(p. B6) MOREHEAD, Ky. — Proximity to big markets is crucial for the fresh produce business.
So when AppHarvest, a two-year-old start-up, was looking for a site for a greenhouse, it picked a 366-acre field in Rowan County just outside Morehead, a university town in eastern Kentucky.
The greenhouse, the largest in the United States, will be just a day’s drive from almost 70 percent of American consumers, including those who love fresh tomatoes.
Next summer, when AppHarvest begins production at its $97 million building, 285 employees will start shipping 45 million pounds of fresh produce annually, primarily tomatoes, to grocery stores from Atlanta to New York, and as far west as Chicago and St. Louis.
For the greenhouse to be cost-effective, size was as important as location. The 60-acre, 2.76-million-square-foot building will be big enough to lower costs on materials, production and distribution.
“I asked the engineers, ‘How big can we possibly be to operate efficiently and effectively?’” said Jonathan Webb, AppHarvest’s 34-year-old founder and chief executive. “We have to compete with produce coming from 2,000 miles away.” Continue reading “Start-Up Is Building Largest Greenhouse in U.S., Creating 285 Jobs in Kentucky”
Category: Economics
California Passes Statewide Rent Control
(p. A20) California lawmakers approved a statewide rent cap on Wednesday [Sept. 11, 2019] covering millions of tenants, the biggest step yet in a surge of initiatives to address an affordable-housing crunch nationwide.
The bill limits annual rent increases to 5 percent after inflation and offers new barriers to eviction, providing a bit of housing security in a state with the nation’s highest housing prices and a swelling homeless population.
. . .
“Caps on rent increases, like the one proposed in California or the one recently passed in Oregon, are part of a new generation of rent-regulation policies that are trying to thread the needle by offering some form of protection against egregious rent hikes for vulnerable renters without stymieing much-needed new housing construction,” said Elizabeth Kneebone, research director at the Terner Center for Housing Innovation at the University of California.
. . .
Even as more states begin to experiment with rent control, it has long existed in places like New York City, which intervened to address a housing shortage post-World War II, and San Francisco, where it was adopted in 1979.
Today it is common in many towns across New Jersey and in several cities in California, including Berkeley and Oakland, although the form differs by jurisdiction. Regulated apartments in New York City are mostly subject to rent caps even after a change in tenants, for example, while rent control in the Bay Area has no such provision.
In New York City, where almost half of the rental stock is regulated, a board determines the maximum rent increases each year; this year it approved a 1.5 percent cap on one-year leases, considerably lower than the limits passed in Oregon and California.
For the full story, see:
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the same date Sept. 11, 2019, and has the title “California Approves Statewide Rent Control to Ease Housing Crisis.” The online version says that the page of the New York print edition was A16. The page number in my National edition was A15.)
Some Workers Seek to Unionize Brooklyn Food Co-op
(p. 29) Had you found yourself with nothing to read at any point this summer, the letters section of The Linewaiters’ Gazette, the bi-weekly newsletter of the Park Slope Food Coop, might have sated a certain narrative hunger. Serving a community of 17,000 members, The Gazette is a forum for news, grievance, debate, inquiry and perhaps above all, the expression of principle.
. . .
Given the seriousness with which the co-op takes matters of equity and justice, it surprised many members to learn that an effort on the part of some paid workers to unionize had not been going smoothly. Member owned and operated since its founding in the 1970s, the co-op permits only those who work a certain number of hours per month (behind the cash register, unloading delivery trucks, stocking oranges and so on) to shop there. It also employs about 75 people, all but 11 or so of whom receive an hourly wage.
How was it possible that these workers in an institution so famously aligned with the left were not already unionized? It was like imagining the Catholic Church without baptism. As one stunned member pointed out in his letter to The Gazette, the co-op is “literally on Union Street.”
Money is not what has motivated the movement. Many workers receive upward of $27 an hour, and health-insurance fees are not deducted from that pay. Instead, as Marc Thompson, who has been behind the effort to organize, told me, the problems have had more to do with strained dynamics between workers and supervisors and poor communication generally.
Another big issue is that the co-op is an “at will” shop, meaning that workers can be let go at any time for any reason, without managers having to offer cause. Although it rarely happens, the notion that such a scenario could play out has troubled certain employees. The last time someone was abruptly fired, it was because of theft, Mr. Holtz explained, and that was three years ago.
. . .
In a letter to The Gazette that appeared in May [2019], a group of workers representing the majority who oppose the union said they had “doubts that the traditional union model is the right fit for our very nontraditional workplace.” They were pro-union as a matter of political belief but thought that the co-op had “a rich history” of solving its own problems. Whatever was wrong could be handled within the family, in essence.
For the full story, see:
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story was last updated on Sept. 30 [sic], 2019, and has the title “BIG CITY; They Tried to Unionize the Park Slope Food Coop. Guess What Happened.” Above, I cite the title, section, and page number from my National print edition. Those may have been different in the New York print edition. Where there are differences in wording between the online and print versions, the passages quoted above follow the print version.)
Netflix’s Reed Hastings Was Blunt for the Sake of the Project
(p. B1) SANTA CRUZ, Calif. — Long before binge-watching, the streaming wars and “Netflix and chill,” there were two guys barreling down Highway 17 — the California roadway that connects Santa Cruz to Silicon Valley — trying to come up with the next big thing.
One was Marc Randolph, an entrepreneur and marketing specialist who had co-founded a start-up, Integrity QA. The other was Reed Hastings, then the head of the software company Pure Atria.
It was 1997. Mr. Randolph, whose start-up had been acquired by Pure Atria, did most of the pitching. Customized dog food, customized baseball bats, customized shampoo — all sold over the internet and delivered by mail.
Mr. Hastings was the one with the cash and the ability to shoot down ideas without worrying about hurt feelings.
They flirted with the notion of challenging Blockbuster Video with a mail-order videocassette business, only to decide that mailing VHS tapes would cost too much. Finally, they thought they had something: DVDs, sold and rented online and delivered to customers by mail.
Although few people had DVD players at the time, they forged ahead, with Mr. Randolph as the chief executive and Mr. Hastings (p. B5) as the chairman backing the operation.
. . .
Mr. Randolph describes an evening in 1998 when he got a big dose of Netflix’s radical honesty. It happened after a botched investor pitch and a promotion deal with Sony that went horribly wrong. Mr. Hastings asked to see Mr. Randolph alone and subjected him to a PowerPoint presentation detailing the reasons he was no longer fit to remain chief executive.
In the book, Mr. Randolph describes what he said in reaction to the surprise presentation: “‘There is no way I’m sitting here while you pitch me on why I suck.’”
Mr. Hastings closed his Dell laptop. By the end of the talk, Mr. Randolph was bumped down to president, and Mr. Hastings was the new chief executive. As part of the demotion, Mr. Hastings persuaded Mr. Randolph to give up some 650,000 stock shares, which reduced his Netflix stake to 15 percent.
“Doing it with a PowerPoint slide show perhaps wasn’t the most empathetic gesture,” Mr. Randolph said with a laugh. “But he was right.”
The episode, as described in the book, helps form a portrait of Mr. Hastings as someone whose bluntness results more from a sure sense of what a business needs than from an inner ruthlessness.
“What I really want from the book is to paint Reed as a real person,” Mr. Randolph said. “I hope it comes through that I have this tremendous respect and affection for him, as opposed to bitterness. Most people wouldn’t have had the strength to say that. But he recognized it was the right thing for the company.”
For the full review, see:
(Note: ellipsis added.)
(Note: the online version of the review has the date Sept. 18, 2019, and has the title “Long Before ‘Netflix and Chill,’ He Was the Netflix C.E.O.”)
The book under review is:
Randolph, Marc. That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. New York: Little, Brown and Company, 2019.
Art Diamond Interviewed on the Small Business Advocate Radio Show
Yesterday morning, Jim Blasingame, the host of his nationally syndicated “The Small Business Advocate” radio show, interviewed me on issues related to my book Openness to Creative Destruction, and “A Disney Story for Young Socialists,” my Oct. 10 op-ed piece in the Wall Street Journal. You can click on the links below to listen to each segment of the interview.
Hunter Hastings Posts “Professor Arthur Diamond on Sustaining Innovative Dynamism” Podcast to His “Economics for Entrepreneurs (E4E)”
The podcast episode “Professor Arthur Diamond on Sustaining Innovative Dynamism,” is also posted at the Mises Institute site: https://mises.org/library/professor-arthur-diamond-sustaining-innovative-dynamism
Mott Joined Sloan in Methodically Avoiding Durant’s Entrepreneurial Hunches
(p. A13) Charles Stewart Mott never had his name on an American automobile, but he was on intimate terms with most of the men who did (he was godfather to Walter Chrysler’s daughters). He was also crucial to the rise and success of General Motors.
. . .
By the time Mott, a graduate of Stevens Institute of Technology in Hoboken, had returned from the Spanish-American War, his uncle Fred had added Weston-Mott, a company that manufactured wire bicycle wheels, to the family’s cider and vinegar operations. Charles went to work at Weston-Mott, soon becoming superintendent, just as the bicycle business entered into a sudden eclipse; the automobile had begun its imperial progress. Happily for Weston-Mott, most early cars ran on wire wheels, which Charles Mott supplied—$200,000 worth in 1903—many of them to the Buick Motor Co. of Flint, Mich.
At that time, Buick was in the hands of William Durant, the future founder of General Motors. Cars were being assembled piecemeal, with parts delivered from many far-flung suppliers. Durant didn’t like that, so he asked Mott to move his wheel-building operation to Flint from Utica, N.Y. According to Alfred P. Sloan, who in 1923 became president of GM and whose fortunes would be tied with Mott’s for six decades, the move marked “the first step in the integration of the automobile industry.”
The years to come would see struggles for control of the ever-growing GM, a complex and tangy story that Mr. Renehan recounts with verve and lucidity. “I like to work with Mott,” Sloan wrote of his most valuable lieutenant in his 1941 memoir. “His training had made him methodical. When he was confronted by a problem, he tacked it as I did my own, with engineering care to get the facts. Neither of us ever took any pride in hunches. We left all the glory of that kind of thinking to such men as liked to be labeled ‘genius’ ”—by which Sloan meant Durant.
For the full review, see:
Richard Snow. “BOOKSHELF; Company Man.” The Wall Street Journal (Friday, Sept. 6, 2019): A13.
(Note: ellipsis added.)
(Note: the online version of the review has the date Sept. 5, 2019, and has the title “BOOKSHELF; ‘The Life of Charles Stewart Mott’ Review: Company Man.”)
The book under review is:
Renehan, Edward J., Jr. The Life of Charles Stewart Mott: Industrialist, Philanthropist, Mr. Flint. Ann Arbor, MI: University of Michigan, 2019.
“To Be Profitable, You Have to Have a Purpose”
(p. F2) When a group of the nation’s largest companies said last month that they had changed their mission strictly from making profits to also include benefiting “customers, employees, suppliers, communities and shareholders,” it was generally applauded as an important step in the right direction.
. . .
Treasury Secretary Steven Mnuchin in his first public comment on the topic, flatly told me: “I wouldn’t have signed it,” stunning a room of policymakers and business leaders in Washington at last week’s DealBook DC Strategy Forum.
His explanation was nuanced: “To be profitable, you have to have a purpose. I think it’s not as simple as saying we either have a purpose or we have profits. I think the problem with creating a simple answer is it doesn’t fully explore the issues.”
He added: “I do think companies should be long-term oriented. I don’t think companies need to necessarily be focused on quarterly profits and hitting Street earnings numbers. But I think, ultimately, a business’s job is to deploy the capital correctly and to make profits.”
Stephen A. Schwarzman, the co-founder and chairman of Blackstone Group and one of only a handful of members of the Business Roundtable who declined to sign the document, also went public with his explanation in a conversation with me earlier this week: “I know why we’re in business: because people give us money to manage. They want us to earn a lot of money to give them back or else they would give us nothing.”
He said “the idea that business should be concerned” with employees, customers, suppliers and the community should be a given. But, he said, he objected to the idea in the Business Roundtable statement that profits should be listed as simply equal to the other four issues.
“I have trouble managing when I don’t know what I’m supposed to be doing,” he said, suggesting the statement gives managers too many masters. “I know what I’m supposed to be doing, which is making good investments, safely, and making a great contribution to these pension funds and regular people.”
For the full commentary, see:
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Sept. 18, 2019, and has the title “Profits or the Public Interest: The Debate Continues.”)
Pilots of Delivery Robots Benefit from Video Game Skills
(p. B4) Michael Niedermayer used to fly drones for the U.S. Army and the Central Intelligence Agency, gathering real-time, life-and-death intelligence on battlefields in Iraq. Now he pilots delivery robots for a San Francisco Bay Area startup that wants to disrupt burrito delivery.
Postmates, which in mid-August received a permit to operate its Serve delivery robot in San Francisco and is already testing it for food delivery in Los Angeles, employs a growing team of “pilots” to remotely oversee, and at times steer, these four-wheeled food ferries.
“We will probably see a drastic increase in our workforce over the next five years,” says Postmates Chief Executive Bastian Lehmann.
Disrupting “last-mile” delivery—historically the domain of box trucks, bike couriers and personal vehicles—“felt like a great fit for my military background,” says Mr. Niedermayer.
His story is hardly unique. Across industries, engineers are building atop work done a generation ago by designers of military drones. Whether it’s terrestrial delivery robots, flying delivery drones, office-patrolling security robots, inventory-checking robots in grocery stores or remotely piloted cars and trucks, the machines that were supposed to revolutionize everything by operating autonomously turn out to require, at the very least, humans minding them from afar.
Until the techno-utopian dream of full automation comes into effect—and frankly, there’s no guarantee that will ever happen—there will be plenty of jobs for humans, just not ones their parents would recognize. Whether the humans in charge are in the same city or thousands of miles away, the proliferation of not-yet-autonomous technologies is driving a tiny but rapidly growing workforce.
. . .
When Postmates managers interview potential delivery-robot pilots like Diana Villalobos, they ask whether or not they played videogames in their youth.
“When I was a kid, my parents always said, ‘Stop playing videogames!’ But it came in handy,” she says.
For the full commentary, see:
(Note: ellipsis added.)
(Note: the online version of the commentary has the same date as the print version, and has the title “KEYWORDS; The Next Hot Job: Pretending to Be a Robot.”)
With Work Ethic, but Not Much Education, “You Can Come Out Here and Still Make Six Figures”
(p. B1) When Mike Wilkinson moved to Midland, Tex., in 2017, he hoped the world’s largest oil field would change his life. His marriage was in tatters. He owed tens of thousands in credit card debt. His morale was broken.
He soon began working as a “hot shot” truck driver, carrying loads for drillers who need pipes or drums in a hurry. The United States is the world’s largest producer of oil, surpassing Saudi Arabia and Russia, and demand for “hot shots” has soared.
The epicenter of the oil boom is the Permian Basin in Texas and New Mexico, a massive layer cake of shale that’s cracked open with a blasting technique known as fracking. The country’s growing energy dominance has created tens of thousands of jobs in this part of the Southwest in recent years, many for people like Wilkinson looking for fresh starts.
. . .
(p. B4) There are now 55,000 people now work in the Permian. Mr. Wilkinson says he’s found a certain camaraderie with other transplants: “They are either escaping debt or family issues or poverty.
. . .
“I have to make money, and this is the best way I can make money,” he said. “If you’re not educated and have a good work ethic, you can come out here and still make six figures.”
For the full story, see:
(Note: ellipses added.)
(Note: the online version of the story has the date Sept. 10, 2019, and has the title “‘This Is the Most Lonesome Job’: Ride With a ‘Hot Shot’ Trucker in Oil-Rich Texas.” The online version highlights photographs by Tamir Kalifa. The online and print versions have significant differences in wording and ordering. Where there are differences, the passages quoted above, follow the print version.)
45 Is Average Age of Gazelle Founders
(p. B7) It took an entrepreneur to reimagine the mundane home thermostat as an object of beauty — and then to make a fortune based on that vision.
The entrepreneur was Tony Fadell, who had that thermostat epiphany after decades in the tech industry, including at companies like Apple. Mr. Fadell embodied his idea in a new company, Nest, which he started with the help of a colleague from Apple in 2010, at age 41.
The Nest thermostat had a sleek and intuitive design, smartphone connectivity and the ability to learn its owner’s temperature-setting habits. The product was a big hit, and within a few years Google acquired Nest for $3.2 billion.
Mr. Fadell’s deep experience and relatively mature age when he started Nest are typical of superstar entrepreneurs, who are rarely fresh out of college — or freshly dropped out of college. That’s what a team of economists discovered when they analyzed high-growth companies in the United States. Their study is being published in the journal American Economic Review: Insights.
The researchers looked at start-ups established between 2007 and 2014 and analyzed the top 0.1 percent — defined as those with the fastest growth in employment and sales. The average age of those companies’ founders was 45.
For the full commentary, see:
(Note: the online version of the commentary has the date Aug. 29, 2019, and has the title “ECONOMIC VIEW; Founders of Successful Tech Companies Are Mostly Middle-Aged.”)
The forthcoming article mentioned above, is:
Azoulay, Pierre, Benjamin Jones, J. Daniel Kim, and Javier Miranda. “Age and High-Growth Entrepreneurship.” American Economic Review: Insights (forthcoming).