Entrepreneurship – Page 169 – artdiamondblog.com

Jeff Bezos’ Goal: “Earth’s Biggest Selection”

Jeff Bezos. Source of photo: online version of the NYT article quoted and cited below.

(p. 18) You’re a longtime science buff who studied electrical engineering and computer science at Princeton. Why did you want to be a bookseller in the first place?
You have to go back in time to 1994, and there’s something very unusual about the book category. There are more items in the book category than there are items in any other product category. One of the things it was obvious you could do with an online store is have a much more complete selection.

Initially, Amazon sold books exclusively, but it has since expanded into a retail omnivore that sells basketballs and vacuum cleaners and hamster food and everything under the sun. What is your goal, exactly?
We want to have earth’s biggest selection. Earth’s biggest river, earth’s biggest selection.

For the full interview, see:
DEBORAH SOLOMON. “QUESTIONS FOR Jeffrey P. Bezos; Book Learning.” The New York Times, Magazine Section (Sun., December 6, 2009): 18.

(Note: bold in original, to indicate questions by Deborah Solomon.)
(Note: the online version of the interview is dated December 2, 2009.)

Both New York City and Cars Assert Individuality and Enterprise

(p. C5) If the culture and character of some cities are closely associated with modes of transportation (gondolas in Venice, bicycles in Amsterdam), the automobile may be the defining force in New York, not because it decreed the layout of streets or because it is essential (as in Los Angeles), but because its assertion of individuality and enterprise and its readiness to expand beyond assigned boundaries had so much to do with the city’s spirit.

For the full review, see:
EDWARD ROTHSTEIN. “Last Chance; Exhibition Review; The Anatomy of a Citywide Traffic Jam.” The New York Times (Tues., July 20, 2010): C1 & C5.
(Note: the online version of the article is dated July 19, 2010.)

Inventors Should Work Alone, Even If They Have to Moonlight

(p. 291) If you’re that rare engineer who’s an inventor and also an artist, I’m going to give you some advice that might be hard to take. That advice is: Work alone.

When you’re working for a large, structured company, there’s much less leeway to turn clever ideas into revolutionary new products or product features by yourself. Money is, unfortunately, a god in our society, and those who finance your efforts are businesspeople with lots of experience at organizing contracts that define who owns what and what you can do on your own.
But you probably have little business experience, know-how, or acumen, and it’ll be hard to protect your work or deal with all that corporate nonsense. I mean, those who provide the funding and tools and environment are often perceived as taking the credit for inventions. If you’re a young inventor who wants to change the world, a corporate environment is the wrong place for you.
(p. 292) You’re going to be best able to design revolutionary products and features if you’re working on your own. Not on a committee. Not on a team. That means you’re probably going to have to do what I did. Do your projects as moonlighting, with limited money and limited resources. But man, it’ll be worth it in the end. It’ll be worth it if this is really, truly what you want to do–invent things. If you want to invent things that can change the world, and not just work at a corporation working on other people’s inventions, you’re going to have to work on your own projects.
When you’re working as your own boss, making decisions about what you’re going to build and how you’re going to go about it, making trade-offs as to features and qualities, it becomes a part of you. Like a child you love and want to support. You have huge motivation to create the best possible inventions–and you care about them with a passion you could never feel about an invention someone else ordered you to come up with.
And if you don’t enjoy working on stuff for yourself–with your own money and your own resources, after work if you have to– then you definitely shouldn’t be doing it!

. . .

It’s so easy to doubt yourself, and it’s especially easy to doubt yourself when what you’re working on is at odds with everyone else in the world who thinks they know the right way to do things. Sometimes you can’t prove whether you’re right or wrong. Only time can tell that. But if you believe in your own power to objectively reason, that’s a key to happiness. And a key to confidence. Another key I found to happiness was to realize that I didn’t have to disagree with someone and let it get all intense. If you believe in your own power to reason, you can just relax. You don’t have to feel the pressure to set out and convince anyone. So don’t sweat it! You have to trust your own designs, your own intuition, and your own understanding of what your invention needs to be.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.
(Note: Italics and centered ellipsis in original.)

“Vast Majority of People” Will Reject a New Idea at the Start

(p. 288) . . . , my advice has to do with what you do when you find yours elf sitting there with ideas in your head and a desire to build them. But you’re young. You have no money. All you have is the stuff in your brain. And you think it’s good stuff, those ideas you have in your brain. Those ideas are what drive you, they’re all you think about.

(p. 289) But there’s a big difference between just thinking about inventing something and doing it. So how do you do it? How do you actually set about changing the world?

. . .

Well, first you need to believe in yourself. Don’t waver. There will be people–and I’m talking about the vast majority of people, practically everybody you’ll ever meet–who just think in black-and-white terms. Most people see things the way the media sees them or the way their friends see them, and they think if they’re right, everyone else is wrong. So a new idea–a revolutionary new product or product feature–won’t be understandable to most people because they see things so black and white. Maybe they don’t get it because they can’t imagine it, or maybe they don’t get it because someone else has already told them what’s useful or good, and what they heard doesn’t include your idea.
Don’t let these people bring you down. Remember that they’re just taking the point of view that matches whatever the popular cultural view of the moment is. They only know what they’re exposed to. It’s a type of prejudice, actually, a type of prejudice that is absolutely against the spirit of invention.

Inventor Wozniak Tries Entrepreneurship

(p. 247) In a way, that happened to me. The US Festival was exactly the opposite of the Apple experience for me. It didn’t come easily. It involved having plans to get certain groups, and having those groups cancel. It involved having plans for sites, and having those sites cancel. It involved having plans for equipment, and having the equipment not come through. It was a costly battle to do all the right things, but we did them anyway.

I’d written a check. I had confidence in my people. I’d already taken a stand, and when you take a stand, you don’t back away from it. Sometimes this has been a big problem in my life–especially marriage-wise–but if I’m in, I’m in. I don’t back out. And by the time I could see this was a disaster, I had this guy, Pete Ellis, and all the people he’d hired, counting on me. I couldn’t just (p. 248) all of a sudden pull the rug out. And we’d already planned the date: the first US Festival would be the Labor Day weekend of 1982, right after my first year back at school.
. . .
(p. 255) I loved that first US Festival concert, and I knew I’d made so many people happy doing it. We thought from press reports that enough people–nearly half a million–had shown up. So we thought that would make us money. But we lost money, nearly $12 million, because it turned out we didn’t sell as many tickets as there were people.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

“A Rare Phenomenon in Europe — A Genuine Business Celebrity”

“Nicolas Hayek was asked to help shut the troubled Swiss watch industry, but instead he revived it by introducing the Swatch.” Source of caption and photo: online version of the NYT article quoted and cited below.

Richard Langlois has used the story of Nicolas Hayek to illustrate why Schumpeter was wrong when he worried that the entrepreneur might become obsolete.

(p. A23) Nicolas Hayek, a Lebanese-born business consultant who is widely credited with having saved the Swiss watch industry with the introduction of the Swatch, the inexpensive, plastic — and, as it transpired, highly collectible — wristwatch that made its debut in 1983, died Monday in Biel, Switzerland. He was 82.

Mr. Hayek, a founder and the chairman of the Swatch Group, died of heart failure while working at the company’s headquarters, according to an announcement on the company Web site.
The formation of the Swatch Group, which in addition to Swatch today comprises high-end watch brands like Breguet, Omega, Longines, Tissot, Calvin Klein and Mido, made Mr. Hayek one of Switzerland’s wealthiest men. The exquisite irony is that the company came about after Mr. Hayek was brought in to help shut the foundering Swiss watch industry altogether.
A flamboyant figure with a roguish sense of humor, Mr. Hayek was “a rare phenomenon in Europe — a genuine business celebrity,” as The Harvard Business Review described him in 1993.

For the full story, see:
MARGALIT FOX. “Nicolas Hayek Dies at 82; His Swatch Saved an Industry.” The New York Times (Tues., June 29, 2010): A23.
(Note: the online version of the article is dated June 28, 2010.)

Nicolas Hayek’s entrepreneurship is nicely summarized and analyzed on pp. 59-65 of:
Langlois, Richard N. The Dynamics of Industrial Capitalism: Schumpeter, Chandler and the New Economy. London: Routledge, 2006.

Commodore, Atari, and Some Venture Capitalists, Refused to Fund Jobs and Wozniak

(p. 196) After Commodore turned us down, we went over to Al Alcorn’s house. He was one of the founders of Atari with Nolan Bushnell, and he was the one who’d hired Steve to do video games there two years before.

Now, I knew Al knew me. He knew I had designed Breakout, the one-player version of Pong. I remember that when we went to his house I was so impressed because he had one of the earliest color projection TVs. Man, in 1976, he would have been among the first people to have one. That was cool.
But he told us later that Atari was too busy with the video game market to do a computer project.
A few days after that, venture capitalists Steve had contacted started to come by. One of them was Don Valentine at Sequoia. He kind of pooh-poohed the way we talked about it.
He said, “What’s the market?”
“About a million,” I told him.
“How do you know?”
I told him the ham radio market had one million users, and this could be at least that big.
Well, he turned us down, but he did get us in touch with a guy named Mike Markkula. He was only thirty, he told us, but already retired from Intel. He was into gadgets, he told us. Maybe Mike would know what to do with us.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

“Fun” and “Profits” as Motives for Entrepreneurship

(p. 184) After we started selling the boards to Paul Terrell–working day and night to get them to him on time–we had profits like I never imagined. Suddenly our little business was making more than I was making at HP. That wasn’t very much, admittedly. But still, it was a lot. We were building the boxes for $220 and selling them wholesale to Paul Terrell for $500.

And, of course, we didn’t need a ton of money to operate. I had a day job, so I looked at it as, Hey, cool. Extra money for pizza! As for Steve, he was living at home. I was twenty-five and he was only twenty-one at the time, so what expenses could we have, really? Apple didn’t have to make that much to sustain itself and be ongoing. We weren’t paying ourselves salaries or paying rent, after all. We didn’t have any patents to pay for. Or lawyers. It was a small-time business, and we weren’t worried that much about anything.
My dad, watching this, pointed out that we weren’t actually making money because we weren’t paying ourselves anything. But we didn’t care, we were having too much fun.

But note, only several pages later:

(p. 194) Like I said before, we needed money. Steve knew it and I knew it.

So by that summer of 1976, we started talking to potential money people about Apple, showing them the Apple II working in color in Steve’s garage.

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Apple Was Founded Without Clear Path to Profit

(p. 172) Frankly, I couldn’t see how we would earn our money back. I figured we’d have to invest about. $1,000 to get a computer company to print the boards. To get. that money back, we’d have to sell the board for $40 to fifty people. And I didn’t think there were fifty people at Homebrew who’d buy the board. After all, there were only about five hundred members at this point, and most of them were Altair enthusiasts.

But Steve had a good argument. We were in his car and he said–and I can remember him saying this like it was yesterday: “Well, even if we lose our money, we’ll have a company. For once in our lives, we’ll have a company.”
For once in our lives, we’d have a company. That convinced me. And I was excited to think about us like that. To be two best friends starting a company. Wow. I knew right then that I’d do it. How could I not?

Source:
Wozniak, Steve, and Gina Smith. iWoz: Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. New York: W. W. Norton & Co., 2006.

Porter Airlines Beats Incumbents in Serving High End Customers

“Robert Deluce set up Porter Airlines at Billy Bishop Toronto City Airport in October 2006.” Source of caption and photo: online version of the WSJ article quoted and cited below.

Clayton Christensen explains why upstart entrepreneurs who move up-market to serve under-served customers, will almost always lose to motivated incumbents.
Apparently Robert Deluce has not read Christensen.

(p. B8) TORONTO–As a teenager, Robert Deluce learned to fly at this city’s small airport just outside the downtown on a Lake Ontario island.
Lately, the 59-year-old airline entrepreneur has been giving his own brand of flying lessons there in a dogfight with larger competitors over a lucrative flying niche: the high-margin business traveler.
n 2005, Mr. Deluce bought the airport’s ramshackle terminal and later kicked out an Air Canada regional partner named Jazz Air. Then, he set up Porter Airlines, which has become a hit with business fliers for its top-notch service and convenient location, a one-minute ferry ride from the downtown waterfront. Earlier this month, closely held Porter opened the first phase of a gleaming, 150,000-square-foot terminal that eventually will house two passenger lounges and 10 aircraft gates.
. . .
The new carrier’s mascot is a raccoon. “He’s mischievous and determined and pretty much always achieves his desired goal,” said Mr. Deluce, chuckling over breakfast at a Toronto hotel. “Air Canada and Jazz probably think he’s over-mischievous.”
. . .
In recent years, Toronto’s waterfront has been revitalized, with high-rise condos and parks replacing grain elevators and industrial warehouses. Air Canada’s partner Jazz and a predecessor, which had been flying to and from the downtown airport for years, reduced service even as the redevelopment was progressing. The airport’s traffic waned to 25,000 fliers in 2005 from 400,000 a year in the late 1980s.
Smelling opportunity, Mr. Deluce pounced, acquiring the old terminal and evicting Jazz. He raised C$126 million in start-up capital and placed a US$500 million order for 20 Canadian-built turboprop aircraft. With 70 seats, they are perfectly sized for the airport’s short, 4,000-foot runway. Porter took wing in October 2006.
His aggressive tactics as CEO have earned him both criticism and grudging respect. Brian Iler, chairman of CommunityAir, a Toronto citizens advocacy group that wants the airport shut because of noise issues and other concerns, gives Mr. Deluce his due. “Everything he has done, he’s managed to turn things his way,” Mr. Iler says. “It’s an amazing run of luck.”
. . .
Porter now flies to four U.S. destinations and seven other cities in Eastern Canada, with an eighth coming this month. It had its first month of profitability in June 2007 and paid out to its employee profit-sharing plan that year and in 2008, Mr. Deluce says. He won’t say whether Porter was profitable in 2009.
The new airline has attracted a following for its downtown location, competitive fares, leather seats with generous legroom and complimentary beer, wine and snacks. Female flight attendants wear retro pillbox hats and peplum jackets.
Christopher Sears, vice president of research for Montreal-based brokerage firm MacDougall, MacDougall & MacTier Inc., said he has flown Porter 30 to 40 times between Montreal and Toronto. Once he arrives in Toronto, he grabs a free shuttle to a hotel two blocks from his firm’s Toronto office.
“Porter has built up a lot of goodwill with me,” he says, vowing to stick with the company even if rivals break into the downtown airport.

For the full story, see
SUSAN CAREY. “Tiny Airline Flies Circles Around Its Rivals; Top-Notch Service, Proximity to Downtown Toronto Make Porter a Hit With High-Margin Business Travelers.” The Wall Street Journal (Weds., MARCH 17, 2010): B8.
(Note: ellipses added.)
(Note: the online version of the article has the slightly different title “Tiny Airline Flies Circles Around Rivals; Top-Notch Service, Proximity to Downtown Toronto Makes Porter a Hit With High-Margin Business Travelers.”)

On Christensen’s theories, see:
Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Source of graph: online version of the WSJ article quoted and cited above.

Not All Entrepreneurs Believe in Property Rights

“Titan Cement’s Bob Odom in March at the site of a proposed plant near Wilmington, N.C. The company says hundreds of jobs would be created.” Source of book image: online version of the WSJ review quoted and cited below.

Is it just me, or does entrepreneur Lloyd Smith, quoted below, come across as a bit arrogant in believing the government should enforce his view of what Wilmington should be like, even if that means violating the property rights of the owner of the land on which the cement plant will be built? (And even if that means that would-be janitor Ron Givens remains unemployed.)

(p. A3) WILMINGTON, N.C.–The old economy and the new economy are squaring off in this coastal city, which is having second thoughts about revisiting its roots in heavy industry.

Titan Cement Co. of Greece wants to build one of the largest U.S. cement plants on the outskirts of the city and is promising hundreds of jobs. The factory would be on the site of a cement plant that closed in 1982 and today is populated mainly by fire ants, copperhead snakes and the occasional skateboarder.
The proposed $450 million plant by Titan America LLC, Titan’s U.S. unit, is welcome news to Ron Givens Sr., a 44-year-old unemployed Wilmington native. Mr. Givens’s father supported 12 children while working at the former Ideal Cement plant, and Mr. Givens and two brothers have now applied for jobs with Titan. “I will apply for janitor if that’s what is going to get me into that plant,” he said.
But thousands of opponents have petitioned local and state politicians to block the plan. They object to the emissions from the plant and say it will scare off tourists, retirees, entrepreneurs and others who might otherwise want to live here.
An initial state environmental review has dragged on for two years, and critics of the plant have filed a lawsuit seeking to further broaden the review. The governor, amid public pressure, has asked the State Bureau of Investigation to probe the plant’s permitting process.
“That’s their tactic: Delay, delay, and at some point Titan will leave,” said Bob Odom, Titan’s general manager in Wilmington, of opposition efforts.
Among the most vocal opponents is a fast-growing class of high-tech entrepreneurs and telecommuters who moved to Wilmington in recent years, drawn to the temperate climate, sandy beaches and good fishing. They argue the plant, by curbing the community’s appeal, will cost more jobs and tax revenue in the long run than it produces.
“I think we can be discriminating,” said Lloyd Smith, a 43-year-old entrepreneur who moved here from northern Virginia in 2001 and founded Cortech Solutions Inc., a neuroscience company with nine employees and about $5 million in annual sales.
The standoff in Wilmington reflects a broader tug-of-war across the country as communities try to kick-start employment. It is unclear how much manufacturing will power the long-term U.S. economic recovery–even in southern states that have long embraced heavy industry but have begun to feel the new economy’s pull.

For the full story, see:
MIKE ESTERL. “Clash of Old, New Economy; Cement Plant Is Resisted by Some Neighbors Who Would Rather Lure High-Tech Jobs.” The Wall Street Journal (Tues., April 6, 2010): A3.