Does Musk Want to Reach Mars or Conspicuously Consume Real Estate?

In my book Openness to Creative Destruction, I describe and praise those who I call “project entrepreneurs.” These are innovative entrepreneurs, like Walt Disney and Cyrus Field, who are motivated primarily by a desire to bring their project into the world, rather than a desire for conspicuous personal consumption. I have been unsure whether to count Elon Musk as a project entrepreneur. The evidence quoted below suggests the answer is “no.”

(p. M1) Over the last seven years, Mr. Musk and limited-liability companies tied to him have amassed a cluster of six houses on two streets in the “lower” and “mid” areas of the Bel-Air neighborhood of Los Angeles, a celebrity-filled, leafy enclave near the Hotel Bel-Air.

Those buys—plus a grand, 100-year-old estate in Northern California near the headquarters of Tesla, the electric car concern he heads—means Mr. Musk or LLCs with ties to him have spent around $100 million on seven properties.

For the full story, see:

Nancy Keates. “Elon Musk’s Big Buyout.” The Wall Street Journal (Friday, December 6, 2019): M1 & M6.

(Note: the online version of the story has the date Dec. 5, 2019, and has the title “Elon Musk Buys Out the Neighbors.”)

My book, mentioned at the top, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Google Pivots Back to Search and Away from Audacious Projects

(p. B1) Sundar Pichai’s appointment this week as chief executive of Google parent Alphabet Inc. effectively shifts the focus back on the company’s advertising profit machine and away from its “moonshots” and other potential new businesses.

Mr. Pichai’s promotion late Tuesday amounted to the biggest managerial overhaul of the internet giant since 2015, when co-founders Larry Page and Sergey Brin created Alphabet as a parent company above Google. Their goal then was to make Google and its highly profitable advertising businesses just one of many subsidiaries. The stated purpose, as they said in a public letter: “We are still trying to do things other people think are crazy.”

Those goals were on-brand for the two former Stanford University graduate students. They famously celebrated a “don’t be evil” ethos and were working on driverless cars, wearable computers, beating death and a host of other money-losing projects. The idea was to free the duo from the day-to-day at Google, which remains a profit machine, to build out new, world-changing ideas.

Those now include Alphabet’s Waymo unit, which is piloting self-driving car rides, and Calico Labs, which says it’s “tackling aging.”

At least financially, those efforts have yet to amount to much. Google, which includes search, YouTube, the Chrome web browser, hardware and much else, reported $40 billion of revenue in the past quarter alone, with a 23% margin. These areas draw in more than 99% of the parent company’s staggering $155 billion in annual revenue.

The rest of Alphabet eked out $155 million in revenue, and lost $941 million while doing it.

For the full story, see:

Rob Copeland. “Alphabet Backs Off the ‘Crazy,’ Turns to Reliable Model.” The Wall Street Journal (Friday, December 6, 2019): B1 & B4.

(Note: the online version of the story has the date Dec. 5, 2019, and has the title “Google Management Shuffle Points to Retreat From Alphabet Experiment.” The online version says that the title of the print edition was “Alphabet Backs Off On Experimentation.” My copy of the print edition had the title “Alphabet Backs Off the ‘Crazy,’ Turns to Reliable Model.”)

Parrots Are Politically Incorrect Food Wasters

(p. D2) According to a study last month in Scientific Reports, wild parrots across the world . . . waste food . . .

The new study provides “a comprehensive picture of parrots’ food wasting behavior in their natural environment,” said Anastasia Krasheninnikova, a biologist at the Max Planck Comparative Cognition Research Group in Spain, an independent commenter.

For the full story, see:

Cara Giaimo. “Polly Wants to Discard Another Cracker.” The New York Times (Tuesday, November 5, 2019): D2.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 2, 2019, and has the title “Why Do Parrots Waste So Much Food?” The online version quoted above, but not the print version, gives the name of the journal Scientific Reports.)

The Scientific Reports study mentioned above, is:

Sebastián-González, Esther, Fernando Hiraldo, Guillermo Blanco, Dailos Hernández-Brito, Pedro Romero-Vidal, Martina Carrete, Eduardo Gómez-Llanos, Erica C. Pacífico, José A. Díaz-Luque, Francisco V. Dénes, and José L. Tella. “The Extent, Frequency and Ecological Functions of Food Wasting by Parrots.” Scientific Reports 9, no. 1 (2019): 15280, DOI: https://doi.org/10.1038/s41598-019-51430-3 .

How Much Do Entrepreneurs Learn from Failure?

(p. R2) . . . , I looked at 8,400 German startups to see if the new companies launched by failed entrepreneurs did any better than first-timers.

They didn’t. In fact, they had poorer outcomes the second time around.

Failed entrepreneurs were more likely to go bankrupt or dissolve their business than first-time entrepreneurs. In fact, even if an entrepreneur had run a business successfully before, they were just as likely to see their new business fail as a first-time entrepreneur.

Other researchers have reached similar conclusions. A Harvard Business School study of venture-capital-backed firms in the U.S., published in the April 2010 Journal of Financial Economics, found that previously failed entrepreneurs were no more likely to succeed than first-time entrepreneurs.

A study of German entrepreneurs by a researcher at KfW Bankengruppe found that entrepreneurs who started a company after a failure performed poorly compared with other founders. “Their probability of survival in general as well as their risk of failure in particular is worse than that of other startups,” according to the researcher, who added: On average, “there is no indication that business failure triggers a reflection process in which entrepreneurs look back on mistakes they have made and adapt their future behavior accordingly.”

. . .

Why does this happen? Why don’t entrepreneurs learn from failure?

For one thing, learning is difficult in startup contexts.

Usually, when we think of learning, we think about gaining expertise through regular practice. In his “Outliers” book, for instance, Malcolm Gladwell calculates that it takes about 10,000 hours of practice to be a chess grandmaster.

But part of the reason practice pays off is because a chessboard is regular: It always has 64 squares and starts off with 32 pieces. You face one competitor. Likewise, in football, a consistent number of players on offense face a consistent number of defenders and try to advance by clear, regular rules.

These regularities don’t occur in startup situations. Markets evolve, customers are fickle, and opposition numbers vary. You must learn what it takes to become the equivalent of a chess grandmaster by playing with constantly evolving rules and opponents—making it much more difficult to interpret prior actions and experiences successfully.

For the full story, see:

Francis Greene. “If at First You Don’t Succeed, You Most Likely Will Fail Again.” The Wall Street Journal (Monday, December 2, 2019): R1-R2.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 1, 2019, and has the title “Why Entrepreneurs Don’t Learn From Their Mistakes.”)

The unpublished working paper, co-authored by Greene, that looked at 8,400 German startups, is:

Gottschalk, Sandra, Daniel Höwer, Francis J. Greene, and Bettina Müller. “If You Don’t Succeed, Should You Try Again? The Role of Entrepreneurial Experience in Venture Survival.” ZEW Discussion Paper, #14-009, 2014.

A related paper by three of the four co-authors, is:

Gottschalk, Sandra, Francis Greene, and Bettina Müller. “The Impact of Habitual Entrepreneurial Experience on New Firm Closure Outcomes.” Small Business Economics 48, no. 2 (Feb. 2017): 303-21.

The Harvard Business School paper, mentioned above, is:

Gompers, Paul A., Anna Kovner, Josh Lerner, and David S. Scharfstein. “Performance Persistence in Entrepreneurship.” Journal of Financial Economics 96, no. 1 (April 2010): 18–32.

Wisconsin May Have a Robustly Redundant Labor Market

From Nathan Wiese’s description, below, Wisconsin is described in as what I call a “robustly redundant labor market” in my book Openness to Creative Destruction: Sustaining Innovative Dynamism.

(p. A1) ROSENDALE, Wis.—Nathan Wiese, a third-generation dairy farmer who is struggling to get by, says even if he has to close his family’s farm, he feels confident he could hire on as a truck driver and take home more money.

“If you want a job, you can get a job,” said Mr. Wiese, who voted for Donald Trump in 2016 and plans to do so again. “I could probably get one in one day.”

. . .

. . . in an era of severe worker shortages, people losing jobs when a plant or a farm closes are quickly getting scooped up by others. This provides a safety net in the broader economy by keeping incomes and consumer spending strong.

For the full story, see:

Shayndi Raice and Jon Hilsenrath. “In Wisconsin, Demand for Workers Buffers a Slowdown.” The Wall Street Journal (Friday, November 29, 2019): A1 & A9.

(Note: ellipses added.]

(Note: the online version of the story has the date Nov. 28, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)

My book, mentioned at the top, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Anonymous Message Apps Enable Protesters to Act at “Hyperspeed”

(p. A7) In June [2019], hundreds of thousands of young protesters connected by messaging apps took to the streets of Hong Kong to protest the encroachment of China’s central authorities on life in their city.

Four months on, antigovernment demonstrations have swept more than a dozen countries. From Chile and Bolivia to Lebanon and Spain, millions have taken to the streets—sometimes peacefully, often not.

. . .

Propelling the action on the streets to a kind of hyperspeed is a new generation of encrypted-messaging software such as WhatsApp and Telegram that enable large groups of protesters who have never met each other to communicate anonymously.

Whereas platforms like Twitter and Facebook were great for broadcasting ideas, the newer technology allows any would-be activist connected to the group to build consensus for large-scale actions in real time—without fear of being identified.

Meanwhile, the internet’s global reach has helped activists learn by watching and connecting with peers in other countries.

For the full story, see:

John Lyons in Hong Kong, Nazih Osseiran in Beirut and Margherita Stancati in Barcelona. “A Wave of Protest Rattles Governments.” The Wall Street Journal (Saturday, November 23, 2019): A7.

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

(Note: the online version of the story has the date November 22, 2019, and has the title “Global Wave of Protests Rattles Governments.” The penultimate sentence quoted above, appears in the online, but not in the print, version of the article.)

Opening a New “Treasure Box of Strange Phenomena”

(p. D1) In the universe of office supplies, pencil lead — a mixture of graphite and clay, which does not include any lead — appears unexceptional beyond its ability to draw dark lines.

But 15 years ago, scientists discovered that a single sheet of graphite — a one-atom-thick layer of carbon atoms laid out in a honeycomb pattern — is a wonder. This ultrathin carbon, called graphene, is flexible and lighter than paper yet 200 times stronger than steel. It is also a good conductor of heat and electrical current.

Scientists imagined all of the remarkable things that graphene might be made into: transistors, sensors, novel materials. But after studying and cataloging its properties, scientists moved on to other problems. Practical uses have been slow to come, because part of what makes graphene alluring — its strength — also makes the material difficult to cut into precise shapes.

Last year, graphene burst back on the physics research scene when physicists at the Massachusetts Institute of Technology discovered that stacking two sheets of the material, twisted at a small angle between them, opened up a treasure box of strange phenomena. It started a new field: twistronics.

For the full story, see:

Kenneth Chang. “A Physics Trick: Take 2 Sheets of Carbon and Twist.” The New York Times (Tuesday, November 5, 2019): D1 & D3.

(Note: the online version of the story has the date Oct. 30, 2019, and has the title “A Physics Magic Trick: Take 2 Sheets of Carbon and Twist.”)