held for you.

In more and more industries, those conditions no longer apply. You're seeing temporary advantages, very rapid swings in who's on top competitively, new technologies that make older ones irrelevant at an ever-faster clip--the usual litany of things people moan about today. But I think one of the things that has not yet quite been fully recognized is that these have an impact on our management processes--or should.

For the full interview, see:

Martha E. Mangelsdorf. "Executive Briefing; Learning From Corporate Flops; When starting new ventures, companies should revisit their assumptions early and often." The Wall Street Jounal (Mon., OCTOBER 26, 2009): R2.

(Note: italics in original.)

Source of book image: http://events.roundtable.com/iguru/DiscoveryDrivenGrowth.gif.

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"A woman examined bouquets and messages left by Google users on Wednesday outside the Internet search company's headquarters in Beijing." Source of caption and photo: online version of the NYT article cited way below (after the citation to the quoted article, which is a different article).

David Smick in The World as Curved, has suggested that restrictions on the internet in China, limit entrepreneurship, and ultimately economic growth.

(p. 5) BEIJING -- At the elite Tsinghua University here, some students were joking Friday that they had better download all the Internet information they wanted now in case Google left the country.

But to many of the young, well-educated Chinese who are Google's loyal users here, the company's threat to leave is in fact no laughing matter. Interviews in Beijing's downtown and university district indicated that many viewed the possible loss of Google's maps, translation service, sketching software, access to scholarly papers and search function with real distress.

"How am I going to live without Google?" asked Wang Yuanyuan, a 29-year-old businessman, as he left a convenience store in Beijing's business district.

. . .

Li An, a Tsinghua University senior, said she used to download episodes of "Desperate Housewives" and "Grey's Anatomy" from sites run by BT China that are now closed. "I love American television series," she said with frustration during a pause from studying Japanese at a university fast-food restaurant on Friday.

The loss of Google would hit her much harder, she said, because she relies on Google Scholar to download academic papers for her classes in polymer science. "For me, this is terrible," Ms. Li said.

Some students contend that even after Google pulls out, Internet space will continue to shrink. Until now, Google has shielded Baidu by manning the front line in the censorship battle, said a 20-year-old computer science major at Tsinghua.

"Without Google, Baidu will be very easy to manipulate," he said. "I don't want to see this trend."

A 21-year old civil engineering student predicted a strong reaction against the government. "If Google really leaves, people will feel the government has gone too far," he insisted over lunch in the university cafe.

But asked whether that reaction would influence the government to soften its policies, he concentrated on his French fries. "I really don't know," he said.

For the full story, see:

SHARON LaFRANIERE. "Google Users in China, Mostly Young and Educated, Fear Losing Important Tool." The New York Times, First Section (Sun., January 17, 2010): 5.

(Note: the online version of the article has the title "China at Odds With Future in Internet Fight" and is dated January 16, 2010.)

(Note: ellipsis added.)

The source of the photo at the top is the online version of:

KEITH BRADSHER and DAVID BARBOZA. "Google Is Not Alone in Discontent, But Its Threat Stands Out." The New York Times (Thurs., January 13, 2010): B1 & B4.

(Note: the online version of the article has the slightly different title "Google Is Not Alone in Discontent, But Its Threat to Leave Stands Out" and is dated January 14, 2010.)

The reference to the Smick book is:

Smick, David M. The World Is Curved: Hidden Dangers to the Global Economy. New York: Portfolio Hardcover, 2008.

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(p. B5) Venture capitalists, whose money provides fuel to technology start-ups, last year invested the lowest amount in such companies since 1997, according to a report from PricewaterhouseCoopers and the National Venture Capital Association released on Friday.

. . .

In 2009, venture capitalists invested $17.7 billion in 2,795 start-ups -- 37 percent less cash and 30 percent fewer deals than in 2008. Internet companies, which have excited investors for more than a decade, took a big hit as investment declined 39 percent.

For the full story, see:

CLAIRE CAIN MILLER. "Venture Capital Was Tight for Tech Start-Ups in '09." The New York Times (Fri., January 22, 2010): B5.

(Note: ellipsis added.)

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"Collection of Studebaker National Museum, South Bend, Ind." "Those who disparage buggies as a dead end forget Studebaker switched from carriages to cars." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) I spoke recently about buggy whips with Thomas A. Kinney, an assistant professor of history at Bluefield College in Virginia and author of "The Carriage Trade: Making Horse-Drawn Vehicles in America."

There were 13,000 businesses in the wagon and carriage industry in 1890, Mr. Kinney said. A company survived not by conceiving of itself as being in the "personal transportation" business, but by commanding technological expertise relevant to the automobile, he said. "The people who made the most successful transition were not the carriage makers, but the carriage parts makers," he said, some of whom are still in business.

One is the giant Timken Company, whose signature products, roller bearings, were first used in wagon wheels in the 1890s. They easily adapted to the automobile because they could be applied "to nearly anything that moved," Mr. Kinney wrote.

Westfield, Mass., still known as "Whip City," once had more than 40 businesses that made whips, tools and carriage parts. Today, only Westfield Whip Manufacturing, founded in 1884, remains. Although it produces buggy whips -- now called carriage whips -- most of its whips and crops, called "bats," are for equestrian activities like dressage and jumping.

Buggy whips, with their long, rigid handles and flexible end lashes, were created by braiding fiber around a hard core and had no automotive analog.

The carriage makers did, and they tried their best to remake themselves into automakers. But they were expert woodworkers without expertise in precision metalworking, Mr. Kinney said: "Bicycle manufacturers were actually better suited for auto manufacturing than were carriage makers."

Businesses do die, even big ones. Leslie Hannah, a visiting professor of economic history at the London School of Economics, studied the 100 largest industrial companies in the world between 1912 and 1995. Almost half of them disappeared, "and more than a quarter experienced bankruptcy or a similar close shave with it," he wrote in "Learning by Doing in Markets, Firms and Countries."

The standout carriage business that succeeded was the Studebaker Brothers Manufacturing Company, which began as a blacksmith shop in 1852 and had the financial resources to acquire smaller companies that supplied it with the precision metalworking expertise it lacked when it decided to enter the auto business. In 1913, its automobile production was second only to that of Ford Motor.

For the full story, see:

RANDALL STROSS. "Digital Domain; Failing Like a Buggy Whip Maker? Better Check Your Simile." The New York Times, SundayBusiness Section (Sun., January 10, 2010): 4.

(Note: the online version of the article is dated January 9, 2010.)

(Note: bold added.)

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(p. 265) On the snowy morning of January 13, 1976, . . . , there was unusual traffic on Rogers Street. Outside the gray one-story buildings with their clouded tilt-out windows, vans from various television channels maneuvered to park. A man from the National Federation of the Blind struggled over a snow bank onto the sidewalk and began tapping earnestly to get his bearings. A dark-haired young man set our on a three-block trek to the nearest vendor of coffee and donuts for the gathering media. In the room at number 68, two engineers poked at a gray box that looked like a mimeograph machine sprouting wires to a Digital Equipment Corporation computer. Several intense young men in their early twenties debated when to begin a demonstration of the device. The short, curly-haired leader of the group, twenty-seven-year-old Raymond Kurzweil, refused to start until the arrival of a reporter from The New York Times.

The event was a press conference announcing the first breakthrough product in the field of artificial intelligence: a reader for the blind. Described as an "omnifont character recognition device" linked to a synthetic voice, the machine could read nearly any kind of book or document laid face down on its glass lens. With a learning faculty that improved the device's performance as it proceeded through blurred, faded, or otherwise illegible print, the machine solved problems of pattern recognition and synthesis that had long confounded IBM, Xerox, and the Japanese conglomerates, as well as thousands of university researchers.

. . .

(p. 266) Stevie Wonder, the great blind musician, called. He had heard about the device after its appearance on the "Today Show" and it seemed a lifelong dream come true. He headed up to Cambridge to meet with Kurzweil.

. . .

As Kurzweil remembers, "He was very excited about it and wanted (p. 267) one right away, so we actually turned the factory upside down and produced a unit that day. We showed him how to hook it up himself. He left with it practically under his arm. I understand he took it straight to his hotel room, set it up. and read all night." As Wonder said, the technology has been "a brother and a friend . . . . without question, another sunshine of my life." Wonder stayed in touch with Kurzweil over the years and would play a key role in conceiving and launching a second major Kurzweil product.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: italics in original; all ellipses added except the ellipsis internal to the last paragraph, which was in the original.)

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"The Bose QuietComfort 15 has refined circuitry and redesigned earcaps." Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.

(p. B8) . . . , if your sales are getting eaten alive by cheaper rivals, and you don't want to play the price game, you have only one option: play leapfrog. Make your gadget so much better than the me-toos that people will be willing to pay your premium once again.

That's the idea behind Bose's new QuietComfort 15 model ($300), which replaces the QuietComfort 2.

. . .

First, the QC15 model really, truly does advance the art of noise cancellation -- big time. The QC 2 headphones and my Panasonics cut the airplane roar by half. But the 15 reduced it by, say, 85 percent, leaving only a distant, whispery whoosh to remind you that you're in an aluminum tube 39,000 feet up in the air. Taking them off after a while, as you'll want to do because your ears get sweaty, is like walking into a rock concert when you've been outside the building.

For the full story, see:

DAVID POGUE. "State of the Art; Ho Ho Ho? You Won't Hear a Thing." The New York Times (Thurs., December 3, 2009): B1 & B8.

(Note: the online version of the article is "State of the Art; Bose's Latest Headphones Can Quell the Clangor" and is dated December 2, 2009.)

(Note: ellipses added.)

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(p. 111) By launching the computer-on-a-chip, Intel gave America an enduring advantage in this key product in information technology--an edge no less significant because it was achieved largely by immigrants from Hungary, Italy, Israel, and Japan. Intel's three innovations of 1971--plus the silicon gate process that made them the smallest, fastest, and best-selling devices in the industry--nearly twenty years later remain in newer versions the most powerful force in electronics.

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

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Clayton Christensen has shown how good management, following respected practices, can fail in the face of disruptive technologies. It would be interesting to investigate whether Fairchild was an example of what Christensen is talking about, or whether it just did not have good management.

(p. 89) Andrew Grove . . . had played a central role in bringing Fairchild to the threshold of a new era. But Fairchild would not enjoy the fruits of his work. Following the path of venture capital pioneer Peter Sprague were scores of other venture capitalists seeking to exploit the new opportunities he had shown them. Collectively, they accelerated the pace of entrepreneurial change--splits and spinoffs, startups and staff shifts--to a level that might be termed California Business Time ("What do you mean, I left Motorola quickly?" asked Gordon Campbell with sincere indignation. "I was there eight months!").

The venture capitalist focused on Fairchild: that extraordinary pool of electronic talent assembled by Noyce and Moore, but left essentially unattended, undervalued, and little understood by the executives of the company back in Syosset, New York. Fairchild leaders John Carter and Sherman Fairchild commanded the microcosm: the most important technology in the history of the human race. Noyce, Moore, Hoerni, Grove, Sporck, design genius Robert Widlar, and marketeer Jerry Sanders represented possibly the most potent management and technical team ever assembled in the history of world business. But, hey, you guys, don't forget to report back to Syosset. Don't forget who's boss. Don't give out any bonuses without clearing them through the folks at Camera and Instrument. You might upset some light-meter manager in Philadelphia.

They even made Charles Sporck, the manufacturing titan, feel like "a little kid pissing in his pants." Good work, Sherman, don't let the big lug put on airs, don't let him feel important. He only controls 80 percent of the company's growth. Widlar is leaving? Great, he never fit in with the corporate culture anyway. Sporck has gone off with Peter Sprague? There are plenty more where he came from.

"It was weird," said Grove, "they had no idea about what the company or the industry was like, nor did they seem to care. . . . Fairchild was just crumbling. If you wish, the semiconductor division management consisted of twenty significant players: eight went to National, eight went into Intel, and four of them went to Alcoholics Anonymous or something." Actually there were more than twenty and they went into startups all over the Valley; some twenty-six new semiconductor firms sprouted up between 1967 and 1970. "It got to the point," recalled one man quoted in Dirk Hanson's The New Alchemists, "where people were practically driving trucks over to Fairchild and loading up with employees."

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

(Note: the first ellipsis was added; the others were in the original. The italics were also in the original.)

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(p. 54) . . . in 1950, Shockley published his book Electrons and Holes in Semiconductors, which stood for many years as the definitive work in the field and confirmed his credentials for the Nobel Prize that he shared with Brattain and Bardeen in 1956. The fact was that for his theory of the field effect transistor that later dominated the industry and for the junction transistor that was dominating it at the time, Shockley deserved the prize alone. He had at last made his point.

Yet Shockley was not satisfied. "Every physicist," he said at the time, "wants two things: glory and money. I have won the glory. Now I want the money."