Economics of Technology – Page 19

James Dyson Persevered Through 5,127 Prototypes to Achieve Vacuum Cleaner Success

(p. C7) James Dyson was a less than stellar student at the boarding school he attended in Norfolk, England, where his father was a classics master. Yet he would become the founder of a family-owned global manufacturing empire. Mr. Dyson gained fame—and a peerage—as the inventor of a revolutionary vacuum cleaner that exploits the principle of the cyclone and never needs a replacement bag, among other novel domestic appliances.

. . .

It took Mr. Dyson four years and precisely 5,127 prototypes—as he reminds us in the first paragraph of this book’s introduction and in the last paragraph of its last chapter, as well as several times in between. He points out that his perseverance—abetted by subsequent and continuing failures in the form of rebuffs from the likes of banks, venture capitalists, government agencies, manufacturers, distributors and retailers—was rewarded with ultimate success. The idea of “accepting and even enjoying failure, but going on” is another theme carried throughout Mr. Dyson’s book.

. . .

With success achieved in the United Kingdom, Mr. Dyson looked to sell the fruits of his intellectual property beyond the sceptered shores. In America, he got legally tangled up with Amway, which he was convinced was infringing on his patents. The lessons learned from his failure to protect his patent rights for the Ballbarrow, however, steeled Mr. Dyson and his wife and business partner, Deirdre, against allowing this to happen a second time. Mr. Dyson sued Amway and, after five years of costly litigation, received a favorable settlement. The victory boosted the businessman’s growing reputation as a fighter and a winner.

. . .

. . . , Mr. Dyson tells a story of the struggles of entrepreneurship, and his arduous quests for private capital; suitable manufacturing facilities; building permits; talented and trained employees; and at least moral support from the British government. He reveals the many and continuing obstacles—financial, political, regulatory, sociological, cultural—that frustrated his attempts to expand his manufacturing enterprises within the United Kingdom. This challenge, he explains, eventually drove him to move the bulk of his business to Singapore, where Mr. Dyson’s company is now headquartered.

For the full review, see:

Henry Petroski. “The Inventor’s Dilemma.” The Wall Street Journal (Saturday, Sept. 4, 2021): C7.

(Note: ellipses added.)

(Note: the online version of the review was updated Sept. 3, 2021, and has the title “‘Invention’ Review: James Dyson’s Dilemma.”)

The book under review is:

Dyson, James. Invention: A Life. New York: Simon & Schuster, 2021.

“Folly” of $66 Billion Subsidy for Trains, When Americans Prefer Cars and Planes

(p. 9) While long-haul railroads have a beloved place in our history, Americans almost entirely abandoned them more than a half century ago for the greater convenience of cars and the speed of planes.

And yet, not only have we continued to run a hugely loss-making nationwide network of passenger trains, last week’s bipartisan infrastructure plan includes tens of billions more for an Amtrak-based transportation system that will only ever be used by a small sliver of Americans outside of the Northeast Corridor rail line (known as the N.E.C.), which stretches from Washington to Boston.

The folly of another $66 billion — mostly for passenger railroads, one of the biggest allocations in the bipartisan compromise — makes me doubt how well other pieces of the trillions in spending proposed by the administration will be allocated. (President Biden wanted even more for Amtrak.)

. . .

Really? Consider a few stats: In the 2019 fiscal year, when excluding the N.E.C., Amtrak carried just 4.5 million passengers (not including services subsidized by states and cities), roughly 1.4 percent of our population. On average, passengers paid $115 while Amtrak spent $222 to transport each of them.

Unprofitable ticket prices notwithstanding, long-distance train travel dropped by 5.4 percent between the 2010 and 2018 fiscal years, while air travel rose by nearly 24 percent. On average, Amtrak filled only 55 percent of its long-distance seats in 2018. Does that warrant another $66 billion?

. . .

Populous California, where the automobile has reigned for decades, is an example of why betting on an American train travel revival is questionable. High-speed service between Los Angeles and San Francisco — which was approved by voters in 2008 at an estimated cost of $33 billion with completion expected in 2020 — remains a mirage. Completion is unlikely before 2030, while outlays are now projected to total at least $100 billion.

The California fiasco illustrates how execution will be key to implementing any infrastructure projects. But the government’s record is not great.

For the full commentary, see:

Steven Rattner. “Who Needs Amtrak? Not Wyoming.” The New York Times, SundayReview Section (Sunday, July 4, 2021): 9.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 1, 2021, and has the title “Why ‘Amtrak Joe’ Should Pull Back on Train Funding’.” Where the wording of the two versions slightly differs, the passages quoted above follow the online version.)

A Firm Does Not Need to Be a Platform to Matter

(p. 17) Over the past two decades, the world’s hyper-ambitious entrepreneurs — is there now any other kind? — have largely pursued a pair of goals in tandem. First: Become a platform. Second: Take over the world. The former is supposed to lead to the latter, as it seemingly has for the five companies conglomerated under the intimidating acronym FAANG. Facebook, Apple, Amazon, Netflix and Google have taken such a bloodsucking bite (get it?) out of the world economy that in the past half decade alone they have more than tripled in value — at a rate three times faster than the growth of the entire S&P 500 — and are now worth north of $7 trillion. The appeal of building a platform is clear.

. . .

The word “platform” has been deployed so many times in so many ways that it has lost almost all meaning, a fact that Jonathan Knee, who teaches at Columbia University’s business school, tries to spell out in his new book, “The Platform Delusion.”

. . .

Knee’s book is filled with business school case studies that might be a bit in the weeds for general readers. (One of the successes he identifies is a company that makes software for a very specific financial accounting function.) But for aspiring entrepreneurs these stories offer a primer on the delusion Knee has identified, and show how to avoid the two primary misjudgments that cause it. The first is a belief that platforms emerged with the dawn of the internet. In fact, they’ve been around for decades.

. . .

But the crux of Knee’s argument is that “beyond their size and success” — no small feat — there is little the big platforms have in common.

. . .

Knee grants that the breadth and scope of the giant tech platforms is “awe-inspiring,” but he thinks our collective fear of them is overblown. (. . . ) The platforms have weaknesses just like any business, he argues, and the succubi themselves push the myth of their own invincibility in order to dissuade any potential competition.

But what the myth has mostly done is tempt young entrepreneurs to try to match them.

. . .

Knee believes that investors, and many of his students, are fooling themselves into thinking that building a globe-spanning platform is a viable goal. Platforms are successful not because they are platforms, but because they exploit the same kinds of advantages that successful businesses have enjoyed for decades. It’s a boring realization, but one that Knee hopes will save his students not only from pursuing bad ideas, but from ruining their lives. The platform siren song, he writes, “fatally impedes the ability of many to clearly consider what they might actually enjoy.” Not everyone needs to start a company to be happy. And not every company needs to take over the world.

For the full review, see:

Reeves Wiedeman. “Nosedive.” The New York Times Book Review (Sunday, September 26, 2021): 17.

(Note: ellipses added.)

(Note: the online version of the review has the date Sept. 15, 2021, and has the title “Why Does Every Company Now Want to Be a Platform?”)

The book under review is:

Knee, Jonathan A. The Platform Delusion: Who Wins and Who Loses in the Age of Tech Titans. New York: Portfolio, 2021.

Nazi Regime Was “Really Bad at Industrial Production”

(p. A6) The failure of Nazi Germany’s nuclear program is well established in the historical record.

. . .

In their quest to produce an atomic bomb, the Germans wanted to use a method in which uranium is submerged in heavy water, Professor Brown said. But the Allies dealt those plans “a big blow” when they bombed a plant in Norway that was the only place the Germans could get the key ingredient, she added.

Additionally, to succeed in its efforts, Nazi Germany would have needed large factories to produce bombs, vast tracts of land to test them and security from the threat of aerial attacks so that enemies could not spy on them, Professor Brown said.

Adam Seipp, a history professor at Texas A&M University, said Nazi Germany lacked the resources because it was “really bad at industrial production.”

“It’s one of the reasons they lost the war so catastrophically,” he said.

For the full story, see:

Jesus Jiménez. “New Podcasts Add to the Conversation in Cuba.” The New York Times, First Section (Sunday, September 12, 2021): A6.

(Note: ellipsis added.)

(Note: the online version of the story was updated Sept. 11, 2021, and has the title “Could Nazis Have Built Bomb? Lab Tracks a Clue.” The sentence starting with “Additionally” appears in the online, but not the print, version of the article.)

Cuban Podcasts Thrive Because Cheap to Produce and Hard for Communists to Censure

(p. 4) There has been little to laugh about in Cuba lately. But on a recent episode of El Enjambre, a weekly podcast produced on the island, the three hosts were howling at the latest form of censorship by the state-run telecommunications company.

“If you send a text message with the word freedom, the message doesn’t reach the recipient,” Lucía March told her incredulous co-hosts, referring to the Spanish language word libertad. “It evaporates, vanishes! I’m serious.”

The exchange was funny, informative and lighthearted, traits that have made El Enjambre one of the biggest hits among the scores of new Cuban-made podcasts that are now competing for residents’ attention and limited internet bandwidth.

Cubans began having access to the internet on smartphones only in 2018. Since then, podcasts about politics, current events, history, entrepreneurship and language have upended how Cubans get their information, expanding the middle ground between the hyperpartisan content generated by government-run media outlets and American government funded newsrooms that are highly critical of the island’s authoritarian leaders.

. . .

“It’s very difficult for a government to censor a podcast because there are many ways of distributing it,” said Mr. Lugones, who believes the new audio initiatives are stirring nuanced conversations on the island. “Podcasts spark debates in society all the time. They cause people to reflect.”

A desire to do just that prompted Camilo Condis, an industrial engineer who has opened a few restaurants in Havana, to launch El Enjambre — Spanish for swarm of bees — in late 2019. The heart of the show is a spirited, spontaneous conversation among Mr. Condis and his co-hosts, Ms. March and Yunior García Aguilera.

No subject is off limits.

El Enjambre provided detailed coverage of the remarkable July 11 anti-government protests in Cuba and searing criticism of the ruthless crackdown that followed.

The hosts also dissected the dismal state of the health care system as Covid-19 cases surged on the island, mocked the sputtering initiatives by the government to allow some private sector activities, such as garage sales, and attempted to read the tea leaves on the future of Washington’s relationship with Havana.

Each episode includes a short, humorous, scripted drama, a segment called History without Hysteria and a lengthy conversation that tends to focus on the issues Cubans have been arguing about on social media over the past few days.

“The objective was to create a conversation like you’d have on any street corner in Cuba,” Mr. Condis said. “But we provide only verified facts, because it matters greatly to us to never provide false information.”

. . .

But the format is the rare media venture that requires little training or capital, said Elaine Díaz, the founder of Periodismo de Barrio, a watchdog news site that covers environmental and human rights issues in Cuba.

. . .

Podcasts in Cuba are labors of love at this point, said Mr. Condis. But he hopes that one day they can become profitable.

“In the future, I want to have advertisers,” he said.

For the full story, see:

Ernesto Londoño. “New Podcasts Add to the Conversation in Cuba.” The New York Times, First Section (Sunday, September 19, 2021): 4.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 18, 2021, and has the title “Despite Censorship and Poor Internet, Cuban Podcasts Are Booming.”)

E.U. Blocks Innovations in Charger Port Technology

(p. B1) The European Union unveiled plans on Thursday [September 23, 2021] to make USB-C connectors the standard charging port for all smartphones, tablets and other electronic devices sold across the bloc, an initiative that it says will reduce environmental waste but that is likely to hit Apple the hardest.

The move would represent a long-awaited yet aggressive step into product-making decisions by the European Commission, the bloc’s executive arm. Apple, whose iPhones are equipped with a different port, has long opposed the plan, arguing that it would stifle innovation and lead to more electronic waste as all current chargers that are not USB-C would become obsolete.

. . .

(p. B6) European Union officials and lawmakers at the European Parliament have been advocating a common charger since 2009, when there were more than 30 charging options on the market, now down to three. They have argued that fewer wires would be more convenient for users and better for the environment, as mobile phone chargers are responsible for 11,000 tons of electronic waste per year across the bloc, according to estimates by the European Commission.

But Apple has also argued that if the European Union had imposed a common charger in 2009, it would have restricted innovation that led to USB-C and Lightning connectors. In a statement, Apple said that although it welcomed the European Commission’s commitment to protecting the environment, it favored a solution that left the device side of the charging interface open for innovation.

For the full commentary, see:

Elian Peltier. “E.U. Aims to Require USB-C Ports.” The New York Times (Friday, Sept. 24, 2021): B1 & B6.

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

(Note: the online version of the commentary has the date Sept. 23, 2021, and has the title “In a setback for Apple, the European Union seeks a common charger for all phones.”)

Central Planners’ Electric-Vehicle Push Is “More Political Showmanship Than Sound Planning”

(p. A1) The Toyota Prius hybrid was a milestone in the history of clean cars, attracting millions of buyers worldwide who could do their part for the environment while saving money on gasoline.

But in recent months, Toyota, one of the world’s largest automakers, has quietly become the industry’s strongest voice opposing an all-out transition to electric vehicles — which proponents say is critical to fighting climate change.

. . .

(p. A9) In statements, Toyota said that it was in no way opposed to electric vehicles. “We agree and embrace the fact that all-electric vehicles are the future,” Eric Booth, a Toyota spokesman, said. But Toyota thinks that “too little attention is being paid to what happens between today, when 98 percent of the cars and trucks sold are powered at least in part by gasoline, and that fully electrified future,” he said.

Until then, Mr. Booth said, it makes sense for Toyota to lean on its existing hybrid and plug-in hybrid vehicles to reduce emissions. Hydrogen fuel cell technology should also play a role. And any efficiency standards should “be informed by what technology can realistically deliver and help keep vehicles affordable,” the company said in a statement.

. . .

On paper, Toyota’s approach to zero-emissions vehicles, the hydrogen fuel cell, is a dream: Unlike battery-powered electric vehicles, these cars carry hydrogen tanks and fuel cells that turn the hydrogen into electricity. They refuel and accelerate quickly, and can travel for several hundred miles on a tank, emitting only water vapor. And hydrogen, theoretically, is abundant.

But a high sticker price, as well as lack of refueling infrastructure, has hampered the growth of a hydrogen economy, at least for passenger cars.

. . .

Jeffrey K. Liker, professor emeritus of industrial and operations engineering at the University of Michigan and author of “The Toyota Way,” said that there were other factors slowing Toyota’s push. A famously cautious company, Toyota has researched solid-state batteries, which are safer than the widely used lithium-ion technology, but readying that technology has taken longer than they expected, he said. Toyota has also spoken about not wanting to lay off employees or bankrupt suppliers in a rapid transition to electrics.

“Toyota’s view is also that countries are jumping in with the idea of the electric-vehicle endgame without a real plan, and it’s more political showmanship than sound planning,” Mr. Liker said.

For the full story, see:

Hiroko Tabuchi. “Maker of Prius Now Resisting Emissions Push.” The New York Times (Monday, July 26, 2021): A1 & A9.

(Note: ellipses added.)

(Note: the online version of the story was updated Aug. [sic] 6, 2021, and has the title “Toyota Led on Clean Cars. Now Critics Say It Works to Delay Them.”)

Liker’s book mentioned above is:

Liker, Jeffrey. The Toyota Way, 14 Management Principles from the World’s Greatest Manufacturer. 2nd ed: McGraw-Hill Education, 2021.

Users of “Free” Public Housing Wi-Fi Do Not Know How to Keep It Online

(p. 30) After months of back and forth, NYC Mesh got the greenlight to put a hub on the 24-story public housing tower in Bed-Stuy, along with two other developments in the Bronx and Queens. Four other small providers, including Silicon Harlem, were selected to wire up 10 other NYCHA developments. As part of Phase One of the Internet Master Plan, to which the city will direct $157 million, NYC Mesh installed free public hot spots around the exterior grounds of the projects; the other companies must provide residents access to Wi-Fi in their apartments for no more than $20 a month.

. . .

But the people who use the free hot spots in public housing or the family shelter in Brownsville don’t know how to fix the equipment or where to request a repair or report an outage on Slack. Indeed, all but one of the hallway routers in the shelter have been out for the last couple of months, and a number of new ones at the Bed-Stuy tower keep going offline.

For the full story, see:

Bliss Broyard. “Meet the Warriors of Wi-Fi.” The New York Times, First Section (Sunday, July 18, 2021): 30.

(Note: ellipsis added.)

(Note: the online version of the story has the date July 16, 2021, and has the title “‘Welcome to the Mesh, Brother’: Guerrilla Wi-Fi Comes to New York.”)

Volatile Investor Goaded WeWork Entrepreneur “to Think Bigger”

(p. B1) Adam Neumann and Masayoshi Son were negotiating a possible $20 billion check when Mr. Son pulled up an image of Yoda on his iPad.

It was summer 2018 and Mr. Son’s tech conglomerate, SoftBank Group Corp., had already pumped over $4 billion into WeWork, the shared office space startup Mr. Neumann co-founded eight years earlier. Now Mr. Neumann was trying to get Mr. Son to buy a majority stake in WeWork. It would have been the largest acquisition ever of a startup, part of a bid to turbocharge a three-pronged strategy to dominate global real estate.

Mr. Son, a risk-taking investor who likened his gut-based strategy of “use the force” to that of the bat-eared Star Wars Jedi, was visibly excited that his new disciple was pushing for such an ambitious plan. Mr. Neumann, more than 20 years younger than Mr. Son and roughly a foot taller, charted out (p. B6) gargantuan growth projections in presentation after presentation throughout the summer. Mr. Son, scribbling on his iPad, calculated WeWork would be worth $10 trillion in a decade, more than 10 times the price tag of Apple at the time, the world’s most valuable company.

Still, Mr. Son kept urging Mr. Neumann to think bigger.

WeWork’s salespeople, real estate professionals and buildings numbered in the low hundreds. Mr. Son, though, told Mr. Neumann each category needed to grow—to 10,000. On his iPad, he commemorated the dictate.

“10k, 10k, 10k!” Mr. Son wrote in yellow, above Yoda grasping a green lightsaber. He signed below: “Masa.”

Fourteen months later, WeWork underwent one of the most spectacular corporate meltdowns of the decade.

. . .

Mr. Neumann, a long-haired, energetic entrepreneur, started WeWork after struggling to build a baby-clothes business in New York, where he moved from Israel in 2001.

. . .

Following a dinner with Walter Isaacson, biographer of Steve Jobs, he gathered staff around to read a complimentary email from the author. He told his employees he wanted Mr. Isaacson to write a biography about him.

. . .

Playing a role in Mr. Neumann’s growing ambitions was Mr. Son, who was frequently needling Mr. Neumann to think bigger.

At a meal in Tokyo with Mr. Son and Cheng Wei, CEO of Chinese ridehail giant Didi Global Inc., Mr. Son told Mr. Neumann that the Didi CEO beat out Uber Technologies Inc. in China not because he was smarter than Uber CEO Travis Kalanick. Mr. Cheng was crazier, Mr. Son said.

On the same Tokyo trip, Mr. Son asked Mr. Neumann who would win a fight between a smart guy and a crazy guy, according to people familiar with the conversation. He told Mr. Neumann that being crazy is how you win and that Mr. Neumann was not crazy enough, according to these people.

Roughly a year later at another meeting in Tokyo, Mr. Son clicked on a promotional video of SoftBank-backed Oyo Hotels & Homes, led by the then 24-year-old Ritesh Agarwal. Oyo was growing far faster than WeWork, Mr. Son told Mr. Neumann, ribbing him about lagging behind his SoftBank-backed counterpart, whom Mr. Son equated with a sibling.

“Your little brother is going to beat you,” Mr. Son told Mr. Neumann, according to people familiar with the conversation. “He is being bolder than you.”

Following meetings like this, Mr. Neumann often pushed for bigger ideas, aides said.

For the full commentary, see:

Eliot Brown and Maureen Farrell. “The We That Didn’t Work.” The Wall Street Journal (Saturday, July 17, 2021): B1 & B6.

(Note: ellipses added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “The We That Didn’t Work at WeWork.”)

The commentary quoted above is based on the authors’ book:

Brown, Eliot, and Maureen Farrell. The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion. New York: Crown, 2021.

Rivian Entrepreneur Is “Starkly Different” From Elon Musk, but Both “Are Immersed in the Details of Their Business”

(p. B5) Rivian, a promising and well-funded electric truck maker, plans to sell shares through an initial public offering, the company said Friday [Aug. 27, 2021], just weeks before it expects to deliver its first electric pickups to customers.

. . .

“Rivian is one of the best-positioned electric vehicle start-ups,” Asad Hussain, senior mobility analyst for PitchBook, said by email. “The company’s focus on the relatively untapped premium electric truck market should allow it to gain rapid market adoption.”

The leaders of Rivian and Tesla are also starkly different. Tesla’s chief executive, Elon Musk, has been a brash and combative force in the automotive industry, making big promises and engaging in public feuds with individuals and government agencies. Mr. Scaringe is understated and has been measured in his public statements and promises.

Still, both executives are immersed in the details of their business. Mr. Musk has said he has slept at his company’s main factory in Fremont, Calif., at important moments when Tesla was ramping up production. Mr. Scaringe is also a frequent presence at Rivian’s factory in Normal, Ill., and workers there refer to the color of robots and safety lines directing the flow of people as “R.J. Blue.” He has been known to weigh in on vehicle colors, including one known as “launch green.”

. . .

“In the very beginning, on Day 1, Year 1, the risk of starting a business like this is enormously high, and the likelihood of success was very low,” he said. “That’s just true. And I had to accept that.”

But Mr. Scaringe said he remained confident in his team and in the strategic plan they had assembled: First, raise enough money to develop core technologies — software, battery architecture, mechanical systems — that could support vehicles for both consumers and commercial customers; then raise more capital to mass produce trucks and vans.

Rivian appeared to embark on that second phase a few years ago. In the fall of 2018, Jeff Bezos, the Amazon founder, flew to Michigan to meet Mr. Scaringe and preview the company’s vehicles. By the end of the next year, Rivian had raised nearly $3 billion from investors including Ford and Amazon, which also ordered 100,000 delivery vans.

For the full story, see:

Niraj Chokshi, Noam Scheiber and Lauren Hirsch. “Rivian Set to Go Public as It Prepares to Deliver Electric Pickup Trucks.” The New York Times (Saturday, August 28, 2021): B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Sept. [sic] 13, 2021, and has the title “Rivian, Electric Truck Maker Backed by Amazon and Ford, Files for I.P.O.”)

Intel Commits $50 Billion to Expand Chip Output

(p. B1) Less than six months into the job, Intel Corp. INTC -0.53% Chief Executive Officer Pat Gelsinger’s approach to reviving the chipmaker’s fortunes is emerging: move quickly and carry a big checkbook.

. . .

Mr. Gelsinger’s answer, effectively, has been an emphatic ”no.” He has committed Intel to not only make its own semiconductors but also become a so-called foundry, a maker of chips for others—underwritten with more than $50 billion in financial commitments, if Intel’s exploratory talks to acquire chip-making specialist GlobalFoundries come to fruition. The Wall Street Journal on Thursday reported Intel is considering an acquisition that would value GlobalFoundries at roughly $30 billion.

. . .

(p. B14) A GlobalFoundries takeover would come after Mr. Gelsinger, after little more than a month in the top job, committed Intel to making $20 billion in chip-plant investments in Arizona. Less than two months later, he added a $3.5 billion expansion plan in New Mexico. The Intel CEO has said more financial commitments are on the drawing board, both in the U.S. and overseas.

. . .

The global chip shortage has put semiconductor production in the spotlight like rarely before.

. . .

Intel is betting the chip boom is lasting. Mr. Gelsinger has said the market to make chips for others should become a $100 billion market by 2025.

For the full story, see:

Aaron Tilley. “Intel Bets Billions on Rising Chip Demand.” The Wall Street Journal (Saturday, July 17, 2021): B1 & B14.

(Note: ellipses added.)

(Note: the online version of the story has the date July 16, 2021, and has the title “Intel CEO’s Chip-Building Plan Has a $50 Billion-Plus Price Tag.”)