Category: Entrepreneurship

Public Policies Choke Off Entrepreneurial Opportunities

George McGovern was the Democratic candidate for President of the United States in 1972. He was a fervent advocate for expansion of the federal government.

(p. A12) We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

My own business perspective has been limited to that small hotel and restaurant in Stratford, Conn., with an especially difficult lease and a severe recession. But my business associates and I also lived with federal, state and local rules that were all passed with the objective of helping employees, protecting the environment, raising tax dollars for schools, protecting our customers from fire hazards, etc. While I never have doubted the worthiness of any of these goals, the concept that most often eludes legislators is: “Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.” It is a simple concern that is nonetheless often ignored by legislators.
For example, the papers today are filled with stories about businesses dropping health coverage for employees. We provided a substantial package for our staff at the Stratford Inn. However, were we operating today, those costs would exceed $150,000 a year for health care on top of salaries and other benefits. There would have been no reasonable way for us to absorb or pass on these costs.
Some of the escalation in the cost of health care is attributed to patients suing doctors. While one cannot assess the merit of all these claims, I’ve also witnessed firsthand the explosion in blame-shifting and scapegoating for every negative experience in life.
Today, despite bankruptcy, we are still dealing with litigation from individuals who fell in or near our restaurant. Despite these injuries, not every misstep is the fault of someone else. Not every such incident should be viewed as a lawsuit instead of an unfortunate accident. And while the business owner may prevail in the end, the endless exposure to frivolous claims and high legal fees is frightening.

For the full commentary, see:
McGovern, George. “Manager’s Journal: A Politician’s Dream Is a Businessman’s Nightmare.” The Wall Street Journal (Mon., June 1, 1992): A12.

Alzheimer’s Innovator Financed Research with Loan on His House

(p. 29) In the early 1990s, Dr. Roses and his collaborators at Duke University rejected prevailing assumptions that the buildup in the brain of a protein plaque called amyloid directly caused memory loss and other mental impairments in Alzheimer’s patients.
Instead, they maintained that the plaque largely resulted from the disease, and that the deterioration of brain function actually originated from the variation of a single gene.
In 2009, after financing his research with a loan of almost $500,000 on his house, Dr. Roses and his team identified a second gene that they said could help predict whether the cognitive ability of an older person, generally between 65 and 83, would decline within about five years of acquiring Alzheimer’s.
. . .
The heart attack that caused his death was his third since 1990, but his pace never faltered. “He treated every day like it was his last one, because he knew it probably was,” Stephanie Roses said. “He woke up every morning and would blink three times and say, ‘I have another day.'”

For the full obituary, see:
SAM ROBERTS. “Allen Roses, Who Studied Genes’ Role in Alzheimer’s Disease, Is Dead at 73.” The New York Times (Thurs., OCT. 6, 2016): 29.
(Note: ellipsis added.)
(Note: the online version of the obituary has the date OCT. 5, 2016, and has the title “Allen Roses, Who Upset Common Wisdom on Cause of Alzheimer’s, Dies at 73.”)

Judgment Overrode Algorithm to Save First Moon Landing

(p. 29) On July 20, 1969, moments after mission control in Houston had given the Apollo 11 lunar module, Eagle, the O.K. to begin its descent to the moon, a yellow warning light flashed on the cockpit instrument panel.
“Program alarm,” the commander, Neil Armstrong, radioed. “It’s a 1202.”
The alarm appeared to indicate a computer systems overload, raising the specter of a breakdown. With only a few minutes left before touchdown on the moon, Steve Bales, the guidance officer in mission control, had to make a decision: Let the module continue to descend, or abort the mission and send the module rocketing back to the command ship, Columbia.
By intercom, Mr. Bales quickly consulted Jack Garman, a 24-year-old engineer who was overseeing the software support group from a back-room console.
Mr. Garman had painstakingly prepared himself for just this contingency — the possibility of a false alarm.
“So I said,” he remembered, “on this backup room voice loop that no one can hear, ‘As long as it doesn’t reoccur, it’s fine.'”
At 4:18 p.m., with only 30 seconds of fuel remaining for the descent, Mr. Armstrong radioed: “Houston, Tranquillity Base here. The Eagle has landed.”
Mr. Garman, whose self-assurance and honed judgment effectively saved mankind’s first lunar landing, died on Tuesday outside Houston.

For the full obituary, see:
SAM ROBERTS. “Jack Garman, Who Saved Moon Landing, Dies at 72.” The New York Times, First Section (Sun., SEPT. 25, 2016): 29.
(Note: the online version of the obituary has the date SEPT. 24, 2016, and has the title “Jack Garman, Whose Judgment Call Saved Moon Landing, Dies at 72.”)

Musk Unveils Bold Private Enterprise Plan to Colonize Mars

(p. B3) Entrepreneur Elon Musk unveiled his contrarian vision for sending humans to Mars in roughly the next decade, and ultimately setting up colonies there, relying on bold moves by private enterprise, instead of more-gradual steps previously proposed by Washington.
Mr. Musk–who in 14 years transformed his closely held rocket company, Space Exploration Technologies Corp., into a global presence–envisions hosts of giant, reusable rockets standing more than 300 feet tall eventually launching fleets of carbon-fiber spacecraft into orbit.
The boosters would return to Earth, blast off again into the heavens with “tanker” spaceships capable of refueling the initial vehicles, and then send those serviced spacecraft on their way to the Red Planet. The rockets would be twice as powerful as the Saturn 5 boosters that sent U.S. astronauts to the Moon. Each fully developed spacecraft likely would carry between 100 and 200 passengers, Mr. Musk said.

For the full story, see:
ANDY PASZTOR. “Musk Offers Vision of Mars Flights.” The Wall Street Journal (Weds., Sept. 28, 2016): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date Sept. 27, 2016, and has the title “Elon Musk Outlines Plans for Missions to Mars.”)

“You Never Know for Sure Where Good Ideas Will Come From”

(p. B1) The best-performing U.S. stock over the past 30 years isn’t a household name like Costco Wholesale Corp. or Johnson & Johnson. It’s Balchem, up 107,099% since the end of 1985, according to FactSet Research Systems.
You’d never heard of Balchem? Me either; stocks don’t come much more obscure than this. Based in Wawayanda, N.Y. (population 7,266), about 70 miles northwest of New York City, Balchem makes flavorings, fumigating gases and nutritional additives for animal feed. Its total stock market value is about $1.7 billion.
Since the end of 1985, Balchem has gained an average of 26.2% annually, compared with 10.3% for the S&P 500 and 15.7% for Warren Buffett’s Berkshire Hathaway Inc.
. . .
(p. B7) But you can learn from Balchem and its peers for free. Over the past 30 years, 44 U.S. stocks generated cumulative total returns of 10,000% or more, according to FactSet. The 10 behind Balchem are Home Depot Inc., Amgen Inc., Nike Inc., UnitedHealth Group Inc., Danaher Corp., Altair Corp., Kansas City Southern, Jack Henry & Associates Inc., Apple Inc. and Altria Group Inc. All grew by at least twice the rate of the S&P 500. Investment manager William Bernstein of Efficient Frontier Advisors in Eastford, Conn., has christened such companies “superstocks.”
Perhaps the most notable thing they share, says David Salem, chief investment officer at Windhorse Capital Management in Boston, is that “they have all undergone at least one near-death experience.”
. . .
Balchem shows the patience, grit and good luck it takes for a company to turn into a superstock.
The firm began in 1967 as a specialty-chemicals company that made ingredients for hairspray and ink, among other things, says Raymond Reber, who stepped down as chief executive in 1997.
In 1996, Balchem was losing so much on a new technology to coat nutrients that “it was crazy,” says Mr. Reber. “We couldn’t operate that way.” So, he recalls, he told the company’s factory workers, “‘You have to figure out a way to double our production without raising our costs.’ And they did it.”
But the transition was rough. Balchem’s shares dropped 57% in 13 months between late 1997 and the end of 1998.
Dino Rossi, who was Balchem’s chief executive between 1998 and last year, remembers a staff engineer pointing out long ago that its nutritional choline salts might have a nonfood purpose: to help stabilize clay deposits. Years went by before fracking for oil and gas created a bonanza for that use. The end result: tens of millions of dollars in revenue for Balchem.
“You never know for sure where good ideas will come from,” says Mr. Rossi, “and it doesn’t happen overnight.”
It took years for Balchem to perfect microcapsules that could survive the harsh acids of a cow’s first stomach and then release nutrients farther along in the animal’s digestive system. “You have to be constantly working the technology harder,” says Mr. Rossi.

For the full commentary, see:
JASON ZWEIG. “No. 1 Over 30 Years? You Will Never Guess.” The Wall Street Journal (Sat., Jan 30, 2016): B1 & B7.
(Note: ellipses added.)
(Note: the online version of the article has the date Jan 29, 2016, and has the title The Best Stock Over the Last 30 Years? You’ve Never Heard of It.”)

“A Corporate Jargon of Uplift That Turns Sensitive Souls Suicidal”

(p. C1) Though Dante cataloged many forms of diabolical torture in his “Inferno,” a guided tour of hell, he somehow missed out on what could well be the most excruciating eternal punishment of all. I mean (ominous organ chords, please) the staff meeting that never, ever ends.
You’ve surely been a part of such sessions. They’re those gatherings in which people waste time by talking about how to be more productive, with algebraic visual aids and a corporate jargon of uplift that turns sensitive souls suicidal.

For the full review, see:
BEN BRANTLEY. “A Circle of Hell: The Staff Meeting.” The New York Times (Mon., OCT. 10, 2016): C1 & C4.
(Note: the online version of the review has the date OCT. 9, 2016, and has the title “Review: ‘Miles for Mary,’ a Sendup of the Interminable Meeting From Hell.”)

Blockchain Is a Process Innovation That Will Make Financial Records More Reliable and Easier to Access

(p. A13) Until the mid-1990s, the internet was little more than an arcane set of technical standards used by academics. Few predicted the profound effect it would have on society. Today, blockchain–the technology behind the digital currency bitcoin–might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.
Blockchain offers a way to track items or transactions using a shared digital “ledger.” Blocks of new transactions are added at the end of the chain, and encryption ensures that it remains unbroken–tamper-proof and error-free. This is significantly more efficient than the current methods for logging and sharing such information.
Consider the process of buying a house, a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes roughly 50 days. Blockchain offers a solution: a trusted, immutable digital ledger, visible to all participants, that shows every element of the transaction.

For the full commentary, see:
GINNI ROMETTY. “How Blockchain Will Change Your Life.” The Wall Street Journal (Tues., Nov. 8, 2016): A13.
(Note: the online version of the commentary has the date Nov. 7, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)

Spreadsheets and Committees Are Enemies of Innovation

(p. B4) “As we became more sophisticated in quantifying things we became less and less willing to take risks,” says Horace Dediu, a technology analyst and fellow at the Clayton Christensen Institute for Disruptive Innovation, a think tank. “The spreadsheet is the weapon of mass destruction against creative power.”
The same could be said of university research, says Dr. Prabhakar. Research priorities are often decided by peer review, that is, a committee.
“It drives research to more incrementalism,” she says. “Committees are a great way to reduce risk, but not to take risk.”

For the full commentary, see:
CHRISTOPHER MIMS. “KEYWORDS; Engine of Innovation Loses Some Spark.” The Wall Street Journal (Mon., Nov. 21, 2016): B1 & B4.
(Note: the online version of the article has the date Nov. 20, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)

Studying Cancer in Dogs Can Help Humans and Dogs

(p. D4) Dogs are a better natural model for some human diseases than mice or even primates because they live with people, Dr. Karlsson says. “Compared to lab mice, with dogs they’re getting diseases within their natural life span, they’re exposed to the same pollutants in the environment” as humans, she says.
Previous canine studies conducted by other scientists have shed light on human diseases like osteosarcoma, a type of bone cancer, as well as the sleep disorder narcolepsy and a neurological condition, epilepsy.
With osteosarcoma, the most common type of bone cancer in children and one that frequently strikes certain dog breeds, researchers have discovered that tumors in dogs and children are virtually indistinguishable. The tumors share similarities in their location, development of chemotherapy-resistant growths and altered functioning of certain proteins, making dogs a good animal model of the disease. Collecting more specimens from dogs could lead to progress in identifying tumor targets and new cancer drugs in dogs as well as in children, some scientists say.

For the full story, see:
SHIRLEY S. WANG. “IN THE LAB; How Dogs’ Genes Can Help Humans.” The Wall Street Journal (Thurs., Dec. 3, 2015): D4.
(Note: the online version of the story has the date Dec. 2, 2015, and has the title “IN THE LAB; Why Dogs Are Some Scientists’ New Best Friends.”)

A paper showing how cancer research on dogs can help humans, is:
Fenger, Joelle M., Cheryl A. London, and William C. Kisseberth. “Canine Osteosarcoma: A Naturally Occurring Disease to Inform Pediatric Oncology.” ILAR Journal 55, no. 1 (2014): 69-85.

“We Shall Increasingly Have the Power to Make Life Good”

(p. B13) Derek Parfit, a British philosopher whose writing on personal identity, the nature of reasons and the objectivity of morality re-established ethics as a central concern for contemporary thinkers and set the terms for philosophic inquiry, died on Monday at his home in London.
. . .
The two volumes of “On What Matters,” published in 2011, dealt with the theory of reasons and morality, arguing for the existence of objective truth in ethics.
. . .
“With no other philosopher have I had such a clear sense of someone who had already thought of every objection I could make, of the best replies to them, of further objections that I might then make, and of replies to them too,” the philosopher Peter Singer wrote recently on the philosophy website Daily Nous.
. . .
In February [2017], Oxford University Press plans to publish a third volume of “On What Matters.” It consists in part of responses to criticism of his work by leading philosophers, which will appear in a companion volume, edited by Mr. Singer, titled “Does Anything Really Matter?”
. . .
On Daily Nous, Mr. Singer offered a snippet from Mr. Parfit’s new work:
“Life can be wonderful as well as terrible, and we shall increasingly have the power to make life good. Since human history may be only just beginning, we can expect that future humans, or supra-humans, may achieve some great goods that we cannot now even imagine.
“In Nietzsche’s words, there has never been such a new dawn and clear horizon, and such an open sea.”

For the full obituary, see:
WILLIAM GRIMES. “Derek Parfit, 74, Philosopher Who Explored Identity.” The New York Times (Thurs., JAN. 5, 2017): B13.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date JAN. 4, 2017, and has the title “Derek Parfit, Philosopher Who Explored Identity and Moral Choice, Dies at 74.”)

The book by Parfit quoted above, is:
Parfit, Derek. On What Matters: Volume Three. Oxford, UK: Oxford University Press, forthcoming 2017.

Internet Innovations Only Arose After Entrepreneurs Created PCs

(p. B15) Leo L. Beranek, an engineer whose company designed the acoustics for the United Nations and concert halls at Lincoln Center and Tanglewood, then built the direct precursor to the internet under contract to the Defense Department, died on Oct. 10 [2016] at his home in Westwood, Mass.
. . .
After the war, Dr. Beranek was recruited to teach at M.I.T., where he was named technical director of the engineering department’s acoustics laboratory. The administrative director of that lab was Richard Bolt, who later founded Bolt, Beranek & Newman with Dr. Beranek and Robert Newman, a former student of Dr. Bolt’s.
The company was conceived as a center for leading-edge acoustic research. But Dr. Beranek changed its direction in the 1950s to include a focus on the nascent computer age.
“As president, I decided to take B.B.N. into the field of man-machine systems because I felt acoustics was a limited field and no one seemed to be offering consulting services in that area,” Dr. Beranek said in a 2012 interview for this obituary.
He hired J.C.R. Licklider, a pioneering computer scientist from M.I.T., to lead the effort, and it was Dr. Licklider who persuaded him that the company needed to get involved in computers.
Under Dr. Licklider, the company developed one of the best software research groups in the country and won many critical projects with the Department of Defense, NASA, the National Institutes of Health and other government agencies. Though Dr. Licklider left in 1962, the company became a favored destination for a new generation of software developers and was often referred to as the third university in Cambridge.
“We bought our first digital computer from Digital Equipment Corporation, and with it we were able to attract some of the best minds from M.I.T. and Harvard, and this led to the ARPA contract to build the Arpanet,” Dr. Beranek said.
“I never dreamed the internet would come into such widespread use, because the first users of the Arpanet were large mainframe computer owners,” he said. “This all changed when the personal computer became available. With the PC, I could see that computers were fun, and that is the real reason why all innovations come into widespread use.”

For the full obituary, see:

GLENN RIFKIN. “Leo Beranek, 102, Who Pivoted From Acoustics to Computers, Dies.” The New York Times (Tues, OCT. 18, 2016): B15.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the obituary has the date OCT. 17, 2016, and has the title “Leo Beranek, Acoustics Designer and Internet Pioneer, Dies at 102.” )