Category: Entrepreneurship

Private ADP Job Data May Better Capture Startup Job Growth than Government Data

“ADP” in the quote below, stands for Automatic Data Processing Inc. which is a large payroll processing firm that provides job growth data that are an alternative to the official Bureau of Labor Statistics numbers. Recent research by Haltiwanger and others, has indicated that startups may have an under-appreciated large role in job growth.

(p. C1) It has been dubbed “Another Dumb Payroll” report and a “random number generator.” But the ADP employment report doesn’t entirely deserve its bad rap.

. . .
ADP may better capture . . . new business formation than Labor Department estimates. BofA Merrill Lynch economist Michelle Meyer notes that new firms show up in ADP data after two months of existence; the government doesn’t have complete records until much later. Indeed, more than half the 187,000 new jobs ADP reported last month came from businesses with fewer than 50 employees.

For the full story, see:
KELLY EVANS. “AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter.” The Wall Street Journal (Tues., FEBRUARY 4, 2011): C1.
(Note: ellipses added.)
(Note: the online version of the story has the title “AHEAD OF THE TAPE; Respect for ADP: Jobs Picture Is Brighter Than Thought.”)

For some of the work showing the importance of startups in job creation, see:
Haltiwanger, John C., Ron S. Jarmin, and Javier Jarmin. “Who Creates Jobs? Small Vs. Large Vs. Young.” NBER Working Paper # 16300, August 2010.

Google CEO Larry Page Admires Steve Jobs

BrinPageSchmidtGoogle2011-06-05.jpg “Former colleagues describe Larry Page, center, as strong-willed and sometimes impolite. He is said to admire Apple CEO Steve Jobs.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Larry Page’s PageRank algorithm was the basis for Google Inc.’s search engine. As Google’s new chief executive, Mr. Page will face the challenge of leading a company that has grown far beyond that algorithm and must compete with agile Web upstarts such as Facebook Inc. and Groupon Inc.

On Friday, a day after being named to replace outgoing CEO Eric Schmidt in April, Mr. Page gave little hint of how he planned to tackle such challenges. The 38-year-old Google co-founder didn’t immediately address employees in an all-hands note or meeting, said a person familiar with the matter, though the company has a weekly Friday meeting that Mr. Page was expected to attend.
But several of Mr. Page’s former colleagues describe him as having similarities to Apple CEO Steve Jobs, whom Mr. Page has said he admired. Both men are strong willed, sometimes impolite and push engineers hard to execute their ambitious projects.
Some former colleagues said Mr. Page is likely to try to pierce through the sometimes “paralyzing” bureaucracy that product managers and engineers have faced when trying to launch some Google products in recent years.
On Thursday, Messrs. Page and Schmidt said some top-level decision-making had gotten slower and the management change would improve that. Also, the company has said it is trying to allow more projects to operate like start-ups inside of Google in order to speed up innovation.

For the full story, see:
AMIR EFRATI and SCOTT MORRISON. “TECHNOLOGY; Chief Seeks More Agile Google; As CEO, Larry Page Must Pierce Bureaucracy, Compete With Nimble Upstarts.” The Wall Street Journal (Tues., January 22, 2011): B1 & B4.

Steve Jobs as Project Entrepreneur

JobsSteveIpadIntroduction2011-06-05.jpg “Steve Jobs’s presence at the unveiling seemed to reassure investors.” Source of caption and photo: online version of the NYT article quoted and cited below.

Innovative entrepreneurs can have several different motives. I think Steve Jobs is mainly a “project entrepreneur”—his main motive is to envision a project and to accomplish it.

(p. B1) SAN FRANCISCO — Steven P. Jobs, Apple’s chief executive, interrupted his medical leave on Wednesday to introduce the company’s much-anticipated new iPad, a thinner, faster and lighter version of its popular tablet computer that will sell at the same prices as the original models.

Mr. Jobs alluded to his leave but neither commented on his health nor said whether he planned to return to the company in the near future.
“We’ve been working on this product for a while and I just didn’t want to miss today,” he said.

For the full story, see:
MIGUEL HELFT. “Jobs Returns to Introduce a New iPad.” The New York Times (Thurs., March 3, 2011): B1 & B6.
(Note: the online version of the commentary is dated March 2, 2011 and has the title “Jobs Returns to Introduce a New iPad.”)

At NeXT Steve Jobs Learned to Delegate, Retain Talent, and Attend to the Price

JobsSteve2011-06-05.jpg

“Steve Jobs, after returning to Apple in 1999. Would Apple be what it is today had he never left?” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 5) Suppose Mr. Jobs had not left in 1985. Suppose he had convinced the Apple board to oust his nemesis, John Sculley, then chief executive and president. Under Mr. Jobs’s uninterrupted direction, would Apple have arrived at the pinnacle it has reached today, but 12 years earlier?

It’s hard to see how anything like that would have transpired. The Steve Jobs who returned to Apple was a much more capable leader — precisely because he had been badly banged up. He had spent 12 tumultuous, painful years failing to find a way to make the new company profitable.
“I am convinced that he would not have been as successful after his return at Apple if he hadn’t gone through his wilderness experience at Next,” said Tim Bajarin, president of Creative Strategies, a technology consulting company.
. . .
Mr. Jobs’s lieutenants tried to warn him away from certain disaster, but he was not receptive. In 1992-93, seven of nine Next vice presidents were shown the door or left on their own.
In this period, Mr. Jobs did not do much delegating. Almost every aspect of the machine — including the finish on interior screws — was his domain. The interior furnishings of Next’s offices, a stunning design showplace, were Mr. Jobs’s concern, too. While the company’s strategy begged to be re-examined, Mr. Jobs attended to other matters. I spoke with many current and former Next employees for my 1993 book, “Steve Jobs and the NeXT Big Thing.” According to one of them, while a delegation of visiting Businessland executives waited on the sidewalk, Mr. Jobs spent 20 minutes directing the landscaping crew on the exact placement of the sprinkler heads.
Next’s computer hardware and software were filled with innovations that drew a small, but devoted, following. Mr. Jobs had created the first easy-to-use Unix machine, but the mainstream marketplace shrugged. He had already helped bring to market an easy-to-use machine, the Mac, so the Next couldn’t differentiate itself enough — and certainly not at the price the company charged.
. . .
And he had always been able to attract great talent. What he hadn’t learned before returning to Apple, however, was the necessity of retaining it. He has now done so. One of the unremarked aspects of Apple’s recent story is the stability of the executive team — no curb filled with dumped managers.
Kevin Compton, who was a senior executive at Businessland during the Next years, described Mr. Jobs after returning to Apple: “He’s the same Steve in his passion for excellence, but a new Steve in his understanding of how to empower a large company to realize his vision.” Mr. Jobs had learned from Next not to try to do everything himself, Mr. Compton said.

For the full commentary, see:
RANDALL STROSS. “DIGITAL DOMAIN; What Steve Jobs Learned in the Wilderness.” The New York Times, SundayBusiness Section (Sun., October 3, 2010): 5.
(Note: ellipses added.)
(Note: the online version of the commentary is dated October 2, 2010.)

“The Century’s Most Daring and Iconic Building Was Entrusted to a Gardener”

(p. 10) . . . the risks were considerable and keenly felt, yet after only a few days of fretful hesitation the commissioners approved Paxton’s plan. Nothing–really, absolutely nothing–says more about Victorian Britain and its capacity for brilliance than that the century’s most daring and iconic building was entrusted to a gardener. Paxton’s Crystal Palace required no bricks at all–indeed, no mortar, no cement, no foundations. It was just bolted together and sat on the ground like a tent. This was not merely an (p. 11) ingenious solution to a monumental challenge but also a radical departure from anything that had ever been tried before.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.
(Note: ellipsis added.)

Moral: In a Crisis You Need Resilience and the Ability to Improvise More than You Need Detailed Advance Plans

(p. D1) When the Three Mile Island nuclear generating station along the Susquehanna River seemed on the verge of a full meltdown in March 1979, Gov. Richard L. Thornburgh of Pennsylvania asked a trusted aide to make sure that the evacuation plans for the surrounding counties would work.

The aide came back ashen faced. Dauphin County, on the eastern shore of the river, planned to send its populace west to safety over the Harvey Taylor Bridge.

“All well and good,” Mr. Thornburgh said in a recent speech, “except for the fact that Cumberland County on the west shore of the river had adopted an evacuation plan that would funnel all exiting traffic eastbound over — you guessed it — the same Harvey Taylor Bridge.”

. . .
(p. D4) Brian Wolshon, the director of the Gulf Coast Center for Evacuation and Transportation Resiliency, said that he was analyzing one county’s emergency plans that seemed to have every detail covered.

“It was a wonderful report, with plans to move senior citizens out of care facilities and even out of hospitals, and they had signed contracts with bus and ambulance providers,” said Dr. Wolshon, who is also a professor at Louisiana State University. “But that same low-cost provider had the same contract with the county next door, and they had the capacity to evacuate only one of these counties.”

For the full story, see:
GARDINER HARRIS. “Dangers of Leaving No Resident Behind.” The New York Times (Tues., March 22, 2011): D1 & D4.
(Note: the online version of the article is dated March 21, 2011.)

Entrepreneur Defends His Store with Gun

SpinelliAnthonyDefendedStore2011-06-05.jpg

“Anthony Spinelli, outside his store in the Bronx on Thursday, was called brave for shooting a man suspected of trying to rob his shop.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A23) On Arthur Avenue, a group of men piled out of Pasquale’s Rigoletto restaurant onto the sidewalk to pay their respects to a sudden local hero.

“Anthony, we love you,” they shouted across the street.
They summed up the local sentiment about a man, Anthony Spinelli, celebrated for protecting his livelihood. On Wednesday, Mr. Spinelli pulled one of two licensed guns in the store, and shot one of the three people suspected of trying to rob his Arthur Avenue jewelry store at gunpoint.
The Bronx neighborhood seemed energized by the event, which people here saw as a testament to the toughness of one of the last Italian neighborhoods in New York City.
“You don’t come in and try to take a man’s livelihood,” said Nick Lousido, who called himself a neighborhood regular. “His family’s store has 50 years on this block, they’re going to come in and rob him?”
On Thursday, Mr. Spinelli, 49, had returned to his shop and sized up the broken front windows and the mess inside. He said that a man and woman had entered his store, and the man had held a gun to his head while the woman had gone through jewelry drawers and stuffed jewelry into a bag. He said he had feared for his life, and that he was still shaken.
. . .
Next door to Mr. Spinelli’s shop is M & M Painter Supplies, which has photographs of Pope John Paul II and Mother Teresa next to a paint color chart on the wall.
“He’s a very brave man,” said the store owner, Ernie Verino. “He had the gun, and it takes guts to use it.”

For the full story, see:
COREY KILGANNON. “Merchant Shooting to Defend His Store Is Celebrated as Hero of Arthur Avenue.” The New York Times (Fri., February 18, 2011): A23.
(Note: ellipsis added.)
(Note: the online version of the article is dated February 17, 2011 and has the title “After Shooting, Merchant Is Hero of Arthur Avenue.”)

“Big Money Is Dumb Money”

“Other People’s Money” is a short story that appears in Cory Doctorow’s short story collection With a Little Help.

(p. C7) Venture capitalists? Forget them, says “Other People’s Money.” Big money is dumb money. Much easier, says one old-lady manufacturer to a smart young gigafund manager, for her to make and market her own product, and keep the money (just like Mr. Doctorow), than for him to find and fund a hundred products and take a rake-off. He only deals in six-figure multiples, and that’s no good: not nimble enough. And he has to get a return on all those billions, poor outdated soul.

For the full review, see:
TOM SHIPPEY. “The Author as Agent of Change; Cory Doctorow has big ideas about the future of technology–and how it can empower writers.” The New York Times (Sat., MAY 21, 2011): C7.

The book of short stories is:
Doctorow, Cory. With a Little Help.

To Burst Higher Ed Bubble, Peter Thiel Pays Students to Drop Out

ThielPeterPayPal2011-06-02.jpg

“Peter Thiel.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B4) Parents, do you hope that your children have the chance to become like Peter Thiel, the PayPal co-founder, Facebook investor and hedge fund manager? If so, Mr. Thiel suggests that you encourage them to drop out of school. In fact, he will help by paying them to do it.

On Wednesday, the Thiel Foundation, funded by Mr. Thiel, announced the first group of Thiel Fellows, 24 people under 20 who have agreed to drop out of school in exchange for a $100,000 grant and mentorship to start a tech company.
More than 400 people applied. The winners include Laura Deming, 17, who is developing antiaging therapies; Faheem Zaman, 18, who is building mobile payment systems for developing countries; and John Burnham, 18, who is working on extracting minerals from asteroids and comets.
. . .
Mr. Thiel, a contrarian investor and libertarian known for his controversial views, knows that suggesting that education is not always worth it strikes at the core of many Americans’ beliefs. But that is exactly why is he doing it.
“We’re not saying that everybody should drop out of college,” he said. The fellows agree to stop getting a formal education for two years but can always go back to school. The problem, he said, is that “in our society the default assumption is that everybody has to go to college.”
“I believe you have a bubble whenever you have something that’s overvalued and intensely believed,” Mr. Thiel said. “In education, you have this clear price escalation without incredible improvement in the product. At the same time you have this incredible intensity of belief that this is what people have to do. In that way it seems very similar in some ways to the housing bubble and the tech bubble.”
. . .
“What I really liked about this program is it’s giving a lot of people who maybe wouldn’t get into Harvard an opportunity to participate in something just as selective and just as valuable and just as educational,” Mr. Burnham said. “It’s giving them that opportunity even though their personalities and characters don’t quite fit the academic mold.”
His father, Stephen Burnham, said the decision for his son to skip college, at least for now, was uncontroversial.
“There’s a lot of other stuff that you get in college and I would say that would be useful for John,” he said. “But I would say in four years there’s a big opportunity cost there if you could be out starting your career doing something that could change the world.”

For the full story, see:
CLAIRE CAIN MILLER. “Changing the World by Dropping Out.” The New York Times (Mon., May 30, 2011): B4.
(Note: ellipses added.)
(Note: the online version of the story is dated May 25 (sic), 2011, has the title “Want Success in Silicon Valley? Drop Out of School,” and is longer than the published version. Most of what is quoted above appears in both the published and online versions, but some (most notably the paragraph on the education bubble and the quotes from Stephen Burnham) appear only in the online verison.)

“Surprisingly Weak Correlation” Between Measures of Maximum Performance and Typical Performance

(p. C12) In the early 1980s, Paul Sackett, a psychologist at the University of Minnesota, began measuring the speed of cashiers at supermarkets. Workers were told to scan a few dozen items as quickly as possible while a scientist timed them. Not surprisingly, some cashiers were much faster than others.

But Mr. Sackett realized that this assessment, which lasted just a few minutes, wasn’t the only way to measure cashier performance. Electronic scanners, then new in supermarkets, could automatically record the pace of cashiers for long stretches of time. After analyzing this data, it once again became clear that levels of productivity varied greatly.
Mr. Sackett had assumed that these separate measurements would generate similar rankings. Those cashiers who were fastest in the short test should also be the fastest over the long term. But instead he found a surprisingly weak correlation between the rankings, leading him to distinguish between two types of personal assessment. One measures “maximum performance”: People who know they’re being tested are highly motivated and focused, just like those cashiers scanning a few items while being timed.
The other type measures “typical performance”–measured over long periods of time, as when Mr. Sackett recorded the speed of cashiers who didn’t know they were being watched. In this sort of test, character traits that have nothing to do with maximum performance begin to influence the outcome. Cashiers with speedy hands won’t have fast overall times if they take lots of breaks.
. . .
The problem, of course, is that students don’t reveal their levels of grit while taking a brief test. Grit can only be assessed by tracking typical performance for an extended period. Do people persevere, even in the face of difficulty? How do they act when no one else is watching? Such traits often matter more than raw talent. We hear about them in letters of recommendation, but hard numbers take priority.
The larger lesson is that we’ve built our society around tests of performance that fail to predict what really matters: what happens once the test is over.

For the full commentary, see:
JONAH LEHRER. “Measurements That Mislead; From the SAT to the NFL, the problem with short-term tests.” The Wall Street Journal (Sat., APRIL 2, 2011): C12.
(Note: ellipsis added.)

The classic article correlating maximum and typical performance, is:
Sackett, Paul R., Sheldon Zedeck, and Larry Fogli. “Relationships between Measures of Typical and Maximum Performance.” Journal of Applied Psychology 73 (1988): 482-86.