Author: Art Diamond

Venture Capitalists Can Be Easy to Fool

I admire much about Peter Thiel, but was stunned to read in his Zero to One (p. 160) that he only invests venture capital money in start-ups whose founding supplicant is wearing a t-shirt. The review quoted below confirms that other venture capitalists also use dubious criteria to evaluate entrepreneurs.

(p. C4) Neumann’s innovation with WeWork was to repurpose office space for freelancers worldwide — rebranding precarity into community.

. . .

. . . Neumann seemed to believe that the pesky demands of having to turn a profit didn’t quite apply to him, even as he was determined to live the ostentatious life of a bohemian tycoon.

. . .

WeWork pulled the classic new-economy maneuver of hiring idealistic young people, deploying them to the point of exhaustion and paying them peanuts while telling them that they were part of a revolution — what Neumann called “the ‘We’ decade.” Eventually, WeWork offered stock options, though Neumann would be the one to cash out hundreds of millions in stock in order to fund an escalating lifestyle that had grown to include five children, several houses, a penchant for $200 T-shirts and lots of pot.

. . .

“Billion Dollar Loser” would be absorbing enough were it just about one man’s grandiosity, but Wiedeman has a larger argument to make about what Neumann represents. Neumann finagled funding not only from SoftBank, the Japanese conglomerate led by the billionaire-entrepreneur Masayoshi Son, who liked to say that “feeling is more important than numbers,” but also from the venerable venture capital firm Benchmark. Neumann had passed himself off as a tech visionary, even though he rarely used a computer and WeWork’s IT department was once run by a high school student from Queens.

For the full review, see:

Jennifer Szalai. “Big Dreams, and a Harsh Awakening.” The New York Times (Thursday, October 22, 2020): C4.

(Note: ellipses added.)

(Note: the online version of the review has the date Oct. 21, 2020, and has the title “‘Billion Dollar Loser’ Recounts WeWork’s Big Dreams and Its Harsh Wake-Up Call.”)

The book under review is:

Wiedeman, Reeves. Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork. New York: Little, Brown and Company, 2020.

“The Founding Principles Have Been Lost”

(p. B1) The president has some bones to pick with the American media: about our “bias,” our obsession with racism, our views on terrorism, our reluctance to express solidarity, even for a moment, with his embattled republic.

So President Emmanuel Macron of France called me on Thursday afternoon from his gilded office in the Élysée Palace to drive home a complaint. He argued that the Anglo-American press, as it’s often referred to in his country, has blamed France instead of those who committed a spate of murderous terrorist attacks that began with the beheading on Oct. 16 of a teacher, Samuel Paty, who, in a lesson on free speech, had shown his class cartoons from the satirical magazine Charlie Hebdo mocking the Prophet Muhammad.

“When France was attacked five years ago, every nation in the world supported us,” President Macron said, recalling Nov. 13, 2015, when 130 people were killed in coordinated attacks at a concert hall, outside a soccer stadium and in cafes in and around Paris.

“So when I see, in that context, several newspapers which I believe are from countries that share our values — journalists who write in a country that is the heir to the Enlightenment and the French Revolution — when I see them legitimizing this violence, and saying that the heart of the problem is that France is racist and Islamophobic, then I say the founding principles have been lost.”

For the full commentary, see:

Ben Smith. “(French) President Faults The (American) Press.” The New York Times (Monday, November 16, 2020): B1 & B4.

(Note: the online version of the commentary has the date Nov. 15, 2020, and has the title “The President vs. the American Media.”)

Many Start-Ups Compete to Make and Sell Chocolates

(p. D10) In India, few foreign confections have been more eagerly embraced than chocolate — and no brand defines this affinity more than Cadbury.

. . .

This brand loyalty endures even among members of the Indian diaspora, like Rajani Konkipudi, 47, who grew up in Visakhapatnam, in Andhra Pradesh, and now lives in the Detroit area.   . . .

In 2005, she visited Cadbury’s factory in Birmingham to make, as she called it, the “holy pilgrimage.”

A decade later, she is one of several smaller competitors seeking to challenge the dominance of Cadbury, and of milk chocolate in general, among Indians.

Ms. Konkipudi’s business, Dwaar Chocolate, in West Bloomfield Township, Mich., sells small-batch chocolate that is a far cry from her corporate rival’s. Her cacao beans come from family-run farms in Ecuador and India, and wind up in cardamom- and pistachio-speckled bars meant to mimic the taste of pistachio kulfi, or truffles inspired by paan, a crunchy, sharply flavored after-dinner snack in which she replaces betel nuts with cocoa nibs.

. . .

Growing up in Ahmedabad, Gujarat, Alak Vasa, who owns Elements Truffles in Union City, N.J., used to make frequent trips to the store with her grandfather to buy Cadbury chocolate. She founded Elements in 2015 with her husband, Kushal Choksi, seeking to emphasize the health benefits of dark chocolate and make sweets free of refined sugar, as a wholesome alternative to mass-market brands.

. . .

Madhu Chocolate, started by Elliott Curelop and Harshit Gupta in 2018 in Austin, Texas, has adopted a similar strategy; its most popular offering is a masala chai dark-chocolate bar whose mild sweetness is tempered with heady ginger and clove. “When we talk about masala chai, people are like, ‘This is how my mom makes chai,’” Mr. Gupta said.

. . .

The wide consumption of dried fruits and nuts in India — as well as the cult popularity of Cadbury’s fruit-and-nut bar — informs Zeinorin Stephen’s offerings at Hill Wild, a chocolate company she founded in 2017 with her husband, Leiyolan Vashum, in Ukhrul, Manipur. She channels those flavors by incorporating locally harvested sesame and perilla seeds, plum and wild apple in her bars.

. . .

Surbhi Sahni, 45, who owns Tagmo Treats, in Yonkers, N.Y., draws a similarly young, savvy crowd for her chocolate-coated besan ladoos and kaju katli. About 40 to 50 percent of her annual sales occur during Diwali.

. . .

In India, Hill Wild and Kocoatrait have been joined by a growing number of independent chocolate businesses, including Soklet and Mason & Company, that offer dark chocolate and heavily tout their sustainable-farming methods.

For the full story, see:

Priya Krishna. “Was There Ever a Battle So Sweet?” The New York Times (Wednesday, November 11, 2020): D10.

(Note: ellipses added.)

(Note: the online version of the story was updated Nov. 17, 2020, and has the title “Indians Love Cadbury Chocolate. These Rivals Would Love to Woo Them Away.”)

Dictator Rawlings Transformed Ghana from Dictatorship to Democracy

I heard a plausible plenary lecture a few years ago at an APEE meeting where the African speaker argued that African autocrats would never voluntarily give up power, because doing so would mean they would trade personal riches for personal poverty. It was a sad but plausible argument, though one that makes Jerry Rawlings’s life especially intriguing.

(p. A22) Jerry Rawlings, a former Ghanaian Air Force officer who led two military coups before steering his country toward democracy with an authoritarian hand, died on Thursday in the nation’s capital, Accra.

. . .

By the time he left office voluntarily 22 years later, he had served two presidential terms brought about by free elections and had established Ghana as a rare democratic example on the continent. Today, peaceful handovers of power are routine in the country, hardly the case with the country’s neighbors.

Mr. Rawlings’ contradictory legacy — brutal beginnings, uncompromising military rule, then free elections — underscores the difficult path to democratic governance still faced by many African nations. But in Ghana at least, where Mr. Rawlings is regarded as something of a founding father after the country’s difficult first steps, democracy is an assumption.

Given Ghana’s first experiences of him, that outcome would not have been predicted. He appeared at first to have all the makings of one of the continent’s classic military autocrats.

For the full obituary, see:

Adam Nossiter. “Jerry Rawlings, Strongman Turned Statesman Who Steered Ghana to Democracy, Dies at 73.” The New York Times (Friday, November 13, 2020): A22.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date Nov. 12, 2020, and has the title “Jerry Rawlings, From Coup-Plotter to Ghanaian Statesman, Dies at 73.”)

“The Often-Unsung Adaptability of Organic Intelligence”

(p. A13) . . ., as the journalist Jonathan Waldman chronicles in “SAM,” the quest for a bricklaying robot has been bumpier than the work of a mason with vertigo.

. . .

Several themes run through the book. First is the often-unsung adaptability of organic intelligence.

. . .

The minute adjustments a human makes when manipulating objects, especially in messy environments like construction sites, result from billions of years of evolution. We make it look easy, until you give instructions to a robot and watch it fumble around or freeze up when it gets a little dirt on its face. Yann LeCun, Facebook’s chief A.I. scientist, once told me, “I would declare victory if in my professional lifetime we could make machines that are as intelligent as a rat.”

Mr. Peters has laudable motivations. “By creating a bricklaying robot,” Mr. Waldman writes, “he aimed to eliminate lifting and bending and repetitive-motion injuries in humans; to improve the quality of walls; to finish jobs faster and safer and cheaper; and to ease project scheduling and estimation. Basically: to modernize the world’s second oldest and most primitive trade.”

. . .

Within this physically and culturally harsh environment, Construction Robotics had to invent and reinvent their business model on the fly. Should they license their innovations? Sell the robots? Rent them? Provide robots and technicians as a service? Create a full-service masonry shop? Pivot from bricks to cement blocks? Take money from venture capitalists, court Google or a Dubai investment fund? Mr. Peters follows the philosophy of the book “The Lean Startup” and aims for an MVP—minimum viable product—to gain exposure and experience, knowing the risks in the construction industry. Word of a robot that builds crummy walls will travel fast, and demolished reputations are hard to rebuild.

The business finally finds its footing in the epilogue, around 2018. Construction Robotics gets SAM to lay more than 3,000 bricks a day (versus 300 to 1,000 for a human mason), and they create another machine that helps workers lift and place concrete blocks, quickly selling dozens. The company now looks to be solvent, though it’s unclear how much the construction landscape is poised to change.

For the full review, see:

Hutson, Matthew. “BOOKSHELF; Building a Better Bricklayer.” The Wall Street Journal (Tuesday, Jan 14, 2020): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date January 13, 2020, and has the title “BOOKSHELF; ‘SAM’ Review: Building a Better Bricklayer.”)

The book under review is:

Waldman, Jonathan. SAM: One Robot, a Dozen Engineers, and the Race to Revolutionize the Way We Build. New York: Simon & Schuster, 2020.

Federal Sugar Quotas Increase Demand for Corn Syrup, Increasing Suffering from Gout

Corn syrup is a substitute for sugar. Federal sugar import quotas increase the price of sugar. As a result, the demand for corn syrup increases. The result, as affirmed in the article quoted below, is an increase in Americans suffering from gout.

(p. 32) As the British and American historians Roy Porter and George Sebastian Rousseau write in “Gout: The Patrician Malady” (1998), the disease, cast by some as “a quasi-deity born of the union of Bacchus and Venus,” appeared to reach epidemic proportions in 18th-century England as more people attained affluence.

. . .

The disease has not been banished to the past, nor is it any longer the exclusive insignia of rich white men (if it ever really was). From the 1960s to the 1990s, the number of sufferers more than doubled in the United States, and that’s continued to rise.

. . .

According to data collected by the National Health and Nutrition Examination Survey (NHANES), as of 2016, around 9.2 million American adults, 5.9 million men and 3.3 million women, were living with the disease, making up 3.9 percent of the adult population, and another 32.5 million (14.6 percent) exhibited hyperuricemia, elevated levels of uric acid, putting them at risk.

. . .

Some scientists point (p. 34) to the dramatic rise in rates of obesity — from 13.4 percent of adults in 1980 to 42.4 percent in 2017-18, again per the NHANES — since excess weight depresses kidney efficiency, and to the likely not unrelated introduction, in 1967, of high-fructose corn syrup, which can cause the body to produce higher levels of uric acid, and its wholesale embrace in the early 1980s by the American food industry and then the world.

. . .

(p. 35) The disease remains mysterious in its onset. Beyond genetic factors, high-fructose corn syrup poses a greater danger than a lobe of foie gras, cutting across class lines.

For the full story, see:

Ligaya Mishan. “The Disease of Kings.” The New York Times Style Magazine (Sunday, November 15, 2020): 32 & 34-35.

(Note: ellipses added.)

(Note: the online version of the story was updated Nov. 14, 2020, and has the title “Once the Disease of Gluttonous Aristocrats, Gout Is Now Tormenting the Masses.”)

“A Safe Space for Entrepreneurs to Share Their Stories of Ascent”

(p. 1) Guy Raz is wrapping up an episode of How I Built This, his podcast about the origin stories of late capitalism, when his guest, the Israeli investor Haim Saban, gets to the good part. The throw-your-arms-aloft, finish-line moment of his personal business journey. In the story Mr. Saban is telling, he is about to make a lot of money, and then quadruple it into even more money.

Mr. Raz cuts in, astonished. “But half a billion dollars — that’s a lot of money,” he says. “I mean, wow.”

“Two billion is more,” Mr. Saban says.

“Was money — becoming really rich — did that motivate you?” Mr. Raz asks a moment later.

“You know, it wasn’t only money, but it was also money,” Mr. Saban says. “Money is a marker to success.”

There’s a moment like this in every episode of How I Built This. The guest has let his or her guard down and revealed something intimate, or financial, or financially intimate, and Mr. Raz keeps the disclosures rolling by reacting with total marvelment.

. . .

By creating a safe space for entrepreneurs to share their stories of ascent, Mr. Raz has become one of the most popular podcasters in history.

For the full story, see:

Nellie Bowles. “How Guy Raz Built ‘How I Built This’.” The New York Times, SundayBusiness Section (Sunday, November 25, 2018): 1 & 7.

(Note: ellipsis added. In the original, the word “more” is italicized.)

(Note: the online version of the story has the date Nov. 23, 2018, and has the same title as the print version.)

Build a Better Chalk and a South Korean Will Beat a Path to Your Door

A cliché usually credited to Emerson says that ‘if you build a better mousetrap, the world will beat a path to your door.’ Many, including Peter Thiel in his co-authored Zero to One, argue that the inventor of the better mousetrap needs some marketing to let the world know that her mousetrap is better. I think Thiel is mainly right, but the story quoted below suggests that sometimes the cliché may be true.

(p. A12) The bright-white sticks drop one by one into the whir and clatter of a weatherworn piece of machinery, where they are stamped with the most celebrated name in chalk: Hagoromo.

. . .

Of the thick grayish mass that emerges, four ingredients are known: calcium carbonate, clay, glue and oyster shells. The other three are a secret. In a video posted to YouTube about the chalk, an American fan offers a guess as to one of them: angel tears.

Hagoromo chalk is a cult favorite of elite academics, artists and others around the world who praise it for its silky feel, vibrant colors, scant dust and nearly unbreakable quality. Mathematicians in particular are prone to waxing poetic about it, and buying it in bulk. The YouTube video, produced by Great Big Story, has been viewed more than 18 million times.

Despite its renown, Hagoromo is still produced on a relatively small scale, using custom-made equipment, much of it run by two laborers who are identical twins — a throwback in a high-tech era where interactive displays are replacing chalkboards.

. . .

In 2014, Takayasu Watanabe, the grandson of the company’s founder, announced that Hagoromo would halt production, partly because of the industry’s declining fortunes and partly because of his own ill health.  . . .

As Mr. Watanabe was preparing to shut it down, he received a visit from Shin Hyeong-seok, who had been importing the chalk to South Korea for nearly 10 years. Mr. Shin sold the chalk through the company he started, Sejong Mall, named after King Sejong the Great, who in the 15th century created Hangeul, the Korean writing system.

Mr. Shin had discovered the chalk years before in Japan while investigating the workings of cram schools.   . . .

“I went into the teachers’ lounge and remember being mesmerized by the fluorescent-colored chalks,” he said. “And when I started writing with one, I could not put it down.”

On his trip to see Mr. Watanabe, Mr. Shin presented what he called a “crazy idea.” He, a teacher and importer with no manufacturing experience, would take over production of the chalk in South Korea. Mr. Watanabe laughed.

But Mr. Shin kept pressing. “My pitch to him was that there are many things in the world that will disappear one day, but the best-quality item should be the last to do so,” Mr. Shin said.

. . .

Takako Iwata, the second of Mr. Watanabe’s three daughters, who served as interpreter for Mr. Shin and her father, . . . said she wasn’t exactly sure how Hagoromo had become so beloved outside Japan. “I guess people who came to Japan just kept on bringing the chalk back to their home countries,” she said. “When my father was still running the company, he did not know about this huge following.”

That changed a bit, though, in his company’s final months, when he received a flood of orders, including from American professors who hoped to buy supplies large enough to last 10 years or more.

David Eisenbud, the director of the Mathematical Sciences Research Institute at the University of California, Berkeley, said he had bought enough to last the rest of his life.

Dr. Eisenbud is a key figure in the chalk’s popularization in the United States. He was first introduced to it years ago during a visit to the University of Tokyo. “Everything about the chalk was exquisite,” he said. “I thought, ‘Chalk is chalk,’ but I was wrong.”

He later persuaded an acquaintance to import the chalk into the United States. (Mr. Shin now sells it to American buyers through Amazon.)

Yujiro Kawamata, a Japanese mathematician who introduced Hagoromo to Dr. Eisenbud, marveled at the turn of events.

“I happened to tell Eisenbud about the chalk, which was just a tool that was a part of my everyday life, and now the whole world knows about it,” Dr. Kawamata said.

For the full story, see:

Hikari Hida and Jean Chung. “How a Beloved Chalk Bridged a Bitter Divide to Survive.” The New York Times (Wednesday, November 18, 2020): A12.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 17, 2020, and has the title “A Ride on the Assembly Line With the World’s Most Famous Chalk.”)

PayPal entrepreneur Peter Thiel’s co-authored book mentioned above is:

Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.

A.I. Lacks Common Sense: “A Broad and Often Unspoken Understanding of How the World Works”

(p. A15) Journalists like to punctuate stories about the risks of artificial intelligence—particularly long-term, humanity-threatening risks—with images of the Terminator. The idea is that unchecked robots will rise up and kill us all.

. . .

Melanie Mitchell, a computer scientist at Portland State University, is in the too-soon-to-worry camp. “My own opinion is that too much attention has been given to the risks from superintelligent AI,” she writes in “Artificial Intelligence,” “and far too little to deep learning’s lack of reliability and transparency and its vulnerability to attacks.”

. . .

Object-recognition software, for instance, can track pedestrians, detect tumors and sort photo libraries. But it doesn’t understand the content the way we do. Its obtuseness becomes sharply apparent in so-called adversarial attacks, in which only minimal changes to an image (or a sound or text file) can fool an AI into misidentifying it. Such attacks even transfer to the real world. A stop sign with a few innocuous stickers becomes a speed-limit sign.

The researchers first elucidating such vulnerabilities in neural networks—machine-learning programs inspired by the brain’s wiring—called them an “intriguing property.” Ms. Mitchell writes, “Calling this an ‘intriguing property’ of neural networks is a little like calling a hole in the hull of a fancy cruise liner a ‘thought-provoking facet’ of the ship.”

Ultimately, these systems lack common sense, a broad and often unspoken understanding of how the world works. Common sense, in turn, might require embodied experience in the world, plus the ability to abstract from it and form analogies. Much of Ms. Mitchell’s academic work concerns helping AI form analogies. It hasn’t progressed far. (No fault of hers.)

For the full review, see:

Matthew Hutson. “BOOKSHELF; Learn Like a Machine.” The Wall Street Journal (Wednesday, November 20, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date November 19, 2019, and has the title “BOOKSHELF; ‘Human Compatible’ and ‘Artificial Intelligence’ Review: Learn Like a Machine.”)

The book under review is:

Mitchell, Melanie. Artificial Intelligence: A Guide for Thinking Humans. New York: Farrar, Straus, and Giroux, 2019.

“When I Knew More Thank Hayek” AIER YouTube Video

The American Institute for Economic Research (AIER) premiered on Mon., Jan. 4, 2020, a neat YouTube video they created based on a shortened version of my article “When I Knew More Than Hayek.” [Hayek, Covid & The Use of Knowledge in Society | Kate Wand via @youtube] #Hayek #localknowledge

Water Entrepreneurs in Kathmandu: “The City Depends on Us”

(p. 1) KATHMANDU, Nepal — It had been 11 days since a ruptured valve reduced Kupondole district’s pipeline flow to a dribble, and the phones at Pradeep Tamanz’s tanker business wouldn’t stop ringing.

A Malaysian embassy residence had run perilously low on water, and the diplomats wanted to shower. They’d pay extra for a swift delivery. A coffee processing plant was on the verge of shutting down production after emptying its storage tank. It, too, would shell out whatever amount of money it would take. Across the neighborhood and other parts of the city, the calls were coming in so feverishly that Sanjay, a tanker driver, jokily wondered if he might get carjacked. “This is like liquid gold,” he said, jabbing at his precious cargo, large amounts of which seeped from every hatch. “Maybe more than gold.”

Dashing from filling stations to houses and factories and back, Mr. Tamanz tried to meet demand. His (p. 6) three tanker crews slept in one or two-hour spurts, often in the cramped, refrigerator-sized truck cabins, and kept the tankers on the road for up to 19 hours a day. He fobbed off business to competitors, an unusual practice in the cutthroat world of Kathmandu tanker men, and even sounded out a mechanic about converting a flatbed truck into a new tanker. With fat profits pouring in, the young businessman figured it might soon repay its cost.

But no matter how hard the crews worked or how furiously they pushed their lumbering vehicles over the potholed roads, there was no satisfying the city’s needs. The going was too slow. The water shortage too severe. By the time the pipeline was fully restored, some households had subsisted on nothing but small jerrycans for almost an entire month. “You know it’s not even peak season, but this is what happens here,” Mr. Tamanz said. “Just imagine what things would be like if we didn’t exist?” He trailed off as his phone rang once more.

In Kathmandu, as in much of South Asia and parts of the Middle East, South America and sub-Saharan Africa, these men and their tanker trucks sometimes prevent entire cities from running dry. Without them, millions of households wouldn’t have sufficient water to cook, clean or wash. Or perhaps any at all. And without them, an already deteriorating infrastructure might break down completely, as the tanker men know well. “The city depends on us,” said Maheswar Dahal, a businessman who owns six trucks in Kathmandu’s Jorpati district. “There would be disaster if we didn’t do our work.”

For the full story, see:

Peter Schwartzstein. “Merchants of Thirst.” The New York Times, SundayBusiness Section (Sunday, January 12, 2020): 1 & 6-7.

(Note: the online version of the story was updated on January 13, 2020, and has the title “The Merchants of Thirst.”)