Economics of Technology – Page 79

Proof of Concept: “A Determined Entrepreneur Can Start a Rocket Company from Scratch”

‘The Falcon 9 rocket seen in a time-exposure photograph during liftoff.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A13) CAPE CANAVERAL, Fla. — He does not have the name recognition of some other space entrepreneurs, people like Richard Branson, the founder of the Virgin empire, or Paul Allen of Microsoft fame, or Jeff Bezos, the Amazon.com billionaire.

That will probably change if things keep going his way. Elon Musk, a computer prodigy and serial entrepreneur whose ambitions include solving the world’s energy needs and colonizing the solar system, was the man of the hour — or of 3:44 a.m. Tuesday, Eastern time — when the rocket ship built by his company, SpaceX, lifted off gracefully in a nighttime launching and arced off in a streak of light amid loud applause.
. . .
If all goes as planned, his unmanned Dragon capsule, lifted into orbit by his Falcon 9 rocket, will berth at the International Space Station on Friday bearing a modest cargo: 162 meal packets (45 of them low-sodium), a laptop computer, a change of clothes for the station astronauts and 15 student experiments.
Far more important than the supplies is the proof of concept. Mr. Musk is trying to show the world that a determined entrepreneur can start a rocket company from scratch and, a decade later, end up doing a job that has until now been the exclusive province of federal governments.
. . .
Just four years ago, SpaceX went through a near-death experience. The first three launchings of the company’s small Falcon 1 rocket failed. One more failure, Mr. Musk said, and he would have run out of money. As he went through a divorce from his first wife, with whom he has five sons, he had to borrow money from friends.
The fourth launching succeeded. Late in 2008, NASA awarded SpaceX the cargo contract. The first two Falcon 9 launchings, in 2010, also succeeded.
Early Tuesday morning, the success streak continued. As the countdown clock hit zero, the engines remained ignited. Less than 10 minutes later, the Dragon was in orbit. It then aced several other early tasks like the deployment of solar arrays and navigational sensors and the testing of GPS equipment.
“Anything could have gone wrong,” Mr. Musk said. “And everything went right, fortunately.”

For the full story, see:
KENNETH CHANG. “Big Day for Entrepreneur Who Promises More.” The New York Times (Weds., May 23, 2012): A13.
(Note: ellipses added.)
(Note: the online version of the story is dated May 22, 2012, and has the title “Big Day for a Space Entrepreneur Promising More.”)

“Elon Musk.” Source of caption and photo: online version of the NYT article quoted and cited above.

First Principle for Trustbusters Should Be “Do No Harm”

(p. A2) In essence, Justice says that, beginning in 2008, several plankton, in the form of five publishers, conspired against a whale, Amazon, whose monopoly clout had imposed a $9.99 retail price for e-books.
The deal the publishers eventually reached with Apple unfixed the price of e-books by linking their prices to the cover price of the print version. More importantly, publishers could begin to reclaim the right to set e-book retail prices generally.
. . .
Apple, with 15% of the e-book market, is no monopolist. The five publishers, though Justice insists they dominate trade publishing, account for only about half of e-book sales. Crucially for antitrust, the barriers to entry are zilch: Amazon, with 60% market share, could create its own e-book imprint tomorrow and begin bidding for the most popular authors.
. . .
Let’s go back to “per se” vs. “rule of reason.” Because the 1890 Sherman Act is so sweeping and almost any business arrangement could be read as prohibited, courts understandably evolved a “rule of reason” to distinguish the permissible from the impermissible. Unfortunately, the result has been antitrust as we know it: wild and fluctuating discretion masquerading as law. Retail price maintenance alone has been embraced and dumped so many times by the courts that it must feel like Jennifer Aniston.
“Do no harm” would be a better principle for trustbusters.

For the full commentary, see:
HOLMAN W. JENKINS, JR. “BUSINESS WORLD; Washington vs. Books; What about piracy, low barriers to entry and the fact that literature isn’t chopped liver?” The Wall Street Journal (Sat., April 14, 2012): A15.
(Note: the online version of the commentary is dated April 13, 2012.)

Asteroid-Mining Start-Up Hopes to Launch First Spacecraft within Two Years

“A computer image shows a rendering of a spacecraft preparing to capture a water-rich, near-Earth asteroid.” Source of caption: print version of the WSJ article quoted and cited below. Source of photo: online version of the WSJ article quoted and cited below.

(p. B3) SEATTLE–A start-up with high-profile backers on Tuesday unveiled its plan to send robotic spacecraft to remotely mine asteroids, a highly ambitious effort aimed at opening up a new frontier in space exploration.

At an event at the Seattle Museum of Flight, a group that included former National Aeronautics and Space Administration officials unveiled Planetary Resources Inc. and said it is developing a “low-cost” series of spacecraft to prospect and mine “near-Earth” asteroids for water and metals, and thus bring “the natural resources of space within humanity’s economic sphere of influence.”
The solar system is “full of resources, and we can bring that back to humanity,” said Planetary Resources co-founder Peter Diamandis, who helped start the X-Prize competition to spur nongovernmental space flight.
The company said it expects to launch its first spacecraft to low-Earth orbit–between 100 and 1,000 miles above the Earth’s surface–within two years, in what would be a prelude to sending spacecraft to prospect and mine asteroids.
The company, which was founded three years ago but remained secret until last week, said it could take a decade to finish prospecting, or identifying the best candidates for mining.

For the full story, see:
AMIR EFRATI. “Asteroid-Mining Strategy Is Outlined by a Start-Up.” The Wall Street Journal (Weds., April 25, 2012): B3.
(Note: the online version of the story is dated April 24, 2012, and has the title “Start-Up Outlines Asteroid-Mining Strategy.”)

Capitalism More about Creating New Markets than about Competing to Dominate Old Ones

(p. A21) As a young man, Peter Thiel competed to get into Stanford. Then he competed to get into Stanford Law School. Then he competed to become a clerk for a federal judge. Thiel won all those competitions. But then he competed to get a Supreme Court clerkship.
Thiel lost that one. So instead of being a clerk, he went out and founded PayPal. Then he became an early investor in Facebook and many other celebrated technology firms. Somebody later asked him. “So, aren’t you glad you didn’t get that Supreme Court clerkship?”
The question got Thiel thinking. His thoughts are now incorporated into a course he is teaching in the Stanford Computer Science Department. (A student named Blake Masters posted outstanding notes online, and Thiel has confirmed their accuracy.)
One of his core points is that we tend to confuse capitalism with competition. We tend to think that whoever competes best comes out ahead. In the race to be more competitive, we sometimes confuse what is hard with what is valuable. The intensity of competition becomes a proxy for value.
In fact, Thiel argues, we often shouldn’t seek to be really good competitors. We should seek to be really good monopolists. Instead of being slightly better than everybody else in a crowded and established field, it’s often more valuable to create a new market and totally dominate it. The profit margins are much bigger, and the value to society is often bigger, too.
Now to be clear: When Thiel is talking about a “monopoly,” he isn’t talking about the illegal eliminate-your-rivals kind. He’s talking about doing something so creative that you establish a distinct market, niche and identity. You’ve established a creative monopoly and everybody has to come to you if they want that service, at least for a time.

For the full commentary, see:
DAVID BROOKS. “The Creative Monopoly.” The Wall Street Journal (Tues., April 24, 2012): A21.
(Note: the online version of the article is dated April 23, 2012.)

The online Peter Thiel notes are at:
http://blakemasters.tumblr.com/post/21169325300/peter-thiels-cs183-startup-class-4-notes-essay

Entrepreneurs Will Mine Asteroids to “Help Ensure Humanity’s Prosperity”

“Space mining has captivated Hollywood. Director James Cameron is a backer of the new venture.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) A new company backed by two Google Inc. billionaires, film director James Cameron and other space exploration proponents is aiming high in the hunt for natural resources–with mining asteroids the possible target.

The venture, called Planetary Resources Inc., revealed little in a press release this week except to say that it would “overlay two critical sectors–space exploration and natural resources–to add trillions of dollars to the global GDP” and “help ensure humanity’s prosperity.” The company is formally unveiling its plans at an event . . . in Seattle.
. . .
[The] . . . event is being hosted by Peter H. Diamandis and Eric Anderson, known for their efforts to develop commercial space exploration, and two former NASA officials.
Mr. Diamandis, a driving force behind the Ansari X-Prize competition to spur non-governmental space flight, has long discussed his goal to become an asteroid miner. He contends that such work by space pioneers would lead to a “land rush” by companies to develop lower-cost technology to travel to and extract resources from asteroids.

For the full story, see:
AMIR EFRATI. “A Quixotic Quest to Mine Asteroids.” The Wall Street Journal (Sat., April 21, 2012,): B1 & B4.
(Note: ellipses and bracketed word added.)
(Note: the online “updated” version of the article is dated April 23, 2012.)

Innovation Took “Three Years Working through the Bureaucratic Snags”

“FULL FLEDGED; The production prototype of the Terrafugia Transition, with its wings folded and road-ready.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 13) THE promise of an airplane parked in every driveway, for decades a fantasy of suburban commuters and a staple of men’s magazines, resurfaced this month in Manhattan. On display at the New York auto show was the Terrafugia Transition, an airplane with folding wings and a drive system that enabled it to be used on the road.
. . .
But there can be many delays along the road from concept to certification. For instance, government officials and the designers have had to determine which regulations — aircraft or automotive — take precedence when the vehicle in question is both.
. . .
In 2010, the $94,000 Maverick, a rudimentary buggy that takes to the air under a powered parachute, earned certification as a light-sport aircraft. Troy Townsend, design manager and chief test pilot for the company, based in Dunnellon, Fla., said he spent spent nearly all of his time over the course of three years working through the bureaucratic snags.
“There was a lot of red tape,” Mr. Townsend said. “The certification process went all the way to Oklahoma and Washington, D.C.”

For the full story, see:
CHRISTINE NEGRONI. “Before Flying Car Can Take Off, There’s a Checklist.” The New York Times, SportsSunday Section (Sun., April 29, 2012): 13.
(Note: ellipses added.)
(Note: the online version of the story is dated April 27, 2012.)

Source of table: online version of the NYT article quoted and cited above.

“In a Garage Pursuing a Dream”

(p. 257) The increase in computer-animated films . . . marked the dawning of a democratic moment in artistic expression and entrepreneurship. Just as technological developments in digital production were (p. 258) opening the door more widely in live-action filmmaking, technology was making computer animation more accessible every year.
Computer animation was still an art form that required talent and intense Commitment; it wasn’t within reach of Everyman. The accessibility of its tools, however, brought new possibilities. Where Pixar’s early years had required a succession of wealthy patrons–Alexander Schure, George Lucas, and Steve Jobs–an enterprising artist of the early twenty-first century was not so dependent. The hardware and software of an animator’s workstation, once the province of major studios and effects houses, could now be had for the cost of a good used car. As Pixar started its new life as a crown jewel of the Walt Disney Co., it was plausible that it would sooner or later have to jockey release dates with a new kind of rival. Or, rather, it would have to face a rival that looked much the way Pixar itself did thirty years earlier, as a group of men and women in a garage pursuing a dream.

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: ellipsis added.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

Intellectual Property Rights as Refined in Case Law

The questions and answers in court illustrate how case law would approach the issue of refining and reforming intellectual property issues based on concepts of justice, but also on practical issues. (This is from Disney and Pixar lawyer Steve Marenberg questioning Dick Cook in testimony before Judge Clarence Brimmer, Jr. on November 1, 2001, the day before Monsters, Inc. was scheduled to be released.)

(p. 193) Q : So obviously the delay of the film by injunction or otherwise would affect the first weekend and the ability to gain all of the benefits you’ve gotten by virtue of the tact that November second is the first weekend?

A : It would be a disaster.
Q : And that would affect, then, not only the theatrical performance of the film, but what other markets in the United Sates?
A : Well, it would completely be a snowball effect in a reverse way in that it would certainly put a damper on all of the home video activities, all the DVD activities; in fact, would influence international because international is greatly influenced on how well it does in the United States, and by taking that away, it would definitely, definitely, have a big, big impact on the success of the film.
And furthermore, going further, is that it would take away any of the other ancillary things that happen, you (p. 194) know, whether it would become a television series, whether or not it becomes a piece of an attraction at the parks, whether it becomes a land at the parks, or any of those kinds of things.

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)
(Note: on p. 190 of the book, Price misspells Marenberg’s name as “Marenburg.”)

“Dematerialization” Means More Goods from Fewer Resources

(p. C4) Economic growth is a form of deflation. If the cost of, say, computing power goes down, then the users of computing power acquire more of it for less–and thus attain a higher standard of living. One thing that makes such deflation possible is dematerialization, the reduction in the quantity of stuff needed to produce a product. An iPhone, for example, weighs 1/100th and costs 1/10th as much as an Osborne Executive computer did in 1982, but it has 150 times the processing speed and 100,000 times the memory.
Dematerialization is occurring with all sorts of products. Banking has shrunk to a handful of electrons moving on a cellphone, as have maps, encyclopedias, cameras, books, card games, music, records and letters–none of which now need to occupy physical space of their own. And it’s happening to food, too. In recent decades, wheat straw has shrunk as grain production has grown, because breeders have persuaded the plant to devote more of its energy to making the thing that we value most. Future dematerialization includes the possibility of synthetic meat–produced in a lab without brains, legs or guts.
Dematerialization is one of the reasons that Peter Diamandis and Steven Kotler give for the future’s being “better than you think” in their new book, “Abundance.”

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; The Future Is So Bright, it’s Dematerializing.” The Wall Street Journal (Sat., February 25, 2012): C4.

The book mentioned by Ridley is:
Diamandis, Peter H., and Steven Kotler. Abundance: The Future Is Better Than You Think. New York: Free Press, 2012.

Benefits of Driverless Cars Justify Changing Liability Laws

“The car is driven by a computer that steers, starts and stops itself. A 360 degrees laser scanner on top of the car, a GPS system and other sensors monitor the surrounding traffic.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p A13) Expect innovations that change the nature of driving more than anything since the end of the hand-crank engine–so long as the legal and regulatory systems don’t strangle new digital technologies before they can roll off the assembly line.
. . .
Mr. Ford outlined a future of what the auto industry calls “semiautonomous driving technology,” meaning increasingly self-driving cars. Over the next few years, cars will automatically be able to maintain safe distances, using networks of sensors, V-to-V (vehicle-to-vehicle) communications and real-time tracking of driving conditions fed into each car’s navigation system.
This will limit the human error that accounts for 90% of accidents. Radar-based cruise control will stop cars from hitting each other, with cars by 2025 driving themselves in tight formations Mr. Ford describes as “platoons,” cutting congestion as the space between cars is reduced safely.
. . .
Over the next decade, cars could finally become true automobiles. Our laws will have to be updated for a new relationship between people and cars, but the benefits will be significant: fewer traffic accidents and fewer gridlocked roads–and, perhaps best of all, young people will be in self-driving cars, not teenager-driven cars.

For the full commentary, see:
L. GORDON CROVITZ. “INFORMATION AGE; The Car of the Future Will Drive You; A truly auto-mobile is coming if liability laws don’t stop it.” The Wall Street Journal (Mon., March 5, 2012): A13.
(Note: ellipses added.)

Quantum Computers May Revolutionize Nanotechnology and Drug Design

“Scott Aaronson.” Source of caption and photo: online version of the NYT commentary quoted and cited below.

(p. D5) When people hear that I work on quantum computing — one of the most radical proposals for the future of computation — their first question is usually, “So when can I expect a working quantum computer on my desk?” Often they bring up breathless news reports about commercial quantum computers right around the corner. After I explain the strained relationship between those reports and reality, they ask: “Then when? In 10 years? Twenty?”

Unfortunately, this is sort of like asking Charles Babbage, who drew up the first blueprints for a general-purpose computer in the 1830s, whether his contraption would be hitting store shelves by the 1840s or the 1850s. Could Babbage have foreseen the specific technologies — the vacuum tube and transistor — that would make his vision a reality more than a century later? Today’s quantum computing researchers are in a similar bind. They have a compelling blueprint for a new type of computer, one that could, in seconds, solve certain problems that would probably take eons for today’s fastest supercomputers. But some of the required construction materials don’t yet exist.
. . .
While code-breaking understandably grabs the headlines, it’s the more humdrum application of quantum computers — simulating quantum physics and chemistry — that has the potential to revolutionize fields from nanotechnology to drug design.
. . .
Like fusion power, practical quantum computers are a tantalizing possibility that the 21st century may or may not bring — depending on the jagged course not only of science and technology, but of politics and economics.

For the full commentary, see:
SCOTT AARONSON. “ESSAY; Quantum Computing Promises New Insights, Not Just Supermachines.” The New York Times (Tues., December 6, 2011): D5.
(Note: ellipses added.)
(Note: the online version of the commentary is dated December 5, 2011.)