Entrepreneurship – Page 130 – artdiamondblog.com

Edison Helped Us See the Light

Source of book image: http://www.strategy-business.com/article/07408i?pg=all

Several biographies of Thomas Edison have appeared in recent decades. One of the strengths of Randall Stross’ The Wizard of Menlo Park is that it emphasizes how Edison’s story is relevant to current issues in the economics of invention, entrepreneurship and technology.
In the next several weeks, I will quote some of the more thought-provoking stories and observations in the Stross book.

The Stross book is:
Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.

Disabled Workers Are More Likely to Be Free Agent Entrepreneurs

“Kevin Hartford, right, and a colleague at his factory. He started his business after employers failed to hire him.” Source of caption and photo: online version of the NYT article quoted and cited below.

HR departments have incentives to avoid hiring risky employees. But a determined high-risk employee can hire themselves by becoming a free agent entrepreneur. If we want to truly help the disabled, we should remove obstacles to entrepreneurship, such as burdensome regulations and high taxation.

(p. B4) Mr. Hartford, the father of two sons, thrived as a business consultant in his 20s and 30s. He was used to flying first class, staying at swank hotels and advising CEOs. Then the consulting firm unraveled in the mid-1990s. When he began looking for a new job, a stuttering problem–something he had always considered manageable–put off potential employers.

“I applied for job after job after job,” says Mr. Hartford, now 58. “I was one of two finalists; I was one of three finalists. But I never got the job.”
In the end, Mr. Hartford concluded that his only shot at a satisfying job was to create a company. He is now president and co-owner of Alle-Kiski Industries, which makes parts, such as exhaust pipes for train locomotives and prototype truck wheels, for larger manufacturers, including Alcoa Inc. and General Electric Co.
Like many before him, Mr. Hartford discovered that one option for people who don’t fit into large organizations is to start a small one. That is particularly true for people with disabilities. About 11% of disabled workers are self-employed, compared with 6.5% of those with no disabilities, according to Labor Department data.
. . .
The business has grown to 38 employees from a dozen when Messrs. Hartford and Newell started in 2005. They own more than $2 million of equipment used to drill, groove and otherwise shape metal, arrayed in a 27,000-square-foot factory with an American flag hanging from one of the beams. Last year’s sales of $6 million were the highest yet, Mr. Hartford says, and the company is building a 4,000-square-foot addition to house more equipment.

For the full story, see:
JAMES R. HAGERTY. “Entrepreneur Let No Impediment Stop Him; Out-of-Work Consultant Started His Own Company After Discovering His Stutter Put Off Employers.” The Wall Street Journal (Thurs., Jan. 16, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date Jan. 15, 2014.)

Carnegie Wanted Institution to Fund “Exceptional” Scientists “Whenever and Where Found”

So was Carnegie suggesting that we should be open to the exceptional appearing in unexpected locations?

(p. 614) In his deed of trust, Carnegie declared that his research institution in Washington should “discover the exceptional man in every department of study whenever and where found… and enable him to make the work for which he seems specially designed his life work.” That notion would remain the driving philosophy behind the institution over the next century. Some of those “exceptional” scientists, supported by Carnegie money were the astronomer Edwin Hubble, who “revolutionized astronomy with his discovery that the universe is expanding,” and Barbara McClintock, whose work on patterns of genetic inheritance in corn won her a Nobel Prize.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Nasaw Claims Carnegie Believed in Importance of Basic Scientific Research

But notice that the two main examples of what Carnegie himself chose to fund (the Wilson Observatory and the yacht to collect geophysical data), were empirically oriented, not theoretically oriented.

(p. 480) Carnegie was, as Harvard President James Bryant Conant would comment in 1935 on the centenary of his birth, “more than a generation ahead of most business men of this country [in understanding] the importance of science to industry.” He recognized far better than his peers how vital basic scientific research was to the applied research that industry fed off. George Ellery Hale, an astronomer and astrophysicist, later to be the chief architect of the National Research Council, was astounded when he learned of Carnegie’s commitment to pure research. “The provision of a large endowment solely for scientific research seemed almost too good to be true…. Knowing as I did the difficulties of obtaining money for this purpose and (p. 481) devoted as I was to research rather than teaching, I could appreciate some of the possibilities of such an endowment.” Hale applied for funds to build an observatory on Mount Wilson in California, and got what he asked for. It would take until 1909 to build and install a 60-inch reflecting telescope in the observatory; in 1917, a second 100-inch telescope, the largest in the world, was added.

The Mount Wilson Observatory– and the work of its astronomers and astrophysicists– was only one of the projects funded in the early years of the new institution. Another, of which Carnegie was equally proud, was the outfitting of the Carnegie, an oceangoing yacht with auxiliary engine, built of wood and bronze so that it could collect geophysical data without the errors inflicted on compass readings by iron and steel. The ship was launched in 1909; by 1911, Carnegie could claim that the scientists on board had already been able to correct several significant errors on navigational maps.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis, and italics, in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Many Important Medical Articles Cannot Be Replicated

The standard scientific method is more fallible, and less logically rigorous, than is generally admitted. One implication is to strengthen the case for allowing patients considerable freedom in choosing their own treatments.

(p. D1) It has been jarring to learn in recent years that a reproducible result may actually be the rarest of birds. Replication, the ability of another lab to reproduce a finding, is the gold standard of science, reassurance that you have discovered something true. But that is getting harder all the time. With the most accessible truths already discovered, what remains are often subtle effects, some so delicate that they can be conjured up only under ideal circumstances, using highly specialized techniques.
Fears that this is resulting in some questionable findings began to emerge in 2005, when Dr. John P. A. Ioannidis, a kind of meta-scientist who researches research, wrote a paper pointedly titled “Why Most Published Research Findings Are False.”
. . .
. . . he published another blockbuster, examining more than a decade’s worth of highly regarded papers — the effect of a daily aspirin on cardiac disease, for example, or the risks of hormone replacement therapy for older women. He found that a large proportion of the conclusions were undermined or contradicted by later studies.
His work was just the beginning. Concern about the problem has reached the point that the journal Nature has assembled an archive, filled with reports and analyses, called Challenges in Irreproducible Research.
Among them is a paper in which C. Glenn Begley, who is chief scientific officer at TetraLogic Pharmaceuticals, described an experience he had while at Amgen, another drug company. He and his colleagues could not replicate 47 of 53 landmark papers about cancer. Some of the results could not be reproduced even with the help of the original scientists working in their own labs.

For the full commentary, see:
GEORGE JOHNSON. “Raw Data; New Truths That Only One Can See.” The New York Times (Tues., JAN. 21, 2014): D1 & D6.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JAN. 20, 2014.)

The first Ioannidis article mentioned above is:
Ioannidis, John P. A. “Why Most Published Research Findings Are False.” PLoS Medicine 2, no. 8 (August 2005): 696-701.

The second Ioannidis article mentioned above is:
Ioannidis, John P. A. “Contradicted and Initially Stronger Effects in Highly Cited Clinical Research.” JAMA 294, no. 2 (July 13, 2005): 218-28.

The Begley article mentioned above is:
Begley, C. Glenn, and Lee M. Ellis. “Drug Development: Raise Standards for Preclinical Cancer Research.” Nature 483, no. 7391 (March 29, 2012): 531-33.

Carnegie Was Depressed by Initial Inactivity of Retirement

(p. 592) IT IS DIFFICULT to picture Andrew Carnegie depressed, but there is no other way to describe his state of being in the months following his retirement. Carnegie confessed as much in an early draft of his Autobiography, but the editor John Van Dyke, chosen by Mrs. Carnegie after her husband’s death, perhaps thinking his melancholic ruminations would displease her, edited them out of the manuscript.
. . .
(p. 593) The vast difference between life in retirement and as chief stockholder of the Carnegie Company was brought home to him as he prepared to leave for Britain in the early spring of 1901. For close to thirty years, he had scurried about for weeks prior to sailing tying up loose ends. There were documents to be signed, instructions to be left with his partners in Pittsburgh and his private secretary in New York. Retirement brought an end to this round of activities and a strange, inescapable melancholy.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis added, italics in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Small Business Will Fire Workers When Minimum Wage Is Raised

(p. B4) . . . , Charlene Conway is watching her numbers. For 22 years, Ms. Conway and her husband have run Carousel Family Fun Centers in Fairhaven and Whitman, Mass. The business has annual revenue of less than $500,000 and depends exclusively on part-time minimum-wage earners, mostly teenagers, to handle tasks like running the snack bar and maintaining the games.
This year, Massachusetts is considering raising its minimum to $9 an hour, from $8. Should that happen, Ms. Conway said, she will probably need to reduce her staff of 20. Her employees currently make an average of $9 an hour, with managers earning from $10 to $15. Like Ms. Riley, Ms. Conway said that an increase in the minimum would force her to raise pay across the board.
And she, too, is reluctant to raise prices again. In 2011 and 2012, she increased her admission fees by a dollar — they generally run from $5 to $10 now, based on age and time of day. Another increase, she said, would just make things worse: “We will price ourselves out of business.”
In the past, when Massachusetts increased the state’s minimum, Ms. Conway responded by increasing the minimum age of her workers to 16 from 14. “I’m not going to pay a 14-year-old $9 an hour with no experience, maturity or work ethic,” she said. More recently, she has been hiring 18-year-olds with college experience. “What this does,” she said, “is eliminate the opportunity for young people to get started in the work force.”
Should minimum wage reach $10 an hour, Ms. Conway said she would reduce her staff to 10 employees and double up on work tasks. “This is a slippery slope that could absolutely cause me to shut down and force me into bankruptcy,” she said.

For the full commentary, see:
STACY PERMAN. “SMALL BUSINESS; As Minimum Wages Rise, Businesses Grapple With Consequences.” The New York Times (Thurs., Feb. 6, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date FEB. 5, 2014.)

Khan’s Cousins Liked Him Better on YouTube than in Person

“Salman Khan at the offices of Khan Academy, which reaches more than 10 million users. Bill Gates invested in the school.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D5) In 2008, Salman Khan, then a young hedge-fund analyst with a master’s in computer science from M.I.T., started the Khan Academy, offering free online courses mainly in the STEM subjects — science, technology, engineering and mathematics.

Today the free electronic schoolhouse reaches more than 10 million users around the world, with more than 5,000 courses, and the approach has been widely admired and copied. I spoke with Mr. Khan, 37, for more than two hours, in person and by telephone. What follows is a condensed and edited version of our conversations.
. . .
Did you have background as a math educator?
No, though I’ve had a passion for math my whole life. It got me to M.I.T. and enabled me to get multiple degrees in math and engineering. Long story shortened: Nadia got through what she thought she couldn’t. Soon word got around the family that “free tutoring” was going on, and I found myself working on the phone with about 15 cousins.
To make it manageable, I hacked together a website where my cousins could go to practice problems and I could suggest things for them to work on. When I’d tutor them over the telephone, I’d use Yahoo Doodle, a program that was part of Yahoo Messenger, so they could visualize the calculations on their computers while we talked.
The Internet videos started two years later when a friend asked, “How are you scaling your lessons?” I said, “I’m not.” He said, “Why don’t you make some videos of the tutorials and post them on YouTube?” I said, “That’s a horrible idea. YouTube is for cats playing piano.”
Still, I gave it try. Soon my cousins said they liked me more on YouTube than in person. They were really saying that they found my explanations more valuable when they could have them on demand and where no one would judge them. And soon many people who were not my cousins were watching. By 2008, I was reaching tens of thousands every month.
Youtube is a search engine where producers can upload short videos at no cost. Would the Khan Academy have been possible without this technology?
No. Before YouTube, the cost of hosting streaming videos was incredibly expensive. I wouldn’t have been able to afford the server space for that much video — or traffic. That said, I was probably the 500th person to show up on YouTube with educational videos. Our success probably had to do with the technology being ready and the fact that my content resonated with users.

For the full interview, see:
CLAUDIA DREIFUS, interviewer. “A Conversation With Salman Khan; It All Started With a 12-Year-Old Cousin.” The New York Times (Tues., JAN. 28, 2014): D5.
(Note: ellipsis added; bold in original; the first two paragraphs, and the bold questions, are Claudia Dreifus; the other paragraphs are Salman Khan.)
(Note: the online version of the interview has the date JAN. 27, 2014.)

Dinosaurs Show that Size Does Not Assure Success, or Even Survival

(p. 504) If the Museum of Natural History was going to be, as Carnegie intended, a world-class institution, it needed more than mummies, ana-(p. 505)tomical models, and Appalachian minerals. It had to have a dinosaur or two. The dinosaur was more than simply a crowd-pleaser. For Carnegie and other devotees of evolutionary science, it was an apt symbol of the unpredictability of a universe in which species and races fell into extinction when they failed to adapt to new environments. For men of slight stature, such as Carnegie, there must have been something quite enthralling about this most vivid demonstration that size and power did not guarantee survival.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Growth Slow Due to Policies Impeding Start-Ups

(p. A11) The most recent period of rapid productivity growth in the U.S.–and rapid economic growth–was in the 1980s and ’90s and reflected the remarkable success of new businesses in information and communications technologies, including Microsoft, Apple, Amazon, Intel and Google. These new companies not only created millions of jobs but transformed modern society, changing how much of the world produces, distributes and markets goods and services.
Rising living standards in the future will depend on the continued success of these businesses but also on the next generation of success stories. Getting the U.S. economy back on track will require a much higher annual rate of new business startups. Sadly, the annual rate of new business creation is about 28% lower today than it was in the 1980s, according to our analysis of the U.S. Census Bureau’s Business Dynamics Statistics annual data series.
Why is the startup rate so low? The answer lies in Washington and the policies implemented in the wake of the 2008 financial crisis that were, ironically, intended to grow and stabilize the economy. . . .
This explosion in federal regulation, intervention and subsidies has retarded productivity growth by protecting incumbents at the expense of more efficient producers, including startups. The number of pages in the Federal Code of Regulations peaked at nearly 175,000 in 2012, an increase of more than 7% in President Obama’s first three years.

For the full commentary, see:
EDWARD C. PRESCOTT and LEE E. OHANIAN. “U.S. Productivity Growth Has Taken a Dive; It has averaged about 1.1% since 2011, less than half the historical rate since 1948. Here’s how to increase it.” The Wall Street Journal (Tues., Feb. 4, 2014): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Feb. 3, 2014.)

The Young, with Managerial Experience, Are Most Likely to Become Entrepreneurs

(p. A13) In a current study analyzing the most recent Global Entrepreneurship Monitor (GEM) survey, my colleagues James Liang, Jackie Wang and I found that there is a strong correlation between youth and entrepreneurship. The GEM survey is an annual assessment of the “entrepreneurial activity, aspirations and attitudes” of thousands of individuals across 65 countries.
In our study of GEM data, which will be issued early next year, we found that young societies tend to generate more new businesses than older societies. Young people are more energetic and have many innovative ideas. But starting a successful business requires more than ideas. Business acumen is essential to the entrepreneur. Previous positions of responsibility in companies provide the skills needed to successfully start businesses, and young workers often do not hold those positions in aging societies, where managerial slots are clogged with older workers.
In earlier work (published in the Journal of Labor Economics, 2005), I found that Stanford MBAs who became entrepreneurs typically worked for others for five to 10 years before starting their own businesses. The GEM data reveal that in the U.S. the entrepreneurship rate peaks for individuals in their late 20s and stays high throughout the 30s. Those in their early 20s have new business ownership rates that are only two-thirds of peak rates. Those in their 50s start businesses at about half the rate of 30-year-olds.
Silicon Valley provides a case in point. Especially during the dot-com era, the Valley was filled with young people who had senior positions in startups. Some of the firms succeeded, but even those that failed provided their managers with valuable business lessons.
My co-author on the GEM study, James Liang, is an example. After spending his early years as a manager at the young and rapidly growing Oracle, he moved back to China to start Ctrip, one of the country’s largest Internet travel sites.

For the full commentary, see:
EDWARD P. LAZEAR. “The Young, the Restless and Economic Growth; Countries with a younger population have far higher rates of entrepreneurship.” The Wall Street Journal (Mon., Dec. 23, 2013): A13.
(Note: the online version of the commentary has the date Dec. 22, 2013.)

The Lazear paper mentioned above, is:
Lazear, Edward P. “Entrepreneurship.” Journal of Labor Economics 23, no. 4 (October 2005): 649-80.