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April 19, 2014

Gas Company Literally Tried to Short-Circuit Edison's Lights



(p. 104) The willingness of Edison to turn his laboratory into a public theater had succeeded, only too well. When he appeared, a shout, "There is Edison!" rang out, causing a surge of bodies in his direction. One report claimed that the crowds "more than once threatened to break down the timbers of the building," a statement that may not have been hyperbole; the lab assistants were convinced that collapse was possible and hurried outside, bolstering the floor supports below with telegraph poles and lumber. Where the realm of science ended and that of entertainment began could no longer be distinguished, judging by the printed condemnation of the behavior of a minority of the visitors who "cared nothing for science, who regarded the laboratory as they would a circus."

In the laboratory itself, the lights were arranged on a table to resemble a miniature layout of Menlo Park, and Edison had assigned assistants on all four sides to look out for sabotage. Their vigilance was needed that day, as one man was caught applying a jumper wire that ran under his clothes and down both sleeves, deliberately short-circuiting four of the lights. He turned out to be an electrician employed by the Baltimore Gas Company and was marched out, with language ringing in his ears "that made the recording angels jump for their typewriters," Edison later recalled.



Source:

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






April 18, 2014

In the Gilded Age Moguls Cleaned Up Their Own Mess and the Economy Was Not Hurt



HarrimanVSHillBK2014-04-09.jpg












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






(p. A13) Takeover wars seem to have lost their sizzle. What happened to the battles of corporate goliaths? Where have they gone, those swaggering deal makers? "Harriman vs. Hill" is a corporate dust-up that takes us back to the beginning of the 20th century, when tycoons who traveled by private rail merrily raided each other's empires while the world around them cringed.


. . .


Mr. Haeg conveys a vivid picture of the Gilded Age in splendor and in turmoil. Champagne still flowed in Peacock Alley in the Waldorf-Astoria, but fistfights erupted on the floor of the exchange, and a young trader named Bernard Baruch skirted disaster with the help of an inside tip, then perfectly legal. There were scant rules governing stock trading, the author reminds us--no taxes, either. "If you won in the market, you kept it all."

In that era, moguls were left to clean up their own mess.   . . .


. . .


Though hardly a cheerleader, Mr. Haeg is admiring of his cast, nostalgic for the laissez-faire world they inhabited. Observing that the economy wasn't upset by the stock market's mayhem, he concludes that, "in a perverse way, the market had worked."



For the full review, see:

ROGER LOWENSTEIN. "BOOKSHELF; When Titans Tie the Knot; Businessmen of a century ago didn't place 'competition' on a revered pedestal. Merger and monopoly were considered preferable." The Wall Street Journal (Fri., Feb. 14, 2014): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date Feb. 13, 2014, and has the title "BOOKSHELF; Book Review: 'Harriman vs. Hill,' by Larry Haeg; Businessmen of a century ago didn't place 'competition' on a revered pedestal. Merger and monopoly were considered preferable.")


The book under review is:

Haeg, Larry. Harriman Vs. Hill: Wall Street's Great Railroad War. Minneapolis, MN: University of Minnesota Press, 2013.






April 13, 2014

Solitary Swimming Helps Creativity and Problem-Solving



(p. 5) Ms. Nyad has spent a lifetime in the water, chasing an elusive mark in marathon swimming, and she has written about the exhilarating out-of-body experience she has when powering through long distances. The medium makes it necessary to unplug; the blunting of the senses by water encourages internal retreat. Though we don't all reach nirvana when we swim, swimming may well be that last refuge from connectivity -- and, for some, the only way to find the solitary self.


. . .


For better or worse, the mind wanders: We are left alone with our thoughts, wherever they may take us. A lot of creative thinking happens when we're not actively aware of it. A recent Carnegie Mellon study shows that to make good decisions, our brains need every bit of that room to meander. Other research has found that problem-solving tends to come most easily when our minds are unfocused, and while we're exercising. The neurologist Oliver Sacks has written books in his head while swimming. "Theories and stories would construct themselves in my mind as I swam to and fro, or round and round Lake Jeff," he writes in the essay "Water Babies." Five hundred lengths in a pool were never boring or monotonous; instead, Dr. Sacks writes, "swimming gave me a sort of joy, a sense of well-being so extreme that it became at times a sort of ecstasy." The body is engaged in full physical movement, but the mind itself floats, untethered. Beyond this, he adds, "there is all the symbolism of swimming -- its imaginative resonances, its mythic potentials."

Dr. Sacks describes a sublime state that is accessible to all, from his father, with his "great whalelike bulk," who swam daily and elegantly until 94 years of age, to the very young.   . . .


. . .


I asked Dara Torres, who has logged countless training hours for her five Olympics, what she thinks about when she's swimming. "I'm always doing five things at once," she told me by phone (at the time, she was driving a car). "So when I get in the water, I think about all the things that I have to do. But sometimes I go into a state -- I don't really think about anything." The important thing, she says, is that the time is yours. "You can use it for anything. It depends where your head is at -- it's a reflection of where you are."

The reflection of where you are: in essence, a status update to you, and only you. The experience is egalitarian. You don't have to be a great swimmer to appreciate the benefits of sensory solitude and the equilibrium the water can bring.



For the full commentary, see:

Justin Gillis. "BY DEGREES; Freezing Out the Bigger Picture." The New York Times (Tues., FEB. 11, 2014): D3.

(Note: ellipses added.)

(Note: the online version of the commentary has the date FEB. 10, 2014.)






April 4, 2014

Gary Becker's Grandson Ponders Opportunity Cost of College



HarboeLouisYoungTechEntrepreneur2014-03-30.jpg



"Louis Harboe with his parents, Frederik Harboe and Catherine Becker. Louis, now 18, got his first freelance tech job at age 12. Last year, he attended the Apple Worldwide Developers Conference in San Francisco." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. 1) Ryan was headed to South by Southwest Interactive, the technology conference in Austin. There, he planned to talk up an app that he and a friend had built. Called Finish, it aimed to help people stop procrastinating, and was just off its high in the No. 1 spot in the productivity category in the Apple App store.


. . .


Ryan is now 17, a senior at Boulder High. He is among the many entrepreneurially minded, technologically skilled teenagers who are striving to do serious business. Their work is enabled by low-cost or free tools to make apps or to design games, and they are encouraged by tech companies and grown-ups in the field who urge them, sometimes with financial support, to accelerate their transition into "the real world." This surge in youthful innovation and entrepreneurship looks "unprecedented," said Gary Becker, a University of Chicago economist and a Nobel laureate.

Dr. Becker is assessing this subject from a particularly intimate vantage point. His grandson, Louis Harboe, 18, is a friend of (p. 6) Ryan's, a technological teenager who makes Ryan look like a late bloomer. Louis, pronounced Louie, got his first freelance gig at the age of 12, designing the interface for an iPhone game. At 16, Louis, who lives with his parents in Chicago, took a summer design internship at Square, an online and mobile payment company in San Francisco, earning $1,000 a week plus a $1,000 housing stipend.

Ryan and Louis, who met online in the informal network of young developers, are hanging out this weekend in Austin at South by Southwest. They are also waiting to hear from the colleges to which they applied last fall -- part of the parallel universe they also live in, the traditional one with grades and SATs and teenage responsibilities. But unlike their peers for whom college is the singular focus, they have pondered whether to go at all. It's a good kind of problem, the kind faced by great high-school athletes or child actors who can try going pro, along with all the risk that entails.

Dr. Becker, who studies microeconomics and education, has been telling his grandson: "Go to college. Go to college." College, he says, is the clear step to economic success. "The evidence is overwhelming."

But the "do it now" idea, evangelized on a digital pulpit, can feel more immediate than academic empiricism. "College is not a prerequisite," said Jess Teutonico, who runs TEDxTeen, a version of the TED talks and conferences for youth, where Ryan spoke a few weeks ago. "These kids are motivated to take over the world," she said. "They need it fast. They need it now."



For the full story, see:

MATT RICHTEL. "The Youngest Technorati." The New York Times, SundayBusiness Section (Fri., MARCH 9, 2014): 1 & 6.

(Note: ellipsis added.)

(Note: the online version of the story has the date MARCH 8, 2014.)






April 2, 2014

In Hard Times Entrepreneurs Need Advice on How to Fire



TheHardThingAboutHardThingsBK2014-03-30.jpg












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






(p. A13) Every entrepreneur has experienced what Ben Horowitz terms "the struggle." That's when things are going really, really badly. It's when, as he puts it in "The Hard Thing About Hard Things," "people ask you why you don't quit and you don't know the answer." But there always is a way, Mr. Horowitz believes, and it's the ability to spot the next move during the struggle that separates winners and losers.

Mr. Horowitz has authority on this subject. He was a successful tech CEO, having co-founded the pioneering cloud-computing company LoudCloud and subsequently overseen its evolution into a software firm, Opsware. He's also one half of the venture-capital firm Andreessen Horowitz. Among the firm's winning bets: Facebook, Skype and Twitter.


. . .


The book, the author says, is written primarily for "wartime CEOs"--those like the late Steve Jobs, who returned to Apple in 1997 at a time when the company was verging on bankruptcy. Jobs recognized that to survive, Apple had to ditch most of its products and focus singularly on just four computer models.

Wartime CEOs don't need classic management books that "focus on how to do things correctly, so you don't screw up," Mr. Horowitz argues. What the author offers instead is "insight into what you must do after you have screwed up. The good news is, I have plenty of experience at that and so does every other CEO."


. . .


Parts of the book are dedicated to providing practical leadership advice: how to hire, fire and scale and when to sell and when to spurn offers. Some of the advice is counterintuitive. He dismisses the "don't bring me a problem without bringing me a solution" management maxim by asking: If an employee can't solve the problem he encounters, do you really want him to hide it?



For the full review, see:

DANIEL FREEDMAN. "BOOKSHELF; Business Tips From Karl Marx; Born to a family of Marxists, Ben Horowitz now invests in tech startups. Among his winning bets: Twitter and Facebook." The Wall Street Journal (Fri., March 7, 2014): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date March 6, 2014, and has the title "BOOKSHELF; Book Review: 'The Hard Thing About Hard Things,' by Ben Horowitz; Born to a family of Marxists, Ben Horowitz now invests in tech startups. Among his winning bets: Twitter and Facebook.")


The book under review is:

Horowitz, Ben. The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers. New York: HarperCollins Publishers, 2014.






March 31, 2014

Better Policies Explain Why Poland Prospers More than Ukraine



RushchyshynYaroslavUkraineEntrepreneur2014-03-30.jpg "Yaroslav Rushchyshyn, a garment manufacturer, wants to end penalties when his company reports a financial loss." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B1) LVIV, Ukraine -- Every kind of business in this restless pro-European stronghold near the border with Poland has an idea about how to make Ukraine like its more prosperous neighbor.

For Yaroslav Rushchyshyn, founder of a garment manufacturer, it is abolishing bizarre regulations that have had inspectors threatening fines for his handling of fabric remnants and for reporting financial losses.

For Andrew Pavliv, who runs a technology company, it is modernizing a rigid education system to help nurture entrepreneurs.

For Natalia Smutok, an executive at a company that makes color charts for paint and cosmetics, it meant starting an antibribery campaign, even though she is 36 weeks pregnant.


. . .


(p. B10) Victor Halchynsky, a former journalist who is now a spokesman for the Ukrainian unit of a Polish bank, said the divergence of the two countries was a source of frustration.

"It's painful because we know it's only happened because of policy," he said, adding that while both countries had started the reform process, Poland "finished it."

Ukraine has been held back by a number of policies. Steep energy subsidies have kept consumption high and left the country dependent on Russian gas, draining state coffers. Mr. Pavliv said the state university system, which he called "pure, pure Soviet," was too inflexible to set up a training program for project managers, or to allow executives without specific certifications to teach courses. An agriculture industry once a Soviet breadbasket has been hurt by antiquated rules, including restrictions on land sales. Aggressive tax police have been used to shake down businesses.



For the full story, see:

DANNY HAKIM. "A Blueprint for Ukraine." The New York Times (Fri., MARCH 14, 2014): B1 & B10.

(Note: ellipsis added.)

(Note: the online version of the story has the date MARCH 13, 2014.)



PavlivAndrewTechEntrepreneur2014-03-30.jpg "Andrew Pavliv, who runs a technology company, wants to help turn Lviv into a little Ukrainian Silicon Valley." Source of caption and photo: online version of the NYT article quoted and cited above.






March 27, 2014

Edison Helped Us See the Light



WizardOfMenloParkBK2014-03-24.jpg









Source of book image: http://www.strategy-business.com/article/07408i?pg=all









Several biographies of Thomas Edison have appeared in recent decades. One of the strengths of Randall Stross' The Wizard of Menlo Park is that it emphasizes how Edison's story is relevant to current issues in the economics of invention, entrepreneurship and technology.

In the next several weeks, I will quote some of the more thought-provoking stories and observations in the Stross book.


The Stross book is:

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






March 23, 2014

Disabled Workers Are More Likely to Be Free Agent Entrepreneurs



HartfordKevinEntrepreneurWhoStutters2014-03-10.jpg "Kevin Hartford, right, and a colleague at his factory. He started his business after employers failed to hire him." Source of caption and photo: online version of the NYT article quoted and cited below.



HR departments have incentives to avoid hiring risky employees. But a determined high-risk employee can hire themselves by becoming a free agent entrepreneur. If we want to truly help the disabled, we should remove obstacles to entrepreneurship, such as burdensome regulations and high taxation.


(p. B4) Mr. Hartford, the father of two sons, thrived as a business consultant in his 20s and 30s. He was used to flying first class, staying at swank hotels and advising CEOs. Then the consulting firm unraveled in the mid-1990s. When he began looking for a new job, a stuttering problem--something he had always considered manageable--put off potential employers.

"I applied for job after job after job," says Mr. Hartford, now 58. "I was one of two finalists; I was one of three finalists. But I never got the job."

In the end, Mr. Hartford concluded that his only shot at a satisfying job was to create a company. He is now president and co-owner of Alle-Kiski Industries, which makes parts, such as exhaust pipes for train locomotives and prototype truck wheels, for larger manufacturers, including Alcoa Inc. and General Electric Co.

Like many before him, Mr. Hartford discovered that one option for people who don't fit into large organizations is to start a small one. That is particularly true for people with disabilities. About 11% of disabled workers are self-employed, compared with 6.5% of those with no disabilities, according to Labor Department data.


. . .


The business has grown to 38 employees from a dozen when Messrs. Hartford and Newell started in 2005. They own more than $2 million of equipment used to drill, groove and otherwise shape metal, arrayed in a 27,000-square-foot factory with an American flag hanging from one of the beams. Last year's sales of $6 million were the highest yet, Mr. Hartford says, and the company is building a 4,000-square-foot addition to house more equipment.



For the full story, see:

JAMES R. HAGERTY. "Entrepreneur Let No Impediment Stop Him; Out-of-Work Consultant Started His Own Company After Discovering His Stutter Put Off Employers." The Wall Street Journal (Thurs., Jan. 16, 2014): B4.

(Note: ellipsis added.)

(Note: the online version of the story has the date Jan. 15, 2014.)






March 22, 2014

Carnegie Wanted Institution to Fund "Exceptional" Scientists "Whenever and Where Found"




So was Carnegie suggesting that we should be open to the exceptional appearing in unexpected locations?


(p. 614) In his deed of trust, Carnegie declared that his research institution in Washington should "discover the exceptional man in every department of study whenever and where found... and enable him to make the work for which he seems specially designed his life work." That notion would remain the driving philosophy behind the institution over the next century. Some of those "exceptional" scientists, supported by Carnegie money were the astronomer Edwin Hubble, who "revolutionized astronomy with his discovery that the universe is expanding," and Barbara McClintock, whose work on patterns of genetic inheritance in corn won her a Nobel Prize.


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






March 18, 2014

Nasaw Claims Carnegie Believed in Importance of Basic Scientific Research




But notice that the two main examples of what Carnegie himself chose to fund (the Wilson Observatory and the yacht to collect geophysical data), were empirically oriented, not theoretically oriented.


(p. 480) Carnegie was, as Harvard President James Bryant Conant would comment in 1935 on the centenary of his birth, "more than a generation ahead of most business men of this country [in understanding] the importance of science to industry." He recognized far better than his peers how vital basic scientific research was to the applied research that industry fed off. George Ellery Hale, an astronomer and astrophysicist, later to be the chief architect of the National Research Council, was astounded when he learned of Carnegie's commitment to pure research. "The provision of a large endowment solely for scientific research seemed almost too good to be true.... Knowing as I did the difficulties of obtaining money for this purpose and (p. 481) devoted as I was to research rather than teaching, I could appreciate some of the possibilities of such an endowment." Hale applied for funds to build an observatory on Mount Wilson in California, and got what he asked for. It would take until 1909 to build and install a 60-inch reflecting telescope in the observatory; in 1917, a second 100-inch telescope, the largest in the world, was added.

The Mount Wilson Observatory-- and the work of its astronomers and astrophysicists-- was only one of the projects funded in the early years of the new institution. Another, of which Carnegie was equally proud, was the outfitting of the Carnegie, an oceangoing yacht with auxiliary engine, built of wood and bronze so that it could collect geophysical data without the errors inflicted on compass readings by iron and steel. The ship was launched in 1909; by 1911, Carnegie could claim that the scientists on board had already been able to correct several significant errors on navigational maps.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis, and italics, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






March 16, 2014

Many Important Medical Articles Cannot Be Replicated




The standard scientific method is more fallible, and less logically rigorous, than is generally admitted. One implication is to strengthen the case for allowing patients considerable freedom in choosing their own treatments.


(p. D1) It has been jarring to learn in recent years that a reproducible result may actually be the rarest of birds. Replication, the ability of another lab to reproduce a finding, is the gold standard of science, reassurance that you have discovered something true. But that is getting harder all the time. With the most accessible truths already discovered, what remains are often subtle effects, some so delicate that they can be conjured up only under ideal circumstances, using highly specialized techniques.

Fears that this is resulting in some questionable findings began to emerge in 2005, when Dr. John P. A. Ioannidis, a kind of meta-scientist who researches research, wrote a paper pointedly titled "Why Most Published Research Findings Are False."


. . .


. . . he published another blockbuster, examining more than a decade's worth of highly regarded papers -- the effect of a daily aspirin on cardiac disease, for example, or the risks of hormone replacement therapy for older women. He found that a large proportion of the conclusions were undermined or contradicted by later studies.

His work was just the beginning. Concern about the problem has reached the point that the journal Nature has assembled an archive, filled with reports and analyses, called Challenges in Irreproducible Research.

Among them is a paper in which C. Glenn Begley, who is chief scientific officer at TetraLogic Pharmaceuticals, described an experience he had while at Amgen, another drug company. He and his colleagues could not replicate 47 of 53 landmark papers about cancer. Some of the results could not be reproduced even with the help of the original scientists working in their own labs.



For the full commentary, see:

GEORGE JOHNSON. "Raw Data; New Truths That Only One Can See." The New York Times (Tues., JAN. 21, 2014): D1 & D6.

(Note: ellipses added.)

(Note: the online version of the commentary has the date JAN. 20, 2014.)


The first Ioannidis article mentioned above is:

Ioannidis, John P. A. "Why Most Published Research Findings Are False." PLoS Medicine 2, no. 8 (August 2005): 696-701.


The second Ioannidis article mentioned above is:

Ioannidis, John P. A. "Contradicted and Initially Stronger Effects in Highly Cited Clinical Research." JAMA 294, no. 2 (July 13, 2005): 218-28.


The Begley article mentioned above is:

Begley, C. Glenn, and Lee M. Ellis. "Drug Development: Raise Standards for Preclinical Cancer Research." Nature 483, no. 7391 (March 29, 2012): 531-33.






March 14, 2014

Carnegie Was Depressed by Initial Inactivity of Retirement



(p. 592) IT IS DIFFICULT to picture Andrew Carnegie depressed, but there is no other way to describe his state of being in the months following his retirement. Carnegie confessed as much in an early draft of his Autobiography, but the editor John Van Dyke, chosen by Mrs. Carnegie after her husband's death, perhaps thinking his melancholic ruminations would displease her, edited them out of the manuscript.


. . .


(p. 593) The vast difference between life in retirement and as chief stockholder of the Carnegie Company was brought home to him as he prepared to leave for Britain in the early spring of 1901. For close to thirty years, he had scurried about for weeks prior to sailing tying up loose ends. There were documents to be signed, instructions to be left with his partners in Pittsburgh and his private secretary in New York. Retirement brought an end to this round of activities and a strange, inescapable melancholy.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis added, italics in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






March 12, 2014

Small Business Will Fire Workers When Minimum Wage Is Raised



(p. B4) . . . , Charlene Conway is watching her numbers. For 22 years, Ms. Conway and her husband have run Carousel Family Fun Centers in Fairhaven and Whitman, Mass. The business has annual revenue of less than $500,000 and depends exclusively on part-time minimum-wage earners, mostly teenagers, to handle tasks like running the snack bar and maintaining the games.

This year, Massachusetts is considering raising its minimum to $9 an hour, from $8. Should that happen, Ms. Conway said, she will probably need to reduce her staff of 20. Her employees currently make an average of $9 an hour, with managers earning from $10 to $15. Like Ms. Riley, Ms. Conway said that an increase in the minimum would force her to raise pay across the board.

And she, too, is reluctant to raise prices again. In 2011 and 2012, she increased her admission fees by a dollar -- they generally run from $5 to $10 now, based on age and time of day. Another increase, she said, would just make things worse: "We will price ourselves out of business."

In the past, when Massachusetts increased the state's minimum, Ms. Conway responded by increasing the minimum age of her workers to 16 from 14. "I'm not going to pay a 14-year-old $9 an hour with no experience, maturity or work ethic," she said. More recently, she has been hiring 18-year-olds with college experience. "What this does," she said, "is eliminate the opportunity for young people to get started in the work force."

Should minimum wage reach $10 an hour, Ms. Conway said she would reduce her staff to 10 employees and double up on work tasks. "This is a slippery slope that could absolutely cause me to shut down and force me into bankruptcy," she said.



For the full commentary, see:

STACY PERMAN. "SMALL BUSINESS; As Minimum Wages Rise, Businesses Grapple With Consequences." The New York Times (Thurs., Feb. 6, 2014): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date FEB. 5, 2014.)






March 11, 2014

Khan's Cousins Liked Him Better on YouTube than in Person



KhanSalmanAtKhanAcademy2014-03-03.jpg "Salman Khan at the offices of Khan Academy, which reaches more than 10 million users. Bill Gates invested in the school." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. D5) In 2008, Salman Khan, then a young hedge-fund analyst with a master's in computer science from M.I.T., started the Khan Academy, offering free online courses mainly in the STEM subjects -- science, technology, engineering and mathematics.

Today the free electronic schoolhouse reaches more than 10 million users around the world, with more than 5,000 courses, and the approach has been widely admired and copied. I spoke with Mr. Khan, 37, for more than two hours, in person and by telephone. What follows is a condensed and edited version of our conversations.


. . .


Did you have background as a math educator?

No, though I've had a passion for math my whole life. It got me to M.I.T. and enabled me to get multiple degrees in math and engineering. Long story shortened: Nadia got through what she thought she couldn't. Soon word got around the family that "free tutoring" was going on, and I found myself working on the phone with about 15 cousins.

To make it manageable, I hacked together a website where my cousins could go to practice problems and I could suggest things for them to work on. When I'd tutor them over the telephone, I'd use Yahoo Doodle, a program that was part of Yahoo Messenger, so they could visualize the calculations on their computers while we talked.

The Internet videos started two years later when a friend asked, "How are you scaling your lessons?" I said, "I'm not." He said, "Why don't you make some videos of the tutorials and post them on YouTube?" I said, "That's a horrible idea. YouTube is for cats playing piano."

Still, I gave it try. Soon my cousins said they liked me more on YouTube than in person. They were really saying that they found my explanations more valuable when they could have them on demand and where no one would judge them. And soon many people who were not my cousins were watching. By 2008, I was reaching tens of thousands every month.

Youtube is a search engine where producers can upload short videos at no cost. Would the Khan Academy have been possible without this technology?

No. Before YouTube, the cost of hosting streaming videos was incredibly expensive. I wouldn't have been able to afford the server space for that much video -- or traffic. That said, I was probably the 500th person to show up on YouTube with educational videos. Our success probably had to do with the technology being ready and the fact that my content resonated with users.



For the full interview, see:

CLAUDIA DREIFUS, interviewer. "A Conversation With Salman Khan; It All Started With a 12-Year-Old Cousin." The New York Times (Tues., JAN. 28, 2014): D5.

(Note: ellipsis added; bold in original; the first two paragraphs, and the bold questions, are Claudia Dreifus; the other paragraphs are Salman Khan.)

(Note: the online version of the interview has the date JAN. 27, 2014.)






March 10, 2014

Dinosaurs Show that Size Does Not Assure Success, or Even Survival



(p. 504) If the Museum of Natural History was going to be, as Carnegie intended, a world-class institution, it needed more than mummies, ana-(p. 505)tomical models, and Appalachian minerals. It had to have a dinosaur or two. The dinosaur was more than simply a crowd-pleaser. For Carnegie and other devotees of evolutionary science, it was an apt symbol of the unpredictability of a universe in which species and races fell into extinction when they failed to adapt to new environments. For men of slight stature, such as Carnegie, there must have been something quite enthralling about this most vivid demonstration that size and power did not guarantee survival.


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 28, 2014

Growth Slow Due to Policies Impeding Start-Ups



(p. A11) The most recent period of rapid productivity growth in the U.S.--and rapid economic growth--was in the 1980s and '90s and reflected the remarkable success of new businesses in information and communications technologies, including Microsoft, Apple, Amazon, Intel and Google. These new companies not only created millions of jobs but transformed modern society, changing how much of the world produces, distributes and markets goods and services.

Rising living standards in the future will depend on the continued success of these businesses but also on the next generation of success stories. Getting the U.S. economy back on track will require a much higher annual rate of new business startups. Sadly, the annual rate of new business creation is about 28% lower today than it was in the 1980s, according to our analysis of the U.S. Census Bureau's Business Dynamics Statistics annual data series.

Why is the startup rate so low? The answer lies in Washington and the policies implemented in the wake of the 2008 financial crisis that were, ironically, intended to grow and stabilize the economy.    . . .

This explosion in federal regulation, intervention and subsidies has retarded productivity growth by protecting incumbents at the expense of more efficient producers, including startups. The number of pages in the Federal Code of Regulations peaked at nearly 175,000 in 2012, an increase of more than 7% in President Obama's first three years.



For the full commentary, see:

EDWARD C. PRESCOTT and LEE E. OHANIAN. "U.S. Productivity Growth Has Taken a Dive; It has averaged about 1.1% since 2011, less than half the historical rate since 1948. Here's how to increase it." The Wall Street Journal (Tues., Feb. 4, 2014): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Feb. 3, 2014.)






February 20, 2014

The Young, with Managerial Experience, Are Most Likely to Become Entrepreneurs



(p. A13) In a current study analyzing the most recent Global Entrepreneurship Monitor (GEM) survey, my colleagues James Liang, Jackie Wang and I found that there is a strong correlation between youth and entrepreneurship. The GEM survey is an annual assessment of the "entrepreneurial activity, aspirations and attitudes" of thousands of individuals across 65 countries.

In our study of GEM data, which will be issued early next year, we found that young societies tend to generate more new businesses than older societies. Young people are more energetic and have many innovative ideas. But starting a successful business requires more than ideas. Business acumen is essential to the entrepreneur. Previous positions of responsibility in companies provide the skills needed to successfully start businesses, and young workers often do not hold those positions in aging societies, where managerial slots are clogged with older workers.

In earlier work (published in the Journal of Labor Economics, 2005), I found that Stanford MBAs who became entrepreneurs typically worked for others for five to 10 years before starting their own businesses. The GEM data reveal that in the U.S. the entrepreneurship rate peaks for individuals in their late 20s and stays high throughout the 30s. Those in their early 20s have new business ownership rates that are only two-thirds of peak rates. Those in their 50s start businesses at about half the rate of 30-year-olds.

Silicon Valley provides a case in point. Especially during the dot-com era, the Valley was filled with young people who had senior positions in startups. Some of the firms succeeded, but even those that failed provided their managers with valuable business lessons.

My co-author on the GEM study, James Liang, is an example. After spending his early years as a manager at the young and rapidly growing Oracle, he moved back to China to start Ctrip, one of the country's largest Internet travel sites.



For the full commentary, see:

EDWARD P. LAZEAR. "The Young, the Restless and Economic Growth; Countries with a younger population have far higher rates of entrepreneurship." The Wall Street Journal (Mon., Dec. 23, 2013): A13.

(Note: the online version of the commentary has the date Dec. 22, 2013.)


The Lazear paper mentioned above, is:

Lazear, Edward P. "Entrepreneurship." Journal of Labor Economics 23, no. 4 (October 2005): 649-80.






February 12, 2014

It Does Not Take a Government to Raise a Railroad



(p. A17) . . . , All Aboard Florida (the train will get a new name this year), is not designed to push political buttons. It won't go to Tampa. It will zip past several aggrieved towns on Florida's Treasure Coast without stopping.

Nor will the train qualify as "high speed," except on a stretch where it will hit 125 miles an hour. Instead of running on a dedicated line, the new service will mostly share existing track with slower freight trains operated by its sister company, the Florida East Coast Railway.

But the sponsoring companies, all owned by the private-equity outfit Fortress Investment Group, appear to have done their sums. By minimizing stops, the line will be competitive with road and air in connecting the beaches, casinos and resorts of Miami and Fort Lauderdale with the big airport and theme-park destination of Orlando. Capturing a small percentage of the 50 million people who travel between these fleshpots, especially European visitors accustomed to intercity rail at home, would let the train cover its costs and then some.

But Fortress has a bigger fish in the pan. Its local operation, Florida East Coast Industries, is a lineal progeny of Henry Flagler, the 1890s entrepreneur who created modern Florida when he built a rail line to support his resort developments. Flagler's heirs are adopting the same model. A Grand Central-like complex will rise on the site of Miami's old train station. A similar but smaller edifice is planned for Fort Lauderdale.

The project is a vivid illustration of the factors that have to fall in place to make passenger rail viable nowadays. If the Florida venture succeeds, it would be the only intercity rail service anywhere in the world not dependent on government operating subsidies. It would be the first privately run intercity service in America since the birth of Amtrak in 1971.



For the full commentary, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; A Private Railroad Is Born; All Aboard Florida isn't looking for government operating subsidies." The Wall Street Journal (Weds., Jan. 15, 2014 ): A17.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Jan. 14, 2014 .)






February 10, 2014

Carnegie Said "Socialism Is the Grandest Theory Ever Presented"




More on why Andrew Carnegie is not my favorite innovative entrepreneur:


(p. 257) "But are you a Socialist?" the reporter asked.

Carnegie did not answer directly. "I believe socialism is the grandest theory ever presented, and I am sure some day it will rule the world. Then we will have obtained the millennium.... That is the state we are drifting into. Then men will be content to work for the general welfare and share their riches with their neighbors."

"'Are you prepared now to divide your wealth' [he] was asked, and Mr. Carnegie smiled. 'No, not at present, but I do not spend much on myself. I give away every year seven or eight times as much as I spend for personal comforts and pleasures."



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis, and bracketed pronoun, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 7, 2014

"Innovation" Word "Is Way Over-Used"



PeanutButterPopTarts2014-01-17.png Source of Pop-Tarts image: http://cdn.foodbeast.com.s3.amazonaws.com/content/wp-content/uploads/2013/05/poptarts.png



(p. B1) It measures nearly 3 inches by 5 inches, and it's made from enriched flour, corn syrup and creamy peanut butter.

This is Kellogg's Gone Nutty! peanut butter Pop-Tart. If you agree with Kellogg CEO John Bryant, it's one of the cereal company's important products of 2013. He went so far as to call it an innovation.

Listen to the chiefs of America's biggest companies, and you'll find the Gone Nutty! Pop-Tart has plenty of company. Most CEOs now spray the word "innovation" as if it were an air freshener. A little spritz can't hurt.

In the last three months, CEOs of S&P 500 companies have put the "innovation" word on Peony & Blush Suede perfume, premium potash and higher-alcohol Miller beer. "Innovation" also describes Dun & Bradstreet credit reports and PetSmart's temporary tattoos for pets.

Back in 2007, 99 companies in the S&P 500 mentioned innovation in their third-quarter conference calls, according to reviews of transcripts from Capital IQ. This year the number was 197.

When Boston Consulting Group asked 1,500 executives to rank their company innovation from 1-10, more than two-thirds rated themselves a seven or higher.

The word "is way overused," says International Paper CEO John Faraci.


. . .


(p. B8) As for the peanut butter Pop-Tarts, a Kellogg spokeswoman says that it had long been one of the most-requested new flavors.

"Development challenges and nut-allergy concerns stood in the way of launching this innovation. Since its launch, Pop-Tarts Gone Nutty has exceeded our expectations."

There's nothing wrong with keeping pace. It's what companies must do. But it's worth asking at your company, no matter what words the CEO uses: Where does survival end
and real innovation begin?



For the full commentary, see:

DENNIS K. BERMAN. "THE GAME; Is a Peanut Butter Pop-Tart an Innovation?" The Wall Street Journal (Weds., December 4, 2013): B1 & B8.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date December 3, 2013.)






February 3, 2014

Trying to Inspire "Parents to Raise More Walts and Roys"



DisneyBirthplaceChicago2014-01-17.jpg











"A rendering of the Walt Disney Birthplace, a planned private museum in Chicago." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. C3) LOS ANGELES -- The on-again-off-again campaign to turn Walt Disney's Chicago birthplace into an attraction has taken an unexpected new turn. And two theme park ride designers who mostly work for Disney rivals are at the wheel.


. . .


"We don't want to disrupt the neighborhood with a big attraction," Mr. Young said. "But we're also not interested in just putting a plaque on a house." Ms. Benadon added: "Our dream is that this house becomes a place that inspires creativity. We want to inspire parents to raise more Walts and Roys."

The couple have worked on attractions like SeaWorld shows; Madagascar: A Crate Adventure, a water ride at Universal Studios Singapore; and theme parks in China that are seeking to compete with Shanghai Disneyland, which is under construction.


. . .


So far, . . . , they have not contacted the Walt Disney Company. "We wanted to do this ourselves," Ms. Benadon said.


. . .


But Ms. Benadon and Mr. Young do have one important ally: Roy P. Disney, whose grandfather, Roy O. Disney, and great-uncle, Walt, founded the company. "On behalf of the Disney family," Mr. Disney said in a statement, "we are so pleased to see Walt Disney's historic birthplace and family home being restored to its humble origins."



For the full story, see:

BROOKS BARNES. "A Chance to Step Into Disney's Childhood." The New York Times (Weds., December 4, 2013): C3.

(Note: ellipses added.)

(Note: the online version of the story has the date December 3, 2013.)






February 2, 2014

Carnegie "Spoke Positively of Socialism"



Carnegie is a mixed bag for several reasons. Here is one more:


(p. 256) "A MILLIONAIRE SOCIALIST. MR. ANDREW CARNEGIE PROCLAIMS IN FAVOR OF SOCIALISTIC DOCTRINES." So read the headline of the January 2, 1885 front-page story in the New York Times, occasioned by Carnegie's remarks "in favor of Socialism" at the December meeting of the Nineteenth Century Club. One of the guests at that meeting was John Swinton, the publisher of a rather obscure radical weekly named Swinton's. Swinton invited Carnegie to sit for an interview and again he spoke positively of socialism.


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 1, 2014

Twitter Founders Were Outsiders and Unafraid of Risk



HatchingTwitterBK2014-01-18.jpg











Source of the book image: http://s.wsj.net/public/resources/images/BN-AF602_bkrvtw_GV_20131031131314.jpg







(p. 20) . . . "Hatching Twitter," a fast-paced and perceptive new book by Nick Bilton, a columnist and reporter for The New York Times, establishes that uncertainty and dissension about its true purpose has characterized Twitter from its inception.


. . .


The company was financed by Williams, who made a bundle selling Blogger to Google and was intent on proving he wasn't a one-hit wonder. It rose from the ashes of a failed podcasting enterprise, Odeo, which Williams had bankrolled as a favor to his friend Noah Glass. Bilton sketches the founders' backgrounds and personalities in quick, skillful strokes that will serve the eventual screenwriter, director and storyboard artist well; these are characters made for the big screen.

None came from money. Ev Williams was a shy Nebraska farm boy whose parents never really understood their socially awkward, computer-obsessed son.


. . .


Having known hardship, none of the four founders were afraid of risk. To join the ill-fated Odeo, Stone walked away from a job at Google, leaving more than $2 million in unvested stock options on the table.

Twitter began with a conversation. Dorsey and Glass sat talking in a car one night in 2006 when Odeo was on the verge of collapse. Dorsey mentioned his "status concept," which was inspired by AOL's Instant Messenger "away messages" and LiveJournal status updates that people were using to mention where they were and what they were doing. Glass warmed to the idea, seeing it as a "technology that would erase a feeling that an entire generation felt while staring into their computer screens": loneliness.



For the full review, see:

MAUD NEWTON. "Four Characters." The New York Times Book Review (Sun., November 3, 2013): 20.

(Note: ellipses added.)

(Note: the online version of the review has the date November 1, 2013.)


Book under review:

Bilton, Nick. Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal. New York: Portfolio, 2013.






January 30, 2014

Diane Disney's Museum Displays Walt Disney's "Childlike Sense of Play"



DisneySharonWaltAndDiane2014-01-17.jpg






"Walt Disney with his daughters Sharon, left, and Diane in 1941." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. B16) Diane Disney Miller, Walt Disney's last surviving child, who . . . co-founded a museum dedicated to the memory of her father as a human being rather than a brand, died on Tuesday [November 19, 2013] in Napa Valley, Calif., where she had a home. She was 79.


. . .


At her death, Mrs. Miller was president of the board of the Walt Disney Family Foundation, whose mission is to ensure that her father, and not just his company, is remembered.

"My kids have literally encountered people who didn't know that my father was a person," she told The Times in 2009. "They think he's just some kind of corporate logo."

She opened the Walt Disney Family Museum in 2009, financing it through the foundation.

"The Disney Museum is far from being an airbrushed portrait," Edward Rothstein of The Times wrote in a review of the museum, adding, "The family movies on display show, at the very least, Disney's childlike sense of play, particularly with his two young daughters."



For the full obituary, see:

DANIEL E. SLOTNIK. "Diane Disney Miller, 79, Keeper of Walt's Flame." The New York Times (Thurs., November 21, 2013): B16.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date November 20, 2013, and has the title "Diane Disney Miller, 79, Keeper of Walt's Flame, Dies." The online version substitutes the word "co-founded" for the word "founded" that appeared in the first paragraph of the print version.)






January 29, 2014

Spencer Justified Carnegie as an Agent of Progress



(p. 229) Whether they read Spencer for themselves, as Carnegie had, or absorbed his teachings secondhand, his evolutionary philosophy provided the Gilded Age multimillionaires with a framework for rationalizing and justifying their outsized material success. In the Spencerian universe, Carnegie and his fellow millionaires were agents of progress who were contributing to the forward march of history into the industrial epoch. Carnegie was not exaggerating when he proclaimed himself a disciple of Spencer and referred to him, in almost idolatrous terms, as his master, his teacher, one of "our greatest benefactors," and the "great thinker of our age."


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






January 28, 2014

Solitude May Allow "Making Novel Connections Between Far-Flung Ideas"



FocusBK2014-01-18.jpg




















Source of book image: http://ffbsccn.files.wordpress.com/2013/12/focus.jpg



(p. 16) What appears to be most at risk is our ability to experience open awareness. Always a rare and elusive form of thinking, it seems to be getting rarer and more elusive. Our modern search-engine culture celebrates information gathering and problem solving -- ways of thinking associated with orienting and selective focus -- but has little patience for the mind's reveries. Letting one's thoughts wander seems frivolous, a waste of practical brainpower. Worse, our infatuation with social media is making it harder to hear the mind's whispers. Solitude has fallen out of fashion. Even when we're by ourselves, we're rarely alone with our thoughts.

In the end, we may come to see the flights and fancies of open awareness as not only dispensable but pathological. Goleman points out that the brain systems associated with creative mind-wandering tend to be "unusually active" in people with attention-deficit disorder. When they appear to be "zoning out," they may actually be making novel connections between far-flung ideas.



For the full review, see:

NICHOLAS CARR. "Attention Must Be Paid." The New York Times Book Review (Sun., November 3, 2013): 16.

(Note: the online version of the review has the date November 1, 2013.)


Book under review:

Goleman, Daniel. Focus: The Hidden Driver of Excellence. New York: HarperCollins Publishers, 2013.






January 26, 2014

Walt Disney's "Job" Was to "Restore Order to the Chaos of Life"



ThompsonHanksSavingMrBanks2014-01-17.jpg "Emma Thompson and Tom Hanks in "Saving Mr. Banks," directed by John Lee Hancock." Source of caption and photo: online version of the NYT article quoted and cited below.



I'm a fan of Disney the entrepreneur and I think that Hanks does a good job of showing that side of Disney. It's a movie made by the Disney company, but has a darker, more adult-themed, side than most "Disney" movies. It's not on my all-time-top-10-list. But we enjoyed it, overall. (Paul Giamatti is wonderful.)



(p. C8) "Saving Mr. Banks," released by Disney, is a movie about the making of a Disney movie ("Mary Poppins"), in which Walt Disney himself (played by Tom Hanks) is a major character. It includes a visit to Disneyland and, if you look closely, a teaser for its companion theme park in Florida (as yet unbuilt, when the story takes place). A large Mickey Mouse plush toy appears from time to time to provide an extra touch of humor and warmth. But it would be unfair to dismiss this picture, directed by John Lee Hancock from a script by Kelly Marcel and Sue Smith, as an exercise in corporate self-promotion. It's more of a mission statement.


. . .


. . . Walt is less a mogul than a kind and reliable daddy. He dotes on his intellectual properties (the mouse, the park, the picture) as if they were his children. He wants to adapt Mrs. Travers's novel to keep a promise to his daughters.


. . .


. . . Walt, in a late, decisive conversation, explains that their job as storytellers is to "restore order" to the chaos of life and infuse bleak realities with bright, happy colors.



For the full review, see:

A. O. SCOTT. "An Unbeliever in Disney World." The New York Times (Fri., December 13, 2013): C8.

(Note: ellipses added.)

(Note: the online version of the review has the date December 12, 2013.)






January 25, 2014

William Abbott Thought Tom Carnegie Was a "Better Business Man" than Andrew




The relationship between Andrew and Tom Carnegie sketched in the passage below seems, in some ways, similar to the relationship between Walt and Roy Disney.


(p. 138) William Abbott, who knew both Carnegies from their early days at the Pittsburgh iron mills, thought Andrew a genius, but regarded Tom as the "better business man." Tom, Abbott told Burton Hendrick, "was solid, shrewd, farseeing, absolutely honest and dependable." The two brothers had very different notions about business. Andrew was the ambitious one, (p. 139) filled with new ideas; Tom "was content with a good, prosperous, safe business and cared nothing for expansion. He disapproved of Andrew's skyrocketing tendencies, regarded him as a plunger and a dangerous leader. Tom wanted earnings in the shape of dividends, whereas Andrew insisted on using them for expansion." There were other differences as well. While Andrew sought out publicity, Tom ran away from it. He was silent, retiring, "not a mixer in society, was tongue-tied at dinner parties and social gatherings."


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






January 20, 2014

AquaBounty Has Waited More than 17 Years for FDA Approval



EnviropigDevelopedAtGuelph2013-12-31.jpg

"The Enviropig Scientists at the University of Guelph, in Canada, developed these pigs to produce more environmentally friendly waste than conventional pigs. But the pigs were killed because the scientists could not get approval to sell them as food." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. 4) If patience is a virtue, then AquaBounty, a Massachusetts biotech company, might be the most virtuous entity on the planet.

In 1993, the company approached the Food and Drug Administration about selling a genetically modified salmon that grew faster than normal fish. In 1995, AquaBounty formally applied for approval. Last month, more than 17 years later, the public comment period, one of the last steps in the approval process, was finally supposed to conclude. But the F.D.A. has extended the deadline -- members of the public now have until late April to submit their thoughts on the AquAdvantage salmon. It's just one more delay in a process that's dragged on far too long.

The AquAdvantage fish is an Atlantic salmon that carries two foreign bits of DNA: a growth hormone gene from the Chinook salmon that is under the control of a genetic "switch" from the ocean pout, an eel-like fish that lives in the chilly deep. Normally, Atlantic salmon produce growth hormone only in the warm summer months, but these genetic adjustments let the fish churn it out year round. As a result, the AquAdvantage salmon typically reach their adult size in a year and a half, rather than three years.


. . .


We should all be rooting for the agency to do the right thing and approve the AquAdvantage salmon. It's a healthy and relatively cheap food source that, as global demand for fish increases, can take some pressure off our wild fish stocks. But most important, a rejection will have a chilling effect on biotechnological innovation in this country.


. . .


Then there's the Enviropig, a swine that has been genetically modified to excrete less phosphorus. Phosphorus in animal waste is a major cause of water pollution, and as the world's appetite for meat increases, it's becoming a more urgent problem. The first Enviropig, created by scientists at the University of Guelph, in Canada, was born in 1999, and researchers applied to both the F.D.A. and Health Canada for permission to sell the pigs as food.

But last spring, while the applications were still pending, the scientists lost their funding from Ontario Pork, an association of Canadian hog farmers, and couldn't find another industry partner. (It's hard to blame investors for their reluctance, given the public sentiment in Canada and the United States, as well as the uncertain regulatory landscape.) The pigs were euthanized in May.

The F.D.A. must make sure that other promising genetically modified animals don't come to the same end. Of course every application needs to be painstakingly evaluated, and not every modified animal should be approved. But in cases like AquaBounty's, where all the available evidence indicates that the animals are safe, we shouldn't let political calculations or unfounded fears keep these products off the market. If we do that, we'll be closing the door on innovations that could help us face the public health and environmental threats of the future, saving countless animals -- and perhaps ourselves.



For the full commentary, see:

EMILY ANTHES. "Don't Be Afraid of Genetic Modification." The New York Times, SundayReview Section (Sun., March 10, 2013): 4.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 9, 2013.)


Emily Anths, who is quoted above, has written a related book:

Anthes, Emily. Frankenstein's Cat: Cuddling up to Biotech's Brave New Beasts. New York: Scientific American / Farrar, Straus and Giroux, 2013.






January 17, 2014

Carnegie Failed Twice Before Bessemer Success



(p. 101) [Carnegie] . . . organized his own company to secure the rights to the Dodd process for strengthening iron rails by coating them with steel facings. Thomson agreed to appropriate $20,000 of Pennsylvania Railroad funds to test the new technology.

On March 12, 1867, Thomson wrote to tell Carnegie that his Dodd-processed rails had failed their first test: "treatment under the hammer.... You may as well abandon the Patent--It will not do if this Rail is a sample." Three days later, Thomson wrote Carnegie again, this time marking his letter with a handwritten "Private" in the top left-hand corner and "a word to the wise" penned in just below. Carnegie had apparently asked Thomson for more time--and/or money--to continue his experiments. Thomson replied that the experiments his engineers had made had so "impaired my confidence in this process that I don't feel at liberty to increase our order for these Rails."

Instead of giving up, Carnegie pushed forward, hawking his new steel-faced iron rails to other railroad presidents, attempting to get a new contract with Thomson, and reorganizing the Freedom Iron Company in Lewistown, Pennsylvania, in which he was a major investor, into Freedom Iron and Steel. In the spring of 1867, he succeeded, despite Thomson's misgivings, in getting the approval to manufacture and deliver a second 500-ton batch of steel-faced rails. The new rails fared as poorly as the old ones. There would be no further contracts forthcoming from the Pennsylvania Railroad or any other railroad.

Carnegie tried to bluff his way through. When his contacts in England recommended that he purchase the American rights to a better process for facing iron rails with steel, this one invented by a Mr. Webb, Carnegie retooled his mill for the new process. He was fooled a second time. Not only was the Webb process as impractical as the Dodd, but there was, as there (p. 102) had been with the Dodd process, confusion as to who held the American patent rights. Within a year, the company Carnegie had organized to produce the new steel-faced rails was out of business.


. . .


These early failures did not deter him from investing in other start-up companies and technologies, but he would in future be a bit more careful before committing his capital. In March 1869, Tom Scott solicited his advice about investing in the rights to a new "Chrome Steel process." Carnegie replied that his "advice (which don't cost anything if of no value) would be to have nothing to do with this or any other great change in the manufacture of steel or iron.... I know at least six inventors who have the secret all are so anxiously awaiting.... That there is to be a great change in the manufacture of iron and steel some of these years is probable, but exactly what form it is to take no one knows. I would advise you to steer clear of the whole thing. One will win, but many lose and you and I not being practical men would very likely be among the more numerous class. At least we would wager at very long odds. There are many enterprises where we can go in even."



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: bracketed name, ellipsis near start, and ellipsis between paragraphs added; ellipsis internal to other paragraphs, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






January 16, 2014

Malcolm Gladwell, on Harvard, Rings True to Debbie Sterling



SterlingDebbieGoldieBlox2013-12-29.jpg









Debbie Sterling, GoldieBlox entrepreneur. Source of photo: online version of the NYT article quoted and cited below.


















(p. 2) Debbie Sterling is the founder and chief executive of GoldieBlox, a toy company dedicated to encouraging girls' interest in engineering and construction.


READING I just started "David and Goliath," by Malcolm Gladwell. He has some really interesting statistics about how at the top-tier universities like Stanford and Harvard, freshmen who go into engineering often fall out versus if those same students had gone to a second-tier school, they would have been in the top of their class and therefore would have stayed in. It really spoke to me because I was definitely one of those engineering students at Stanford who constantly felt like I was surrounded by geniuses. I was intimidated, but I stayed because I am just so stubborn.



For the full interview, see:

KATE MURPHY, interviewer. "DOWNLOAD; Debbie Sterling." The New York Times, SundayReview Section (Sun., December 22, 2013): 2.

(Note: bold in original, indicating that what follows are the words of Debbie Sterling.)

(Note: the online version of the interview has the date December 21, 2013.)


Book that "spoke to" Sterling:

Gladwell, Malcolm. David and Goliath: Underdogs, Misfits, and the Art of Battling Giants. New York, NY: Little, Brown and Company, 2013.






January 15, 2014

The Law-Breaking Entrepreneur as "Savior"



(p. A11) This is a simple lesson in free-market economics, provided courtesy of the harsh winter weather of recent days in the eastern half of the U.S. Coincidentally, the annual meetings of the American Economic Association were scheduled to take place in Philadelphia, from Jan. 3-6. My friend and colleague, Haizheng Li, flew in to Philadelphia late in the evening of Thursday, Jan. 2, landing around 10:45. As he later told me, by then it was snowing heavily. Because of backed-up air traffic, the pilot was not able to park at their arrival gate for 40 minutes. After de-planing, Haizheng waited for another 40 minutes to retrieve his luggage.


. . .


Haizheng and a number of other passengers were facing the grim prospect of an uncomfortable night at the airport. The food vendors were all closed. Haizheng was tired and hungry--and he was scheduled to make a presentation at 8 the next morning.

Unexpectedly, out of the night came a savior. A man walked through baggage claim asking whether any of the recently arrived passengers needed transportation to one of the downtown hotels. Haizheng didn't ask what the ride might cost, he just said yes. As it turned out, the man took six stranded passengers, plus luggage, to their hotels for $25 each.

No doubt in doing so he broke at least one, probably several, laws regarding passenger transport that are designed to prop up the local taxi cartel. Yet this man's action dramatically improved the lives of six individuals, each of whom undoubtedly would have been willing to pay much more than $25 to get from the airport to their respective hotels. Haizheng told me he would have paid a lot more.



For the full commentary, see:

DAVID N. LABAND. "An Economics Lesson at the Baggage Carousel; Government-regulated taxis weren't around in a snowstorm. Then came a man with a car and price." The Wall Street Journal (Fri., Jan. 10, 2014): A11.

(Note: ellipsis added; italics in original.)

(Note: the online version of the article has the date Jan. 9, 2014.)






January 13, 2014

"Despising to Bury in the Ground Any of the Talents . . . Which Might Reach His Coffers"



(p. 97) . . . , Carnegie was concerned that he was overextended. From Dresden, in mid-November, he half jokingly apologized to his brother for placing his--and the family's--finances in jeopardy. "Your finances are reputed far from healthy," he had written Tom. "But how can they ever be otherwise? It was never intended. One of the firm, at least, was made to be forever head and ears in debt and to crowd full sail, despising to bury in the ground any of the talents (silver talents, I mean) which might reach his coffers, or to lie long under the suspicion of having at the bank even a moderate balance upon the right side of the ledger." Carnegie had fantasized that "a whole year's absence from opening up new enterprises... while the funds remained in charge of a super man, might possibly afford him, upon his return, a new sensation," that of being solvent. But that was not going to happen.


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis in title and at start added; ellipsis in Carnegie quote near end, in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






January 11, 2014

Gates Is Only One Who Can Reshape Microsoft's Culture



(p. 1D) Bill Gates should serve as Microsoft Corp.'s chief executive officer for a year as the software company he co-founded seeks a replacement for Steve Ballmer, Charles Schwab said Wednesday [November 20, 2013] at a conference in Chicago. . . . "I think it would behoove Gates to go back for at least a year," Schwab said. "He's the only guy who can really reshape the cultural aspects. Otherwise the organization will spit anybody out, anybody coming in."


For the full story, see:

"Schwab Suggests Gates Return as CEO." Omaha World-Herald (THURSDAY, NOVEMBER 21, 2013): 1D.

(Note: ellipsis, and bracketed date, added.)







January 9, 2014

Early Carnegie Profits "Were Quickly Reinvested in Other Projects"



(p. 78) The tens of thousands of dollars Carnegie earned in the four years he held the Columbia Oil stock were quickly reinvested in other projects.


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






January 5, 2014

The Market Incentive to Conserve



(p. 78) Carnegie, having satisfied himself that there was oil in the ground and a way to ship it to Pittsburgh, agreed to invest in Coleman's oil company. While other prospectors fantasized only about the liquid gold that lay deep in the ground, Coleman and Carnegie believed that in the not too distant future the wells would run dry. To prepare for that day and turn it to their advantage, Coleman proposed--and Carnegie agreed--to construct a man-made lake, pump the oil from their wells into it, and leave it there until the supply dwindled and prices rose. Coleman and Carnegie waited for the region to run out of oil while their lake leaked thousands of barrels daily. Unable to find any efficient way to store the oil, they had to sell it on the open market.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






January 2, 2014

Free Agent Entrepreneur Mr. C Exuded a Zest for Life



CanigliaYanoMisterC2013-11-27.jpg "In a 2000 photo, Sebastiano "Yano" Caniglia, a member of one of Omaha's largest restaurant families, stands outside his Mister C's Steakhouse, which operated from 1953 until 2007." Source of caption and photo: online version of the Omaha World-Herald obituary quoted and cited below.



In the current draft of my book Openness to Creative Destruction, I use Mr. C as my example of a "free agent entrepreneur." An evening at Mr. C's was as much about spirit and experience and entertainment as it was about food. Mr. C's was on the other side of town, but we tried to get there at least once a year, usually around the holidays. When my daughter was young, she would run over to the wonderful diorama that included Frank Sinatra, Mr. C, and the Pope. I remember the strolling violinist, the accordion player and the clown. And the time Mr. C stopped by our table to show us his singing potted flower. This time of year, I remember the thousands of small twinkling Christmas lights throughout the restaurant. Mr. C exuded a wonderful childlike enthusiasm and zest for life.



(p. 1B) "He was only at Hospice House for a few hours," said his son. "He was singing to the nurses, telling them stories and ­having a wonderful day when he dropped."


. . .


(p. 2B) David Caniglia said his father had a simple business model that included "good, old-fashioned hard work."

"He was sincere when people came into the restaurant. They were more than just customers, they were coming into his home," he said.

On the last day for Mister C's, Yano Caniglia told The World-Herald: "I couldn't wait to get to work every day. I never wanted it to end."

A reporter in 1983 described Mr. C in his restaurant:

"If it was your first visit, you probably were still recovering from the dazzle of thousands of Christmas lights that festoon the place when he bustled up to your table, welcomed you in his booming voice and, if there were kids in your party, deftly twisted balloon animals for them."



For the full obituary, see:

Sue Story Truax. "Man Behind Mister C's Success, Sebastiano Caniglia, Dies at 89." Omaha World-Herald (Friday, November 15, 2013): 1B-2B.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date Thursday, November 14, 2013, and has the title "Yano Caniglia was the mister in Mr. C's Steakhouse.")






January 1, 2014

"Carnegie Watched, Listened, Learned" from Scott's Process Innovations



(p. 65) Later in life, Scott would be better known for his political skills, but he was, like his mentor Thomson, a master of cost accounting. Together, the two men steadily cut unit costs and increased revenues by investing in capital improvements--new and larger locomotives, better braking systems, improved tracks, new bridges. Instead of running several smaller trains along the same route, they ran fewer but longer trains with larger locomotives and freight cars. To minimize delays--a major factor in escalating costs--they erected their own telegraph lines, built a second track and extended sidings alongside the first one, and kept roadways, tunnels, bridges, and crossings in good repair.

Carnegie watched, listened, learned. Nothing was lost on the young man. With an exceptional memory and a head for figures, he made the most of his apprenticeship and within a brief time was acting more as Scott's deputy than his assistant. Tom Scott had proven to be so good at his job that when Pennsylvania Railroad vice president William Foster died unexpectedly of an infected carbuncle, Scott was named his successor.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 31, 2013

"Western Union Bullied the Makers of Public Policy into Serving Private Capital"



WesternUnionAndTheCreationOfTheAmericanCorporateOrderBK2013-12-28.jpg












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







(p. A13) Until now there has been no full-scale, modern company history. Joshua D. Wolff's "Western Union and the Creation of the American Corporate Order, 1845-1893" ably fills the bill, offering an exhaustive and yet fascinating account.


. . .


If people today remember anything about Western Union, it is that its coast-to-coast line put the Pony Express out of business and that its leaders didn't see the telephone coming. Mr. Wolff tells us that neither claim is exactly true. It was Hiram Sibley, Western Union's first president, who went out on his own, when his board balked, to form a separate company and build the transcontinental telegraph in 1861; he made his fortune by eventually selling it to Western Union. And the company was very aware of Alexander Graham Bell's invention, patented in 1876, but history had supposedly shown that it wasn't necessary to control a patent to win the technology war. The company's third president, William Orton, was sure that Bell and his "toy" would not get the better of Western Union: "We would come along and take it away from him." They didn't.


. . .


Mr. Wolff contends that the company's practices set the template for today's "corporate triumphalism," not least in the way Western Union bullied the makers of public policy into serving private capital. Perhaps, but telecom competition today is so ferocious and differently arranged from that of the late 19th century that a "triumphant" company today may be toast tomorrow--think of BlackBerry--and can't purchase help with anything like Western's Union's brazenness and scope. Western Union had friends in Congress, the regulatory bureaucracy and the press. Members of the company's board of directors chaired both the 1872 Republican and Democratic national conventions. It seemed that, whatever the battles in business, politics, technology or the courts, the company's shareholders won.



For the full review, see:

STUART FERGUSON. "Bookshelf; The Octopus of the Wires." The Wall Street Journal (Mon., Dec. 23, 2013): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 22, 2013, and has the title "BOOKSHELF; Book Review: 'Western Union and the Creation of the American Corporate Order, 1845-1893,' by Joshua D. Wolff.")


Book under review:

Wolff, Joshua D. Western Union and the Creation of the American Corporate Order, 1845-1893. New York: Cambridge University Press, 2013.






December 28, 2013

Carnegie Objected to $2 a Year Fee to Use Private Library



(p. 44) The story of Andy Carnegie defeating the villainous adults played well in his Autobiography and the biographies that drew from it, but there is another side to the tale which we should not neglect. The Anderson Library was not a free public library, funded by the city, but a subscription library, which relied in great part on the support of its patrons.* Although "working boys" should, as he had argued, have been allowed to borrow books without paying the two-dollar subscription fee, Andy Carnegie, six months from his eighteenth birthday, was hardly a "working boy." He held a man's job and received a man's pay of twenty-five dollars a month. Was it unreasonable for the librarians to ask him to contribute a two-dollar annual subscription fee to keep the library from having to close its doors for the third time in its young history?

Andy thought so. With a talent for cloaking self-interest in larger humanitarian concerns, he made a premature case for free public libraries.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: italics in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 27, 2013

"Myth that Most C.E.O.'s Are Extroverts"



MerrimanDwightMongoDBcoFounder2013-12-07.jpg








""It's a myth that most C.E.O.'s are extroverts," says Dwight Merriman, chairman and co-founder of MongoDB, an open-source document database. He has overcome his own earlier shyness, he says, and relies on enthusiasm for his work." Source of caption and photo: online version of the NYT interview quoted and cited below.



(p. B2) Q. I take it you're an introvert.

A. I am.

Q. You were C.E.O. of MongoDB for five years before becoming chairman, and a big part of that job no doubt required you to spend a lot of time with people and give a lot of talks. How did you handle that?

A. I think 95 percent of the time you can get past that with just sheer brute force. I remember public-speaking class in college. I really didn't want to do it. But today, when I give talks to 1,000 people, I'm not nervous at all. I think you get used to it. You just have to force yourself out of your comfort zone.

And it's a myth that most C.E.O.'s are extroverts. Many are, but probably no more than the general population. I do what works for me, which is being enthusiastic and passionate about what we're doing. You've just got to find what works for you.


For the full interview, see:

ADAM BRYANT. "CORNER OFFICE: Dwight Merriman; Being an Effective Leader Without Being an Extrovert." The New York Times (Fri., November 1, 2013): B2.

(Note: bold and italics in original.)

(Note: the online version of the interview has the date October 31, 2013, and has the title "CORNER OFFICE; Dwight Merriman of MongoDB on Leading by Enthusiasm.")






December 26, 2013

Innovators Agree: Whiteboard Is Fast, Easy to Use and Big



(p. B1) . . . Evernote, like pretty much every tech company I've ever visited, is in thrall to the whiteboard. Indeed, as technologically backward as they may seem, whiteboards are to Silicon Valley what legal pads are to lawyers, what Excel is to accountants, or what long sleeves are to magicians.

They're an all-purpose tool of innovation, often the first place a product or company's vision is dreamed up and designed, and a constant huddling point for future refinement. And though many digital technologies have attempted to unseat the whiteboard, the humble pre-electronic surface can't be beat.

The whiteboard has three chief virtues: It's fast. It's easy to use. And it's big. "We're often doing something I call 'designing in the hallway,' " said Jamie Hull, the product manager for Evernote's iOS apps. "When a new problem or request comes up, the fastest thing you can do is pull two or three people aside, go to the nearest wall, and figure it out."

Unlike a computer or phone, the whiteboard is always on, always fully charged, and it doesn't require that people download, install, and launch software to begin using it.



For the full commentary, see:

FARHAD MANJOO. "HIGH DEFINITION; High Tech's Secret Weapon: The Whiteboard." The Wall Street Journal (Thurs., Oct. 31, 2013): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Oct. 30, 2013. The online version combined paragraphs 1 and 2 above and 3 and 4 above. I have returned them to the form they had in the print version.)






December 24, 2013

Carnegie's Uncle Aitkin Expected to Make a Good Profit Starting a Private Lending Library




Shortly after arriving in Allegheny City (near Pittsburgh) Andrew Carnegie's Uncle Aitkin had complained in a letter:


(p. 42) "There is no possibility of getting papers or periodicals to read here for a small sum--most of the people being in the habit of purchasing them for their own use. This has been to me a great deprivation. I really find that books here are as dear as in the old country everything considered."

Uncle Aitkin hoped to remedy this flaw in American cultural life--and make a profit at it--by starting up his own lending library. "I am now convinced that for any one to keep a library and to give works out at a cheaper rate would pay very well & I think I will be engaged in this business in a short time,--after I make a little money by lecturing etc." Regrettably--for Uncle Aitkin and for Allegheny City's starved readers--he never got around to setting up his business.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 20, 2013

After First "Debilitating" Federal Funding, Morse Funded Telegraph Privately



(p. 37) The first telegraph line had been completed . . . , in 1844, when Samuel F. B. Morse, with $30,000 in federal funding, connected Washington to Baltimore. Morse and his partners had expected to get funding to build additional lines from the federal government, but their experience securing their first $30,000 had been so debilitating that they gave up entirely on the public sector and turned to private capital to fund their new telegraph lines. Henry O'Rielly secured the franchise and agreed to raise the capital to string telegraph poles from east to west. His plan was to extend one line from Buffalo to Chicago, the other across the Alleghenies from Philadelphia through Pittsburgh, to St. Louis, and then north to Chicago, and south to New Orleans.

Although customers were scarce and the first telegraph lines were continually breaking (or being broken by bands of boys who took great joy in throwing stones at the glass insulators that glistened in the sunlight), O'Rielly and the handful of entrepreneurs who believed in the future of telegraphy raised sufficient capital to extend their lines mile by mile. By late 1846, they had also connected Boston to Washington, via New York City and Philadelphia; New York City to Buffalo, through Albany; and in late December, Philadelphia to Pittsburgh, via Lancaster and Harrisburg.



Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: ellipsis added.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 19, 2013

Regulators Harass Saucy and Irreverent Buckyball Entrepreneur



ZuckerCraigBuckyballs2013-12-07.jpg










"Craig Zucker, former head of Maxfield & Oberton, which made Buckyballs, sells Liberty Balls to raise a legal-defense fund against an unusual action by federal regulators." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. B1) Over the last three weeks, more than 2,200 people have placed orders for $10-to-$40 sets of magnetic stacking balls, rising to the call of a saucy and irreverent social media campaign against a government regulatory agency.


. . .


It involves an effort by the federal Consumer Product Safety Commission to recall Buckyballs, sets of tiny, powerfully magnetic stacking balls that the magazines Rolling Stone and People once ranked on their hot products lists.

Last year, the commission declared the balls a swallowing hazard to young children and filed an administrative action against the company that made the product, demanding it recall all Buckyballs, and a related product called Buckycubes, and refund consumers their money. The company, Maxfield & Oberton Holdings, challenged the action, saying labels on the packaging clearly warned that the product was unsafe for children.

But the fuss now has less to do with safety. After Maxfield & Oberton went out of business last December, citing the financial toll of the recall battle, lawyers for the product safety agency took the highly unusual step of adding the chief executive of the dissolved firm, Craig Zucker, as a respondent in the recall action, arguing that he con-
(p. B6)trolled the company's activities. Mr. Zucker and his lawyers say the move could ultimately make him personally responsible for the estimated recall costs of $57 million.

While the "responsible corporate officer" doctrine (also known as the Park doctrine) has been used frequently in criminal cases, allowing for prosecutions of individual company officers in cases asserting corporate wrongdoing, experts say its use is virtually unheard-of in an administrative action where no violations of law or regulations are claimed.


. . .


Three well-known business organizations -- the National Association of Manufacturers, the National Retail Federation and the Retail Industry Leaders Association -- banded together this summer to file a brief urging the administrative law judge reviewing the recall case to drop Mr. Zucker as a respondent.

The groups argue that holding an individual responsible for a widespread, expensive recall sets a disturbing example and runs counter to the business desire for limited liability. They contend that such risk would have a detrimental effect on entrepreneurism and openness in dealing with regulatory bodies.


. . .


Conservative legal groups like Cause of Action, a nonprofit that targets what it considers governmental overreach, have been watching the proceedings with interest and weighing taking some action.

"This really punishes entrepreneurship and establishes a bad precedent for businesses working to create products for consumers," said Daniel Z. Epstein, the group's executive director. "It undermines the business community's ability to rely upon the corporate form."


For the full story, see:

HILARY STOUT. "In Regulators' Sights; Magnetic-Toy Recall Gives Rise to Wider Legal Campaign." The New York Times (Fri., November 1, 2013): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the article has the date October 31, 2013, and has the title "Buckyball Recall Stirs a Wider Legal Campaign.")






December 15, 2013

Amazon's User Reviews Increase Rationality of Consumer Choices



AbsoluteValueBK2013-12-08.png
















Source of book image: http://2.bp.blogspot.com/-dNUZ_u-GWSk/UpqE0zmFQQI/AAAAAAAAAko/Z8uisfEjgRc/s1600/Absolute+Value+cover.png



(p. 3) You are no longer the sucker you used to be.

So suggests continuing research from the Stanford Graduate School of Business into the challenges marketers face in reaching consumers in the digital age. As you might suspect, the research shows that a wealth of online product information and user reviews is causing a fundamental shift in how consumers make decisions.

As consumers rely more on one another, the power of marketers is being undermined, said Itamar Simonson, a Stanford marketing professor and the lead researcher.


. . .


To get the full impact of the findings, you first have to know the conclusions of a similar experiment decades ago by Dr. Simonson, . . . .  . . .

The researchers found that when study subjects had only two choices, most chose the less expensive camera with fewer features. But when given three choices, most chose the middle one. Dr. Simonson called it "the compromise effect" -- the idea that consumers will gravitate to the middle of the options presented to them.


. . .


Flash forward to the new experiment. It was similar to the first, except that consumers could have a glimpse at Amazon. That made a huge difference. When given three camera options, consumers didn't gravitate en masse to the midprice version. Rather, the least expensive one kept its share and the middle one lost more to the most expensive one.

"The compromise effect was gone," said Dr. Simonson, or, rather, he nearly exclaimed the absence of the effect, underscoring his surprise at the findings. They are to be published next month in "Absolute Value," a book by Dr. Simonson and Emanuel Rosen.

Today, products are being evaluated more on their "absolute value, their quality," Dr. Simonson said. Brand names mean less.


For the full story, see:

MATT RICHTEL. "APPLIED SCIENCE; There's Power in All Those User Reviews." The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.

(Note: ellipses added.)

(Note: the online version of the article has the date December 7, 2013.)


The new research is reported in:

Simonson, Itamar, and Emanuel Rosen. Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information. New York: HarperBusiness, 2014.






December 12, 2013

Carnegie Attended a Private School Where Teacher Was an Entrepreneur



(p. 15) At the age of eight, Andra had begun attending school. Although he implies in his Autobiography that it had been his decision to put off school until then, eight, in fact, was the age at which most Scottish boys entered the classroom. There were numerous schools in Dunfermline in the early 1840s, thirty-three of them to be exact, almost half endowed or supported by the kirk (church) or the municipality. Andra was sent to one of the "adventure" schools, so called because they were started up and supported "entirely on the teachers' own adventure."


Source:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: italics in original.)

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 9, 2013

Carnegie Was Important Innovative Entrepreneur



AndrewCarnegieBK2013-12-07.JPG
















Source of book cover image: http://img1.imagesbn.com/p/9781594201042_p0_v2_s260x420.JPG



Andrew Carnegie was a famous, much reviled, and much praised innovative entrepreneur. He is not my favorite innovative entrepreneur. He was happy to have the government protect the steel industry, and he tried to have his sidekick take all the blame for a violent episode at his steel works. But he worked hard (at least in his early decades), was often generous, fought against Teddy Roosevelt's imperialism, and most importantly, he greatly improved the process for making steel, thereby increasing its quality and decreasing its price.

Nasaw's serious and substantial biography is useful at untangling and documenting the good and the bad. In the next several weeks, I will be quoting some of the more important or thought-provoking passages in the book.



Nasaw's biography of Carnegie is:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






December 8, 2013

Functional Stupidity Management



(p. 1194) In this paper we question the one-sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under-recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals' internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self-reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.


Source of paper abstract:

Alvesson, Mats, and André Spicer. "A Stupidity-Based Theory of Organizations." Journal of Management Studies 49, no. 7 (Nov. 2012): 1194-220.







December 7, 2013

Innovative Fracking Entrepreneurs Again Show that Energy Is Only Limited by Ingenuity



TheFrackersBK2013-11-03.jpg












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





(p. 7) In "The Frackers," Gregory Zuckerman sets out a 25-year narrative that focuses on the half-dozen or so Texas and Oklahoma energy companies behind the fracking boom, especially Chesapeake Energy, the Oklahoma City giant that is the Exxon Mobil of fracking. Technologies are born. Gushers gush. And fortunes are made and lost.

In the process, Mr. Zuckerman assembles a chorus of little-heard American voices, from George Mitchell, the Greek goatherd's son whose company first perfected fracking, to Chesapeake's two founders, Aubrey K. McClendon and Tom L. Ward.


. . .


Geologists knew that layers of shale spread across North America contained commercial amounts of oil and gas, but not until a young geologist at Mr. Mitchell's company, Mitchell Energy, perfected a new "secret sauce" of water-based fracturing liquids in the early 1990s did layers of shale -- in Mitchell's case, the Barnett Shale of North Texas -- melt away and begin to yield jaw-dropping gushers.

Oryx Energy, a company that was based in Dallas, was among the first to pair fracking with horizontal drilling, producing even more startling results. Still, it took years, Mr. Zuckerman writes, before larger businesses, especially the skeptical major oil companies, fathomed what their smaller rivals had achieved. This allowed what were flyspeck outfits like Chesapeake to lease vast acreage in shale-rich areas, from Montana to eastern Pennsylvania.



For the full review, see:

BRYAN BURROUGH. "OFF THE SHELF; The Birth of an Energy Boom." The New York Times, SundayBusiness Section (Sun., November 2, 2013): 7.

(Note: ellipses added.)

(Note: the online version of the review has the date November 2, 2013, and has the title "OFF THE SHELF; 'The Frackers' and the Birth of an Energy Boom.")


Book being reviewed:

Zuckerman, Gregory. The Frackers: The Outrageous inside Story of the New Billionaire Wildcatters. New York: Portfolio/Penguin, 2013.






December 4, 2013

"Israel's Entrepreneurial Character"



(p. 272) Israel's entrepreneurial character led Google to establish a center in Haifa as well as the more expected Tel Aviv. The Haifa office was a move to accommodate Yoelle Maarek, a celebrated computer scientist who had headed IBM's labs in Israel. Google hired another world-class computer scientist, Yossi Matias, to head the Tel Aviv office. (In 2009, during Google's austerity push, the company would merge the engineering centers and Maarek would depart.)


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






December 3, 2013

Amazon's Story of the Evolution and Revolution of Disruptive Innovation



EverythingStoreBK2013-10-29.jpg

















Source of book image:
http://i1.wp.com/allthingsd.com/files/2013/10/Stone_EverythingStore1.jpg



(p. C5) Mr. Stone, a senior writer for Bloomberg Businessweek and a former reporter for The New York Times, tells this story of disruptive innovation with authority and verve, and lots of well-informed reporting. Although "The Everything Store" retraces early ground covered by Robert Spector's 2000 book, "Amazon.com: Get Big Fast," Mr. Stone has conducted more than 300 interviews with current and former Amazon executives and employees, including conversations, over the years, with Mr. Bezos, who "in the end was supportive of this project even though he judged that it was 'too early' for a reflective look" at the company.

"The Everything Store" does not examine in detail the fallout that Amazon's rise has had on book publishing and on independent bookstores, but Mr. Stone does a nimble job of situating the company's evolution within the wider retail landscape and within the technological revolution that was remaking the world at the turn of the millennium.



For the full review, see:

MICHIKO KAKUTANI. "BOOKS OF THE TIMES; Selling as Hard as He Can." The New York Times (Tues., October 29, 2013.): C1 & C5.

(Note: the online version of the review has the date October 28, 2013.)


The book under review is:

Stone, Brad. The Everything Store: Jeff Bezos and the Age of Amazon. New York: Little, Brown and Company, 2013.


StoneBrad2013-10-29.jpg










"Brad Stone" Source of caption and photo: online version of the NYT review quoted and cited above.







December 1, 2013

Kits Let Model T Owners Transform Them into Tractors, Snowmobiles, Roadsters and Trucks



ModelTtractorConversion2013-10-25.jpg "OFF ROAD; Kits to take the Model T places Henry Ford never intended included tractor conversions, . . . " Source of caption and photo: online version of the NYT article quoted and cited below.



(p. 1) WHEN Henry Ford started to manufacture his groundbreaking Model T on Sept. 27, 1908, he probably never imagined that the spindly little car would remain in production for 19 years. Nor could Ford have foreseen that his company would eventually build more than 15 million Tin Lizzies, making him a billionaire while putting the world on wheels.

But nearly as significant as the Model T's ubiquity was its knack for performing tasks far beyond basic transportation. As quickly as customers left the dealers' lot, they began transforming their Ts to suit their specialized needs, assisted by scores of new companies that sprang up to cater exclusively to the world's most popular car.

Following the Model T's skyrocketing success came mail-order catalogs and magazine advertisements filled with parts and kits to turn the humble Fords into farm tractors, mobile sawmills, snowmobiles, racy roadsters and even semi-trucks. Indeed, historians credit the Model T -- which Ford first advertised as The Universal Car -- with launching today's multibillion-dollar automotive aftermarket industry.



For the full story, see:

LINDSAY BROOKE. "Mr. Ford's T: Mobility With Versatility." The New York Times, Automobiles Section (Sun., July 20, 2008): 1 & 14.

(Note: the online version of the story has the title "Mr. Ford's T: Versatile Mobility." )






November 30, 2013

Google Surprised at Success of Chinese Cyberattack



(p. 268) Though the underlying issue of Google's China pullout was censorship, it was ironic that a cyberattack had triggered the retreat. Google had believed that its computer science skills and savvy made it a leader in protecting its corporate information. With its blend of Montessori naiveté and hubris that had served it so well in other areas, the company felt it could do security better. Until the China incursion, it appeared to be succeeding.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






November 26, 2013

Nebraska Teenager Becomes the "George Clooney of YouTube"



(p. 263) Google also became more aggressive in connecting sponsors for popular videos. A paragon of YouTube's business model was "Fred," a video channel created by a Columbus, Nebraska, teenager named Lucas Cruikshank. The teen pretended to be a six-year-old kid named Fred Figglehorn in a series of two-minute videos. "Fred is the George Clooney of YouTube," says Hunter Walk. "He was the first one with a million subscribers. He uploads videos, and we put ads against them. Sometimes he sells product placement ads. Fred makes a million dollars a year. He just signed a movie deal." The Fred videos-- generally manic rants in which Cruikshank portrays a hyperactive, possibly brain-damaged child who speaks like one of Ross Bagdasarian's chipmunks-- often sported commercial messages for sponsors such as Samsung, the Food Channel, and Bratz on an overlay at the bottom of the window. Since he started in 2008, at age fourteen, Fred's (p. 264) YouTube videos have chalked up over half a billion viewings. Though Fred's success was solely a product of YouTube, people in the company never met the phenom. "We sent him a cake once," says Walk.

YouTube helped Fred's youthful creator not just by selling ads but by providing analytics, the same way it did for AdSense publishers. (This was a result of an initiative called the YouTube Insight project, developed by engineers in Google's Zurich center.) Such data helped creators learn what was working and where. "They're like, 'Oh my God, I'm big in the U.K.! I never knew I had a London following!'" says Walk. Superusers such as Cruikshank were so successful in exploiting YouTube's business initiatives that corporations such as Sony were studying their methodology and even paid some of them consultant fees to help them understand the digital world.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






November 22, 2013

Pretentious Studios Were Pushed Aside by Grounded Googlers



(p. 261) Kamangar didn't put a value judgment on the way the labels and studios worked but tried to crack their code, talking to executives, producers, agents, and managers. One day he happened to be in New York and was invited to meet with the CEO of Universal Music Group, Doug Morris. Kamangar was escorted by bodyguards to a private elevator and ushered to a fancy office high above the city. He couldn't help thinking of the contrast with Google, where you stumbled in and went to the microkitchen for coffee. Kamangar didn't dwell on the (p. 262) irony that it was the scruffy kids in shorts, munching energy bars and writing analytics programs, who were pushing aside the old power structure. While he put the pieces of YouTube together, though, he always kept in mind that he was documenting a traditional media system on the verge of collapse. He had to deal with the music world as it was but also plan for the way it would be after disruptions, which Google and YouTube were accelerating.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






November 18, 2013

Google Was Lax in Killing Failed Projects



(p. 255) Oddly, whereas Google had built its data infrastructure to reroute around failure, it had no human infrastructure to deal with failed projects. "We didn't know which ones they were, because we never paused to ask ourselves that question," says Pichette. "The people working on that project know it's failing-- as senior management you have to say, 'Let's declare failure-- let's get the champagne out and kill this puppy. Then we can put you on stuff that's really cool and sexy.'" That had always been part of Google's philosophy, but whether from lack of rigor or just distraction, the company had been lax in actually issuing execution orders. One of the first puppies Pichette helped drown was a virtual-reality-style communications program called Lively.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






November 16, 2013

Successful Entrepreneurs Focus Their Attention



(p. A31) Most successful people also have a phenomenal ability to consciously focus their attention. . . .

Control of attention is the ultimate individual power. People who can do that are not prisoners of the stimuli around them. They can choose from the patterns in the world and lengthen their time horizons. This individual power leads to others. It leads to self-control, the ability to formulate strategies in order to resist impulses. If forced to choose, we would all rather our children be poor with self-control than rich without it.

It leads to resilience, the ability to persevere with an idea even when all the influences in the world say it can't be done. A common story among entrepreneurs is that people told them they were too stupid to do something, and they set out to prove the jerks wrong.

It leads to creativity. Individuals who can focus attention have the ability to hold a subject or problem in their mind long enough to see it anew.



For the full commentary, see:

DAVID BROOKS. "Lost in the Crowd." The New York Times (Tues., December 16, 2008): A31.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date December 15, 2008.)






November 14, 2013

Google Gave YouTube Entrepreneurial Autonomy



(p. 250) But after the purchase [of YouTube], Google did something very smart. Almost as if acknowledging that overattention from the top had hobbled Google's original video effort, the company made a conscious decision not to integrate YouTube. "They were edgy and small, and we were getting big," says Drummond. "We didn't want to screw them up." (Google was also smarting from its $ 900 million acquisition of dMarc Broadcasting, a company dealing in radio advertising, which had not gone well. "They had tried more of a top-down approach with dMarc and considered that a disaster," says Hurley.) YouTube would keep its brand and even stay in the building it had recently occupied in San Bruno, a former headquarters of the Gap.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: bracketed words added.)






November 9, 2013

Entrepreneurial Spirit Values "Voyaging into the Unknown"



PhelpsEdmundWinner2006NobelPrize2013-10-24.jpg











"Edmund Phelps, winner of the 2006 Nobel Prize for economics." Source of caption and photo: online version of the WSJ review quoted and cited below.



(p. C7) Edmund Phelps's "Mass Flourishing" could easily be retitled "Contra-Corporatism," for at its heart this fine book is an attack on that increasingly common "third way" between capitalism and socialism. Mr. Phelps cogently argues that America's current economic woes reflect a reduction in the innovative dynamism that generates economic success and personal satisfaction. He places little hope in the Democratic Party, which "voices a new corporatism well beyond Franklin Roosevelt's New Deal or Lyndon Johnson's Great Society," or in Republicans in the thrall of "traditional values," who see "the good economy as mercantile capitalism plus social protection and social insurance." He instead yearns for legislative solons who "could usefully ask of every bill and regulatory directive: How would it impact the dynamism of our economy?"


. . .


The book eloquently discusses the culture of innovation, which can refer to both an entrepreneurial mind-set and the cultural achievements during an age of change. He sees modern capitalism as profoundly humanist, imbued with "a spirit that views the prospect of unanticipated consequences that may come with voyaging into the unknown as a valued part of experience and not a drawback."


. . .


In . . . [the] new corporatism, the state protects both organized labor and politically connected companies. and the state has acquired a "panoply of new roles," from regulations "aimed at shielding companies or workforces from competition" to lawsuits that "add to the diversion of income from earners to those receiving compensation or indemnification." It is as if "every person in a society is a signatory to an implicit contract" in which "no person may be harmed by others without receiving compensation." But protection against all conceivable harm also means protection against almost all change--and this is the death knell of dynamism and innovation.


. . .


But what is to be done? The author wants governments that are "aware of the importance of the role played by dynamism in a modern-capitalist economy," and he disparages both current political camps. He has a number of thoughtful ideas about financial-sector reform. He is no libertarian and even proposes a "national bank specializing in extending credit or equity capital to start-up firms"--not my favorite idea.



For the full review, see:

EDWARD GLAESER. "How to Unleash the Economy." The Wall Street Journal (Sat., Oct. 19, 2013): C7.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the review has the date Oct. 18, 2013, and has the title "BOOKSHELF; Book Review: 'Mass Flourishing' by Edmund Phelps; Innovative dynamism is the key to economic success and personal satisfaction, a Nobel-winner argues.")



The book under review is:

Phelps, Edmund S. Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. Princeton, New Jersey: Princeton University Press, 2013.




Mass-FlourishingBK2013-10-24.jpg















Source of book image: http://blogs.reuters.com/great-debate/files/2013/08/Mass-Flourishing-cover.jpg









November 7, 2013

Multimillionaire Entrepreneur Ek's Life Is Not Satisfying Without a Project



EkDanielSpotifyCEO2013-10-24.jpg














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




(p. C11) As a 16-year-old computer geek, Daniel Ek applied for a job at Google but was turned down because he didn't have a college degree. "I was kind of upset about that," he says. "I was like, 'I'll show them--I'm going to create my own search engine!' "

That turned out to be harder than he thought, so instead he spent several years building an online advertising company in his native Sweden (and no, he never did finish college). In 2006, he sold the company's rights and related patents for over $2 million.

"Now I was 23 and a multimillionaire, but I didn't have anything to do," he said over lunch recently in midtown Manhattan. He became depressed. "You're supposed to be the happiest guy on the planet but...there's no reason why you're existing," he says. "I realized it's really, really fun for a while to go big and go to all of these nightclubs," but just spending money was not satisfying.

In search of a purpose, he came up with a new model for listening to music: Spotify, a digital streaming service that has made the music business look viable again.



For the full interview, see:

ALEXANDRA WOLFE. "Weekend Confidential: Daniel Ek." The Wall Street Journal (Sat., June 22, 2013): C11.

(Note: ellipsis in original.)

(Note: the online version of the interview has the date June 21, 2013.)







November 6, 2013

Steve Jobs Felt Betrayed by Google's Page and Brin



(p. 221) From all accounts, Jobs prided himself as a canny observer not only of business but also of human character, and he did not want to admit-- especially to himself--that he had been betrayed by the two young men he had been attempting to mentor. He felt the trust between the two companies had been violated. After increasingly contentious phone calls, in the summer of 2008, Jobs ventured to Mountain View to see the Android phone and personally judge the extent of the violation. He was reportedly furious. Not only did he believe that Google had performed a bait and switch on him, replacing a noncompeting phone with one that was very much in the iPhone mode, but he also felt that Google had stolen Apple's intellectual property to do so, appropriating features for which Apple had current or pending patents.

While Jobs could not stop Google from developing the Dream version of Android, he apparently was successful, at least in the first version of the Google phone, in halting its implementation of some of the multitouch gestures that Apple had pioneered. Jobs believed that Apple's patents gave it exclusive rights to certain on-screen gestures--the pinch and the swipe, for example. According to one insider, Jobs demanded that Google remove support of those gestures from Android phones. Google complied, even though those gestures, which allowed users to resize images, were tremendously useful for viewing web pages on handheld devices.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






November 5, 2013

Entrepreneur Arik Achmon Stood Down Powerful Union to Keep His Company Alive



LikeDreamersBK2013-10-24.jpg














Source of book image: http://www.seraphicpress.com/wp-content/uploads/2013/10/like-dreamers.jpg





(p. C2) Mr. Halevi, an American immigrant who has worked as a journalist and analyst in Jerusalem for 30 years, has created a textured, beautifully written narrative by focusing on seven men -- and they are all men -- . . . , who served in the paratroop brigade that conquered the Old City of Jerusalem in the 1967 war.


. . .


. . . , the men Mr. Halevi has chosen are compelling. One is Arik Achmon, a secular liberal from a kibbutz who helped transform Israel's failing statist economy into a thriving capitalist one. Mr. Achmon helped found the first private domestic airline in Israel. The story of how he stood down the once-powerful Histadrut trade union federation to keep his company alive illustrates the enormous changes that Israeli society has undergone in the past three decades.



For the full review, see:

ETHAN BRONNER. "BOOKS OF THE TIMES; 7 Paratroopers and Paths They Took Through an Israel at a Crossroads." The New York Times (Thurs., September 26, 2013): C2.

(Note: ellipses added.)

(Note: the online version of the review has the date September 25, 2013.)



The book under review is:

Halevi, Yossi Klein. Like Dreamers: The Story of the Israeli Paratroopers Who Reunited Jerusalem and Divided a Nation. New York: HarperCollins, 2013.



HaleviYossiKlein2013-10-24.jpg













"Yossi Klein Halevi." Source of caption and photo: online version of the NYT review quoted and cited above.







October 25, 2013

Larry Page: "At His Core He Cares about Latency"



(p. 184) Speed had always been an obsession at Google, especially for Larry Page. It was almost instinctual for him. "He's always measuring everything," says early Googler Megan Smith. "At his core he cares about latency." More accurately, he despises latency and is always trying to remove it, like Lady Macbeth washing guilt from her hands. Once Smith was walking down the street with him in Morocco and he suddenly dragged her into a random Internet café with maybe three machines. Immediately, he began timing how long it took web pages to load into a browser there.

Whether due to pathological impatience or a dead-on conviction that speed is chronically underestimated as a factor in successful products, Page had been insisting on faster delivery for everything Google from the beginning. The minimalism of Google's home page, allowing for lightning-quick (p. 185) loading, was the classic example. But early Google also innovated by storing cached versions of web pages on its own servers, for redundancy and speed.

"Speed is a feature," says Urs Hölzle. "Speed can drive usage as much as having bells and whistles on your product. People really underappreciate it. Larry is very much on that line."




Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






October 23, 2013

Push the Flywheel, in Business and Life




Jim Collins makes wonderful use of the flywheel analogy in his Good to Great book. His point is that many achievements in business require long, gradual work to build to a major achievement that finally gets noticed by the business press and the general public. The business press often assumes that the success is overnight, when it is in fact long-building.


(p. C14) Flywheels - weighted wheels used for absorbing, storing and releasing energy - get used in everything from pottery wheels to car engines. Lately, they have showed up in corporate spin.

"Our more than 19,000 store global footprint, our fast-growing CPG presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a 'flywheel' effect elevating the relevancy of all things Starbucks, and driving profitability," CEO Howard Schultz said in a statement accompanying quarterly earnings last month.

"So we have the flywheel spinning in the right direction because it is spinning one way and letting us generate these margins, contribution margins," said Overstock.com CEO Patrick Byrne last month. "And so now we can give some of that back and that makes it easier to get it spinning faster."

"We are at the one-mile market (sic) in a marathon," commented Symantec CEO Steve Bennett in an earnings call with analysts last week, "and the flywheel is just starting to spin."



For the full story, see:

JUSTIN LAHART. "Overheard." The Wall Street Journal (Weds., Aug 6, 2013): C14.

(Note: the online version of the story has the date Aug 6, 2013, and had the title "Ride a Painted Pony, Let the Spinning Wheel Fly." The print version did not identify an author. The versions were slightly different in two or three places--when different, the version quoted above follows the print version.)


The Collins book, mentioned above, is:

Collins, Jim. Good to Great: Why Some Companies Make the Leap... And Others Don't. New York: HarperCollins Publishers, Inc., 2001.






October 21, 2013

Google's Redundant, Fault-Tolerant System Worked with Cheap, Low-Quality, Failure-Prone Equipment



(p. 183) Google was a tough client for Exodus; no company had ever jammed so many servers into so small an area. The typical practice was to put between five and ten servers on a rack; Google managed to get eighty servers on each of its racks. The racks were so closely arranged that it was difficult for a human being to squeeze into the aisle between them. To get an extra rack in, Google had to get Exodus to temporarily remove the side wall of the cage. "The data centers had never worried about how much power and AC went into each cage, because it was never close to being maxed out," says Reese. "Well, we completely maxed out. It was on an order of magnitude of a small suburban neighborhood," Reese says. Exodus had to scramble to install heavier circuitry. Its air-conditioning was also overwhelmed, and the colo bought a portable AC truck. They drove the eighteen-wheeler up to the colo, punched three holes in the wall, and pumped cold air into Google's cage through PVC pipes.


. . .


The key to Google's efficiency was buying low-quality equipment dirt cheap and applying brainpower to work around the inevitably high failure rate. It was an outgrowth of Google's earliest days, when Page and Brin had built a server housed by Lego blocks. "Larry and Sergey proposed that we design and build our own servers as cheaply as we can-- massive numbers of servers connected to a high-speed network," says Reese. The conventional wisdom was that an equipment failure should be regarded as, well, a failure. Generally the server failure rate was between 4 and 10 percent. To keep the failures at the lower end of the range, technology companies paid for high-end equipment from Sun Microsystems or EMC. "Our idea was completely opposite," says Reese. "We're going to build hundreds and thousands of cheap servers knowing from the get-go that a certain percentage, maybe 10 percent, are going to fail," says Reese. Google's first CIO, Douglas Merrill, once noted that the disk drives Google purchased were "poorer quality than you would put into your kid's computer at home."

(p. 184) But Google designed around the flaws. "We built capabilities into the software, the hardware, and the network--network-- the way we hook them up, the load balancing, and so on-- to build in redundancy, to make the system fault-tolerant," says Reese. The Google File System, written by Jeff Dean and Sanjay Ghemawat, was invaluable in this process: it was designed to manage failure by "sharding" data, distributing it to multiple servers. If Google search called for certain information at one server and didn't get a reply after a couple of milliseconds, there were two other Google servers that could fulfill the request.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)






October 18, 2013

Covey Was Amazon's Entrepreneurial CFO



CoveyJoyAndSonTyler2013-09-25.jpg












Joy Covey and son Tyler. Source of photo: was posted on Joy Covey's Google+ page: https://lh6.googleusercontent.com/-3CNdHv-7W3A/Thx9kuMHEPI/AAAAAAAABKs/lX9H2JlJ_lg/w763-h762-no/J+%2526+T+snowbird.jpg



(p. D8) As Amazon's first chief financial officer, Ms. Covey helped take the company public and was an independent-minded advocate for Amazon's plans to ignore Wall Street and invest for the future. That notion, radical in its day, was the foundation for Amazon's growth into a $61 billion retailing and entertainment behemoth.

In its early days, Amazon prided itself on its unconventional hires, telling staffing agencies to "send us your freaks." Ms. Covey did not have a traditional background. She dropped out of high school at 15 and worked as a grocery clerk. She attended Cal State Fresno and later Harvard Law School, where, she said, she did not fit in.

"We'd go to lunch and people would talk about their favorite 17th-century poets, and I'd be thinking, 'Could I even name five poets? From any century?' "

But after joining Amazon in late 1996, when its annual revenue was less than $20 million, she thrived. She sold Wall Street the debt that the company needed to expand. The company went public on May 14, 1997, with an initial offering price of $18. Shares this week were selling for more than $312. Her own wealth is estimated at more than $200 million.



For the full obituary, see:

DAVID STREITFELD. "Joy Covey, 50, Top Executive in Amazon.com's Early Days." The New York Times (Sat., September 21, 2013): D8.

(Note: the online version of the obituary has the date September 19, 2013, and has the title "Joy Covey, Top Executive in Amazon.com's Early Days, Dies at 50.")






October 17, 2013

Gates Did Not See that Gmail's 2-Gig Storage Would Beat Hotmail



(p. 179) About six months after Gmail came out, Bill Gates visited me at Newsweek's New York headquarters to talk about spam. (His message was that within a year it would no longer be a problem. Not exactly a Nostradamus moment.) We met in my editor's office. The question came up whether free email accounts should be supported by advertising. Gates felt that users were more negative than positive on the issue, but if people wanted it, Microsoft would offer it.

"Have you played with Gmail?" I asked him.

"Oh sure, I play with everything," he replied. "I play with A-Mail, B-Mail, C-Mail, I play with all of them."

My editor and I explained that the IT department at Newsweek gave us barely enough storage to hold a few days' mail, and we both forwarded everything to Gmail so we wouldn't have to spend our time deciding what to delete. Only a few months after starting this, both of us had consumed more than half of Gmail's 2-gigabyte free storage space. (Google had already doubled the storage from one gig to two.)

Gates looked stunned, as if this offended him. "How could you need more than a gig?" he asked. "What've you got in there? Movies? PowerPoint presentations?"

No, just lots of mail.

He began firing questions. "How many messages are there?" he demanded. "Seriously, I'm trying to understand whether it's the number of messages or the size of messages." After doing the math in his head, he came to the conclusion that Google was doing something wrong.

The episode is telling. Gates's implicit criticism of Gmail was that it was wasteful in its means of storing each email. Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved. He had written his first programs under a brutal imperative for brevity. And Microsoft's web-based email service reflected that parsimony.

The young people at Google had no such mental barriers. From the moment their company started, they were thinking in terms of huge numbers. Remember, they named their company after a 100-digit number! Moore's Law was as much a fact as air for them, so they understood that the expense of the seemingly astounding 2 gigabytes they gave away in 2004 would be negligible only months later. It would take some months for Gates's minions to catch up and for Microsoft's Hotmail to dramatically increase storage. (Yahoo Mail also followed suit.)

"That was part of my justification for doing Gmail," says Paul Buchheit of its ability to make use of Google's capacious servers for its storage. "When people said that it should be canceled, I told them it's really the foundation for a lot of other products. It just seemed obvious that the way things were going, all information was going to be online."



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






October 14, 2013

Brazilian Entrepreneur Inspired by "The Men Who Built America"



HangLucianoArrivesAtFlagshipHavanStoreInBrusque2013-09-29.jpgThe co-founder of the Havan chain, Luciano Hang, arrives at the chain's flagship store, which is in Brusque, Brazil. Source of photo: online version of the NYT article quoted and cited below.


(p. 6) "My philosophy is pro-capitalism, so of course the best symbols for this come from the United States," said Mr. Hang, who flies around Brazil on a Learjet to visit the nearly 60 stores in his chain, called Havan. "I tell people that we're about freedom: the freedom to stay open when we choose, the freedom to work for us and the freedom to shop," he added. "I know this can be controversial, but I think those who disagree with my approach are few and far between."


. . .


The son of textile factory workers, descended from German and Italian immigrants, Mr. Hang said he admired European culture but preferred the United States. He said he was inspired by a show on the History Channel, "The Men Who Built America," about industrial titans like John D. Rockefeller and Cornelius Vanderbilt.

"I couldn't sleep after I saw that program," he said.

His business model is partly based on Walmart, whose small-town origins he admires, as well as its method of turning economies of scale into low prices.



For the full story, see:

SIMON ROMERO. "Reshaping Brazil's Retail Scene, Inspired by Vegas and Vanderbilt." The New York Times, First Section (Sun., September 15, 2013): 6.

(Note: ellipsis added.)

(Note: the online version of the story has the date September 14, 2013.)






October 13, 2013

Larry Page's Very Tough Love: "I'd Rather Be Doused with Gasoline and Set on Fire than Use Your Product"



(p. 171) Caribou took forever to develop. Part of the problem was that Larry and Sergey were so invested in the project. They adopted it as their primary email system and would often drop by to give criticisms and suggestions. Buchheit would often take a working prototype to the weekly Google product strategy meeting, where product managers submit their products to a human wind tunnel of executive criticism. Products have been known to die at GPSs; there are stories of teams entering the conference room, exhausted and hopeful after long hours of getting a demo just right, and Page saying, "You're wasting our time" and ordering the project dismantled. Larry and Sergey liked Caribou too much to kill it but dished out very tough love. At one point Page told the group, "I'd rather be doused with gasoline and set on fire than use your product."


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






October 11, 2013

Innovative Entrepreneurs More Likely to Have Engaged in Illicit Activities as Teens



(p. C4) What does it take to be a successful entrepreneur? The signs are obvious in future moguls' teenage years: brains, confidence--and illicit activities.

Those are the surprising findings of a new working paper by economists at the University of California at Berkeley and the London School of Economics. The researchers argue that merely being self-employed isn't a particularly good indicator of entrepreneurship, in the sense of taking big risks and mobilizing capital to create new goods and services.


. . .


. . . the professors sorted the self-employed into those who were incorporated and those who were not, with the researchers regarding the former as the genuine entrepreneurs.


. . .


Despite . . . dubious youthful pursuits, the incorporated tended to come from stable, well-educated families with high incomes in 1979. These entrepreneurs were much more likely to be white, male and well-educated than were salaried workers or the unincorporated self-employed.



For the full story, see:

DANIEL AKST. "The Bad-Boy Entrepreneur." The Wall Street Journal (Sat., August 17, 2013): C4.

(Note: ellipses added.)

(Note: the online version of the review has the date August 16, 2013.)


The working paper discussed is:

Levine, Ross, and Yona Rubinstein. "Smart and Illicit: Who Becomes an Entrepreneur and Does It Pay?" NBER Working Paper # 19276, August 2013.






October 9, 2013

Rising Google Stock Prices Led Googlers to Be Wary of Innovation



(p. 156) . . . Googlers were affected by stock ownership. (They were, after all, human.) Bo Cowgill, a Google statistician, did a series of studies of his colleagues' behavior, based on their participation in a "prediction market," a setup that allowed them to make bets on the success of internal projects. He discovered that "daily stock price movements affect the mood, effort level and decision-making of employees." As you'd expect, increases in stock performance made people happier and more optimistic-- but they also led them to regard innovative ideas more warily, indicating that as Googlers became richer, they became more conservative. That was exactly the downside of the IPO that the founders had dreaded.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added; italics in original.)






October 8, 2013

Immigration to the U.S. Is the Story of Hope, Achievement, Youth, Freedom and Creation



ToAmericaWithLoveBK2013-10-04.jpg















Source of book image: http://ecx.images-amazon.com/images/I/51VTjY0xVbL.jpg




(p. C6) In his new book, "To America With Love," the British critic A. A. Gill attempts to make up for his fellow Britons' grouchiness, sending the United States a frilly, funny valentine.


. . .


Perhaps the most provocative thing in "To America With Love" is Mr. Gill's European take on our history of immigration. He argues that America over the years has been a magnet, drawing "the young and the strong from Europe; the adventurous, the clever, and the skilled."

In the United States, "immigration is the story of hope and achievement, of youth, of freedom, of creation," he writes. "But all entrances on one stage are exits elsewhere. In Europe it is loss. Every one a farewell, a failure, a sadness, a defeat." Between 1800 and 1914, he says, "more than 30 million Europeans immigrated to the New World: one in four Irishmen, one in five Swedes, three million Germans, five million Poles, four million Italians. There is not a country, a community, a village or household that wasn't affected by the lure of the West."

As Mr. Gill sees it, much of the bitterness that animates trans-Atlantic relationships (Europeans, he says, patronize America "for being a big, dumb, fat, belligerent child") can be traced back to this dynamic. "The belittling, the discounting, the mocking of the States is not about them at all," he writes. "It's about us, back here in the ancient, classical, civilized continent."

Europe's view of America, he contends, "has been formed and deformed by the truth that we are the ones who stayed behind, for all those good, bad and lazy reasons: because of caution, for comfort, for conformity and obligation, but mostly, I suspect, because of habit and fear. We didn't take the risky road."



For the full review, see:

MICHIKO KAKUTANI. "BOOKS OF THE TIMES; A Rebellious Trans-Atlantic Infatuation: Take That, Mrs. Trollope!" The New York Times (Thurs., August 22, 2013): C6.

(Note: ellipsis added.)

(Note: the online version of the review has the date August 21, 2013.)


The book under review is:

Gill, A.A. To America with Love. Reprint ed. New York: Simon & Schuster, 2013.



GillAA2013-10-04.jpg











"A. A. Gill" Source of caption and photo: online version of the NYT review quoted and cited above.







October 7, 2013

Google's Calico Company Seeks to Expand the Human Life Span



(p. B4) Google Inc.is backing a new company to research aging, taking an unusual business swing at the burgeoning science of extending the human life span.

The venture, which is long on goals but short on specifics, is known as Calico, and will operate separately from Google, the online search giant said on Wednesday.

"We believe we can make good progress within reasonable time scales with the right goals and the right people," Google CEO Larry Page said in a blog post. "This is clearly a longer-term bet."


. . .


Google provided scant details about how Calico would operate or how it would tackle its ambitions of improving the health of "millions of lives." But Jay Olshansky, an expert on aging at the University of Illinois of Chicago, said one potentially promising path is to research therapies that target the aging process itself.

While medical research typically focuses on finding treatments and cures for individual ailments such as cardiovascular disease and cancer, "if you're going to have an impact on human health and longevity in the future, the way to go is to go after aging itself," Dr. Olshansky said.

A founder of a consortium called the Longevity Dividend Initiative, Dr. Olshansky said [he gave a talk at conference (sic) in 2010 in which he said that finding a cure for cancer would only extend human life span by about three and one-half years. The reason is, he said, is (sic) it would "expose people who were saved from dying of cancer to all the other diseases and disorders" that are the result of aging.]


. . .


{He said Mr. Brin attended the meeting and asked him questions about the talk. He hasn't discussed Calico with anyone at Google--the first he'd heard of the venture was Wednesday-- though he described the formation of Calico as "great news."}



For the full story, see:

GREG BENSINGER and RON WINSLOW. "Google Backs New Venture to Research Aging." The Wall Street Journal (Thurs., September 19, 2013): B4.

(Note: ellipsis added; square-bracketed words are in the print, but not the online, version of the article; curly-bracketed words are in the online, but not the print, version of the article.)

(Note: the online version of the story has the date September 18, 2013, and has the title "Google Backs Venture to Research Aging.")






October 6, 2013

Former Economics of Entrepreneurship and Economics of Technology Student Luis López Voted Crowd Favorite at Straight Shot Startup Accelerator Demo Day



LopezLuisPitchesCardioSys2013-10-05.jpg "Luis López pitches his startup, CardioSys, to investors during Demo Day at Aksarben Cinema this week. The event was the culmination of a 90-day Straight Shot startup accelerator program that offered new companies networking opportunities, advisers and investment dollars. Seven startups were in the inaugural accelerator class." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.


Luis López, the entrepreneur who is featured in the article quoted below, was a student of mine in both my Economics of Entrepreneurship and my Economics of Technology seminars (and before that, in micro principles). I cannot say that I taught him everything he knows, but it appears that I did not do him much harm.


(p. 1D) The same day Luis López and his brother, Danny, were accepted into Omaha's Straight Shot startup accelerator for their new company, corporate America called.

The 25-year-old Central High grad had received a job offer from Gallup. But he turned it down, choosing to take an entrepreneurial risk over a predictable salary and benefits.

"I can always apply for a job in the corporate world," he said, but it's not every day that one's company is accepted into an accelerator program that offers $20,000 in investment, more than 300 mentors and more than $75,000 in in-kind services.

The risk paid off, López said last week as the 90-day program wrapped up. The López brothers' startup, CardioSys -- which uses predictive analytics to calculate a person's risk of developing conditions like heart disease and diabetes based on factors such as age, blood pressure and lipid profiles -- came out of the program with a group of nine advisers.


. . .


(p. 2D) Luis López said CardioSys is hoping to land some investment in the next month or two, and is now looking at applying for a short-term health industry-focused incubator program in California, which the founders were connected with via Straight Shot.

In the long term, however, López said that with its strong community of medical and insurance providers, Omaha is CardioSys' home. At Demo Day, the startup was voted crowd favorite. "I was surprised. It's an honor to have people excited about what we're doing," he said.



For the full story, see:

Paige Yowell. "Straight Shot at Success; Accelerator's First Startups Make Their Pitches." Omaha World-Herald (SATURDAY, OCTOBER 5, 2013): 1D & 2D.

(Note: ellipses added.)

(Note: the online version of the story has the title "Straight Shot Accelerator's First Startups Make Their Pitches.")




LopezLuisCoFounderCardioSys2013-10-05.jpg






"Luis Lopez, who with his brother Danny Lopez, created CardioSys, gives his pitch at Demo Day." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited above.







October 5, 2013

"SEC Rules Demanded Complexity"



(p. 152) Google had considerable experience with pleasing users, but in the case of the auction, it could not create a simple interface. SEC rules demanded complexity. So the Google auction was a lot more complicated than buying Pokémon cards on eBay. People had to qualify financially as bidders. Bids had to be placed by a brokerage. If you made an error in reg-(p. 153)istering, you could not correct it but had to reregister. All those problems led to a few postponements of the start of the bidding period.

But the deeper problem was the uncertainty of Google's prospects. As the press accounts accumulated--with reporters informed by Wall Streeters eager to sabotage the process-- the perception grew that Google was a company with an unfamiliar business model run by weird people. A typical Wall Street insider analysis was reflected by Forbes.com columnist Scott Reeves, who concluded that Google's target price, at the time pegged to the range between $ 108 and $ 135 a share, was excessive. "Only those who were dropped on their head at birth [will] plunk down that kind of cash for an IPO," Reeves wrote.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






October 3, 2013

Early Funding for Ameritrade Was a Loan Secured by Joe Ricketts' House and Car



(p. 1D) Even the oldest and most established companies were once a back-of-the-envelope glimmer of an idea.

That was the message Wednesday night from First National Bank's Clark Lauritzen, president of the company's FNN Wealth Management.


. . .


TD Ameritrade founder Joe Ricketts, Lauritzen said, started his company in 1975 with a First National loan secured by his car and house; the first office was in the bank's basement. Now, the online stock brokerage employs 2,000 people in Omaha and is an industry leader.

"Joe reinvested his profits in the business year after year," Lauritzen said.



For the full story, see:

Russell Hubbard. "Even Big Businesses Start Small, Says First National's Clark Lauritzen:." Omaha World-Herald (THURSDAY, AUGUST 29, 2013): 1D.

(Note: ellipsis added.)

(Note: the online version of he article has the title "First National's Clark Lauritzen: Even Big Businesses Start Small.")





September 28, 2013

"I Didn't Open My Own Company to Have Someone Else Tell Me How to Run It"



TaylorEdwardEntrepreneur2013-09-25.jpg""They're picking on my employees," Edward Taylor, the president of Down East Seafood, said, referring to the commission." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A16) The day after Jonathan Sanchez was released from prison in 2010 after serving three years for a burglary, he walked into Down East Seafood in Hunts Point in the South Bronx and asked for a job, and a second chance. He got both.

But now Mr. Sanchez must document the past he has tried to leave behind, in an 11-page application for a photo identification card issued by a city agency that is responsible for ferreting out organized crime. He is one of hundreds of food workers who have come under scrutiny in recent years by the agency, the New York City Business Integrity Commission, not because of any known ties to mob bosses but simply because they work for a company in Hunts Point.


. . .


"This was my brand new start," said Mr. Sanchez, 26, who makes $40,000 a year packing lobster orders.

Mr. Sanchez said he worried that his past crime will follow him from job to job and brand him as an ex-con. "I feel violated because I don't think those things have to be asked," he said. "I feel that it could stigmatize me."


. . .


Edward Taylor, the president of Down East Seafood, said more than half of his 60 employees had told him they did not want to complete the application. A couple of them have even said they would instead quit.

Mr. Taylor, who had to answer similar questions himself to register the company, said he would not have moved to Hunts Point from Manhattan in 2005 if he had known about the commission. The company, which he started in 1990 with $500 borrowed from a friend, supplies more than 700 establishments, including Dean & DeLuca, the Harvard and Yale Clubs and the dining rooms at the United Nations.

"They're picking on my employees," he said. "I didn't open my own company to have someone else tell me how to run it."



For the full story, see:

WINNIE HU. "Food Workers Criticize a Commission's Scrutiny." The New York Times (Sat., September 21, 2013): A16.

(Note: ellipses added.)

(Note: the online version of the story has the date September 20, 2013, and has the title "Food Workers in Hunts Point Criticize a Commission's Scrutiny.")






September 26, 2013

Some Entrepreneurs Are Motivated by Desire for Personal Wealth



WorthlessImpossibleAndStupidBK2013-09-21.jpg











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







I have read many biographies of innovative entrepreneurs. Like the author of the review of the book discussed in the passages quoted below, I believe that they have a variety of motives. But I am more optimistic than the book author that many of the entrepreneurs, those I call "project entrepreneurs," are motivated mainly by a desire to 'make a ding in the universe.' Among these I would count Walt Disney and Steve Jobs.


(p. A11) Successful entrepreneurs, in my experience, are tenacious, hardheaded and creative. They persist with their ideas long after others might have given up, and they are good at persuading clients, partners and investors to take a chance. Like successful people in any field, they are driven by a powerful inner need, sometimes positive, like the hunger to do something entirely original, but often less appealing: a large chip on the shoulder, a desire for revenge, a distaste for authority and in many cases flat-out greed.


. . .


In "Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value," Daniel Isenberg, a professor of entrepreneurship at Babson College and before that at Harvard Business School, offers many useful stories of entrepreneurship, culled from his teaching experience. But it isn't until two-thirds of the way through that he torturously concedes that every entrepreneur needs a streak of Gordon Gekko.

"I have gradually come to the difficult conclusion that the burning desire for extraordinary value capture is almost a sine qua non for the supreme effort required to convert the value from imagined into tangible value," he writes. "Personal gain is the simplest and most powerful motivation. If a person does not feel deeply that 'This must pay off for me,' there will rarely be extraordinary value creation."



For the full review, see:

PHILIP DELVES BROUGHTON. "BOOKSHELF; Who Moved My Fortune? Some entrepreneurs want to do good. Many more are driven by a chip on the shoulder, a desire for revenge, a distaste for authority." The Wall Street Journal (Sat., July 31, 2013): A11.

(Note: ellipsis added.)

(Note: the online version of the review has the date July 30, 2013.)






September 25, 2013

Office Design that Forces Interaction, Causes Exhaustion, Stress, High Errors and Low Productivity



(p. D1) The big push in office design is forcing co-workers to interact more. Cubicle walls are lower, office doors are no more and communal cafes and snack bars abound.

Like most grand social experiments, though, open-plan offices bring an unintended downside: pesky, productivity-sapping interruptions.

The most common disruptions come from co-workers, as tempting as it is to blame email or instant messaging. Face-to-face interruptions account for one-third more intrusions than email or phone calls, which employees feel freer to defer or ignore, according to a 2011 study in the journal Organization Studies.

Other research published earlier this year links frequent interruptions to higher rates of exhaustion, stress-induced ailments and a doubling of error rates.



For the full story, see:

SUE SHELLENBARGER. "WORK & FAMILY; The Biggest Distraction in the Office Is Sitting Next to You." The Wall Street Journal (Weds., September 11, 2013): D1 & D3.

(Note: the online version of the story has the date September 10, 2013, and has the title "WORK & FAMILY; The Biggest Office Interruptions Are... ...not what most people think. And even a 2-second disruption can lead to a doubling of errors.")


Among the academic papers referred to in the article are:

Wajcman, Judy, and Emily Rose. "Constant Connectivity: Rethinking Interruptions at Work." Organization Studies 32, no. 7 (July 2011): 941-61.

Altmann, Erik M., J. Gregory Trafton, and David Z. Hambrick. "Momentary Interruptions Can Derail the Train of Thought." Journal of Experimental Psychology: General (Jan. 7, 2013): 1-12.






September 24, 2013

Nanny Feds Take Revenge on Zucker for Trying to "Save Our Balls"



ZuckerCraigBuckyballsEntrepreneur2013-08-31.jpg











Craig Zucker. Source of caricature: online version of the WSJ article quoted and cited below.



(p. A11) Mr. Zucker is the former CEO of Maxfield & Oberton, the small company behind Buckyballs, an office toy that became an Internet sensation in 2009 and went on to sell millions of units before it was banned by the feds last year.

A self-described "serial entrepreneur," Mr. Zucker looks the part with tussled black hair, a scraggly beard and hipster jeans. Yet his casual-Friday outfit does little to subdue his air of ambition and hustle.

Nowadays Mr. Zucker spends most of his waking hours fighting off a vindictive U.S. Consumer Product Safety Commission that has set out to punish him for having challenged its regulatory overreach. The outcome of the battle has ramifications far beyond a magnetic toy designed for bored office workers. It implicates bedrock American notions of consumer choice, personal responsibility and limited liability.


. . .


In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone's catalog.

Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. "Then," says Mr. Zucker, "we crashed."

On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a "corrective-action plan" within two weeks or face an administrative suit related to Buckyballs' alleged safety defects. Around the same time--and before Maxfield & Oberton had a chance to tell its side of the story--the commission sent letters to some of Maxfield & Oberton's retail partners, including Brookstone, warning of the "severity of the risk of injury and death possibly posed by" Buckyballs and requesting them to "voluntarily stop selling" the product.

It was an underhanded move, as Maxfield & Oberton and its lawyers saw it. "Very, very quickly those 5,000 retailers became zero," says Mr. Zucker. The preliminary letters, and others sent after the complaint, made it clear that selling Buckyballs was still considered lawful pending adjudication. "But if you're a store like Brookstone or Urban Outfitters . . . you're bullied into it. You don't want problems."


. . .


Maxfield & Oberton resolved to take to the public square.On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission's nanny-state excesses. The campaign's tagline? "Save Our Balls."

Online ads pointed out how, under the commission's reasoning, everything from coconuts ("tasty fruit or deadly sky ballistic?") to stairways ("are they really worth the risk?") to hot dogs ("delicious but deadly") could be banned.


. . .


. . . in February [2013] the Buckyballs saga took a chilling turn: The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.

This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law.


. . .


Given the fact that Buckyballs have now long been off the market, the attempt to go after Mr. Zucker personally raises the question of retaliation for his public campaign against the commission. Mr. Zucker won't speculate about the commission's motives. "It's very selective and very aggressive," he says.



For the full interview, see:

SOHRAB AHMARI, interviewer. "THE WEEKEND INTERVIEW with Craig Zucker; What Happens When a Man Takes on the Feds; Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back." The Wall Street Journal (Sat., August 31, 2013): A11.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the interview has the date August 30, 2013, and has the title "THE WEEKEND INTERVIEW; Craig Zucker: What Happens When a Man Takes on the Feds. Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.")





September 23, 2013

Montessori Taught Larry Page and Sergey Brin to Always Ask Questions



(p. 122) "Their attitude is just like, 'We're Montessori kids,'" said Mayer. "We've been trained and programmed to question authority."

Thus it wasn't surprising to see that attitude as the foundation of Google's culture. "Why aren't there dogs at work?" asked Marissa, parroting the never-ending Nerdish Inquisition conducted by her bosses. "Why aren't there toys at work? Why aren't snacks free? Why? Why? Why?"

"I think there's some truth to that," says Larry Page, who spent his preschool and first elementary school years at Okemos Montessori Radmoor School in Michigan. "I'm always asking questions, and Sergey and I both have this."

Brin wound up in Montessori almost by chance. When he was six, recently emigrated from the Soviet Union, the Paint Branch Montessori (p. 123) School in Adelphi, Maryland, was the closest private school. "We wanted to place Sergey in a private school to ease up his adaptation to the new life, new language, new friends," wrote his mother, Eugenia Brin, in 2009. "We did not know much about the Montessori method, but it turned out to be rather crucial for Sergey's development. It provided a basis for independent thinking and a hands-on approach to life."

"Montessori really teaches you to do things kind of on your own at your own pace and schedule," says Brin. "It was a pretty fun, playful environment-- as is this."



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






September 21, 2013

Messy Offices Encourage Creativity



(p. 12) Forty-eight research subjects came individually to our laboratory, . . . assigned to messy or tidy rooms.   . . . , we told subjects to imagine that a Ping-Pong ball factory needed to think of new uses for Ping-Pong balls, and to write down as many ideas as they could. We had independent judges rate the subjects' answers for degree of creativity, which can be done reliably.   . . .

When we analyzed the responses, we found that the subjects in both types of rooms came up with about the same number of ideas, which meant they put about the same effort into the task. Nonetheless, the messy room subjects were more creative, as we expected. Not only were their ideas 28 percent more creative on average, but when we analyzed the ideas that judges scored as "highly creative," we found a remarkable boost from being in the messy room -- these subjects came up with almost five times the number of highly creative responses as did their tidy-room counterparts.


. . .


Our findings have practical implications. There is, for instance, a minimalist design trend taking hold in contemporary office spaces: out of favor are private walled-in offices -- and even private cubicles. Today's office environments often involve desk sharing and have minimal "footprints" (smaller office space per worker), which means less room to make a mess.

At the same time, the working world is abuzz about cultivating innovation and creativity, endeavors that our findings suggest might be hampered by the minimalist movement. While cleaning up certainly has its benefits, clean spaces might be too conventional to let inspiration flow.



For the full commentary, see:

KATHLEEN D. VOHS. "GRAY MATTER; It's Not 'Mess.' It's Creativity." The New York Times, SundayReview Section (Sun., September 15, 2013): 12.

(Note: ellipses added.)

(Note: the online version of the commentary has the date September 13, 2013.)


The main academic paper referred to in the commentary is:

Vohs, Kathleen D., Joseph P. Redden, and Ryan Rahinel. "Physical Order Produces Healthy Choices, Generosity, and Conventionality, Whereas Disorder Produces Creativity." Psychological Science 24, no. 9 (Sept. 2013): 1860-67.






September 19, 2013

Key to Google: "Both Larry and Sergey Were Montessori Kids"



(p. 121) [Marissa Mayer] conceded that to an outsider, Google's new-business process might indeed look strange. Google spun out projects like buckshot, blasting a spray and using tools and measurements to see what it hit. And sometimes it did try ideas that seemed ill suited or just plain odd. Finally she burst out with her version of the corporate Rosebud. "You can't understand Google," she said, "unless you know that both Larry and Sergey were Montessori kids."

"Montessori" refers to schools based on the educational philosophy of Maria Montessori, an Italian physician born in 1870 who believed that children should be allowed the freedom to pursue what interested them.

(p. 122) "It's really ingrained in their personalities," she said. "To ask their own questions, do their own things. To disrespect authority. Do something because it makes sense, not because some authority figure told you. In Montessori school you go paint because you have something to express or you just want to do it that afternoon, not because the teacher said so. This is really baked into how Larry and Sergey approach problems. They're always asking 'Why should it be like that?' It's the way their brains were programmed early on."



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: bracketed name added.)






September 17, 2013

For Innovator It Is Better to Use Wealth to Innovate than to Donate



JobsSteve2013-09-02.jpg
"Steve Jobs, a founder of Apple, has focused on his work to improve the lives of millions of people through technology." Source of caption and photo: online version of the NYT article quoted and cited below.





The column quoted below, written before Steve Jobs' death, asks an important question: should an innovative entrepreneur be a prominent philanthropist? I believe that innovative entrepreneurs can often do the most good by using their wealth to innovate rather than to donate.



(p. B1) Steve Jobs is a genius. He is an innovator. A visionary. He is perhaps the most beloved billionaire in the world.

Surprisingly, there is one thing that Mr. Jobs is not, at least not yet: a prominent philanthropist.

Despite accumulating an estimated $8.3 billion fortune through his holdings in Apple and a 7.4 percent stake in Disney (through the sale of Pixar), there is no public record of Mr. Jobs giving money to charity. He is not a member of the Giving Pledge, the organization founded by Warren E. Buffett and Bill Gates to persuade the nation's wealthiest families to pledge to give away at least half their fortunes. (He declined to participate, according to people briefed on the matter.) Nor is there a hospital wing or an academic building with his name on it.

None of this is meant to judge Mr. Jobs. I have long been a huge admirer of Mr. Jobs and consider him the da Vinci of our time.


. . .


(p. B4) . . . Mr. Jobs has always been upfront about where he has chosen to focus. In an interview with The Wall Street Journal in 1993 , he said, "Going to bed at night saying we've done something wonderful ... that's what matters to me."



For the full commentary, see:

ANDREW ROSS SORKIN. "DEALBOOK COLUMN; The Mystery of Steve Jobs's Public Giving." The New York Times (Tues., AUGUST 30, 2011): B1 & B4.

(Note: ellipsis between paragraphs added; ellipsis within last paragraph, in original.)

(Note: the online version of the commentary has the date AUGUST 29, 2011.)







September 16, 2013

Frank Lloyd Wright Loved Cars



CordL29OwnedByFrankLloydWright2013-08-10.jpg "In the early 1920s, Wright bought a 1929 Cord L-29, which he praised for its sensible front-wheel drive. Besides, "It looked becoming to my houses," he wrote in his book "An Autobiography." He seemed to have a special bond with the Cord. "The feeling comes to me that the Cord should be heroic in this autobiography somewhere," he wrote." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. 9) Frank Lloyd Wright, the architect whose birth in 1867 preceded the gasoline-powered automobile's by about 20 years, was an early adopter of the internal-combustion engine and an auto aficionado all his life.

He was also eerily prophetic in understanding how the car would transform the American landscape, and his designs reflect this understanding. Wright often designed both for and around automobiles, and his masterpiece, the Guggenheim Museum in New York, owes its most distinctive feature, the spiral of its rotunda, to his love for the automobile.


. . .


Wright was seduced by the combination of beauty, power and speed, whether powered by hay or by gas. He owned horses, and his first car, a yellow Model K Stoddard-Dayton roadster, was the same model that in 1909 won the very first automobile race at the Indianapolis Motor Speedway. Called the Yellow Devil by his neighbors, this was a 45-horsepower car capable of going 60 miles an hour. Wright and his sons seemed to enjoy that horsepower with abandon: "Dad was kept busy paying fines," his son John observed. So enamored was Wright of his automobile that he installed gas pumps in the garage of his home and studio in Oak Park, Ill.


. . .


In the early 1920s, Wright owned a custom-built Cadillac and later bought a 1929 Cord L-29, which he praised for its sensible front-wheel drive. Besides, "It looked becoming to my houses," he wrote in his book "An Autobiography." He seemed to have a special bond with the Cord. "The feeling comes to me that the Cord should be heroic in this autobiography somewhere," he wrote.

Wright's Cord can be seen today at the Auburn Cord Duesenberg Museum in Auburn, Ind.



For the full story, see:

INGRID STEFFENSEN. "Frank Lloyd Wright: The Auto as Architect's Inspiration." The New York Times, SportsSunday Section (Sun., August 9, 2009): 9.

(Note: ellipses added.)

(Note: the online version of the article has the date August 6, 2009 and the title "The Auto as Architect's Inspiration." There are some small differences between the print and online versions, although I think the sentences quoted above are the same in both.)


Wright's autobiography, mentioned above, is:

Wright, Frank Lloyd. An Autobiography. New York: Horizon Press, 1977.






September 15, 2013

When Google Earned a Profit, Sergey Brin "Felt Like We Had Built a Real Business"



(p. 94) . . . , Google was reaping rewards, and 2002 was its first profitable year. "That's really satisfying," Brin said at the time. "Honestly, when we were still in the dot-com boom days, I felt like a schmuck. I had an Internet start-up-- so did everybody else. It was unprofitable, like everybody else's, and how hard is that? But when we became profitable, I felt like we had built a real business."


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis added.)






September 14, 2013

Why "Experts" Censor Their Views to Conform to the Consensus



GroupthinkBK2013-09-02.jpg














Source of book image: http://thesituationist.files.wordpress.com/2008/02/irving-janis-groupthink.jpg?w=197&h=290



(p. 5) In his classic 1972 book, "Groupthink," Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. They self-censor personal doubts about the emerging group consensus if they cannot express these doubts in a formal way that conforms with apparent assumptions held by the group.


For the full commentary, see:

ROBERT J. SHILLER. "ECONOMIC VIEW; Challenging the Crowd in Whispers, Not Shouts." The New York Times, SundayBusiness Section (Sun., November 2, 2008): 5.

(Note: the online version of the commentary has the date November 1, 2008.)


The reference for the second, and last, edition of the Janis book, is:

Janis, Irving L. Groupthink: Psychological Studies of Policy Decisions and Fiascoes. 2nd (pb) ed. Boston, MA: Wadsworth Cengage Learning, 1982.






September 11, 2013

Yahoo Execs Complained that Google Did Yahoo Searches too Well



(p. 45) Even though Google never announced when it refreshed its index, there would invariably be a slight rise in queries around the world soon after the change was implemented. It was as if the global subconscious realized that there were fresher results available.

The response of Yahoo's users to the Google technology, though, was probably more conscious. They noticed that search was better and used it more. "It increased traffic by, like, 50 percent in two months," Manber recalls of the switch to Google. But the only comment he got from Yahoo executives was complaints that people were searching too much and they would have to pay higher fees to Google.

But the money Google received for providing search was not the biggest benefit. Even more valuable was that it now had access to many more users and much more data. It would be data that took Google search to the next level. The search behavior of users, captured and encapsulated in the logs that could be analyzed and mined, would make Google the ultimate learning machine.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






September 9, 2013

Silicon Valley May Be Insulated from the Jobs Ordinary People Need to Get Done




A long while ago I read somewhere that in his prime Bill Gates deliberately tested Microsoft software on the limited hardware that mainstream customers could afford, rather than on the cutting edge hardware he himself could easily afford. I thought that this gave an important clue to Gates' and Microsoft's success.

Christensen and Raynor (2003) suggest that the successful entrepreneur will think hard about what jobs ordinary people want to get done, but are having difficulty doing.

The passages quoted below suggest that Silicon Valley entrepreneurs are insulated from ordinary life, and so may need to work harder at learning what the real problems are.



(p. B5) Engineers tend to move to the Bay Area because of the opportunity to get together with other engineers and, just maybe, create a great company, Mr. Smith said. But in a region that has the highest concentration of tech workers in the United States, according to the Bureau of Labor Statistics, the bars, restaurants and other haunts of entrepreneurs can be an echo chamber. The result can be a focus on solutions for mundane problems.


. . .


. . . too often, says Jason Pontin, the editor in chief and publisher of MIT Technology Review, . . . start-ups are solving "fake problems that don't actually create any value." Mr. Pontin knows a thing or two about companies that aren't exactly reaching for the stars. From 1996 to 2002, he was the editor of Red Herring, a magazine in San Francisco that chronicled the region's dot-com boom and eventual collapse.



For the full commentary, see:

NICK BILTON. "Disruptions: The Echo Chamber of Silicon Valley." The New York Times (Mon., June 3, 2013): B5.

(Note: ellipses added.)

(Note: the online version of the commentary has the date June 2, 2013.)


The Christensen and Raynor book that I mention above, is:

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






September 8, 2013

How to Win the Nobel Prize with Dyslexia



GreiderCarolDyslexicNobelPrizeWinner2013-08-10.jpg "HER TURN; Dr. Carol W. Greider is a researcher at Johns Hopkins." Source of caption and photo: online version of the NYT interview quoted and cited below.



(p. D1) Q. Did you always want to be a biologist?

A. My parents were scientists. But I wasn't the sort of child who did science fairs. One of the things I was thinking about today is that as a kid I had dyslexia. I had a lot of trouble in school and was put into remedial classes. I thought that I was stupid.

Q. That must have hurt.

A. Sure. Yes. It was hard to overcome (p. D3) that. I kept thinking of ways to compensate. I learned to memorize things very well because I just couldn't spell words. So later when I got to take classes like chemistry and anatomy where I had to memorize things, it turned out I was very good at that.

I never planned a career. I had these blinders on that got me through a lot of things that might have been obstacles. I just went forward. It's a skill that I had early on that must have been adaptive. I enjoyed biology in high school and that brought me to a research lab at U.C. Santa Barbara. I loved doing experiments and I had fun with them. I realized this kind of problem-solving fit my intellectual style. So in order to continue having fun, I decided to go to graduate school at Berkeley. It was there that I went to Liz Blackburn's lab, where telomeres were being studied.



For the full interview, see:

CLAUDIA DREIFUS. "A CONVERSATION WITH CAROL W. GREIDER; On Winning a Nobel Prize in Science." The New York Times (Tues., October 13, 2009): D1 & D3.

(Note: bold in original; questions capitalized as in print version.)

(Note: the online version of the interview has the date October 12, 2009.)






September 7, 2013

Yahoo Valued "Marketing Gimmicks" More than Search Speed



(p. 44) Google had struck a deal to handle all the search traffic of Yahoo, one of the biggest portals on the web.

The deal--announced on June 26, 2000--was a frustrating development to the head of Yahoo's search team, Udi Manber. He had been arguing that Yahoo should develop its own search product (at the time, it was licensing technology from Inktomi), but his bosses weren't interested. Yahoo's executives, led by a VC-approved CEO named Timothy Koogle (described in a BusinessWeek cover story as "The Grown-up Voice of Reason at Yahoo"), instead were devoting their attention to branding--marketing gimmicks such as putting the purple corporate logo on the Zamboni machine that swept the ice between periods of San Jose Sharks hockey games. "I had six people working on my search team," Manber said. "I couldn't get the seventh. This was a company that had thousands of people. I could not get the seventh." Since Yahoo wasn't going to develop its own search, Manber had the task of finding the best one to license.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






September 3, 2013

Redundancy Allowed Google to Function with Cheap and Failure-Prone Hard Drives



(p. 42) . . . as the web kept growing, Google added more machines--by the end of 1999, there were eighty machines involved in the crawl (out of a total of almost three thousand Google computers at that time)--and the likelihood that something would break increased dramatically. Especially since Google made a point of buying what its engineers referred to as "el cheapo" equipment. Instead of commercial units that carefully processed and checked information, Google would buy discounted consumer models without built-in processes to protect the integrity of data.

As a stopgap measure, the engineers had implemented a scheme where the indexing data was stored on different hard drives. If a machine went bad, everyone's pager would start buzzing, even if it was the middle of the night, and they'd barrel into the office immediately to stop the crawl, copy the data, and change the configuration files. "This happened every few days, and it basically stopped everything and was very painful," says Sanjay Ghemawat, one of the DEC research wizards who had joined Google.


. . .


(p. 43) The experience led to an ambitious revamp of the way the entire Google infrastructure dealt with files. "I always had wanted to build a file system, and it was pretty clear that this was something we were going to have to do," says Ghemawat, who led the team. Though there had previously been systems that handled information distributed over multiple files, Google's could handle bigger data loads and was more nimble at running full speed in the face of disk crashes-- which it had to be because, with Google's philosophy of buying supercheap components, failure was the norm. "The main idea was that we wanted the file system to automate dealing with failures, and to do that, the file system would keep multiple copies and it would make new copies when some copy failed," says Ghemawat.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipses added.)






August 30, 2013

To Page and Brin Search Speed "Was Like Motherhood, and Scale Was Apple Pie"



(p. 37) The average search at that time, Hölzle recalls, took three and a half seconds. Considering that speed was one of the core values of Page and Brin-- it was like motherhood, and scale was apple pie-- this was a source of distress for the founders. "Basically during the middle of the day we were maxed out," says Hölzle. "Nothing was happening for some users, because it would just never get a page basically back. It was all about scalability, performance improvements." Part of the problem was that Page and Brin had written the system in what Hölzle calls "university code," a nice way of saying amateurish.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






August 26, 2013

Google Started in Garage



(p. 34) On September 4, 1998, Page and Brin filed for incorporation and finally moved off campus. Sergey's girlfriend at the time was friendly with a manager at Intel named Susan Wojcicki, who had just purchased a house on Santa Margarita Street in Menlo Park with her husband for $615,000. To help meet the mortgage, the couple charged Google $1,700 a month to rent the garage and several rooms in the house.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






August 22, 2013

"We Just Begged and Borrowed" for Equipment



(p. 32) Google was handling as many as 10,000 queries a day. At times it was consuming half of Stanford's Internet capacity. Its appetite for equipment and bandwidth was voracious. "We just begged and borrowed," says Page. "There were tons of computers around, and we managed to get some." Page's dorm room was essentially Google's operations center, with a motley assortment of computers from various manufacturers stuffed into a homemade version of a server rack-- a storage cabinet made of Legos. Larry and Sergey would hang around the loading dock to see who on campus was getting computers-- companies like Intel and Sun gave lots of free machines to Stanford to curry favor with employees of the future-- (p. 33) and then the pair would ask the recipients if they could share some of the bounty.

That still wasn't enough. To store the millions of pages they had crawled, the pair had to buy their own high-capacity disk drives. Page, who had a talent for squeezing the most out of a buck, found a place that sold refurbished disks at prices so low-- a tenth of the original cost-- that something was clearly wrong with them. "I did the research and figured out that they were okay as long as you replaced the [disk] operating system," he says. "We got 120 drives, about nine gigs each. So it was about a terabyte of space." It was an approach that Google would later adopt in building infrastructure at low cost.

Larry and Sergey would be sitting by the monitor, watching the queries-- at peak times, there would be a new one every second-- and it would be clear that they'd need even more equipment. What next? they'd ask themselves. Maybe this is real.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: italics in original.)






August 19, 2013

George Mitchell, Father of Fracking, Took 20 Years to Make It Work



MitchellGeorgeFatherOfFracking2013-08-04.jpg












"George P. Mitchell with a statue of himself at The Woodlands in 2007." Source of caption and photo: online version of the WSJ obituary quoted and cited below.




(p. B3) George P. Mitchell turned hydraulic fracturing from an experimental technique into an energy-industry mainstay, making it possible to pump oil and gas from once untappable rocks and unleashing an energy boom across the U.S.

Known as the father of fracking, Mr. Mitchell died Friday [July 26, 2013] at age 94 at his home in Galveston, Texas.


. . .


"George Mitchell, more than anyone else, is responsible for the most important energy innovation of the 21st century," said Daniel Yergin, vice chairman of consulting firm IHS and a Pulitzer Prize winning author on energy.


. . .


His first efforts at fracking, in the late 1970s, were expensive, and at times investors and his board of directors questioned the spending. But by the late 1990s the company had figured out the right mix of techniques and materials to produce shale gas economically, and began to do so on a major scale.

Devon Energy Corp. bought Mr. Mitchell's firm in 2002 for $3.1 billion, combined the hydraulic fracturing techniques with horizontal drilling, and helped launch the current surge in oil and gas production.



For the full obituary, see:

TOM FOWLER. "REMEMBRANCES; George P. Mitchell 1919-2013; 'Father of Fracking' Helped Unleash U.S. Energy Boom." The Wall Street Journal (Sat., July 27, 2013): B3.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date July 26, 2013, and has the title "REMEMBRANCES; 'Father of Fracking' Dies at 94; George P. Mitchell Helped Unleash U.S. Energy Boom.")






August 18, 2013

Excite Rejected Google Because It Was too Good



(p. 28) Maybe the closest Page and Brin came to a deal was with Excite, a search-based company that had begun-- just like Yahoo-- with a bunch of sharp Stanford kids whose company was called Architext before the venture capitalists (VCs) got their hands on it and degeekified the name. Terry Winograd, Sergey's adviser, accompanied them to a meeting with Vinod Khosla, the venture capitalist who had funded Excite.


. . .


(p. 29) Khosla made a tentative counteroffer of $ 750,000 total. But the deal never happened. Hassan recalls a key meeting that might have sunk it. Though Excite had been started by a group of Stanford geeks very much like Larry and Sergey, its venture capital funders had demanded they hire "adult supervision," the condescending term used when brainy geeks are pushed aside as top executives and replaced by someone more experienced and mature, someone who could wear a suit without looking as though he were attending his Bar Mitzvah. The new CEO was George Bell, a former Times Mirror magazine executive. Years later, Hassan would still laugh when he described the meeting between the BackRub team and Bell. When the team got to Bell's office, it fired up BackRub in one window and Excite in the other for a bake-off.

The first query they tested was "Internet." According to Hassan, Excite's first results were Chinese web pages where the English word "Internet" stood out among a jumble of Chinese characters. Then the team typed "Internet" into BackRub. The first two results delivered pages that told you how to use browsers. It was exactly the kind of helpful result that would most likely satisfy someone who made the query.

Bell was visibly upset. The Stanford product was too good. If Excite were to host a search engine that instantly gave people information they sought, he explained, the users would leave the site instantly. Since his ad revenue came from people staying on the site--" stickiness" was the most desired metric in websites at the time-- using BackRub's technology would be (p. 30) counterproductive. "He told us he wanted Excite's search engine to be 80 percent as good as the other search engines," says Hassan. And we were like, "Wow, these guys don't know what they're talking about."

Hassan says that he urged Larry and Sergey right then, in early 1997, to leave Stanford and start a company. "Everybody else was doing it," he says. "I saw Hotmail and Netscape doing really well. Money was flowing into the Valley. So I said to them, 'The search engine is the idea. We should do this.' They didn't think so. Larry and Sergey were both very adamant that they could build this search engine at Stanford."

"We weren't ... in an entrepreneurial frame of mind back then," Sergey later said.



Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: ellipsis between paragraphs added; ellipsis in last sentence, in original.)






August 17, 2013

It's Hard to Be Consistent



TheFirstBillionIsTheHardestBK2013-08-08.jpg









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






(p. A13) Both Adam Smith and Horatio Alger would find something to like in the rise of T. Boone Pickens. "Boy geologist" Boone quit a promising job at Phillips Petroleum in the mid-1950s and built, over the following decades, Mesa Petroleum, a top North American independent oil and gas producer. Mesa found lots of oil and gas, provided jobs for hundreds of workers, and earned wealth for thousands of investors. During the same years, Mr. Pickens's attempts to take over Cities Service, Gulf Oil, Phillips and Unocal made the whole oil industry shape up: His bids required the managers of each company to look hard at its practices and improve its shareholder returns.

Such accomplishments are the core of Mr. Pickens's 1987 autobiography, "Boone," which was updated 13 years later and retitled "The Luckiest Guy in the World." In those books, Mr. Pickens's political philosophy rang loud and clear. "I believe," he stated, "the greatest opportunity lies in a free marketplace." He warned: "There are powerful forces afoot trying to restrict that freedom in the interests of the vested and already wealthy. I am talking about a relatively small collection of corporate executives who would use the engine of American commerce for their own narrow ends."


. . .


Now Mr. Pickens has new dreams -- and he is lobbying Washington to make them come alive.

In particular, Mr. Pickens wants the federal government -- through a mix of tax incentives, mandates and subsidies -- to override the market and redirect the uses of natural gas.


. . .


"The First Billion" argues for this plan, along with recounting Mr. Pickens's business ups and downs. The book is often entertaining, featuring the usual "Boone-isms": e.g., "Show me a good loser, and I'll show you a loser." But readers unfamiliar with Mr. Pickens's earlier memoirs may not realize that the new one represents a kind of bait-and-switch. Mr. Pickens's standing to pronounce on energy matters was earned as a free-market producer. He is now using that standing to defy the market itself.



For the full review, see:

ROBERT BRADLEY JR. "BUSINESS BOOKSHELF; When Effort Is Energetic." The Wall Street Journal (Weds., September 10, 2008): A13.

(Note: ellipses added.)


The book under review is:

Pickens, T. Boone. The First Billion Is the Hardest: Reflections on a Life of Comebacks and America's Energy Future. New York: Crown Business, 2008.






August 11, 2013

"No Innovation Happens with 10 People in a Room"



EnglishPaulKayakCofounder2013-08-04.jpg













"Paul English, the co-founder of Kayak, said the company valued testing new ideas, not talking about them." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. B2) Q. You were a co-founder of Kayak nine years ago. What's unusual about the culture?

A. We're a little bit reckless in our decision-making -- not with the business, but the point is that we try things. We give even junior people scary amounts of power to come up with ideas and implement them. We had an intern last summer who, on his very first day at Kayak, came up with an idea, wrote the code and released it. It may or may not have been successful, but it almost doesn't matter, because it showed that we value speed, and we value testing ideas, not talking about them.


. . .


Q. What else?

A. We're known for having very small meetings, usually three people. There's a little clicker for counting people that hangs on the main conference room door. The reason it's there is to send a message to people that I care about this issue. If there's a bunch of people in the room, I'll stick my head in and say, "It takes 10 of you to decide this? There aren't three of you smart enough to do this?"

I just hate design by consensus. No innovation happens with 10 people in a room. It's very easy to be a critic and say why something won't work. I don't want that because new ideas are like these little precious things that can die very easily. Two or three people will nurture it, and make it stronger, give it a chance to see life.



For the full interview, see:

ADAM BRYANT, interviewer. "CORNER OFFICE; Paul English; Ten People in a Meeting Is About Seven Too Many." The New York Times (Fri., July 26, 2013): B2.

(Note: ellipsis added; bold and italics in original.)

(Note: the online version of the interview has the date July 25, 2013, and has the title "CORNER OFFICE; Paul English of Kayak, on Nurturing New Ideas.")






August 10, 2013

"A Jigger of Asperger's in the Mix"



(p. 11) Page was not a social animal-- people who talked to him often wondered if there were a jigger of Asperger's in the mix-- and could unnerve people by simply not talking. But when he did speak, more often than not (p. 12) he would come out with ideas that bordered on the fantastic.


Source:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






August 5, 2013

In the Plex Helps Us Understand Entrepreneurs Page and Brin



InThePlexBK2013-04-06.jpg















Source of book image: http://mastersofmedia.hum.uva.nl/wp-content/uploads/2011/09/intheplex.jpg




In the Plex goes from detail to detail of the values, actions and quirks of a large cast of characters who have been involved in the Google story. I did not find the book as consistently gripping as Isaacson's Steve Jobs biography.

But some of the details help suggest new hypotheses, or test old ones, on important issues of entrepreneurship and technological progress. Some parts are revealing of the goals and methods of Page and Brin.

During the next weeks I will quote some of the more interesting passages.


Book discussed:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.






August 3, 2013

Wittgenstein Heirs Lost Family Wealth and "Found Little Happiness"



TheHouseOfWittgensteinBK2013-07-21.jpg














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








(p. W10) As he lay dying during Christmas 1912 -- from a gruesome throat cancer -- the Viennese industrialist Karl Wittgenstein no doubt took some comfort in the fact that he was leaving to his heirs one of the largest fortunes in Europe. He had acquired his wealth in just 30 years, the period during which Wittgenstein, an engineer, transformed a small steel mill into Europe's largest steel cartel through a combination of hard work, luck and ruthlessness. As der österreichische Eisenkönig (the "Austrian iron king"), he was the chief executive, principal shareholder or director of dozens of industrial companies and banks that provided the ore, manufacturing and financing for most of the steel products of the Habsburg Empire.

In his spare time, Wittgenstein acquired a spectacular house in Vienna, grandly styled as the family's Palais Wittgenstein.


. . .


Today, though, the Wittgenstein millions are gone and the Palais replaced by a hideous concrete apartment block. "Riches," Adam Smith wrote, ". . . very seldom remain long in the same family." Alexander Waugh's grimly amusing "The House of Wittgenstein" shows how the family fortune was lost and how the family members themselves, despite instances of prodigious talent and accomplishment, found little happiness in their own lives or pleasure in their sibling relations.



For the full review, see:

JAMES F. PENROSE. "BOOKS; A Viennese Blend: Riches and Rancor; Blessed by Musical and Intellectual Gifts, and Lots of Money, a Family Still Struggled to Find Harmony." The Wall Street Journal (Sat., March 1, 2009): W10.

(Note: ellipsis added; italics in original.)

(Note: the online version of the review has the date February 28, 2009.)


The book under review is:

Waugh, Alexander. The House of Wittgenstein: A Family at War. New York: Doubleday, 2009.






July 28, 2013

Children of Chinese Entrepreneurs Want to Work for Government



XieChaoboJoblessEngineeringStudent2013-07-23.jpg













"Engineering student Xie Chaobo has yet to land a job." Source of caption and photo: online version of the WSJ article quoted and cited below.




(p. A1) BEIJING--Xie Chaobo figures he has the credentials to land a job at one of China's big state-owned firms. He is a graduate student at Tsinghua University, one of China's best. His field of study is environmental engineering, one of China's priorities. And he is experimenting with new techniques for identifying water pollutants, which should make him a valuable catch.

But he has applied to 30 companies so far and scored just four interviews, none of which has led to a job.

Although Mr. Xie's parents are entrepreneurs who have built companies that make glasses, shoes and now water pumps, he has no interest in working at a private startup. Chinese students "have been told since we were children to focus on stability instead of risk," the 24-year-old engineering student says.

Over the past decade, the number of new graduates from Chinese universities has increased sixfold to more than six million a year, creating an epic glut that is depressing wages, (p. A10) leaving many recent college graduates without jobs and making students fearful about their future. Two-thirds of Chinese graduates say they want to work either in the government or big state-owned firms, which are seen as recession-proof, rather than at the private companies that have powered China's remarkable economic climb, surveys indicate. Few college students today, according to the surveys, are ready to leave the safe shores of government work and "jump into the sea," as the Chinese expression goes, to join startups or go into business for themselves, although many of their parents did just that in the 1990s.



For the full story, see:

MIKE RAMSEY and VALERIE BAUERLEIN. "Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws." The Wall Street Journal (Tues., June 18, 2013): B1-B2.



ChineseStudentAfterGraduationPlans2013-07-23.jpgSource of table: online version of the WSJ article quoted and cited above.






July 25, 2013

Slow Patent System Makes U.S. Look Like Third World Country



(p. 118) The absurd length of time and the outrageous cost of obtaining a patent is a national disgrace. If we heard it took two to five years to obtain title to real property somewhere, we would assume it was a corrupt third world country. And yet that is how long it takes to receive a patent now, depending on the area of technology.


Source:

Halling, Dale B. The Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations Are Killing Innovation. Charleston, S.C.: BookSurge Publishing, 2009.






July 24, 2013

Laws to Protect Car Dealers, Keep Car Prices High



TeslaGalleryVirginia2013-07-23.jpg "Tesla 'galleries' such as this one in McLean, Va., can show but not sell cars." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. B1) RALEIGH, N.C.--Elon Musk made a fortune disrupting the status quo in online shopping and renewable energy. Now he's up against his toughest challenge yet: local car dealers.

Mr. Musk, the billionaire behind PayPal and now Tesla Motors Inc., wants to sell his $70,000 Tesla electric luxury vehicles directly to consumers, bypassing franchised automobile dealers. Dealers are flexing their considerable muscle in states including Texas and Virginia to stop him.

The latest battleground is North Carolina, where the Republican-controlled state Senate last month unanimously approved a measure that would block Tesla from selling online, its only sales outlet here. Tesla has staged whiz-bang test drives for legislators in front of the State House and hired one of the state's most influential lobbyists to stave off a similar vote in the House before the legislative session ends in early July.

The focus of the power struggle between Mr. Musk and auto dealers is a thicket of state franchise laws, many of which go back to the auto industry's earliest days when industry pioneer Henry Ford began turning to eager entrepreneurs to help sell his Model T.

Dealers say laws passed over the decades to prevent car makers from selling directly to consumers are justified because without them auto makers could use their economic clout to sell vehicles for less than their independent franchisees.



For the full story, see:

MIKE RAMSEY and VALERIE BAUERLEIN. "Tesla Clashes With Car Dealers; Electric-Vehicle Maker Wants to Sell Directly to Consumers; Critics Say Plan Violates Franchise Laws." The Wall Street Journal (Tues., June 18, 2013): B1-B2.






July 17, 2013

"The Million-Dollar Question" for "Our Long Economic Slump": Why "the Severe Downturn in Jobs"?



(p. 5) [There are] . . . two underappreciated aspects of our long economic slump. First, it has exacted the harshest toll on the young -- even harsher than on people in their 50s and 60s, who have also suffered. And while the American economy has come back more robustly than some of its global rivals in terms of overall production, the recovery has been strangely light on new jobs, even after Friday's better-than-expected unemployment report. American companies are doing more with less.

"This still is a very big puzzle," said Lawrence F. Katz, a Harvard professor who was chief economist at the Labor Department during the Clinton administration. He called the severe downturn in jobs "the million-dollar question" for the economy.



For the full commentary, see:

DAVID LEONHARDT. "CAPITAL IDEAS; The Idled Young Americans." The New York Times, SundayReview Section (Sun., May 5, 2013): 5.

(Note: ellipsis, and words in brackets, added.)

(Note: the online version of the commentary has the date May 3, 2013.)






July 16, 2013

Will Apple Innovate Without Jobs?



JobsSteveHoldingIphone2013-06-28.jpg "Steve Jobs, introducing the iPhone 4 in January [2011]." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B4) "The good news for Apple is that the product road map in this industry is pretty much in place two and three years out," said David B. Yoffie, a professor at the Harvard Business School. "So 80 percent to 90 percent of what would happen in that time would be the same, even without Steve."

"The real challenge for Apple," Mr. Yoffie continued, "will be what happens beyond that road map. Apple is going to need a new leader with a new way of recreating and managing the business in the future."


. . .


His design decisions, Mr. Jobs explained, were shaped by his understanding of both technology and popular culture. His own study and intuition, not focus groups, were his guide. When a reporter asked what market research went into the iPad, Mr. Jobs replied: "None. It's not the consumers' job to know what they want."


. . .


Great products, Mr. Jobs once explained, were a triumph of taste, of "trying to expose yourself to the best things humans have done and then trying to bring those things into what you are doing."

Mr. Yoffie said Mr. Jobs "had a unique combination of visionary creativity and decisiveness," adding: "No one will replace him."



For the full story, see:

STEVE LOHR. "Without Its Master of Design, Apple Will Face Challenges." The New York Times (Thurs., August 25, 2011): B1 & B4.

(Note: ellipses in text, and bracketed year in caption, added.)

(Note: the online version of the story has the date August 24, 2011, and the slightly longer title "Without Its Master of Design, Apple Will Face Many Challenges.")





July 15, 2013

Chinese Peasants Applied Precautionary Principle to Scythe Technology



(p. 249) In a letter Orville Wright wrote to his inventor friend Henry Ford, Wright recounts a story he heard from a missionary stationed in China. Wright told Ford the story for the same reason I tell it here: as a cautionary tale about speculative risks. The missionary wanted to improve the laborious way the Chinese peasants in his province harvested grain. The local farmers clipped the stalks with some kind of small hand shear. So the missionary had a scythe shipped in from America and demonstrated its superior productivity to an enthralled crowd. "The next morning, however, a delegation came to see the missionary. The scythe must be destroyed at once. What, they said, if it should fall into the hands of thieves; a whole field could be cut and carried away in a single night." And so the scythe was banished, progress stopped, because nonusers could imagine a possible--but wholly improbable--way it could significantly harm their society.


Source:

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






July 8, 2013

Project Entrepreneur Would Rather Change the World than Buy a Luxury Car



HoffmanReidGreylockPartners2013-06-28.jpg"Reid Hoffman at Greylock Partners foresees a tectonic shift coming in the Web, with data and its many uses as the new linchpin, replacing identity and relationships." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 5) As an executive vice president, it was up to Mr. Hoffman to manage external relations. "He was the firefighter in chief at PayPal," Mr. Thiel says. "Though that diminishes his role because there were many, many fires."

Mr. Hoffman emerged as a connector and high-level strategist. He packed his schedule with meetings, charmed credit card companies and soothed the regulators.

PayPal survived, and when the company went public, in 2002, Mr. Hoffman and many of his colleagues became multimillionaires.

Mr. Thiel splurged on a Ferrari. Mr. Hoffman wanted to buy an Audi but instead invested his newfound riches in one of the first solar panel companies to come out of Silicon Valley, Nanosolar, and bought an Acura instead.

"I started to think about the value of money," he says. "I thought if I only had $75,000, would I rather invest in a luxury car or make a play in changing the world?"

Nanosolar became a multibillion-dollar enterprise.



For the full story, see:

EVELYN M. RUSLI. "A King of Connections; How Reid Hoffman of LinkedIn Became Tech's Go-To Guy." The New York Times, SundayBusiness Section (Sun., November 6, 2011): 1 & 5.

(Note: ellipsis added.)

(Note: the online version of the article has the date November 5, 2011, and has the title "A King of Connections Is Tech's Go-To Guy.")






July 4, 2013

Walker Says Those Who Call Him "Patent Troll" Want His Property Without Paying



WalkerJayPatentDefender2013-06-28.jpg














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




(p. B1) Jay Walker turned his idea for "name your own price" Internet auctions into a fortune by starting Priceline.com Inc. Now the entrepreneur is trying to cash in on his ideas by suing other companies.

Since it was founded in 1994 as a research lab, Walker Digital LLC has made much of its money by spinning out its inventions, like online travel agent Priceline and vending-machine firm Vendmore Systems LLC, as independent businesses.


. . .


Mr. Walker defends his newly aggressive tactics, which some critics compare to those of "patent trolls," a derogatory term for firms that opportunistically enforce patents. Without the lawsuits, he said, his patents could expire while other companies exploit them. Patents have a 20-year lifespan.

"Not only are we not a troll, but the people who want to label me are often the same ones that want to use our property and not pay," Mr. Walker said in an interview.



For the full story, see:

JOHN LETZING. "Founder of Priceline Spoiling for a Fight Over Tech Patents." The Wall Street Journal (Mon., August 22, 2011): B1 & B10.

(Note: ellipsis added.)






June 30, 2013

iPhone: "A Gleaming World of Innovation and Opportunity, of Capitalism Behaving Well"



SubwayIphoneUse2013-06-21.jpg "The theft of electronic devices like iPhones has fueled a rise in subway crime this year, the police say. In the past, New Yorkers were mugged, sometimes killed, for bomber jackets, Cazal glasses and Air Jordan sneakers." 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.24) The current spate of iPhone thefts feels, if anything, more poignant than disruptive. Apple products have always read as cooler than their rivals' because their design suggests a gleaming world of innovation and opportunity, of capitalism behaving well -- a world that seems ever diminishing, ever less accessible to the struggling and young.

Unlike the sneakers and glasses that caused such a fury in the '80s and '90s, iPhones didn't originate in the celebrity system. They come with a democratic ethos (if not the analogous price tag); BlackBerrys are for suits, but even a child can work an iPhone. Wasn't everyone supposed to have a shot?



For the full story, see:

GINIA BELLAFANTE. "BIG CITY; Easy to Use and Easy to Steal, a Status Object Inches Out of Reach." The New York Times, First Section (Sun., October 30, 2011): 24.

(Note: the first paragraph quoted above is from the print version, rather than from the somewhat different online version. The second quoted paragraph is the same in both versions.)

(Note: the online version of the story has the date October 28, 2011, and has the slightly different title "BIG CITY; Easy to Use, or Steal, but Inching Out of Reach.")






June 26, 2013

Larry Page Makes an O.K. Decision Now, Rather than a Perfect Decision Later



PageLarryGoogleCEO2013-06-21.jpg "Larry Page has pushed for quicker decision-making and jettisoned more than 25 projects that were not up to snuff." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A1) MOUNTAIN VIEW, Calif. -- Larry Page, Google's chief executive, so hates wasting time at meetings that he once dumped his secretary to avoid being scheduled for them. He does not much like e-mail either -- even his own Gmail -- saying the tedious back-and-forth takes too long to solve problems.


. . .


(p. A3) Borrowing from the playbooks of executives like Steven P. Jobs and Mayor Michael R. Bloomberg, he has put his personal imprint on the corporate culture, from discouraging excessive use of e-mail to embracing quick, unilateral decision-making -- by him, if need be.

"Ever since taking over as C.E.O., I have focused much of my energy on increasing Google's velocity and execution, and we're beginning to see results," Mr. Page, 38, told analysts recently.


. . .


Despite the many external pressures on Google, it is dominant in its business and highly profitable. But, when asked at a recent conference about the biggest threat to his company, Mr. Page answered in one word, "Google."

The problem was that the company had ballooned so quickly -- it now has more than 31,000 employees and $27.3 billion in revenue so far this year -- that it had become sclerotic. A triumvirate of Mr. Page, his co-founder, Sergey Brin, and Eric E. Schmidt, Google's former chief and current chairman, had to agree before anything could be done. The unwieldy management and glacial pace of decision-making were particularly noticeable in the Valley, where start-ups overtake behemoths in months.

It is different now.

"It's much more of a style like Steve Jobs than the three-headed monster that Google was," said a former Google executive who has spoken with current executives about the changes and spoke anonymously to preserve business relationships. "When Eric was there, you'd walk into a product meeting or a senior staff meeting, and everyone got to weigh in on every decision. Larry is much more willing to make an O.K. decision and make it now, rather than a perfect decision later."



For the full story, see:

CLAIRE CAIN MILLER. "Google's Chief Works to Trim a Bloated Ship." The New York Times (Thurs., November 10, 2011): A1 & A3.

(Note: ellipses added.)

(Note: the online version of the story has the date November 9, 2011.)






June 22, 2013

Self-Taught Ovshinsky Created New Field in Physics and Licensed His Patents



OvshinskyStanfordSelfTaughtInventorPhysicist2013-06-21.jpg














"Stanford Ovshinsky helped to establish a new field of physics." Source of caption and photo: online version of the WSJ obituary quoted and cited below.



(p. B5) Inspired by the structure of the brain, Stanford Ovshinsky created a new class of semiconductors that helped lead to flat-panel displays, solar cells and nickel-metal hydride batteries for cars, laptops and cameras.

Mr. Ovshinsky, who died Wednesday [October 17, 2012] at age 89, was an industrialist and self-taught scientific prodigy who helped found a new field of physics that studies the electronics of amorphous materials resembling glass.


. . .


"It was like discovering a new continent, like discovering America," said Hellmut Fritzsche, former chairman of physics department at the University of Chicago who worked with Mr. Ovshinsky. "Nobody in the past 50-60 years has created such a revolution in science."

The new materials--dubbed ovonics--were switches like transistors but worked better for many applications.

Mr. Ovshinsky used his discovery to fund a publicly traded research laboratory that teamed up with companies such as 3M Co., Atlantic Richfield Oil Corp. and General Motors, for which he developed the battery that powered the EV1, GM's electric car.

Companies around the world license his patents.

What made Mr. Ovshinsky's work particularly remarkable was that he had little connection to mainstream physics.

His education stopped after high school, . . .



For the full obituary, see:

STEPHEN MILLER. "Stanford Ovshinsky 1922-2012; An Inventor of Chips and Batteries." The Wall Street Journal (Fri., October 19, 2012): B5.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date October 18, 2012.)






June 15, 2013

Cuban Government Employees "Are Known for Surly Service, Inefficiency, Absenteeism and Pilfering"



(p. A10) However small, . . . , the private sector is changing the work culture on an island where state employees earn meager salaries and are known for surly service, inefficiency, absenteeism and pilfering.

Sergio Alba Marín, who for years managed the restaurants of a state-owned hotel and now owns a popular fast-food restaurant, said he was very strict with his employees and would not employ workers trained by the state.

"They have too many vices -- stealing, for one," said Mr. Alba, who was marching with his 25 employees and two large banners emblazoned with the name of his restaurant, La Pachanga. "You can't change that mentality."

"Even if you could, I don't have time," he added. "I have a business to run."



For the full story, see:

VICTORIA BURNETT. "HAVANA JOURNAL; Amid Fealty to Socialism, a Nod to Capitalism." The New York Times (Thurs., May 2, 2013): A6 & A10.

(Note: ellipsis added.)

(Note: the online version of the story has the date May 1, 2013.)






June 4, 2013

Edison, Not Muybridge, Remains the Father of Hollywood



TheInventorAndTheTycoonBK2013-05-12.jpg













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






(p. A13) Wish it though we might, this strangely off-center Briton isn't really the Father of Hollywood, nor even a distant progenitor of "Avatar." The famous time-lapse images that he took for Stanford, proving that a horse does take all four hoofs off the ground while galloping--and the tens of thousands of photographs that he went on to make of birds flying and people sneezing or bending over and picking things up--were soon so comprehensively overtaken by newer technologies (lenses, shutters, celluloid) that his stature as a proto-movie-maker was soon reduced to a way-station. His contribution was technically interesting but hardly seminal at all. The tragic reality is that Thomas Edison, with whom Muybridge was friendly enough to propose collaboration, retains the laurels--though, as Mr. Ball points out with restrained politeness, Muybridge might have fared better had he been aware of Edison's reputation for "borrowing the work of others and not returning it."


For the full review, see:

SIMON WINCHESTER. "BOOKSHELF; Lights, Camera, Murder; The time-lapse photos Muybridge took in the 19th century were technically innovative, but they didn't make him the Father of Hollywood." The Wall Street Journal (Thurs., February 6, 2013): A13.

(Note: the online version of the review has the date February 6, 2013.)


The book under review is:

Ball, Edward. The Inventor and the Tycoon: A Gilded Age Murder and the Birth of Moving Pictures. New York: Doubleday, 2013.






June 2, 2013

Tesla CTO Straubel Likes Biography of Tesla



StraubelJBteslaCTO2013-05-14.jpg











J.B. Straubel, Chief Technology Officer of Tesla Motors. Source of photo: online version of the NYT article quoted and cited below.






(p. 2) J. B. Straubel is a founder and the chief technical officer of Tesla Motors in Palo Alto, Calif. The company makes electric vehicles that some compare to Apple products in terms of obsessive attention to design, intuitive user interface and expense.



READING I like to read biographies of interesting people, mostly scientists and engineers. Right now, it's "Steve Jobs," by Walter Isaacson. One of my favorites biographies was "Wizard: The Life and Times of Nikola Tesla," by Marc Seifer, which I read even before Tesla Motors started.


. . .


WATCHING I really like the movie "October Sky." It's about a guy who grew up in a little coal-mining town around the time of Sputnik. He fell in love with the idea of building rockets and the movie follows him through his high school years when he's building rockets and eventually he ends up becoming an engineer at NASA. I watch it every year or so. It's inspirational. I always come out of it wanting to work harder.



For the full interview, see:

KATE MURPHY. "DOWNLOAD; J. B. Straubel." The New York Times, SundayReview Section (Sun., April 7, 2013): 2.

(Note: ellipsis added; bold in original.)

(Note: the online version of the interview has the date April 6, 2013.)






May 31, 2013

Paul Allen's Account of the Founding of Microsoft



idea-man-paul-allenBK2013-05-12.jpg
















Source of book image: http://www.entrepreneur.com/dbimages/slideshow/idea-man-paul-allen.jpg



(p. C6) The first half of "Idea Man" sets forth Mr. Allen's version of the Microsoft creation myth, depicting Mr. Gates as a petulant, ambitious and money-minded mogul-to-be and Mr. Allen as an underappreciated visionary. Pictures of them from the 1970s and early '80s also tell this story, making Mr. Allen look like a hirsute, powerful older brother and Mr. Gates like a kid.


. . .


"Idea Man" is long overdue. It turns out to be as remote, yet as surpassingly strange, as its author, whose receipt of a diagnosis of Stage 4 non-Hodgkin's lymphoma in 2009 has made it that much more important for him to tell his story. Though it is written in the smoothly proficient style of many a collaborator-assisted memoir, it is a book filled with wild extremes: breakthrough, breakup, power, indulgence, blue-sky innovation. And it winds up offering Mr. Allen's guarded, partial answer to a universal question: what if you could make your wildest dreams come true?



For the full review, see:

JANET MASLIN. "BOOKS OF THE TIMES; The Reclusive Other Half of Microsoft's Odd Couple Breaks His Silence." The New York Times (Tues., April 19, 2011): C6.

(Note: ellipsis added.)

(Note: the online version of the review has the date April 18, 2011.)


The book under review is:

Allen, Paul. Idea Man: A Memoir by the Cofounder of Microsoft. New York: Portfolio, 2011.






May 15, 2013

Were Phone Phreaks Creative Incipient Entrepreneurs or Destructive "Sophomoric Savants"?



ExplodingThePhoneBK2013-05-05.JPG

















Source of book image: http://img1.imagesbn.com/p/9780802120618_p0_v2_s260x420.JPG



(p. C6) Mr. Lapsley also describes John Draper, aka Captain Crunch, who was probably the most celebrated of the phreakers; his nickname derived from the fact that whistles that used to come in Cap'n Crunch cereal boxes happened to generate the key 2600-Hz tone used in long-distance switching. . . .

The phone-phreak netherworld was introduced to a mass audience by the October 1971 issue of Esquire magazine, which included what has to be (at least indirectly) one of the most influential articles ever written: Ron Rosenbaum's "Secrets of the Little Blue Box." Not only did it turn phreakers into folk heroes, but it inspired two young men, Steve Wozniak (who provided the foreword for this book) and Steve Jobs, to construct and sell blue boxes. Going door to door in Berkeley dorms, they managed to sell several dozen at $170 each. The "two Steves" savored this mix of clever engineering and entrepreneurial hustle: As Mr. Lapsley quotes Jobs saying: "If we hadn't made blue boxes, there would have been no Apple." (Mr. Rosenbaum's article also put the "phreak" into "phone phreak.")

. . .: By the 1980s, computerized phone systems and fiber-optic cables rendered many of the old phreaking modes obsolete. In addition, I can't help suspecting that the breakup of AT&T in 1984--the result of an antitrust lawsuit filed by the federal government--deeply discouraged the hard-core phreaks. Surreptitiously penetrating one of the shriveled new regional phone companies must have seemed a paltry caper compared with taking on mighty, majestic AT&T.


. . .


I must, however, take issue with one of Mr. Lapsley's conclusions. In reflecting on the phreaks' legacy, he writes: "The phone phreaks taught us that there is a societal benefit to tolerating, perhaps even nurturing (in the words of Apple) the crazy ones--the misfits, the rebels, the troublemakers." Is that truly what they taught us? . . .

Wilt Chamberlain supposedly once said that "nobody roots for Goliath." Perhaps. But the lesson to be learned from those waging guerrilla war against giants like the phone company and the Internet is that sophomoric savants who tamper with society's indispensable systems ultimately harm all too many innocent people.



For the full review, see:

HOWARD SCHNEIDER. "BOOKSHELF; Playing Tricks on Ma Bell." The Wall Street Journal (Sat., February 2, 2013): C6.

(Note: ellipses added.)

(Note: the online version of the review has the date February 1, 2013.)



The book under review, is:

Lapsley, Phil. Exploding the Phone: The Untold Story of the Teenagers and Outlaws Who Hacked Ma Bell. New York: Grove Press, 2013.






April 16, 2013

Tax Rates Have Big Effect on Labor Supply and Rate of Entrepreneurial Start-Ups



(p. A23) Higher taxes will produce long-term changes in social norms, behavior and growth. Edward Prescott, a winner of the Nobel Memorial Prize in economics, found that, in the 1950s when their taxes were low, Europeans worked more hours per capita than Americans. Then their taxes went up, reducing the incentives to work and increasing the incentives to relax. Over the next decades, Europe saw a nearly 30 percent decline in work hours.

The rich tend to be more sensitive to tax-rate changes because they've got advisers who are paid to be. Martin Feldstein, an economics professor at Harvard, looked into tax changes in the 1980s and concluded that raising rates causes people to shift compensations to untaxed fringe benefits and otherwise suppresses their economic activity. A study last year by the economists Michael Keane and Richard Rogerson found that tax rates can have a surprisingly large influence on how much people invest in education, how likely they are to create businesses and which professions they go into.



For the full commentary, see:

DAVID BROOKS. "The Progressive Shift." The New York Times (Tues., March 19, 2013): A23.

(Note: the online version of the commentary has the date March 18, 2013.)


The Keane and Rogerson paper summarized by Brooks is:

Keane, Michael, and Richard Rogerson. "Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom." Journal of Economic Literature 50, no. 2 (June 2012): 464-76.






April 7, 2013

Confident Winner Studied Economics at Cambridge and Directed Bronson in "Death Wish"



WinnerMichaelWithCharlesBronsonDeathWishSet2013-03-10.jpg

"Michael Winner, left, and Charles Bronson on the set of the 1974 film "Death Wish." The two collaborated on several films." Source of caption and photo: online version of the NYT obituary quoted and cited below.


(p. B8) Michael Winner, the brash British director known for violent action movies starring Charles Bronson including "The Mechanic" and the first three "Death Wish" films, died on Monday [January 21, 2013] at his home in London. He was 77.


. . .


Mr. Winner's films viscerally pleased crowds, largely ignored artistic pretensions and often underwhelmed critics. He directed many major stars in more than 30 films over more than four decades.


. . .


Mr. Bronson played Paul Kersey, a New York City architect who becomes a vigilante after his wife is murdered and his daughter is sexually assaulted by muggers.


. . .


Michael Robert Winner was born in London on Oct. 30, 1935. The son of a well-to-do business owner, Mr. Winner graduated from Cambridge, having studied law and economics.


. . .


He was confident on set, sometimes bordering on the dictatorial. "You have to be an egomaniac about it. You have to impose your own taste," he said. "The team effort is a lot of people doing what I say."



For the full obituary, see:

DANIEL E. SLOTNIK. "Michael Winner, 77, 'Death Wish' Director." The New York Times (Tues., January 22, 2013): B8.

(Note: the online version of the obituary has the slightly different title "Michael Winner, 'Death Wish' Director, Dies at 77.")

(Note: ellipses and bracketed date were added.)






April 3, 2013

Liver Transplant Pioneer Roy Calne Has a "Rebellious Nature"



CalneRoyLiverTransplantPioneer2013-03-09.jpg











"Roy Y. Calne" Source of caption and photo: online version of the NYT interview quoted and cited below.





(p. D2) Sir Roy Calne is a pioneer of organ transplants -- the surgeon who in the 1950s found ways to stop the human immune system from rejecting implanted hearts, livers and kidneys. In 1968 he performed Europe's first liver transplant, and in 1987 the world's first transplant of a liver, heart and lung.


. . .


When you were studying medicine in early-1950s Britain, what was the prevailing attitude toward organ transplantation?

It didn't exist! While a medical student, I recall being presented with a young patient with kidney failure. I was told to make him as comfortable as possible because he would die in two weeks.

This troubled me. Some of our patients were very young, very deserving. Aside from their kidney disease, there was nothing else wrong with them. I wondered then if it might be possible to do organ transplants, because kidneys are fairly simple in terms of their plumbing. I thought in gardening terms. Might it not be possible to do an organ graft, replacing a malfunctioning organ with a healthy one? I was told, "No, that's impossible."

Well, I've always tended to dislike being told that something can't be done. I've always had a somewhat rebellious nature. Just ask my wife.



For the full interview, see:

CLAUDIA DREIFUS, interviewer. "A CONVERSATION WITH ROY Y. CALNE; "I've always tended to dislike being told that something can't be done. I've always had a somewhat rebellious nature."" The New York Times (Weds., November 27, 2012): D2.

(Note: ellipsis added; bold in original to indicate interviewer (Dreifus) question.)

(Note: the online version of the interview has the date November 26, 2012 and has the title "A CONVERSATION WITH ROY Y. CALNE; Organ Transplant Pioneer Talks About Risks and Rewards.")






March 28, 2013

Driving to MobileIron Job Interview in $100,000 Car, Tells CEO Tinker You Are Not Hungry Enough



TinkerRobertMobileIronCEO2013-03-09.jpg "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.)






March 27, 2013

Jobs' Protest Against Mortality: Omit the On-Off Switches on Apple Devices



(p. 571) . . . [Jobs] admitted that, as he faced death, he might be overestimating the odds out of a desire to believe in an afterlife. "I like to think that something survives after you die," he said. "It's strange to think that you accumulate all this experience, and maybe a little wisdom, and it just goes away. So I really want to believe that something survives, that maybe your consciousness endures."

He fell silent for a very long time. "But on the other hand, perhaps it's like an on-off switch," he said. "Click! And you're gone."

Then he paused again and smiled slightly. "Maybe that's why I never liked to put on-off switches on Apple devices."



Source:

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

(Note: ellipsis and bracketed "Jobs" added; italics in original.)






March 24, 2013

Many Corporations Refused to Finance Semiconductors



FairlchildSemiconductorEightFounders2013-03-08.jpg "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






March 23, 2013

"The Ante for Being in the Room" at Apple Was Brutal Honesty




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


(p. 569) I don't think I run roughshod over people, but if something sucks, I tell people to their face. It's my job to be honest. I know what I'm talking about, and I usually turn out to be right. That's the culture I tried to create. We are brutally honest with each other, and anyone can tell me they think I am full of shit and I can tell them the same. And we've had some rip-roaring arguments, where we are yelling at each other, and it's some of the best times I've ever had. I feel totally comfortable saying "Ron, that store looks like shit" in front of everyone else. Or I might say "God, we really fucked up the engineering on this" in front of the person that's responsible. That's the ante for being in the room: You've got to be able to be super honest. Maybe there's a better way, a gentlemen's club where we all wear ties and speak in this Brahmin language and velvet codewords, but I don't know that way, because I am middle class from California.

I was hard on people sometimes, probably harder than I needed to be. I remember the time when Reed was six years old, coming home, and I had just fired somebody that day, and I imagined what it was like (p. 570) for that person to tell his family and his young son that he had lost his job. It was hard. But somebody's got to do it. I figured that it was always my job to make sure that the team was excellent, and if I didn't do it, nobody was going to do it.



Source:

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






March 22, 2013

Adolphus Busch Was First to Pasteurize Beer



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Source of book image: https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTAFP9Hrx5IMUu1VH2WgoGcF43prrX2QiZx1J770DEx8BcGm55p1g



(p. C9) The first King of Beers was a German immigrant who came to America just before the Civil War. Adolphus Busch set down roots in heavily Germanic St. Louis, used an inheritance to buy a brewery-supply business and married into the Anheuser family, which owned a struggling brewery of its own. Installed as president of the family business (re-christened Anheuser-Busch), Adolphus purchased a beer recipe--you have to love this--used by monks in a Bohemian village named Budweis. The crisp, pale lager was known as Budweiser.


. . .


Adolphus certainly knew how to sell beer. He was the first American brewer to pasteurize his product, meaning that he could store it longer and ship it greater distances. He bought his own rail-car company and glass bottler; in the age of trusts he was a one-man conglomerate. Anticipating the family taste for luxury, Adolphus maintained baronial mansions in St. Louis, Cooperstown, N.Y., and Pasadena, Calif. His style was grand or, as Mr. Knoedelseder puts it, "over-the-top gauche."



For the full review, see:

Roger Lowenstein. "BOOKSHELF; Fall of the House of Busch." The Wall Street Journal (Sat., December 1, 2012): C9.

(Note: ellipsis added.)

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





Book under review:

Knoedelseder, William. Bitter Brew: The Rise and Fall of Anheuser-Busch and America's Kings of Beer. New York: HarperBusiness, 2012.






March 20, 2013

Many New Tech Entrepreneurs Shun "Fast Cars and Fancy Parties"



LibinPhilEvernoteCEO2013-03-09.jpg

















"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.)






March 19, 2013

Real Entrepreneurs Do Not Launch a Startup in Order to Cash In and Move On




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

I agree with the part about real entrepreneurs not going public quick in order to cash in. But I disagree that the real entrepreneurs are mainly interested in building a lasting company. I think that often they are mainly interested in getting a project, or a series of projects, done (and done reasonably well). Recall that when Walt Disney couldn't convince Roy Disney to pursue the Disneyland project, Walt left the main Disney company to pursue the project through a secondary rump Disney company.


(p. 569) I hate it when people call themselves "entrepreneurs" when what they're really trying to do is launch a startup and then sell or go public, so they can cash in and move on. They're unwilling to do the work it takes to build a real company, which is the hardest work in business. That's how you really make a contribution and add to the legacy of those who went before. You build a company that will still stand for something a generation or two from now. That's what Walt Disney did, and Hewlett and Packard, and the people who built Intel. They created a company to last, not just to make money. That's what I want Apple to be.


Source:

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






March 18, 2013

Much of "A Charlie Brown Christmas" Was Funded Out of Producer's Own Pocket



TheArtAndMakingOfPeanutsAnimation2013-03-09.jpg














Source of book image: http://www.awn.com/files/imagepicker/23/artofpeanuts-cover-620.jpg



(p. C10) Of all the "Peanuts" television specials ever made, the first--"A Charlie Brown Christmas" (1965)--was the Charlie Browniest. The 25-minute special was an underdog, just like its hapless protagonist, and barely made it on the air. CBS gave producer Lee Mendelson so minuscule a budget, we learn in Charles Solomon's "The Art and Making of Peanuts Animation," that he was forced to fund the rest out of his own pocket--even though Coca-Cola had already guaranteed sponsorship. When "A Charlie Brown Christmas" pulled in sensational ratings, CBS grudgingly asked for follow-ups. "We're going to order four more," a network executive told Mr. Mendelson, "though my aunt in New Jersey didn't like it either"--a line that Schulz might have written.


. . .


"A Charlie Brown Christmas" established the template, mixing morals and gags in a way that made the peachiness seem endearing. The perfectly pitched dialogue, written by Schulz himself, was voiced (at his insistence) by actual children. The expressionist use of line and color was introduced by director Bill Melendez, and the understated yet supremely catchy Latin jazz scores were the work of pianist-composer Vince Guaraldi and his combo. The tune Guaraldi called "Linus and Lucy" came to be synonymous with "Peanuts" for the generations that grew up on the specials.

While the movements of the characters--especially Snoopy--could be antic, Guaraldi's scores set a cool counterpoint and provided a sense of serenity that was utterly unique. The characters weren't always moving--sometimes they would stop and simply listen to each other--and Schulz insisted that there be no laugh track. He made the climax of the drama Linus walking to the center of the school stage to recite from the gospel of Luke--a decision daring even in its day, not least because it stopped the action for an extended period to show a hand-drawn character delivering a lisping speech.



For the full review, see:

WILL FRIEDWALD. "BOOKSHELF; Cheers for Chuck." The Wall Street Journal (Sat., December 22, 2012): C10.

(Note: ellipsis added.)

(Note: the online version of the review has the date December 21, 2012.)


Book under review:

Solomon, Charles. The Art and Making of Peanuts Animation: Celebrating Fifty Years of Television Specials. San Francisco, CA: Chronicle Books, 2012.






March 15, 2013

Jobs Believed Great Companies Decline When Salesmen (Rather than Engineers and Designers) Take Over




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


(p. 568) I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of (p. 569) the product becomes less important. The company starts valuing the great salesmen, because they're the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company. John Akers at IBM was a smart, eloquent, fantastic salesperson, but he didn't know anything about product. The same thing happened at Xerox. When the sales guys run the company, the product guys don't matter so much, and a lot of them just turn off.


Source:

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






March 12, 2013

Resveratrol Activates Sirtuins to Switch on Energy Producing Mitochondria




A new study, just published in the prestigious journal Science, appears to substantially vindicate the recently beleaguered resveratrol longevity research of David Sinclair:


. . . a new study led by David Sinclair of the Harvard Medical School, who in 2003 was a discoverer resveratrol's role in activating sirtuins, found that resveratrol did indeed influence sirtuin directly, though in a more complicated way than previously thought.    . . .    . . . activated, the sirtuins do several things, one of which is to switch on a second protein that spurs production of the mitochondria, which provide the cell's energy. This would explain why mice treated with resveratrol ran twice as far on a treadmill before collapsing from exhaustion as untreated mice.


For the full story, see:

NICHOLAS WADE. "New Optimism on Resveratrol." New York Times "Well" Blog    Posted on MARCH 11, 2013. URL: http://well.blogs.nytimes.com/2013/03/11/new-optimism-on-resveratrol/

(Note: ellipses added.)


The Sinclair article (see last-listed co-author) is:

Hubbard, Basil P., Ana P. Gomes, Han Dai, Jun Li, April W. Case, Thomas Considine, Thomas V. Riera, Jessica E. Lee, Sook Yen E (sic), Dudley W. Lamming, Bradley L. Pentelute, Eli R. Schuman, Linda A. Stevens, Alvin J. Y. Ling, Sean M. Armour, Shaday Michan, Huizhen Zhao, Yong Jiang, Sharon M. Sweitzer, Charles A. Blum, Jeremy S. Disch, Pui Yee Ng, Konrad T. Howitz, Anabela P. Rolo, Yoshitomo Hamuro, Joel Moss, Robert B. Perni, James L. Ellis, George P. Vlasuk, and David A. Sinclair. "Evidence for a Common Mechanism of Sirt1 Regulation by Allosteric Activators." Science 339, no. 6124 (March 8, 2013): 1216-19.






March 11, 2013

Open Systems Limit the Integrated Vision that Creates Great Products




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.






March 10, 2013

Ibrahim's Celtel Provided Private Infrastructure to Aid African Growth



LessWalkMoreTalkBK2013-01-29.jpg

















Source of book image: http://media.wiley.com/product_data/coverImage300/04/04707432/0470743204.jpg



I was searching for a biography of the entrepreneur Mo Ibrahim who founded the innovative African cell phone company Celtel. The closest I have been able to find so far is Less Walk, More Talk which looks promising, but which I have not yet read.

Arguably, cell phones in Africa have provided important infrastructure that has made it somewhat easier to be productive there, and hence made a contribution to economic growth.



The book is:

Southwood, Russell. Less Walk More Talk: How Celtel and the Mobile Phone Changed Africa. Hoboken, NJ: John Wiley & Sons, 2009.






March 7, 2013

Steve Jobs: "Never Rely on Market Research"




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.






March 6, 2013

Entrepreneur Ping Fu Learned the Resilience of Bamboo



BendNotBreakBK2013-01-13.jpg











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








(p. A11) The history of American business is full of immigrant success stories--of men and women who flee poverty and oppression in their home countries, arrive on our shores with only pennies in their pockets, and go on to build companies that generate wealth, create jobs, and provide innovative products and services.

Count among them Ping Fu, the Chinese-born chief executive of the high-tech company Geomagic, which provides 3D-imaging for such modern-day miracles as customized prosthetic limbs. If your child wears orthodontic braces, chances are that they were designed for his teeth with the help of Geomagic technology. Ms. Fu founded the company in 1997, 13 years after arriving in San Francisco with $80 in her purse and three English phrases in her vocabulary: "hello," "thank you" and "help."


. . .


In the U.S., Ms. Fu worked as a maid, a waitress and a baby sitter while learning English and studying computer science. She eventually landed at Bell Labs in Illinois before striking out on her own. "I was a reluctant and unlikely entrepreneur," she writes. In China, "I had been hardwired to think that money was evil, and traumatized as a child because of my family's success." Encouraged by her Shanghai Papa to follow in the family's entrepreneurial tradition, she and her then-husband launched Geomagic. In her book, she traces the challenges she faced in building a company--obtaining funding, winning customers, managing a growing staff of professionals.

Ms. Fu's life story raises a core question about the development of the human psyche: Why is it that, confronted with the kind of horrors that Ms. Fu experienced as a child, some survivors succeed in later life while others fail, overcome by the trials they endured?

Ms. Fu credits the tranquil, happy childhood she experienced for the first eight years of her life. She also points to the Taoist teachings of her Shanghai Papa, who taught her to admire the flexible nature of the bamboo trees that grew in the family garden. Bamboo, he told her, "suggests resilience, meaning that we have the ability to bounce back from even the most difficult times."



For the full review, see:

MELANIE KIRKPATRICK. "BOOKSHELF; The Art Of Resilience; Ping Fu endured gang-rape and political prison in China before arriving on our shores and founding her own high-tech firm." The Wall Street Journal (Weds., January 9, 2013): D7.

(Note: ellipsis added.)

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



The book under review is:

Fu, Ping. Bend, Not Break: A Life in Two Worlds. New York: Portfolio, 2012.






March 3, 2013

Profits Allow You to Make Great Products, But the Products, Not the Profits, Are the Motivation




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


(p. 567) My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything: the people you hire, who gets promoted, what you discuss in meetings.


Source:

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







February 28, 2013

Greek Government Buries Olive Oil Entrepreneur in Red Tape



AntonopoulosFotisGreekOliveOil2013-02-23.jpg "Fotis Antonopoulos's struggles to start OliveShop.com have made him a reluctant emblem of thwarted Greek entrepreneurship." Source of caption and photo: online version of the NYT article quoted and cited below.



Vassilis Korkidis, who is quoted below, is (p. A3) "the president of the National Confederation of Hellenic Commerce, a trade association in Athens."



(p. A1) ATHENS -- It was about a year ago that Fotis I. Antonopoulos, a successful Web program designer here, decided he wanted to open an e-business selling olive products.

Luckily, he already had a day job.

It took him 10 months -- crisscrossing the city to collect dozens of forms and stamps of approval, including proof that he was up to date on his pension contributions -- before he could get started. But even that was not enough. In perhaps the strangest twist of all, his board members were required by the Health Department to submit lung X-rays -- and stool samples -- since this was a food company.


. . .


With Greece's economy entering its fourth year of recession, its entrepreneurs are eager to reverse a frightening tide. Last year, at least 68,000 small and medium-size businesses closed in Greece; nearly 135,000 jobs associated with them vanished. Predictions for 2012 are also bleak.

But despite the government's repeated promises to improve things, the climate for doing business here remains abysmal. In a recent report titled "Greece 10 Years Ahead," McKinsey & Company described Greece's economy as "chronically suffering from unfavorable conditions for business." Start-ups faced immense amounts of red tape, complex administrative and tax systems and procedural disincentives, it said.


. . .


(p. A3) Part of Mr. Antonopoulos's problem, Mr. Korkidis ventured, was his unwillingness to pay what is routinely referred to here as the "speed tax" -- bribes to move things along.

Nor is Mr. Korkidis much of a fan of recent government efforts to improve things. He pointed to a pamphlet produced by the Ministry of Development, which explained a new "one-stop shop" program for new businesses.

"This doesn't work," he said. "You have to collect 10 papers first -- and then it is one-stop shopping. Ridiculous."

At 36, Mr. Antonopoulos is an aging computer whiz kid with long hair and an easy smile.


. . .


The worst moment, he said, was when representatives from two agencies came to inspect the shop and disagreed about the legality of a circular staircase. They walked out telling him that he "would have to figure it out."

"At that point, we actually thought about just going to the U.K. with this," he said. "One of the inspectors knew about new legislation. The other didn't. And they just refused to come up with a solution."

At one point, the company got a huge order from Denmark, he said. But the paperwork for what amounted to a wholesale transaction was so onerous that they decided not to even try to fill the order.



For the full story, see:

SUZANNE DALEY. "A Tale of Greek Enterprise and Olive Oil, Smothered in Red Tape." The New York Times (Mon., March 19, 2012): A1 & A3.

(Note: ellipses added.)

(Note: the online version of the story has the date March 18, 2012.)






February 27, 2013

Steve Jobs' "Nasty Edge" Helped Him Create an Apple "Crammed with A Players"



(p. 565) . . . I think . . . [Jobs] actually could have controlled himself, if he had wanted. When he hurt people, it was not because he was lacking in emotional awareness. Quite the contrary: He could size people up, understand their inner thoughts, and know how to relate to them, cajole them, or hurt them at will.

The nasty edge to his personality was not necessary. It hindered him more than it helped him. But it did, at times, serve a purpose. Polite and velvety leaders, who take care to avoid bruising others, are generally not as effective at forcing change. Dozens of the colleagues whom Jobs most abused ended their litany of horror stories by saying that he got them to do things they never dreamed possible. And he created a corporation crammed with A players.



Source:

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

(Note: ellipses and bracketed "Jobs" added.)






February 24, 2013

Entrepreneur Mackey Says Whole Foods Drops Prices as Larger Size Creates Economies of Scale



MackeyJohnWholeFoodsCEO2013-02-23.jpg











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





(p. 16) In your new book, "Conscious Capitalism," you write that Whole Foods sees its customers as its "most important stakeholders" and that the company is obsessed with their happiness. The biggest complaint I hear about Whole Foods is how expensive it is. Why not drop prices to make your customers happier? People always complain about prices being too high. Whole Foods prices have dropped every year as we get to be larger and we have economies of scale. Also, people are not historically well informed about food prices. We're only spending about 7 percent of our disposable personal income on food. Fifty years ago, it was nearly 16 percent.


. . .


In 2009, some Whole Foods customers organized boycotts after you wrote an op-ed in The Wall Street Journal expressing opposition to Obama's health care proposals. Do you wish you hadn't written it?
No, I don't. I regret that a lot of people didn't actually read it and it got taken out of context. President Obama asked for ideas about health care reform, and I put my ideas out there. Whole Foods has a good health care plan. It's not a solution to America's health care problems, but it's part of the solution.

So did you vote for Romney?
I did.

I imagine a certain percentage of Whole Foods customers will also boycott because of this.
I don't know what to say except that I'm a capitalist, first. There are many things I don't like about Romney, but more things I don't like about Obama. This is America, and people disagree on things.



For the full interview, see:

Andrew Goldman, Interviewer. "TALK; The Kale King." The New York Times Magazine (Sun., January 20, 2013): 16.

(Note: ellipsis added; bold in original, indicating interviewer questions.)

(Note: the online version of the interview has the date January 18, 2013, and has the title "TALK; John Mackey, the Kale King.")


Mackey's book is:

Mackey, John, and Rajendra Sisodia. Conscious Capitalism: Liberating the Heroic Spirit of Business. Boston, MA: Harvard Business Review Press, 2013.






February 23, 2013

Admiring Jobs' New Products, Gates Wistfully Wondered If "Maybe I Should Have Stayed in That Game"



(p. 553) Bill Gates had never lost his fascination with Jobs. In the spring of 2011 I was at a dinner with him in Washington, where he had come to discuss his foundation's global health endeavors. He expressed amazement at the success of the iPad and how Jobs, even while sick, was focusing on ways to improve it. "Here I am, merely saving the world from malaria and that sort of thing, and Steve is still coming up with amazing new products," he said wistfully. "Maybe I should have stayed in that game." He smiled to make sure that I knew he was joking, or at least half joking.


Source:

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






February 20, 2013

Entrepreneur Kurzweil Says If He Gets Cancer, He Will Invent a Cure



KurzweilRay2013-02-03.jpg











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


















(p. 12) As a futurist, you are famous for making predictions of when technological innovations will actually occur. Are you willing to predict the year you will die? My plan is to stick around. We'll get to a point about 15 years from now where we're adding more than a year every year to your life expectancy.

To clarify, you're predicting your immortality.
The problem is I can't get on the phone with you in the future and say, "Well, I've done it, I have lived forever," because it's never forever.


. . .


You've said that if you woke up one day with a terminal disease, you'd be forced to invent a cure. Were you being serious?
I absolutely would try. I'm working now on a cancer project with some scientists at M.I.T., and if I develop cancer, I do have some ideas of what I would do.

I imagine a lot of people would hear that and say, Ray, if you think you're capable of curing yourself, why don't you go ahead and start curing others?
Well, I mean, I do have to pick my priorities. Nobody can do everything. What we spend our time on is probably the most important decision we make. I don't know if you're aware, but I'm joining Google as director of engineering.



For the full interview, see:

Andrew Goldman, Interviewer. "TALK; The Life Robotic; The Futurist Ray Kurzweil Says We're Going to Live Forever. Really." The New York Times Magazine (Sun., January 27, 2013): 12.

(Note: ellipsis added; bold in original, indicating interviewer questions.)

(Note: the online version of the interview has the date January 25, 2013, and has the title "TALK; Ray Kurzweil Says We're Going to Live Forever.")






February 19, 2013

Steve Jobs Advised Obama to Reduce Regulations of Business and Union Power in Education



(p. 544) The meeting . . . lasted forty-five minutes, and Jobs did not hold back. "You're headed for a one-term presidency," Jobs told Obama at the outset. To prevent that, he said, the administration needed to be a lot more business-friendly. He described how easy it was to build a factory in China, and said that it was almost impossible to do so these days in America, largely because of regulations and unnecessary costs.

Jobs also attacked America's education system, saying that it was hopelessly antiquated and crippled by union work rules. Until the teachers' unions were broken, there was almost no hope for education reform. Teachers should be treated as professionals, he said, not as industrial assembly-line workers. Principals should be able to hire and fire them based on how good they were. Schools should be staying open until at least 6 p.m. and be in session eleven months of the year. It was absurd, he added, that American classrooms were still based on teachers standing at a board and using textbooks. All books, learning materials, and assessments should be digital and interactive, tailored to each student and providing feedback in real time.



Source:

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

(Note: ellipsis added.)






February 18, 2013

Entrepreneur Peter Thiel Says We Should Fight for Longer Lives



100PlusBK2013-01-12.jpg











Source of book image: http://si.wsj.net/public/resources/images/OB-PJ926_bkrv10_DV_20110829191924.jpg







(p. C13) Sonia Arrison's "100 Plus" was first published in 2011, but its message is evergreen: how scientists are directly attacking the problem of aging and death and why we should fight for life instead of accepting decay as inevitable. The goal of longer life doesn't just mean more years at the margin; it means a healthier old age. There is nothing to fear but our own complacency.


For the full review essay, see:

Peter Thiel (author of passage quoted above, one of 50 contributors to whole article). "Twelve Months of Reading; We asked 50 of our friends to tell us what books they enjoyed in 2012--from Judd Apatow's big plans to Bruce Wagner's addictions. See pages C10 and C11 for the Journal's own Top Ten lists." The Wall Street Journal (Sat., December 15, 2012): passim (Thiel's contribution is on p. C13).

(Note: the online version of the review essay has the date December 14, 2012.)



The book Thiel endorses is:

Arrison, Sonia. 100 Plus: How the Coming Age of Longevity Will Change Everything, from Careers and Relationships to Family and Faith. New York: Basic Books, 2011.






February 17, 2013

Higher Taxes Would Slow Creation of Entrepreneur Bronfein's Time-Saving Medical Robotic Systems



(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.)






February 15, 2013

Steve Jobs Framing a Decision in Terms of Christensen's "The Innovator's Dilemma"





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



(p. 532) It's important that we make this transformation, because of what Clayton Christensen calls "the innovator's dilemma," where people who invent something are usually the last ones to see past it, and we certainly don't want to be left behind. I'm going to take MobileMe and make it free, and we're going to make syncing content simple. We are building a server farm in North Carolina. We can provide all the syncing you need, and that way we can lock in the customer.


Source:

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






February 11, 2013

Apple's Corporate Culture Under Jobs: "Accountability Is Strictly Enforced"



(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.






February 3, 2013

Steve Jobs Viewed Patents as Protecting Property Rights in Ideas



(p. 512) . . . Apple filed suit against HTC (and, by extension, Android), alleging infringement of twenty of its patents. Among them were patents covering various multi-touch gestures, swipe to open, double-tap to zoom, pinch and expand, and the sensors that determined how a device was being held. As he sat in his house in Palo Alto the week the lawsuit was filed, he became angrier than I had ever seen him:

Our lawsuit is saying, "Google, you fucking ripped off the iPhone, wholesale ripped us off." Grand theft. I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go to thermonuclear war on this. They are scared to death, because they know they are guilty. Outside of Search, Google's products--Android, Google Docs--are shit.

A few days after this rant, Jobs got a call from Schmidt, who had resigned from the Apple board the previous summer. He suggested they get together for coffee, and they met at a café in a Palo Alto shopping center. "We spent half the time talking about personal matters, then half the time on his perception that Google had stolen Apple's user interface designs," recalled Schmidt. When it came to the latter subject, Jobs did most of the talking. Google had ripped him off, (p. 513) he said in colorful language. "We've got you red-handed," he told Schmidt. "I'm not interested in settling. I don't want your money. If you offer me $5 billion, I won't want it. I've got plenty of money. I want you to stop using our ideas in Android, that's all I want." They resolved nothing.



Source:

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

(Note: ellipsis added.)






January 31, 2013

Dr. William House "Faced Stern Opposition" to Bring Cochlear Implants to the Deaf



HouseAndHustedFirstCochlearImplant2013-01-12.jpg "Dr. William F. House in 1981 with Tracy Husted, the first pre-school-age child to get a cochlear implant." Source of caption and photo: online version of the NYT obituary quoted and cited below.


(p. 34) Dr. William F. House, a medical researcher who braved skepticism to invent the cochlear implant, an electronic device considered to be the first to restore a human sense, died on Dec. 7 at his home in Aurora, Ore. He was 89.

. . .


Dr. House pushed against conventional thinking throughout his career. Over the objections of some, he introduced the surgical microscope to ear surgery. Tackling a form of vertigo that doctors had believed was psychosomatic, he developed a surgical procedure that enabled the first American in space to travel to the moon. Peering at the bones of the inner ear, he found enrapturing beauty.


. . .


More than a decade would pass before the Food and Drug Administration approved the cochlear implant, but when it did, in 1984, Mark Novitch, the agency's deputy commissioner, said, "For the first time a device can, to a degree, replace an organ of the human senses."

One of Dr. House's early implant patients, from an experimental trial, wrote to him in 1981 saying, "I no longer live in a world of soundless movement and voiceless faces."

But for 27 years, Dr. House had faced stern opposition while he was developing the device. Doctors and scientists said it would not work, or not work very well, calling it a cruel hoax on people desperate to hear. Some said he was motivated by the prospect of financial gain. Some criticized him for experimenting on human subjects. Some advocates for the deaf said the device deprived its users of the dignity of their deafness without fully integrating them into the hearing world.


. . .


When his brother returned from West Germany with a surgical microscope, Dr. House saw its potential and adopted it for ear surgery; he is credited with introducing the device to the field. But again there was resistance. As Dr. House wrote in his memoir, "The Struggles of a Medical Innovator: Cochlear Implants and Other Ear Surgeries" (2011), some eye doctors initially criticized his use of a microscope in surgery as reckless and unnecessary for a surgeon with good eyesight.



For the full obituary, see:

DOUGLAS MARTIN. "Dr. William F. House, Inventor of Pioneering Ear-Implant Device, Dies at 89." The New York Times, First Section (Sun., December 16, 2012): 34.

(Note: ellipses added.)

(Note: the online version of the obituary has the date December 15, 2012.)



Dr. House's memoir is:

House, William F. The Struggles of a Medical Innovator: Cochlear Implants and Other Ear Surgeries. CreateSpace Independent Publishing Platform, 2011.

(Note: the copyright page of the book gives neither city nor name of publisher; the publisher in the reference is as given by Amazon.com.)



HouseWilliamInventorOfCochlearImplant2013-01-12.jpg













"Dr. William F. House sitting at an operating microscope." Source of caption and photo: online version of the NYT obituary quoted and cited above.








January 30, 2013

Rupert Murdoch and Steve Jobs "Hit It Off Well"



(p. 508) Murdoch and Jobs hit it off well enough that Murdoch went to his Palo Alto house for dinner twice more during the next year. Jobs joked that he had to hide the dinner knives on such occasions, because he was afraid that his liberal wife was going to eviscerate Murdoch when (p. 509) he walked in. For his part, Murdoch was reported to have uttered a great line about the organic vegan dishes typically served: "Eating dinner at Steve's is a great experience, as long as you get out before the local restaurants close." Alas, when I asked Murdoch if he had ever said that, he didn't recall it.


Source:

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






January 27, 2013

Is Economics Major Nuts to Have Left Investment Banking?



BravermanJeffreyAndFatherUncleCousinNutBusiness2013-01-12.jpg "Jeffrey Braverman, right, stepped away from Wall Street to join his father, uncle and cousin in the family's New Jersey nut business." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B8) Ten years ago, Jeffrey Braverman was living the dream of many business school graduates. With a freshly minted bachelor's degree in economics, he landed a job in 2002 at the Blackstone Group, a Wall Street firm specializing in private equity and investment banking.

Less than a year later, however, Mr. Braverman stepped away from Wall Street and returned to his family's New Jersey nut business, the Newark Nut Company. It struck some as an odd choice: the family-owned company, which had been started by Mr. Braverman's grandfather, Sol Braverman (known as Poppy), and had once employed 30 people, was down to two employees and two family members, Mr. Braverman's father and his uncle.

Located in an indoor mall in a desolate part of Newark, the nut shop's retail sales were fading and its wholesale business was, at best, stagnant. But Mr. Braverman harbored entrepreneurial ambitions.

At the beginning, he agreed to work with his father and uncle for a salary tied directly to how much new business he attracted. He focused on Internet sales and before long, they began to dwarf the existing business.

Now based in Cranford, N.J., the company has grown to more than 80 employees with more than $20 million in revenue, 95 percent of it online. The following is a condensed version of a recent conversation.

Q. Who leaves investment banking to work at a struggling family nut company?

A. Only someone nuts, right? My dad and my uncle both thought I was crazy. I was making more than they were at the time.

Q. Then why?

A. Have you ever read the book "Monkey Business"? It's a fairly accurate profile of what it's like to be in investment banking, at least at a junior level. You know, there's this economic concept called deadweight loss, and I think a lot of investment banking is like that: it doesn't really add anything to the world, to the economy. I just wanted to do more.

Q. I assume your father and uncle made you take a pay cut.

A. The one thing I did was, I didn't want to take anything away from them. I structured it so that my compensation was 100 percent based on incremental profit improvement. So from their perspective, there wasn't very much risk. I also got a small piece of the business. But at the time the business was worth nothing, book value. No one would have bought it.

Q. Did you have any experience in Internet sales?

A. In 1999, I was a freshman in college and I started our Web site, Nutsonline.com. I spent my second semester of freshman year working on that thing four or five hours a day. It kind of just trickled along. In 1999, very few people were buying from Amazon, so they certainly weren't going to buy from Nutsonline. In 2000, I remember I set a goal: I wanted to do 10 orders a day.



For the full version of the condensed conversation, see:

IAN MOUNT. "Forsaking Investment Banking to Turn Around a Family Business." The New York Times (Thurs., April 19, 2012): B8.

(Note: bold in original.)

(Note: the online version of the conversation has the date April 18, 2012.)



BravermanSolNutBusinessEarly1930s2013-01-12.jpg "Sol Braverman, Jeffrey's grandfather, in the early 1930s." Source of caption and photo: online version of the NYT article quoted and cited above.






January 26, 2013

The Project Entrepreneur: Never Say Die



(p. 485) . . . [Jobs] chafed at not being in control, and he sometimes hallucinated or be-(p. 486)came angry. Even when he was barely conscious, his strong personality came through. At one point the pulmonologist tried to put a mask over his face when he was deeply sedated. Jobs ripped it off and mumbled that he hated the design and refused to wear it. Though barely able to speak, he ordered them to bring five different options for the mask and he would pick a design he liked. The doctors looked at Powell, puzzled. She was finally able to distract him so they could put on the mask. He also hated the oxygen monitor they put on his finger. He told them it was ugly and too complex. He suggested ways it could be designed more simply. "He was very attuned to every nuance of the environment and objects around him, and that drained him," Powell recalled.


Source:

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

(Note: ellipsis and bracketed "Jobs" added.)






January 23, 2013

David Koch Institute for Integrative Cancer Research



LangerRobertResearchLab2013-01-12.jpg "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.)






January 22, 2013

Apple's iTunes for Windows Gave "a Glass of Ice Water to Somebody in Hell"



(p. 463) Mossberg wanted the evening joint appearance to be a cordial discussion, not a debate, but that seemed less likely when Jobs unleashed a swipe at Microsoft during a solo interview earlier that day. Asked about the fact that Apple's iTunes software for Windows computers was extremely popular, Jobs joked, "It's like giving a glass of ice water to somebody in hell."

So when it was time for Gates and Jobs to meet in the green room before their joint session that evening, Mossberg was worried. Gates got there first, with his aide Larry Cohen, who had briefed him about Jobs's remark earlier that day. When Jobs ambled in a few minutes later, he grabbed a bottle of water from the ice bucket and sat down. After a moment or two of silence, Gates said, "So I guess I'm the representative from hell." He wasn't smiling. Jobs paused, gave him one of his impish grins, and handed him the ice water. Gates relaxed, and the tension dissipated.



Source:

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






January 21, 2013

The Creation of Consistent, Predictable Dyes and Paints



The-Color-Revolution-by-Regina-Lee-Blaszczyk.png
















Source of book image: http://www.kristenlovesdesign.com/wp-content/uploads/2012/09/The-Color-Revolution-by-Regina-Lee-Blaszczyk.png




(p. C12) Few things seem as eternal as color. Yet as Regina Lee Blaszczyk argues, color has a history, a history largely created by business. In "The Color Revolution," Ms. Blaszczyk shows how the invention of synthetic organic chemistry in the 1850s allowed chemists to create consistent, predictable colors in dyes and paints. Once a chemical company's magenta was reliable, manufacturers could select it from a color card, order it by mail, and use it to produce dresses and dishware in exactly the promised hue.


For the full review essay, see:

Marc Levinson. "Boardroom Reading of 2012." The Wall Street Journal (Sat., December 15, 2012): C12.

(Note: the online version of the review essay has the date December 14, 2012.)



The book under review, is:

Blaszczyk, Regina Lee. The Color Revolution, Lemelson Center Studies in Invention and Innovation. Cambridge, MA: The MIT Press, 2012.






January 16, 2013

Descartes Saw that a Great City Is "an Inventory of the Possible"



(p. 226) Joel Kotkin writes about "The Broken Ladder: The Threat to Upward Mobility in the Global City." "A great city, wrote Rene Descartes in the 17th Century, represented 'an inventory of the possible,' a place where people could create their own futures and lift up their families. In the 21st Century--the first in which the majority of people will live in cities--this unique link between urbanism and upward mobility will become ever more critical."


Source:

Taylor, Timothy. "Recommendations for Further Reading." Journal of Economic Perspectives 24, no. 4 (Fall 2010): 219-26.






January 14, 2013

With iTunes, Apple Leapfrogged CD Burners (a Boat Apple Had Missed)




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.)






January 10, 2013

Apple "Finding a Way to Leapfrog Over Its Competitors"




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.






January 9, 2013

UnCollege Seeks "to Open People's Minds to a Different Set of Opportunities"



StephensDaleUnCollegeFounder2013-01-01.jpg











"Dale J. Stephens, who founded UnCollege." Source of caption and photo: online version of the WSJ article quoted and cited below.




(p. 1) BENJAMIN GOERING does not look like Facebook's Mark Zuckerberg, talk like him or inspire the same controversy. But he does apparently think like him.

Two years ago, Mr. Goering was a sophomore at the University of Kansas, studying computer science and philosophy and feeling frustrated in crowded lecture halls where the professors did not even know his name.

"I wanted to make Web experiences," said Mr. Goering, now 22, and create "tools that make the lives of others better."

So in the spring of 2010, Mr. Goering took the same leap as Mr. Zuckerberg: he dropped out of college and moved to San Francisco to make his mark. He got a job as a software engineer at a social-software company, Livefyre, run by a college dropout, where the chief technology officer at the time and a lead engineer were also dropouts. None were sheepish about their lack of a diploma. Rather, they were proud of their real-life lessons on the job.

"Education isn't a four-year program," Mr. Goering said. "It's a mind-set."

The idea that a college diploma is an all-but-mandatory ticket to a successful career is showing fissures. Feeling squeezed by a sagging job market and mounting student debt, a groundswell of university-age heretics are pledging allegiance to new groups like UnCollege, dedicated (p. 16) to "hacking" higher education. Inspired by billionaire role models, and empowered by online college courses, they consider themselves a D.I.Y. vanguard, committed to changing the perception of dropping out from a personal failure to a sensible option, at least for a certain breed of risk-embracing maverick.

Risky? Perhaps. But it worked for the founders of Twitter, Tumblr and a little company known as Apple.

When Mr. Goering was wrestling with his decision, he woke up every morning to a ringtone mash-up that blended electronic tones with snippets of Steve Jobs's 2005 commencement address at Stanford University, in which he advised, "love what you do," "don't settle." Mr. Goering took that as a sign.

"It's inspiring that his dropping out basically had no effect, positive or negative, on the work and company and values he could create," he said of the late Apple co-founder.

In that oft-quoted address, Mr. Jobs called his decision to drop out of Reed College "one of the best decisions I ever made." Mr. Jobs's "think different" approach to education (backpacking through India, dining with Hare Krishnas) is portrayed in countless hagiographies as evidence of his iconoclastic genius.


. . .


. . . Dale J. Stephens, [is] the founder of a group called UnCollege that champions "more meaningful" alternatives to college. . . .


. . .


UnCollege advocates a D.I.Y. approach to higher education and spreads the message through informational "hackademic camps." "Hacking," in the group's parlance, can involve any manner of self-directed learning: travel, volunteer work, organizing collaborative learning groups with friends. Students who want to avoid $200,000 in student-loan debt might consider enrolling in a technology boot camp, where you can learn to write code in 8 to 10 weeks for about $10,000, Mr. Stephens said.

THEY can also nourish their minds from a growing menu of Internet classrooms, including the massive open online courses, or MOOCs, which stream classes from elite universities like Princeton. This guerrilla approach hits home with young people who came of age seeking out valuable content free on Napster and BitTorrent.

Mr. Stephens, a dropout from Hendrix College in Arkansas (he later earned a Thiel Fellowship), started UnCollege less than two years ago, and already its Web site attracts 20,000 unique visitors a month. "I get on scale of 10 to 15 e-mails a day from people who say something along lines of, 'I thought I was the only one out there who thought about education like this, I don't feel crazy anymore,' " he said.


. . .


The goal is not to foment for a mass exodus from the ivy halls, Mr. Stephens said, but to open people's minds to a different set of opportunities.



For the full story, see:

ALEX WILLIAMS. "The Old College Try? No Way." The New York Times (Sun., December 2, 2012): 1 & 16.

(Note: ellipses and bracketed "is" were added.)

(Note: the online version of the story has the date November 30, 2012, and has the title "Saying No to College.")






January 7, 2013

"A Fairy Tale About a Lonely Candle that Wants to Be Lighted"



TallowCandleManuscript2013-01-01.jpeg "A newly found manuscript of a fairy tale by Hans Christian Andersen, which has been located in Odense, is pictured in the State Archives in Copenhagen, Denmark, Wednesday, Dec. 12, 2012. The story of 'The Tallow Candle' might have been written about 1823, when he was 18 year old." Source of caption and photo: http://www.ctvnews.ca/entertainment/new-found-tale-of-a-lonely-candle-could-be-early-work-of-hc-andersen-1.1077533#ixzz2GmTQNcFvhttp://www.ctvnews.ca/polopoly_fs/1.1077539!/



(p. C2) A fairy tale about a lonely candle that wants to be lighted had been languishing in a box in Denmark's National Archives for many years. In October it was discovered by a retired historian, who now believes it is one of the first fairy tales ever written by Hans Christian Andersen.


. . .


The six-page manuscript, called "Tallow Candle," is dedicated to a vicar's widow named Bunkeflod who lived across the street from Andersen's home. Ejnar Stig Askgaard, a Hans Christian Andersen expert, said the work was probably one of Andersen's earliest.



For the full story, see:

CAROL VOGEL. "Discovery of Story Is Like a Fairy Tale." The Wall Street Journal (Fri., December 14, 2012): C2.

(Note: ellipsis and underline added; bold in original.)

(Note: the online version of the story has the date December 13, 2012, and has the title "Like a Fairy Tale: Hans Christian Andersen Story Is Found in a Box.")

(Note: the words underlined by me above, were in the online, but not the print, version of the article.)






January 6, 2013

"Think Profit"



(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.)






January 3, 2013

"People Said He Was a Fraud, But He Turned Out to Be Right"



WhitfieldWillisCleanRoom2013-01-01.jpg













"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.")






January 2, 2013

Jobs Laid Off 3,000 from Apple to Save It from Bankruptcy



(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.






December 30, 2012

"The Arpanet Was Not an Internet"



XeroxParcSign2012-12-18.jpg "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.






December 29, 2012

Debating Grammar: "Think Different" or "Think Differently"



(p. 329) They debated the grammatical issue: If "different" was supposed to modify the verb "think," it should be an adverb, as in "think dif-(p. 330)ferently." But Jobs insisted that he wanted "different" to be used as a noun, as in "think victory" or "think beauty." Also, it echoed colloquial use, as in "think big." Jobs later explained, "We discussed whether it was correct before we ran it. It's grammatical, if you think about what we're trying to say. It's not think the same, it's think different. Think a little different, think a lot different, think different. 'Think differently' wouldn't hit the meaning for me."


Source:

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






December 25, 2012

"The People Who Are Crazy Enough to Think They Can Change the World Are the Ones Who Do"



(p. 329) . . . those who could stand up to Jobs, including Clow and his teammates Ken Segall and Craig Tanimoto, were able to work with him to create a tone poem that he liked. In its original sixty-second version it read:

Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.


Source:

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

(Note: ellipsis added.)






December 21, 2012

Ellison and Jobs on Money



(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.)






December 17, 2012

"It's Kind of Fun to Do the Impossible"



(p. 284) "It's kind of fun to do the impossible," Walt Disney once said. That was the type of attitude that appealed to Jobs. He admired Disney's obsession with detail and design, and he felt that there was a natural fit between Pixar and the movie studio that Disney had founded.


Source:

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






December 13, 2012

"Did Alexander Graham Bell Do Any Market Research Before He Invented the Telephone?"



(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.)






December 10, 2012

With Scorned Ideas, and Without College, Inventor and Entrepreneur "Ovshinsky Prevailed"



OvshinskyStanfordAndiris2012-12-01.jpg









"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.")






December 9, 2012

"What Marketing Guys Are: Paid Poseurs"



(p. 152) Jobs had asked Hertzfeld and the gang to prepare a special screen display for Sculley's amusement. "He's really smart," Jobs said. "You wouldn't believe how smart he is." The explanation that Sculley might buy a lot of Macintoshes for Pepsi "sounded a little bit fishy to me," Hertzfeld recalled, but he and Susan Kare created a screen of Pepsi caps and cans that danced around with the Apple logo. Hertzfeld was so excited he began waving his arms around during the demo, but Sculley seemed underwhelmed. "He asked a few questions, but he didn't seem all that interested," Hertzfeld recalled. He never ended up warming to Sculley. "He was incredibly phony, a complete poseur," he later said. "He pretended to be interested in technology, but he wasn't. He was a marketing guy, and that is what marketing guys are: paid poseurs."


Source:

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






December 4, 2012

Isaacson's "Steve Jobs" Tells Us Much About the Innovative Project Entrepreneur



walter-isaacson-steve-jobsBD2012-12-01.png








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.






November 28, 2012

Rajan Hired to Open India to Entrepreneurship



RajanRaghuramIndiaSchoolOfBusiness2012-11-20.jpg "Raghuram G. Rajan criticized Indian policy makers during a speech in April at the Indian School of Business. In August, the Indian government offered him a job." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B3) NEW DELHI -- In April, the economist Raghuram G. Rajan gave a speech to a group of graduating Indian students in which he criticized the country's policy makers for "repeating failed experiment after failed experiment," rather than learning from the experiences of other countries. A week later, he assailed the government again, this time in a speech attended by Prime Minister Manmohan Singh.

But instead of drawing a rebuke from India's often thin-skinned leaders, he got a job offer. In August, Mr. Singh, who has frequently sought Mr. Rajan's advice, called and asked him to take a leave from his job as a professor at the University of Chicago to return to India, where he was born, to help revive the country's flagging economy. Within weeks, he was at work as the chief economic adviser in the Finance Ministry.

Analysts say the appointment of an outspoken academic like Mr. Rajan, along with the recent push by New Delhi to reduce energy subsidies and open up retailing, insurance and aviation to foreign investment, signal that India's policy makers appear to be serious about tackling the nation's economic problems.


. . .


Mr. Rajan said he would like to focus his efforts on three big themes: liberalizing India's financial system; making it easier to do business, particularly for entrepreneurs and manufacturers; and fixing India's dysfunctional food distribution system, which wastes a lot of food even as many of the country's poor are malnourished.



For the full story, see:

VIKAS BAJA. "As Its Economy Sags, India Asks a Critic to Come Home and Help Out." The New York Times (Sat., October 6, 2012): B3.

(Note: ellipsis added.)

(Note: the online version of the article was dated October 5, 2012.)






November 27, 2012

Entrepreneurial Capitalism Offers the Best Chance "for a Life of Engagement and Personal Growth"



(p. 228) Edmund S. Phelps explores "Refounding Capitalism." "One has to conclude that 'generation of wealth' is not special to capitalism. Corporatist economies are quite good at that. . . . A merit of a well-functioning capitalism (again: I do not mean free-market policy: low tax rates, etc.) is the economic freedoms it offers entrepreneurs, managers, employees and consumers--freedoms that socialist, corporatist and statist systems do not provide. . . . Ordinary people, if they are to find intellectual growth and an engaging life, have to look outside the home: these (p. 229) things can be found only at work, if anywhere. And for these rewards to be available for large numbers of people, the economy must be modern. And as a practical matter, that requires that it be based predominantly on a well-functioning capitalist system. Thanks to the grassroots, bottom-up processes of innovation, capitalism at its best can deliver--far more broadly than Soviet communism, eastern European socialism, and western European corporatism can--chances for the mental stimulation, problem-solving, exploration and discovery required for a life of engagement and personal growth."


Nobel-Prize winner Edmund Phelps as quoted in:

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

(Note: ellipses in original.)


The original source of the Phelps quotes is:

Phelps, Edmund S. "Refounding Capitalism." Capitalism and Society 4, no. 3 (2009).






November 14, 2012

Entrepreneurs of Coffee, the Battlefield, and Missing Minerals



InventionOfEnterpriseBK2012-11-04.jpg














Source of book image: http://img.qbd.com.au/product/l/9780691143705.jpg



[p. 167] The book . . . contains a variety of entertaining stories and colorful facts about entrepreneurship that could potentially be used for teaching. [p. 168] Murray, for instance, explains that the word "entrepreneur" was borrowed from the French language in the late Middle Ages, a time when it was used to describe a battlefield commander (p. 88). Kuran describes how Middle Eastern coffee entrepreneurs originally faced harsh resistance from many clerics who believed that "coffee drinkers reap hell-fire" (pp. 71-72). Hudson traces early merchant activity and entrepreneurship all the way back to Sumerian cities in Mesopotamia in the third millennium BC (pp. 11-17). These cities, made rich by their fertile alluvial soil, still needed to acquire other important minerals, missing in their own ground, from the distant Iranian plateau or Anatolia. Since military conquest proved too expensive and because the Sumerian cities really needed these resources, they pioneered international import-export activities in their temples and palaces.


For the full review, see:

Bikard, Michael, and Scott Stern. "The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times." Journal of Economic Literature 49, no. 1 (March 2011): 164-68.

(Note: ellipsis added.)

(Note: the page numbers in square parentheses refer to the review; the page numbers in curved parentheses refer to the book under review.)


Book being reviewed:

Landes, David S., Joel Mokyr, and William J. Baumol, eds. Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times. Princeton, NJ: Princeton University Press, 2010.






November 13, 2012

Personal Genomics Startups Struggle Under a "Circus" of Government Regulation



(p. 118) Government regulation of consumer genomics companies has been centerpiece (and the semblance of a circus) in their short history. Back in 2008, the states of California and New York sent "cease and desist" letters to the genome scan companies. State officials were concerned that the laboratories that generated the results were not certified as CLIA (Clinical Laboratory Improvement Amendments) and that the tests were being performed without a physician's order. All three companies developed work-around plans in California and remained operational but were unable to market the tests in New York.

In 2010, the regulation issues escalated to the federal level. In May it was announced that 7,500 Walgreens drugstores throughout the United States would soon sell Pathway Genomics's saliva kit for disease susceptibility and pharmacogenomics. While the tests produced by all four companies had been widely available via the Internet for three years, the announcement of wide-scale availability in drugstores (which was cancelled by Walgreens within two days) appeared to "cross the line" and set off a cascade of investigations and hearings by the FDA, the Government Accountability Office (GAO), and the Congressional House Committee on Energy and Commerce. The FDA's Alberto Gutierrez said, "We don't think physi-(p. 119)cians are going to be able to interpret the results," and "genetic tests are medical devices and must be regulated." The GAO undertook a "sting" operation with its staff posing as consumers who bought genetic tests and detailed significant inconsistencies, misleading test results, and deceptive marketing practices in its report.

All four personal genomics companies are struggling.



Source:

Topol, Eric. The Creative Destruction of Medicine: How the Digital Revolution Will Create Better Health Care. New York: Basic Books, 2012.






October 31, 2012

Thiel Fellows Avoid Formal Education to Pursue Entrepreneurial Projects



FullEdenTh ielFellowSolarPanel2012-10-12.jpg












"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.")



DemingLauraThielFellow2012-10-12.jpg "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.






October 20, 2012

Much Innovation Has "Nothing to Do with Science--It's Just Creative Mankind Chipping Away at Things"



(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.






October 17, 2012

The Entrepreneurial Resilience of a Business School Dean



ZupanMarkRochesterDean2012-10-11.jpg














"Mark Zupan is the dean of the Simon School of Business at the University of Rochester. Baggage carts once were his salvation." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. B4) Once I landed in Boston without my wallet or any money, I was able to put into practice what I learned from watching the wonderful movie "The Terminal" featuring Tom Hanks.

Like the character he portrayed, Viktor Navorski, I wandered through the airport and rounded up and returned six baggage carts. I was refunded enough change to be able to afford the subway fare to get to my first meeting. Then, I was able to borrow enough cash from the amused alum I was meeting with to get through the rest of the day and back home to Rochester that night after my assistant faxed a copy of my driver's license and passport to me.

I have to admit I felt a little idiotic rounding up the carts, but it was one of my finest entrepreneurial ventures.



For the full story, see:

MARK ZUPAN. "FREQUENT FLIER; How to Cope at the Airport Without a Wallet." The New York Times (Tues., September 4, 2012): B4.

(Note: the online version of the article is dated September 3, 2012.)






October 13, 2012

Romney Praises Dan Senor Book on Israeli Entrepreneurship



SenorDanRomneyAdviserBriefing2012-09-03.jpg "Dan Senor, left, a leading campaign adviser, at a briefing on Saturday for the Romney campaign on the plane en route to Israel." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A10) WASHINGTON -- Moments after making remarks in Jerusalem about Middle East culture that enraged Palestinians and undermined the public relations value of his trip to Israel, Mitt Romney looked around the room for Dan Senor, one of his campaign's top foreign policy advisers.

It was Mr. Senor's book about entrepreneurs in Israel that informed his comments, Mr. Romney explained to the group of Jewish-American donors he had assembled at the King David hotel. The book, "Start-up Nation," is among Mr. Senor's writings that Mr. Romney frequently cites in public.



For the full story, see:

MICHAEL D. SHEAR. "Adviser Draws Attention to Romney Mideast Policy." The New York Times (Thurs., August 2, 2012): A10.

(Note: the online version of the article is dated August 1, 2012.)



The Senor book is:

Senor, Dan, and Saul Singer. Start-up Nation: The Story of Israel's Economic Miracle. hb ed. New York: Twelve, 2009.



BremerSenor2012-09-03.jpg







"L. Paul Bremer III, left, in 2004 when he was the top United States envoy in Iraq, with Mr. Senor, who was his spokesman." Source of caption and photo: online version of the NYT article quoted and cited above.







September 17, 2012

A Marshmallow Now or an Elegant French Pastry Four Years Later



HowChildrenSucceedBK2012-08-31.jpg
















Source of book image: http://images.amazon.com/images/G/01/richmedia/images/cover.gif



(p. 19) Growing up in the erratic care of a feckless single mother, "Kewauna seemed able to ignore the day-to-day indignities of life in poverty on the South Side and instead stay focused on her vision of a more successful future." Kewauna tells Tough, "I always wanted to be one of those business ladies walking downtown with my briefcase, everybody saying, 'Hi, Miss Lerma!' "

Here, as throughout the book, Tough nimbly combines his own reporting with the findings of scientists. He describes, for example, the famous "marshmallow experiment" of the psychologist Walter Mischel, whose studies, starting in the late 1960s, found that children who mustered the self-control to resist eating a marshmallow right away in return for two marshmallows later on did better in school and were more successful as adults.

"What was most remarkable to me about Kewauna was that she was able to marshal her prodigious noncognitive capacity -- call it grit, conscientiousness, resilience or the ability to delay gratification -- all for a distant prize that was, for her, almost entirely theoretical," Tough observes of his young subject, who gets into college and works hard once she's there. "She didn't actually know any business ladies with briefcases downtown; she didn't even know any college graduates except her teachers. It was as if Kewauna were taking part in an extended, high-stakes version of Walter Mischel's marshmallow experiment, except in this case, the choice on offer was that she could have one marshmallow now or she could work really hard for four years, constantly scrimping and saving, staying up all night, struggling, sacrificing -- and then get, not two marshmallows, but some kind of elegant French pastry she'd only vaguely heard of, like a napoleon. And Kewauna, miraculously, opted for the napoleon, even though she'd never tasted one before and didn't know anyone who had. She just had faith that it was going to be delicious."



For the full review, see:

ANNIE MURPHY PAUL. "School of Hard Knocks." The New York Times Book Review (Sun., August 26, 2012): 19.

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


The full reference for the book under review, is:

Tough, Paul. How Children Succeed: Grit, Curiosity, and the Hidden Power of Character. Boston, MA: Houghton Mifflin Harcourt, 2012.






August 31, 2012

Failed Entrepreneurial Firms that Signal New Markets Are "Optimistic Martyrs"



(p. 260) Colin Camerer and Dan Lovallo, who coined the concept of competition neglect, illustrated it with a quote from the then chairman of Disney Studios. Asked why so many expensive big-budget movies are released on the same days (such as Memorial Day and Independence Day), he replied: Hubris. Hubris. If you only think about your own business, you think, "I've got a good story department, I've got a good marketing department, we're (p. 261) going to go out and do this." And you don't think that everybody else is thinking the same way. In a given weekend in a year you'll have five movies open, and there's certainly not enough people to go around.

The candid answer refers to hubris, but it displays no arrogance, no conceit of superiority to competing studios. The competition is simply not part of the decision, in which a difficult question has again been replaced by an easier one. The question that needs an answer is this: Considering what others will do, how many people will see our film? The question the studio executives considered is simpler and refers to knowledge that is most easily available to them: Do we have a good film and a good organization to market it? The familiar System 1 processes of WYSIATI and substitution produce both competition neglect and the above-average effect. The consequence of competition neglect is excess entry: more competitors enter the market than the market can profitably sustain, so their average outcome is a loss. The outcome is disappointing for the typical entrant in the market, but the effect on the economy as a whole could well be positive. In fact, Giovanni Dosi and Dan Lovallo call entrepreneurial firms that fail but signal new markets to more qualified competitors "optimistic martyrs"-- good for the economy but bad for their investors.



Source:

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






August 29, 2012

Resilience



(p. 183) In 1832, a young man was fired from his job and lost his bid for election to the state legislature. The next year his new business failed. Three years later he suffered a nervous breakdown. After recovering, he was defeated as speaker in the state legislature. He was defeated in his efforts to win his party's nomination to Congress in 1843. He was rejected as land officer in 1849. In 1854, he was defeated in the U.S. Senate election and, in 1856, his efforts to win the nomination as his party's vice president failed. The string of failures continued. He was again defeated in the Senate election in 1858. Finally, in 1860, Abraham Lincoln was elected as the sixteenth president of the United States.


Source:

Audretsch, David. "Review of: Adapt: Why Success Always Starts with Failure." Journal of Economic Literature 50, no. 1 (March 2012): 183.






August 28, 2012

Entrepreneurs Thrive in a Culture of "Chutzpah"



VanceCyrus2012-08-22.jpg "Manhattan District Attorney Cyrus Vance, Jr." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. C13) Before a recent business trip to Israel, someone handed me a copy of "Start-Up Nation: The Story of Israel's Economic Miracle," a book by Dan Senor and Saul Singer about Israel's culture of innovation and entrepreneurialism. I had finished the book on the overnight flight to Tel Aviv. When I returned home a week later, based on what I had seen in Israel, I purchased multiple copies and handed them out to senior staff who work with me.

"Start-Up Nation" recounts and dissects how Israel, in just 60 years, has thrived as an economy, creating an environment where talent and technology have attracted more venture-capital dollars per person than any other country in the world.

In a nutshell, and admittedly oversimplifying, the authors boil Israel's success down to a few, core themes. First, Israel was born into and exists in an adverse political environment. Surrounded by hostile neighbors, Israelis survived--and thrived--by adapting quickly, making the most out of limited resources and taking on outsize challenges without fear or undue regard for authority. The latter quality might be called chutzpah. Second, Israelis all participate in military service, before university. The skills they learn in the military, and the maturity they gain from military service, make their work force better skilled and more capable of better teamwork at the entry level on up.

If my recent visit provides any evidence of national characteristics, Israelis question authority, openly and all the time. At any given meal, whether it included ordinary citizens, generals, government officials or business executives, deference was in short supply. No quarter is given. But debate and disagreement create a climate of self-awareness. That in turns helps to create a culture of achievement.

So why did I give copies of the book to my senior staff? I believe in a bottom-up organizational culture, where problems are identified, raised and solved by the line employees who make the enterprise run. Our American system--and especially our legal and government cultures--frequently operates with a top-down style, which can discourage creativity and individualism.

The one thing that I am not planning to do is give copies of "Start-Up Nation" to my children until they graduate from college and have left the house. They have questioned my authority enough already.



For the full book discussion, see:

Cyrus Vance. "Twelve Months of Reading: Cyrus Vance." The Wall Street Journal (Sat., December 17, 2011): C13.

(Note: the broad multi-page article was sub-divided into sections headed by the name of the person who was writing the book advice in that section. Internally the broad article seemed to be entitled "Books of the Year.")


The first book Vance recommends is:

Senor, Dan, and Saul Singer. Start-up Nation: The Story of Israel's Economic Miracle. hb ed. New York: Twelve, 2009.






August 27, 2012

Overly Optimistic Entrepreneurs Seek Government Support for Projects that Will Usually Fail




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.





August 23, 2012

For Inventors "Optimism Is Widespread, Stubborn, and Costly"



(p. 257) One of the benefits of an optimistic temperament is that it encourages persistence in the face of obstacles. But persistence can be costly. An impressive series of studies by Thomas Åstebro sheds light on what happens when optimists receive bad news. He drew his data from a Canadian organization--the Inventors Assistance Program--which collects a small fee to provide inventors with an objective assessment of the commercial prospects of their idea. The evaluations rely on careful ratings of each invention on 37 criteria, including need for the product, cost of production, and estimated trend of demand. The analysts summarize their ratings by a letter grade, where D and E predict failure--a prediction made for over 70% of the inventions they review. The forecasts of failure are remarkably accurate: only 5 of 411 projects that were given the lowest grade reached commercialization, and none was successful.

Discouraging news led about half of the inventors to quit after receiving a grade that unequivocally predicted failure. However, 47% of them continued development efforts even after being told that their project was hopeless, and on average these persistent (or obstinate) individuals doubled their initial losses before giving up. Significantly, persistence after discouraging advice was relatively common among inventors who had a high score on a personality measure of optimism--on which inventors generally scored higher than the general population. Overall, the return on private invention was small, "lower than the return on private equity and on high-risk securities." More generally, the financial benefits of self-employment are mediocre: given the same qualifications, people achieve higher average returns by selling their skills to employers than by setting out on their own. The evidence suggests that optimism is widespread, stubborn, and costly.



Source:

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





August 19, 2012

Entrepreneurs Are Optimistic About the Odds of Success



(p. 256) The chances that a small business will survive for five years in the United States are about 35%. But the individuals who open such businesses do not believe that the statistics apply to them. A survey found that American entrepreneurs tend to believe they are in a promising line of business: their (p. 257) average estimate of the chances of success for "any business like yours" was 60%--almost double the true value. The bias was more glaring when people assessed the odds of their own venture. Fully 81% of the entrepreneurs put their personal odds of success at 7 out of 10 or higher, and 33% said their chance of failing was zero.


Source:

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





August 17, 2012

"If Apple Is a Fruit on a Tree, Its Branches Are the Freedom to Think and Create"



(p. B3) Millions of Chinese flooded the popular micro blogging site Sina Weibo to tweet their condolences on the death of Steve Jobs over the past two days. They also raised the question: Why isn't there a Steve Jobs in China?


. . .


One of the most popular postings on Mr. Jobs' legacy came from scholar Wu Jiaxiang. "If Apple is a fruit on a tree, its branches are the freedom to think and create, and its root is constitutional democracy," he wrote. "An authoritarian nation may be able to build huge projects collectively but will never be able to produce science and technology giants." On that, Wang Ran, founder of a boutique investment bank China eCapital Corp., added, "And its trunk is a society whose legal system acknowledges the value of intellectual property."



For the full story, see:

Li Yuan. "China Frets: Innovators Stymied Here." The Wall Street Journal (Sat., October 8, 2011): B3.

(Note: ellipsis added.)





August 15, 2012

"Planning Fallacy": Overly Optimistic Forecasting of Project Outcomes



(p. 250) This should not come as a surprise: overly optimistic forecasts of the outcome of projects are found everywhere. Amos and I coined the term planning fallacy to describe plans and forecasts that

  • are unrealistically close to best-case scenarios
  • could be improved by consulting the statistics of similar cases


. . .


The optimism of planners and decision makers is not the only cause of overruns. Contractors of kitchen renovations and of weapon systems readily admit (though not to their clients) that they routinely make most of their profit on additions to the original plan. The failures of forecasting in these cases reflect the customers' inability to imagine how much their wishes will escalate over time. They end up paying much more than they would if they had made a realistic plan and stuck to it.

Errors in the initial budget are not always innocent. The authors of unrealistic plans are often driven by the desire to get the plan approved--(p. 251)whether by their superiors or by a client--supported by the knowledge that projects are rarely abandoned unfinished merely because of overruns in costs or completion times. In such cases, the greatest responsibility for avoiding the planning fallacy lies with the decision makers who approve the plan. If they do not recognize the need for an outside view, they commit a planning fallacy.



Source:

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

(Note: ellipsis added; italics in original.)





August 14, 2012

"Let the Consumers Decide When and Where They Want to Eat"



BillowRachelLaCocinita2012-08-13.jpg"Rachel Billow is the co-founder of La Cocinita, a food truck in New Orleans that serves Latin American cuisine. She says the city's requirement that mobile food vendors change locations after 45 minutes in one spot isn't feasible. "It takes about a half-hour to set up," she says." Source of caption and photo: online version of the WSJ article quoted and cited below.



(p. B8) A street fight is brewing between gourmet food-truck vendors and restaurants--not over the grub, but how it's sold.

Under pressure to protect bricks-and-mortar restaurants from increased competition, several big cities are starting to apply the brakes on a rising tide of food-truck vendors with fully loaded kitchens.

Boston, Chicago, St. Louis and Seattle are among the cities enacting laws that restrict where food trucks can serve customers in proximity to their rivals and for how long. Some food-truck operators argue that they shouldn't be punished for offering an innovative service, especially since many cities already allow restaurants to open up alongside one another.

"The rules are unfair," says Amy Le, owner of Duck N Roll, a food truck in Chicago serving Asian-style cuisine that includes short ribs and mango lychee.

Three weeks after she launched the business last fall, she received a ticket from local law enforcement for doing business about 150 feet from a wine bar--50 feet within the city's limit for how close food trucks can park outside of retail food establishments.

Ms. Le says she later had to spend nearly a full day in court to find out what the violation would cost her--about $300--and that she lost an estimated $600 to $700 in sales as a result.

"The 200-foot buffer prohibits me from competing," says Ms. Le, 32 years old, who also opposes a new rule requiring food trucks to install global-positioning devices so the city can track their whereabouts. "It is a free market. Let the consumers decide when and where they want to eat."


. . .


Gourmet food-truck operators say another problem is that in many cities they are still relegated to antiquated rules intended for ice-cream, hot-dog and other traditional mobile vendors with smaller and less complex menus.

New Orleans, for example, requires mobile food vendors to change locations after 45 minutes in one spot, among other restrictions.

"It's not a feasible amount of time for this business model," says 31-year-old Rachel Billow, who last year co-founded La Cocinita, a food truck that serves Latin American cuisine such as plantains and arepas. "It takes about a half-hour to set up."

Ms. Billow says she and her business partner, Venezuelan chef Benoit Angulo, started La Cocinita after several years of working in the restaurant industry. They invested $50,000 in start-up costs, an amount that included $12,000 in modifications to their vehicle to satisfy the city's fire code, she adds.



For the full story, see:

SARAH E. NEEDLEMAN. "Street Fight: Food Trucks vs. Restaurants; Some Big Cities Jump Into the Fray, Enacting Parking Restrictions to Cope With Rising Tide of Gourmet Vendors." The Wall Street Journal (Thurs., August 9, 2012): B8.

(Note: ellipsis added.)



LeAmyDuckNRollTruck2012-08-13.jpg "Amy Le, owner of Duck N Roll, an Asian-style food truck in Chicago, says last fall she received a fine for doing business about 150 feet from a wine bar--50 feet within the city's limit for how close food trucks can park outside of retail food establishments." Source of caption and photo: online version of the WSJ article quoted and cited above.






August 13, 2012

Revolutionary Entrepreneurs Need "Unbridled Confidence and Arrogance"



(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.)





August 12, 2012

Vivid Examples of Government Obstacles to Entrepreneurship







EconomicFreedom.org/Stories is posting video clips of free agent entrepreneurs and the obstacles that government policies put in the path to their achievements. The videos give concrete examples and make the costs of regulations more real by connecting the costs to the faces of actual people.





August 11, 2012

"Unknown Unknowns" Will Delay Most Projects




Kahneman's frequently-used acronym "WYSIATI," used in the passage quoted below, means "What You See Is All There Is."


(p. 247) On that long-ago Friday, our curriculum expert made two judgments about the same problem and arrived at very different answers. The inside view is the one that all of us, including Seymour, spontaneously adopted to assess the future of our project. We focused on our specific circumstances and searched for evidence in our own experiences. We had a sketchy plan: we knew how many chapters we were going to write, and we had an idea of how long it had taken us to write the two that we had already done. The more cautious among us probably added a few months to their estimate as a margin of error.

Extrapolating was a mistake. We were forecasting based on the informa-(p. 248)tion in front of us--WYSIATI--but the chapters we wrote first were probably easier than others, and our commitment to the project was probably then at its peak. But the main problem was that we failed to allow for what Donald Rumsfeld famously called the "unknown unknowns:' There was no way for us to foresee, that day, the succession of events that would cause the project to drag out for so long. The divorces, the illnesses, the crises of coordination with bureaucracies that delayed the work could not be anticipated. Such events not only cause the writing of chapters to slow down, they also produce long periods during which little or no progress is made at all. The same must have been true, of course, for the other teams that Seymour knew about. The members of those teams were also unable to imagine the events that would cause them to spend seven years to finish, or ultimately fail to finish, a project that they evidently had thought was very feasible. Like us, they did not know the odds they were facing. There are many ways for any plan to fail, and although most of them are too improbable to be anticipated, the likelihood that something will go wrong in a big project is high.



Source:

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





August 7, 2012

Intuitive Expertise Develops Best When Feedback Is Clear and Fast



(p. 241) Some regularities in the environment are easier to discover and apply than others. Think of how you developed your style of using the brakes on your car. As you were mastering the skill of taking curves, you gradually learned when to let go of the accelerator and when and how hard to use the brakes. Curves differ, and the variability you experienced while learning ensures that you are now ready to brake at the right time and strength for any curve you encounter. The conditions for learning this skill arc ideal, because you receive immediate and unambiguous feedback every time you go around a bend: the mild reward of a comfortable turn or the mild punishment of some difficulty in handling the car if you brake either too hard or not quite hard enough. The situations that face a harbor pilot maneuvering large ships are no less regular, but skill is much more difficult to acquire by sheer experience because of the long delay between actions and their noticeable outcomes. Whether professionals have a chance to develop intuitive expertise depends essentially on the quality and speed of feedback, as well as on sufficient opportunity to practice.


Source:

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






August 6, 2012

Stewart Brand Marvels at Hippie Perfectionist Jobs' Results



BrandStewart2012-08-05.jpg











Stewart Brand. Source of photo: online version of the NYT interview quoted and cited below.






(p. 3) Stewart Brand is best known as the editor of the Whole Earth Catalog, a counterculture compendium published twice a year between 1968 and 1972 and the only catalog to win the National Book Award. Its credo, "Stay hungry. Stay foolish," influenced many of the hippie generation, most notably Steve Jobs.


. . .


READING I'm devouring "Steve Jobs," by Walter Isaacson. Steve's life and interests intersected with mine a number of times, so revisiting all that in sequence is like galloping through a version of my own life, plus I get to fill in the parts of his life I wondered about. Take a hippie who is also a driven perfectionist at crafting digital tools, let him become adept at managing corporate power, and marvel at what can result. The book I'm studying line by line, and dog-earing every other page, is Steven Pinker's "Better Angels of Our Nature." It chronicles the dramatic decline of violence and cruelty in human affairs in every century. Now that we know that human behavior has been getting constantly gentler and fairer, how do we proceed best with that wind at our backs?



For the full interview, see:

KATE MURPHY, interviewer. "DOWNLOAD; Stewart Brand." The New York Times, Sunday Review (Sun., Nov. 6, 2011): 3.

(Note: ellipsis added.)

(Note: the online version of the interview has the date November 5, 2011.)







August 4, 2012

Veterinarians Can Suggest Innovative Hypotheses to Doctors



ZoobiquityBK2012-08-01.jpg














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





Vets face less government regulation and so are freer to rapidly innovate. They may thus be a promising source of innovative hypotheses for medical doctors.


(p. D2) Cardiologist Barbara Natterson-Horowitz made her first foray into the world of animal medicine when she was asked to treat Spitzbuben, an exceedingly cute emperor tamarin suffering from heart failure.

But first, the veterinarian at the Los Angeles Zoo warned Dr. Natterson-Horowitz: Mere eye contact with the tiny primate could trigger a potentially fatal surge of stress hormones. What she learns from that experience spurs a journey to examine the links between the human and animal condition--and the discovery that the species are closer than she ever imagined.


. . .


The authors recommend that doctors, who often look with disdain on veterinarians, go the next step and collaborate with them in a cross-disciplinary "zoobiquitous" approach--using knowledge about how animals live, die and heal to spark innovative hypothesis for advancing medicine.



For the full review, see:

LAURA LANDRO. "Healthy Reader." The Wall Street Journal (Tues., June 12, 2012): D2.

(Note: ellipsis added.)

(Note: the online version of the review has the date June 11, 2012.)


The book being reviewed, is:

Natterson-Horowitz, Barbara, and Kathryn Bowers. Zoobiquity: What Animals Can Teach Us About Health and the Science of Healing. New York: Alfred A. Knopf, 2012.





August 3, 2012

When Is Intuitive Judgment Valid?



(p. 240) If subjective confidence is not to be trusted, how can we evaluate the probable validity of an intuitive judgment? When do judgments reflect true expertise? When do they display an illusion of validity? The answer comes from the two basic conditions for acquiring a skill:

  • an environment that is sufficiently regular to be predictable
  • an opportunity to learn these regularities through prolonged practice


When both these conditions are satisfied, intuitions are likely to be skilled. Chess is an extreme example of a regular environment, but bridge and poker also provide robust statistical regularities that can support skill. Physicians, nurses, athletes, and firefighters also face complex but fundamentally orderly situations. The accurate intuitions that Gary Klein has described are due to highly valid cues that the expert's System 1 has learned to use, even if System 2 has not learned to name them. In contrast, stock pickers and political scientists who make long-term forecasts operate in a zero-validity environment. Their failures reflect the basic unpredictability of the events that they try to forecast.




Source:

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






August 2, 2012

Romney Right that Culture Matters for Economic Success



WealthAndPovertyOfNationsBK2012-07-31.jpg
















Source of book image: http://photo.goodreads.com/books/1172699090l/209176.jpg




In the piece quoted below, and in much of the TV media coverage, the story is spun as being that Romney offended the Palestinians. But that is not the story. The story is that Romney courageously highlighted an important, but politically incorrect, truth---culture, generally, does matter for economic performance; and Israeli culture, specifically, has encouraged economic growth.

Romney referred to an important book by the distinguished economic historian David Landes. Last school year, one of the students in my Economics of Technology seminar gave a presentation on a related Landes book. That presentation can be viewed at: http://www.amazon.com/review/R2GLBAMFCS5PXH/ref=cm_cr_pr_perm?ie=UTF8&ASIN=0521094186&linkCode=&nodeID=&tag=

I recently read another relevant book, Start-Up Nation, that directly supports Romney's specific claim, by making the case that Israeli culture is especially congenial to entrepreneurial initiative and success.



(p. A1) JERUSALEM -- Mitt Romney offended Palestinian leaders on Monday by suggesting that cultural differences explain why the Israelis are so much more economically successful than Palestinians, thrusting himself again into a volatile issue while on his high-profile overseas trip.


. . .


In the speech, Mr. Romney mentioned books that had influenced his thinking about nations -- particularly "The Wealth and Poverty of Nations," by David S. Landes, which, he said, argues that culture is the defining factor in determining the success of a society.

"Culture makes all the (p. A14) difference," Mr. Romney said. "And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things."

He added, "As you come here and you see the G.D.P. per capita, for instance, in Israel, which is about $21,000, and compare that with the G.D.P. per capita just across the areas managed by the Palestinian Authority, which is more like $10,000 per capita, you notice such a dramatically stark difference in economic vitality. And that is also between other countries that are near or next to each other. Chile and Ecuador, Mexico and the United States."

The remarks, which vastly understated the disparities between the societies, drew a swift rejoinder from Palestinian leaders.



For the full story, see:

ASHLEY PARKER and RICHARD A. OPPEL Jr. "Romney Trip Raises Sparks at a 2nd Stop." The New York Times (Tues., July 31, 2012): A1 & A14.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 30, 2012.)


The Landes book discussed by Romney is:

Landes, David S. The Wealth and Poverty of Nations. New York: W.W. Norton & Company, 1998.


The book on Israeli entrepreneurship, that I mention in my comments, is:

Senor, Dan, and Saul Singer. Start-Up Nation: The Story of Israel's Economic Miracle. hb ed. New York: Twelve, 2009.






July 29, 2012

Neural Implants "Restored Their Human Functionality"



KurzweilRay2012-07-28.jpg




Ray Kurzweil. Source of photo: online version of the WSJ article quoted and cited below.






(p. C12) Inventor and entrepreneur Ray Kurzweil is a pioneer in artificial intelligence--the principal developer of the first print-to-speech reading machine for the blind, and the first text-to-speech synthesizer, among other breakthroughs. He is also a writer who explores the future of information technology and how it is changing our world.

In a wide-ranging interview, Mr. Kurzweil and The Wall Street Journal's Alan Murray discussed advances in artificial intelligence, nanotechnology, and what it means to be human. Here are edited excerpts of their conversation:


. . .


MR. MURRAY: What about life expectancy? Is there a limit?

MR. KURZWEIL: No. We're constantly pushing back life expectancy. Now it's going to go into high gear because of the inherent exponential progression of information technology. According to my models, within 15 years we'll be adding more than a year to your remaining life expectancy each year.

MR. MURRAY: So if you play the odds right, you never hit the endpoint.

MR. KURZWEIL: Right. If you can hang in there for another 15 years, we could get to that point.


What Is Human?

MR. MURRAY: What does it mean to be human in a post-2029 world?

MR. KURZWEIL: It's a slippery slope. But we've already gone down that slope. I've talked to people who have neural implants in their brain, for Parkinson's, and I've asked them, "Are you still human? Are you less human?"

Generally speaking, they say, "It's part of me." And they're very proud of it, because it restored their human functionality.



For the full interview, see:

Alan Murray, interviewer. "Man or Machine? Ray Kurzweil on how long it will be before computers can do everything the brain can do." The Wall Street Journal (Fri., June 29, 2012): C12.

(Note: ellipsis added; bold in original.)






July 28, 2012

Possible Lessons from Steve Jobs' Entrepreneurial Journey



(p. 4) GOOD IDEAS TAKE TIME After he was ousted from Apple, Mr. Jobs founded NeXT in 1985. It produced a powerful desktop computer, a stylish black cube, and its initial market was going to be in education. The idea was that the machine would be more than hardware and software; it would also offer content, "a universe of wisdom," recalls Michael Hawley, a computer scientist who worked closely with Mr. Jobs at NeXT and lived part time in Mr. Jobs's house, as Mr. Hawley shuttled between California and his post at the M.I.T. Media Lab.

NeXT computers, in Mr. Jobs's vision, would marry technology and the liberal arts by including digital books, music and art. Mr. Jobs began pursuing the rights to works that could be converted to digital form. He persuaded a few publishers that because they would save the expense of paper, printing and distribution, NeXT should pay a royalty that was a fraction of the cost of a printed book. Mr. Jobs, Mr. Hawley recalled, struck a deal with the Oxford University Press for the complete works of Shakespeare for a royalty of $1 a digital copy.

NeXT's foray into education fizzled; its machines were too expensive for that market. But Mr. Jobs's concept and business model for digital media were "the instinct that was translated to Apple with the iTunes store, 99-cents-a-song pricing and all the media offerings that have followed," Mr. Hawley says.

"When Steve believed in an idea, he was both passionate and patient, scratching away over the years until he got it right," says Mr. Hawley, a scientist, concert pianist and host of the EG Conference, an annual gathering for technologists, educators and people in media and entertainment.

DON'T DWELL ON MISTAKES Steve Capps, a computer scientist, describes creating the Macintosh, which shipped in 1984, as a constant process of making decisions -- part experiment and part product development, with steps ahead mixed with many setbacks. "Steve kind of knew what he wanted, but he didn't precisely," says Mr. Capps, who designed software for Macintosh.

Mr. Jobs, Mr. Capps remembers, was the arbiter on countless hardware, software and design choices. "His combination of incisiveness and decisiveness, I think, really explained his success," Mr. Capps says.

Mr. Jobs was also decisive in recognizing mistakes, even when they were his own. For example, he favored one model of a disk drive -- for reading computer programs stored on small, removable so-called floppy disks -- while other members of the team championed another design. They kept their disk project going surreptitiously. When they showed him the result, he embraced it. "He turned on a dime," Mr. Capps says. "Don't dwell on your mistakes. It's a great lesson."

PASSION COUNTS FOR A LOT The relentless intensity and total commitment that Mr. Jobs brought to his work, former colleagues and friends agree, had a simple explanation: he genuinely enjoyed what he did and found it worthwhile.

Andy Hertzfeld, a member of original Macintosh team who is now an engineer at Google, says: "The most important thing that I learned from Steve is to always follow your heart. He believed that the only way to do truly great work is to adore what you are doing."

Mr. Jobs made a lot of money over the years, for himself and for Apple shareholders. But money never seemed to be his principal motivation. One day in the late 1990s, Mr. Jobs and I were walking near his home in Palo Alto. Internet stocks were getting bubbly at the time, and Mr. Jobs spoke of the proliferation of start-ups, with so many young entrepreneurs focused on an "exit strategy," selling their companies for a quick and hefty profit.

"It's such a small ambition and sad really," Mr. Jobs said. "They should want to build something, something that lasts."



For the full commentary, see:

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

(Note: bold in original.)

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

(Note: 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.)






July 27, 2012

Edison Was Great Inventor; "Jobs Was the Far Shrewder Businessman"



EdisonThomasAlva2012-06-22.jpg "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.






July 21, 2012

Technology Allows Start-Ups to Launch with Fewer Employees



HarelAndShilonOfBiteHunter2012-06-22.jpg "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.)






July 20, 2012

Innovation Depends Less on R&D Spending and More on "Talent, Process, Execution and Strategy"



(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.)






July 19, 2012

Larry Page on Tesla, Commerce, and Changing the World







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.






July 16, 2012

"Why Would I Ever Need 10 Floppy Disks?"



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.)






July 8, 2012

Dyslexics Better at Processing Some Visual Data



(p. 5) Gadi Geiger and Jerome Lettvin, cognitive scientists at the Massachusetts Institute of Technology, used a mechanical shutter, called a tachistoscope, to briefly flash a row of letters extending from the center of a subject's field of vision out to its perimeter. Typical readers identified the letters in the middle of the row with greater accuracy. Those with dyslexia triumphed, however, when asked to identify letters located in the row's outer reaches.


. . .


Dr. Catya von Károlyi, an associate professor of psychology at the University of Wisconsin, Eau Claire, found that people with dyslexia identified simplified Escher-like pictures as impossible or possible in an average of 2.26 seconds; typical viewers tend to take a third longer. "The compelling implication of this finding," wrote Dr. Von Károlyi and her co-authors in the journal Brain and Language, "is that dyslexia should not be characterized only by deficit, but also by talent."


. . .


Five years ago, the Yale Center for Dyslexia and Creativity was founded to investigate and illuminate the strengths of those with dyslexia, while the seven-year-old Laboratory for Visual Learning, located within the Harvard-Smithsonian Center for Astrophysics, is exploring the advantages conferred by dyslexia in visually intensive branches of science. The director of the laboratory, the astrophysicist Matthew Schneps, notes that scientists in his line of work must make sense of enormous quantities of visual data and accurately detect patterns that signal the presence of entities like black holes.

A pair of experiments conducted by Mr. Schneps and his colleagues, published in the Bulletin of the American Astronomical Society in 2011, suggests that dyslexia may enhance the ability to carry out such tasks. In the first study, Mr. Schneps reported that when shown radio signatures -- graphs of radio-wave emissions from outer space -- astrophysicists with dyslexia at times outperformed their nondyslexic colleagues in identifying the distinctive characteristics of black holes.

In the second study, Mr. Schneps deliberately blurred a set of photographs, reducing high-frequency detail in a manner that made them resemble astronomical images. He then presented these pictures to groups of dyslexic and nondyslexic undergraduates. The students with dyslexia were able to learn and make use of the information in the images, while the typical readers failed to catch on.


. . .


Mr. Schneps's study is not the only one of its kind. In 2006, James Howard Jr., a professor of psychology at the Catholic University of America, described in the journal Neuropsychologia an experiment in which participants were asked to pick out the letter T from a sea of L's floating on a computer screen. Those with dyslexia learned to identify the letter more quickly.

Whatever special abilities dyslexia may bestow, difficulty with reading still imposes a handicap.



For the full commentary, see:

ANNIE MURPHY PAUL. "The Upside of Dyslexia." The New York Times, SundayReview Section (Sun., February 5, 2012): 5.

(Note: ellipsis added.)

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





July 7, 2012

"At Least Here I Am in Control of My Destiny"



MesgaranAliSandwichShopTehran2012-06-12.jpg "Ali Mesgaran and a friend at the sandwich shop he opened this year in Tehran. He said his shop was one place where he controlled his destiny." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A4) TEHRAN -- About two months ago, when many Iranian families were stocking up on rice and meat to prepare for seemingly inevitable military conflict with the West over Iran's nuclear program, Ali Mesgaran, 35, decided to open a sandwich shop.

Iran's national currency, the rial, had just lost nearly half of its value amid new international sanctions, and banks and exchange offices were spilling over with orders for gold and foreign currency from people hoping to protect family savings from soaring inflation.

"There are always problems in this country," Mr. Mesgaran said, explaining why he decided to open his shop, Piyaz Jafari, named after a traditional Iranian sandwich spread of onions and herbs. "We felt that if we ever wanted to be successful, we just had to ignore those."


. . .


The widespread sense of hopelessness is reinforced by memories of the presidency of Mohammad Khatami, Mr. Ahmadinejad's predecessor, who was in power from 1997 to 2005. During his two terms, he tried to promote personal freedom, to encourage better relations with the West and to relax suffocating dress codes, drawing anger from conservatives but attracting millions of votes from youths and women.


. . .


(p. A12) On a recent day at Mr. Mesgaran's sandwich shop, the talk was not about politics, but about the odd torrential rains that in recent weeks had flooded even parts of the city's subway system. "This is my world," he said, gesturing at his shop and his customers. "At least here I am in control of my destiny. That is a good feeling."



For the full story, see:

THOMAS ERDBRINK. "TEHRAN JOURNAL; Pinched Aspirations of Iran's Young Multitudes." The New York Times (Tues., May 8, 2012): A4 & A12.

(Note: ellipses added.)

(Note: the online version of the article has the date May 7, 2012.)






July 6, 2012

Experience Can Provide Sound Intuitive Knowledge



(p. 11) . . . , the accurate intuitions of experts are better explained by the effects of prolonged practice than by heuristics. We can now draw a richer and more balanced picture, in which skill and heuristics are alternative sources of intuitive judgments and choices.

The psychologist Gary Klein tells the story of a team of firefighters that entered a house in which the kitchen was on fire. Soon after they started hosing down the kitchen, the commander heard himself shout, "Let's get out of here!" without realizing why. The floor collapsed almost immediately after the firefighters escaped. Only after the fact did the commander realize that the fire had been unusually quiet and that his ears had been unusually hot. Together these impressions prompted what he called a "sixth sense of danger." He had no idea what was wrong, but he knew something was wrong. It turned out that the heart of the fire had not been in the kitchen but in the basement beneath where the men had stood.

We have all heard such stories of expert intuition: the chess master who walks past a street game and announces "White mates in three" without stopping, or the physician who makes a complex diagnosis after a single glance at a patient. Expert intuition strikes us as magical, but it is not. Indeed, each of us performs feats of intuitive expertise many times each day. Most of us are pitch-perfect in detecting anger in the first word of a telephone call, recognize as we enter a room that we were the subject of the conversation, and quickly react to subtle signs that the driver of the car in the next lane is dangerous. Our everyday intuitive abilities are no less marvelous than the striking insights of an experienced firefighter or physician--only more common.

The psychology of accurate intuition involves no magic. Perhaps the best short statement of it is by the great Herbert Simon, who studied chess masters and showed that after thousands of hours of practice they come to see the pieces on the board differently from the rest of us. You can feel Simon's impatience with the mythologizing of expert intuition when he writes: "The situation has provided a cue; this cue has given the expert access to information stored in memory, and the information provides the answer. Intuition is nothing more and nothing less than recognition."



Source:

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

(Note: ellipsis added.)





July 1, 2012

Behavioral Economics Does Not Undermine Capitalism



thinkingfastandslowBK2012-06-21.jpg












Source of book image: http://www.brainpickings.org/wp-content/uploads/2011/10/thinkingfastandslow.jpg





Daniel Kahneman first gained fame in economics through research with Tversky in which they showed that some of economists' assumptions about human rationality do not always hold true.

Kahneman, whose discipline is psychology, went on to win the Nobel Prize in economics, sharing the prize with Vernon Smith. (Since the Prize is not normally awarded posthumously, Tversky was not a candidate.)

I have always thought that ultimately there should be only one unified science of human behavior---not claims that are "true" in economics and other claims that are "true" in psychology. (I even thought of minoring in psychology in college, before I realized that the price of minoring included taking time-intensive lab courses where you watched rats run through mazes.)

But I don't think the implications of current work in behavioral economics are as clear as has often been asserted.

Some important results in economics do not depend on strong claims of rationality. For instance, the most important "law" in economics is the law of demand, and that law is due to human constraints more than to human rationality. Gary Becker, early in his career, wrote an interesting paper in which he showed that the law of demand could also be derived from habitual and random behavior. (I remember in conversation, George Stigler saying that he did not like this paper by Becker, because it did not hone closely to the rationality assumption that Stigler and Becker defended in their "De Gustibus" article.)

The latest book by Kahneman is rich and stimulating. It mainly consists of cataloging the names of, and evidence for, a host of biases and errors that humans make in thinking. But that does not mean we cannot choose to be more rational when it matters. Kahneman believes that there is a conscious System 2 that can over-ride the unconscious System 1. In fact, part of his motive for cataloging bias and irrationality is precisely so that we can be aware, and over-ride when it matters.

Sometimes it is claimed, as for instance in a Nova episode on PBS, that bias and irrationality were the main reasons for the financial crisis of 2008. I believe the more important causes were policy mistakes, like Clinton and Congress pressuring Fannie Mae and Freddie Mac to make home loans to those who did not have the resources to repay them; and past government bailouts encouraging finance firms to take greater risks. And the length and depth of the crisis were increased by government stimulus and bailout programs. If instead, long-term cuts had been made in taxes, entrepreneurs would have had more of the resources they need to create start-ups that would have stimulated growth and reduced unemployment.

More broadly, aspects of behavioral economics mentioned, but not emphasized, by Kahneman, can actually strengthen the underpinnings for the case in favor of entrepreneurial capitalism. Entrepreneurs may be more successful when they are allowed to make use of informal knowledge that would not be classified as "rational" in the usual sense. (I discuss this some in my forthcoming paper, "The Epistemology of Entrepreneurship.")

Still, there are some useful and important examples and discussions in Kahneman's book. In the next several weeks, I will be quoting some of these.


Book discussed:

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


The Becker article mentioned above is:

Becker, Gary S. "Irrational Behavior and Economic Theory." Journal of Political Economy 70, no. 1 (Feb. 1962): 1-13.


The Stigler-Becker article mentioned above is:

Stigler, George J., and Gary S. Becker. "De Gustibus Non Est Disputandum." American Economic Review 67, no. 2 (March 1977): 76-90.





June 26, 2012

Sam Walton Was No Overnight Success



(p. 199) Sam Walton used to joke that people thought he was an overnight success. "No," he'd say, "they just heard of me last night."


Source:

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





June 22, 2012

Sam Walton Was "America's Greatest Entrepreneur of the Twentieth Century"



(p. 194) Sam Walton is my pick for America's greatest entrepreneur of the twentieth century.

He not only built the world's largest retailing empire and the single most valuable company in America, he created the institution with the greatest muscle to do good today.



Source:

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





June 18, 2012

Ben Franklin Stores as Incubators of Retail Success



(p. 192) The chain was called Michaels. I'd never heard of it but, as George related its ancestry, I became more and more intrigued. You see, once upon a time it had been a Ben Franklin store, and therein lies a story.

Back in 1877, Edward and George Butler, brothers from Boston, came up with a new concept for retailing. Instead of setting up a specialty shop to sell one line of items--like shoes or dresses or kitchen supplies--they set up a store where they could sell all sorts of stuff. This was the very beginning of department stores, except that they weren't yet called that. They were called variety stores, and they carried a large assortment of low-cost goods. Then the Butlers set up a "five-cent counter," where everything cost a nickel. It worked in Boston, so they expanded westward and called it Ben Franklin Stores.

Three-quarters of a century later, in the days when America was just starting to move westward with the automobile, there were no shopping malls or big national retail chains. What you found in every town, especially in small-town America, was a variety store, like Ben Franklin's. In Lake Providence, we had Morgan and Lindsey's, where you could buy everything from paper napkins to thimbles, birthday cards, curtain hooks, and boxes of chocolates. The Butlers' idea of a nickel counter became so popular and widespread that these places came to be nicknamed "five-and-dimes" or "five-and ten-cent" stores.

(p. 193) While some of them became the heart of Main Street America, others grew to become legendary department stores, like Macy's in New York, Wanamaker's in Philadelphia, and Lehman's in Chicago. Still others merged into chains to compete with Ben Franklin Stores. That's how JC Penney's was born.



Source:

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





June 11, 2012

For Federal Regulators "It's Easier Not to Approve than to Approve"



LauthXavierAquacultureScientist2012-06-04.jpg "Xavier Lauth, a scientist, working with zebra fish in a lab at the Center for Aquaculture Technologies." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. B1) SAN DIEGO -- If Americans ever eat genetically engineered fast-growing salmon, it might be because of a Soviet biologist turned oligarch turned government minister turned fish farming entrepreneur.

That man, Kakha Bendukidze, holds the key to either extinction or survival for AquaBounty Technologies, the American company that is hoping for federal approval of a type of salmon that would be the first genetically engineered animal in the human food supply.

But 20 months since the Food and Drug Administration tentatively concluded that the fish would be safe to eat and for the environment, there has been no approval. And AquaBounty is running out of money.

Mr. Bendukidze, the former economics minister of Georgia and AquaBounty's largest shareholder, says the company can stay afloat a while longer. But he is skeptical that genetically altered salmon will be approved in the United States in an election year, given the resistance from environmental and consumer groups.

"I understand politically that it's easier not to approve than to approve," Mr. Bendukidze said during a recent visit to a newly acquired laboratory in San Diego, where jars of tiny zebra fish for use in genetic engineering experiments are stacked on shelves. While many people would be annoyed by the approval, he said, "There will be no one except some scientists who will be annoyed if it is not approved."


. . .


(p. B6) Mr. Bendukidze, 56, began his career as a molecular biologist in a research institute outside Moscow, working on genetically engineering viruses for vaccine use. He later started a company selling biology supplies. When parts of the Soviet economy were privatized, he earned a reputation as a corporate raider, building through acquisitions and leading United Heavy Machinery, a large maker of equipment for mining, oil drilling and power generation.

In 2004, Mr. Bendukidze returned to his native Georgia as economics minister under Mikheil Saakashvili, the newly elected president. With a free-market philosophy and a penchant for insulting those who disagreed with him, Mr. Bendukidze earned his share of enemies as he moved to deregulate and privatize the economy.

He still lives in Georgia and now spends his time as chairman of the Free University of Tbilisi, which he founded. He also set up Linnaeus Capital Partners to manage his money. It has increasingly focused on aquaculture, with stakes in companies in Greece, Israel and Britain, in addition to AquaBounty.



For the full story, see:

ANDREW POLLACK. "An Entrepreneur Bankrolls a Genetically Engineered Salmon." The New York Times (Tues., May 22, 2012): B1 & B6.

(Note: ellipsis added.)

(Note: the online version of the article has the date May 21, 2012.)



BendukidzeKakhaEntrepreneur2012-06-04.jpg "Kakha Bendukidze acquired the lab after agreeing to give AquaBounty more cash." Source of caption and photo: online version of the NYT article quoted and cited above.






June 6, 2012

Michael Milken Provided "Access to Capital for Growing Companies"



(p. 163) Although [high yield] . . . bonds eventually became known as a favored tool for leveraged--buyout specialists in the 1980s, Mike's original goal was different. He wanted to provide access to capital for growing companies that needed financing to expand and create jobs. Most of these companies lacked the investment grade" bond ratings required before the big financial institutions would back them. Mike knew that non-investment-grade (a k a "junk") companies create virtually all new jobs, and he believed that helping these companies grow strengthened the American economy and created good jobs for American workers.

It was by studying credit history at Berkeley in the 1960s that Mike developed his first great insight. He found that while there could be significant risk in any one high-yield bond, a carefully constructed portfolio of these assets produced a consistently better return over the long run than supposedly "safe" investment-grade debt. This was proved during the two decades of the 1970s and '80s when returns on high-yield bonds topped all other asset classes. Mike saw a great opportunity when he realized that the perception of default risk far exceeded the reality. In fact, these bonds had a surprisingly low-risk profile when adjusted for the potential returns.

After twenty years of superior gains, the high-yield bond market finally fell in 1990. Actually, it didn't fall--it was pushed by unwise government regulation that forced institutions to sell their bonds. The dip only lasted a year, however, with the market roaring back 46 percent in 1991.

Mike's competitors--Goldman Sachs, Morgan Stanley, and Credit Suisse First Boston, the old oligopolies of the syndication (p. 164) business--labeled them "junk bonds" to disparage Mike's brainchild. He was not a member of their white-shoe club and they were not going to take his act lying down.



Source:

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

(Note: bracketed words and ellipsis added.)





June 3, 2012

Entrepreneurs Should Seek Problems, Not Opportunities



McKelveyJimEntrepreneurBig2012-06-02.jpg "Jim McKelvey drew on experiences as a businessman and glassblower in his speech at Big Omaha 2012." Source of caption and photo: online version of Macy Koch, "Jim McKelvey: "Just go ahead and build it"." Silicon Prairie News. (Thursday May 10, 2012).



(p. 2D) The dynamics of the glass-blowing industry changed when a new, smaller version of the traditional glass-blowing furnace was developed. The economics of glass-blowing suddenly changed.

But as McKelvey's glass-blowing skills grew and as he developed more products, including a patented glass water faucet, another barrier emerged: access to the financial system.

At one point, McKelvey was about to sell one of his faucets. The customer wanted to pay with an American Express credit card, but McKelvey couldn't accept it without the requisite hardware. The sale fell through.

McKelvey then had a problem he needed to solve: Why wasn't there a way to accept payments on a smartphone?

So he teamed up with Jack Dorsey, a co-founder of Twitter who worked with McKelvey at Mira, to start Square, which allows users to accept payments through their phones.
It was an idea that tackled a problem, McKelvey said, suggesting to attendees: "Go out there and seek problems. Don't look for opportunities."



For the full story, see:

Ross Boettcher. "Traveling the Road to Innovation; A former 'Quitter' and Others Offer tips at the Big Omaha Conference." Omaha World-Herald (Fri., May 11, 2012): 1D & 2D.

(Note: the online version of the article has the title "Many roads to innovation at Big Omaha.")




McKelveyJimEntrepreneur2012-06-01.jpg











""Go out there and seek problems. Don't look for opportunities." Jim McKelvey, co-founder of Square." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited above.









June 2, 2012

In Antitrust, as in Medicine, First Do No Harm



(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.





June 1, 2012

Lucasfilm Will Build Somewhere "That Sees Us as a Creative Asset, Not as an Evil Empire"



LucasValleyMarinCounty2012-05-30.jpg "Lucas Valley in Marin County, Calif., where residents' objections led George Lucas to abandon a bid to expand operations at a new site near Skywalker Ranch." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A13) SAN RAFAEL, Calif. -- In 1978, a year after "Star Wars" was released, George Lucas began building his movie production company far from Hollywood, in the quiet hills and valley of Marin County here just north of San Francisco. Starting with Skywalker Ranch, the various pieces of Lucasfilm came together over the decades behind the large trees on his 6,100-acre property, invisible from the single two-lane road that snakes through the area.

And even as his fame grew, Mr. Lucas earned his neighbors' respect through his discretion. Marin, one of America's richest counties, liked it that way.

But after spending years and millions of dollars, Mr. Lucas abruptly canceled plans recently for the third, and most likely last, major expansion, citing community opposition. An emotional statement posted online said Lucasfilm would build instead in a place "that sees us as a creative asset, not as an evil empire."

If the announcement took Marin by surprise, it was nothing compared with what came next. Mr. Lucas said he would sell the land to a developer to bring "low income housing" here.


. . .


Whatever Mr. Lucas's intentions, his announcement has unsettled a county whose famously liberal politics often sits uncomfortably with the issue of low-cost housing and where battles have been fought over such construction before. His proposal has pitted neighbor against neighbor, who, after failed peacemaking efforts over local artisanal cheese and wine, traded accusations in the local newspaper.

The staunchest opponents of Lucasfilm's expansion are now being accused of driving away the filmmaker and opening the door to a low-income housing development. That has created an atmosphere that one opponent, who asked not to be identified, saying she feared for her safety, described as "sheer terror" and likened to "Syria."

Carl Fricke, a board member of the Lucas Valley Estates Homeowners Association, which represents houses nearest to the Lucas property, said: "We got letters saying, 'You guys are going to get what you deserve. You're going to bring drug dealers, all this crime and lowlife in here.' "



For the full story, see:

NORIMITSU ONISHI. "A Pyrrhic Victory for Foes of a New Lucasfilm Project; In Lieu of digital Studio, Plan for Low-Income Homes." The New York Times (Tues., May 22, 2012): A13 & A19.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 21, 2012 and has the title "Lucas and Rich Neighbors Agree to Disagree: Part II.")



LucasGeorge2012-05-30.jpg "Mr. Lucas said Marin needs affordable housing. A resident called his plan "class warfare."" Source of caption and photo: online version of the NYT article quoted and cited above.






May 30, 2012

"Innovation" Should Be Reserved for Electricity, Printing Press, Telephone and iPhone



LightBulbInnovationGraphic2012-05-29.jpg Source of graphic: online version of the WSJ article quoted and cited below.



(p. B1) "Most companies say they're innovative in the hope they can somehow con investors into thinking there is growth when there isn't," says Clayton Christensen, a professor at Harvard Business School and the author of the 1997 book, "The Innovator's Dilemma."


. . .


Scott Berkun, the author of the 2007 book "The Myths of Innovation," which warns about the dilution of the word, says that what most people call an innovation is usually just a "very good product."

He prefers to reserve the word for civilization-changing inventions like electricity, the printing press and the telephone--and, more recently, perhaps the iPhone.


. . .


Mr. Berkun tracks innovation's popularity as a buzzword back to the 1990s, amid the dot-com bubble and the release of James M. Utterback's "Mastering the Dynamics of Innovation" and Mr. Christensen's "Dilemma."


. . .


(p. B8) Mr. Christensen classifies innovations into three types: efficiency innovations, which produce the same product more cheaply, such as automating credit checks; sustaining innovations, which turn good products into better ones, such as the hybrid car; and disruptive innovations, which transform expensive, complex products into affordable, simple ones, such as the shift from mainframe to personal computers.

A company's biggest potential for growth lies in disruptive innovation, he says, noting that the other types could just as well be called ordinary progress and normally don't create more jobs or business.

But the disruptive innovations can take five to eight years to bear fruit, he says, so companies lose patience.

It is far easier, he adds, for companies to just say they're innovating. "Everybody's innovating, because any change is innovation."



For the full story, see:

LESLIE KWOH. "You Call That Innovation? Companies Love to Say They Innovate, but the Term Has Begun to Lose Meaning." The Wall Street Journal (Weds., May 23, 2012): B1 & B8.

(Note: ellipses added.)






May 29, 2012

"I Can't Explain Strategy at the Same Time that I'm Inventing It"



(p. 75) I felt deceived. I felt betrayed. Their 51 percent control could be like working for IBM or Honeywell again. I felt a threat to the most important value I was seeking: independence. I had to ask myself "Do I say no? Or do I say yes and accept their contract, even though it isn't what we shook hands on and it makes me uncomfortable?" "This was a major difficulty for me. The 51 percent issue is at the very core of what every entrepreneur is trying to do: control his own destiny.

We were talking about my company. I dreamed it up. I put it together and I was going to run it. I was not going to hand it over to some committee of lawyers and accountants. But neither could I let anger get hold of me.

I knew that "those whom the gods would destroy, they first make angry." That said, not getting angry does not mean not being firm. So I firmly told Jerry, "I want to run this company. I don't have time to sit around and explain to your staff what I'm doing. No offense, but they don't know beans about what I'm (p. 76) trying to do, and neither do you, for that matter. I've got to be able to run this business. I can't explain strategy at the same time that I'm inventing it."



Source:

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





May 28, 2012

Proof of Concept: "A Determined Entrepreneur Can Start a Rocket Company from Scratch"



Falcon9RocketLiftoff2012-05-27.jpg '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.")



MuskElon2012-05-27.jpg











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








May 22, 2012

Entrepreneur Krupp Was Paternalistically "Benevolent" and Was Skeptical of Capitalism



KrupBK2012-05-17.jpg











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








(p. A13) Harold James, professor of history and international affairs at Princeton University, portrays a vastly different organization in "Krupp," a painstaking chronicle of a company that traces its roots to a steel foundry in Essen in 1810. Mr. James's Krupp is a company for which the manufacturing of war matériel was always of secondary interest to that of civilian production. The company might have preferred to concentrate on manufacturing railroad equipment and consumer goods, but in the developing and expansionist German empire of the 19th century, state requirements for the tools of power dovetailed with Krupp's desire for regular long-term contracts. The result for Krupp was a practical, if not deliberate, focus on armaments.

From the manufacturer's perspective, the emphasis on war matériel did not consign Krupp to the ranks of belligerent militarists; it was just smart business. "The purpose of work should be the common good," founder Alfred Krupp once said, or at least that quote graces a statue the company erected after his death in 1887. All through the 19th century, Mr. James says, the pursuit of profit was less central to the Krupp mission than building a solid enterprise within a framework of social responsibility. As early as 1836, Krupp established a voluntary health-insurance program for its workers. By the middle of the century, life-insurance and pension plans had been instituted. Workers' hostels and company hospitals were constructed. In exchange for this paternalistic benevolence, Krupp expected complete loyalty from its work force and vehemently opposed the slightest hint of union organization or political activity among its employees.

"Alfred Krupp perfectly fits the mold of the heroic entrepreneur," Mr. James writes. "Profoundly skeptical of joint-stock companies, banks, and capitalism in general, but also of big-scale science and modern research methods, he was a genius at extending to its utmost limits the possibilities of the craft entrepreneur."



For the full review, see:

JENNIFER SIEGEL. "BOOKSHELF; Heavy Industry, Burdened Past; The company's 19th-century founder said it was devoted to the "common good." In World War II, it worked hard for the Third Reich." The Wall Street Journal (Tues., April 17, 2012): A13.

(Note: the online version of the interview is dated April 16, 2012.)






May 21, 2012

Texas Was a Place Where It Was OK for an Entrepreneur to Be Poco Loco



(p. 42) Today, everybody knows something about Texas, but in those days Texas was still like an undiscovered oasis of freethinking, individualistic, action-oriented, business-minded people. It was a place where gut American characteristics were concentrated and magnified. A place where you could taste the frontier spirit that is part of our national heritage. There was a feeling in the air that you could invent yourself as any character you chose, and that your neighbors would leave you alone to be whoever you wanted to be. I liked the aggressiveness of the people in pursuing their goals, and the fact that you could be poco loco, as Spanish speakers say: a little crazy. This quality is a big help when you're an entrepreneur. I felt that, in Dallas. there was extra oxygen in the air.


Source:

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

(Note: italics in original.)





May 18, 2012

Asteroid-Mining Start-Up Hopes to Launch First Spacecraft within Two Years



AsteroidMining2012-05-07.jpg

"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.")







May 16, 2012

"Birdseye Coaxes Readers to Re-examine Everyday Miracles"



BirdseyeBK.jpg

















Source of book image: http://media.miamiherald.com/smedia/2012/05/04/10/50/13z9ot.Em.56.jpg



(p. C7) Birdseye made and lost money, went west to search for the cause of Rocky Mountain spotted fever and hunted fox for furs in Labrador, where he took his wife and infant son to live 250 miles by dogsled from the nearest hospital. He harpooned whales near his home in Gloucester, Mass., and wore a necktie while doing it. And he designed the industrial processes that made it possible to fast-freeze food, thus rendering obsolete much canned, dried, salted and smoked food and the musty basement bins that once held a winter's diet of turnips, onions and potatoes.

Food had been frozen earlier but more slowly. Crystallization turned it mushy and tasteless. It was poor man's food. In Labrador, fishing with the Inuit, Birdseye noticed that when a fish was pulled from a hole in the ice and into minus-40-degree air, it froze instantly, staying so fresh that when it was thawed months later, it would sometimes come alive.

He spent years putting together modern mass production with what he had seen in Labrador. By the 1920s, he was fast-freezing food that was far closer to fresh than any competition. "Today's locavore movement--the movement to shun food from afar and eat what is produced locally . . . would have perplexed him," Mr. Kurlansky writes. After all, "consumers could go to a supermarket and buy the food of California, France and China for less money."


. . .


The author makes a telling point about locavores: "We need to grasp that people who are accustomed only to artisanal goods long for the industrial. It is only when the usual product is industrial that the artisanal is longed for. This is why artisanal food, the dream of the food of family farms, caught on so powerfully in California, one of the early strongholds of agribusiness with little tradition of small family farms."

Birdseye's heroism has been forgotten, and his frozen food is taken for granted, the way all inventions are taken sooner or later. He sold his business for $23.5 million in 1929 to what would become General Foods. He stayed on as a consultant and also ran his light bulb company, which he would sell too.



For the full review, see:

HENRY ALLEN. "The American Way of Eating; Harlan Sanders and Clarence Birdseye, just like today's locavores, saw a meal as a way to improve people's lives." The Wall Street Journal (Sat., May 5, 2012): C5 & C7.

(Note: ellipsis added.)

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




(p. C6) "Birdseye" is a slight but intriguing book that raises far more questions than it answers. But it indeed coaxes readers to re-examine everyday miracles like frozen food, and to imagine where places with no indigenous produce would be without them. It emphasizes the many steps that went into developing such a simple-seeming process.


For the full review, see:

JANET MASLIN. "BOOKS OF THE TIMES; The Inventor Who Put Frozen Peas on Our Tables." The New York Times (Thurs., April 26, 2012): C6.

(Note: the online version of the review is dated April 25, 2012.)



Book reviewed:

Kurlansky, Mark. Birdseye: The Adventures of a Curious Man. New York: Doubleday, 2012.



KurlanskyMark2012-05-07.jpg











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







May 13, 2012

A "Boring" and "Excellent" Business Education



(p. 34) Most of what they taught us in those days was functional. This was before they added "entrepreneurship" to business courses. It was all about manufacturing, marketing, and personnel. I found that somewhat boring. I had two favorite courses. The first was Small Business. It was the only course where all the pieces carne together. The other was Computing, which was the first computer course that the Michigan Business School had ever taught. I had a feeling that this was the big new thing. But, more important, it was what IBM did. I had never seen a computer lab before. This was soon after Remington Rand made headlines with its UNIVAC I, the world's first commercial computer.


. . .


(p. 59) The University of Michigan is an excellent school. I loved being there and I am proud to have earned an MBA. When I was there, I noticed that the fìve-and--ten-cents-store founder, Sebastian S. Kresge--the man who invented the Kmart chain--had given them Kresge Hall. When I could afford to, I figured, why not do the same? I have always been so grateful for what I learned there. In 1997 I gave the school funding for a Sam Wyly Hall. (A few years earlier, Charles and I had helped to build Louisiana Tech's 16-story Wyly Tower of Learning.) It's fulfilling to me that today Paton Scholars study at Sam Wyly Hall on the Ann Arbor campus.



Source of both quotes:

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

(Note: ellipsis added.)





May 9, 2012

Capitalism More about Creating New Markets than about Competing to Dominate Old Ones



(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





May 8, 2012

Entrepreneur Sam Wyly Hard to Classify



1000-dollars-and-an-ideaBK.jpg











Source of book image: http://www.charlesandsamwyly.com/images/1000-dollars-and-an-idea.jpg



I sometimes divide entrepreneurs into two broad types: free agent entrepreneurs and innovative entrepreneurs. Free agent entrepreneurs are the self-employed. Innovative entrepreneurs are the agents of Schumpeter's process of creative destruction.

Then there are entrepreneurs like Sam Wyly who don't fit very well in either category.

He built or improved businesses in ways that made the world better, but usually did not involve breakthrough innovations.

Like many of the entrepeneurs considered in Amar Bhidé's main books, Wyly grew businesses that served consumers, enriched investors and created jobs. Some of his most important start-ups, especially early-on, involved computer services. And his efforts to compete with the government-backed AT&T monopoly, were heroic.

I read the 2008 version of his autobiography a few months ago, and found that it contained a few stories and observations that are worth pondering. In the next few weeks I will briefly quote a few of these.


The 2008 Wyly autobiography is:

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


I have not read the 2011 version of Wyly's autobiography:

Wyly, Sam. Beyond Tallulah: How Sam Wyly Became America's Boldest Big-Time Entrepreneur. New York: Melcher Media, 2011.


The dominant examples in Bhidé's two main books are entrepreneurs like Wyly. The two main Bhidé books are:

Bhidé, Amar. The Origin and Evolution of New Businesses. Oxford, UK: Oxford University Press, 2000.

Bhidé, Amar. The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World. Princeton, NJ: Princeton University Press, 2008.






May 6, 2012

Entrepreneurs Will Mine Asteroids to "Help Ensure Humanity's Prosperity"



CameronJames2012-04-30.jpg "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.)






May 5, 2012

The One Percent's Quick History: "We Worked Hard, We Went to College, We Tried to Better Our Lives"



(p. F1) SOON after the Occupy Wall Street encampment was set up at Zuccotti Park in Manhattan last fall, 26-year-old Ryan Quick told his father, Leslie C. Quick III, a financier, that he might drop by the site.

"Don't you even let me see you over there," the father replied.

The senior Mr. Quick later said that he and his son were both "half-kidding" each other. But he need not have worried about any class rebellion. According to Mr. Quick, his son came back from his visit and said: "It just looks like a Phish concert. It's difficult to get engaged by something that doesn't really have a purpose."

As scions of a family that co-founded Quick & Reilly, a pioneering discount brokerage firm acquired for $1.6 billion by another company in 1997, the Quicks are undoubtedly among the "1 percent" -- the wealthiest 1 percent of Americans targeted by the Occupy Wall Street movement. Indeed, having made their fortune in finance, the Quicks might be particular targets.


. . .


(p. F5) "Almost all my clients are self-made," said Christopher J. Cordaro, chief executive of RegentAtlantic Capital, a wealth management firm based in Morristown, N.J., whose clients have at least $2 million in investable assets. "They're saying, 'We worked hard, we went to college, we tried to better our lives. Isn't that what I'm supposed to do?' "

That is also the Quick family's history. When he joined the year-old family firm after graduating from college in 1975, Leslie Quick recalled, "we didn't know if my father was going to declare bankruptcy or this discount brokerage thing was going to work."



For the full story, see:

FRAN HAWTHORNE. "Color the 1 Percent 99 Percent Conflicted." The New York Times (Thurs., February 9, 2012): F1 & F5.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 8, 2012.)






May 4, 2012

Innovation Took "Three Years Working through the Bureaucratic Snags"



FlyingCar2012-04-30.jpg "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.)



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






May 3, 2012

Steve Jobs Channels Ellis Wyatt



(p. 260) In 2007 Forbes magazine named Steve Jobs the highest-paid exec-(p. 261)utive of any of America's five hundred largest companies, based on gains in the value of stock granted to him at Apple. He was on the board of directors of the Walt Disney Co. Yet his former residence in Woodside, where he had once met with Catmull and Smith and mused about buying Lucasfilm's Computer Division, was now in a state of decay under his ownership.

He had wanted to demolish it; after a group of neighborhood residents opposed his plan to do so, he left the house open to the elements. The interior suffered damage from water and mold. Vines crept up the stucco walls and wandered inside.

The memories that haunted its hallways were those of Jobs's darkest times. He had bought the house only months before the humiliation of his firing from Apple; he lived in it through that firing and through the hard, money-hemorrhaging years of Pixar and NeXT. He left it as his fortunes were about to change, as he was sending Microsoft away from Pixar, convinced that he had something he should hold on to.

When a judge ruled against his quest for a demolition permit, Jobs appealed in 2006 and 2007 all the way to the California Supreme Court, but he lost at every stage. He received proposals from property owners offering to cart the house away in sections and restore it elsewhere; he rejected them. One way or another, it seemed, he meant for the house to be destroyed.



Source:

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

(Note: italics in original.)

(Note: The passage above is from the Epilogue and the pages given above are from the hardback edition (pp. 260-261). The identical passage also appears in the 2009 paperback edition, but on p. 265.





April 29, 2012

"In a Garage Pursuing a Dream"



(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.)





April 21, 2012

Workers Want to See Compensation Related to Contribution



This is a great example contra (or at least qualifying) Daniel Pink's claim that all you need do for knowledge workers is provide them enough money so that they can provide for the basic needs of themselves and their family.



(p. 145) The public offering process brought details of the intended allocation of Pixar stock options into view. A registration statement and other documents with financial data had to be prepared for the Securities and Exchange Commission and a prospectus needed to be made ready for potential investors. These documents had to be reviewed and edited, and it was here that the word apparently leaked: A small number of people were to receive low-cost options on enormous blocks of stock. Catmull, Levy, and Lasseter were to get options on 1.6 million shares apiece; Guggenheim and Reeves were to get 1 million and 840,000, respectively. If the company's shares sold at the then-planned price of fourteen dollars, the men would be instant multimillionaires.

The revelation was galling. Apart from the money, there was the symbolism: The options seemed to denigrate the years of work everyone else had put into the company. They gave a hollow feel to Pixar's labor-of-love camaraderie, its spirit that everyone was there to do cool work together. Also, it was hard not to notice that Levy, one of the top recipients, had just walked in the door.

"There was a big scene about all that because some people got (p. 146) huge amounts more than other people who had come at the same time period and who had made pretty significant contributions to the development of Pixar and the ability to make Toy Story," Kerwin said. "People like Tom Porter and Eben Ostby and Loren Carpenter--guys that had been there since the beginning and were part of the brain trust."

Garden-variety employees would also get some options, but besides being far fewer, those options would vest over a four-year period. Even employees who had been with the organization since its Lucasfilm days a decade earlier--employees who had lost all their Pixar stock in the 1991 reorganization--would be starting their vesting clock at zero. In contrast, most of the options of Catmull, Lasseter, Guggenheim, and Reeves vested immediately--they could be turned into stock right away.

"I decided, 'Well, gee, I've been at this company eight years, and I'll have been here twelve years before I'm fully vested,' " one former employee remembered. " 'It doesn't sound like these guys are interested in my well-being.' A lot of this piled up and made me say, 'What am I doing? I'm sitting around here trying to make Steve Jobs richer in ways he doesn't even appreciate.' "



Source:

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

(Note: italics in original.)

(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.)


For Daniel Pink's views, see:

Pink, Daniel H. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2009.






April 15, 2012

Regulation Sunset Would Aid Entrepreneurs



John Mackey is the entrepreneur behind the Whole Foods Market.



(p. A17) The success of economic freedom in increasing human prosperity, extending our life spans and improving the quality of our lives in countless ways is the most extraordinary global story of the past 200 years.


. . .


Economic freedom is declining in the U.S. In 2000, the U.S. was ranked third in the world behind only Hong Kong and Singapore in the Index of Economic Freedom, published annually by this newspaper and the Heritage Foundation. In 2011, we fell to ninth behind such countries as Australia, New Zealand, Canada and Ireland.

The reforms we need to make are extensive.


. . .


According to the Small Business Administration, total regulatory costs amount to about $1.75 trillion annually, nearly twice as much as all individual income taxes collected last year. While some regulations create important safeguards for public health and the environment, far too many simply protect existing business interests and discourage entrepreneurship. Specifically, many government regulations in education, health care and energy prevent entrepreneurship and innovation from revolutionizing and re-energizing these very important parts of our economy.

A simple reform that would make a monumental difference would be to require all federal regulations to have a sunset provision. All regulations should automatically expire after 10 years unless a mandatory cost-benefit analysis has been completed that proves the regulations have created significantly more societal benefit than harm. Currently thousands of new regulations are added each year and virtually none ever disappear.



For the full commentary, see:

JOHN MACKEY. "OPINION; To Increase Jobs, Increase Economic Freedom; Business is not a zero-sum game struggling over a fixed pie. Instead it grows and makes the total pie larger, creating value for all of its major stakeholders, including employees and communities.." The New York Times (Fri., November 16, 2011): A15.

(Note: ellipses added.)





April 13, 2012

Mhyrvold Left Work with Hawking for the Excitement of Entrepreneurship



(p. 139) Microsoft was represented ¡n the discussion by its senior vice president for advanced technology, a thirty-five-year-old Nathan Myhrvold. After finishing his Ph.D. at Princeton at age twenty-three, Myhrvold had worked for a year as a postdoctoral fellow with the physicist Stephen Hawking at Cambridge, tackling theories of (p. 140) gravitation and curved space-time, before taking a three-month leave of absence to help some friends in the Bay Area with a software project. He became caught up in the excitement of personal computer software and entrepreneurship and never went back. In Berkeley, he co-founded a company called Dynamical Systems to develop operating system for personal computers, which struggled for two years until Microsoft bought it in 1986. At Microsoft, he persuaded Bill Gates to let him establish a corporate research center, Microsoft Research, with Myhrvold himself in charge.


Source:

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

(Note: italics in original.)

(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.)





April 10, 2012

James Morrison Was a "Retailing Genius"



GeniusForMoneyBK2012-03-25.jpg











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








(p. A13) Morrison was not an inventor-capitalist but a retailing genius, more Sam Walton than Steve Jobs. He catered to England's growing consumer class by diversifying his wares and, in his ever-growing network of shops, introducing luxurious showrooms. He was a disciple of volume, seeking "high turnover, small profits, and quick returns." He sent his traveling men not to find buyers, as was typical, but to find the best suppliers. Advantageously purchased in bulk, goods would sell themselves. Morrison's buyers were specialists, anticipating the practices of later department stores. He kept his finger on the pulse of fashion and on "market making" events. Legendarily, he was never caught short of black crepe when a member of the royal family was ill. "The Duke of York has died most conveniently," he once quipped while tallying profits.

The "Napoleon of shopkeepers" went on to found his own merchant bank and accumulate a prodigious investment portfolio, much of it in American bonds. Strategic lending to broke aristocrats greased Morrison's way into Parliament, where he served as a "radical Whig," championing political reform and free trade.


. . .


. . . Morrison conducted both his retailing and his banking business with impeccable transparency. The investments he sold were honestly structured, and the risks he ran were his own, backed by sufficient collateral. Morrison's was an era before bailouts, an era of some moral luck but little moral hazard. Markets rose and fell with reasonably predictable effects. For him and many of his contemporaries, credit remained a personal matter of the highest consequence. In this, alas, a character such as Morrison now seems more alien than familiar.



For the full review, see:

JEFFREY COLLINS. "BOOKSHELF; King of the Shopkeepers; The lessons of a merchant prince and a brilliant retailer whose wool, linen, silk, thread and lace flew off the shelves." The Wall Street Journal (Mon., March 5, 2012): A13.

(Note: ellipses added.)


The book under review is:

Dakers, Caroline. A Genius for Money: Business, Art and the Morrisons. New Haven, CT: Yale University Press, 2012.






April 9, 2012

Oswald the Lucky Rabbit Returned to Disney After 78 Years



OswaldDisneyRabbit2012-03-25.jpgDo you recognize this rabbit? Source of image: online version of the Omaha World-Herald article quoted and cited below.



The story of Oswald the Lucky Rabbit is one of entrepreneurial resilience. Walt Disney was duped out of his legal rights to Oswald. Instead of fighting it out in court, or giving in to discouragement, he shortened Oswald's ears and transformed him into a mouse with a new name.



(p. 2E) LOS ANGELES (AP) - One of Walt Disney's oldest drawings is seeing the light of day after being locked away for nearly 40 years.

A rough 1928 image of Oswald the Lucky Rabbit, the wacky predecessor to Mickey Mouse, was brought out of the Walt Disney Co. archive this week and showcased at an event unveiling "Disney Epic Mickey 2: The Power of Two," an upcoming action-adventure game for the Wii, PlayStation 3 and Xbox 360 that allows players to control both Mickey and Oswald.

The mischievous Oswald was co-created by Disney before Mickey, but he was lost in a 1928 contract dispute with Universal Studios. Oswald hopped back to Disney in 2006 when CEO Bob Iger brokered a deal that sent sportscaster Al Michaels to Universal-NBC. Oswald's first appearance since his return came in 2010's "Epic Mickey" as the ruler of a forgotten realm.



For the full story, see:

DERRIK J. LANG. "Disney image displayed for first time in 40 years." Omaha World-Herald (Sun., March 18, 2012): 2E.







April 8, 2012

The Project Entrepreneur Does Not Sell Out Soon



FerdowsiHoustonDropboxFounders2012-03-25.jpg










"Dropbox founders, Arash Ferdowsi, left, and Drew Houston, won Best Overall Startup at the Crunchies in San Francisco earlier this year." Source of caption and photo: online version of the WSJ article quoted and cited below.





(p. B6) Arash Ferdowsi was a Massachusetts Institute of Technology student when he met fellow MIT student Drew Houston through a mutual friend.

The pair collaborated, working from a Cambridge, Mass., apartment, to solve a modern-day problem.

They created a virtual file cabinet that would make it possible for users to access piles of documents, spreadsheets, photos, music and videos from their laptops, tablets or personal devices.

After launching Dropbox Inc. in June 2007, they relocated to San Francisco. Mr. Ferdowsi dropped out of MIT.


. . .


WSJ: Before Steve Jobs of Apple Inc. died, he approached you with a buyout offer. Why did you turn it away?

Mr. Ferdowsi: The problem that we're trying to solve is a problem that only an independent company can solve. We want to let you use a Mac, or Windows PC, or iPad, or Android, without having to think about any of the technical details. It isn't a problem any of those larger companies is going to be as inclined to solve in the same way we are.



For the full interview, see:

ANGUS LOTEN, interviewer. "HOW I BUILT IT; Dropbox Seeks Big Solutions." The Wall Street Journal (Thurs., March 15, 2012): B6.

(Note: ellipsis added; bold in original.)

(Note: the online version of the interview is dated March 14, 2012.)






April 6, 2012

Diamond to Teach Economics of Entrepreneurship in Fall 2012


EntrepreneurshipPoster2012PortraitTopHalfCropped.jpg






















Some Questions to Be Discussed:


• How can policies encouraging innovative entrepreneurship help us recover from the current economic stagnation?


• Are innovative entrepreneurs smarter, or less risk-averse, or more intuitive, or more determined, or more frugal, or nobler, or greedier, than the rest of us?


• Can economic historian John Nye defend his claim that successful entrepreneurs are "lucky fools?"


• What is the role of entrepreneurship in the process of creative destruction, and what is the role of creative destruction in making our lives longer and better?


• Would labor be better off in an economy in which innovative entrepreneurship is encouraged?


• Why does economist Will Baumol believe that too much higher education can discourage successful innovative entrepreneurship?


• What are the most promising sources of financing for successful innovative entrepreneurship?






April 5, 2012

Lasseter's Success Came from Seeing How the Details Affected the Storytelling



(p. 138) "I had no reason to think it would be any good," recalled Barzel, who was then a recently minted California Institute of Technology Ph.D. on the lighting team. "I knew John was absolutely brilliant as a animator of shorts. But I've read authors who write good short stories and crummy novels; I figured it's a different skill. I had no reason to think John would have the skill to pull off a full-length movie."

He expected something that animators and animation buffs might find interesting, but that probably would not have a particularly wide audience.

"I joined because I wanted the practical experience," he said, "I thought, Well, it's going to be the first full-length [computer-animated] movie, so it'll be a fun thing to have been associated with, however it turns out."

What finally made Barzel a believer was watching Lasseter at work. He found that Lasseter had an uncanny ability to shift between the macro level of the entire film and the micro level of whatever detail he was dealing with at the moment. "Looking at an individual frame -- it's meticulous work-- he would always be aware of its role in the larger context of storytelling," Barzel recalled. "He'd say something like, 'This is the first time this character responds to that situation; it's really important that he get the right glint in his eye.' " Barzel started to think, John knows what he's doing. This movie could be really good.



Source:

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

(Note: italics and brackets in original.)

(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.)





April 4, 2012

Lean Start-Ups "Ruthlessly Cull Failures"



eric-ries-lean-startup.jpgEric Ries and his book. Source of photo: http://nemonics.files.wordpress.com/2011/11/eric-ries-lean-startup.jpg?w=584&h=262



(p. D3) "What's different in the Valley is that we've found a quasi-scientific method for reinventing businesses and industries, not just products," said Randy Komisar, a partner in a leading venture capital firm, Kleiner Perkins Caufield & Byers, and a lecturer on entrepreneurship at Stanford University. "The approach is much more systematic than it was several years ago."

The newer model for starting businesses relies on hypothesis, experiment and testing in the marketplace, from the day a company is founded. That is a sharp break with the traditional approach of drawing up a business plan, setting financial targets, building a finished product and then rolling out the business and hoping to succeed. It was time-consuming and costly.

The preferred formula today is often called the "lean start-up." Its foremost proponents include Eric Ries, an engineer, entrepreneur and author who coined the term and is now an entrepreneur in residence at the Harvard Business School, and Steven Blank, a serial entrepreneur, author and lecturer at Stanford.

The approach emphasizes quickly developing "minimum viable products," low-cost versions that are shown to customers for reaction, and then improved. Flexibility is the other hallmark. Test business models and ideas, and ruthlessly cull failures and move on to Plan B, Plan C, Plan D and so on -- "pivoting," as the process is known.



For the full story, see:

STEVE LOHR. "Looking Backward to Put New Technologies in Focus." The New York Times (Tues., December 6, 2011): D3 & D4.

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


Ries' recent book is:

Ries, Eric. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York: Crown Business, 2011.


Blank's books are:

Blank, Steve. Not All Those Who Wander Are Lost. CafePress.com, 2010.

Blank, Steven Gary. The Four Steps to the Epiphany: Successful Strategies for Products That Win. 2nd ed: CafePress.com, 2005.

Blank, Steve, and Bob Dorf. The Startup Owner's Manual: The Step-by-Step Guide for Building a Great Company. K & S Ranch, 2012.


Another relevant book is:

Maurya, Ash. Running Lean: Iterate from Plan A to a Plan That Works. 2nd ed. Sebastopol, CA: O'Reilly Media, 2012.






April 1, 2012

"Being Able to Work on a Great Project"



(p. 133) Recruiting was brisk; the magnet for talent was not the pay, generally mediocre, but rather the allure of taking part in the first fully computer-animated feature film. "Disney gave us a very modest budget [$17.5 million] for Toy Story," Guggenheim said. "Although that budget went up progressively over time, it didn't afford for very high salaries, unfortunately. We tried to make the other working conditions better. Just the enthusiasm of being able to work on a great project is as often as not what attracts artists and animators."


Source:

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

(Note: italics and brackets in original.)

(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.)





March 28, 2012

Innovative Entrepreneurs Need to Be Able to Fire People



(p. 116) Jobs met with the remaining employees soon after the layoffs and brought his reality distortion field with him. "You're seeing your friends packing their stuff up and pushing it out to their cars," Phillips remembered, "and yet somehow he had convinced you that that was the greatest possible thing that could happen."

Within the Silicon Valley community, the talk was not of the way Jobs had handled his former employees at Pixar, but of his having kept Pixar going at all. It seemed to make little sense from a business point of view. For all his bravado about RenderMan, his motivation was likely a matter of status as much as economics. After his rise and fall at Apple, the onus was on him either to create another success story or to leave his peers to conclude that the first one had been a quirk of fate.

"It wasn't really working," Smith said of Pixar's early years. "In fact, that's being kind of gentle. We should have failed. But it seemed to me that Steve just would not suffer a defeat. He couldn't sustain it."



Source:

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

(Note: italics in original.)

(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.)





March 24, 2012

The Intensity of Entrepreneur Jobs



(p. 114) As Jobs was criticizing the Pixar managers for failing to hit a delivery date on a project, Smith interrupted and said, "Steve, but you haven't delivered your board on time"--meaning, a board for the NeXT computer.

It was the sort of remark Jobs normally might have put up with, but it seemed Smith had crossed a line by joking about Jobs's [sic] computer. "He went completely nonlinear," Smith recalled. "He went crazy on me and started insulting my accent."

Jobs had homed in on a sensitive spot. Smith's native southwestern accent, which he had mostly suppressed since his days as an academic in New York City, sometimes reemerged in moments of stress. Jobs mocked it.

"So I went nonlinear, too, which I had never done before or since," Smith remembered. "We're screaming at each other, and our faces are about three inches apart."

There was an unspoken understanding around Jobs that the whiteboard in his office was part of his personal space--no one else was to write on it. As the confrontation went on, Smith defiantly marched past him and started writing on the whiteboard. "You can't do that," Jobs interjected. When Smith continued writing, Jobs stormed out of the room.

To outward appearances, the conflict blew over, but the men's relationship would never be the same.



Source:

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

(Note: italics in original.)

(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.)





March 20, 2012

Tool Makers Cannot Predict Creative Ways Tools Will Be Used



(p. 89) Jobs had no use for small-minded naysayers. His experience had taught him that if you offered a better computer, well priced and accessible, there was no limit to what human ingenuity could achieve with it. No one, after all, had thought of electronic spread-sheets when he and Wozniak rolled out the Apple II, in 1977, but within two years, a spreadsheet program called VisiCalc--created in an attic by a first-year Harvard MBA student and a programmer friend--was one of the strongest drivers of Apple Il sales. The PIC was not a consumer product like the Apple II, but the principle was the same. "People are inherently creative," Jobs remarked to an interviewer a few years later. "They will use tools in ways the tool makers never thought possible."


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.)





March 19, 2012

"No Street Protester Has Yet Endowed a University Department"



AmericanEgyptologistBK2012-03-08.jpg











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







(p. A13) Over the next three decades, Breasted would excavate a series of sites in Egypt, the Sudan and the Near East. He would also develop an important ability to identify rich and influential benefactors and to gain their confidence without resorting to sycophancy. . . . Notable among the Maecenas figures he cultivated was John D. Rockefeller.

Rockefeller had been an early patron of the University of Chicago; he might have done something for Near Eastern studies in any case, but it is clear that without Breasted's energy and enthusiasm, Rockefeller's scholarly philanthropy would never have taken the course it did. Eventually, he provided the funding for an entire Oriental Institute in 1931. (The OI, as it is affectionately known, had existed from 1919 but essentially as a concept between academic committees.) Together with its Egyptian offshoot, Chicago House, the OI is perhaps the leading center of Egyptology and Assyriology in the world. At the moment, on both sides of the Atlantic, we are hearing a lot about the evils of bankers and capitalism, but as far as I know no street protester has yet endowed a university department.



For the full review, see:

JOHN RAY. "BOOKSHELF; From Illinois To Mesopotamia; Excavating sites in Egypt and the Near East, writing groundbreaking books and developing a talent for courting wealthy donors." The Wall Street Journal (Thurs., February 23, 2012): A13.

(Note: ellipsis added.)


Book under review:

Abt, Jeffrey. American Egyptologist: The Life of James Henry Breasted and the Creation of His Oriental Institute. Chicago: University of Chicago Press, 2012.






March 16, 2012

Lasseter's Epiphany: "This Is What Walt Was Waiting For"



(p. 52) In a trailer on the Disney lot, Lasseter huddled with Rees and Kroyer to look at the first computer-generated scene to come in--a race among drivers in virtual motorcycles known as light cycles. The scene had no character animation and its graphics were rudimentary, but it brought Lasseter an epiphany. The dimensionality of the scene was something he had never witnessed before. If this technology could be melded with Disney animation, he thought, he would have the makings of a revolution. Until then, three-dimensional effects in animation had required difficult, costly sessions with the multistory "multiplane" camera, practical for only a few key sequences in a film, if that. The computers could even move the audience's point of view around a scene like a Steadicam. The possibilities seemed infinite.

"I couldn't believe what I was seeing," he said later. "Walt Disney, all his career, all his life, was striving to get more dimension in his (p. 53) animation . . . and I was standing there, looking at it, going, 'This is what Walt was waiting for.'"

He was not able to interest the animation executives in it; they did not care to hear about new technology unless it made animation faster or cheaper.



Source:

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

(Note: ellipsis in original.)

(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.)





March 8, 2012

Funding Was Scarce to Develop Computer Graphics



(p. 29) As in Catmull's graduate school days, however, the Walt Disney Co. was not interested in computer graphics. Walt had died of cancer in 1966, and the company was now run by a caretaker chief executive, Esmond Cardon "Card" Walker. Some of Disney's technology experts saw great promise in the NYIT group's work, but that was as far as it ever went.

Who else hail pockets deep enough to support a major research effort into computer animation for filmmaking? It might cake a decade, or even longer, before computer costs came clown enough for (p. 30) a feature film to be anywhere near the realm of possibility. The only option, it seemed, was to keep making progress on the technical issues--On NYIT's dime--while waiting for Disney to call.



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.)





February 29, 2012

Successful Innovation Depends More on Will than on Intellect



(p. 9) The odysseys of [Lasseter, Catmull, Smith and Jobs], and of Pixar as a whole, bring to mind the observation of the maverick economist Joseph Schumpeter that successful innovation "is a feat not of intellect, but of will." Writing about the psychology of entrepreneurs in the early twentieth century, a rime when the subject was unfashionable, he believed few individuals are prepared for "the resistances and uncertainties incident to doing what has not been done before." Those who braved the risks of failure did so out of noneconomic as well as economic motives, among them "the joy of creating, of getting things done, or simply of exercising one's energy and ingenuity." In Pixar's case, at least, the resistances and uncertainties were abundant--as was the will.


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.)





February 28, 2012

Carnegie and Twain Opposed Roosevelt's Imperialism



HonorInDustBK2012-02-22.jpg










Source of book image: http://www.chinarhyming.com/wp-content/uploads/2012/01/51Hr-aIgESL._SL500_AA300_.jpg





Marxists and others on the left often claim that big business is the main force behind U.S. imperialism. Is it not ironic that the most imperialistic U.S. President was the anti-big-business "progressive" Teddy Roosevelt who was vehemently opposed by big businessman Andrew Carnegie?

Mark Twain is sometimes accused of insufficient sympathy with the downtrodden. Those who so accuse, misunderstand his message. He too opposed Roosevelt's war on the Filipinos.

(Carnegie and Twain's friendship is discussed in David Nasaw's biography of Carnegie.)



(p. 13) There was within the United States a strong and vocal anti-imperialist movement, which included former President Grover Cleveland, Andrew Carnegie and Mark Twain, but it struggled to tamp down the country's growing expansionist zeal, and to compete with the energy, tenacity and bulldog ambition of one man in particular: Theodore Roosevelt. Roosevelt, who in just six years rose meteorically from New York City police commissioner to president, nurtured a deep and unshakable contempt for what he called the "unintelligent, cowardly chatter for 'peace at any price.' " Not only had the "clamor of the peace faction" left him unmoved, Roosevelt wrote, it had served to strengthen his conviction that "this country needs a war."


. . .


Although Roosevelt moves in and out of Jones's narrative, disappearing for long stretches, he still manages to steal the spotlight, just as he does in every book in which he appears. When McKinley dragged his feet before sending troops to Cuba, Roosevelt sneered that the president had "no more backbone than a chocolate éclair." In the Department of the Navy, Roosevelt gleefully took over while his boss was on summer vacation, anointing himself the "hot weather secretary" and crowing to a friend that he was having "immense fun running the Navy." In Cuba, after choosing his regiment of Rough Riders from 23,000 applicants, he ordered his famous charge up Kettle Hill wearing a custom-made fawn-colored Brooks Brothers uniform with canary-yellow trim.



For the full review, see:

CANDICE MILLARD. "Looking for a Fight; At the Turn of the 20th Century, Theodore Roosevelt Set Out to Transform the United States into a Major World Power." The New York Times Book Review (Sun., February 19, 2012): 13.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 17, 2012 and has the title "Looking for a Fight; A New History of the Philippine-American War.")



The book under review is:

Jones, Gregg. Honor in the Dust: Theodore Roosevelt, War in the Philippines, and the Rise and Fall of America's Imperial Dream. New York: New American Library, 2012.



The Nasaw book on Carnegie mentioned in my initial comments is:

Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.

(Note: the pagination of the hardback and paperback editions of Nasaw's book are the same.)






February 25, 2012

How Pixar Vision Was Made Real



(p. 8) . . . Pixar's story was anything but preordained. It is a triple helix of artistic, technological, and business struggles, and it is a study in the tremendously uncertain and contingent nature of artistic, technological, and business success. It illustrates how professional prestige and social status flow into each other, and how a small organization can magnify its power by deploying them as an economic force. It shows how small things, done well, can lead to big things. It is the story of a small group of individuals who started with a shared ambition to create a new way of telling stories--within a virtual world of mathematical constructions--and who traveled a long and circuitous road until their vision became a reality.


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.)





February 24, 2012

Manifesto for a Rising Standard of Living



AbundanceBK2012-02-22.jpg











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







(p. A13) Mr. Diamandis is the chairman and chief executive of the X Prize Foundation and the founder of more than a dozen high-tech companies. With his journalist co-author, he has produced a manifesto for the future that is grounded in practical solutions addressing the world's most pressing concerns: overpopulation, food, water, energy, education, health care and freedom. The authors suggest that "humanity is now entering a period of radical transformation where technology has the potential to significantly raise the basic standard of living for every man, woman, and child on the planet."


. . .


Predictions of a rosy future have a way of sounding as unrealistic as end-is-nigh forecasts. But Messrs. Diamandis and Kotler are not just dreamers. They lay out a plausible road map, discussing, among other things, the benefits of do-it-yourself tinkering--like the work by geneticist J. Craig Venter in beating the U.S. government in the race to sequence the human genome--and the growing willingness of techno-philanthropists like Bill Gates to tackle real-world problems.

The biggest hurdles, however, are not scientific or technological but political. There are still too many corrupt dictators and backward-looking governments keeping millions in penury. But as we have seen lately, the misruled have a way of throwing off despotic governments. With ever more people reaching for freedom, countless millions are tacitly embracing the Diamandis motto: "The best way to predict the future is to create it yourself."



For the full review, see:

MICHAEL SHERMER. "BOOKSHELF; Defying the Doomsayers; Abundance" argues that growing technologies have the potential not only to spread information but to solve some of humanity's most vexing problems." The Wall Street Journal (Thurs., FEBRUARY 22, 2012): A13.

(Note: ellipsis added.)


The book being reviewed is:

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







February 23, 2012

"The Government Is a Crappy Venture Capitalist"



(p. A13) Like the mythical monster Hydra--who grew two heads every time Hercules cut one off--President Obama, in both his State of the Union address and his new budget, has defiantly doubled down on his brand of industrial policy, the usually ill-advised attempt by governments to promote particular industries, companies and technologies at the expense of broad, evenhanded competition.

Despite his record of picking losers--witness the failed "clean energy" projects Solyndra, Ener1 and Beacon Power--Mr. Obama appears determined to continue pushing his brew of federal spending, regulations, mandates, special waivers, loan guarantees, subsidies and tax breaks for companies he deems worthy.

Favoring key constituencies with taxpayer money appeals to politicians, who can claim to be helping the overall economy, but it usually does far more harm than good. It crowds out valuable competing investment efforts financed by private investors, and it warps decisions by bureaucratic diktats susceptible to political cronyism. Former Obama adviser Larry Summers echoed most economists' view when he warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that "the government is a crappy venture capitalist."



For the full commentary, see:

MICHAEL J. BOSKIN. "OPINION; Washington's Knack for Picking Losers; Former Obama adviser Larry Summers warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that 'the government is a crappy venture capitalist'." The Wall Street Journal (Weds., FEBRUARY 15, 2012): A13.







February 21, 2012

"The Patience of Jobs"



(p. 7) Steve Jobs was missing from the scene of the meeting, though he would soon be Disney's largest individual shareholder (the acquisition was a stock-for-stock trade) and the newest member of Disney's board. Lasseter was right about his money; Jobs had driven a hard bargain in buying Lucas's Computer Division for five million dollars (not ten million, as is sometimes reported), but as it turned out, he put ten times that amount into the company over the course of a decade to keep it afloat. Few other investors would have had the patience of Jobs.


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.)





February 20, 2012

Nasar Gives Compelling Portrait of Joseph Schumpeter and His Vienna



Grand-PursuitBK2012-02-05.jpg














Source of book image: http://luxuryreading.com/wp-content/uploads/2011/10/grand-pursuit.jpg





(p. C31) Ms. Nasar gives us Belle Époque Vienna -- infatuated with modernity and challenging London in the race to electrify with new telephone service, state-of-the-art factories and power-driven trams -- and then a devastating picture of Vienna at the end of World War I: war veterans loitering outside restaurants waiting for scraps, and desperate members of a middle class that saw inflation wipe out all its savings trading a piano for a sack of flour, a gold watch chain for a few sacks of potatoes.


. . .


Among the more compelling portraits in this volume is that of Joseph Alois Schumpeter, the brilliant European economist who argued that the distinctive feature of capitalism was "incessant innovation" -- a "perennial gale of creative destruction" -- and who identified the entrepreneur as the visionary who could "revolutionize the pattern of production by exploiting an invention" or "an untried technological possibility."



For the full review, see:

MICHIKO KAKUTANI. "BOOKS OF THE TIMES; The Economist's Progress: Better Living Through Fiscal Chemistry." The New York Times (Fri., December 2, 2011): C31.

(Note: ellipsis added.)

(Note: the online version of the article is dated December 1, 2011.)







February 19, 2012

Economic Freedom and Growth Depend on Protecting the Right to Rise



(p. A19) Congressman Paul Ryan recently coined a smart phrase to describe the core concept of economic freedom: "The right to rise."

Think about it. We talk about the right to free speech, the right to bear arms, the right to assembly. The right to rise doesn't seem like something we should have to protect.

But we do. We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.

That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or nothing. . . .


. . .


But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself.


. . .


. . . , we must choose between the straight line promised by the statists and the jagged line of economic freedom. The straight line of gradual and controlled growth is what the statists promise but can never deliver. The jagged line offers no guarantees but has a powerful record of delivering the most prosperity and the most opportunity to the most people. We cannot possibly know in advance what freedom promises for 312 million individuals. But unless we are willing to explore the jagged line of freedom, we will be stuck with the straight line. And the straight line, it turns out, is a flat line.



For the full commentary, see:

JEB BUSH. "OPINION; Capitalism and the Right to Rise; In freedom lies the risk of failure. But in statism lies the certainty of stagnation." The Wall Street Journal (Mon., December 19, 2011): A19.

(Note: ellipses added.)







February 18, 2012

Paul Allen Uses Microsoft Profits for Bold Private Space Project



StratolaunchSpacePlane2012-02-05.jpgSource 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.







February 17, 2012

"What Success Had Brought Him, . . . , Was Freedom"



(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.)





February 12, 2012

Pixar as a Case Study on Innovative Entrepreneurship



Pixar-TouchBK2012-02-05.jpg














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.






January 27, 2012

Intuit Aimed to End Hassle and Was Mainly Self-Financed at Start



CookScottIntuitCoFounder2012-01-21.jpg














"Scott Cook." Source of caption and photo: online version of the WSJ article quoted and cited below.





(p. B4) WSJ: Before building Intuit, you worked at large firms like Procter & Gamble Co. and Bain & Co. What prompted you to leave Corporate America and start your own business?

Mr. Cook: My wife complained about doing the bills. It was a hassle. I had been trained at P&G to find a problem that everybody has and that you could solve with technology. And this struck me as a classic entrepreneurial opportunity. Nobody likes to pay bills. There were about 20-plus personal-finance software products already on the market.


. . .


WSJ: How much start-up capital did have to work with?

Mr. Cook: We raised between $500,000 and $600,000. It came from my savings and my retirement plan that I cashed out. I also borrowed money from my parents. Lines of credit were another big source of capital. The banks were lending to me and my wife as a couple, not the business. We tried venture capital and that failed. We talked to about two dozen venture-capital firms and they all shut us down. We did get two angels to invest, but they put in only $151,000, total.



For the full interview, see:

SARAH E. NEEDLEMAN. "HOW I BUILT IT; For Intuit Co-Founder, the Numbers Add Up" The Wall Street Journal (Thurs., AUGUST 18, 2011): B4.

(Note: ellipsis added.)





January 24, 2012

Personal Risk Lovers Make Better CEOs?



(p. C4) Chief executives with a penchant for personal risk-taking are also corporate risk-takers who take on more debt, aggressively pursue mergers and acquisitions, and make bold equity plays. But, in general, they are also more effective leaders who create more value in their organizations than their less risk-loving counterparts. And they do so, the researchers add, without additional incentives; they imprint their risk-loving natures on their companies because it's simply who they are.


For the full summary, see:

DAVID DISALVO. "Management; For Effective CEOs, Look Up." The Wall Street Journal (Sat., August 20, 2011): C4.



The article summarized is:

Cain, Matthew D., and Stephen B. McKeon. "Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies." SSRN eLibrary (2011).





January 19, 2012

Branson Advises Entrepreneurs: "Think of What Frustrates You"



BransonRichardCaricature2012-01-13.jpg















Source of caricature: online version of the WSJ interview quoted and cited below.





(p. A13) Governments have long dominated space, starting with the Soviet Union's 1957 launch of Sputnik 1. The U.S. soon followed. "If they'd used just a small fraction of that money as prize money and given it to the best commercial companies, that money would've been far better spent," Mr. Branson muses. "The $10 million [Ansari] X Prize very much sparked our move into space travel," he notes, referring to the competition organized by entrepreneur Peter Diamandis and launched in 1996.

Mr. Branson had dreamed of exploring the final frontier for decades. "I think it just simply goes back to watching the moon landing on blurry black-and-white television when I was a teenager and thinking, one day I would go to the moon--and then realizing that governments are not interested in us individuals and creating products that enable us to go into space," he says. In 1995, after making billions of dollars in the music and airline businesses, Mr. Branson registered a new company, Virgin Galactic (the name "sounded good"), at London's Companies House. Then the company started searching for rocket scientists and the right technology.

Several years later, in July 2002, Virgin's team traveled to California to check on American aerospace designer Burt Rutan's progress on the Virgin Atlantic Global Flyer, a plane built "to circumnavigate the globe non-stop on a single tank of fuel," according to Virgin's website. Virgin discovered that Mr. Rutan intended to compete for the X Prize with SpaceShip One, the world's first privately developed spacecraft, financed by Microsoft co-founder Paul Allen.

Mr. Branson quickly struck a deal: Virgin would license Mr. Rutan's SpaceShip One technology from Mr. Allen if he won the competition. In 2004, Mr. Rutan did just that, and Virgin Galactic was off to the races.


. . .


So what advice does Mr. Branson have for aspiring entrepreneurs? "Think of what frustrates you--and if you're frustrated by something and you feel 'Dammit, if only people could do this better,' then go try to do it better yourself. It can start off in a really small way . . . and you'll be surprised: If you're doing it better yourself, in whatever field it is, you'll be filling a gap and you suddenly might start creating a business."



For the full interview, see:

MARY KISSEL. "THE WEEKEND INTERVIEW with Richard Branson; Space: The Next Business Frontier; By next Christmas the airline mogul could be ferrying paying customers outside the atmosphere--and, later, to the bottom of the ocean." The Wall Street Journal (Sat., December 17, 2011): A13.

(Note: ellipsis added.)





January 17, 2012

Krim Saw Use for Noisy CK722 Transistors



KrimNorman2012-01-13.jpg








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.")





January 13, 2012

Indian Middle Class: "The State Is Preventing Me from Doing What I Want to Do"



NagParthoIndianEntrepreneur2011-11-14.jpg"Partho Nag, a childhood friend of Shubhrangshu Roy's who lives in the same New Delhi suburb. Mr. Nag, who runs an IT service company out of his home, joined Mr. Roy and other friends as they volunteered at the Hazare protests. "We've been told since our childhoods, 'Politics is bad, don't get into politics,'" Mr. Nag said. "But the point is that somebody has to clean it up. We can't just scold people."" Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) DWARKA, India -- Shubhrangshu Barman Roy and his childhood friends are among the winners in India's economic rise. They have earned graduate degrees, started small companies and settled into India's expanding middle class. They sometimes take vacations together and meet for dinners or parties, maybe to celebrate a new baby or a new business deal.

Yet in August, Mr. Roy and his friends donned white Gandhi caps, boarded a Metro train in this fast-growing suburb of the Indian capital and rode into New Delhi like a band of revolutionaries to join the large anticorruption demonstrations led by the rural activist Anna Hazare. They waved Indian flags, distributed water to the crowds and vented their outrage at India's political status quo.

"I could feel that people really wanted change," Mr. Roy, 36, recalled proudly.

It may seem unlikely that middle-class Indians would crave change. They mostly live in rapidly growing cities and can afford cars, appliances and other conveniences that remain beyond the reach of most Indians. Theirs is the fastest growing demographic group in the country, and their buying power is expected to triple in the next 15 years, making India one of the most important consumer markets in the world.

But buying power is not political power, at least not yet in India. The wealthier India has become, the more politically disillusioned many of the beneficiaries have grown -- an Indian paradox. The middle class has vast economic clout yet often remains politically marginalized in a huge democracy where the rural masses still dominate the outcome of elections and the tycoon class has the ear of politicians.


. . .


(p. 10) "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do,' " said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania.

The Hazare movement rattled India's political establishment because it offered a glimpse of what could happen if the middle class was mobilized across the country. Professionals and college students provided the organizational spine, and money, that brought hundreds of thousands of people of all backgrounds onto the streets in what many described as a political awakening.


. . .


Mr. Roy and his friends, including Mr. Nag, had grown up in New Delhi in the same government housing development. They were all the sons of government bureaucrats who would later offer similar advice: Get a government job.

"He always insisted," Mr. Nag recalled of his father's prodding. "But we had an idea that a government job was too lousy."

They were teenagers in the early 1990s when Indian leaders embarked on the reforms that began dismantling the stifling licensing regulations that had choked the economy. Private enterprise, large and small, would steadily emerge as the engine of Indian growth and the delivery vehicle of growing aspirations. Mr. Nag would open a small IT service firm. Two other friends would start a textile trading company. Mr. Roy would earn graduate degrees and start a consulting firm.


. . .


On a recent afternoon, Mr. Roy pointed to a crude asphalt scar in the road where workers had installed an underground water connection. The scar extended along the road toward Mr. Roy's house, only to abruptly turn left in the direction of another building.

"You see this?" he asked, angrily. "This is a connection that comes here, but it is illegal."

For Mr. Roy, the scar in the street marks the corruption and collusion and the failure of the state to deliver on its end of India's social contract. His family is supposed to get water from a legal connection for $4 a month. Except that water is unusable. For years, his father had paid a fee to fill large jugs from a private water tanker -- until his father slipped while carrying one of them.

Mr. Roy then spent about $1,000 to build an underground water storage tank beside his home. Now, every week a tanker delivers a $30 shipment of water into the tank, while Mr. Roy also buys bottled water for drinking, bringing his monthly bill to about $160. Mr. Roy suspects that local officials, rather than correcting the situation, allow it to continue in exchange for kickbacks from the owners of the private water tankers. In the end, though, he pays.

These tales of petty graft proliferate across India, but especially in cities, analysts say, for the simple reason that cities now have more money.

McKinsey Global Institute, a consulting group, has estimated that India's middle class could grow to nearly 600 million people by 2030. Today, nearly three-quarters of India's gross domestic product comes from cities, where less than a third of India's population lives, an imbalance that correlates with the divide between middle-class economic and political power.

"For politicians, the city has primarily become a site of extraction, and the countryside is predominantly a site of legitimacy and power," Ashutosh Varshney, an India specialist at Brown University, wrote recently. "The countryside is where the vote is; the city is where the money is. Villages do have corruption, but the scale of corruption is vastly greater in cities."



For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Protests Help Awaken a Goliath in India." The New York Times, First Section (Sun., October 30, 2011): 1 & 10.

(Note: ellipses added.)

(Note: the online version of the article is dated October 29, 2011 and has the title "INDIA'S WAY; Protests Awaken a Goliath in India.")





January 7, 2012

Few Banks Give S.B.A. Loans, They Take Two Years, and Have "Absolutely No Flexibility"



BlumenthalNeilEntrepreneur2011-11-14.jpg"Neil Blumenthal, one of the founders of Warby Parker, an online eyewear company, was invited to Washington in an initiative to encourage companies owned by members of the millennial generation." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B7) Mr. Blumenthal, 31, one of the founders of Warby Parker, an online eyewear company that sells designer frames for less than $100, was among 150 young chief executives invited to Washington by Our Time, a youth advocacy group, . . .


. . .


The following is a condensed version of a recent conversation in which Mr. Blumenthal spoke, among other things, about what politicians don't understand about business, . . .


. . .


Q. What was it like trying to get an S.B.A. loan?

A. Finding a bank that did S.B.A.-term loans was a challenge. We were surprised that they needed two years and that banks had absolutely no flexibility. Many of the loan officers said we had a reputable business that was cash-flow positive and we had the most sophisticated business plan they'd ever seen, but they can't provide loans to people who don't have two years of tax returns.

Q. Isn't that a reasonable request when you're talking about using taxpayer dollars to guarantee a loan to a private company?

A. I understand where the banks are coming from. It probably was necessary to implement hard and fast rules to stop the bleeding when the crisis hit, but they should be looking at the policies and thinking: Does this make sense now?

Q. Was the application process difficult?

A. We had to sign so many documents that my hand hurt after I was done. I had to pledge not to open a zoo, swimming pool or aquarium. It struck me as strange. Yes, it's the bank's duty to do due diligence, but this was just a silly restriction.

Q. But there was a happy ending, right?

A. Yes, after being turned down by 15 banks, it was a personal relationship that introduced us to a regional bank in New Jersey that gave us a $200,000 loan.

Q. What reasons did the 15 banks give for turning you down?

A. They didn't have the authority to bypass the rule that you have to have two years of tax returns.

Q. Was your company profitable at the time?

A. Yes, we were profitable and we had a ton of traction. We had higher customer satisfaction scores than Zappos or Apple. A rational bank should have wanted to support us, even though we were a more risky bet than a company that had been around longer.

Q. What did the bank that lent you money do differently? Did it demand collateral?

A. We came through a personal relationship at a very high level at a regional bank in New Jersey that didn't have the draconian guidelines because their management was empowered to make decisions. For the $200,000 S.B.A.-backed loan that we got, the bank wanted $100,000 in collateral in either cash or marketable products. The reason they wanted so much collateral was that if we default, the regional bank is not going to go through the process of getting the money from the S.B.A. because it's so onerous.


. . .


Q. Are you involved in the political process?

A. We have never met with politicians. I don't know the first thing about how to get heard. My suspicion is that it's to donate a lot of money.


. . .


Q. What do you make of the economic turmoil we've been experiencing?

A. It highlights that it might be too much to ask Washington to help with entrepreneurship when they can't even get the basics right, like maintaining a decent credit rating.



For more of the conversation, see:

HANNAH SELIGSON. "SMALL BUSINESS; Young Entrepreneur Sees Little Help In Washington." The Wall Street Journal (Thurs., August 18, 2011): C12.

(Note: ellipses added.)

(Note: the online version of the article is dated August 17, 2011.)





January 4, 2012

Colleges Not Good at Producing Innovative Start-Up Entrepreneurs



(p. 5) I typed these words on a computer designed by Apple, co-founded by the college dropout Steve Jobs. The program I used to write it was created by Microsoft, started by the college dropouts Bill Gates and Paul Allen.

And as soon as it is published, I will share it with my friends via Twitter, co-founded by the college dropouts Jack Dorsey and Evan Williams and Biz Stone, and Facebook -- invented, among others, by the college dropouts Mark Zuckerberg and Dustin Moskovitz, and nurtured by the degreeless Sean Parker.

American academia is good at producing writers, literary critics and historians. It is also good at producing professionals with degrees. But we don't have a shortage of lawyers and professors. America has a shortage of job creators. And the people who create jobs aren't traditional professionals, but start-up entrepreneurs.

In a recent speech promoting a jobs bill, President Obama told Congress, "Everyone here knows that small businesses are where most new jobs begin."

Close, but not quite. In a detailed analysis, the National Bureau of Economic Research found that nearly all net job creation in America comes from start-up businesses, not small businesses per se. (Since most start-ups start small, we tend to conflate two variables -- the size of a business and its age -- and incorrectly assume the former was the relevant one, when in fact the latter is.)

If start-up activity is the true engine of job creation in America, one thing is clear: our current educational system is acting as the brakes. Simply put, from kindergarten through undergraduate and grad school, you learn very few skills or attitudes that would ever help you start a business. Skills like sales, networking, creativity and comfort with failure.


. . .


If I were betting on the engines of future job creation, I wouldn't put my money on college students cramming for tests and writing papers with properly formatted M.L.A.-style citations in order to bolster their résumés for careers in traditional professions and middle-management jobs in large corporate and government bureaucracies.

I'd put my money on the kids who are dropping out of college to start new businesses. If we want to get out of the jobs mess we're in, we should hope that more will follow in their footsteps.



For the full commentary, see:

MICHAEL ELLSBERG. "Will Dropouts Save America?." The New York Times, SundayReview Section (Sun., October 23, 2011): 5.

(Note: ellipsis added.)

(Note: the online version of the article has the date October 22, 2011.)


The commentary above is in a spirit similar to Ellsberg's book:

Ellsberg, Michael. The Education of Millionaires: It's Not What You Think and It's Not Too Late. New York: Portfolio Hardcover, 2011.






January 2, 2012

The Kauffman Foundation's Startup Act Would Encourage Entrepreneurs




The WSJ tells us the credentials of the authors of the following advice: "Mr. Muller is CEO of GenOn Energy. Mr. Zimpleman is president and CEO of the Principal Financial Group."



(p. A15) In our view, there is no hope of giving consumers renewed confidence in America unless governments at all levels mount a vigorous effort to get rid of rules that discourage entrepreneurs from launching and growing new businesses.

The Kauffman Foundation recently proposed a way to do that with a set of ideas aptly called the Startup Act. Those ideas, which would cost the government virtually nothing, include:

• Letting in immigrant entrepreneurs who hire American workers.

• Reducing the cost of capital through capital gains tax relief for early stage investments.

• Reducing barriers to IPOs by allowing shareholders to opt out of Sarbanes-Oxley.

• Charging higher fees for patent applicants who want quick decisions to remove the backlog of applications at the Patent Office.

• Giving licensing freedom to academic entrepreneurs at universities to accelerate the commercialization of their ideas.

• Having the government provide data to permit rankings of startup friendliness of states and localities.

• Regular sunsets for regulations and a consistent policy of putting new ones in place only if their benefits exceed their costs.



For the full commentary, see:

EDWARD R. MULLER and LARRY ZIMPLEMAN. "OPINION; An Entrepreneurial Fix for the U.S. Economy; Several reforms can make it faster and easier for new business startups.." The Wall Street Journal (Mon., AUGUST 29, 2011): A15.






December 28, 2011

Collins Says Successful CEOs Are Empirical and Disciplined



GreatByChoiceBK.jpg















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







(p. A15) 'Great by Choice" is a sequel to Jim Collins's best-selling "Good to Great" (2001), which identified seven characteristics that enabled companies to become truly great over an extended period of time. Never mind that one of the 11 featured companies is now bankrupt (Circuit City) and another is in government receivership (Fannie Mae). Mr. Collins has a knack for analysis that business readers find compelling.

Mr. Collins's new book tackles the question of how to steer a company to lasting success in an environment characterized by change, uncertainty and even chaos. Like his previous work, this book builds its conclusions on a framework of painstaking research, conducted over nine years and overseen by Mr. Collins and his co-author, Morten T. Hansen, a management professor at the University of California, Berkeley.


. . .


Messrs. Collins and Hansen draw some interesting and counterintuitive conclusions from their research. First, the successful leaders were not the most "visionary" or the biggest risk-takers; instead, they tended to be more empirical and disciplined, relying on evidence over gut instinct and preferring consistent gains to blow-out winners. The successful companies were not more innovative than the control companies; indeed, they were in some cases less innovative. Rather, they managed to "scale innovation"--introducing changes gradually, then moving quickly to capitalize on those that showed promise. The successful companies weren't necessarily the most likely to adopt internal changes as a response to a changing environment. "The 10X companies changed less in reaction to their changing world than the comparison cases," the authors conclude.


. . .


If "Great by Choice" shares the qualities that made "Good to Great" so popular, it also shares some that drew criticism. The authors' conclusions sometimes feel like the claims of a well-written horoscope--so broadly stated that they are hard to disprove. Their 10X leaders are both "disciplined" and "creative," "prudent" and "bold"; they go fast when they must but slow when they can; they are consistent but open to change. This encompassing approach allows the authors to fit pretty much any leader who achieves 10X performance into their analysis. Would it ever be possible, one wonders, to find a leader whose success contradicted their thesis?



For the full review, see:

ALAN MURRAY. "BOOKSHELF; Turbulent Times, Steady Success; How certain companies achieved shareholder returns at least 10 times greater than their industry." The Wall Street Journal (Tues., OCTOBER 11, 2011): A15.

(Note: ellipses added.)






December 27, 2011

Companies Can Grow to Greatness in Brutally Turbulent Environments



(p. 118) All that said, there remains a question: what about "the perennial gale of creative destruction" as described by the famous twentieth-century economist Joseph Schumpeter, wherein technological change and visionary entrepreneurs upend and destroy the old order and create a new order, only to see their new order destroyed and replaced by an even newer order, in an endless cycle of chaos and upheaval? Perhaps all social institutions in our modern world face disruptive forces so fast, big, and unpredictable that every entity will fall within years or decades, without exception. Can we still stave off decline in the face of severe turbulence?

While working on How the Mighty Fall, my colleague Morten Hansen and I have been simultaneously working on a six-year research project to study companies that grew from vulnerability to greatness in severe environments characterized by rapid and unpredictable change in contrast to others that did not prevail in the same brutally turbulent environments.



Source:

Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.

(Note: italics in original.)






December 24, 2011

Innovation Not Highly Correlated with R&D Spending



InnovationAndRandDGraph2011-11-11.jpg











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.





December 20, 2011

A&P Sold Consumers Better and Lower-Priced Food



GreatA&Pbk.jpg














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








(p. A15) Mr. Levinson's history centers on the two Hartford sons who followed their father into the business. They would spend their entire working lives at the company being known simply as "Mr. George" and "Mr. John." Thoughtful and studious, Mr. George's idea of excitement was a good jigsaw puzzle; Mr. John, somewhat more outgoing, liked the horses but also a daily lunch of milk and crackers. Together the brothers, neither of whom had finished high school, built what would be, for 40 years, the largest retail outlet in the world.

The brothers' business philosophy was simple, writes Mr. Levinson: "If the company keeps its costs down and prices low, more shoppers would come through its doors, producing more profits than if it kept prices high." The more stores they could open, the greater the take.

But the Hartfords had a public-relations problem. Since the nation's earliest days, small family stores had served as community anchors. There were thousands across the country. Mom and pop knew every customer who came through their door; they extended credit to families down on their luck. If low-priced chains drove out such stores, what would happen to small-town America?

In fact, many mom-and-pop operations were inefficiently and incompetently run. A&P might be coldly corporate by comparison, but it offered consumers far more variety and fresher, better-quality goods at less cost to the family budget.



For the full review, see:

PATRICK COOKE. "BOOKSHELF; How a Grocer Bagged Profits; At its peak, the chain had nearly 16,000 stores. Critics charged it with competing unfairly by offering too-low prices." The Wall Street Journal (Mon., AUGUST 29, 2011): A15.

(Note: ellipsis added.)



The book under review is:

Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.





December 19, 2011

Entrepreneur Sam Walton Sought to Learn from Others



(p. 40) So where is Ames at the time of this writing, in 2008?

Dead. Gone. Never to be heard from again. Wal-Mart is alive and well, #1 on the Fortune 500 with $379 billion in annual revenues.

What happened? What distinguished Wal-Mart from Ames?

A big part of the answer lies in Walton's deep humility and learning orientation. In the late 1980s, a group of Brazilian investors bought a discount retail chain in South America. After purchasing the company, they figured they'd better learn more about discount retailing, so they sent off letters to about ten CEOs of American retailing companies, asking for a meeting to learn about how to run the new company better. All the (p. 41) CEOs either declined or neglected to respond, except one: Sam Walton.

When the Brazilians deplaned at Bentonville, Arkansas, a kindly, white-haired gentleman approached them, inquiring, "Can I help you?"

"Yes, we're looking for Sam Walton."

"That's me," said the man. He led them to his pickup truck, and the Brazilians piled in alongside Sam's dog, Ol' Roy.

Over the next few days, Walton barraged the Brazilians with question after question about their country, retailing in Latin America, and so on, often while standing at the kitchen sink washing and drying dishes after dinner. Finally, the Brazilians realized, Walton-the founder of what may well become the world's first trillion-dollar-per-year corporation-sought first
and foremost to learn from them, not the other way around.



Source:

Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.






December 15, 2011

How Entrepreneurship Rebuilt San Francisco After the Fire



(p. 5) At 5:12 a.m. on April 18, 1906, Amadeo Peter Giannini felt an odd sensation, then a violent one, a slight, almost imperceptible shift in his surroundings coupled with a distant rumble like faraway thunder or a train! Pause. One second. Two seconds. Then-bang!-his house in San Mateo, California, began to pitch and shake, to, fro, up, and down. Seventeen miles north in (p. 6) San Francisco, the ground liquefied underneath hundreds of buildings, while heaving spasms under more solid ground catapulted stones and facades into the streets. Walls collapsed. Gas mains exploded. Fires erupted.

Determined to find out what had happened to his fledgling company, the Bank of Italy, Giannini endured a six-hour odyssey, navigating his way into the city by train and then by foot while people streamed in the opposite direction, fleeing the conflagration. Fires swept toward his offices, and Giannini had to rescue all the imperiled cash sitting in the bank. But criminals roamed through the rubble, prompting the mayor to issue a terse proclamation: "Officers have been authorized by me to KILL any and all persons found engaged in Looting or in the Commission of Any Other Crime." With the help of two employees, Giannini hid the cash under crates of oranges on two commandeered produce wagons and made a nighttime journey back to San Mateo, where he hid the money in his fireplace. Giannini returned to San Francisco the next morning and found himself at odds with other bankers who wanted to impose up to a six-month moratorium on lending. His response: putting a plank across two barrels right in the middle of a busy pier and opening for business the very next day. "We are going to rebuild San Francisco," he proclaimed.

Giannini lent to the little guy when the little guy needed it most. In return, the little guy made deposits at Giannini's bank. As San Francisco moved from chaos to order, from order to growth, from growth to prosperity, Giannini lent more to the little guy, and the little guy banked even more with Giannini. The bank gained momentum, little guy by little guy, loan by loan, deposit by deposit, branch by branch, across California, (p. 7) renaming itself Bank of America along the way. In October 1945, it became the largest commercial bank in the world, overtaking the venerable Chase National Bank. (Note of clarification: in 1998, NationsBank acquired Bank of America and took the name; the Bank of America described here is a different company than NationsBank.)



Source:

Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.






December 14, 2011

Entrepreneur Julius Blank's Greatest Pleasure Came from "Building Something from Nothing"



FairchildSemiconductorFoundersIn1988.jpg"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.")



BlankJuliusInMay2011.jpg












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






December 13, 2011

Steve Jobs on Public School System Monopoly



(p. A15) These days everyone is for education reform. The question is which approach is best. I favor the Steve Jobs model.

In 1984 Steve introduced the Mac with a Super Bowl ad. It ran only once. It ran for only one minute. And it shows a female athlete being chased by the helmeted police of some totalitarian regime.

At the climax, the woman rushes up to a large screen where Big Brother is giving a speech. Just as he announces, "We shall prevail," she hurls her hammer through the screen.

If you ask me what we need to do in education, I would point you to that ad.


. . .


Steve Jobs knew all about competitive markets. He once likened our school system to the old phone monopoly. "I remember," he said in a 1995 interview, "seeing a bumper sticker with the Bell Logo on it and it said 'We don't care. We don't have to.' And that's what a monopoly is. That's what IBM was in their day. And that's certainly what the public school system is. They don't have to care."

We have to care. In this new century, good is not good enough. Put simply, we must approach education the way Steve Jobs approached every industry he touched. To be willing to blow up what doesn't work or gets in the way. And to make our bet that if we can engage a child's imagination, there's no limit to what he or she can learn.



For the full commentary, see:

RUPERT MURDOCH. "OPINION; The Steve Jobs Model for Education Reform; If we can engage a child's imagination, there's no limit to what he or she can learn.." The Wall Street Journal (Sat., OCTOBER 15, 2011): A15.

(Note: ellipsis added.)






December 12, 2011

Creativity Continues at Disney



GirolamiCrumpNikolailittleMermaidRide2011-11-10.jpg"'We're kind of like an old married couple,' said Imagineer Chris Crump, center, of his longtime colleague Larry Nikolai, right. Lisa Girolami, the ride's producer, is left. It took nearly four years to conceive and build 'Ariel's Undersea Adventure,' which opened at Disney California Adventure Park last week. The trio spearheaded a group of over 100 designers, architects, lighting experts and other specialists." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. C11) It took nearly four years to conceive and build a theme-park ride that put visitors inside the world of "The Little Mermaid," including several musical numbers, a few key narrative moments and 184 figures from Disney's animated hit.

And that followed the 18 years it took to settle on an approach to the ride, which was on the entertainment giant's to-do list almost from the day the film was released in 1989. The ride finally opened last week at Disney California Adventure, Disneyland's younger neighbor, and takes visitors through a condensed version of the movie's narrative, cramming nine scenes and four songs into 5½ minutes.


. . .


They start by thinking big: Ms. Girolami described their brainstorming sessions as "an iterative process"--first deciding what parts of the movie to retell, then returning to the drawing table as the decision-making focuses to smaller and smaller details.

Then, helped by "rapid prototyping," a technology that allows them to generate physical models directly from computer-design files, the group tests and retests their models.


. . .


The Imagineers pride themselves on their never-say-die spirit. "We commit to things creatively that haven't been done," Ms. Girolami said. "Someone will say, 'That's never been done before,' and it's our job to say, 'Great--let's do it.' "



For the full story, see:

Ethan Smith. "CREATING; Taking the Little Mermaid for a Spin." The Wall Street Journal (Sat., JUNE 4, 2011): C11.

(Note: ellipses added.)





December 11, 2011

Jobs, Hope and Cash



(p. A15) 'Ten years ago, Steve Jobs was alive, Bob Hope was alive, Johnny Cash was alive. Now we're outta jobs, outta hope and outta cash." I heard that from a TSA agent in New York the other day, as he eyed me for explosives. We laughed, but there was a poignant edge.

Part of the outpouring over Steve Jobs last week was that he was a huge symbol of what seems a lost world of American dynamism. The inventor in his garage changes the world. We'll not only make the new machine powerful and fast, we'll make it so beautiful it will make you cry. Like you're looking at the future, like you're looking at a baby in its crib.



For the full commentary, see:

PEGGY NOONAN. "DECLARATIONS; This Is No Time for Moderation; America can't trim and tweak its way back to economic dynamism." The Wall Street Journal (Sat., OCTOBER 15, 2011): A15.






December 8, 2011

Berkeley Environmentalist Sticks to Her Knitting



StofleShelbyGathersWool2011-11-10.jpg "Avid knitter Shelby Stofle, gathering wool from sheep in Vacaville Calif., hopes to set up a business making scarves and selling them at craft fairs." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. A5) Shelby Stofle graduated in December from the University of California at Berkeley with $10,250 in student-loan debt--and no job offers from a dozen applications.

The 24-year-old had hoped to work in environmental conservation or sustainable agriculture but struck out even at a grocery store near her rural hometown of Suisun City, Calif.


. . .


With many employment options exhausted, she said she feels her best shot is to set up her own business, selling her hand-made scarves at craft fairs and farmers' markets.



For the full story, see:

VAUHINI VARA. "As Jobs Vanish, Sticking to Knitting." The Wall Street Journal (Mon., OCTOBER 31, 2011): A5.

(Note: ellipsis added.)







November 20, 2011

For-Profit Entrepreneur Brings Good Things to Bangladesh



PolakPaulEntrepreneur2011-11-09.jpg"INVENTOR Paul Polak creates cheap and effective devices to help the poor." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. D4) If necessity is the mother of invention, Paul Polak is one of its fathers.

For 30 years Dr. Polak, a 78-year-old former psychiatrist, has focused on creating devices that will improve the lives of 2.6 billion people living on less than $2 a day. But, he insists, they must be so cheap and effective that the poor will actually buy them, since charity disappears when donors find new causes.

Inventing a new device is only the beginning, he says; the harder part is finding dependable manufacturers and creating profitable distributorships. The "appropriate technology" field, he argues, is "dominated by tinkerers and short of entrepreneurs."

His greatest success has been a treadle pump that lets farmers raise groundwater in the dry season, when crops fetch more money. He has sold more than two million, he said.


. . .


Q. What got you interested in poverty?


. . .


Q. And in third-world poverty?

A. My wife's a Mennonite, and they had programs in Bangladesh. It had hit me between the eyes that homeless people in Denver were living on $500 a month, but there were people overseas living on $30 a month. So I took a trip to Bangladesh.

Some farmers were using hand pumps, but biomechanically, that's a lousy way to raise water. A Mennonite guy had invented a rower pump that would pull up enough to water a half-acre of vegetables. They had installed 2,000 over five years, and those farmers seemed to be making a lot of money, so I said, "Why don't we do a project, with an objective of selling 25,000 a year?"

We hit that pretty quickly. One or two Mennonites objected -- they considered the idea of selling something to poor people immoral. But we kept at it, and then we found the treadle pump. It was brilliantly simple, it could be manufactured by local workshops, and a local driller could dig a 40-foot well and install it for $25. Studies showed that farmers made $100 in one season on that investment.

We talked to 75 little welding shops where they make things like bedsprings, and jawboned them into making treadle pumps. We went to people who sold things like toilet bowls, and cut a deal with them to be dealers. We trained 3,000 tinkerers to be well-drillers. We hired troubadours to write songs about treadle pumps, and we'd pass out leaflets when they performed. We even produced a 90-minute Bollywood movie.


. . .


Q. What's the biggest mistake aid agencies make?

A. As we were developing our pump, the World Bank was subsidizing deep-well diesel pumps that could cover 40 acres. The theory was that you'd get a macroeconomic benefit, but it was also very destructive to social justice. The big pumps were handed out by government agents; the government agent was bribeable. The pump would go to the biggest landholder, and he'd become a waterlord.

Q. There have been some well-known failures in this field, like One Laptop Per Child and the Playpump. Can you say why?

A. The laptop was a middle-class device that doesn't communicate with people who don't read and write. It cost $100, plus it used the charity model -- buy two, give one away. The Playpump, which was a children's merry-go-round that pumps water, cost $11,000. Women in Africa walk for hours to a well, and then jiggle the pump handle for 60 seconds. This replaces the jiggling. How important is that? And they break. For $11,000, you could dig five wells and eliminate the walk.

Q. What are your principles for success?

A. In 1981, I said, "I'm going to interview 100 $1-a-day families every year, come rain or shine, and learn from them first."

Over 28 years, I've interviewed over 3,000 families. I spend about six hours with each one -- walking with them through their fields, asking what they had for breakfast, how far their kids walk to school, what they feed their dog, what all their sources of income are. This is not rocket science. Any businessman knows this: You've got to talk to your customers.



For the full story, see:

DONALD G. McNEIL Jr. "A CONVERSATION WITH PAUL R. POLAK; An Entrepreneur Creating Chances at a Better Life." The New York Times (Tues.,September 27, 2011): D4.

(Note: ellipses added; bold in original.)

(Note: the online version of the article is dated September 26, 2011.)





November 13, 2011

Haiku Economist Ziliak Praises and Analyzes Jobs Haiku




On 11/8/11 I received a gracious and interesting email from Steve Ziliak praising and analyzing my recent Jobs haiku. Economist Ziliak has written haiku and written about haiku.

He gave me his permission to share his email:


Dear Art,

Congratulations on your prize-winning haiku about the economy! I read all of the haiku selected by the Kauffman Foundation and posted by The Economist. Meaning no disrespect for the hard-working others, Steve Ziliak aka The Haiku Economist agrees that your haiku was the best of the bunch. Pairing jobs-with-Jobs is potentially hazardous to poetry to the point of being country-newspaper corny. But you've pulled it off well in a "senryu" thanks to the dead-serious yet softly spoken third line, "innovate to grow". Thus "jobs" and "Jobs" serve as "cut words" (kiru or kireji), taking us from the literal to the figurative and back again (that is, to innovation, output, and employment). Well done.

Here are a few articles on the theory, Art, and history of haiku economics, which I first developed ten years ago (in 2001) when I was teaching at Georgia Tech:

http://www.poetryfoundation.org/poetrymagazine/article/240970

http://stephentziliak.com/doc/IJPEE0101-0209%20ZILIAK.pdf

http://stephentziliak.com/doc/Ziliak%20Verses%20of%20Economy%201.pdf

http://www.economist.com/blogs/prospero/2011/01/poetry_and_economics

http://www.tandfonline.com/doi/abs/10.1080/08935690500241501#preview
(In 2002 I published "Haiku Economics" in Rethinking Marxism;
this link here is to "Haiku Economics, No. 2", published in 2005).

And here is a link to my students' achievements with haiku economics:

http://sites.roosevelt.edu/sziliak/haiku-economics-by-roosevelt-students/


Congrats again, Art, and keep writing!

Things beyond number
all somehow brought to mind by
blossoming cherries.

- Basho


All the best,

Steve aka The Haiku Economist

Stephen T. Ziliak
Trustee and Professor of Economics
Roosevelt University
430 S. Michigan Ave
Chicago, IL 60605
http://sites.roosevelt.edu/sziliak
http://stephentziliak.com





November 12, 2011

Wozniak Waits 20 Hours to Be First in Line for iPhone 4S; They Say "4S" Means "For Steve"



WozniakIphone4S2011-11-04.jpg"Apple co-founder Steve Wozniak uses the voice feature on his new Apple iPhone 4S at the Apple Store in Los Gatos, Calif., on Friday. Wozniak, who created Apple with Steve Jobs in a Silicon Valley garage in 1976, waited 20 hours in line to be the first customer at the store to buy the new iPhone." Source of caption and photo: online version of the Omaha World-Herald article cited below.



What a classy and wonderfully symbolic way to pay tribute to his friend and the values they shared.



Source of photo and caption:

AP. "Even Wozniak stood in line for new iPhone." Omaha World-Herald (Saturday October 15, 2011): 9A.






November 5, 2011

Art Diamond Defended Air Conditioning in WPR Debate with Stan Cox




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






October 31, 2011

More on Jobs Haiku



My Jobs haiku has received some discussion in the blogosphere.


It is reproduced, along with haikus submitted by other economics bloggers, in an entry of the blog of the Economist magazine:

http://www.economist.com/blogs/freeexchange/2011/10/poetry?fsrc=scn/tw/te/bl/theeconomyinhaiku


I especially like a comment to the Economist blog entry:

CaitP

Oct 26th 2011 7:59 GMT

What a creative way to describe the economy. It is so interesting to see how everyone interprets the economy through poem. I personally like the "jobs and Jobs" one. I think it describes our economy, and gives a snapshot of a major moment in our history.



kbuch5

Nov 2nd 2011 1:41 GMT

It is interesting to see people's opinions about the economy being put into haikus. My favorite out of these is the haiku that refers to the fact that we have lost Steve Jobs and many jobs for US citizens. And in order to regain these jobs we are going to need more people to contribute in ways Steve Jobs has.


(Note: I added kbuch5's comment on 11/7/11.)


CNBC correspondent Jane Wells describes my haiku as "poetic" on her blog:

http://www.cnbc.com/id/45078738






October 30, 2011

Innovative Entrepreneurs Finance Basic Research in Mariana Trench



OceanDepthGraphic2011-08-10.jpgSource of graphic: online version of the NYT article quoted and cited below.


(p. D1) A new generation of daredevils is seeking to plunge through nearly seven miles of seawater to the bottom of a rocky chasm in the western Pacific that is veiled in perpetual darkness. It is the ocean's deepest spot. The forbidding place, known as the Challenger Deep, is so far removed from the warming rays of the sun that its temperature hovers near freezing.

"When I was a kid, I loved not only amazing ocean exploration but space, too," James Cameron, the director of "Avatar," "Titanic" and "The Abyss," said in an interview. "I can think of no greater fantasy than to be an explorer and see what no human eye has seen before."

The would-be explorers can afford to live their dreams because of their extraordinarily deep pockets. Significantly, their ambitions far exceed those of the world's seafaring nations, which have no plans to send people so deep.

The billionaires and millionaires include Mr. Cameron, the airline mogul Richard Branson and the Internet guru Eric E. Schmidt. Each is building, planning to build or financing the construction of minisubmarines meant to transport them, their friends and scientists into the depths. Entrepreneurs talk of taking tourists down as well.

The vehicles, meant to hold one to three people, are estimated to cost anywhere from $7 million to $40 million.



For the full story, see:

WILLIAM J. BROAD. "Ambitions as Deep as Their Pockets." The New York Times (Tues., August 2, 2011): D1 & D4.

(Note: the online version of the article is dated August 1, 2011.)






October 27, 2011

Schumpeter on the Difference Between "Making a Road and Walking Along It"



(p. 85) Carrying out a new plan and acting according to a customary one are things as different as making a road and walking along it.



Source:

Schumpeter, Joseph A. The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Translated by Redvers Opie. translation of 2nd German edition that appeared in 1926; translation first published by Harvard in 1934 ed. New Brunswick, NJ: Transaction Publishers, 1983.






October 20, 2011

Fewer Entrepreneurial Startups Leads to Fewer New Jobs




JobsCreatedByStartupsGraph2011-10-18.jpg
















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






(p. B1) Start-ups fuel job growth disproportionately since by definition they are starting and growing, adding employees, says the Kauffman Foundation, which researches and advocates for entrepreneurship.

Though there was start-up activity during and after the recession, driven partly by unemployed individuals putting out a shingle, Bureau of Labor Statistics data show the total number of "births" of new businesses declined sharply from previous years. What's more, the number of people employed by new businesses that are less than a year old--a common definition of a start-up--also declined. That trend started a decade ago.

In a recent report on entrepreneurship, the BLS said the number of new businesses less than a year old that existed in the year ending March 2010 "was lower than any other year" since its research began in 1994. The downdraft started with the recession.

"More people who were self-employed failed and left self-employment than people who entered," says Scott Shane, an economics professor at Case Western Reserve University who wrote a study on entrepreneurship and the recession for the Cleveland Fed. "The net effect is negative, not positive, largely because downturns hurt those in business and those thinking of entering business."



For the full story, see:

JOHN BUSSEY. "THE BUSINESS; Shrinking in a Bad Economy: America's Entrepreneur Class." The Wall Street Journal (Fri., AUGUST 12, 2011): B1 & B2.

(Note: ellipsis added.)


The BLS report mentioned above can be found at: http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm


The Scott Shane commentary mentioned above can be found at:
http://www.clevelandfed.org/research/commentary/2011/2011-04.cfm



YoungFirmsGraph2011-10-18.jpg














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










October 19, 2011

Jobs Haiku




jobs and Jobs are gone
need more Jobs to get more jobs
innovate to grow

Arthur Diamond



In his Q4 survey of influential economics bloggers, Tim Kane of the Kauffman Foundation whimsically requested that we create a haiku that speaks to the state of the economy. I sent him my haiku, above, on Sunday, October 16, 2011.

(Do not worry---I have no plans to retire and devote myself to writing poetry.)






October 14, 2011

Larry Page's Wonderful Crusade to Save Us Time



InThePlexBK.jpg
















Source of book image: http://www.kurzweilai.net/images/intheplex.jpg




On C-SPAN's book TV I saw the last part of an interesting and entertaining interview with Steven Levy that was originally recorded at the Computer History Museum on April 6, 2011. Levy is the author of of In the Plex which I have not read, but which is now on my to-read list.

At the end of the interview, Levy read a passage from his book about how Larry Page is obsessed with reducing latency, which is a technical term for how long we have to wait for something to happen on a computer.

Isn't it wonderful that Larry Page is on a crusade to save us from wasted time?


Book discussed above:

Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

(Note: "latency" appears on the following pages of Steven Levy's book: 93, 184, 185, 186, 187, 207, 262, and 398.)






October 11, 2011

Confirmation Bias (aka "Pigheadedness") in Science



(p. 12) In a classic psychology experiment, people for and against the death penalty were asked to evaluate the different research designs of two studies of its deterrent effect on crime. One study showed that the death penalty was an effective deterrent; the other showed that it was not. Which of the two research designs the participants deemed the most scientifically valid depended mostly on whether the study supported their views on the death penalty.

In the laboratory, this is labeled confirmation bias; observed in the real world, it's known as pigheadedness.

Scientists are not immune. In another experiment, psychologists were asked to review a paper submitted for journal publication in their field. They rated the paper's methodology, data presentation and scientific contribution significantly more favorably when the paper happened to offer results consistent with their own theoretical stance. Identical research methods prompted a very different response in those whose scientific opinion was challenged.



For the full commentary, see:

CORDELIA FINE. "GRAY MATTER; Biased but Brilliant." The New York Times, SundayReview Section (Sun., July 31, 2011): 12.

(Note: the online version of the article is dated July 30, 2011.)






October 10, 2011

In Greece "Entrepreneurial Activity Was Denigrated"



CoustasDanaosGreekShippiingEntrep2011-08-10.jpg











John Coustas. Source of image: online version of the WSJ article quoted and cited below.







(p. A15) Athens

If you've ever wondered why so many Greeks succeed in shipping, John Coustas has a plausible theory: "Greek shipping has nothing to do with the Greek state."

His firm, Danaos Corporation, is a case in point. Mr. Coustas took over the company, which owns container ships, from his father in 1987 and has since transformed it from a three-vessel outfit into the third-largest company of its kind in the world, with a fleet of 56 ships. Danaos is incorporated in the Marshall Islands, a popular and stable jurisdiction for the global industry, and handles many of its operations through its German, Ukrainian, Russian and Tanzanian offices.

Nevertheless, Mr. Coustas is deeply concerned with the fate of his country. The government is now on the brink of default after passing its latest round of spending cuts and tax hikes. Yet the biggest risk to Greece, he says, is brain drain, that "all the good people, who really have something to offer, are either leaving or seriously considering it."


. . .


On top of misguided government spending, Mr. Coustas says entrepreneurial activity was denigrated for many years and profit was regarded as "wrong." "Anyone who wanted to make an investment here was considered a kind of bloodsucker."



For the full commentary, see:

ANNE JOLIS. "Greece: Where Profit Is Taboo; A shipping magnate on the fate of his country." The Wall Street Journal (Weds., July 13, 2011): A15.

(Note: ellipsis added.)





October 8, 2011

Entrepreneur Jobs Was an Exemplar of Creative Destruction






The clip embedded above from the CNBC web site, was broadcast on CNBC on Weds., Oct. 5, 2011.


I watched several commentaries on Steve Jobs after his death was announced today (Weds., Oct. 5). I think the one above, from CNBC, was one of the best.

It highlights many important aspects of Jobs' life. That he came back from failure, that he brought us products we didn't know we needed until he showed us what they could do, that his products disrupted the status quo of whole industries, that at his death he owned more shares of Disney than anyone else. (Steve Jobs and Walt Disney were two of the greatest "project entrepreneurs" of all time.)






October 6, 2011

"Insanely Great" Entrepreneur Steve Jobs Wanted "a Chance to Change the World"



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.






October 4, 2011

Neuroscientist Sees Entrepreneurs as "Never Satisfied" Due to "Attenuated Dopamine Function"



Compass-of-Pleasure-BK.jpg














Source of book image: http://www.kurzweilai.net/images/The-Compass-of-Pleasure-Linden-David-J-9780670022588.jpg





David J. Linden is the author of The Compass of Pleasure and a Johns Hopkins University School of Medicine Professor of Neuroscience.



(p. 4) . . . , the psychological profile of a compelling leader -- think of tech pioneers like Jeff Bezos, Larry Ellison and Steven P. Jobs -- is also that of the compulsive risk-taker, someone with a high degree of novelty-seeking behavior. In short, what we seek in leaders is often the same kind of personality type that is found in addicts, whether they are dependent on gambling, alcohol, sex or drugs.

How can this be? We typically see addicts as weak-willed losers, and chief executives and entrepreneurs are people with discipline and fortitude. To understand this apparent contradiction we need to look under the hood of the brain, and in particular at the functions that relate to pleasure and reward.


. . .


Crucially, genetic variants that suppress dopamine signaling in the pleasure circuit substantially increase pleasure- and novelty-seeking behaviors -- their bearers must seek high levels of stimulation to reach the same level of pleasure that others can achieve with more moderate indulgence. Those blunted dopamine receptor variants are associated with substantially increased risk of addiction to a range of substances and behaviors.


. . .


The risk-taking, novelty-seeking and obsessive personality traits often found in addicts can be harnessed to make them very effective in the workplace. For many leaders, it's not the case that they succeed in spite of their addiction; rather, the same brain wiring and chemistry that make them addicts also confer on them behavioral traits that serve them well.

So, when searching for your organization's next leader, look for someone with an attenuated dopamine function: someone who is never satisfied with the status quo, someone who wants the feeling of success more than others -- but likes it less.



For the full commentary, see:

DAVID J. LINDEN. "Addictive Personality? You Might be a Leader." The New York Times, SundayReview Section (Sun., July 24, 2011): 4.

(Note: ellipses added.)

(Note: the online version of the commentary is dated July 23, 2011.)


The book mentioned above is:

Linden, David J. The Compass of Pleasure: How Our Brains Make Fatty Foods, Orgasm, Exercise, Marijuana, Generosity, Vodka, Learning, and Gambling Feel So Good. New York: Viking Adult, 2011.





September 30, 2011

American Gangster as Destructive Entrepreneur



Denzel_Washington_American_Gangster2011-08-09.jpgSource of image: http://celebritywonder.ugo.com/wp/Denzel_Washington_in_American_Gangster_Wallpaper_12_1280.jpg



William Baumol famously categorized entrepreneurs as productive, unproductive, or destructive. (Somewhat similarly, Burt Folsom distinguished market entrepreneurs from political entrepreneurs.) Baumol's view is that we cannot much influence the supply of entrepreneurs, but good policies can increase the percent of entrepreneurs who are productive.

Frank Lucas, at least as portrayed in the 2007 film American Gangster, is an apt example of the destructive entrepreneur. As portrayed by Denzel Washington, the character is intense, willing to take risks, and works hards. There is a scene where Lucas argues that the quality of his product (cocaine) must not be adulterated, because his business depends on his customers knowing that his brand is better than that of competitors. He finds ways of making his supply chain shorter, and his distribution system more trustworthy (by hiring brothers and cousins).

One can easily imagine that with different incentives and constraints, the Denzel Washington character might have brought the world a product that made the world better, rather than worse.


The Baumol article mentioned is:

Baumol, William J. "Entrepreneurship: Productive, Unproductive, and Destructive." The Journal of Political Economy 98, no. 5, Part 1 (Oct. 1990): 893-921.


The Folsom book mentioned is:

Folsom, Burton W. The Myth of the Robber Barons. 4th ed: Young America's Foundation, 2003 (1st ed. 1987).





September 28, 2011

We Tend to Ignore Information that Contradicts Our Beliefs



BelievingBrainBK2011-08-09.jpg



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