Category: Entrepreneurship

Once Great A.&P. Was “Going Out of Business for a Long Time”

(p. 17) Linda Fisch stopped at the A.&P. on Riverdale Avenue in the Bronx on Thursday and bought eight prepackaged containers of cottage cheese and fruit. She did not realize the store had become a footnote to history.
That A.&P. is the last in New York City, where the once-mighty chain was born just before the Civil War. Now the company has filed for bankruptcy protection for the second time in five years. Once its plan for liquidating is approved, the store’s A.&P. signs will come down. And the A.&P. name will vanish from New York.
. . .
Once, A.&P. had no competition. It all but invented the grocery store in the 19th century, and in the 20th century, it reinvented itself as a low-price, cash-and-carry chain. Its thousands of stores were “so devoid of frills that they are simply machines for selling food,” according to “The Great Merchants,” a history of retailers and retailing published in 1974.
But it had been fading for years. In the mid-1980s, a former A.&P. executive published a book “The Rise and Decline of the Great Atlantic & Pacific Tea Company” even as A.&P. continued to expand, buying Waldbaum’s and the Food Emporium chain in New York City and the Farmer Jack chain in the Midwest. A.&P. acquired Pathmark in 2007 for $679 million in a deal that involved significant debt. It also operated Super Fresh and Food Basics stores.
. . .
It began as a sideline for a hide and leather importer, George H. Gilman. “At some point around 1859 or 1860, there’s no precise date, he started selling tea,” said Marc Levinson, a historian and the author of “The Great A.&P. and the Struggle for Small Business in America.” “In 1860 or 1861, he gave up on the leather business, gave it to his brother, and decided to go into business as a tea wholesaler. He leased a property on Front Street. It’s the area where most of the ships carrying tea would come in.”
Mr. Levinson said a Gilman employee, George Huntington Hartford, became involved in the new business. Some accounts say it was Hartford who proposed eliminating middlemen — and cutting prices to consumers. From its earliest years, the little tea company promised in advertisements, it would “do away with various profits and brokerages, cartages, storages, cooperage and waste, with the exception of a small commission paid for purchasing to our correspondents in Japan and China.”
. . .
“I grew up on Long Island and the A.&P. was the only supermarket in the town I grew up in, which was Lynbrook,” said Ms. Fisch, 71. “Of course that’s where we shopped. It was bright and it was clean, which is totally different from the one in Riverdale. It’s like it’s been going out of business for a long time.”

For the full story, see:
JAMES BARRON. “A.& P. Bankruptcy Means New York, Chain’s Birthplace, Will Lose Last Store.” The New York Times, First Section (Sun., AUG. 2, 2015): 17.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 1, 2015.)

The first book mentioned above, is:
Mahoney, Tom, and Leonard Sloane. The Great Merchants: America’s Foremost Retail Institutions and the People Who Made Them Great. Updated and Enlarged ed. New York: Harper & Row, 1974.

The second book mentioned above, is:
Walsh, William I. The Rise and Decline of the Great Atlantic & Pacific Tea Company. Secaucas, N.J.: Lyle Stuart, 1986.

Levinson’s great book, mentioned above, is:
Levinson, Marc. The Great A&P and the Struggle for Small Business in America. New York: Hill and Wang, 2011.

Peter Thiel Asks “What Happened to the Future?”

(p. B4) Mr. Thiel has been an important player in Silicon Valley since the first dot-com boom, but he has recently taken on a much more public role. He was born in Germany and came to the United States as an infant when his father, a chemical engineer, found work here. He was raised in Silicon Valley and went to Stanford, where he developed the views in his first book, “The Diversity Myth,” about the multiculturalism debate on campuses, written with the entrepreneur David O. Sacks.
In 1998, Mr. Thiel helped found the online payments company PayPal, an immediate success. He was the first outside investor in Facebook. Forbes estimates his net worth at $2.7 billion. Last year, he became a part-time partner at Y Combinator, a loosely defined advisory position.
A handful of others in Silicon Valley have similar investing track records. Where Mr. Thiel really separates himself from his peers is his skepticism that Silicon Valley is building a better world for all. His investment firm, Founders Fund, used to begin its online manifesto with the complaint, “We wanted flying cars; instead we got 140 characters,” a reference to Twitter. Now it says simply, “What happened to the future?”
San Francisco, Manhattan and Washington, D.C., are doing well, but the presidential campaign has laid bare the angst of many other places. Feelings of decline are rampant. “Most of the millennials have lower expectations than their baby boomer parents,” Mr. Thiel said. “Where I differ from others in Silicon Valley is in thinking that you can’t fence yourself off. If it continues, it will ultimately be bad for everybody.”

For the full story, see:
DAVID STREITFELD. “Peter Thiel, Contrarian Tech Billionaire, Defends His Support of Trump.” The New York Times (Mon., OCT. 31, 2016): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 29, 2016, and has the title “Peter Thiel Defends His Most Contrarian Move Yet: Supporting Trump.”)

The book mentioned above, that was co-authored by Thiel, is:
Sacks, David O., and Peter A. Thiel. The Diversity Myth: Multiculturalism and the Politics of Intolerance at Stanford. Oakland, CA: The Independent Institute, 1995.

Breakthrough Surgeon “Defied Skepticism”

(p. D8) Dr. Johnson was a reluctant surgeon — early on, he once recalled, “I disliked surgeons and their pompous attitudes” — but he applied the crocheting skills he had learned from his mother, who was a home economics teacher, and the needlecraft he was taught in a seventh-grade sewing class (he got an A), to perform more than 8,500 heart bypass operations over four decades.
. . .
Doctors had experimented with coronary artery surgery since the 1950s, the goal being to remove accumulated plaque caused by cholesterol deposits, which can block blood flow and cause the stabbing pain of angina. One method was to remove the clogged portion of an artery and graft on a replacement patch of cardiac membrane or a segment of vein from a leg.
In 1968, Dr. Johnson and his team took another path, sewing segments of veins from multiple arteries end to end and stitching them directly into the aorta, the body’s main artery, bypassing cardiac ducts where the flow of blood was impeded.
His breakthrough, reported the next year, defied skepticism within the medical profession and heralded a new era of successful double, triple and quadruple bypass surgeries.
“It was perhaps the presentation of Johnson in the spring of 1969 that had the greatest impact on the widespread use” of coronary artery bypass grafting, Dr. Eugene A. Hessel II wrote in “Cardiac Anesthesia: Principles and Clinical Practice,” published in 2001.
To facilitate surgery, Dr. Johnson made another breakthrough by temporarily stopping the heart and slowing the body’s metabolism by cooling and circulating the blood through a heart-lung machine.
. . .
Dr. Johnson’s multiple bypass surgeries, which could take as long as nine hours and were often accompanied by classical music in the operating room, were credited with saving an untold number of lives.
But in an interview with Dr. William S. Stoney for “Pioneers of Cardiac Surgery” (2008), Dr. Johnson said “the single biggest thing I ever did to lower mortality” was to prescribe the drug allopurinol, which is ordinarily used to inhibit the production of uric acid (high levels of it can cause gout), but which has also been found to improve survival in cardiac patients by improving their capacity for exercise.
. . .
“The coronary artery bypass graft operation does nothing for the basic cause of the disease,” Dr. Johnson said, adding, “Prevention is, of course, the ultimate answer.”

For the full obituary, see:
SAM ROBERTS. “W. Dudley Johnson, Heart Bypass Pioneer, Dies at 86.” The New York Times (Mon., OCT. 31, 2016): D8.
(Note: ellipses added.)
(Note: the online version of the obituary has the date OCT. 30, 2016, and has the title “W. Dudley Johnson, Heart Bypass Surgery Pioneer, Dies at 86.”)

Stoney’s book mentioned above, is:
Stoney, William S. Pioneers of Cardiac Surgery. Nashville: Vanderbilt University Press, 2008.

GE Shifts Away from Six Sigma and Toward Innovation

(p. B1) One of the biggest engineering projects under way at General Electric Co. these days isn’t a turbine or locomotive. It is reinventing the way the company’s employees are assessed, reviewed and even paid.
For decades, an ideal GE worker was one adept at squeezing out product defects and almost allergic to admitting uncertainty.
Now, as the 124-year-old company refocuses itself on industrial businesses, executives say top performers are those willing to take risks, test new ideas with customers and even make mistakes.
Leaders say GE’s multiyear effort to remake itself into a leaner, innovation-driven company requires a nimble workforce that can develop products faster and more cheaply. The shift is significant for GE, whose corporate ethos had long been embodied by Six Sigma, a manufacturing system designed to eliminate error, enshrining certainty and consistency.
. . .
(p. B6) The new style of measuring employees has roots in FastWorks, a companywide initiative intended to hasten product development and ensure that customers want new products before GE spends millions building them. It is based on Lean Startup, a management system popularized by Eric Ries, a 37-year-old author and consultant GE brought in with the blessing of Chief Executive Jeff Immelt to help employees get comfortable with trial, error and experimentation.

For the full story, see:
RACHEL EMMA SILVERMAN. “GE Tries to Reinvent the Employee Review, Encouraging Risks.” The Wall Street Journal (Weds., June 8, 2016): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the story has the title “GE Re-Engineers Performance Reviews, Pay Practices.”)

Ries’s Lean Startup management system is advocated in his book:
Ries, Eric. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York: Crown Business, 2011.

Those Who See, and Fill, Big Unmet Needs Are Often “Weirdos”

(p. A11) . . . “A Truck Full of Money” provides a portrait of a strange, troubled man who happens to be one of the smartest minds in the Route 128 tech corridor.
. . .
The book is being marketed as inspirational, but I found it to be the opposite. No one could read it and become Paul English, or want to. Most tech startups think too small, but the few people with the vision to identify big unmet needs seem to be, for whatever reason, weirdos. The split-second fare comparison that Kayak did is something no human being could do–it requires super-computing–and it has an enormous value, since 8% of the U.S. economy is travel. But once you’ve solved a problem like that, what do you do next?
Paul English hasn’t figured that out, so this book sort of peters out–he may do his once-in-a-lifetime charity project, or he may follow through on Blade–and he has retreated back into the familiar, running a company called Lola that is sort of the opposite of Kayak: It gives you live access to travel concierges. But how could Mr. Kidder’s ending be anything but inconclusive? Mr. English is just 53. Undoubtedly he has another billion-dollar idea nestled in that overactive brainpan, but his investors have to make a leap of faith–that they’ve bet on the right weirdo. God bless these genius geeks, who make our economy leaner by constantly finding more efficient ways to do old things. And God bless the pharmaceutical industry, which protects and preserves them.​

For the full review, see:
JOHN BLOOM. “BOOKSHELF; The Man Who Built Kayak; During one episode of hypomania, Paul English bid $500,000 on an abandoned lighthouse. Recently, he decided to become an Uber driver.” The Wall Street Journal (Thurs., Sept. 27, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date Sept. 26, 2016.)

The book under review, is:
Kidder, Tracy. A Truck Full of Money: One Man’s Quest to Recover from Great Success. New York: Random House, 2016.

Making Technologies Useful to End Users Can Be Hard

Sharma’s theory sounds somewhat similar to that of Bhidé in his The Venturesome Economy.

(p. B4) Anshu​ Sharma,​ a venture capitalist at Storm Ventures, thinks he knows why so many companies that should have all the resources and brainpower required to build the next big thing so often fail to. He calls his thesis the “stack fallacy,” and though he sketched its outline in a recent essay, I found it so compelling that I thought it worth a more thorough exploration of the implications of his theory. What follows is the result of that conversation.

“Stack fallacy is the mistaken belief that it is trivial to build the layer above yours,” Mr. Sharma wrote. And as someone who worked at both Oracle and Salesforce, his exhibit A is these two companies. To Oracle, which is primarily a database company, Salesforce is just a “hosted database app,” he wrote. and yet despite spending millions on it, Oracle has been unable to beat Salesforce in Salesforce’s core competency, notably customer-relations management software.
It helps to understand that in tech, the “stack” is the layer cake of technology, one level of abstraction sitting atop the next, that ultimately delivers a product or service to the user. On the Internet, for example, there is a stack of technologies stretching from the server through the operating system running on it through a cloud abstraction layer and then the apps running atop that, until you reach the user. Even the electricity grid required to power the data center in which the server lives could be considered part of the technology “stack” of, say, your favorite email service.
. . .
The reason that companies fail when they try to move up the stack is simple, argues Mr. Sharma: They don’t have firsthand empathy for what customers of the product one level above theirs in the stack actually want. Database engineers at Oracle don’t know what supply-chain managers at Fortune 500 companies want out of an enterprise resource-planning system like SAP, but that hasn’t stopped Oracle from trying to compete in that space.

For the full commentary, see:
CHRISTOPHER MIMS. “Why Companies Are Being Disrupted.” The Wall Street Journal (Mon., Jan. 25, 2016): B4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the title “Why Big Companies Keep Getting Disrupted.” The last sentence quoted above appears in the online, but not the print, version of the article.)

Sharma’s blog essay mentioned above, is:
Sharma, Anshu. “Why Big Companies Keep Failing: The Stack Fallacy.” On Crunch Network blog, Posted Jan. 18, 2016.

The Bhidé book that I mention way above, is:
Bhidé, Amar. The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World. Princeton, NJ: Princeton University Press, 2008.

A briefer version of Bhidé’s theory can be found in:
Bhidé, Amar. “The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World.” Journal of Applied Corporate Finance 21, no. 1 (Winter 2009): 8-23.

Censored and Walled-Off Internet Hurts Chinese Start-Ups

(p. B1) Two decades after Beijing began walling off its homegrown internet from the rest of the planet, the digital world has split between China and everybody else. That has prevented American technology companies like Facebook and Uber, which recently agreed to sell its China operations, from independently being able to tap the Chinese market.
For China’s web companies, the divide may have even more significant implications.
It has penned in the country’s biggest and most innovative internet companies. Alibaba, Baidu and Tencent have grown to be some of the world’s largest internet companies, but they rely almost entirely on domestic businesses. Their ventures abroad have been mostly desultory, and prognostications that they will challenge American giants internationally have (p. B2) not materialized.
. . .
In many ways, the split is like 19th century railroads in the United States, when rails of different sizes hindered a train’s ability to go from one place to another.
“The barrier to entering the U.S. or China market is becoming higher and higher,” said Kai-fu Lee, a venture investor from Taiwan and former head of Google China.
The difficulties that China’s internet companies face in expanding their success abroad are epitomized by WeChat, the messaging app owned by Tencent.
. . .
Critics pointed to Tencent’s lack of distinctive marketing, a record of censorship and surveillance in China and its late arrival to foreign markets. Yet the biggest problem was that outside of China, WeChat was just not the same. Within China, WeChat can be used to do almost everything, like pay bills, hail a taxi, book a doctor’s appointment, share photos and chat. Yet its ability to do that is dependent on other Chinese internet services that are limited outside the country.

For the full story, see:
PAUL MOZUR. “Internet’s Great Wall.” The New York Times (Weds., AUG. 10, 2016): B1-B2.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 9, 2016, and has the title “Chinese Tech Firms Forced to Choose Market: Home or Everywhere Else.”)

Uber Drivers Learn to Work Optimal Hours

(p. B1) For nearly 20 years, economists have been debating how cabdrivers decide when to call it a day. This may seem like a trivial question, but it is one that cuts to the heart of whether humans are fundamentally rational — in this case, whether they earn their incomes efficiently — as the discipline has traditionally assumed.
In one camp is a group of so-called behavioral economists who have found evidence that many taxi drivers work longer hours on days when business is slow and shorter hours when business is brisk — the opposite of what economic rationality, to say nothing of common sense, would seem to dictate.
In another camp is a group of more orthodox economists who argue that this perverse habit is largely an illusion in the eyes of certain researchers. Once you consult more precise numbers, they argue, you find that drivers typically work longer hours when it is in their financial interest to do so.
. . .
So who is right? That’s where Uber comes in. When one of the company’s researchers, using its supremely detailed data on drivers’ work time and rides, waded into the debate with a paper this year, the results were intriguing.
Over all, there was little evidence that drivers were driving less when they could make more per hour than usual. But that was not true for a large portion of new drivers. Many of these drivers appeared to have an income goal in mind and stopped when they were near it, causing them to knock off sooner when their hourly wage was high and to work longer when their wage was low.
. . .
“A substantial, although not most, frac-(p. B5)tion of partners do in fact come into the market with income targeting behavior,” the paper’s author, Michael Sheldon, an Uber data scientist, wrote. The behavior is then “rather quickly learned away in favor of more optimal decision making.”
In effect, Mr. Sheldon was saying, the generally rational beings that most economists presume to exist are made, not born — at least as far as their Uber driving is concerned.
. . .
As for Mr. Sheldon, the Uber paper’s author, he attributed his finding to the adventurous nature of many Uber drivers, who were open to running headlong into unfamiliar territory. It’s the sheer unfamiliarity of the Uber driving experience, he speculated, that may explain the initial bout of economically irrational behavior.
Mr. Sheldon was less open to the idea that people who did not depend on Uber for their livelihood helped account for his finding. So far as Uber can tell from other research, he said, those who drive irregularly respond more to fare increases than more regular drivers, at any level of earnings.

For the full story, see:
NOAM SCHEIBER. “Are Uber Drivers Rational? Not Always, Economists Say.” The New York Times (Mon., SEPT. 5, 2016): B1 & B5.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date SEPT. 4, 2016, and has the title “How Uber Drivers Decide How Long to Work.”)

The working paper by Michael Sheldon mentioned above, is:
Sheldon, Michael. “Income Targeting and the Ridesharing Market.” Working Paper, Feb. 18, 2016.

Income Redistribution May Hurt Innovation

(p. A13) Edward Conard is on a dual crusade. First, he is out to prove that technological innovation is the major driver of the creation of wealth. Second, that government programs to redistribute income are at best futile and at worst the enemy of the middle class.
. . .
“The late Steve Jobs,” Mr. Conard writes, “may have made huge profits from his innovations, but his wealth was small in comparison with the value of the iPhone and its imitators to their users.”
. . .
“Redistribution–whether achieved through taxation, regulatory restrictions, or social norms–appears,” he asserts, “to have large detrimental effects on risk-taking, innovation, productivity, and growth over the long run, especially in an economy where innovation produced by the entrepreneurial risk-taking of properly trained talent increasingly drives growth.”

For the full review, see:
RICHARD EPSTEIN. “BOOKSHELF; The Necessity of the Rich; Steve Jobs may have earned huge profits from his innovations, but they pale in comparison with the value of the iPhone to its users.” The Wall Street Journal (Thurs., Sept. 15, 2016): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date Sept. 14, 2016, and has the title “BOOKSHELF; The Necessity of the Rich; Steve Jobs may have earned huge profits from his innovations, but they pale in comparison with the value of the iPhone to its users.”)

The book under review, is:
Conard, Edward. The Upside of Inequality: How Good Intentions Undermine the Middle Class. New York: Portfolio, 2016.

“I Could Lose My Ability to Control My Business”

(p. B4) Small-business owners say they are shouldering higher costs and scaling back expansion plans because of a revised federal rule that gives employees more leverage in settling workplace grievances.
The new policy, intended to hold businesses accountable for labor-law violations against people whose working conditions they control but don’t claim as employees, was put in place last year through a ruling by the National Labor Relations Board, . . .
. . .
Businesses say they are in a regulatory limbo because the new standard is vague about what constitutes control.
The previous test measured the direct control one business had over working conditions of people employed by another business. Now, even indirect control can count.
So far the impact seems to be largely on the franchisees. A home health-care business in Wisconsin is taking on $10,000 in annual recruiting costs because its franchiser stopped providing assistance to steer clear of regulators, and a small hotelier in Florida is abandoning expansion plans in small markets because one of its franchisers scaled back worker training it provides. A printing business owner in Washington state said he canceled plans to open an eighth store because he doesn’t want to risk the investment until it is clear his franchiser wouldn’t be considered a joint-employer.
“I could lose my ability to control my business,” said Chuck Stempler, an owner of the seven printing stores that operate under the AlphaGraphics brand in Washington and California.
. . .
Employers say the NLRB is confusing control with contractual relationships that help businesses and workers thrive.
“The NLRB is applying a new legal standard that would undermine a successful American business model that has enabled thousands of families to operate their own small businesses and help support millions of American jobs,” McDonald’s said in a statement, referring to the franchising business.

For the full story, see:
MELANIE TROTTMAN. “New Labor Law Curbs Small Firms’ Plans.” The Wall Street Journal (Sat., Aug. 6, 2016): B4.
(Note: ellipses added.)
(Note: the online version of the story has the date Aug. 5, 2016, and has the title “Some Small-Business Owners Trim Expansion Plans, Cite New Labor Law.”)

“Giving Peas a Chance”

(p. C1) Thank heavens Gregor Mendel was a lousy priest. Had he shown even the faintest aptitude for oratory or ministering to the poor, he might never have determined the basic laws of heredity. But bumbling he was, and he made a rotten university student to boot; his failures drove him straight to his room, where he bred mice in secret. The experiment scandalized his superiors.
“A monk coaxing mice to (p. C4) mate to understand heredity was a little too risqué, even for the Augustinians,” writes Siddhartha Mukherjee in “The Gene: An Intimate History.” So Mendel switched — auspiciously, historically — to pea plants. The abbot in charge, writes the author, acquiesced this time, “giving peas a chance.”
Love Dr. Mukherjee, love his puns. They’re everywhere. I warn you now.
. . .
Many of the same qualities that made “The Emperor of All Maladies” so pleasurable are in full bloom in “The Gene.” The book is compassionate, tautly synthesized, packed with unfamiliar details about familiar people.
. . .
But there are also crucial differences. Cancer is the troll that scratches and thumps beneath the floorboards of our consciousness, if it hasn’t already beaten its way into the room. The subject immediately commands our attention; it’s almost impossible to deny, and not to hear, the emotional clang of its appeal. In Dr. Mukherjee’s skilled hands, the story of this frightening disease became a page-turner. He explained its history, politics and cunning biological underpinnings; he traced the evolving and often gruesome logic underlying cancer treatment.
And in the middle of it all, agonizing over treatment protocols and watching his patients struggle with tremendous existential and physical pain, was the author himself.
There are far fewer psychological stakes in reading about the history of genetics. “The Gene” is more pedagogical than dramatic; as often as not, the stars of this story are molecules, not humans.
. . .
But any book about the history of something as elemental and miraculous as the gene is bound, at least indirectly, to tell the story of innovation itself. “The Gene” is filled with scientists who dreamed in breathtakingly lateral leaps.
Erwin Schrödinger in particular was one visionary cat: In 1944, he hazarded a guess about the molecular nature of the gene and decided it had to be a strand of code scribbled along the chromosome — which pretty much sums up the essence of DNA.

For the full review, see:
JENNIFER SENIOR. “Books of The Times; In Molecular Pursuit of the Genetic Code.” The New York Times (Mon., MAY 9, 2016): C1 & C4.
(Note: ellipses added.)
(Note: the online version of the review has the date MAY 8, 2016, and has the title “Books of The Times; Review: Siddhartha Mukherjee’s ‘The Gene,’ a Molecular Pursuit of the Self.”)

The book under review, is:
Mukherjee, Siddhartha. The Gene: An Intimate History. New York: Scribner, 2016.