Category: Entrepreneurship

Sutter Headed BHAG Team that Created Boeing 747

Collins and Porras in Built to Last recommend the pursuit of Big, Hairy, Audacious Goals (BHAGs). A prime example is the Boeing 747.

(p. B9) Joe Sutter, whose team of 4,500 engineers took just 29 months to design and build the first jumbo Boeing 747 jetliner, creating a gleaming late-20th-century airborne answer to the luxury ocean liner, died on Tuesday [August 30, 2016] in Bremerton, Wash.
. . .
In less time than Magellan spent circumnavigating the globe, Boeing engineers transformed Mr. Sutter’s napkin doodles into the humpbacked, wide-bodied behemoth passenger and cargo plane known as the 747. The plane would transform commercial aviation and shrink the world for millions of passengers by traveling faster and farther than other, conventional jetliners, without having to refuel.
. . .
“If ever a program seemed set up for failure, it was mine,” Mr. Sutter said in his 2006 autobiography, “747: Creating the World’s First Jumbo Jet and Other Adventures From a Life in Aviation,” written with Jay Spenser.
. . .
Adam Bruckner of the University of Washington’s department of aeronautics and astronautics later described the 747 as “one of the great engineering wonders of the world, like the pyramids of Egypt, the Eiffel Tower or the Panama Canal.”
. . .
“Aviators were more than mere mortals to us,” Mr. Sutter recalled in his autobiography. “They were a different breed, intrepid demigods in silk scarves, puttees and leather flying helmets with goggles.”

For the full obituary, see:
SAM ROBERTS. “Joe Sutter, 95, Is Dead; Guided the Development of Boeing’s 747 Jetliner.” The New York Times (Fri., Sept. 2, 2016): B9.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date Sept. 1, 2016, and has the title “Joe Sutter, Who Led an Army in Building Boeing’s Jumbo 747, Dies at 95.”)

Sutter’s autobiography, is:
Sutter, Joe, and Jay Spencer. 747: Creating the World’s First Jumbo Jet and Other Adventures from a Life in Aviation. New York: HarperCollins Publishers, 2006.

Airline Startups Stall in Bureaucratic Regulatory Headwinds

(p. B4) Mr. Vallas owns California Pacific Airlines, known as CP Air, his latest venture in a peripatetic business career that has included stints in areas as varied as land development and other aviation-related ventures.
CP Air has sat on a metaphorical runway for years — engines idling, ready for takeoff — while awaiting certification by the Federal Aviation Administration.
Mr. Vallas’s patience is wearing thin. After all, he is 95, and he regards the airline as a legacy, an exclamation point to a colorful life.
. . .
. . . then there was that matter with the F.A.A. The agency has repeatedly denied applications. A letter from 2013, one of several from the agency, advised him that the application’s contents were “incomplete, inaccurate and do not appear to have been reviewed for quality.”
. . .
The government shutdown in 2013 and the F.A.A.’s staff reduction did not help matters, the agency acknowledges.
. . .
The process of greenlighting a new airline has become more complicated since Mr. Vallas sold a previous venture, a charter service called Air Resorts, in 1997.
He acknowledges the vast increase in paperwork since that era but contends that the conditions for acceptance have been met.
Mr. Vallas’s airline is not the only one that has encountered bureaucratic headwinds. Other proposed airlines are in limbo for various reasons, including Baltia Airlines, created in 1989 to fly between New York City and Russia, which still lacks the authorities’ blessing.

For the full story, see:
MIKE TIERNEY. “ITINERARIES; A Start-Up Airline Idles on a California Runway.” The New York Times (Tues., APRIL 26, 2016): B4.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 25, 2016, and has the title “ITINERARIES; Start-Up Airline Idles on a California Runway, Stymied by Bureaucracy.”)

Innovations Make It Easier to Form and Run Smaller Firms

(p. B3) Unilever is paying $1 billion for Dollar Shave Club, a five-year-old start-up that sells razors and other personal products for men. Every other company should be afraid, very afraid.
The deal anecdotally shows that no company is safe from the creative destruction brought by technological change. The very nature of a company is fundamentally changing, becoming smaller and leaner with far fewer employees.
. . .
Now it is possible to leverage technology and transportation systems that never existed before. Dollar Shave Club used Amazon Web Services, a cloud computing service started by the online retailing giant in 2006 that encouraged a proliferation of e-commerce companies. Manufacturing now is just as much a line item as is a distribution apparatus. This is the business strategy of many other disruptive companies, including the home-sharing site Airbnb, which upends the idea of needing a hotel. The ride-hailing start-up Uber could never have been possible without a number of inventions including the internet, the smartphone and, most important, location tracking technology, enabling anyone to be a driver.

For the full commentary, see:
STEVEN DAVIDOFF SOLOMON. “Deal Professor; In Comfort of a Close Shave, a Distressing Disruption.” The New York Times (Weds., JULY 27, 2016): B3.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JULY 26, 2016, and has the title “Deal Professor; $1 Billion for Dollar Shave Club: Why Every Company Should Worry.”)

Lack of Control at Job Causes Stress, Leading to Cardiovascular Disease

(p. 6) Allostasis is not about preserving constancy; it is about calibrating the body’s functions in response to external as well as internal conditions. The body doesn’t so much defend a particular set point as allow it to fluctuate in response to changing demands, including those of one’s social circumstances. Allostasis is, in that sense, a politically sophisticated theory of human physiology. Indeed, because of its sensitivity to social circumstances, allostasis is in many ways better than homeostasis for explaining modern chronic diseases.
Consider hypertension. Seventy million adults in the United States have it. For more than 90 percent of them, we don’t know the cause. However, we do have some clues. Hypertension disproportionately affects blacks, especially in poor communities.
. . .
Peter Sterling, a neurobiologist and a proponent of allostasis, has written that hypertension in these communities is a normal response to “chronic arousal” (or stress).
. . .
Allostasis is attractive because it puts psychosocial factors front and center in how we think about health problems. In one of his papers, Dr. Sterling talks about how, while canvassing in poor neighborhoods in Cleveland in the 1960s, he would frequently come across black men with limps and drooping faces, results of stroke. He was shocked, but today it is well established that poverty and racism are associated with stroke and poor cardiovascular health.
These associations also hold true in white communities. One example comes from the Whitehall study of almost 30,000 Civil Service workers in Britain over the past several decades. Mortality and poor health were found to increase stepwise from the highest to the lowest levels in the occupational hierarchy: Messengers and porters, for example, had nearly twice the death rate of administrators, even after accounting for differences in smoking and alcohol consumption. Researchers concluded that stress — from financial instability, time pressures or a general lack of job control — was driving much of the difference in survival.

For the full commentary, see:
SANDEEP JAUHAR. “When Blood Pressure Is Political.” The New York Times, SundayReview Section (Sun., AUG. 7, 2016): 6.
(Note: ellipses added.)
(Note: the online version of the review has the date AUG. 6, 2016.)

The commentary quoted above is distantly related to Jauhar’s book:
Jauhar, Sandeep. Doctored: The Disillusionment of an American Physician. New York: Farrar, Straus and Giroux, 2014.

Andreessen Venture Funds Succeed Modestly

In an Andrew Ross Sorkin column, Sean Parker urged successful entrepreneurs to become serial entrepreneurs, rather than to semi-retire as venture capitalists. In that column, Marc Andreessen was quoted as sympathizing with Parker’s view.

(p. A1) Andreessen Horowitz’s first three venture funds have nearly doubled their investment capital or better since inception, according to documents reviewed by The Wall Street Journal that provide a rare look at the performance of one of Silicon Valley’s top venture-capital firms.
But an analysis of its returns, compared with funds from top rivals and industry averages, shows that Andreessen Horowitz hasn’t yet earned its reputation as an elite firm.
The firm, co-founded by web pioneer Marc Andreessen in 2009, is routinely mentioned among the pantheon of great startup investors with the likes of Sequoia Capital, a status that has allowed it to command higher fees than some of its peers.
Sequoia has separated itself from the pack thanks to its consistently high returns. Its 2003 and 2006 venture funds have both risen eightfold net of fees, according to a person familiar with the matter.
. . .
(p. A2) Venture-capital firms raise money from universities, pension funds and other institutions to wager on startups. They typically raise a new fund every few years, operating a handful at the same time with each expected to wind down after 10 years.
Though they fall short of their top-notch rivals, all three Andreessen Horowitz funds–whose bets include Instagram, Airbnb and Pinterest Inc.–have outperformed the average of venture funds raised in the same years, according to benchmark data from investment adviser Cambridge Associates. The earliest fund, raised in 2009, ranks in the top 5% of venture funds from that year; the second fund, raised in 2010, ranks in the top 50%; and the third from 2012 ranks in the top 25%.

For the full story, see:
Winkler, Rolfe. “Andreessen’s Venture Firm Trails Rivals.” The Wall Street Journal (Fri., Sept. 2, 2016): A1-A2.
(Note: ellipsis added.)
(Note: the online version of the article has the date Sept. 1, 2016, and had the title “Andreessen Horowitz’s Returns Trail Venture-Capital Elite.”)

The views of Sean Parker and Marc Andreessen on venture capital, that I mention at the top, are summarized in:
Sorkin, Andrew Ross. “Dealbook; Taking a Risk, and Hoping That Lightning Strikes Twice.” The New York Times (Tues., July 24, 2012): B1 & B4.

FDA Blocking Stem-Cell Therapies from Those With No Other Hope

(p. D2) Research is exploding into ways stem cells might be harnessed to cure diseases, mend damaged tissue, even grow replacement organs.
. . .
Jeffrey Weiss, a retinal surgeon in Margate, Fla., has treated about 570 patients with retinal and optic nerve diseases with stem cells taken from patients’ bone marrow as part of a study, and says that about 60% have had meaningful improvement. Patients pay $19,000 to $21,000 to receive the injections.
Shawn Rockafellow, a 31-year old truck dispatcher in Chandler, Ariz., started rapidly losing his vision in 2014 to a genetic disease and says he was told to accept that he was going blind. His mother read about Dr. Weiss’s work. Mr. Rockafellow raised the $20,000 fee on GoFundMe, a personal charity website, and had the treatment in both eyes in January.
After three months, the vision in his right eye went from roughly 20/1,000 to 20/400. After six months, it was 20/300. His left eye hasn’t improved as much, so he wants to try the treatment again. His regular ophthalmologist, Scott Markham, says “the fact that he’s not worsening is fantastic.”
. . .
Mark Berman, a Beverly Hills, Calif., cosmetic surgeon who co-founded a network of stem-cell clinics, says “fundamentally, all we are doing is a simple, surgical procedure. This is not witch-doctor stuff. We are repairing cell damage with people’s own stem cells.” He says the member clinics in 25 states have treated about 5,000 patients to date, with no significant adverse events.
SammyJo Wilkinson, a former dot-com executive, developed multiple sclerosis in 1995 and was confined to a wheelchair by 2011. She says her symptoms started to improve almost immediately after receiving a high-dose stem cell treatment at a Houston clinic in 2012. When the FDA blocked access to that form of therapy, Ms. Wilkinson went to Cancún, Mexico, for follow-ups. After a total of five treatments for $90,000, she says she has far less pain, can exercise and walk short distances with the help of a walker.
At the FDA hearing, Ms. Wilkinson, who founded a patient group called Patients for Stem Cells, plans to appeal for a faster approval process for stem-cell therapies and a registry to monitor patient outcomes. “Patients will never get these treatments if they have to go the traditional double-blind placebo-controlled trial route. That takes 10 years and $1 billion,” she says. “There’s got to be a middle ground, where you don’t shut off treatment, you just keep track of it.”

For the full story, see:
Beck, Melinda. “Stem-Cell Treatments Become More Available, and Face More Scrutiny.” The Wall Street Journal (Tues., Aug. 30, 2016): D2.
(Note: ellipses added.)
(Note: the online version of the story has the date Aug. 29, 2016, and has the title “Stem-Cell Treatments Become More Available, and Face More Scrutiny.” There are minor differences in wording between the online and print versions. The sentences quoted above, follow the online version.)

“Practice Makes Perfect, but It Doesn’t Make New”

(p. 12) Child prodigies rarely become adult geniuses who change the world. We assume that they must lack the social and emotional skills to function in society. When you look at the evidence, though, this explanation doesn’t suffice: Less than a quarter of gifted children suffer from social and emotional problems. A vast majority are well adjusted — as winning at a cocktail party as in the spelling bee.
What holds them back is that they don’t learn to be original. They strive to earn the approval of their parents and the admiration of their teachers. But as they perform in Carnegie Hall and become chess champions, something unexpected happens: Practice makes perfect, but it doesn’t make new.
. . .
In adulthood, many prodigies become experts in their fields and leaders in their organizations. Yet “only a fraction of gifted children eventually become revolutionary adult creators,” laments the psychologist Ellen Winner. “Those who do must make a painful transition” to an adult who “ultimately remakes a domain.”
Most prodigies never make that leap. They apply their extraordinary abilities by shining in their jobs without making waves. They become doctors who heal their patients without fighting to fix the broken medical system or lawyers who defend clients on unfair charges but do not try to transform the laws themselves.

For the full commentary, see:
Grant, Adam. “How to Raise a Creative Child.” The New York Times, SundayReview Section (Sun., JAN. 31, 2016): 12.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JAN. 16, 2016, and has the title “How to Raise a Creative Child. Step One: Back Off.”)

Grant’s commentary is related to his book:
Grant, Adam. Originals: How Non-Conformists Move the World. New York: Viking, 2016.

RFID Tags Can Enable Process Innovations

(p. A11) The numbers don’t look good: Last week the Bureau of Labor Statistics reported that worker productivity dropped 0.5% in the second quarter of 2016–the third quarterly decline in a row. Productivity growth, a key driver of improved living standards, has averaged only 1.3% a year over the past decade, compared with 2.9% from mid-1995 through the end of 2005.
Why the slowdown? One theory is that markets have already wrung the easy efficiencies out of current technology. Federal Reserve Chair Janet Yellen noted in June that some economists “believe that the low-hanging fruit of innovation largely has been picked and that there is simply less scope for further gains.”
Count me in the optimistic camp. Low-cost wireless technologies are only beginning to break down the wall between the physical and digital worlds, and early-adopting companies are already achieving astounding productivity gains.
. . .
Employees can take inventory by waving an RFID reader over a shelf or a rack. A 2009 study by the University of Arkansas found scanning 10,000 items took 53 hours using bar codes, but only two hours with RFID. That efficiency allows Macy’s to inventory items every month rather than once or twice annually. Pam Sweeney, Macy’s senior vice president of logistics systems, tells me that RFID has pushed inventory accuracy in these departments to 95%.
. . .
As the cost of RFID tags falls to only cents apiece, the applications widen. Imagine checking out at the grocery store one day simply by running your cart through a scanner in a few seconds–no bar codes required. How many hours a year would that save consumers and employees both? If you want a million minuscule reasons to be bullish about productivity, look no further than tiny RFID tags.

For the full commentary, see:
MARK ROBERTI. “How Tiny Wireless Tech Makes Workers More Productive; Macy’s and Delta are using cheap RFID tags to blend the physical and digital.” The Wall Street Journal (Weds., Aug. 17, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Aug. 16, 2016.)

87% of Billionaires Inherited Less than Half of Wealth

(p. C6) Billionaires controlled 3.9% of the world’s total household wealth in 2015, slightly down from 4% in 2014, according to Wealth-X, a consulting group that uses public records and research staff to manually track the habits of ultra-high-net-worth individuals, or people valued at more than $30 million.
. . .
For most billionaires, however, it takes more than an inheritance to join the so-called three-comma club, according to the census; 87% of billionaires, up from 81% in 2014, made the majority of their fortunes themselves.
Todd Morgan, senior managing director at Bel Air Investment Advisors LLC in Los Angeles, says several of his billionaire clients are entrepreneurs and they are “very driven” and typically opt to keep working long after they’ve made their fortune.
“It’s not, ‘I’m worth a billion, now I’m going to sit on a beach and relax.’ It’s more of, ‘What can I create or achieve next?'” he says.

For the full story, see:
VERONICA DAGHER. “Ranks of Billionaires Grow, and They’re Getting Richer.” The Wall Street Journal (Weds., Aug. 8, 2016): C6.
(Note: ellipsis added.)
(Note: the online version of the story has the title “The Rich Get Richer as Billionaires Increase in Number.” There are minor differences in wording between the online and print versions. The sentences quoted above, follow the online version.)

Mather and Boylston Risked Much to Fight Smallpox

I enjoyed reading the book reviewed below. From the title, and from reviews, I had the impression that it would mostly be about the smallpox epidemic and the innoculation conflict. I was surprised that of equal, or greater, importance in the book is the role of James Franklin’s newspaper in laying the intellectual groundwork for the American Revolution. I learned from that part of the book too, but some might feel misled from the title about what the book was mainly about. (I think “fever” in the title is intended as a double entendre, referring both to a fever from smallpox, and a fever from the ideas of liberty.)

(p. A11) Inoculation was proposed by Cotton Mather, a figure much diminished in the 30 years since Salem. He had suffered a terrible sequence of tragedies, losing his wife and 10 of his children to accidents and epidemic disease. He had also been marginalized within the religious community by quarrels and scandals. But he had become an assiduous student of science, corresponding with the Royal Society in London and learning from its “Transactions” that inoculation against smallpox had long been practiced in Constantinople. Mr. Coss shows how Mather’s investigations led him to consult a source closer to home. His slave Onesimus, when asked whether he had ever had smallpox, replied “both Yes, and No”: He had been inoculated as a child in Africa, receiving a mild infection and subsequent immunity.

Inoculation was commonplace across swaths of Africa, the Middle East and Asia, Mr. Coss explains, but this inclined the doctors of Enlightenment-era Europe to regard it as a primitive superstition. Such was the view of William Douglass, the only man in Boston with the letters “M.D.” after his name, who was convinced that “infusing such malignant filth” in a healthy subject was lethal folly. The only person Mather could persuade to perform the operation was a surgeon, Zabdiel Boylston, whose frontier upbringing made him sympathetic to native medicine and who was already pockmarked from a near-fatal case of the disease.
“Given that attempting inoculation constituted an almost complete leap of faith for Boylston,” Mr. Coss writes, “he spent surprisingly little time agonizing over it.” He knew personally just how savage the toll could be. On June 26, 1721, just as the epidemic began to rage in earnest, Boyston filled a quill with the fluid from an infected blister and scratched it into the skin of two family slaves and his own young son.
News of the experiment was greeted with public fury and terror that it would spread the contagion. A town-hall meeting was convened, at Dr. Douglass’s instigation, at which inoculation was condemned and banned. Mather’s house was firebombed with an incendiary device to which a note was attached: “I will inoculate you with this.”

For the full review, see:
MIKE JAY. “‘BOOKSHELF; An Ounce of Prevention; When Cotton Mather advocated inoculation during a smallpox outbreak, young Benjamin Franklin helped foment outrage against him.” The Wall Street Journal (Thurs., March 3, 2016): A11.
(Note: the online version of the review has the date March 2, 2016, and has the title “‘BOOKSHELF; When Ben Franklin Was Against Vaccines; When Cotton Mather advocated inoculation during a smallpox outbreak, young Benjamin Franklin helped foment outrage against him.”)

The book under review, is:
Coss, Stephen. The Fever of 1721: The Epidemic That Revolutionized Medicine and American Politics. New York: Simon & Schuster, 2016.

GE Replaces Annual Performance Review with Frequent Feedback

(p. B8) General Electric Co. is getting rid of ratings.
The industrial giant’s salaried employees will no longer be given one of five labels–ranging from “role model” to “unsatisfactory”–as part of their annual performance review. The changes, to be announced to employees Tuesday, breaks with a system GE has used in some form or another for the last 40 years.
Chief Executive Jeffrey Immelt is undertaking a bid to refocus on the company’s core industrial business. To spur these efforts, GE has spent the past few years reimagining the way its 310,000 employees work, placing new emphasis on experimentation and risk-taking. A new performance-management system asks employees and managers to exchange frequent feedback via a mobile app called PD@GE, in person or by phone. The messages are compiled into a performance summary at the end of the year.

For the full story, see:
RACHEL EMMA SILVERMAN. “GE Scraps Staff Ratings to Spur Feedback.” The Wall Street Journal (Weds., July 27, 2016): B8.
(Note: the online version of the story has the date July 26, 2016, and has the title “GE Does Away With Employee Ratings.”)