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.”)

When Does Selling an Entrepreneurial Vision Cross a Legal or Ethical Line?

(p. B4) I’m angry about start-up founders who over-promise, behave badly and sometimes crater their companies and walk away unscathed.

. . .

I’ve been thinking about this recently because of the glare on two start-up founders, Adam Neumann and Trevor Milton.

. . .

A new book details the ways that WeWork mostly just rented cubicles, burned through piles of other people’s money, treated employees like garbage and made Neumann stinking rich as the company nearly collapsed in 2019. WeWork has stuck around in less outlandish form without Neumann.

And last week, federal authorities charged Milton with duping investors in his electric truck start-up Nikola into believing that the company’s battery- and hydrogen-powered vehicle technology was far more capable than it really was. Among the allegations are that Milton ordered the doctoring of a promotional video to make a Nikola prototype truck appear to be fully functional when it was not.

. . .

Disproportionate rewards go to the entrepreneurs and companies that can sell a vision of billions of users and values in the trillions of dollars.

. . .

Those conditions tempt people to skirt the edges of what’s right and legal. But I also wonder if curtailing the excesses would also curb the ambition that we want. Sometimes the zeal to imagine ridiculously grand visions of the future brings us Theranos. And sometimes it brings us Google. Are these two sides of the same coin?

For the full commentary, see:

Shira Ovide. “Why Do Hucksters Come With the Territory?” The New York Times (Monday, August 9, 2021): B4.

(Note: ellipses added.)

(Note: the online version of the commentary was updated August 4, 2021, and has the title “Innovation Invites Hucksters.”)

The book on WeWork mentioned in the above commentary is:

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

Facebook and Twitter Colluded with Government to Censor Free Speech

(p. A17) The media has panned Donald Trump’s First Amendment lawsuits against Facebook, Twitter and YouTube: “sure to fail,” “as stupid as you’d think,” “ridiculous.”

. . .

But the central claim in Mr. Trump’s class-action lawsuit—that the defendants should be treated as state actors and are bound by the First Amendment when they engage in selective political censorship—has precedent to back it up. Their censorship constitutes state action because the government granted them immunity from legal liability, threatened to punish them if they allow disfavored speech, and colluded with them in choosing targets for censorship.

. . .

A growing body of evidence suggests that social media companies have voluntarily worked with Democratic officials to censor content the latter disfavor. In Brentwood Academy v. Tennessee Secondary School Athletic Association (2001), the high court held that state action exists if the private party’s conduct results from “significant encouragement, either overt or covert,” or if the private party is a “willful participant in joint activity with the State or its agents.”

According to allegations in other pending lawsuits, Twitter formed “trusted partner” relationships with state officials to remove content identified by the officials as election misinformation—when in reality the content was simply critical of state policies.

In September 2020 Mr. Zuckerberg acknowledged that Facebook “works with” the Centers for Disease Control and Prevention to remove Covid-related content. The company’s official policy states that it is “advised” by public-health authorities about what Covid content should be blocked. For months, while officials including Anthony Fauci proclaimed that the Wuhan lab-leak theory was “debunked” and a “conspiracy theory,” Facebook blocked any mention of that theory as “misinformation.”

But after Dr. Fauci and the administration retreated from this position, Facebook almost immediately lifted its ban. Recently published email exchanges between Mr. Zuckerberg and Dr. Fauci reveal no evidence of direct instruction from the government on this point but make a case for Facebook’s willful participation in a joint activity with the government.

For the full commentary, see:

Vivek Ramaswamy. “Trump Can Win His Case Against Tech Giants.” The Wall Street Journal (Monday, July 12, 2021): A17.

(Note: ellipses added; italics in original.)

(Note: the online version of the commentary has the date July 11, 2021, and has the same title as the print version.)

“Weak Venture Capitalists Who Kowtow to Charismatic Entrepreneurs”

(p. 11) . . . the unbelievability of the rise and fall of a company that marketed itself to investors as a tech enterprise when it actually rented work space to gig-economy freelancers and starry-eyed entrepreneurs is part of the considerable lure of “The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion,” a juicy guided tour through the highly leveraged, not-quite-rags-to-billion-dollar-parachute saga of WeWork and its co-founder Adam Neumann, a startup demagogue who aspired to be a demigod, but got hamstrung by his ego and greed.

. . .

. . ., the book saves its firepower for the cataclysmic combination of Neumann’s gift for salesmanship, addiction to fund-raising and focus on his personal wealth. We meet weak venture capitalists who kowtow to charismatic entrepreneurs as well as mutual fund directors, investment bankers and deep-pocketed benefactors like SoftBank’s Masayoshi Son who enabled Neumann.

For the full review, see:

Katherine Rosman. “Office Space.” The New York Times Book Review (Sunday, August 15, 2021): 11.

(Note: ellipses added.)

(Note: the online version of the review has the date July [sic] 18, 2021, and has the title “‘How to Explain the Rise and Fall of WeWork?”)

The book under review is:

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

“Extrapolate to Doomsday”

(p. B1) The giant tech companies with their power-hungry, football-field-size data centers are not the environmental villains they are sometimes portrayed to be on social media and elsewhere.

Shutting off your Zoom camera or throttling your Netflix service to lower-definition viewing does not yield a big saving in energy use, contrary to what some people have claimed.

Even the predicted environmental impact of Bitcoin, which does require lots of computing firepower, has been considerably exaggerated by some researchers.

Those are the conclusions of a new analysis by Jonathan Koomey and Eric Masanet, two leading scientists in the field of technology, energy use and the environment. Mr. Koomey is now an independent analyst, and Mr. Masanet is a professor at the University of California, Santa Barbara. (Mr. Masanet receives research funding from Amazon.)

They said their analysis, published on Thursday [June 24, 2021] as a commentary article in Joule, a scientific journal, was not necessarily intended to be reassuring. Instead, they said, it is meant to inject a dose of reality into the public discussion of technology’s impact on the environment.

. . .

(p. B3) Exaggerated claims, the pair said, are often well-intentioned efforts by researchers who make what may seem like reasonable assumptions. But they are not familiar with fast-changing computer technology — processing, memory, storage and networks. In making predictions, they tend to underestimate the pace of energy-saving innovation and how the systems work.

. . .

Computer data centers are a case study. The biggest data centers, from which consumers and workers tap services and software over the internet, do consume huge amounts of electricity. These so-called cloud data centers are operated by companies including Alibaba, Amazon, Apple, Facebook, Google and Microsoft.

From 2010 to 2018, the data workloads hosted by the cloud data centers increased 2,600 percent and energy consumption increased 500 percent. But energy consumption for all data centers rose less than 10 percent.

What happened, the authors explain, was mainly a huge shift of workloads to the bigger, more efficient cloud data centers — and away from traditional computer centers, largely owned and run by non-tech companies.

In 2010, an estimated 79 percent of data center computing was done in traditional computer centers. By 2018, 89 percent of data center computing took place in cloud data centers.

“The big cloud providers displaced vastly less efficient corporate data centers,” Mr. Koomey said. “You have to look at the whole system and take substitution effects into account.”

The complexity, dynamism and unpredictability of technology development and markets, the authors say, make projecting out more than two or three years suspect. They critiqued a Bitcoin energy paper that projected out decades, based on what they said were old data and simplified assumptions — an approach Mr. Masanet called “extrapolate to Doomsday.”

For the full story, see:

Steve Lohr. “The Internet Is Eating Up Less Energy Than Expected.” The New York Times (Saturday, June 26, 2021): B1 & B3.

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

(Note: the online version of the story has the date June 24, 2021, and has the title “The Internet Eats Up Less Energy Than You Might Think.”)

The commentary summarized in the passages quoted above is:

Koomey, Jonathan, and Eric Masanet. “Does Not Compute: Avoiding Pitfalls Assessing the Internet’s Energy and Carbon Impacts.” Joule 5, no. 7 (July 21, 2021): 1625-28.

MSG Seasoning Maker Finds Lucrative Tech Use for MSG Byproducts

(p. B10) The chip shortage is adding extra flavor to a 113-year-old Japanese seasoning company.

Japan’s Ajinomoto is renowned for inventing monosodium glutamate—the controversial flavor enhancer that adds umami to dishes. But it also makes a material that goes into the central processing units of computers around the world.

Ajinomoto manufactures a type of insulation material called Ajinomoto Buildup Film, or ABF. It was once made using byproducts from MSG manufacturing but isn’t any longer. The insulation material in turn goes into a semiconductor component called ABF substrate, which connects microchips to circuit boards.

. . .

Ajinomoto expects ABF shipment volume to grow 67% over the next four fiscal years. And its customers downstream are expanding capacity to meet demand. Ajinomoto said growth this fiscal year may slow but it will pick up again once those expansion plans are realized.

Ajinomoto’s core seasoning business is a less tasty morsel, but the business has still weathered the pandemic well. Even though demand from restaurants dropped, increases in home cooking have helped profits since retail products sell at higher margins.

For the full story, see:

Jacky Wong. “Microchips Punch Up MSG Maker.” The Wall Street Journal (Friday, Aug. 20, 2021): B10.

(Note: ellipsis added.)

(Note: the online version of the story has the date August 19, 2021, and has the title “Is MSG Bad for You? Not if It Comes With a Side of Microchips.”)

“Creatively Destructive Innovation” Is Continuous in Book Publishing Industry

(p. A13) In 2000 the RAND Corporation invited a group of historians—including me—to address a newly pressing question: Would digital media revolutionize society as profoundly as Gutenberg and movable type? Two decades later, John Thompson’s answer is yes, but not entirely as predicted. And our forecasts were often wrong because we overlooked key variables: We cannot understand the impact of technologies “without taking account of the complex social processes in which these technologies were embedded and of which they were part.”

Mr. Thompson provides that context in “Book Wars” (Polity, 511 pages, $35), an expert diagnosis of publishers and publishing, robustly illustrated with charts, graphs, tables, statistics and case studies.

. . .

My warning to the RAND corporation was to avoid succumbing to the “Two Big Bangs Theory”—the assumption that there were only two world-changing events in the history of print, in or around 1450 and 2000. With books, change is a constant. In the last two centuries the publishing trade has dealt with one creatively destructive innovation after another—mechanized printing and papermaking, railway bookstalls and distribution networks, linotype and offset printing, photomechanical reproduction, paperbacking and books-of-the-month. The movies opened up vast new possibilities (and revenues) for novelists, who increasingly wrote with the screen in mind, as Ernest Hemingway did when he insisted on casting Gary Cooper in “For Whom the Bell Tolls.” And television supercharged book publicity, climaxing (so far) with Oprah. While Mr. Thompson is entirely right to conclude that the transformation of publishing in the past 20 years has been bewildering, that’s nothing new. In a dynamic capitalist economy, the dust never settles.

For the full review, see:

Jonathan Rose. “BOOKSHELF; Publishing In a Protean Age.” The Wall Street Journal (Monday, August 9, 2021): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date August 8, 2021, and has the title “BOOKSHELF; ‘Book Wars’ Review: Publishing in a Protean Age.”)

The book under review is:

Thompson, John B. Book Wars: The Digital Revolution in Publishing. Cambridge, UK: Polity Press, 2021.

Capitalist Innovations Made Rapid Covid-19 Vaccines Possible

(p. A15) The Wuhan lab appears to have operated, in part, with U.S. government grant funding, although American scientists had no oversight role. Chinese scientists allegedly pursued gain-of-function research, increasing the virulence and transmissibility of certain viruses. It isn’t unheard of for a virus to escape from a government-funded lab, and the evidence increasingly suggests that’s what happened in Wuhan, even as China dubiously points a finger at the U.S. military.

Regardless of which government, if any, contributed to the emergence of Covid-19, the pandemic was quickly controlled by innovation from the private economy. New vaccines and private protocols, not government mandates, mainly slowed the spread in workplaces and schools. The pandemic originated from government failures that had to be corrected by private actors.

Even if the lab-leak theory proves false, and it turns out that SARS-CoV2 passed directly from animals to humans, one could still argue the Chinese government’s actions created the pandemic. Beijing covered up evidence of the virus’s early spread and allowed international flights from Wuhan during January and February 2020 while locking down domestic travel.

. . .

American capitalism supported decades of innovation that created conditions conducive to the rapid development of the Covid vaccines. About 70% of the returns to medical research and development across the world come from the U.S., where price controls are less prevalent than elsewhere and companies compete to bring new treatments and cures to market. Without the U.S. market, investors would have shied away from funding the cumulative advances that eventually led to successful Covid vaccines. In this sense, the U.S. market-based healthcare economy saved the world from Covid-19. None of it would have happened in a government-run health system.

For the full commentary see:

Casey B. Mulligan and Tomas J. Philipson. “Government Failure Gave the World Covid.” The Wall Street Journal (Tuesday, Aug. 10, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 9, 2021, and has the same title as the print version.)

Subsidy of “Thriving” Chip Industry Is “Inexcusable”

(p. A16) Consider this recent summary, by the Cato Institute’s Scott Lincicome, of the healthy state of America’s semiconductor industry: “The United States is also a top-five global exporter of semiconductors and related equipment, shipping almost $47 billion of those goods in 2019. These and other data led the SIA [Semiconductor Industry of America] to conclude in its 2020 State of the U.S. Semiconductor Industry report that ‘the semiconductor manufacturing base in the United States remains on solid footing.’”

“The SIA also reports that the U.S. industry has ‘nearly half’ of all global semiconductor sales—a market share that has been steady (ranging from the mid‐40s to low 50s) since the late 1990s—and is the top seller in every major regional market, including China. Sales by U.S. semiconductor firms also grew from $76.7 billion in 1999 to $192.8 billion in 2019—a compound annual growth rate of almost 5%.”

“Beyond output and sales, the U.S. semiconductor industry has been a global leader in capital spending (capex) and R&D.”

Subsidies are always suspect, but when showered on industries that are thriving, they are beyond doubt inexcusable. What further proof do we need to conclude that politicians cannot be trusted to allocate resources wisely?

For Boudreaux’s full letter to the editor, see:

Boudreaux, Donald J. “LETTERS; U.S. Chip Industry Chipper, Subsidy a Waste.” The Wall Street Journal (Tuesday, June 1, 2021): A16.

(Note: the online version of the letter to the editor has the date May 31, 2021, and has the same title as the print version.)

Anderson Led NCR to Disrupt Its Own Cash Register Technology

I believe that Clayton Christensen (with Raynor) in The Innovator’s Solution, used the NCR transition from mechanical cash registers to electronic cash registers as an example of creative destruction that was NOT an example of his disruptive innovation. Alternatively, should this be considered a rare case where a firm succeeds in disrupting itself, especially rare because it was not implemented by the firm founders? (The usual case of rare self-disruption is HP disrupting its laser printer by developing the ink jet printer.)

(p. A9) The same self-belief that kept Mr. Anderson alive as a POW gave him confidence he could save NCR.

“The most important message I try to get across to our managers all over the world is that we are in trouble but we will overcome it,” he told Business Week, which reported that he had the “stance and mien of a middleweight boxer.”

Founded in 1884, NCR was comfortably entrenched as a dominant supplier of mechanical cash registers and machines used in accounting and banking. It underestimated the speed at which microelectronics and computers would wipe out its legacy product line. By the early 1970s, NCR was losing sales to more nimble rivals.

A factory complex covering 55 acres in Dayton made hundreds of exceedingly complicated machines rapidly becoming obsolete. Mr. Anderson found that NCR was using about 130,000 different parts, including more than 9,000 types and sizes of screws. For 1972, his first year as president, NCR took a $70 million charge, largely to write down the value of parts and inventory and replace outdated production equipment.

Mr. Anderson slashed the payroll and invested in new products, including automated teller machines and computers. Profitability recovered, and NCR reported record revenue of $4.07 billion for 1984, the year he retired as chairman.

For the full obituary, see:

James R. Hagerty. “Former POW Revived National Cash Register.” The Wall Street Journal (Saturday, July 10, 20211): A9.

(Note: the online version of the obituary has the date July 6, 2021, and has the title “Former Prisoner of War Saved NCR From Obsolescence.”)

The Christensen co-authored book mentioned above is:

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