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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












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






We learn the most when our priors are contradicted. But the dissonance between evidence and beliefs is painful. So we often do not see, or soon forget, evidence that does not fit with our beliefs.

The innovative entrepreneur is often a person who sees and forces herself to remember, the dissonant fact, storing it away to make sense of, or make use of, later. At the start, she may be alone in what she sees and what she remembers. So if we are to benefit from her ability and willingness to bear the pain of dissonance, she must have the freedom to differ, and she must have the financial wherewith-all to support herself until her vision is more widely shared, better understood, and more fruitfully applied.


(p. A13) Beliefs come first; reasons second. That's the insightful message of "The Believing Brain," by Michael Shermer, the founder of Skeptic magazine. In the book, he brilliantly lays out what modern cognitive research has to tell us about his subject--namely, that our brains are "belief engines" that naturally "look for and find patterns" and then infuse them with meaning. These meaningful patterns form beliefs that shape our understanding of reality. Our brains tend to seek out information that confirms our beliefs, ignoring information that contradicts them. Mr. Shermer calls this "belief-dependent reality." The well-worn phrase "seeing is believing" has it backward: Our believing dictates what we're seeing.


. . .


One of the book's most enjoyable discussions concerns the politics of belief. Mr. Shermer takes an entertaining look at academic research claiming to prove that conservative beliefs largely result from psychopathologies. He drolly cites survey results showing that 80% of professors in the humanities and social sciences describe themselves as liberals. Could these findings about psychopathological conservative political beliefs possibly be the result of the researchers' confirmation bias?

As for his own political bias, Mr. Shermer says that he's "a fiscally conservative civil libertarian." He is a fan of old-style liberalism, as in liberality of outlook, and cites "The Science of Liberty" author Timothy Ferris's splendid formulation: "Liberalism and science are methods, not ideologies." The "scientific solution to the political problem of oppressive governments," Mr. Shermer says, "is the tried-and-true method of spreading liberal democracy and market capitalism through the open exchange of information, products, and services across porous economic borders."

But it is science itself that Mr. Shermer most heartily embraces. "The Believing Brain" ends with an engaging history of astronomy that illustrates how the scientific method developed as the only reliable way for us to discover true patterns and true agents at work. Seeing through a telescope, it seems, is believing of the best kind.



For the full review, see:

RONALD BAILEY. "A Trick Of the Mind; Looking for patterns in life and then infusing them with meaning, from alien intervention to federal conspiracy." The Wall Street Journal (Weds., July 27, 2011): A13.

(Note: ellipsis added.)


Book reviewed:

Shermer, Michael. The Believing Brain: From Ghosts and Gods to Politics and Conspiracies---How We Construct Beliefs and Reinforce Them as Truths. New York: Times Books, 2011.





September 25, 2011

Lunar Entrepreneurs



(p. A1) Now that the last space shuttle has landed back on Earth, a new generation of space entrepreneurs would like to whip up excitement about the prospect of returning to the Moon.


. . .


(p. A3) "It's probably the biggest wealth creation opportunity in modern history," said Barney Pell, a former NASA computer scientist turned entrepreneur and now a co-founder of Moon Express. While Moon Express might initially make money by sending small payloads, the big fortune would come from bringing back platinum and other rare metals, Dr. Pell said.

"Long term, the market is massive, no doubt," he said. "This is not a question of if. It's a question of who and when. We hope it's us and soon."

Like the aviation prizes that jump-started airplane technology a century ago, the Google Lunar X Prize is meant to rally technologists and entrepreneurs. It is administered by the X Prize Foundation, which handed out $10 million in 2004 to the first private team to build a spacecraft that could carry people 60 miles above the Earth's surface. (The winner, SpaceShipOne, was built by the aerospace designer Burt Rutan with backing from Paul Allen, the software magnate.)



For the full story, see:

KENNETH CHANG. "In a Private Race to the Moon, Flights of Fancy Are in the Air." The New York Times (Fri., July 22, 2011): A1 & A3.

(Note: the online version of the story is dated July 21, 2011 and has the title "Race to the Moon Heats Up for Private Firms.")





September 20, 2011

"Mystified by an American Disdain for Its Own Business Culture"



HollandAndDavisProducersSomethingVentured2011-05-17.jpg "Paul Holland and Molly Davis, producers of a new documentary, "Something Ventured," that gives an admiring look at innovators and investors from the past." Source of caption and photo: online version of the NYT article quoted and cited below.


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


. . .


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

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

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

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


. . .


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

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



For the full story, see:

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

(Note: ellipses added.)

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





September 12, 2011

From Inventor to Entrepreneur When No Company Would Distribute Weed Eater



BallasGeorgeWeedEaterInventer2011-08-08.jpg "George Ballas showed off in 1975 the original Weed Eater, a popcorn can rigged up with some wires." Source of caption and photo: online version of the WSJ obituary quoted and cited below.


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

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


. . .


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

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


. . .


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

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


. . .


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

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



For the full obituary, see:

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

(Note: ellipses added.)





September 10, 2011

The Anecdote for Malignant Perfectionism: "I'll Fix that in My Next Piece"



MoreauWellesChimesAtMidnight2011-08-08.jpg"Jeanne Moreau and Orson Welles in 'Chimes at Midnight,' a 1965 Shakespeare-based film that's recently been restored." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. D8) Every great artist, . . . , strives for perfection. In fact, that's part of what makes them great: They're never entirely satisfied with anything that they do. The classical pianist Artur Schnabel once remarked that he was only interested in performing music that was "better than it can be performed...unless a piece of music presents a problem to me, a never-ending problem, it doesn't interest me too much." This sums up the plight of all serious artists: They lead lives of endless frustration, struggling to reach the top of the hill, then seeing another, higher hill just beyond it.


. . .


Alas, that kind of suffering goes with the territory. The trick, as every artist knows, is not to let it interfere with getting things done. The wisest artists are the ones who finish a new work, walk away and move on to the next project. Whenever a colleague pointed out a "mistake" in one of Dmitri Shostakovich's compositions, he invariably responded, "Oh, I'll fix that in my next piece."

The road to malignant perfectionism, by contrast, starts with chronic indecision. Jerome Robbins, whose inability to make up his mind was legendary throughout the world of dance, was known for choreographing multiple versions of a variation, then waiting until the last possible minute to decide which one to use. Beyond a certain point, this kind of perfectionism is all but impossible to distinguish from unprofessionalism, and Mr. Welles reached that point early in his career. . . .


. . .


Mr. Welles's problem was that he wanted it both ways. He was a perfectionist who expected his collaborators to sit around endlessly waiting for him to make up his mind--and to pay for all the overtime that he ran up along the way. Simon Callow, his biographer, has summed up this failing in one devastating sentence: "Any form of limitation, obligation, responsibility or enforced duty was intolerable to him, rendering him claustrophobic and destructive." That's the wrong kind of perfectionism, and it led, as it usually does, to disaster.



For the full commentary, see:

TERRY TEACHOUT. "The Snare of Perfectionism: When Artists Aim Too High." The Wall Street Journal (Fri., July 22, 2011): D8.

(Note: ellipsis in Schnabel quote was in original; other ellipses added.)





September 9, 2011

Occupational Licensing Reduces Job Creation



(p. A15) Only one in 20 workers needed the government's permission to pursue their chosen occupation in the 1950s, notes University of Minnesota Prof. Morris Kleiner. Today that figure is nearly one in three.


. . .


The breadth of jobs is remarkable. Travel and tourist guides, funeral attendants, home-entertainment installers, florists, makeup artists, even interpreters for the deaf are all regulated by various states. Want to work as an alarm installer? In 35 states, you will need to earn the government's permission. Are you skilled in handling animals? You will need more than that skill in the 20 states that require a license for animal training.

There's usually more to these licenses than filling out some paperwork and paying a small fee. Most come with government-dictated educational requirements, examinations, minimum age and grade levels, and other hurdles.


. . .


Instead of looking to the federal government to create jobs, state legislatures could have a real and immediate effect on unemployment in their states by showing how less truly is more. They can remove the barriers to job creation that their predecessors erected and enjoy the job-generating drive of their states' aspiring entrepreneurs.



For the full commentary, see:

CHIP MELLOR And DICK CARPENTER. "Want Jobs? Cut Local Regulations." The Wall Street Journal (Thurs., July 28, 2011): A15.

(Note: ellipses added.)






September 6, 2011

The Movie Auteur as a Model for Technology Entrepreneurship



AuteurVersusCommittee2011-08-07.jpg Source of image: online version of the NYT article quoted and cited below.



(p. 3) Two years ago, the technology blogger John Gruber presented a talk, "The Auteur Theory of Design," at the Macworld Expo. Mr. Gruber suggested how filmmaking could be a helpful model in guiding creative collaboration in other realms, like software.

The auteur, a film director who both has a distinctive vision for a work and exercises creative control, works with many other creative people. "What the director is doing, nonstop, from the beginning of signing on until the movie is done, is making decisions," Mr. Gruber said. "And just simply making decisions, one after another, can be a form of art."

"The quality of any collaborative creative endeavor tends to approach the level of taste of whoever is in charge," Mr. Gruber pointed out.

Two years after he outlined his theory, it is still a touchstone in design circles for discussing Apple and its rivals.

Garry Tan, designer in residence and a venture partner at Y Combinator, an investor in start-ups, says: "Steve Jobs is not always right--MobileMe would be an example. But we do know that all major design decisions have to pass his muster. That is what an auteur does."

Mr. Jobs has acquired a reputation as a great designer, Mr. Tan says, not because he personally makes the designs but because "he's got the eye." He has also hired classically trained designers like Jonathan Ive. "Design excellence also attracts design talent," Mr. Tan explains.



For the full story, see:

RANDALL STROSS. "DIGITAL DOMAIN; The Auteur vs. the Committee." The New York Times, SundayBusiness Section (Sun., July 24, 2011): 3.

(Note: the online version of the story is dated July 23, 2011.)





September 3, 2011

Edison Excelled as an Organizer of Systems




(p. 131) Where Edison truly excelled was as an organizer of systems. The invention of the light bulb was a wondrous thing but of not much practical use when no one had a socket to plug it into. Edison and his tireless workers had to design and build the entire system from scratch, from power stations to cheap and reliable wiring, to lampstands and switches. Within months Edison had set up no fewer than 334 small electrical plants all over the world; (p. 132) within a year or so his plants were powering thirteen thousand light bulbs. Cannily he put them in places where they would be sure to make maximum impact: on the New York Stock Exchange, in the Palmer House Hotel in Chicago, La Scala opera house in Milan, the dining room of the House of Commons in London. Swan, meanwhile, was still doing much of his manufacturing in his own home. He didn't, in short, have a lot of vision. Indeed, he didn't even file for a patent. Edison took out patents everywhere, including in Britain in November 1879, and so secured his preeminence.


Source:

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





August 30, 2011

Bill Bryson Slams Thomas Edison Based on Brief Comments in Linda Simon Book




In the passage quoted below, Bill Bryson is strongly critical of Thomas Edison. It's been many years since I last read a full biography of Edison, but my impression is that Bryson is not being fair to Edison.

I like Bryson and I like Edison, so I was bothered enough to dig out the online "Notes" that Bryson posted to go with his book. On the passage critical of Edison, he cites p. 83 of Linda Simon's Dark Light book.

It turns out that Simon is a literature professor whose book is mainly about the early fears that superstitious people had about electricity. Many of her sources are literary. The book is a long way from a focused, balanced biography of Edison.

On page 83, she makes a casual and unjustifiedly snide comment on Morgan, Vanderbilt, and especially Gould, and then criticizes Edison by associating him with them. She also criticizes Edison because others sometimes challenged his patents. (Just because lawsuits were brought against Edison, does not imply his patent claims were unsound---anyone can file a lawsuit who is willing to hire a lawyer.)

The "bribe" is apparently that Edison gave some reporters stock, or "suppers or songfests" who had reported favorably. To judge such claims, we would like more evidence and more context. (Today, many institutions hire former reporters to do public relations work. Universities often provide free meals to those whose favor they seek; even book publishers send out free books in the hope that they will be reviewed favorably. Do we count all of these as "bribes"? Are all "rewards" ipso facto "bribes"?)

My view is that if we are going to strongly malign the character of one who brought us so much good (Edison), we should do so based on stronger evidence than the brief casual opinions of Linda Simon.

On my "to do" list is to read a biography or two on Edison. When I do so, I will comment again on this issue.


(p. 130) By 1877, when he started his quest to make a commercially successful light, Edison was already well on his way to becoming known as 'the Wizard of Menlo Park'. Edison was not a wholly attractive human being. He didn't scruple to cheat or lie, and was prepared to steal patents or bribe journalists for favourable coverage. In the words of one of his contemporaries, he had 'a vacuum where his conscience ought to be'. But he was enterprising and hard-working and a peerless organizer.


Source:

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





August 27, 2011

"A Passion for the Ambition of Walt"



FavreauJon2011-08-06.jpg





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







(p. 11) You've announced you won't be doing the third "Iron Man" movie, in order to make "Magic Kingdom," which is a Disney movie about a family that gets caught inside Disneyland. A movie produced by Disney about a Disney theme park? It sounds a little cynical.

That's my Rubik's Cube that I have to solve on this one. I found a writing partner in the novelist Michael Chabon, who shares a passion for the ambition of Walt.







For the full interview, see:

ANDREW GOLDMAN. "TALK; Jon Favreau, From Swingers to Aliens." The New York Times Magazine (Sun., July 31, 2011): 11.

(Note: bold in original, indicating comments/questions by interviewer Andrew Goldman.)

(Note: the online version of the interview is dated July 29 (sic), 2011.)





August 25, 2011

Drug from David Sinclair's Sirtris Start-Up Lengthens Life of Obese Mice



MiceLiveLonger2011-08-19.jpg"An obese mouse given the drug SRT-1720, center, and one not given the drug, right." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A1) Sustaining the flickering hope that human aging might somehow be decelerated, researchers have found they can substantially extend the average life span of obese mice with a specially designed drug.

The drug, SRT-1720, protects the mice from the usual diseases of obesity by reducing the amount of fat in the liver and increasing sensitivity to insulin. These and other positive health effects enable the obese mice to live 44 percent longer, on average, than obese mice that did not receive the drug, according to a team of researchers led by Rafael de Cabo, a gerontologist at the National Institute on Aging.

Drugs closely related to SRT-1720 are now undergoing clinical trials in humans.

The findings "demonstrate for the first time the feasibility of designing novel molecules that are safe and effective in promoting longevity and preventing multiple age-related diseases in mammals," Dr. de Cabo and colleagues write in Thursday's issue of the new journal Scientific Reports. Their conclusion supports claims that had been thrown in doubt by an earlier study that was critical of SRT-1720.

A drug that makes it cost-free to be obese may seem more a moral hazard than an incentive to good health. But the rationale behind the research is somewhat different: the researchers are trying to capture the benefits that allow mice on very low-calorie diets to live longer. It just so happens that such benefits are much easier to demonstrate in mice under physiological stress like obesity than in normal mice.


. . .


. . . , a small pharmaceutical concern in Cambridge, Mass., designed SRT-1720 and a set of similar drugs to mimic resveratrol -- the trace ingredient of red wine that is thought to activate protective proteins called sirtuins.

The sirtuins help bring about the 30 percent extension of life span enjoyed by mice and rats that are kept on very low-calorie diets.



For the full story, see:

NICHOLAS WADE. "Longer Lives for Obese Mice, With Hope for Humans of All Sizes." The New York Times (Fri., August 19, 2011): A1 & A3.

(Note: ellipses added.)

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







August 6, 2011

Entrepreneur Frederic Tudor Spent Family Fortune to Make Ice Obsession a Business Success



(p. 71) Lake ice was a marvelous product. It created itself at no cost to the producer, was clean, renewable, and infinite in supply. The only drawbacks were that there was no infrastructure to produce and store it, and no market to sell it to. In order to make the ice industry exist, it was necessary to work out ways to cut and lift ice on a large scale, build storehouses, secure trading rights, and engage a reliable chain of shippers and agents (p. 72) and, above all, create a demand for ice in places where ice had seldom or never been seen, and was most assuredly not something anyone was predisposed to pay for. The man who did all this was a Bostonian of good birth and challenging disposition named Frederic Tudor. Making ice a commercial proposition became his overweening obsession.

The notion of shipping ice from New England to distant ports was considered completely mad - 'the vagary of a disordered brain', in the words of one of his contemporaries. The first shipment of ice to Britain so puzzled customs officials as to how to classify it that all 300 tons of it melted away before it could be moved off the docks. Shipowners were highly reluctant to accept it as cargo. They didn't relish the humiliation of arriving in a port with a holdful of useless water, but they were also wary of the very real danger of tons of shifting ice and sloshing melt-water making their ships unstable. These were men, after all, whose nautical instincts were based entirely on the idea of keeping water outside the ship, so they were loath to take on such an eccentric risk when there wasn't even a certain market at the end of it all.

Tudor was a strange and difficult man - 'imperious, vain, contemptuous of competitors and implacable to enemies', in the estimation of Daniel J. Boorstin. He alienated all his closest friends and betrayed the trust of colleagues, almost as if that were his life's ambition. Nearly all the technological innovations that made the ice trade possible were actually the work of his retiring, compliant, long-suffering associate Nathaniel Wyeth. It cost Tudor years of frustrated endeavour, and all of his family fortune, to get the ice business up and running, but gradually it caught on and eventually it made him and many others rich. For several decades, ice was America's second biggest crop, measured by weight. If securely insulated, ice could last a surprisingly long while. It could even survive the 16,000-mile, 130-day trip from Boston to Bombay - or at least about two-thirds of it could, enough to make the long trip profitable. Ice went to the furthest corners of South America and from New England to California via Cape Horn. Sawdust, a product previously without any value at all, proved to be an excellent insulator, providing useful extra income for Maine lumber mills.



Source:

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





August 5, 2011

Banker Rhodes Saved Murdoch from Bankruptcy



BankerToTheWorldBK.jpg












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







(p. A13) In "Banker to the World," Mr. Rhodes tries to distil the "leadership lessons" he has learned from his remarkable career on the "front lines of global finance."


. . .


. . . , Mr. Rhodes does succeed in hammering home three lessons that we need to take to heart if we are to have any chance of navigating the troubled waters that lie ahead. The first is that there is no substitute for the human touch: For all banking's bells and whistles today, it is much the same business it was in Florentine Italy. Consider one of Mr. Rhodes's greatest exploits: coordinating the rescue of Rupert Murdoch's News Corp. from bankruptcy in 1990. Mr. Rhodes was worried that the collapse of Mr. Murdoch's heavily-indebted media empire would tip the world economy back into recession. But he decided to bet on Mr. Murdoch only after the two had sat down for a three-hour heart-to-heart over dinner in New York.



For the full review, see:

ADRIAN WOOLDRIDGE. "BOOKSHELF; A Conspiracy of Hunches; A rare master of both the financial and political realms reports on what a half-century of experience taught him." The Wall Street Journal (Weds., June 8, 2011): A15.

(Note: ellipsis added.)

(Note: online version of article had the date JULY 13, 2011.)


Book being reviewed:

Rhodes, William R. Banker to the World: Leadership Lessons from the Front Lines of Global Finance. New York: McGraw-Hill, 2011.





July 30, 2011

Capitalism Was Not Inevitable



RelentlessRevolutionBK.jpg













Source of book image:
http://ecx.images-amazon.com/images/I/519PfT2oUtL.jpg




(p. 15) What is the nature of capitalism? For Joseph Schumpeter, the Austrian-born economist whose writings have acquired a special relevance in the past year or two, this most modern of economic systems "incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." Capitalism, Schumpeter proclaimed, cannot stand still; it is a system driven by waves of entrepreneurial innovation, or what he memorably described as a "perennial gale of creative destruction."

Schumpeter died in 1950, but his ghost looms large over Joyce Appleby's splendid new account of the "relentless revolution" unleashed by capitalism from the 16th century onward. Appleby, a distinguished historian who has dedicated her career to studying the origins of capitalism in the Anglo-American world, here broadens her scope to take in the global history of capitalism in all its creative -- and destructive -- glory.

She begins "The Relentless Revolution" by noting that the rise of the economic system we call capitalism was in many ways improbable. It was, she rightly observes, "a startling departure from the norms that had prevailed for 4,000 years," signaling the arrival of a new mentality, one that permitted private investors to pursue profits at the expense of older values and customs.

In viewing capitalism as an extension of a culture unique to a particular time and place, Appleby is understandably contemptuous of those who posit, in the spirit of Adam Smith, that capitalism was a natural outgrowth of human nature. She is equally scornful of those who believe that its emergence was in any way inevitable or inexorable.


. . .


. . . , she captures how a new generation of now forgotten economic writers active long before Adam Smith built a case "that the elements in any economy were negotiable and fluid, the exact opposite of the stasis so long desired." This was a revolution of the mind, not machines, and it ushered in profound changes in how people viewed everything from usury to joint stock companies. As she bluntly concludes, "there can be no capitalism . . . without a culture of capitalism."


. . .


The individual entrepreneur is at the center of her analysis, and her book offers thumbnail sketches of British innovators from James Watt to Josiah Wedgwood. She continues on to the United States and Germany, giving readers a whirlwind tour of the lives and achievements of a host of men whom she calls "industrial leviathans" -- Vanderbilt, Rockefeller and Carnegie in the United States; Thyssen, Siemens and Zeiss in Germany. All created new industries while destroying old ones.



For the full review, see:

STEPHEN MIHM. "Capitalist Chameleon." The New York Times Book Review (Sun., January 24, 2010): 15.

(Note: ellipses added except for the one in the "there can be no capitalism . . . without a culture of capitalism" quote.)

(Note: the online version of the review is dated January 22, 2010.)


Book under review:

Appleby, Joyce. The Relentless Revolution: A History of Capitalism. New York: W. W. Norton & Company, 2010.





July 28, 2011

Zuckerberg Has Most Followers on Google+



ZuckerbergGooglePlusPage2011-07-16.jpg




"The profile page of Mark Zuckerberg on Google+, a service created to compete with Facebook." Source of caption and image: online version of the NYT article quoted and cited below.




(p. B1) Any guesses as to who is the most popular person on Google+, the company's new social networking service? Ashton Kutcher, perhaps? Or Lady Gaga?

Actually, that title is currently held by Mark Zuckerberg, the founder and chief executive of Facebook -- the very service that Google+ was meant to challenge.

As of Tuesday evening, Mr. Zuckerberg had nearly 35,000 people following his updates on the service, more than anyone else in a broad survey of Google+ profiles by Social Statistics, an outside service. His fan base exceeds that of Larry Page, one of the founders of Google and its recently appointed chief executive, who had only 24,000 people following him.

Google+ is less than a week old and is still not yet widely available to the public. But access to the service, which lets people share photos, links, status updates and video chats with groups of friends, is already in high demand among early adopters who are eager to play with its (p. B8) features. That includes Mr. Zuckerberg, who apparently signed up to keep tabs on his new adversary.



For the full story, see:

JENNA WORTHAM. "Zuckerberg Finds Fans on Google+." The New York Times (Weds., July 5, 2011): B1 & B8.

(Note: the online version of the story is dated July 6, 2011.)







July 26, 2011

Technology as an Enabler of Free Speech



InternetJalalabad2011-07-16.jpg "Volunteers have built a wireless Internet around Jalalabad, Afghanistan, from off-the-shelf electronics and ordinary materials." Source of caption and photo: online version of the NYT article quoted and cited below.


The main point of the passages quoted below is to illustrate how, with the right technology, we can dance around tyrants in order to enable human freedom.

(But as a minor aside, note in the large, top-of-front-page photo above, that Apple once again is visibly the instrument of human betterment---somewhere, before turning to his next challenge, one imagines a fleeting smile on the face of entrepreneur Steve Jobs.)


(p. 1) The Obama administration is leading a global effort to deploy "shadow" Internet and mobile phone systems that dissidents can use to undermine repressive governments that seek to silence them by censoring or shutting down telecommunications networks.

The effort includes secretive projects to create independent cellphone networks inside foreign countries, as well as one operation out of a spy novel in a fifth-floor shop on L Street in Washington, where a group of young entrepreneurs who look as if they could be in a garage band are fitting deceptively innocent-looking hardware into a prototype "Internet in a suitcase."

Financed with a $2 million State Department grant, the suitcase could be secreted across a border and quickly set up to allow wireless communication over a wide area with a link to the global Internet.



For the full story, see:

JAMES GLANZ and JOHN MARKOFF. "U.S. Underwrites Internet Detour Around Censors." The New York Times, First Section (Sun., June 12, 2011): 1 & 8.



InternetDetourGraphic2011-07-16.jpg















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







July 24, 2011

Bricks-and-Mortar Restaurants Use Police (Instead of Better Food) to Beat Food Trucks



KimImaAndKennyLaoFoodTruck2011-07-16.jpg "Kim Ima and Kenny Lao parked their food trucks on Front Street in Dumbo." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. D4) FOOD trucks, those rolling symbols of New York City's infatuation with haute casual food, are suddenly being chased from Midtown Manhattan. In the last 10 days, the Treats Truck, which has sold cookies and brownies for four years during lunchtime at West 45th Street near Avenue of the Americas, has been told by police officers that it is no longer welcome there, nor at its late-afternoon 38th Street and Fifth Avenue location. The Rickshaw Dumpling truck, a presence for three years at West 45th Street near the Treats Truck, has been shooed away as well.

The police "have told us they no longer want food trucks in Midtown," said Kim Ima, the owner of the Treats Truck, a pioneer of the city's new-wave food-truck movement, who began cultivating customers on West 45th Street in 2007.


. . .


Mr. Lao and other food-truck operators said they suspect that the police are responding to complaints by brick-and-mortar businesses that resent competition. Such was the case last year, when store merchants on the Upper East Side complained about Patty's Taco Truck, which sold tortas, tacos de lengua and cemitas on Lexington Avenue. The truck was towed several times and the operator arrested, prompting the Street Vendor Project, an advocate for vendors based at the Urban Justice Center, to file the lawsuit that resulted in Judge Wright's ruling, which said food is merchandise that can be regulated.



For the full story, see:

GLENN COLLINS. "Food Trucks Shooed From Midtown." The New York Times (Weds., June 29, 2011): D4.

(Note: ellipsis added.)

(Note: the online version of the story is dated June 28, 2011.)






July 22, 2011

Entrepreneurs Stanley and Wood Apply Econometrics to Business Data Analysis



StanleyWoodEntrepreneurs2011-07-16.jpg "Grant Stanley, left, and Tadd Wood founded Contemporary Analysis, which uses data to solve sales, marketing, customer retention, employee management and planning problems." Source of caption and photo: online version of the Omaha World-Herald article quoted and cited below.


The entrepreneurs celebrated in the article quoted below are former students of mine. Grant Stanley was in my Economics of Entrepreneurship and Economics of Technology seminars and Tadd Wood was in my Honors Colloquium on Creative Destruction. I wish them well.


(p. 1D) A half-dozen 20-something math, economics and neuroscience whizzes form Contemporary Analysis, an Omaha-based firm that is making predictive analytics available to a wider array of firms faster and for less money.

The team, which has a penchant for roaming around its Old Market office shoeless, is led by Grant Stanley, 23, the company's chief executive. He founded the firm in March 2008 with Tadd Wood, 23, who is now a senior analyst.

For nearly three years, Contemporary Analysis has built a customer base mostly of companies and businesses with lean budgets, meaning they didn't have a lot of cash to spend on analytics products. Traditionally, analytics firms lock clients into expensive, long-term contracts.

Not Contemporary Analysis.

Their products are designed to yield results in about a month, and average contracts are about $5,000, Stanley said. The company's analytics tools use data to solve sales, marketing, customer retention, employee management and planning problems.


. . .


(p. 2D) A . . . report from the IBM Institute for Business Value found that top-performing organizations use analytics five times more than lower performers.

Of the 3,000 executives, managers and analysts polled for the IBM report, those who came from high-performing companies said they used analytics to guide future strategies 45 percent of the time and day-to-day operations 53 percent of the time. By comparison, lower-performing firms used analytics 20 percent when addressing future business matters and 27 percent on a daily basis.



For the full story, see:

Ross Boettcher. "Omaha Whizzes Bring Analytics to More Companies." Omaha World-Herald (Thursday, July 14, 2011): 1D & 2D.

(Note: ellipses added.)

(Note: the online version of the article has the title "Making analytics affordable.")





July 20, 2011

Zuckerberg: ''Filmmakers Can't Get Their Head around the Idea that Someone Might Build Something because They Like Building Things''



AndreessenMarcVentureCapitalist2011-07-12.jpg







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






(p. 13) After hearing a story about Foursquare's co-founder, Dennis Crowley, walking into a press event in athletic wear and eating a banana, I developed a theory that bubbles might be predicted by fashion: when tech founders can't be bothered to appear businesslike, the power has shifted too much in their favor.


Believe it or not, this goes deep into the interior mentality of the engineer, which is very truth-oriented. When you're dealing with machines or anything that you build, it either works or it doesn't, no matter how good of a salesman you are. So engineers not only don't care about the surface appearance, but they view attempts to kind of be fake on the surface as fundamentally dishonest.

That reminds me of Mark Zuckerberg's criticism of ''The Social Network.'' He said that ''filmmakers can't get their head around the idea that someone might build something because they like building things.''

Aaron Sorkin was completely unable to understand the actual psychology of Mark or of Facebook. He can't conceive of a world where social status or getting laid or, for that matter, doing drugs, is not the most important thing.



For the full interview, see:

ANDREW GOLDMAN. "TALK; Bubble? What Bubble? Marc Andreessen, one of Silicon Valley's biggest venture capitalists, has no fear." The New York Times Magazine (Sun., July 10, 2011): 13.

(Note: bold in original, indicating comments/questions by interviewer Andrew Goldman.)

(Note: the online version of the interview is dated July 7, 2011 (sic).)





July 18, 2011

"If We Can't Win on Quality, We Shouldn't Win at All"



ImFeelingLuckyBK.jpg












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






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


. . .


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

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



For the full review, see:

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

(Note: ellipsis added.)


Book being reviewed:

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






July 8, 2011

Private ADP Job Data May Better Capture Startup Job Growth than Government Data




"ADP" in the quote below, stands for Automatic Data Processing Inc. which is a large payroll processing firm that provides job growth data that are an alternative to the official Bureau of Labor Statistics numbers. Recent research by Haltiwanger and others, has indicated that startups may have an under-appreciated large role in job growth.


(p. C1) It has been dubbed "Another Dumb Payroll" report and a "random number generator." But the ADP employment report doesn't entirely deserve its bad rap.


. . .


ADP may better capture . . . new business formation than Labor Department estimates. BofA Merrill Lynch economist Michelle Meyer notes that new firms show up in ADP data after two months of existence; the government doesn't have complete records until much later. Indeed, more than half the 187,000 new jobs ADP reported last month came from businesses with fewer than 50 employees.



For the full story, see:

KELLY EVANS. "AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter." The Wall Street Journal (Tues., FEBRUARY 4, 2011): C1.

(Note: ellipses added.)

(Note: the online version of the story has the title "AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter Than Thought.")


For some of the work showing the importance of startups in job creation, see:

Haltiwanger, John C., Ron S. Jarmin, and Javier Jarmin. "Who Creates Jobs? Small Vs. Large Vs. Young." NBER Working Paper # 16300, August 2010.






July 6, 2011

Google CEO Larry Page Admires Steve Jobs



BrinPageSchmidtGoogle2011-06-05.jpg "Former colleagues describe Larry Page, center, as strong-willed and sometimes impolite. He is said to admire Apple CEO Steve Jobs." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. B1) Larry Page's PageRank algorithm was the basis for Google Inc.'s search engine. As Google's new chief executive, Mr. Page will face the challenge of leading a company that has grown far beyond that algorithm and must compete with agile Web upstarts such as Facebook Inc. and Groupon Inc.

On Friday, a day after being named to replace outgoing CEO Eric Schmidt in April, Mr. Page gave little hint of how he planned to tackle such challenges. The 38-year-old Google co-founder didn't immediately address employees in an all-hands note or meeting, said a person familiar with the matter, though the company has a weekly Friday meeting that Mr. Page was expected to attend.

But several of Mr. Page's former colleagues describe him as having similarities to Apple CEO Steve Jobs, whom Mr. Page has said he admired. Both men are strong willed, sometimes impolite and push engineers hard to execute their ambitious projects.

Some former colleagues said Mr. Page is likely to try to pierce through the sometimes "paralyzing" bureaucracy that product managers and engineers have faced when trying to launch some Google products in recent years.

On Thursday, Messrs. Page and Schmidt said some top-level decision-making had gotten slower and the management change would improve that. Also, the company has said it is trying to allow more projects to operate like start-ups inside of Google in order to speed up innovation.



For the full story, see:

AMIR EFRATI and SCOTT MORRISON. "TECHNOLOGY; Chief Seeks More Agile Google; As CEO, Larry Page Must Pierce Bureaucracy, Compete With Nimble Upstarts." The Wall Street Journal (Tues., January 22, 2011): B1 & B4.





July 4, 2011

Steve Jobs as Project Entrepreneur



JobsSteveIpadIntroduction2011-06-05.jpg "Steve Jobs's presence at the unveiling seemed to reassure investors." Source of caption and photo: online version of the NYT article quoted and cited below.


Innovative entrepreneurs can have several different motives. I think Steve Jobs is mainly a "project entrepreneur"---his main motive is to envision a project and to accomplish it.


(p. B1) SAN FRANCISCO -- Steven P. Jobs, Apple's chief executive, interrupted his medical leave on Wednesday to introduce the company's much-anticipated new iPad, a thinner, faster and lighter version of its popular tablet computer that will sell at the same prices as the original models.

Mr. Jobs alluded to his leave but neither commented on his health nor said whether he planned to return to the company in the near future.

"We've been working on this product for a while and I just didn't want to miss today," he said.



For the full story, see:

MIGUEL HELFT. "Jobs Returns to Introduce a New iPad." The New York Times (Thurs., March 3, 2011): B1 & B6.

(Note: the online version of the commentary is dated March 2, 2011 and has the title "Jobs Returns to Introduce a New iPad.")






June 28, 2011

At NeXT Steve Jobs Learned to Delegate, Retain Talent, and Attend to the Price



JobsSteve2011-06-05.jpg











"Steve Jobs, after returning to Apple in 1999. Would Apple be what it is today had he never left?" Source of caption and photo: online version of the NYT article quoted and cited below.



(p. 5) Suppose Mr. Jobs had not left in 1985. Suppose he had convinced the Apple board to oust his nemesis, John Sculley, then chief executive and president. Under Mr. Jobs's uninterrupted direction, would Apple have arrived at the pinnacle it has reached today, but 12 years earlier?

It's hard to see how anything like that would have transpired. The Steve Jobs who returned to Apple was a much more capable leader -- precisely because he had been badly banged up. He had spent 12 tumultuous, painful years failing to find a way to make the new company profitable.

"I am convinced that he would not have been as successful after his return at Apple if he hadn't gone through his wilderness experience at Next," said Tim Bajarin, president of Creative Strategies, a technology consulting company.


. . .


Mr. Jobs's lieutenants tried to warn him away from certain disaster, but he was not receptive. In 1992-93, seven of nine Next vice presidents were shown the door or left on their own.

In this period, Mr. Jobs did not do much delegating. Almost every aspect of the machine -- including the finish on interior screws -- was his domain. The interior furnishings of Next's offices, a stunning design showplace, were Mr. Jobs's concern, too. While the company's strategy begged to be re-examined, Mr. Jobs attended to other matters. I spoke with many current and former Next employees for my 1993 book, "Steve Jobs and the NeXT Big Thing." According to one of them, while a delegation of visiting Businessland executives waited on the sidewalk, Mr. Jobs spent 20 minutes directing the landscaping crew on the exact placement of the sprinkler heads.

Next's computer hardware and software were filled with innovations that drew a small, but devoted, following. Mr. Jobs had created the first easy-to-use Unix machine, but the mainstream marketplace shrugged. He had already helped bring to market an easy-to-use machine, the Mac, so the Next couldn't differentiate itself enough -- and certainly not at the price the company charged.


. . .


And he had always been able to attract great talent. What he hadn't learned before returning to Apple, however, was the necessity of retaining it. He has now done so. One of the unremarked aspects of Apple's recent story is the stability of the executive team -- no curb filled with dumped managers.

Kevin Compton, who was a senior executive at Businessland during the Next years, described Mr. Jobs after returning to Apple: "He's the same Steve in his passion for excellence, but a new Steve in his understanding of how to empower a large company to realize his vision." Mr. Jobs had learned from Next not to try to do everything himself, Mr. Compton said.



For the full commentary, see:

RANDALL STROSS. "DIGITAL DOMAIN; What Steve Jobs Learned in the Wilderness." The New York Times, SundayBusiness Section (Sun., October 3, 2010): 5.

(Note: ellipses added.)

(Note: the online version of the commentary is dated October 2, 2010.)





June 24, 2011

Diamond to Teach Economics of Entrepreneurship Seminar in Fall 2011




EntrepreneurshipPoster2011A.jpg


As of 6/22/11, space is still available in the graduate economics, MBA, and upper level undergraduate economics sections of the seminar.





June 23, 2011

"The Century's Most Daring and Iconic Building Was Entrusted to a Gardener"



(p. 10) . . . the risks were considerable and keenly felt, yet after only a few days of fretful hesitation the commissioners approved Paxton's plan. Nothing--really, absolutely nothing--says more about Victorian Britain and its capacity for brilliance than that the century's most daring and iconic building was entrusted to a gardener. Paxton's Crystal Palace required no bricks at all--indeed, no mortar, no cement, no foundations. It was just bolted together and sat on the ground like a tent. This was not merely an (p. 11) ingenious solution to a monumental challenge but also a radical departure from anything that had ever been tried before.


Source:

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

(Note: ellipsis added.)





June 21, 2011

Moral: In a Crisis You Need Resilience and the Ability to Improvise More than You Need Detailed Advance Plans



(p. D1) When the Three Mile Island nuclear generating station along the Susquehanna River seemed on the verge of a full meltdown in March 1979, Gov. Richard L. Thornburgh of Pennsylvania asked a trusted aide to make sure that the evacuation plans for the surrounding counties would work.

The aide came back ashen faced. Dauphin County, on the eastern shore of the river, planned to send its populace west to safety over the Harvey Taylor Bridge.

"All well and good," Mr. Thornburgh said in a recent speech, "except for the fact that Cumberland County on the west shore of the river had adopted an evacuation plan that would funnel all exiting traffic eastbound over -- you guessed it -- the same Harvey Taylor Bridge."


. . .


(p. D4) Brian Wolshon, the director of the Gulf Coast Center for Evacuation and Transportation Resiliency, said that he was analyzing one county's emergency plans that seemed to have every detail covered.

"It was a wonderful report, with plans to move senior citizens out of care facilities and even out of hospitals, and they had signed contracts with bus and ambulance providers," said Dr. Wolshon, who is also a professor at Louisiana State University. "But that same low-cost provider had the same contract with the county next door, and they had the capacity to evacuate only one of these counties."



For the full story, see:

GARDINER HARRIS. "Dangers of Leaving No Resident Behind." The New York Times (Tues., March 22, 2011): D1 & D4.

(Note: the online version of the article is dated March 21, 2011.)





June 20, 2011

Entrepreneur Defends His Store with Gun



SpinelliAnthonyDefendedStore2011-06-05.jpg















"Anthony Spinelli, outside his store in the Bronx on Thursday, was called brave for shooting a man suspected of trying to rob his shop." Source of caption and photo: online version of the NYT article quoted and cited below.




(p. A23) On Arthur Avenue, a group of men piled out of Pasquale's Rigoletto restaurant onto the sidewalk to pay their respects to a sudden local hero.

"Anthony, we love you," they shouted across the street.

They summed up the local sentiment about a man, Anthony Spinelli, celebrated for protecting his livelihood. On Wednesday, Mr. Spinelli pulled one of two licensed guns in the store, and shot one of the three people suspected of trying to rob his Arthur Avenue jewelry store at gunpoint.

The Bronx neighborhood seemed energized by the event, which people here saw as a testament to the toughness of one of the last Italian neighborhoods in New York City.

"You don't come in and try to take a man's livelihood," said Nick Lousido, who called himself a neighborhood regular. "His family's store has 50 years on this block, they're going to come in and rob him?"

On Thursday, Mr. Spinelli, 49, had returned to his shop and sized up the broken front windows and the mess inside. He said that a man and woman had entered his store, and the man had held a gun to his head while the woman had gone through jewelry drawers and stuffed jewelry into a bag. He said he had feared for his life, and that he was still shaken.


. . .


Next door to Mr. Spinelli's shop is M & M Painter Supplies, which has photographs of Pope John Paul II and Mother Teresa next to a paint color chart on the wall.

"He's a very brave man," said the store owner, Ernie Verino. "He had the gun, and it takes guts to use it."



For the full story, see:

COREY KILGANNON. "Merchant Shooting to Defend His Store Is Celebrated as Hero of Arthur Avenue." The New York Times (Fri., February 18, 2011): A23.

(Note: ellipsis added.)

(Note: the online version of the article is dated February 17, 2011 and has the title "After Shooting, Merchant Is Hero of Arthur Avenue.")






June 17, 2011

"Big Money Is Dumb Money"




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


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


For the full review, see:

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

The book of short stories is:

Doctorow, Cory. With a Little Help.






June 12, 2011

To Burst Higher Ed Bubble, Peter Thiel Pays Students to Drop Out



ThielPeterPayPal2011-06-02.jpg













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




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

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

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


. . .


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

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

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


. . .


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

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

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



For the full story, see:

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

(Note: ellipses added.)

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





June 11, 2011

"Surprisingly Weak Correlation" Between Measures of Maximum Performance and Typical Performance



(p. C12) In the early 1980s, Paul Sackett, a psychologist at the University of Minnesota, began measuring the speed of cashiers at supermarkets. Workers were told to scan a few dozen items as quickly as possible while a scientist timed them. Not surprisingly, some cashiers were much faster than others.

But Mr. Sackett realized that this assessment, which lasted just a few minutes, wasn't the only way to measure cashier performance. Electronic scanners, then new in supermarkets, could automatically record the pace of cashiers for long stretches of time. After analyzing this data, it once again became clear that levels of productivity varied greatly.

Mr. Sackett had assumed that these separate measurements would generate similar rankings. Those cashiers who were fastest in the short test should also be the fastest over the long term. But instead he found a surprisingly weak correlation between the rankings, leading him to distinguish between two types of personal assessment. One measures "maximum performance": People who know they're being tested are highly motivated and focused, just like those cashiers scanning a few items while being timed.

The other type measures "typical performance"--measured over long periods of time, as when Mr. Sackett recorded the speed of cashiers who didn't know they were being watched. In this sort of test, character traits that have nothing to do with maximum performance begin to influence the outcome. Cashiers with speedy hands won't have fast overall times if they take lots of breaks.


. . .


The problem, of course, is that students don't reveal their levels of grit while taking a brief test. Grit can only be assessed by tracking typical performance for an extended period. Do people persevere, even in the face of difficulty? How do they act when no one else is watching? Such traits often matter more than raw talent. We hear about them in letters of recommendation, but hard numbers take priority.

The larger lesson is that we've built our society around tests of performance that fail to predict what really matters: what happens once the test is over.



For the full commentary, see:

JONAH LEHRER. "Measurements That Mislead; From the SAT to the NFL, the problem with short-term tests." The Wall Street Journal (Sat., APRIL 2, 2011): C12.

(Note: ellipsis added.)


The classic article correlating maximum and typical performance, is:

Sackett, Paul R., Sheldon Zedeck, and Larry Fogli. "Relationships between Measures of Typical and Maximum Performance." Journal of Applied Psychology 73 (1988): 482-86.





June 4, 2011

To Teach the Truth, the Best Teachers Must Become "Canny Outlaws"



PracticalWisdomBK2.jpg

















Source of book image: http://www.swarthmore.edu/Images/news/practical_wisdom.jpg




(p. 170) Walking into Mr. Drew's economics class, researchers might have interrupted a board meeting of the student-run start-up company that was at the heart of his course. Drawing on his own experience in industry, Mr. Drew taught students economic principles in a way that made sense to them because they were researching potential products they would actually sell (a mug with the school logo; a T-shirt designed by a student graphics team). They were conducting market surveys, accumulating capital, making decisions about the scale of investment, the risk, the profits.


. . .


In Houston. the magnet schools were forced to reorganize to prepare for the coming White-Perot reforms. McNeil changed her study. The new question was: How would these teachers cope with a curriculum that was test-driven?


. . .


Mr. Drew's economics class did not conform to the proficiency sequence and he had to drop the course, except as an elective.


. . .


The paperwork required by such new requirements--to assure the bureaucracy that teachers were teaching by the rules--discouraged individualized time spent with students and robbed time previously devoted to planning and assessing lessons. The requirements created the same kind of time bind Wong observed when such requirements were imposed on military trainers. (p. 171) And, as in the case of the new military training model, the new requirements discouraged flexibility, adaptability, and creativity.

McNeil found that many of the experienced teachers fought back. They became canny outlaws, or creative saboteurs, dodging the "law," finding ways to cover the "proficiencies" with great efficiency and squirreling away time to sneak real education back in at the margins of the standardized system, sometimes even conspiring with their students or teaching them how to "game" the system. Mr. Drew taught his students that economic cycles vary in length and intensity, but in the test prep period, he told them to forget this because the official answer was that each cycle lasts eighteen months. There was a danger that students who learned to look beyond the obvious, to ask "what if," to look for the exceptions to the rules, would do badly on the tests.


. . .


The ability of wise teachers to operate as canny outlaws is most seriously constrained when a highly scripted curriculum comes riding into town on the heels of high-stakes standardized tests. By prescribing, step by step, what to say and do each day to prepare students for these tests, such lockstep curricula pose a serious challenge to professional discretion. Yet even under these adverse conditions, in many schools there are canny
outlaws who find ways to avoid being channeled.



Source:

Schwartz, Barry, and Kenneth Sharpe. Practical Wisdom: The Right Way to Do the Right Thing. New York: Riverhead Books, 2010.

(Note: ellipses added.)


The McNeil book mentioned above is:

Linda, McNeil. Contradictions of School Reform: Educational Costs of Standardized Testing, Critical Social Thought. New York: Routledge, 2000.


The Wong report mentioned above is:

Wong, Leonard. "Stifled Innovation? Developing Tomorrow's Leaders Today." Strategic Studies Institute Monograph, April 1, 2002.



contradictions-school-reform-educational-costs-standardized-testing-linda-m-mcneil-paperback-cover-art.jpg

















Source of book image: http://i43.tower.com/images/mm101682007/contradictions-school-reform-educational-costs-standardized-testing-linda-m-mcneil-paperback-cover-art.jpg





May 30, 2011

The "Disneyland Dream" Lives



Liberal columnist Frank Rich writes of the home movie "Disneyland Dream"---with a measure of eloquence, but unfortunately also with a measure of condescension and sarcasm. In the end, he believes the dream is dead.

But Rich is wrong. Disneyland is still the happiest place on earth, and Walt Disney's entrepreneurial spirit is also still alive.

Here are a couple of the more eloquent bits of Rich (though not entirely devoid of sarcasm):


(p. 14) "Disneyland Dream" was made in the summer of 1956, shortly before the dawn of the Kennedy era. You can watch it on line at archive.org or on YouTube. Its narrative is simple. The young Barstow family of Wethersfield, Conn. -- Robbins; his wife, Meg; and their three children aged 4 to 11 -- enter a nationwide contest to win a free trip to Disneyland, then just a year old. The contest was sponsored by 3M, which asked contestants to submit imaginative encomiums to the wonders of its signature product. Danny, the 4-year-old, comes up with the winning testimonial, emblazoned on poster board: "I like 'Scotch' brand cellophane tape because when some things tear then I can just use it."


. . .


. . . The Barstows accept as a birthright an egalitarian American capitalism where everyone has a crack at "upper class" luxury if they strive for it (or are clever enough to win it). It's an America where great corporations like 3M can be counted upon to make innovative products, sustain an American work force, and reward their customers with a Cracker Jack prize now and then. The Barstows are delighted to discover that the restrooms in Fantasyland are marked "Prince" and "Princess." In America, anyone can be royalty, even in the john.

"Disneyland Dream" is an irony-free zone. "For our particular family at that particular time, we agreed with Walt Disney that this was the happiest place on earth," Barstow concludes at the film's end, from his vantage point of 1995. He sees himself as part of "one of the most fortunate families in the world to have this marvelous dream actually come true" and is "forever grateful to Scotch brand cellophane tape for making all this possible for us."



For the full commentary, see:

FRANK RICH. "Who Killed the Disneyland Dream?" The New York Times, Week in Review Section (Sun., December 25, 2010): 14.

(Note: ellipses added.)

(Note: the online version of the commentary is dated December 25, 2010.


Part 1 of "Disneyland Dream" via YouTube's "embed" feature:




Part 2 of "Disneyland Dream" via YouTube's "embed" feature:




Part 3 of "Disneyland Dream" via YouTube's "embed" feature:




Part 4 of "Disneyland Dream" via YouTube's "embed" feature:











May 25, 2011

Corruption, Inefficiency, Inflation and Bad Policies Lead to Decline in Foreign Investment in India



ForeignDirectInvestmentGraph2011-05-19.jpg Source of graph: online version of the NYT article quoted and cited below.



(p. B1) While inefficiency and bureaucracy are nothing new in India, analysts and executives say foreign investors have lately been spooked by a highly publicized government corruption scandal over the awarding of wireless communications licenses. Another reason for thinking twice is a corporate tax battle between Indian officials and the British company Vodafone now before India's Supreme Court.

Meanwhile, the inflation rate -- 8.2 percent and rising -- seems beyond the control of India's central bank and has done nothing to reassure foreign investors.

And multinationals initially lured by India's growth narrative may find that the realities of the Indian marketplace tell a more vexing story. Some companies, including the insurer MetLife and the retailing giant Wal-Mart, for example, are eager to invest and expand here but have been waiting years for policy makers to let them.



For the full story, see:

VIKAS BAJAJ. "Foreign Investment Ebbs in India." The New York Times (Fri., February 25, 2011): B1 & B6.

(Note: the online version of the article is dated February 24, 2011.)





May 23, 2011

"Gambles on Original Concepts Paid Off"



InceptionMovieStill2011-05-19.jpg"One surprise hit was "Inception," with Leonardo DiCaprio." Source of caption and photo: online version of the NYT article quoted and cited below.


I thought the movie "Inception" was a wonderful, intellectual and adventure thrill ride. And if memory serves, what they were trying to instill in the conflicted inheritor of a monopoly, was that he should become more entrepreneurial.


(p. B1) As Hollywood plowed into 2010, there was plenty of clinging to the tried and true: humdrum remakes like "The Wolfman" and "The A-Team"; star vehicles like "Killers" with Ashton Kutcher and "The Tourist" with Angelina Jolie and Johnny Depp; and shoddy sequels like "Sex and the City 2." All arrived at theaters with marketing thunder intended to fill multiplexes on opening weekend, no matter the quality of the film. "Sex and the City 2," for example, had marketed "girls' night out" premieres and bottomless stacks of merchandise like thong underwear.

But the audience pushed back. One by one, these expensive yet middle-of-the-road pictures delivered disappointing results or flat-out flopped. Meanwhile, gambles on original concepts paid off. "Inception," a complicated thriller about dream invaders, racked up more than $825 million in global ticket sales; "The Social Network" has so far delivered $192 million, a stellar result for a highbrow drama.

As a result, studios are finally and fully conceding that moviegoers, armed with Facebook and other networking tools and concerned about escalating ticket prices, are holding them to higher standards. The product has to be good.



For the full story, see:

BROOKS BARNES. "Hollywood Moves Away From Middlebrow." The New York Times (Mon., December 27, 2010): B1 & B5.

(Note: the online version of the article is dated December 26, 2010 and has the title "Hollywood Moves Away From Middlebrow.")





May 19, 2011

Entrepreneur Ken Olsen Was First Lionized and Then Chastised



OlsenKenObit2011-05-16.jpg"Ken Olsen, the pioneering founder of DEC, in 1996." Source of caption and photo: online version of the NYT article quoted and cited below.


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

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



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


. . .


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

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

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



For the full obituary, see:

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

(Note: ellipsis added.)

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


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

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


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

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





May 18, 2011

"For the First 40 Years of Indian Independence, Entrepreneurs . . . Were Looked Down Upon"



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

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

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



For the full commentary, see:

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

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






May 17, 2011

Patients Face Higher Costs and Less Innovation Due to FDA



CongerMartiDiskImplant2011-05-16.jpg"Marti Conger, a business consultant in Benicia, Calif., went to England in October 2009 to get an implant of a new artificial disk for her spine developed by Spinal Kinetics of Sunnyvale, Calif., a short distance from her home." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B1) Late last year, Biosensors International, a medical device company, shut down its operation in Southern California, which had once housed 90 people, including the company's top executives and researchers.

The reason, executives say, was that it would take too long to get its new cardiac stent approved by the Food and Drug Administration.

"It's available all over the world, including Mexico and Canada, but not in the United States," said the chief executive, Jeffrey B. Jump, an American who runs the company from Switzerland. "We decided, let's spend our money in China, Brazil, India, Europe."


. . .


(p. B7) "Ten years from now, we'll all get on planes and fly somewhere to get treated," said Jonathan MacQuitty, a Silicon Valley venture capitalist with Abingworth Management.

Marti Conger, a business consultant in Benicia, Calif., already has. She went to England in October 2009 to get an implant of a new artificial disk for her spine developed by Spinal Kinetics of Sunnyvale, Calif.

"Sunnyvale is 40 miles south of my house," said Ms. Conger, who has become an advocate for faster device approvals in the United States. "I had to go to England to get my surgery."


. . .


Device companies have been seeking early approval in Europe for years because it is easier. In Europe, a device must be shown to be safe, while in the United States it must also be shown to be effective in treating a disease or condition. And European approvals are handled by third parties, not a powerful central agency like the F.D.A.

But numerous device executives and venture capitalists said the F.D.A. has tightened regulatory oversight in the last couple of years. Not only does it take longer to get approval but it can take months or years to even begin a clinical trial necessary to gain approval.

Disc Dynamics made seven proposals over three years but could not get clearance from the F.D.A. to conduct a trial of its gel for spine repair, said David Stassen, managing partner of Split Rock Partners, a venture firm that backed the company. "It got to the point where the company just ran out of cash," Mr. Stassen said. Disc Dynamics was shut down last year after an investment of about $65 million.



For the full story, see:

ANDREW POLLACK. "Medical Treatment, Out of Reach." The New York Times (Thurs., February 10, 2011): B1 & B7.

(Note: ellipses added.)

(Note: the online version of the story is dated February 9, 2011.)





ArtificialDisk2011-05-16.jpg







"An artificial disk like the one Marti Conger received."
Source of caption and photo: online version of the NYT article quoted and cited above.





May 14, 2011

Income Inequality Makes People Happy When It Gives Them Hope



(p. A19) If the royal family were to utilize Kate's background to help encourage and spread this culture of entrepreneurship, the effects in Britain--and possibly much of the world--could be incredible. The people of the United Kingdom would be much richer, and not just in material terms. "Earned success gives people a sense of meaning about their lives," writes the social scientist Arthur Brooks, who is president of the American Enterprise Institute think tank.

Indeed, studies show that in both the U.S. and U.K., many blue- and white-collar workers prefer to have the opportunity to advance, even if this means a less equal income distribution. A study of thousands of British employees by Andrew Clark, associate chair of the Paris School of Economics, found that measures of these workers' happiness actually rose as their demographic group's average income increased relative to their own.

These findings suggests that as people see members of their peer group gain wealth--even surpassing them--it gives them hope that they can improve their lot as well. As Mr. Clark put it in his study of British workers, "income inequality . . . need not be harmful for economic growth" if it "contains an aspect of opportunity."



For the full story, see:

JOHN BERLAU. "The Entrepreneurs' Princess; For centuries in Britain, commercial activities were looked down upon by the aristocracy, whose wealth lay in landownership." Wall Street Journal (Thurs., APRIL 28, 2011): A17.





May 5, 2011

"When We Get 'Out of Book,' We Are at Our Most Human"



Most-Human-HumanBK2011-04-25.jpg














Source of book image: http://www.turingfilm.com/wp-content/uploads/2011/03/11-3-18-The-Most-Human-Human.jpg




To be an innovative entrepreneur is to "get out of book" in the language well-expressed below.


(p. A17) In chess, computers are strongest in the parts of the game in which human players rely most on memory: the opening and closing sequences. (Serious players learn strategies by rote, and the early stages of even grandmaster games contain few surprises for the cognoscenti.) Knowledge of these tried and tested moves is called "the book." By the middle section of a game, however, the number of permutations of moves is too vast for memorization to help. Here players need to get "out of book" and act unexpectedly, which is why computers--even Deep Blue--can struggle.

Mr. Christian elaborates on this distinction and applies it to human intelligence in general. For isn't it precisely when people refuse to get "out of book"--just following orders or playing their role--that we find them least human? Likewise, when we get "out of book," we are at our most human. Think of the difference between the waiter who runs through the usual routine and the one who responds to your order with a witticism. Remaining alive to what is mechanical or original in our own behavior can preserve a sense of human difference.



For the full review, see:

JULIAN BAGGINI. "BOOKSHELF; More Than Machine; No computer has yet to pass the Turing Test, fooling judges into believing its responses come from a person." Wall Street Journal (Tues., MARCH 8, 2011): A17.





April 29, 2011

"The Internet Is Really the Work of a Thousand People"



BaranPaulInternet2011-04-25.jpg












Paul Baran. Source of photo: online version of the NYT obituary quoted and cited below.




(p. A23) In the early 1960s, while working at the RAND Corporation in Santa Monica, Calif., Mr. Baran outlined the fundamentals for packaging data into discrete bundles, which he called "message blocks." The bundles are then sent on various paths around a network and reassembled at their destination. Such a plan is known as "packet switching."

Mr. Baran's idea was to build a distributed communications network, less vulnerable to attack or disruption than conventional networks. In a series of technical papers published in the 1960s he suggested that networks be designed with redundant routes so that if a particular path failed or was destroyed, messages could still be delivered through another.

Mr. Baran's invention was so far ahead of its time that in the mid-1960s, when he approached AT&T with the idea to build his proposed network, the company insisted it would not work and refused.


. . .


Mr. Baran was also an entrepreneur. He started seven companies, five of which eventually went public.

In recent years, the origins of the Internet have been subject to claims and counterclaims of precedence, and Mr. Baran was an outspoken proponent of distributing credit widely.

"The Internet is really the work of a thousand people," he said in an interview in 2001.

"The process of technological developments is like building a cathedral," he said in an interview in 1990. "Over the course of several hundred years, new people come along and each lays down a block on top of the old foundations, each saying, 'I built a cathedral.'

"Next month another block is placed atop the previous one. Then comes along an historian who asks, 'Well, who built the cathedral?' Peter added some stones here, and Paul added a few more. If you are not careful you can con yourself into believing that you did the most important part. But the reality is that each contribution has to follow onto previous work. Everything is tied to everything else."



For the full obituary, see:

KATIE HAFNER. "Paul Baran, Internet Pioneer, Dies at 84." The New York Times (Mon., MARCH 28, 2011): A23.

(Note: ellipsis added.)

(Note: the online version of the obituary is dated March 27, 2011.)





April 28, 2011

Does Montessori Nurture Creativity?



Ironically, the Montessori educational approach might be the surest route to joining the creative elite, which are so overrepresented by the school's alumni that one might suspect a Montessori Mafia: Google's founders Larry Page and Sergei Brin, Amazon's Jeff Bezos, videogame pioneer Will Wright, and Wikipedia founder Jimmy Wales, not to mention Julia Child and rapper Sean "P.Diddy" Combs.

Is there something going on here? Is there something about the Montessori approach that nurtures creativity and inventiveness that we can all learn from?


. . .


The Montessori Mafia showed up in an extensive, six-year study about the way creative business executives think. Professors Jeffrey Dyer of Brigham Young University and Hal Gregersen of globe-spanning business school INSEAD surveyed over 3,000 executives and interviewed 500 people who had either started innovative companies or invented new products.

"A number of the innovative entrepreneurs also went to Montessori schools, where they learned to follow their curiosity," Mr. Gregersen said. "To paraphrase the famous Apple ad campaign, innovators not only learned early on to think different, they act different (and even talk different)."

When Barbara Walters, who interviewed Google founders Messrs. Page and Brin in 2004, asked if having parents who were college professors was a major factor behind their success, they instead credited their early Montessori education. "We both went to Montessori school," Mr. Page said, "and I think it was part of that training of not following rules and orders, and being self-motivated, questioning what's going on in the world, doing things a little bit differently."

Will Wright, inventor of bestselling "The Sims" videogame series, heaps similar praise. "Montessori taught me the joy of discovery," Mr. Wright said, "It's all about learning on your terms, rather than a teacher explaining stuff to you. SimCity comes right out of Montessori..."

Meanwhile, according to Jeff Bezos's mother, young Jeff would get so engrossed in his activities as a Montessori preschooler that his teachers would literally have to pick him up out of his chair to go to the next task. "I've always felt that there's a certain kind of important pioneering that goes on from an inventor like Thomas Edison," Mr. Bezos has said, and that discovery mentality is precisely the environment that Montessori seeks to create.

Neuroscience author Jonah Lehrer cites a 2006 study published in Science that compared the educational achievement performance of low-income Milwaukee children who attended Montessori schools versus children who attended a variety of other preschools, as determined by a lottery.



Source:

Peter Sims. "The Montessori Mafia." http://blogs.wsj.com/ideas-market/2011/04/05/the-montessori-mafia/ Posted: April 5, 2011, 10:57 AM ET

(Note: ellipsis between paragraphs is added; ellipsis at the end of a paragraph was in the original.)


The reference for the Science article mentioned above is:

Lillard, Angeline, and Nicole Else-Quest. "Evaluating Montessori Education." Science 313, no. 5795 (September 29, 2006): 1893-94.





April 25, 2011

Are Small Bets Enough to Get Breakthrough Innovation, Or Do You Usually Need Big Bets?



LittleBetsBK.jpg














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







I am dubious of the main thesis of the book discussed in the review quoted below. But it sounds like an interesting read.


"I'll be happy to give you innovative thinking," a bedraggled employee tells his boss in a classic Leo Cullum cartoon. "What are the guidelines?"

Guidelines are what Peter Sims seeks to provide in "Little Bets," an enthusiastic, example-rich argument for innovating in a particular way--by deliberately experimenting and taking small exploratory steps in novel directions. Some little bets will not pay off, of course, in which case little is lost; but others may pay off in big ways.


. . .


The point is that good (or even just delicious) ideas rarely emerge fully formed, like Athena from the head of Zeus; rather they evolve in a discursive and unpredictable fashion. The challenge is to enable this process rather than squelch it because it is hard to manage or because its results are hard to predict.

Light, bright and packed with tidy anecdotes, "Little Bets" feels at times like a motivational speaker's presentation. Its claims are often attractive, but the analytical apparatus can be shaky: correlation is confused with causation; counter-evidence is ignored (such as those who put down small bets but never enjoy large returns); the role of circumstance or luck is underestimated; and some facts seem cherry-picked to push the message.



For the full commentary, see:

DAVID A. SHAYWITZ. "BOOKSHELF; Where the Action Is; Taking small exploratory steps and 'prototyping,' as when Chris Rock tests out jokes at obscure comedy clubs." The Wall Street Journal (Fri., APRIL 22, 2011): A11.

(Note: ellipsis added.)


The book under review is:

Sims, Peter. Little Bets: How Breakthrough Ideas Emerge from Small Discoveries. New York: Free Press, 2011.





April 23, 2011

"If We Actually Want to Change Anything--Dedicate Our Lives to It--We Need to Make Money Doing It"



DavidsonNeilUndergroundFood2011-04-22.jpg "The underground market seeks to encourage food entrepreneurship by helping young vendors avoid the costs -- including for health permits and liability insurance -- required by legitimate farmers' markets. Neil Davidson prepared part of a Hawaiian breakfast dish for a customer." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A1) SAN FRANCISCO -- . . .


. . .


At midnight, the smell of stir-fried pork bellies was wafting through the Mission district. There was live music, liquor, bouncers, a disco ball -- and a line waiting to sample hundreds of delicacies made mostly on location, among them bacon-wrapped mochi (a Japanese rice paste) and ice cream made from red beets, Guinness and chocolate cake.

In a sense it is civil disobedience on a paper plate.

The underground market seeks to encourage food entrepreneurship by helping young vendors avoid roughly $1,000 a year in fees -- including those for health permits and liability insurance -- required by legitimate farmers markets. Here, where the food rave -- call it a crave -- was born, the market organizers sidestep city health inspections by operating as a private club, requiring that participants become "members" (free) and sign a disclaimer noting that food might not be prepared in a space that has been inspected.


. . .


(p. A12) Where psychedelic drugs famously transported another self-conscious San Francisco generation, the rebel act of choice by Valerie Luu, 23, a first-generation Vietnamese chef, is deep-frying string cheese in a cast-iron pan.

"When I was their age I was doing drugs and going to rock shows," said Novella Carpenter, an urban farmer and author who recently got into a spat with the City of Oakland for selling chard and other produce at a pop-up farm stand without a permit. "That's not their culture," she continued. "Their culture is food -- incredible yummy-tasting food."


. . .


The underground market here, which also has a less chic daytime component, was started by Iso Rabins, 30, the founder of ForageSF, a company that began with foraging walks and dinners featuring dishes like wild nettle soup with crème fraiche.

He started in 2009 from a private home after observing that many friends could not afford to sell at farmers markets, which requires business and product liability insurance (around $250), space rental ($40 to $55 a day), yearly member fees (around $110), and a health and safety permit (about $500). The use of commercial kitchens would cost an additional $45 to $75 an hour, Mr. Rabins noted, and making jam can take eight hours or more. "The small-batch economics just don't work," he said.

The goal is to be an incubator for culinary start-ups, and be a profit-making venture. Vendors pay $50 to reserve a cooking space and return 10 percent of sales over $500 to ForageSF. "The feeling in the food community is that if you're making money, it's not something you're passionate about," Mr. Rabins said. "But if we actually want to change anything -- dedicate our lives to it -- we need to make money doing it," he said.

Amateur cooks around the country are pushing to have the right to sell unlicensed goods directly to consumers. So-called "cottage food" laws that allow products considered nonhazardous, like pies and cookies, exist in 18 states, with five more considering similar legislation.



For the full story, see:

PATRICIA LEIGH BROWN. "They Gather Secretly at Night, and Then They (Shhh!) Eat." The New York Times (Weds., April 15, 2011): A1 & A12.

(Note: ellipses added.)

(Note: the online version of the story is dated April 14, 2011.)





April 15, 2011

Italy's Dynastic Capitalism "Is Built Around Loyalty, Not Performance"



AltomonteCarloItalianEconomist2011-03-12.jpg"Carlo Altomonte, an economist, says that "Italy's problem isn't that we have a lot of debt. It's that we don't grow."" Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 6) "I know that in the States, all Mediterranean countries get lumped together," says Carlo Altomonte, an economist with Bocconi University in Milan. "But Italy's problem isn't that we have a lot of debt. It's that we don't grow."


. . .


"There is no sense of what a market economy is in this country," says Professor Altomonte. "What you see here is an incredible fear of competition."


. . .


FIVE years ago, Francesco Giavazzi needed a taxi. Cabs are relatively scarce in Milan, especially at 5 a.m., when he wanted to head to the airport, so he called a company at 4:30 to schedule a pickup. But when he climbed into the cab half an hour later, he discovered that the meter had been running for more than 20 minutes, because the taxi driver had arrived soon after the call and started charging for (p. 7) his time. Allowed by the rules, but to Mr. Giavazzi, utterly unfair.

"So it was 20 euros before we started the trip to the airport," recalls Mr. Giavazzi, who is an economics professor at Bocconi University. "I said, 'This is impossible.' "

Professor Giavazzi later wrote an op-ed article denouncing this episode as another example of the toll exacted by Italy's innumerable guilds, known by several names here, including "associazioni di categoria." (These are different from unions, another force here, in that guilds are made up of independent players in a trade or profession who have joined to keep outsiders out and maintain standards, as opposed to representing employees in negotiations with management, as a union might.) Even baby sitters have associations in Italy.

The op-ed did not endear Professor Giavazzi to the city's cab drivers. They pinned leaflets with his name and address at taxi stands around Milan and for the next five nights, cabs drove around his home, honking their horns.

"This is a country with a lot of rents," says Professor Giavazzi, sitting in his office one recent afternoon, . . . "You need a notary public, it's like 1,000 euros before you even open your mouth. If you're a notary public in this country, you live like a king."

For Mr. Barbera, as is true with every entrepreneur here, the prevalence and power of Italy's guilds explains much of what is driving up costs. He says he must overspend for accountants, lawyers, truckers and other members of guilds on a list that goes on and on: "Everything has a tariff, and you have to pay."


. . .


Italians, notes Professor Altomonte, are among the world's heaviest consumers of bottled water. "Do you know why? Because the water in the tap comes from the government."

The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It's an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn't growth, so much as keeping the business in the family. For a company to really expand, it needs capital, but that means giving up at least some control. So thousands of companies here remain stubbornly small -- all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.

"The prevailing management style in this country is built around loyalty, not performance," says Tito Boeri, scientific director at Fondazione Rodolfo Debenedetti, who has written about Italy's dynastic capitalism.



For the full story, see:

DAVID SEGAL. "Is Italy Too Italian?" The New York Times (Sun., August 1, 2010): 1 & 6-7.

(Note: ellipses added.)

(Note: the online version of the article is dated July 31, 2010.)


BarberaSpaForYarn2011-03-12.jpg"The clothier Luciano Barbera in his family's "spa for yarn," where crates of thread rest for months. Economists fear that such small-scale artisanship cannot sustain Italy's economy forever." Source of caption and photo: online version of the NYT article quoted and cited above.





April 9, 2011

If Countries Have Souls "Then America's Is the Patent System"



MrGatlingsTerribleMarvelBK2011-03-11.jpg















Source of book image: http://yourbooksworld.com/images/Biographies/mr-gatlings-terrible-marvel.jpg



(p. 46) [Julia Keller] discusses Lincoln's little-known interest in personally testing new Army weapons and, in a brilliant passage, rhapsodizes about creativity and the Patent Office: "If a country can be said to possess a soul, then America's is the patent system: the simple, fair method of staking claim to a new idea and getting the chance to make money from it."


For the full review, see:

MAX BYRD. "The Bullet Machine." The New York Times Book Review (Sun., November 9, 2008): 46.

(Note: bracketed name added.)

(Note: the online version of the review is dated November 7, 2008.)


Book reviewed:

Keller, Julia. Mr. Gatling's Terrible Marvel: The Gun That Changed Everything and the Misunderstood Genius Who Invented It. New York: Viking, 2008.





April 3, 2011

U.S. Holds "Edge in Its Openness to Innovation"



TycoonsBK2011-03-11.jpg














Source of book image: http://www.tower.com/tycoons-how-andrew-carnegie-john-d-rockefeller-jay-charles-r-morris-paperback/wapi/100346776?download=true&type=1



(p. 24) Judging by Charles R. Morris's new book, "The Tycoons," it takes about 100 years for maligned monopolists and "robber barons" to morph into admirable innovators.

Morris skillfully assembles a great deal of academic and anecdotal research to demonstrate that Andrew Carnegie, John D. Rockefeller, Jay Gould and J. P. Morgan did not amass their fortunes by trampling on the downtrodden or ripping off consumers - . . .


. . .


Though Morris only hints at it, the truth is that the real heroes of the American industrial revolution were not his four featured tycoons, but the American people themselves. I don't mean this to sound like a corny burst of patriotism. In the 19th century, the United States was still young. Most families had either been booted out of Europe or fled it, and they didn't care about tradition or the Old Guard. With little to lose, they were willing to bet on a roll of the dice, even if it was they who occasionally got rolled. Europe was encrusted with guilds, unions and unbendable rules. Britons took half a day to make a rifle stock, because 40 different tradesmen poked their noses into the huddle. American companies polished off new rifle stocks in 22 minutes.

The United States still holds an edge in its openness to innovation. In 1982, French farmers literally chased the French agriculture minister, Edith Cresson, off their fields with pitchforks because she suggested reform. By contrast, back in the late 1850's, Abraham Lincoln was a hot after-dinner speaker. Was he discussing slavery? No. The title of his talk was "Discoveries and Inventions." The real root of economic growth is not natural resources or weather or individual genius. It's attitude, not latitude. The Austrian economist Joseph Schumpeter called innovations gales of "creative destruction." Americans, not Europeans, had the gall to stare into those gales - with optimism.



For the full review, see:

TODD G. BUCHHOLZ . "'The Tycoons': Benefactors of Great Wealth." The New York Times Book Review (Sun., October 2, 2005): 24.

(Note: ellipses added.)

(Note: the online version of the review has the title "'The Tycoons': Benefactors of Great Wealth.")


Book under review:

Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy. New York: Times Books, 2005.





March 30, 2011

In Greece It Is Illegal for Brewers to Produce Tea



PolitopooulosDemetriGreekEntrepreneur2011-03-09.jpg "Demetri Politopoulos at his microbrewery in northern Greece. He says Greek leaders need to do more to make the country an easier place to do business." Source of caption and photo: online version of the NYT article quoted and cited below.



(p. 1) DEMETRI POLITOPOULOS says he has suffered countless indignities in his 12-year battle to build a microbrewery and wrest a sliver of the Greek beer market from the Dutch colossus, Heineken.

His tires have been slashed and his products vandalized by unknown parties, he says, and his brewery has received threatening phone calls. And he says he has had to endure regular taunts -- you left Manhattan to start up a beer factory in northern Greece? -- not to mention the pain of losing 5.3 million euros.

Bad as all that has been, nothing prepared him for this reality: He would be breaking the law if he tried to fulfill his latest -- and, he thinks, greatest -- entrepreneurial dream. It is to have his brewery produce and export bottles of a Snapple-like beverage made from herbal tea, which he is cultivating in the mountains that surround this lush pocket of the country.

An obscure edict requires that brewers in Greece produce beer -- and nothing else. Mr. Politopoulos has spent the better part of the last year trying fruitlessly to persuade the Greek government to strike it. "It's probably a law that goes back to King Otto," said Mr. Politopoulos with a grim chuckle, referring to the Bavarian-born king of Greece who introduced beer to the country around 1850.

Sitting in his office, Mr. Politopoulos took a long pull from a glass of his premium Vergina wheat beer and said it was absurd that he had to lobby Greek politicians to repeal a 19th-century law so that he could deliver the exports that Greece urgently needed. And, he said, his predicament was even worse than that: it was emblematic of the web of restrictions, monopolies and other distortions that have made many Greek companies uncompetitive, and pushed the country close to bankruptcy.



For the full story, see:

LANDON THOMAS Jr. "What's Broken in Greece? Ask an Entrepreneur." The New York Times, SundayBusiness Section (Sun., January 30, 2011): 1 & 5.

(Note: the online version of the article is dated January 29, 2011.)





March 20, 2011

"The Adventurous, Pioneering Spirit"



Jet_AgeBK.jpeg
















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



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


. . .


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

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



For the full review, see:

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

(Note: ellipses added.)

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


The book under review is:

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





March 18, 2011

Roy E. Disney as a "Real-life Jiminy Cricket"



DisneyRoyE2011-03-08.jpg"Roy E. Disney, shown in 1996, was considered a tough and outspoken critic of top executives at the Walt Disney Company." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. B18) LOS ANGELES -- Roy E. Disney, who helped revitalize the famed animation division of the company founded by his uncle, Walt Disney, and who at times publicly feuded with top Disney executives, died on Wednesday in Newport Beach, Calif. He was 79.

His death, at Hoag Memorial Hospital Presbyterian, was caused by stomach cancer, a spokeswoman for the Walt Disney Company said. Mr. Disney, who had homes in Newport Beach and the Toluca Lake district of Los Angeles, was the last member of the Disney family to work at the entertainment conglomerate built by his uncle and his father, Roy O. Disney.

As a boy the younger Roy would play in the halls of his uncle's studio, where animators often used him as a test audience as they toiled on movies like "Pinocchio." As an adult he helped bring the animation studio back from the brink, overseeing a creative renaissance that led to "The Little Mermaid," "Beauty and the Beast" and "The Lion King."

But the soft-spoken Mr. Disney was primarily known for a willingness to question the company's top managers, aggressively and publicly, when he felt they were mishandling the family empire. Some people in the company referred to him as its real-life Jiminy Cricket: a living conscience who was at times intensely disliked by management for speaking out.


. . .


Returning to the company in 1984, Mr. Disney set about revitalizing the floundering animation division. He obtained financing, for instance, for a computerized postproduction facility, helping to make possible the revolving ballroom scene in "Beauty and the Beast."



For the full obituary, see:

BROOKS BARNES. "Roy E. Disney Dies at 79; Rejuvenated Animation." The New York Times (Thurs., December 17, 2009): B18.

(Note: ellipsis added.)





March 14, 2011

"The Information in a Message Is Inversely Proportional to Its Probability"



TheInformationBKd.jpg
















Source of book image: http://www.umcs.maine.edu/~chaitin/



(p. A13) What, exactly, is information? Prior to Shannon, Mr. Gleick notes, the term seemed as hopelessly subjective as "beauty" or "truth." But in 1948 Shannon, then working for Bell Laboratories, gave information an almost magically precise, quantitative definition: The information in a message is inversely proportional to its probability. Random "noise" is quite uniform; the more surprising a message, the more information it contains. Shannon reduced information to a basic unit called a "bit," short for binary digit. A bit is a message that represents one of two choices: yes or no, heads or tails, one or zero.


For the full review, see:

JOHN HORGAN. "Little Bits Go a Long Way; The more surprising a message, the more information it contains." The Wall Street Journal (Tues., March 1, 2011): A13.



Book being reviewed:

Gleick, James. The Information: A History, a Theory, a Flood. New York: Pantheon Books, 2011.





March 7, 2011

Better Rails Were Needed Before Train Would "Work"



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


. . .


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



Source:

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

(Note: ellipsis added.)





February 26, 2011

How Bacardi Fought Predatory Taxation in Pre-Castro Cuba



BacardiAndTheLongFightForCubaBK2011-02-05.jpg











Source of book image: http://www.nytimes.com/2008/09/21/business/21shelf.html?_r=1





(p. W6) When it comes to chronicling the Bacardi rum dynasty, the best model may be "Buddenbrooks" or some other novelistic attempt to capture the experience of a family business trying to survive across generations. Tom Gjelten's "Bacardi and the Long Fight for Cuba" -- though fact-driven history and far more upbeat that Thomas Mann's tale of dynastic decline -- feels very much in this literary tradition.


. . .


Perhaps the most fascinating figure in the Bacardi tale is José Bosch, called Pepín, a young businessman who also married into the Bacardi family and was an early opponent of Gerardo Machado's corrupt rule in the 1920s. Machado made Bacardi, one of Cuba's most successful companies, a target of predatory taxation, but a proposed rum tax was more than the distiller could stand. Bacardi opened new facilities in Mexico and threatened to move its operations there if the tax was enacted. The Cuban legislature dropped the idea -- and Bacardi soon found itself with a Mexican distillery it didn't need, trying to sell a liquor to tequila- quaffing public that didn't want it.

Bosch was dispatched in 1933 to shut down the Mexican facility, but instead he saved it. "Noticing that Mexicans drank a lot of Coca-Cola," Mr. Gjelten writes, Bosch urged the company to promote Bacardi-and-Coke cocktails. Observing the rich tradition of Mexican handicrafts, he also suggested that the locals would be more inclined to drink rum if it was sold in the sort of wicker-covered jugs often used for it in Cuba. Sales in 1934 doubled.



For the full review, see:

ALVARO VARGAS LLOSA. "The Family Spirit." The Wall Street Journal (Fri., September 12, 2008): W6.

(Note: ellipsis added.)


The book being reviewed, is:

Gjelten, Tom. Bacardi and the Long Fight for Cuba: The Biography of a Cause. New York: Viking Penguin, 2008.





February 22, 2011

Luther Burbank's Income Suffered Because His Inventions Could Not Be Patented



BurbankLuther2011-02-05.jpg












"Luther Burbank pollinating poppies in Santa Rosa, Calif." Source of book image: online version of the NYT review quoted and cited below.



(p. C4) There is a particular type of potato at the heart of Jane S. Smith's book about Luther Burbank, a man who described himself as an "evoluter of new plants." Ms. Smith nicknames that potato "the lucky spud." That turn of phrase is one of many reasons to appreciate "The Garden of Invention," her colorful, far-reaching book about the genetic, agricultural, economic and legal issues raised by Burbank's life and legend.


. . .


This book takes more than a passing interest in Burbank's income, insofar as it reflected his legal ability to protect his scientific advances. In his early professional years he grappled with the doctrine that held that while a gold mine was real property and a machine to extract gold was intellectual property, the actual mineral belonged to anyone who could find it; ditto with potatoes. Throughout his career, even as he developed friendships with tycoons like Ford and Thomas Edison, Burbank lived under constant financial pressure to keep creating new plant products. "His income was entirely dependent on his latest marvel," Ms. Smith writes

.

For the full review, see:

JANET MASLIN. "Books of The Times; The Curious Man Lucky Enough to Create 'the Lucky Spud'." The New York Times (Mon., May 4, 2009): C4.

(Note: ellipsis added.)

(Note: the online version of the article is dated May 3, 2009.)


The book being reviewed, is:

Smith, Jane S. The Garden of Invention: Luther Burbank and the Business of Breeding Plants. New York: The Penguin Press, 2009.





February 21, 2011

The Story of Spielberg's "World-Changing Movies" Deserves "a Detailed, Impassioned and Insightful Telling"



(p. 20) . . . , LaPorte combines tabloid celebrity worship with an older oddity: the incongruous fact that a free market also produces resentment, especially when a competitor like Spielberg demonstrates leadership, superior achievement and undeniable success. He's one of the few filmmakers still committed to exploring the human condition -- and in popular terms. This is what sets him apart and makes him admired, envied and even inscrutable to those who think only in craven terms of business and royalty.


. . .


So it's a tabloid book. We can only hope it doesn't become the historical record. LaPorte undermines her research with a headachy repetition of anonymous informants ("one insider," "one former executive," "one source"). She concludes that "inherent in all of it was hubris." But a story this significant, about world-changing movies, doesn't need homilies. It needs a detailed, impassioned and insightful telling, one that would help us better appreciate a frequently misunderstood, underinterpreted pop artist whose work connects with the public, defines the complexities of human experience and dwarfs most of contemporary Hollywood's output. DreamWorks calls for a sensitive sociologist -- a Tom Wolfe or a Norman Mailer or a Pauline Kael -- who can discern the deep, divided heart of Hollywood.



For the full review, see:

ARMOND WHITE. "The Big Picture." The New York Times Book Review (Sun., July 11, 2010): 20.

(Note: ellipses added.)

(Note: the online version of the review is dated July 9, 2010.)


The book White credibly pans is:

LaPorte, Nicole. The Men Who Would Be King; an Almost Epic Tale of Moguls, Movies, and a Company Called Dreamworks. New York: Houghton Mifflin Harcourt, 2010.





February 18, 2011

Bloggers See Bad Conditions for Entrepreneurs



conditions.gif


The chart above and the one below are from the recently-released results of the First Quarter 2011 influential blogger survey conducted by the Kauffman Foundation. (Tim Kane gave permission to put the charts on my blog.) artdiamondblog.com is one of the blogs included in the survey.

The results above show a perception that conditions are currently tough for entrepreneurs. The chart below displays one of the main reasons: the current economy is perceived as uncertain and fragile. There are many reasons for the uncertainty, but one of them is surely that the bloggers have doubts about the depth of support in government for the institutions and policies upon which entrepreneurship depends (like private property, restrained regulations, and low taxes).


For a full PDF report on the 2011 Q1 survey results, see:

http://www.kauffman.org/uploadedfiles/econ_blogger_outlook_q1_2011.pdf



word-cloud.gif






February 14, 2011

Salesforce.com Needed More than New Economy Cockiness to Succeed



BehindTheCloudBK2011-02-05.jpg











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







(p. A25) Mr. Benioff tells the story of his success in "Behind the Cloud," a triumphalist memoir and business self-help manual. He makes it clear that, when he was starting out, he followed the standard dot-com playbook: Get some high-profile tech-industry backers and mentors--Mr. Benioff's former boss, Oracle chief executive Larry Ellison, was one--create buzz and let the revenues flow in. Salesforce.com might have been launched with New Economy cockiness, but success followed for solid, old-fashioned reasons: The company's products filled a market gap.


For the full review, see:

JESSICA HODGSON. "Selling and Software; How a start-up found a new way to deliver computer products to salespeople." The Wall Street Journal (Thurs., DECEMBER 17, 2009): A25.

(Note: the online version of the article is dated DECEMBER 16, 2009.)


The book being reviewed, is:

Benioff, Marc. Behind the Cloud: The Untold Story of How Salesforce.Com Went from Idea to Billion-Dollar Company-and Revolutionized an Industry. San Francisco, CA: Jossey-Bass, 2009.





February 10, 2011

Mackey Reduced Role in Whole Foods after Being "Drained" by Antitrust Battle



MackeyJohnWholeFoods2011-02-05.jpg














"Higher existing-store sales powered Whole Foods earnings. Above, co-founder John Mackey juggles apples in a New York store last November." Source of caption and photo: online version of the WSJ article quoted and cited below.



(p. B6) Whole Foods Market Inc. reported Wednesday that fiscal second-quarter profits had more than doubled and raised its full-year earnings forecast. The company also shook up its management team, naming a co-chief executive, though current CEO and co-founder John Mackey said he expects to work "for another decade or so."


. . .


Mr. Mackey in December resigned as Whole Foods' chairman after a year of controversy. Last summer, he wrote a controversial opinion article for The Wall Street Journal on his views of health care reform that led to boycotts of the natural grocer by some of his most loyal shoppers. Last spring, the Fair Trade Commission ordered the sale of 37 former Wild Oats Markets Inc. stores, a multi-year battle that Mr. Mackey says left him drained and influenced his decision to appoint Mr. Robb as co-CEO.



For the full story, see:

TIMOTHY W. MARTIN. "Profit Soars at Whole Foods; Grocery Chain Forecasts Sharply Higher Profit, Promotes Two Veteran Executives." The Wall Street Journal (Thurs., MAY 13, 2010): B6.

(Note: ellipsis added.)

(Note: the first paragraph quoted above has slightly different wording in the online version than the print version; the second paragraph quoted is the same in both.)





February 9, 2011

Informal Sector Responded Quicker to Quake than Established Companies



HaitianCoalVendors2011-02-02.jpg "In Port-au-Prince . . . , Haitian vendors peddled small bags of coal." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A10) PORT-AU-PRINCE, Haiti -- The price of candles in the teeming La Saline market here has climbed 60 percent since last week's earthquake. A box of matches is up 50 percent. A package of Perdue Chicken Franks has gone up 30 percent.


. . .


Haiti's huge informal sector reacted faster to the quake than did established companies and banks. Outdoor markets like La Saline are already filled with goods from the countryside, including salt, cornmeal, fruits like mangoes and used clothing from the United States.


. . .


"People want candles because they have no electricity or fuel for their generators," said Manouchka Wendiwou, 21, a vendor in La Saline who raised her candle prices by 60 percent and made no apology for charging what the market would bear.



For the full story, see:

SIMON ROMERO. "Economy in Shock Struggles to Restart." The New York Times (Fri., January 22, 2010): A10.

(Note: ellipses added.)

(Note: the online version of the article is dated January 21, 2010.)





February 3, 2011

"Inventors Are Sometimes Beneficiaries of Their Own Ignorance"




William Rosen gives us a thought-provoking anecdote about Edmund Cartwright, the inventor of the first power loom:


(p. 238) He was also, apparently, convinced of the practicality of such a machine by the success of the "Mechanical Turk," a supposed chess-playing robot that had mystified all of Europe and which had not yet been revealed as one of the era's great hoaxes: a hollow figurine concealing a human operator. Inventors are sometimes beneficiaries of their own ignorance.


Source:

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





February 1, 2011

Federal Regulations Hurt Small Toy Makers



(p. C12) The story begins in 2007, an unusually good year for Peapods Natural Toys and Baby Care, in St. Paul, Minn., and many similar mom-and-pop businesses. Frightened by news that toys made in China contained unsafe levels of lead, customers were looking for alternatives to the usual big-box offerings. Just as organic farmers gain market share whenever there's a food-safety panic, the lead scare boosted sales of artisanal children's goods. "People wanted made-in-USA products, and we were the only place in town that had them," says Dan Marshall, the owner of Peapods.

Vendors offering organic materials and a personal touch seemed poised to prosper. But the short-term boon soon turned into a long-term disaster. In response to the lead panic, Congress passed the Consumer Product Safety Improvement Act, or CPSIA, by an overwhelming majority. The law mandates third-party testing and detailed labels not only for toys but for every single product aimed at children 12 and under.


. . .


Although big companies like Mattel could spread the extra costs over millions of toys, Mr. Marshall's small-scale suppliers couldn't. Unable to afford thousands of dollars in testing per product, some went out of business. Others moved production to China to cut costs. Many slashed their product lines, reserving the expensive new tests for only their top sellers. The European companies that used to sell Peapods such specialty items as wooden swords and shields or beeswax-finished cherry-wood rattles simply abandoned the U.S. market. The survivors jacked up prices.



For the full commentary, see:

VIRGINIA POSTREL. "COMMERCE & CULTURE; Small Crafts vs. Big Government." The Wall Street Journal (Sat., January 29, 2011): C12.

(Note: ellipsis added.)





January 30, 2011

Carlyle (and Rosen) on Arkwright



(p. 236) The greatest hero-worshipper of them all, Thomas Carlyle. described Arkwright as

A plain, almost gross, bag-checked, potbellied, much enduring, much inventing man and barber... . French Revolutions were a-brewing: to resist the same in any measure, imperial Kaisers were impotent without the cotton and cloth of England, and it was this man that had to give England the power of cotton.... It is said ideas produce revolutions, and truly they do; not spiritual ideas only, but even mechanical. In this clanging clashing universal Sword-dance which the European world now dances for the last half-century, Voltaire is but one choragus [leader of a movement, from the old Greek word for the sponsor of a chorus] where Richard Arkwright is another.

. . .


Arkwright was not a great inven-(p. 237)tor, but he was a visionary, who saw, better than any man alive, how to convert useful knowledge into cotton apparel and ultimately into wealth: for himself, and for Britain.



Source:

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

(Note: internal ellipses in original; ellipsis between paragraphs added.)





January 29, 2011

"It Isn't the Consumers' Job to Know What They Want"



iPadChild2011-01-21.jpg "Steven P. Jobs has played a significant role in a string of successful products at Apple, including the iPad, shown above, which was introduced last year." Source of caption and photo: online version of the NYT article quoted and cited below.


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

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

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

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


. . .


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

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

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

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


. . .


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

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

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



For the full story, see:

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

(Note: ellipses added.)

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





January 27, 2011

Stranded Chinese Drivers Curse Government and Buy Noodles from Entrepreneurs



StrandedTrafficChinaEntrepreneurs2011-01-21.jpg"Enterprising residents of Hetaocun sold food to stranded travelers at a markup." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A7) HETAOCUN, China -- Compared with some of the more spectacular recent traffic jams in China, among them a 60-mile snarl last summer that paralyzed a major artery outside Beijing for two weeks, the thousands of travelers who spent the night trapped on a snow-coated highway in southwest Guizhou Province on Monday did not even warrant a mention in the local news media.


. . .


Stranded drivers chain-smoked, stomped their feet against the chill and cursed the government for failing to come to their rescue. As the night wore on, fuel lines froze and cellphone batteries died.

The residents of Hetaocun, however, saw the unmoving necklace of taillights from their mountain village and got entrepreneurial. They roused children from their beds, loaded boxes of instant noodles into baskets and began hawking their staples to a captive clientele. The 500 percent markup did not appear to dent sales.

"It rarely snows here, so this is a good thing," said Yi Zhonggui, 42, as he wove past stalled vehicles with his wife and 4-year-old daughter lugging thermoses of hot water.

As the supply of noodles ran low, residents began gathering up the walnuts that give the village its name. In between cries of "walnuts, walnuts," salesmen like Chen Xianneng obliged the desperate with snippets of news from the front, even if the information was based on hearsay.



For the full story, see:

ANDREW JACOBS. "Hetaocun Journal; As Traffic Backs Up, Villagers See Opportunity." The New York Times (Weds., JANUARY 19, 2011): A7.

(Note: ellipsis added.)

(Note: the online version of the article is dated January 18, 2011 and has the title "Hetaocun Journal; In China, Traffic Jam Benefits Enterprising Villagers.")





January 20, 2011

Economic Importance of Inarticulate Knowledge Undermines Case for Central Planning



(p. 78) . . . the intelligence of humans, though immensely strengthened by articulation, nonetheless contains a large component of tacit understanding by individuals who know more than they can say. If this is also true with respect to the sorts of knowledge relevant to our economic activities, then no comprehensive planning agency could obtain the sort of knowledge necessary for economic planning, for it would lie buried deep in the minds of millions of persons.


Source:

Lavoie, Don. National Economic Planning: What Is Left? Washington, DC: Cato Institute, 1985.

(Note: ellipsis added.)






January 9, 2011

U.S. Sets Capital Requirement Too High for Entrepreneurs' Visas



WongBrian2011-01-02.jpg "Brian Wong, above at his company's office in San Francisco, is a Canadian citizen hoping for a rule change that would ease U.S. visa restrictions." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. B7) San Francisco entrepreneur Brian Wong has already hired two employees and secured $300,000 in funding for his start-up, and hopes to have a staff of 40 or more full-time workers by this time next year.

But there's at least one red flag in his business plan: Mr. Wong isn't American; he's Canadian.


. . .


. . . foreign entrepreneurs have long played an outsized role in the U.S. start-up sector, especially in the tech industry. Immigrants are nearly 30% more likely to start a business than nonimmigrants, the Small Business Administration says. University of California researchers estimate about a third of Silicon Valley technology firms were started by Indian or Chinese entrepreneurs, while a joint study with Duke University found at least one immigrant founder in over a quarter of all engineering and technology firms launched in the U.S. since the mid 1990s, together generating nearly 450,000 jobs by 2005. Google Inc., Intel Corp., Yahoo Inc. and eBay Inc. all had at least one immigrant founder.

Yet many of these companies were also started on a shoestring, leading some tech industry insiders to say the bill's capital requirements are far too high.


. . .


. . . , the start-up visa's high capital requirement is certain to filter out sole-proprietorships, while ensuring it attracts innovative, mostly tech-savvy entrepreneurs, says Bob Litan, a researcher at the Kauffman Foundation. The downside, he says, is that only a handful of immigrant entrepreneurs will qualify.

"Hardly any businesses get venture capital in a given year," Mr. Litan says. "This isn't going to have much of an impact on the U.S. economy and I suspect that's why so few people are opposed to it."


. . .


Without a visa, Mr. Wong says he'll be forced to launch his start-up back in Canada, taking the new jobs with him.



For the full story, see:

ANGUS LOTEN. "New Pitch for Start-Up Visas; Senate Bill Would Make for Smoother U.S. Entry for Foreign Entrepreneurs ." The Wall Street Journal (Thurs., December 16, 2010): B7.

(Note: ellipses added.)





December 22, 2010

Under Health Care 'Reform' the Total Cost of Health Care Will "Go through the Roof!"



BushJonathanAthenahealth2010-12-20.jpg










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




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

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


. . .


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

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

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

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

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

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

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

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

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



For the full story, see:

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

(Note: ellipsis added.)

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





November 28, 2010

Whittle "Struggled for Years to Get Funding and Time to Pursue His Idea"



DeHavilandComet2010-11-14.jpg"When Britain Ruled The Skies: A De Havilland Comet under construction in Belfast in 1954." Source of caption and photo: online version of the WSJ review quoted and cited below.


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

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

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

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


. . .


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




For the full review, see:

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

(Note: ellipsis added.)


The book under review is:

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





November 22, 2010

Ice Entrepreneur Gorrie Died Dispirited for Lack of Funds



ConnectionsBK.jpg



















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



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


. . .


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



Source:

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

(Note: ellipsis and bracketed information added.)





November 20, 2010

Capitalism's Market Entrepreneurs Benefit the Common Man



VanderbiltFiskCartoon2010-11-14.jpg"Rails to riches: An 1870 cartoon depicting James Fisk's attempt to stop Cornelius Vanderbilt from gaining control of the Erie Railroad Company." Source of caption and cartoon: online version of the WSJ article quoted and cited below.


I have read H.W. Brands' Masters of Enterprise book and found that it contained some interesting anecdotes, but not very insightful interpretation. From Amity Shlaes' uswdul review quoted below, I would expect the same from Brands' most recent book.


(p. C7) Mr. Brands laments that capitalism's triumph in the late 19th century created a disparity between the "wealthy class" and the common man that dwarfs any difference of income in our modern distribution tables. But this pitting of capitalism against democracy will not hold. When the word "class" crops up in economic discussions, watch out: it implies a perception of society held in thrall to a static economy of rigid social tiers. Capitalism might indeed preclude democracy if capitalism meant that rich people really were a permanent class, always able to keep the money they amass and collect an ever greater share. But Americans are an unruly bunch and do not stay in their classes. The lesson of the late 19th century is that genuine capitalism is a force of creative destruction, just as Joseph Schumpeter later recognized. Snapshots of rich versus poor cannot capture the more important dynamic, which occurs over time.

One capitalist idea (the railroad, say) brutally supplants another (the shipping canal). Within a few generations--and in thoroughly democratic fashion--this supplanting knocks some families out of the top tier and elevates others to it. Some poor families vault to the middle class, others drop out. If Mr. Brands were right, and the "triumph of capitalism" had deadened democracy and created a permanent overclass, Forbes's 2010 list of billionaires would today be populated by Rockefellers, Morgans and Carnegies. The main legacy of titans, former or current, is that the innovations they support will produce social benefits, from the steel-making to the Internet.

The second failing of "Colossus" is its perpetuation of the robber-baron myth. Years ago, historian Burton Folsom noted the difference between what he labeled political entrepreneurs and market entrepreneurs. The political entrepreneur tends to compete over finite assets--or even to steal them--and therefore deserves the "robber baron" moniker. An example that Mr. Folsom provided: the ferry magnate Robert Fulton, who operated successfully on the Hudson thanks to a 30-year exclusive concession from the New York state legislature. Russia's petrocrats nowadays enjoy similar protections. Neither Fulton nor the petrocrats qualify as true capitalists.

Market entrepreneurs, by contrast, vanquish the competition by overtaking it. On some days Cornelius Vanderbilt was a political entrepreneur--perhaps when he ruined those traitorous partners, for instance. But most days Vanderbilt typified the market entrepreneur, ruining Fulton's monopoly in the 1820s with lower fares, the innovative and cost-saving tubular boiler and a splendid advertising logo: "New Jersey Must Be Free." With market entrepreneurship, a third party also wins: the consumer. Market entrepreneurs are not true robbers, for their ruining serves the common good.



For the full review, see:

AMITY SHLAES. "An Age of Creative Destruction." The Wall Street Journal (Sat., October 16, 2010): C7.

(Note: the online version of the article is dated October 29 (sic), 2010.)


The book under critical review by Shlaes:

Brands, H.W. American Colossus: The Triumph of Capitalism, 1865-1900. New York: Doubleday, 2010.


The Folsom book rightly praised in passing by Shlaes is:

Folsom, Burton W. The Myth of the Robber Barons. 4th ed: Young America's Foundation, 2003.





November 12, 2010

Guidelines for Innovative Thinking?



innovation-cartoon.jpg Source of cartoon: http://filipspagnoli.files.wordpress.com/2009/11/innovation-cartoon.jpg?w=361&h=364


The NYT ran the above cartoon by New Yorker cartoonist Leo Cullum as part of Cullum's obituary.


(p. A22) Leo Cullum, a cartoonist whose blustering businessmen, clueless doctors, venal lawyers and all-too-human dogs and cats amused readers of The New Yorker for the past 33 years, died on Saturday in Los Angeles. He was 68 and lived in Malibu, Calif.

Mr. Cullum, a TWA pilot for more than 30 years, was a classic gag cartoonist whose visual absurdities were underlined, in most cases, by a caption reeled in from deep left field. "I love the convenience, but the roaming charges are killing me," a buffalo says, holding a cellphone up to its ear. "Your red and white blood cells are normal," a doctor tells his patient. "I'm worried about your rosé cells."


. . .


His most popular cartoon, from 1998, showed a man addressing the family cat, which is sitting next to the litterbox. "Never, ever, think outside the box," he says.




For the full obituary, see:

WILLIAM GRIMES. "Leo Cullum, New Yorker Cartoonist, Dies at 68." The New York Times (Tues., October 26, 2010): A22.

(Note: the online version of the obituary is dated October 25, 2010.)

(Note: ellipsis added.)





November 2, 2010

William Rosen's "The Most Powerful Idea in the World"



Most-Powerful-Idea-in-the-WorldBK2010-10-24.jpg














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




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

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

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

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

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


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

THE PATENT SYSTEM ADDED

THE FUEL OF INTEREST

TO THE FIRE OF GENIUS



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


Book discussed:

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





October 31, 2010

"Small-Business Marketplace at a Standstill"



WetzelDavidHardware2010-10-23.jpg"David Wetzel tried for two years to sell his New Jersey hardware store." Source of caption and photo: online version of the WSJ article quoted and cited below.


(p. B1) Small-business owners banking on a big payoff when they sell their establishments may have to settle for a lot less than planned.

A combination of tight credit, skittish buyers and business owners unwilling to sell at rock-bottom prices--factors similarly affecting home sellers--has left the small-business marketplace at a standstill.


. . .

(p. B4) "Owners still think their businesses are worth what they used to be," says Thomas Coffey, a partner in Malvern, Pa., with B2BCFO, a provider of outsourced chief financial officers to small businesses. In reality, many "small companies just aren't earning what they used to earn," he says.



For the full story, see:

SARAH E. NEEDLEMAN. "Businesses Put Up for Sale Smack Into Harsh Reality." The Wall Street Journal (Thurs., OCTOBER 14, 2010): B1 & B4.

(Note: ellipsis added.)





October 28, 2010

Home Depot Co-Founder Asks Obama to Stop Blocking Startups



Below I quote from the comments that Home Depot co-founder Ken Langone addressed to President Obama:


(p. A21) A little more than 30 years ago, Bernie Marcus, Arthur Blank, Pat Farrah and I got together and founded The Home Depot. Our dream was to create (memo to DNC activists: that's build, not take or coerce) a new kind of home-improvement center catering to do-it-yourselfers. The concept was to have a wide assortment, a high level of service, and the lowest pricing possible.

We opened the front door in 1979, also a time of severe economic slowdown. Yet today, Home Depot is staffed by more than 325,000 dedicated, well-trained, and highly motivated people offering outstanding service and knowledge to millions of consumers.

If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it's a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase--never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers.

Meantime, you seem obsessed with repealing tax cuts for "millionaires and billionaires." Contrary to what you might assume, I didn't start with any advantages and neither did most of the successful people I know. I am the grandson of immigrants who came to this country seeking basic economic and personal liberty. My parents worked tirelessly to build on that opportunity. My first job was as a day laborer on the construction of the Long Island Expressway more than 50 years ago. The wealth that was created by my investments wasn't put into a giant swimming pool as so many elected demagogues seem to imagine. Instead it benefitted our employees, their families and our community at large.



For the full commentary, see:

KEN LANGONE. "Stop Bashing Business, Mr. President; If we tried to start The Home Depot today, it's a stone cold certainty that it would never have gotten off the ground." The Wall Street Journal (Fri., OCTOBER 15, 2010): A21.





October 25, 2010

Entrepreneurial Improvisation is Like "Jumping Rock to Rock Up a Stream"



HoppingCreekStones2010-10-04.jpg"Crossing the Sulphurous River." Source of caption and photo: http://www.flickr.com/photos/33506763@N00/211985842#/photos/sparlingo/211985842/lightbox/


In The Venturesome Economy book, and later (pp. 129 and 142) in the book quoted below, Bhidé describes the entrepreneur's decision process as "improvisation."


(p. 18) Entrepreneurs who start uncertain businesses with limited funds have little reason to devote much effort to prior planning and research. They cannot afford to spend much time or money on the research; the modest likely profit doesn't merit much; and the high uncertainty of the business limits its value.

Sketchy planning and high uncertainty require entrepreneurs to adapt to many unanticipated problems and opportunities. One entrepreneur likens the process of starting a new business to jumping from rock to rock up a stream rather than constructing the Golden Gate Bridge from a detailed blueprint. Often, to borrow a term from Elster's discussion of biological evolution, entrepreneurs adapt to unexpected circumstances in an "opportunistic" fashion: Their response derives from a spur-of-the- moment calculation made to maximize immediate cash flow. Capital-constrained entrepreneurs cannot afford to sacrifice short-term cash for long-term profits. They have to play rapid-fire pinball rather than a strategic game of chess.


Source:

Bhidé, Amar. The Origin and Evolution of New Businesses. Oxford and New York: Oxford University Press, 2000.

[Note to self: the search phrase "jumping rock stream" seems most productive of relevant images]



Chris_and_Andrea_Jumping_from_Rock_to_Rock_Up_a_Stream.JPG"Chris and Andrea Jumping from Rock to Rock Up a Stream." Source of caption and photo: http://picasaweb.google.com/lh/photo/Q-FvMT8GFG7kZdvUm8d_Jw


JumpingRiverRocks2010-10-04cropped.jpg

























"Girl (10-12) jumping on rocks in river." Source of caption and photo: http://cache4.asset-cache.net/xc/200447463-001.jpg?v=1&c=NewsMaker&k=2&d=B3B7071D257FC0393BFC8E309AE4811E35B7CE0CF91BE8709437A3EAE6A5D3E800123AA3B5A18ED0





October 21, 2010

Joe Ricketts Stands Tall Against Earmarks



RickettsJoe2010-10-01.jpg







Entrepreneur Joe Ricketts. Source of photo: online version of the Omaha World-Herald article quoted and cited below.



I used to teach an Economics of Technology course in the UNO EMBA program (until a curriculum committee axed the course). As a long-shot I once invited Joe Ricketts to speak to the class. I was surprised that he accepted, and maybe also surprised that he clearly invested some time and thought in his presentation. The class was riveted not only by the story of his own entrepreneurial challenges, but also of his views of the policy issues of the day. I remember his good-natured persistence in arguing with one student who challenged him on his view of the importance of tort-reform.

From his manner, and some of the stories he told, he seemed to be the sort of entrepreneur who exemplified George Gilder's view that great entrepreneurs have a kind of humility that leaves them open to learning, at least in key areas related to their business goals. By all accounts, Sam Walton was another example. And I heard Charles Koch speak this summer and saw him interact with some of his executives; he also gave the impression of being down-to-earth, and open to learning.

(Of course, then there's Steve Jobs and Larry Ellison---generalizations on entrepreneurship are hard to come by!)

Ricketts and Koch also share another trait---this one too rare among successful entrepreneurs. They are both willing to invest a considerable part of their hard-earned wealth in order to preserve and protect the institutions of limited government that will make it possible for future entrepreneurs to succeed. In Ricketts' case, for example:


(p. 7A) WASHINGTON -- Joe Ricketts wants to bring down at least one Capitol Hill lawmaker who seeks earmarks so he can get the rest of Congress' attention.

The founder and former CEO of what is now TD Ameritrade has started a new organization called Taxpayers Against Earmarks, which will seek to highlight what he describes as the evils of legislators setting aside money for pet projects back home.


. . .


Ricketts said that while some earmarks support worthy projects, he is against them all because the process is flawed. He compared those who support earmarks to addicts and criminals.

"I'm sure that all over the country there are people that like earmarks and people come to defend earmarks, and those are the people that are on the dope," he said.

Ricketts said those who seek earmarks are asking legislators to spend other people's money for their purposes.

"That's theft," he said. "As Tom Coburn says, that's intergenerational theft. So those people that like earmarks, you can consider thieves."


. . .


Ricketts said . . . the process encourages lawmakers to throw their support behind other spending bills to gain other lawmakers' support for their earmarks.

"A lot of elected officials like the earmarks, but they've never had anybody like me or anybody else push back. ... So now the scales are going to balance a little bit," he said. "I'm going to spend as many years and as many dollars as it takes to be successful."



For the full story, see:

Joseph Morton. "Joe Ricketts Will Put Up Big Bucks to Fight Earmarks." Omaha World-Herald (Friday, October 1, 2010): 7A.

(Note: all ellipses added, except for the last one which was in the original.)

(Note: the online version of the article has the title "Joe Ricketts will help fight earmarks.")





October 16, 2010

Long and Unknown Incubation Time Sometimes Needed for Innovation



(p. 118) The incubation stage is the most mysterious of the three stages of divergent thinking. Sometimes it appears as if the problem-solving process has stopped altogether.

Incubation is the absolute opposite of the normal business processes of the operating organization. It is often totally unpredictable. But since it is also the heart of the creative process, it creates a dilemma for the business executive who wants to support innovation but has little patience for unfocused activity. In the incubation period, observations stew on the edge of consciousness until something clarifies. As Newton observed, "I keep the subject constantly before me, and wait until the first dawnings open slowly, little by little, into the full and clear light."

There is no way to plan "enough" incubation time. What, then, can one do to improve the productivity of this period of incubation? One useful tool is what psychologists call "suspending disbelief--suspending judgment on data or observations that seem to make no sense. It allows time for the rearrangement of data, allowing one time to find new images that explain or illustrate how things might work. Suspending disbelief (p.119) is essential to avoiding premature closure on an issue, or entrenchment in existing ideas and approaches. Suspending disbelief helps to improve one's chances of finding a fresh view of the universe. It is an unnatural act for an operating organization, but an essential trait for an innovative organization.

A second useful tool is to deconstruct the problem so that you can recombine elements of it and gain fresh insight. Sir James Black, Nobel Prize winner for the discovery of histamine antagonists, suggests that one "turn the question around." Dr. Black prefers an "oblique attack" to a problem rather than a direct one.

One way to change context, Csikszentmihalyi observes, is to position yourself at the intersection of different cultures or disciplines: "where beliefs, lifestyles, and knowledge mingle and allow individuals to see new combinations of ideas with greater ease. In cultures that are uniform and rigid it takes a greater investment of attention to achieve new ways of thinking. In other words, creativity is more likely in places where new ideas require less effort to be perceived."




Source:

Foster, Richard N., and Sarah Kaplan. Creative Destruction: Why Companies That Are Built to Last Underperform the Market---and How to Successfully Transform Them. New York: Currency Books, 2001.





October 15, 2010

What Cuba Must Do to Welcome Entrepreneurs



BlancoSerafinCuban2010-0.jpg"Serafin Blanco is the owner of Ñooo! ¡Que Barato!, a huge discount store in Hialeah, Fla., where recent arrivals stock up on $1.99 flip-flops and other items for relatives to resell in Cuba." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A6) "Things move very slowly in Cuba be-(p. A9)cause they are very, very concerned about breaking the balance of power with economic reforms," said Jorge Sanguinetty, president of the Association for the Study of the Cuban Economy, a research group. "This is the reality. They don't want to emulate Gorbachev when he started making reforms in Russia and the whole thing came down."

Mr. Sanguinetty, who served as a senior economic official with the Cuban government until he resigned in June 1966, said that Cuba might be just beginning the long, painstaking process of rebuilding the most basic economic relationships. He noted that Cuba even eliminated accounting schools in the first decade after the 1959 revolution because officials thought money would be unnecessary, and that many Cubans had no experience with credit cards, banks or checks. Now, he said, the government must move forward -- with import-export licenses, with clearer communication about rules -- if it hopes to make entrepreneurs a vital element of the economy.



For the full story, see:

DAMIEN CAVE. "Near to Cuba, Wary Kin Wait for Proof of a New Path." The New York Times (Weds., September 22, 2010): A6 & A9.

(Note: the online version of the article is dated September 21, 2010 and has the slightly different title "Near Cuba, Wary Kin Wait for Proof of a New Path.")





September 27, 2010

Twitter CEO Returned to Nebraska to Found First Company



WilliamsEvanTwitter2010-09-02.jpg











Evan Williams, Twitter CEO. Source of photo: online version of the NYT article quoted and cited below.



(p. 9) I GREW up on a farm in Nebraska, where we grew mostly corn and soybeans. During the summers I was responsible for making sure the crops were irrigated.

After high school, I enrolled at the University of Nebraska at Lincoln, but I stayed only a year and a half. I felt college was a waste of time; I wanted to start working. I moved to Florida, where I did some freelance copywriting. After that I moved to Texas and stayed with my older sister while I figured out what to do next. In 1994, I returned to Nebraska and started my first company with my dad.

We didn't know anything about the Internet, but I thought it was going to be a big deal. We produced CD-ROMs and a video on how to use the Internet, and we did some Web hosting. I recruited some friends and we tossed around some ideas, but none of us knew how to write software and we didn't have much money. We watched what entrepreneurs in California were doing and tried to play along.

. . .


My life has been a series of well-orchestrated accidents; I've always suffered from hallucinogenic optimism. I was broke for more than 10 years. I remember staying up all night one night at my first company and looking in couch cushions the next morning for some change to buy coffee. I've been able to pay my father back, which is nice, and my mother doesn't worry about me as much since I got married a year and a half ago.



For the full story, see:

EVAN WILLIAMS. "The Boss; For Twitter C.E.O., Well-Orchestrated Accidents." The New York Times, SundayBusiness Section (Sun., March 8, 2009): 9.

(Note: the online version of the story is dated March 7, 2009.)





September 24, 2010

Successful Entrepreneurs Do Not Need to Give Back to Society---They Already Gave at the Office



(p. A15) Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to "give back" to society. But "giving back" implies they have taken something. What, exactly, have they taken? Yes, they have amassed great sums of wealth. But that wealth is the reward they have earned for investing their time and talent in creating products and services that others value. They haven't taken from society, but rather enriched us in ways that were previously unimaginable.


. . .


Let's hope the philanthropy of those who . . . sign the Giving Pledge achieves great things. But let's not fool ourselves into thinking that businessmen are likely to achieve more by giving their money away than they have by making it in the first place.



For the full commentary, see:

Kimberly O. Dennis. "Gates and Buffett Take the Pledge; Wealthy businessmen often feel obligated to 'give back.' Who says they've taken anything?" The Wall Street Journal (Fri., AUGUST 20, 2010): A15.

(Note: ellipses added.)






September 16, 2010

Tax Hike Would Hurt Entrepreneurs



(p. A17) When Congress returns from its summer recess, members will face a pivotal decision about the expiring Bush tax cuts. President Barack Obama has called for their permanent extension for singles with incomes below $200,000 and married couples with incomes below $250,000, but has proposed that most of the tax cuts for households with higher incomes be allowed to expire.


. . .


The fact that there are millions of people in the lower tax brackets with small amounts of business income may be interesting for some purposes, but it is irrelevant for the assessment of the economic impact of the tax hikes.

The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.


. . .


Economic research supports a large impact. A pair of papers by economists Robert Carroll, Douglas Holtz-Eakin, Harvey Rosen and Mark Rider that were published in 1998 and 2000 by the National Bureau of Economic Research analyzed tax return data and uncovered high responsiveness of sole proprietors' business activity to tax rates. Their estimates imply that increasing the top rate to 40.8% from 35% (an official rate of 39.6% plus another 1.2 percentage points from the restoration of a stealth provision that phases out deductions), as in Mr. Obama's plan, would reduce gross receipts by more than 7% for sole proprietors subject to the higher rate.

These results imply a similar effect on proprietors' investment expenditures. A paper published by R. Glenn Hubbard of Columbia University and William M. Gentry of Williams College in the American Economic Review in 2000 also found that increasing progressivity of the tax code discourages entrepreneurs from starting new businesses.



For the full commentary, see:

KEVIN A. HASSETT and ALAN D. VIARD. "The Small Business Tax Hike and the 97% Fallacy; The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery." The Wall Street Journal (Fri., SEPTEMBER 3, 2010): A17.

(Note: ellipses added.)


One of the papers by Carroll et al, is:

Carroll, Robert, Douglas Holtz-Eakin, Mark Rider, and Harvey S. Rosen. "Income Taxes and Entrepreneurs' Use of Labor." Journal of Labor Economics 18, no. 2 (April 2000): 324-51.


The Hubbard paper is:

Gentry, William M., and R. Glenn Hubbard. "Tax Policy and Entrepreneurial Entry." The American Economic Review 90, no. 2 (May 2000): 283-87.





September 15, 2010

Brit Papers Survived Due to "the Gratifying Defeat of the Luddite Unions by Rupert Murdoch"



EvansHarold2010-09-01.jpg















"Evans says: "Ultimately, Mrs Thatcher was the reason I was fired, because I attacked her so much." Source of caption and photo: online version of The Independent on Sunday article quoted and cited below.



(p. 12) As a condition of acquiring both The Times and The Sunday Times in early 1981, Murdoch promised that the independence of each would be protected by a board of directors, and made other solemn guarantees.

"On this basis," Evans wrote in Good Times, Bad Times, "I accepted Rupert Murdoch's invitation to edit The Times on February 17 1981. My ambition," he admitted, "got the better of my judgement." Every assurance regarding editorial independence, he added, was blithely disregarded.

On 9 March 1982, the day after he'd come back from burying his father at Bluebell Wood cemetery in Prestatyn, Harold Evans was sacked.

"Ultimately," he says, "Mrs Thatcher was the reason I was fired. Because I was attacking her so much. When she started to dismantle the British economy, the most cogent critic of that policy which led, OK, to... a lot of things... was The Sunday Times. I wrote 70 per cent of that criticism myself. When I became editor of The Times, I continued to criticise monetarism. But I could still see some of the good things about her."

"Just remind us?"

"I'm thinking - and you probably won't agree with this because I sense that you're a firm supporter of the NUJ [National Union of Journalists] - mainly of her dealings with the unions."

"How do you feel about her now?"

"I think she is a very brave woman."

"Hitler was brave."

"Yes, but... she was right about terrorism. She was right about the IRA."

"Do you think Britain would be a better place if she'd never existed?"

"No. I think Britain benefited from her having been there. Britain was becoming so arthritic with labour restrictions."

"Good Times, Bad Times is an unforgiving portrait of Rupert Murdoch."


. . .


(p. 13) [Evans] has called Rupert Murdoch elitist, anti-democratic, and asserted that the Australian cares nothing about the opinion of others, so long as his business expands. This is the same man who refers to "the gratifying defeat of the Luddite unions by Rupert Murdoch".


. . .


"So how do you feel about the Murdoch empire now?"

Evans pauses. "I'm not that familiar with the British... OK. Let's take an alternative scenario. Murdoch never arrives. I manage to take control of The Sunday Times with the management buyout. Then I get defeated by the unions. The Independent wouldn't be here. Rival papers survived because they got the technology. Thanks to Murdoch."




For the full interview, see:

Robert Chalmers, Interviewer. "Harold Evans: 'All I tried to do was shed a little light'." The Independent on Sunday (Sun., June 13, 2010): 8 & 10-13.

(Note: free-standing ellipsis, between paragraphs, added; internal ellipses in original; italics in original; bracketed name added in place of "he.")





September 9, 2010

Jeff Bezos' Goal: "Earth's Biggest Selection"



BezonJeff2010-08-29.jpg



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





(p. 18) You're a longtime science buff who studied electrical engineering and computer science at Princeton. Why did you want to be a bookseller in the first place?
You have to go back in time to 1994, and there's something very unusual about the book category. There are more items in the book category than there are items in any other product category. One of the things it was obvious you could do with an online store is have a much more complete selection.



Initially, Amazon sold books exclusively, but it has since expanded into a retail omnivore that sells basketballs and vacuum cleaners and hamster food and everything under the sun. What is your goal, exactly?
We want to have earth's biggest selection. Earth's biggest river, earth's biggest selection.



For the full interview, see:

DEBORAH SOLOMON. "QUESTIONS FOR Jeffrey P. Bezos; Book Learning." The New York Times, Magazine Section (Sun., December 6, 2009): 18.

(Note: bold in original, to indicate questions by Deborah Solomon.)

(Note: the online version of the interview is dated December 2, 2009.)


.




August 14, 2010

Both New York City and Cars Assert Individuality and Enterprise



(p. C5) If the culture and character of some cities are closely associated with modes of transportation (gondolas in Venice, bicycles in Amsterdam), the automobile may be the defining force in New York, not because it decreed the layout of streets or because it is essential (as in Los Angeles), but because its assertion of individuality and enterprise and its readiness to expand beyond assigned boundaries had so much to do with the city's spirit.


For the full review, see:

EDWARD ROTHSTEIN. "Last Chance; Exhibition Review; The Anatomy of a Citywide Traffic Jam." The New York Times (Tues., July 20, 2010): C1 & C5.

(Note: the online version of the article is dated July 19, 2010.)






August 12, 2010

Inventors Should Work Alone, Even If They Have to Moonlight



(p. 291) If you're that rare engineer who's an inventor and also an artist, I'm going to give you some advice that might be hard to take. That advice is: Work alone.

When you're working for a large, structured company, there's much less leeway to turn clever ideas into revolutionary new products or product features by yourself. Money is, unfortunately, a god in our society, and those who finance your efforts are businesspeople with lots of experience at organizing contracts that define who owns what and what you can do on your own.

But you probably have little business experience, know-how, or acumen, and it'll be hard to protect your work or deal with all that corporate nonsense. I mean, those who provide the funding and tools and environment are often perceived as taking the credit for inventions. If you're a young inventor who wants to change the world, a corporate environment is the wrong place for you.

(p. 292) You're going to be best able to design revolutionary products and features if you're working on your own. Not on a committee. Not on a team. That means you're probably going to have to do what I did. Do your projects as moonlighting, with limited money and limited resources. But man, it'll be worth it in the end. It'll be worth it if this is really, truly what you want to do--invent things. If you want to invent things that can change the world, and not just work at a corporation working on other people's inventions, you're going to have to work on your own projects.

When you're working as your own boss, making decisions about what you're going to build and how you're going to go about it, making trade-offs as to features and qualities, it becomes a part of you. Like a child you love and want to support. You have huge motivation to create the best possible inventions--and you care about them with a passion you could never feel about an invention someone else ordered you to come up with.

And if you don't enjoy working on stuff for yourself--with your own money and your own resources, after work if you have to-- then you definitely shouldn't be doing it!

. . .


It's so easy to doubt yourself, and it's especially easy to doubt yourself when what you're working on is at odds with everyone else in the world who thinks they know the right way to do things. Sometimes you can't prove whether you're right or wrong. Only time can tell that. But if you believe in your own power to objectively reason, that's a key to happiness. And a key to confidence. Another key I found to happiness was to realize that I didn't have to disagree with someone and let it get all intense. If you believe in your own power to reason, you can just relax. You don't have to feel the pressure to set out and convince anyone. So don't sweat it! You have to trust your own designs, your own intuition, and your own understanding of what your invention needs to be.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: Italics and centered ellipsis in original.)





August 8, 2010

"Vast Majority of People" Will Reject a New Idea at the Start



(p. 288) . . . , my advice has to do with what you do when you find yours elf sitting there with ideas in your head and a desire to build them. But you're young. You have no money. All you have is the stuff in your brain. And you think it's good stuff, those ideas you have in your brain. Those ideas are what drive you, they're all you think about.

(p. 289) But there's a big difference between just thinking about inventing something and doing it. So how do you do it? How do you actually set about changing the world?

. . .


Well, first you need to believe in yourself. Don't waver. There will be people--and I'm talking about the vast majority of people, practically everybody you'll ever meet--who just think in black-and-white terms. Most people see things the way the media sees them or the way their friends see them, and they think if they're right, everyone else is wrong. So a new idea--a revolutionary new product or product feature--won't be understandable to most people because they see things so black and white. Maybe they don't get it because they can't imagine it, or maybe they don't get it because someone else has already told them what's useful or good, and what they heard doesn't include your idea.

Don't let these people bring you down. Remember that they're just taking the point of view that matches whatever the popular cultural view of the moment is. They only know what they're exposed to. It's a type of prejudice, actually, a type of prejudice that is absolutely against the spirit of invention.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

(Note: Italics and centered ellipsis in original; initial ellipsis added.)





August 4, 2010

Inventor Wozniak Tries Entrepreneurship



(p. 247) In a way, that happened to me. The US Festival was exactly the opposite of the Apple experience for me. It didn't come easily. It involved having plans to get certain groups, and having those groups cancel. It involved having plans for sites, and having those sites cancel. It involved having plans for equipment, and having the equipment not come through. It was a costly battle to do all the right things, but we did them anyway.

I'd written a check. I had confidence in my people. I'd already taken a stand, and when you take a stand, you don't back away from it. Sometimes this has been a big problem in my life--especially marriage-wise--but if I'm in, I'm in. I don't back out. And by the time I could see this was a disaster, I had this guy, Pete Ellis, and all the people he'd hired, counting on me. I couldn't just (p. 248) all of a sudden pull the rug out. And we'd already planned the date: the first US Festival would be the Labor Day weekend of 1982, right after my first year back at school.


. . .


(p. 255) I loved that first US Festival concert, and I knew I'd made so many people happy doing it. We thought from press reports that enough people--nearly half a million--had shown up. So we thought that would make us money. But we lost money, nearly $12 million, because it turned out we didn't sell as many tickets as there were people.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.





July 28, 2010

"A Rare Phenomenon in Europe -- A Genuine Business Celebrity"



HayekNicolas2010-07-08.jpg












"Nicolas Hayek was asked to help shut the troubled Swiss watch industry, but instead he revived it by introducing the Swatch." Source of caption and photo: online version of the NYT article quoted and cited below.



Richard Langlois has used the story of Nicolas Hayek to illustrate why Schumpeter was wrong when he worried that the entrepreneur might become obsolete.


(p. A23) Nicolas Hayek, a Lebanese-born business consultant who is widely credited with having saved the Swiss watch industry with the introduction of the Swatch, the inexpensive, plastic -- and, as it transpired, highly collectible -- wristwatch that made its debut in 1983, died Monday in Biel, Switzerland. He was 82.

Mr. Hayek, a founder and the chairman of the Swatch Group, died of heart failure while working at the company's headquarters, according to an announcement on the company Web site.

The formation of the Swatch Group, which in addition to Swatch today comprises high-end watch brands like Breguet, Omega, Longines, Tissot, Calvin Klein and Mido, made Mr. Hayek one of Switzerland's wealthiest men. The exquisite irony is that the company came about after Mr. Hayek was brought in to help shut the foundering Swiss watch industry altogether.

A flamboyant figure with a roguish sense of humor, Mr. Hayek was "a rare phenomenon in Europe -- a genuine business celebrity," as The Harvard Business Review described him in 1993.



For the full story, see:

MARGALIT FOX. "Nicolas Hayek Dies at 82; His Swatch Saved an Industry." The New York Times (Tues., June 29, 2010): A23.

(Note: the online version of the article is dated June 28, 2010.)


Nicolas Hayek's entrepreneurship is nicely summarized and analyzed on pp. 59-65 of:

Langlois, Richard N. The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy. London: Routledge, 2006.





July 23, 2010

Commodore, Atari, and Some Venture Capitalists, Refused to Fund Jobs and Wozniak



(p. 196) After Commodore turned us down, we went over to Al Alcorn's house. He was one of the founders of Atari with Nolan Bushnell, and he was the one who'd hired Steve to do video games there two years before.

Now, I knew Al knew me. He knew I had designed Breakout, the one-player version of Pong. I remember that when we went to his house I was so impressed because he had one of the earliest color projection TVs. Man, in 1976, he would have been among the first people to have one. That was cool.

But he told us later that Atari was too busy with the video game market to do a computer project.

A few days after that, venture capitalists Steve had contacted started to come by. One of them was Don Valentine at Sequoia. He kind of pooh-poohed the way we talked about it.

He said, "What's the market?"

"About a million," I told him.

"How do you know?"

I told him the ham radio market had one million users, and this could be at least that big.

Well, he turned us down, but he did get us in touch with a guy named Mike Markkula. He was only thirty, he told us, but already retired from Intel. He was into gadgets, he told us. Maybe Mike would know what to do with us.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.





July 15, 2010

"Fun" and "Profits" as Motives for Entrepreneurship



(p. 184) After we started selling the boards to Paul Terrell--working day and night to get them to him on time--we had profits like I never imagined. Suddenly our little business was making more than I was making at HP. That wasn't very much, admittedly. But still, it was a lot. We were building the boxes for $220 and selling them wholesale to Paul Terrell for $500.

And, of course, we didn't need a ton of money to operate. I had a day job, so I looked at it as, Hey, cool. Extra money for pizza! As for Steve, he was living at home. I was twenty-five and he was only twenty-one at the time, so what expenses could we have, really? Apple didn't have to make that much to sustain itself and be ongoing. We weren't paying ourselves salaries or paying rent, after all. We didn't have any patents to pay for. Or lawyers. It was a small-time business, and we weren't worried that much about anything.

My dad, watching this, pointed out that we weren't actually making money because we weren't paying ourselves anything. But we didn't care, we were having too much fun.




But note, only several pages later:

(p. 194) Like I said before, we needed money. Steve knew it and I knew it.

So by that summer of 1976, we started talking to potential money people about Apple, showing them the Apple II working in color in Steve's garage.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.





July 7, 2010

Apple Was Founded Without Clear Path to Profit



(p. 172) Frankly, I couldn't see how we would earn our money back. I figured we'd have to invest about. $1,000 to get a computer company to print the boards. To get. that money back, we'd have to sell the board for $40 to fifty people. And I didn't think there were fifty people at Homebrew who'd buy the board. After all, there were only about five hundred members at this point, and most of them were Altair enthusiasts.

But Steve had a good argument. We were in his car and he said--and I can remember him saying this like it was yesterday: "Well, even if we lose our money, we'll have a company. For once in our lives, we'll have a company."

For once in our lives, we'd have a company. That convinced me. And I was excited to think about us like that. To be two best friends starting a company. Wow. I knew right then that I'd do it. How could I not?



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.





July 6, 2010

Porter Airlines Beats Incumbents in Serving High End Customers



DeluceRobertOfPorterAirlines2010-05-20.jpg"Robert Deluce set up Porter Airlines at Billy Bishop Toronto City Airport in October 2006." Source of caption and photo: online version of the WSJ article quoted and cited below.


Clayton Christensen explains why upstart entrepreneurs who move up-market to serve under-served customers, will almost always lose to motivated incumbents.

Apparently Robert Deluce has not read Christensen.


(p. B8) TORONTO--As a teenager, Robert Deluce learned to fly at this city's small airport just outside the downtown on a Lake Ontario island.

Lately, the 59-year-old airline entrepreneur has been giving his own brand of flying lessons there in a dogfight with larger competitors over a lucrative flying niche: the high-margin business traveler.

n 2005, Mr. Deluce bought the airport's ramshackle terminal and later kicked out an Air Canada regional partner named Jazz Air. Then, he set up Porter Airlines, which has become a hit with business fliers for its top-notch service and convenient location, a one-minute ferry ride from the downtown waterfront. Earlier this month, closely held Porter opened the first phase of a gleaming, 150,000-square-foot terminal that eventually will house two passenger lounges and 10 aircraft gates.


. . .


The new carrier's mascot is a raccoon. "He's mischievous and determined and pretty much always achieves his desired goal," said Mr. Deluce, chuckling over breakfast at a Toronto hotel. "Air Canada and Jazz probably think he's over-mischievous."


. . .


In recent years, Toronto's waterfront has been revitalized, with high-rise condos and parks replacing grain elevators and industrial warehouses. Air Canada's partner Jazz and a predecessor, which had been flying to and from the downtown airport for years, reduced service even as the redevelopment was progressing. The airport's traffic waned to 25,000 fliers in 2005 from 400,000 a year in the late 1980s.

Smelling opportunity, Mr. Deluce pounced, acquiring the old terminal and evicting Jazz. He raised C$126 million in start-up capital and placed a US$500 million order for 20 Canadian-built turboprop aircraft. With 70 seats, they are perfectly sized for the airport's short, 4,000-foot runway. Porter took wing in October 2006.

His aggressive tactics as CEO have earned him both criticism and grudging respect. Brian Iler, chairman of CommunityAir, a Toronto citizens advocacy group that wants the airport shut because of noise issues and other concerns, gives Mr. Deluce his due. "Everything he has done, he's managed to turn things his way," Mr. Iler says. "It's an amazing run of luck."


. . .


Porter now flies to four U.S. destinations and seven other cities in Eastern Canada, with an eighth coming this month. It had its first month of profitability in June 2007 and paid out to its employee profit-sharing plan that year and in 2008, Mr. Deluce says. He won't say whether Porter was profitable in 2009.

The new airline has attracted a following for its downtown location, competitive fares, leather seats with generous legroom and complimentary beer, wine and snacks. Female flight attendants wear retro pillbox hats and peplum jackets.

Christopher Sears, vice president of research for Montreal-based brokerage firm MacDougall, MacDougall & MacTier Inc., said he has flown Porter 30 to 40 times between Montreal and Toronto. Once he arrives in Toronto, he grabs a free shuttle to a hotel two blocks from his firm's Toronto office.

"Porter has built up a lot of goodwill with me," he says, vowing to stick with the company even if rivals break into the downtown airport.




For the full story, see

SUSAN CAREY. "Tiny Airline Flies Circles Around Its Rivals; Top-Notch Service, Proximity to Downtown Toronto Make Porter a Hit With High-Margin Business Travelers." The Wall Street Journal (Weds., MARCH 17, 2010): B8.

(Note: ellipses added.)

(Note: the online version of the article has the slightly different title "Tiny Airline Flies Circles Around Rivals; Top-Notch Service, Proximity to Downtown Toronto Makes Porter a Hit With High-Margin Business Travelers.")


On Christensen's theories, see:

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


BillyBishopAirportTrafficGraph2010-05-20.gif














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





June 26, 2010

Not All Entrepreneurs Believe in Property Rights



OdomBobbTitanCement2010-05-20.jpg"Titan Cement's Bob Odom in March at the site of a proposed plant near Wilmington, N.C. The company says hundreds of jobs would be created." Source of book image: online version of the WSJ review quoted and cited below.


Is it just me, or does entrepreneur Lloyd Smith, quoted below, come across as a bit arrogant in believing the government should enforce his view of what Wilmington should be like, even if that means violating the property rights of the owner of the land on which the cement plant will be built? (And even if that means that would-be janitor Ron Givens remains unemployed.)


(p. A3) WILMINGTON, N.C.--The old economy and the new economy are squaring off in this coastal city, which is having second thoughts about revisiting its roots in heavy industry.

Titan Cement Co. of Greece wants to build one of the largest U.S. cement plants on the outskirts of the city and is promising hundreds of jobs. The factory would be on the site of a cement plant that closed in 1982 and today is populated mainly by fire ants, copperhead snakes and the occasional skateboarder.

The proposed $450 million plant by Titan America LLC, Titan's U.S. unit, is welcome news to Ron Givens Sr., a 44-year-old unemployed Wilmington native. Mr. Givens's father supported 12 children while working at the former Ideal Cement plant, and Mr. Givens and two brothers have now applied for jobs with Titan. "I will apply for janitor if that's what is going to get me into that plant," he said.

But thousands of opponents have petitioned local and state politicians to block the plan. They object to the emissions from the plant and say it will scare off tourists, retirees, entrepreneurs and others who might otherwise want to live here.

An initial state environmental review has dragged on for two years, and critics of the plant have filed a lawsuit seeking to further broaden the review. The governor, amid public pressure, has asked the State Bureau of Investigation to probe the plant's permitting process.

"That's their tactic: Delay, delay, and at some point Titan will leave," said Bob Odom, Titan's general manager in Wilmington, of opposition efforts.

Among the most vocal opponents is a fast-growing class of high-tech entrepreneurs and telecommuters who moved to Wilmington in recent years, drawn to the temperate climate, sandy beaches and good fishing. They argue the plant, by curbing the community's appeal, will cost more jobs and tax revenue in the long run than it produces.

"I think we can be discriminating," said Lloyd Smith, a 43-year-old entrepreneur who moved here from northern Virginia in 2001 and founded Cortech Solutions Inc., a neuroscience company with nine employees and about $5 million in annual sales.

The standoff in Wilmington reflects a broader tug-of-war across the country as communities try to kick-start employment. It is unclear how much manufacturing will power the long-term U.S. economic recovery--even in southern states that have long embraced heavy industry but have begun to feel the new economy's pull.




For the full story, see:

MIKE ESTERL. "Clash of Old, New Economy; Cement Plant Is Resisted by Some Neighbors Who Would Rather Lure High-Tech Jobs." The Wall Street Journal (Tues., April 6, 2010): A3.


ServicesManufactureGraph2010-05-20.jpg


















Source of graph: scanned from print version of the WSJ article quoted and cited above.






June 25, 2010

Wozniak on the Motives and Rewards of Inventor and Innovator



(p. 147) The whole thing used forty-five chips, and Steve paid me half the seven hundred bucks he said they paid him for it. (They were paying us based on how few chips I could do it. in.) Later I found out he got paid a bit (p. 148) more for it--like a few thousand dollars--than he said at the time, but we were kids, you know. He got paid one amount, and told me he got paid another. He wasn't honest with me, and I was hurt. But I didn't make a big deal about it or anything.

Ethics always mattered to me, and I still don't really understand why he would've gotten paid one thing and told me he'd gotten paid another. But, you know, people are different. And in no way do I regret the experience at Atari with Steve Jobs. He was my best friend and I still feel extremely linked with him. I wish him well. And it was a great project that was so fun. Anyway, in the long run of money--Steve and I ended up getting very comfortable money-wise from our work founding Apple just a few years later--it certainly didn't add up to much.

Steve and I were the best of friends for a very, very long time. We had the same goals for a while. They jelled perfectly at forming Apple. But we were always different people, different people right from the start.

You know, it's strange, hut right around the time I started working on what later became the Apple I board, this idea popped into my mind about two guys who die on the same day. One guy is really successful, and he's spending all his time running companies, managing them, making sure they are profitable, and making sales goals all the time. And the other guy, all he does is lounge around, doesn't have much money, really likes to tell jokes and follow gadgets and technology and other things he finds interesting in the world, and he just spends his life laughing.

In my head, the guy who'd rather laugh than control things is going to be the one who has the happier life. That's just my opinion. I figure happiness is the most important thing in life, just how much you laugh. The guy whose head kind of floats, he's so happy. That's who I am, who I want to be and have always wanted to be.

(p. 149) And that's why I never let stuff like what happened with Breakout bother me. Though you can disagree--you can even split from a relationship--you don't have to hold it against the other. You're just different. That's the best way to live life and be happy

And I figured this all out even before Steve and I started Apple.



Source:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.





June 7, 2010

Class Action Suit Did Little for Class Members, But "Enriched" Attorneys



Many attorneys are good people, including my late father, one of my brothers, and one of my favorite former students.

But a few attorneys must be conscience-challenged; for instance the ones "representing" the class in the case described below.

More importantly, class-action litigation increases the costs and uncertainty of doing business, and thereby increases the prices of the products and services we buy.

In speaking to one of my classes a few years ago, Omaha entrepreneur Joe Ricketts made a strong case for tort reform. it is hard to disagree, unless, like the Democratic Party, you are receiving large contributions from trial lawyers.


(p. B1) . . . , a 2008 settlement of a class action against Ford Motor Co., involving incidents in which Firestone tires exploded on Ford Explorers, offered certain Explorer owners coupons worth $500 toward the purchase of a new Explorer and $300 toward the purchase of any other Ford vehicle.

As of March, only 148 people had redeemed a coupon out of 1,647 people eligible. The plaintiffs' attorneys who led that litigation collected about $19 million in fees.

"It was rather absurd," said Julie Hamilton Webber of Glendale, Calif., a class member who has a 1993 Ford Explorer. "The net result was the attorneys were enriched and did nothing for the class."



For the full story, see:

DIONNE SEARCEY. "Toyota Owners May Reap Little." The Wall Street Journal (Thurs., MAY 20, 2010): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the article has the slightly different title "Toyota Owners May See Little.")





June 4, 2010

At Apple Wozniak Was the Inventor, and Jobs Was the Entrepreneur



iWozBK2010-05-18.jpg















Source of book image: http://1.bp.blogspot.com/_TwOg8fVl5Og/SkXmn7MyaxI/AAAAAAAAAug/G-klN-KQHis/s1600/iWoz.jpg




iWoz is a fun read, with wild fluctuations in the significance of what is written. When Wozniak writes about the ingredients of inventiveness, it is significant. When he talks about his pranks, or his obsessions with certain number combinations, it is strange. (Maybe I just haven't figured out the significance of Wozniak's quirks---I once heard George Stigler say that even the mistakes of a great mind were worth pondering.)

In the next few weeks I'll be quoting a few of the more significant passages.

An over-riding lesson from the book, is the extent to which both Wozniak and Jobs were necessary for the Apple achievement. Wozniak was a genius inventor, but he did not have the drive or the skills, or the judgment of the entrepreneur.

Schumpeter famously distinguished invention from innovation. Wozniak was the inventor, and Jobs was the innovator (aka, the entrepreneur).


Book discussed:

Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.






May 4, 2010

Henry Ford's Finest Hour



(p. 52) Not all men who refused to sign the code could be easily intimidated. In the auto industry Henry Ford refused to sign the NRA code and jack up his car prices, as his competitors were doing. "I do not think that this country is ready to be treated like Russia for a while," Ford wrote in his notebook. "There is a lot of the pioneer spirit here yet:' However, General Motors, Chrysler, and the smaller independents eagerly signed Blue Eagle codes, which, under penalty of fine and imprisonment, regulated their production, (p. 53) wages. prices, and hours of work. Ford was astounded: his colleagues preferred stability and government regulation to competition and free trade. He was especially irked when Pierre S. DuPont, the former head of General Motors, urged him at a party to sign the code.

In the face of strong pressure from the NRA, Ford refused to sign the auto code. He defied the law, pronouncing it un-American and unconstitutional. Hugh Johnson, the NRA chief, and President Roosevelt, however, wanted government control as well as compliance. They tried to pressure Ford into signing the code, and when he refused they tried force. Ford would receive no government contracts until he signed--and with the large increase in government agencies during the 1930s, that meant a huge business. For example, the bid of a Ford agency on five hundred trucks for the Civilian Conservation Corps was $169,000 below the next best offer. The government announced, however, that it would reject Ford's bid and pay $169,000 more for the trucks because Ford refused to sign the auto code. As Roosevelt announced at a press conference, "We have got to eliminate the purchase of Ford cars" for the government because Ford has not "gone along with the general [NRA] agreement:"




Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipses in original.)





April 20, 2010

"We Don't Lie Out Here; We Just Remember Big"



(p. W11) Americans love a winner and they remember what they want to remember, and so let us now remember the Central Overland California & Pike's Peak Express Co.--known from the day it began 150 years ago on April 3, 1860, as the Pony Express.

We remember the Pony Express as one of the most enduring and endearing of American stories, a tale of the frontier, a story of bold entrepreneurs, daring young horsemen, true riders of the purple sage and all that. In truth, the venture hemorrhaged money from day one, was doomed by technology (another particularly American story), lasted a mere 78 weeks, ruined its backers and then disappeared into what historian Bernard DeVoto called "the border land of fable." Across the wide Missouri, fact and fantasy collided and the Pony Express became "a tale of truth, half-truth and no truth at all," as another historian observed.


. . .


The service was shut down in the flash of a telegrapher's key when the transcontinental telegraph was completed in October 1861. The records of the business, if there were any records, were lost. That would prove liberating for later chroniclers.


. . .


If the Pony Express continues to thrill and baffle us, consider the words of an old horseman in western Nebraska who advised me when I expressed some concerns about the pedigree of this yarn. "We don't lie out here," he explained kindly. "We just remember big."




For the full commentary, see:

CHRISTOPHER CORBETT. "Real (and Fake) Hoofbeats of the Pony Express." The Wall Street Journal (Fri., APRIL 2, 2010): W11.

(Note: ellipses added.)





April 10, 2010

"The GodKing Drives a Hyundai"



(p. 176) As an homage to Wales's sticking with a low-key style, the community adopted the saying "The GodKing (sic) drives a Hyundai," making fun of his humble Korean-made car, a brand known more for frugality than flash.



Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.





April 8, 2010

If We Want More Jobs, We Need More (Steve) Jobs



(p. A19) Mr. Obama and his advisers need to grasp this essential fact: Entrepreneurs are not just a cute little subsector of the American economy. They are the whole game. They will give us tomorrow's Apples and the multiplier effect of small businesses and exciting new jobs that go with them. Entrepreneurs are necessary to keep our large multinationals on their toes. It's no coincidence that the entrepreneurial flowering of the 1970s forced a managerial revolution in large companies during the 1980s and 1990s. Without Steve Jobs, there would have been no Lou Gerstner to reinvent IBM in the '90s. Entrepreneurs like Steve Jobs make everyone better.


For the full story, see:

RICH KARLGAARD. "Apple to the Rescue?" The Wall Street Journal (Thurs., JANUARY 28, 2010): A19.





April 6, 2010

"Coase's Penguin" and the Motives for "Commons-Based Peer Production"



(p. 108) Noted Yale law professor Yochai Benkler has a theory. In a widely circulated and famous essay on the Internet called "Coase's Penguin," he offered his thinking on why people participate in efforts such as Linux and other "free" projects. There was already a culture, before Wikipedia, of folks donating their time, effort, and skills to the collective good for no monetary gain or immediate compensation. Benkler observed this part of the hacker ethos and was curious to know what the common thread was.

He dubbed it "commons-based peer production." It's a fancy moniker for the phenomenon of people working together toward the same end--creating computer code or content that is free to be copied, distributed, used, and modified by others.

Benkler believes the Internet and the "free culture" movement have allowed individuals to connect and combine their efforts in ways unprecedented in history. The legal academic is not shy to combine scholarship outside his area of training by drawing on economics, sociology, and technology to form his theory.

According to Benkler, if monetary rewards and the creation of corporate firms have been the accepted driving force for human innovation and progress, there has to be something else driving volunteers in Linux, Wikipedia, and other "free" projects that have become so pervasive and monumental in the digital age.

He asserts the motivation comes from two main things other than money: the "socio-psychological" reward of interacting with others, and the "hedonic" personal gratification of the task.

Wikipedia's magic occurs when these two things come together. One person's personal affection and indulgence---mapmaking, grammar checking, baseball statistics, history of stamps---easily finds a home in Wikipedia's amalgam of topics, where it also feeds into and inspires activities by others.



Source:

Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia. New York: Hyperion, 2009.





April 5, 2010