Author: Art Diamond

Largest U.S. Firm Now Has 3% of U.S. Market Capitalization; In 1930s through 1990s the Largest U.S. Firm Had About 6%

(p. B5) . . . , consider the history of all the companies that have ranked No. 1 by market size. It’s full of surprises.

. . .

Hendrik Bessembinder and Goeun Choi, finance researchers at Arizona State University, calculate that the largest company in the U.S. clung to that spot for an average of 20 months from the late 1920s through the late 1950s—although it was nearly always either AT&T or GM.

From the 1960s through the end of the 1990s, the top company held the No. 1 position for an average of 12 months. From 2000 through mid-2018, the average tenure at the top was 15 months.

Over the past month, Apple, Microsoft and Amazon, all with market values of $700 billion or more, have each been No. 1 for several days at a time.

. . .

The single largest stock has made up about 3% of total U.S. market capitalization for the past 20 years, according to Savina Rizova, co-head of research at Dimensional Fund Advisors, an investment firm in Austin, Texas, that manages $517 billion. That’s down from the earlier average, since the late 1920s, of nearly 6%.

. . .

All in all, Amazon’s ascendancy is a reminder not of how new this era is but how old the dominance by big companies is. In some ways, these are the good old days: The top stocks account for less of the total market, and the giants don’t appear to be much easier—or harder—to topple than they used to be.

For the full commentary, see:

Jason Zweig. “Don’t Get Too Comfy At the Top, Amazon.” The Wall Street Journal (Saturday, January 12, 2019): B5.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Jan. 11, 2019, and has the title ” THE INTELLIGENT INVESTOR; What Amazon’s Rise to No. 1 Says About the Stock Market.”)

Venture Capital Can Force Startups to Grow Too Fast

(p. 8) . . . for every unicorn, there are countless other start-ups that grew too fast, burned through investors’ money and died — possibly unnecessarily. Start-up business plans are designed for the rosiest possible outcome, and the money intensifies both successes and failures. Social media is littered with tales of companies that withered under the pressure of hypergrowth, were crushed by so-called “toxic V.C.s” or were forced to raise too much venture capital — something known as the “foie gras effect.”

Now a counter movement, led by entrepreneurs who are jaded by the traditional playbook, is rejecting that model. While still a small part of the start-up community, these founders have become more vocal in the last year as they connect venture capitalists’ insatiable appetite for growth to the tech industry’s myriad crises.

. . .

. . . founders have decided the expectations that come with accepting venture capital aren’t worth it. Venture investing is a high-stakes game in which companies are typically either wild successes or near total failures.

“Big problems have occurred when you have founders who have unwillingly or unknowingly signed on for an outcome they didn’t know they were signing on for,” said Josh Kopelman, a venture investor at First Round Capital, an early backer of Uber, Warby Parker and Ring.

. . .

But people like Sandra Oh Lin, the chief executive of KiwiCo, a seller of children’s activity kits, say that more money isn’t necessary. Ms. Oh Lin raised a little over $10 million in venture funding between 2012 and 2014, but she is now rebuffing offers of more just as her company has hit on a product people want — the very moment when investors would love to pour more gas on the fire. KiwiCo is profitable and had nearly $100 million in sales in 2018, a 65 percent increase over the prior year, Ms. Oh Lin said.

“We are aggressive about growth, but we are not a company that chases growth at all costs,” Ms. Oh Lin said. “We want to build a company that lasts.” Continue reading “Venture Capital Can Force Startups to Grow Too Fast”

Closed Factories Re-purposed as E-commerce Distribution Hubs

(p. B7) As the United States economy continues its shift away from manufacturing, locations that once housed industries such as automobiles or chemicals are being remade as distribution hubs for the millions of items bought by consumers online.

Developers are trying to meet growing demand by modifying industrial buildings to meet the requirements of the logistics business or, more likely, demolishing them to make way for facilities built for the distribution industry. These sites offer many benefits ideal for distribution, including easy access to highways, ports and rail links and a proximity to major markets.

“Logistics and fulfillment is really the segment of the industrial world that has backfilled the void that manufacturing has left in terms of employment and economic activity,” said Thomas J. Hanna, president of Harvey Hanna & Associates, which plans to tear down a former General Motors assembly plant at Newport, Del., to create a three-million-square-foot complex for distribution companies.

Plans are in place to redevelop other former manufacturing sites across the nation, including a former plastics factory in Piscataway, N.J., and an old Ford plant in Lorain, Ohio.

E-commerce is driving strong growth in demand for industrial sites, according to a report from Newmark Knight Frank, a global commercial real estate company. “As consumers across economic and demographic spectrums continue to demand more rapid product delivery, developers have had to innovate their product and offer more highly efficient space in the largest urban markets,” the report said.

For the full story, see:

Jon Hurdle. “SQUARE FEET; Places That Once Made Goods Now Speed Them to Your Door.” The New York Times (Wednesday, Sept. 19, 2018): B7.

(Note: the online version of the story has the date Sept. 18, 2018, and has the title “SQUARE FEET; These Sites No Longer Make Goods. Now They’ll Get Them to You Faster.”)

“You Don’t Venture into the Wilderness Expecting to Find a Paved Road”

(p. 40) I, . . . , always considered the heart a pump, much the way a doctor explained it to Sandeep Jauhar during his cardiology fellowship. “In the end,” the doctor said, “cardiology is mostly a problem of plumbing.”

Jauhar quickly learned otherwise. His gripping new book, “Heart: A History,” had me nearly as enthralled with this pulsating body part as he seems to be. The tone — a physician excited about his specialty — takes a sharp turn from his first two memoirs. The first, “Intern,” was filled with uncertainty; the second, “Doctored,” with disillusionment.

. . .

We go into an operating room where a young girl is having open-heart surgery, tethered to a heart-lung machine. Then we learn that the concept for this machine began with one doctor’s brazen idea of connecting a patient to another person’s blood supply. He was inspired by the way a fetus feeds off its mother. Six of seven cases ended with a death.

Eventually, the heart-lung machine replaced the volunteers. The machine got off to a rough start too: 17 of the first 18 patients died. As one of the mid-20th-century researchers remarked, “You don’t venture into the wilderness expecting to find a paved road.”

Continue reading ““You Don’t Venture into the Wilderness Expecting to Find a Paved Road””

Bonaire Succeeds in Coral Reef Renewal

(p. 6) Bonaire is a leader in new efforts at reef restoration, along with a nongovernmental organization called Reef Renewal Bonaire, that in just a few years has grown and replanted some 20,000 staghorn corals in the water around the island. Corals are tiny soft creatures that survive on plankton and photosynthesis, and secrete calcium carbonate. They split and clone themselves one by one to eventually form large, curious looking underwater structures — brain coral, staghorn, elkhorn, fan, star and hundreds more shapes, depending on their species.

. . .

Reef Renewal Bonaire is partly financed by local dive shops and it has successfully experimented with underwater “nurseries,” which are treelike and fiberglass, to grow new coral from tiny bits of living coral, to transplantable size. When the baby coral grows to about the size of a basketball, after about six months, volunteers and a few interns again transplant it onto the reef floor. Some 20,000 coral transplantations are thriving on reefs around Bonaire and more are being planted all the time.

. . .

(p. 7) Besides Reef Renewal Bonaire, the Marine Park also rescues and replants corals in the path of any underwater pier or mooring construction. Large transplanted colonies are now thriving in areas away from cruise ship piers. . . .

Ramon de Leon Barrios, a Uruguayan-born oceanographer who ran Bonaire’s Marine Park for 11 years, said Bonaire’s success at maintaining a pristine reef proves that local community efforts can and do make a difference, even in times of environmental degradation.

“I want people to realize that there is hope,” he said.

For the full story, see:

Nina Burleigh. “Nurturing Coral, and the Soul.” The New York Times, Travel Section (Sunday, Feb. 23, 2019): 1 & 6-7.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 18, 2019, and has the title “Bonaire: Where Coral and Cactus Thrive, and the Sea Soothes the Soul.”)

Global Warming Improves German Wine

(p. 11) WILTINGEN, Germany — In the bright, cavernous basement of the new Van Volxem vinery building, Christoph Dirksen, one of the Mosel region’s most important wine tasters, was making his rounds sampling from giant stainless-steel tanks.

It’s early to make a final judgment on the wines of 2018, even for Mr. Dirksen, a critic for Vinum, an industry publication. But he nodded his head approvingly. Here, and almost everywhere else in the country, German winemakers are celebrating what they believe will prove to be a banner vintage.

“It’s not just good,” said Roman Niewodniczanski, one of Germany’s most celebrated vintners and the owner of Van Volxem. “It’s grandiose!”

. . .

“Especially for cooler regions, this year is going to be historic,” Mr. Niewodniczanski said, adding: “I’m not sure I’ll see anything like this again.”

As exceptional as 2018’s harvest looks, it’s also a sign of how much conditions have changed and are changing for the German wine industry.

“We are the big winners from climate change,” said Dirk Würtz, a vintner and wine journalist. “I know it’s disgusting to say, but it’s the truth.”

For the full story, see:

Christopher F. Schuetze. “In Germany, a Reason To Toast Climate Change.” The New York Times, First Section (Sunday, January 20, 2019): 11.

(Note: ellipsis added.)

(Note: the online version of the story has the date Jan. 19, 2019, and has the title “‘Disgusting to Say, but It’s the Truth’: German Winemakers See Boon in Climate Change.”)

Your Passion Is Not “Found,” It Is Developed with “Time, Effort and Investment”

(p. B7) People “often assume that their own interest or passion just needs to be ‘found’ or revealed. Once revealed, it will be in a fully formed state,” said Paul A. O’Keefe, an assistant professor of psychology at Yale-NUS College in Singapore. Nonsense, of course, he said.

“By that logic, pursuing one’s passion should come with boundless motivation and should be relatively easy,” he said.

Dr. O’Keefe was part of a team that published a study in 2018 that examined how two different “implicit theories of interest” impacted how people approach new potential passions. One, the fixed theory, says that our interests are relatively fixed and unchanging, while the other, the growth theory, suggests our interests are developed over time and not necessarily innate to our personality.

In other words: Do we truly find our passions, or develop them over time? (You can probably guess where this is going.)

The researchers found that people who hold a fixed theory had less interest in things outside of their current interests, were less likely to anticipate difficulties when pursuing new interests, and lost interest in new things much quicker than people who hold a growth theory. In essence, people with a growth mind-set of interest tend to believe that interests and passions are capable of developing with enough time, effort and investment.

“This comes down to the expectations people have when pursuing a passion,” Dr. O’Keefe said. “Someone with a fixed mind-set of interest might begin their pursuit with lots of enthusiasm, but it might diminish once things get too challenging or tedious.”

Passion alone won’t carry you through in the face of difficulty, he said, when overcoming those challenges actually counts.

For the full story, see:

Stephanie Lee. “Finding Your Passion’ Takes Some Work.” The New York Times (Monday, May 6, 2019): B7.

(Note: the online version of the story has the date April 21 [sic], 2019, and has the title “Why ‘Find Your Passion’ Is Such Terrible Advice.”)

The academic article discussed above, is:

O’Keefe, Paul A., Carol S. Dweck, and Gregory M. Walton. “Implicit Theories of Interest: Finding Your Passion or Developing It?” Psychological Science 29, no. 10 (Oct. 2018): 1653-64.

Are We “Made of Sugar Candy”?

(p. 11) Less a conventional history than an extended polemic, “Capitalism in America: A History,” by Greenspan and Adrian Wooldridge, a columnist and editor for The Economist, explores and ultimately celebrates the Austrian economist Joseph Schumpeter’s concept of “creative destruction,” which the authors describe as a “perennial gale” that “uproots businesses — and lives — but that, in the process, creates a more productive economy.”

. . .

. . . , Greenspan’s admiration for the rugged individualists who populate the novels of Ayn Rand (who merits a nod in this history) and the frontier spirit that animated America’s early development shows no sign of weakening as Greenspan has aged. He and Wooldridge lament that Americans are “losing the rugged pioneering spirit” that once defined them and mock the “trigger warnings” and “safe spaces” that now obsess academia.

The authors quote Winston Churchill: “We have not journeyed across the centuries, across the oceans, across the mountains, across the prairies, because we are made of sugar candy.” But now, they conclude, “sugar candy people are everywhere.”

Their prescription for American renewal — reining in entitlements, instituting fiscal responsibility and limited government, deregulating, focusing on education and opportunity, and above all fostering a fierceness in the face of creative destruction — was Republican orthodoxy not so long ago. Before the Great Recession it was embraced by most Democrats as well, and more recently by President Bill Clinton, the recipient of glowing praise in these pages.

No longer. “Capitalism in America,” in both its interpretation of economic history and its recipe for revival, is likely to offend the dominant Trump wing of the Republican Party and the resurgent left among Democrats. It’s not clear who, if anyone, will pick up the Greenspan torch.

For the full review, see:

James B. Stewart. “Creative Destruction.” The New York Times Book Review (Sunday, Nov. 4, 2018): 11.

(Note: ellipses added.)

(Note: the online version of the review has the date Nov. 2, 2018, and has the title “Alan Greenspan’s Ode to Creative Destruction.”)

The book under review, is:

Greenspan, Alan, and Adrian Wooldridge. Capitalism in America: A History. New York: Penguin Press, 2018.

Complexity of Drug Discovery Requires More Than A.I.

(p. B1) Every two years, hundreds of scientists enter a global competition. Tackling a biological puzzle they call “the protein folding problem,” they try to predict the three-dimensional shape of proteins in the human body.

. . .

Mohammed AlQuraishi, a biologist who has dedicated his career to this kind of research, flew in early December to Cancun, Mexico, where academics were gathering to discuss the results of the latest contest. As he checked into his hotel, a five-star resort on the Caribbean, he was consumed by melancholy.

The contest, the Critical Assessment of Structure Prediction, was not won by academics. It was won by DeepMind, the artificial intelligence lab owned by Google’s parent company.

. . .

“It is not that machines are going to replace chemists,” said Derek Lowe, a longtime drug discovery researcher and the author of In the Pipeline, a widely read blog dedicated to drug discovery. “It’s that the chemists who use machines will replace those that don’t.”

. . .

(p. 5) Working with two other computer scientists, the DeepMind researcher Rich Evans homed in on protein folding. They found a game that simulated this scientific task. They built a system that learned to play the game on its own, and the results were promising enough for DeepMind to greenlight a full-time research project.

The protein folding problem asks a straightforward question: Can you predict the physical structure of a protein — its shape in three dimensions?

If scientists can predict a protein’s shape, they can better determine how other molecules will “bind” to it — attach to it, physically — and that is one way drugs are developed. A drug binds to particular proteins in your body and changes their behavior.

In the latest contest, DeepMind made these predictions using “neural networks,” complex mathematical systems that can learn tasks by analyzing vast amounts of data. By analyzing thousands of proteins, a neural network can learn to predict the shape of others.

. . .

Mr. Hassabis said DeepMind was committed to solving the protein folding problem. But many experts said that even if it was solved, more work was needed before doctors and patients benefited in any practical way.

“This is a first step,” said David Baker, the director of the Institute for Protein Design at the University of Washington. “There are so many other steps still to go.”

As they work to better understand the proteins in the body, for instance, scientists must also create new proteins that can serve as drug candidates. Dr. Baker now believes that creating proteins is more important to drug discovery than the “folding” methods being explored, and this task, he said, is not as well suited to DeepMind-style A.I.

DeepMind researchers focus on games and contests because they can show a clear improvement in artificial intelligence. But it is not clear how that approach translates to many tasks.

“Because of the complexity of drug discovery, we need a wide variety of tools,” Dr. Alvarez said. “There is no one-size-fits-all answer.”

For the full story, see:

Cade Metz. “Making New Medicines With a Spoonful of A.I.” The New York Times (Wednesday, Feb. 6, 2019): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 5, 2019, and has the title “Making New Drugs With a Dose of Artificial Intelligence.”)

“When the Forts of Folly Fall”

When I read the poem below I smiled. Part of me found it inspiring and part of me found it foolish. But I smiled.

(p. A11) . . . from the final stanza of Matthew Arnold’s poem “The Last Word”: “Charge once more, then, and be dumb! / Let the victors, when they come, / When the forts of folly fall, / Find thy body by the wall.”

For the full commentary, see:

Abigail Shrier, interviewer. “THE WEEKEND INTERVIEW; Standing Against Psychiatry’s Crazes.” The Wall Street Journal (Saturday, May 4, 2019): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date May 3, 2019.)

Australia’s 27-Year Economic Expansion

(p. A2) Australia is experiencing an amazing economic run—a 27-year expansion that survived a regional economic crisis in the 1990s, a global economic crisis in the 2000s, and a boom-boost cycle in its core commodity sector in the 2010s.

Its experience offers lessons for the U.S. and the rest of the world. Among them, the laws of economics don’t dictate that expansions run on preset timetables. Wise policy-making, and some good luck, carried Australia’s expansion into the record books.

For the full commentary, see:

James Glynn. “THE OUTLOOK; Keeping an Economic Boom Going.” The Wall Street Journal (Monday, July 16, 2018): A2.

(Note: the online version of the commentary has the date July 15, 2018, and has the title “THE OUTLOOK; How an Economic Boom Can Run Out the Clock.”)