Category: Economics of Technology

“Insanely Great” Entrepreneur Steve Jobs Wanted “a Chance to Change the World”

Steve Jobs died yesterday (Weds., October 5, 2011).
Jobs was an innovator of my favorite kind, what I call a “project entrepreneur.” He showed us what excitement and progress is possible if we preserve the institutions that allow entrepreneurial capitalism to exist.
When he was recruiting John Sculley to leave Pepsi and join Apple, Jobs asked him: “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” (p. 90).
Steve Jobs wanted to change the world. He got the job done.

Source of quote of Jobs’ question to Sculley:
Sculley, John, and John A. Byrne. Odyssey: Pepsi to Apple. paperback ed. New York: HarperCollins, 1988.

Solyndra Debacle Illustrates Why Feds Should Not Pick Tech Winners

The clip above is embedded from the Jon Stewart “The Daily Show” episode that was aired on Thurs., September 15, 2011.

Government “industrial policy” is likely to fail for many reasons. One is that the government decision makers are unlikely to know which future technologies will turn out to be the best ones. Another reason is that even if they know, government decision makers often decide based on what is politically expedient or what is beneficial to their friends.

Solyndra is a case in point, as Jon Stewart hilariously reveals.

Deregulation Revived Railroads

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“ALL ABOARD: The Wasp magazine in 1881 lampooned railroad moguls as having regulators in the palms of their hands.” Source of caricature: online version of the WSJ article quoted and cited below.

(p. C8) Mr. Klein has written thoroughly researched and scrupulously objective biographies of the previously much maligned Jay Gould and E.H. Harriman, remaking their public images by presenting them in full. Now he has published the third and final volume of his magisterial history of the Union Pacific railroad, taking the company from 1969 to the present day.

Union Pacific–the only one of the transcontinentals to remain in business under its original name–is now a flourishing business. Thanks to a series of mergers, it is one of the largest railroads in the world, with more than 37,000 miles of track across most of the American West. Thanks to its investment in new technology, it is also among the most efficient.
In 1969, though, the future of American railroading was in doubt as the industry struggled against competition from airplanes, automobiles and trucks–all of which were in effect heavily subsidized through the government’s support for airports and the Interstate Highway System.
Another major factor in the decline of the railroads had been the stultifying hand of the Interstate Commerce Commission. The ICC had come into existence in the late 19th century to limit the often high-handed ways of the railroads as they wrestled with the difficult economics of an industry that has very high fixed costs. ( . . . .) But the ICC soon evolved into a cartel mechanism that discouraged innovation and wrapped the railroad industry in a cocoon of stultifying rules.
Mr. Klein notes that in 1975 he wrote a gloomy article about the sad state of an industry with a colorful past: “Unlike many other historical romances,” he wrote back then, “the ending did not promise to be a happy one.”
Fortunately, a deregulation movement that began under the Carter administration–yes, the Carter administration–limited the power of the ICC and then abolished it altogether. As Mr. Klein shows in the well-written “Union Pacific,” the reduction of government interference left capitalism to work its magic and produce–with the help of dedicated and skillful management–the modern, efficient and profitable railroad that is the Union Pacific.

For the full review, see:
JOHN STEELE GORDON. “Tracks Across America.” The Wall Street Journal (Sat., JUNE 11, 2011): C8.
(Note: ellipsis added.)

Book reviewed in the part of the review quoted above:
Klein, Maury. Union Pacific: The Reconfiguration: America’s Greatest Railroad from 1969 to the Present. New York: Oxford University Press, USA, 2011.

“Mystified by an American Disdain for Its Own Business Culture”

HollandAndDavisProducersSomethingVentured2011-05-17.jpg “Paul Holland and Molly Davis, producers of a new documentary, “Something Ventured,” that gives an admiring look at innovators and investors from the past.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B3) The film, “Something Ventured,” is a frankly admiring look at those who went out on a limb to back upstarts like Atari, Cisco Systems, Genentech and Apple.
. . .
But the film’s beating heart is captured by Tom Perkins, whose Kleiner Perkins Caufield & Byers company backed the gene-splicing technology of Genentech, among other things. “It’s great if you can make money and change the world for the better at the same time,” said Mr. Perkins, . . .
Other stars of “Something Ventured” include Nolan Bushnell of Atari; Sandy Lerner of Cisco; Jimmy Treybig of Tandem Computers; and a string of venture capitalists, among them Don Valentine, Dick Kramlich, and Arthur Rock.
Many who appear joined dozens of other business people to finance the picture’s roughly $700,000 cost with contributions of a few thousand dollars each, Mr. Holland said.
In becoming involved, several participants said they wanted to rekindle an entrepreneurial spirit that had either waned or changed since the rough-and-tumble years when, by the film’s telling, Atari was started with $250 but needed capital to push Pong, and Mr. Bushnell passed up a chance to own a third of Apple, started by his employee Steve Jobs, for $50,000.
. . .
Mr. Valentine, . . . , said entrepreneurship had not ended — his company was a force behind Google — but it is less often coming from those born in the United States.
“You don’t understand what you have here” is a constant refrain, he said, from Southeast Asian and Indian innovators who are sometimes mystified by an American disdain for its own business culture.

For the full story, see:
MICHAEL CIEPLY . “A Film About Capitalism, and (Surprise) It’s a Love Story.” The New York Times, Week in Review Section (Sun., March 8, 2011): 8.
(Note: ellipses added.)
(Note: the online version of the story is dated March 7, 2011.)

Art Diamond Describes Honors Colloquium on Creative Destruction

The clip above is embedded from You Tube. It was recorded on July 6, 2011 in Mammel Hall, the location of the College of Business at the University of Nebraska at Omaha (UNO). I am grateful to Charley Reed of UNO University Relations for doing a great job of shooting and editing the clip.

From Inventor to Entrepreneur When No Company Would Distribute Weed Eater

BallasGeorgeWeedEaterInventer2011-08-08.jpg “George Ballas showed off in 1975 the original Weed Eater, a popcorn can rigged up with some wires.” Source of caption and photo: online version of the WSJ obituary quoted and cited below.

(p. A5) George Ballas got his big idea after a poisonous snake bit a worker who was trimming his lawn with shears. The idea turned an old popcorn can, some wires and an edger into the Weed Eater.

Mr. Ballas, who died Saturday at age 85, was a dance instructor, developer, inventor and marketer who built hotels, patented an adjustable table and marketed an early portable phone.
. . .
Mr. Ballas said the idea for the Weed Eater came to him while he was in a car wash, contemplating the big rotating bristles that cleaned hard-to-reach corners yet somehow didn’t scratch the finish.
Drawing from that inspiration, he rigged up an old popcorn can with some wires and hooked it to a rotating edger, and the first string trimmer was born.
. . .
He hired an engineer to design new models that substituted monofilament fishing line for wire and ran on electricity and gas. He dubbed it “Weed Eater” and held several patents on it.
When Mr. Ballas failed to find a company interested in distributing the device, he decided to sell it himself.
. . .
Mr. Ballas also taught entrepreneurship at Rice University in Houston. He continued to tinker with new inventions, and at one point marketed a football-helmet-sized portable phone that found few takers.
“A Weed Eater,” Mr. Ballas told the Houston Chronicle in 1993, “comes along once in a lifetime.”

For the full obituary, see:
STEPHEN MILLER. “REMEMBRANCES; Dance Studio Owner Invented Weed Eater.” The Wall Street Journal (Thurs., JUNE 30, 2011): A5.
(Note: ellipses added.)

In 1880s Prices Fell Because of Technological Progress

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Michael Perelman has strongly suggested that I read David Well’s book. It is on my “to do” list.

(p. C10) The dull title of “Recent Economic Changes” does no justice to David A. Wells’s fascinating contemporary account of a deflationary miasma that settled over the world’s advanced economies in the 1880s. His cheery conclusion: Prices were falling because technology was progressing. What had pushed the price of a bushel of wheat down to 67 cents in 1887 from $1.10 in 1882 was nothing more sinister than the opening up of new regions to cultivation (Australia, the Dakotas) and astounding improvements in agricultural machinery.

For the full review, see:
JAMES GRANT. “FIVE BEST; Little-Known Gold From the Gilded Age.” The Wall Street Journal (Sat., AUGUST 6, 2011): C10.

Source of book under review:
Wells, David A. Recent Economic Changes and Their Effect on Production and Distribution of Wealth and Well-Being of Society. New York: D. Appleton and Co., 1889.

Michael Perelman argues that in Recent Economic Changes, David Wells anticipates the substance, although not the wording, of Schumpeter’s “creative destruction”:
Perelman, Michael. “Schumpeter, David Wells, and Creative Destruction.” The Journal of Economic Perspectives 9, no. 3 (Summer 1995): 189-97.

Gas Lighting Did Not Appeal to Those Who Had Servants to Light Their Candles

(p. 123) Gas was particularly popular in America and Britain. By 1850 it was available in most large cities in both countries. Gas remained, however, a (p. 124) middle-class indulgence. The poor couldn’t afford it and the rich tended to disdain it, partly because of the cost and disruption of installing it and partly because of the damage it did to paintings and precious fabrics, and partly because when you have servants to do everything for you already there isn’t the same urgency to invest in further conveniences. The ironic upshot, as Mark Girouard has noted, is that not only middle-class homes but institutions like lunatic asylums and prisons tended to be better lit – and, come to that, better warmed – long before England’s stateliest homes were.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

“How Painfully Dim the World Was before Electricity”

(p. 112) We forget just how painfully dim the world was before electricity. A candle – a good candle – provides barely a hundredth of the illumination of a single 100-watt light bulb. Open your refrigerator door and you summon forth more light than the total amount enjoyed by most households in the eighteenth century. The world at night for much of history was a very dark place indeed.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

“If We Can’t Win on Quality, We Shouldn’t Win at All”

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Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) At the tail end of the 1990s dot-com boom, Douglas Edwards took a gamble: He left his marketing job at an old-media company, taking a $25,000 salary cut to start work at a small, little-known Internet concern in its second year of operation. That his new employer was losing money and burning through venture capital went without saying. But unlike the footloose 20-somethings who usually populated Silicon Valley start-ups, Mr. Edwards had little margin to bet wrong; he was 41, with a mortgage, three children and a worried wife. He hoped he could get his old job back if the company ran out of money.

. . .
Mr. Edwards came to his job as a subscriber to the conventional wisdom. In an early presentation to cofounder Larry Page and others, Mr. Edwards unwisely declared that only marketing, not technology, could set Google apart. “In a world where all search engines are equal,” he asserted, “we’ll need to rely on branding to differentiate us from our competitors.”
The room became quiet. Then Mr. Page spoke up. “If we can’t win on quality,” he said, “we shouldn’t win at all.”

For the full review, see:
DAVID A. PRICE. “BOOKSHELF; How Google Got Going; Branding, shmanding, a marketer was told. ‘If we can’t win on quality,’ Larry Page said, ‘we shouldn’t win at all.'” The Wall Street Journal (Tues., July 12, 2011): A13.
(Note: ellipsis added.)

Book being reviewed:
Edwards, Douglas. I’m Feeling Lucky: The Confessions of Google Employee Number 59. New York: Houghton Mifflin Harcourt Publishing Co., 2011.

“Big Money Is Dumb Money”

“Other People’s Money” is a short story that appears in Cory Doctorow’s short story collection With a Little Help.

(p. C7) Venture capitalists? Forget them, says “Other People’s Money.” Big money is dumb money. Much easier, says one old-lady manufacturer to a smart young gigafund manager, for her to make and market her own product, and keep the money (just like Mr. Doctorow), than for him to find and fund a hundred products and take a rake-off. He only deals in six-figure multiples, and that’s no good: not nimble enough. And he has to get a return on all those billions, poor outdated soul.

For the full review, see:
TOM SHIPPEY. “The Author as Agent of Change; Cory Doctorow has big ideas about the future of technology–and how it can empower writers.” The New York Times (Sat., MAY 21, 2011): C7.

The book of short stories is:
Doctorow, Cory. With a Little Help.