Entrepreneurship – Page 170 – artdiamondblog.com

Wozniak on the Motives and Rewards of Inventor and Innovator

(p. 147) The whole thing used forty-five chips, and Steve paid me half the seven hundred bucks he said they paid him for it. (They were paying us based on how few chips I could do it. in.) Later I found out he got paid a bit (p. 148) more for it–like a few thousand dollars–than he said at the time, but we were kids, you know. He got paid one amount, and told me he got paid another. He wasn’t honest with me, and I was hurt. But I didn’t make a big deal about it or anything.

Ethics always mattered to me, and I still don’t really understand why he would’ve gotten paid one thing and told me he’d gotten paid another. But, you know, people are different. And in no way do I regret the experience at Atari with Steve Jobs. He was my best friend and I still feel extremely linked with him. I wish him well. And it was a great project that was so fun. Anyway, in the long run of money–Steve and I ended up getting very comfortable money-wise from our work founding Apple just a few years later–it certainly didn’t add up to much.
Steve and I were the best of friends for a very, very long time. We had the same goals for a while. They jelled perfectly at forming Apple. But we were always different people, different people right from the start.
You know, it’s strange, hut right around the time I started working on what later became the Apple I board, this idea popped into my mind about two guys who die on the same day. One guy is really successful, and he’s spending all his time running companies, managing them, making sure they are profitable, and making sales goals all the time. And the other guy, all he does is lounge around, doesn’t have much money, really likes to tell jokes and follow gadgets and technology and other things he finds interesting in the world, and he just spends his life laughing.
In my head, the guy who’d rather laugh than control things is going to be the one who has the happier life. That’s just my opinion. I figure happiness is the most important thing in life, just how much you laugh. The guy whose head kind of floats, he’s so happy. That’s who I am, who I want to be and have always wanted to be.
(p. 149) And that’s why I never let stuff like what happened with Breakout bother me. Though you can disagree–you can even split from a relationship–you don’t have to hold it against the other. You’re just different. That’s the best way to live life and be happy
And I figured this all out even before Steve and I started Apple.

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.

Class Action Suit Did Little for Class Members, But “Enriched” Attorneys

Many attorneys are good people, including my late father, one of my brothers, and one of my favorite former students.
But a few attorneys must be conscience-challenged; for instance the ones “representing” the class in the case described below.
More importantly, class-action litigation increases the costs and uncertainty of doing business, and thereby increases the prices of the products and services we buy.
In speaking to one of my classes a few years ago, Omaha entrepreneur Joe Ricketts made a strong case for tort reform. it is hard to disagree, unless, like the Democratic Party, you are receiving large contributions from trial lawyers.

(p. B1) . . . , a 2008 settlement of a class action against Ford Motor Co., involving incidents in which Firestone tires exploded on Ford Explorers, offered certain Explorer owners coupons worth $500 toward the purchase of a new Explorer and $300 toward the purchase of any other Ford vehicle.

As of March, only 148 people had redeemed a coupon out of 1,647 people eligible. The plaintiffs’ attorneys who led that litigation collected about $19 million in fees.
“It was rather absurd,” said Julie Hamilton Webber of Glendale, Calif., a class member who has a 1993 Ford Explorer. “The net result was the attorneys were enriched and did nothing for the class.”

For the full story, see:
DIONNE SEARCEY. “Toyota Owners May Reap Little.” The Wall Street Journal (Thurs., MAY 20, 2010): B1-B2.
(Note: ellipsis added.)
(Note: the online version of the article has the slightly different title “Toyota Owners May See Little.”)

At Apple Wozniak Was the Inventor, and Jobs Was the Entrepreneur

Source of book image: http://1.bp.blogspot.com/_TwOg8fVl5Og/SkXmn7MyaxI/AAAAAAAAAug/G-klN-KQHis/s1600/iWoz.jpg

iWoz is a fun read, with wild fluctuations in the significance of what is written. When Wozniak writes about the ingredients of inventiveness, it is significant. When he talks about his pranks, or his obsessions with certain number combinations, it is strange. (Maybe I just haven’t figured out the significance of Wozniak’s quirks—I once heard George Stigler say that even the mistakes of a great mind were worth pondering.)
In the next few weeks I’ll be quoting a few of the more significant passages.
An over-riding lesson from the book, is the extent to which both Wozniak and Jobs were necessary for the Apple achievement. Wozniak was a genius inventor, but he did not have the drive or the skills, or the judgment of the entrepreneur.
Schumpeter famously distinguished invention from innovation. Wozniak was the inventor, and Jobs was the innovator (aka, the entrepreneur).

Book discussed:
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.

Henry Ford’s Finest Hour

(p. 52) Not all men who refused to sign the code could be easily intimidated. In the auto industry Henry Ford refused to sign the NRA code and jack up his car prices, as his competitors were doing. “I do not think that this country is ready to be treated like Russia for a while,” Ford wrote in his notebook. “There is a lot of the pioneer spirit here yet:’ However, General Motors, Chrysler, and the smaller independents eagerly signed Blue Eagle codes, which, under penalty of fine and imprisonment, regulated their production, (p. 53) wages. prices, and hours of work. Ford was astounded: his colleagues preferred stability and government regulation to competition and free trade. He was especially irked when Pierre S. DuPont, the former head of General Motors, urged him at a party to sign the code.

In the face of strong pressure from the NRA, Ford refused to sign the auto code. He defied the law, pronouncing it un-American and unconstitutional. Hugh Johnson, the NRA chief, and President Roosevelt, however, wanted government control as well as compliance. They tried to pressure Ford into signing the code, and when he refused they tried force. Ford would receive no government contracts until he signed–and with the large increase in government agencies during the 1930s, that meant a huge business. For example, the bid of a Ford agency on five hundred trucks for the Civilian Conservation Corps was $169,000 below the next best offer. The government announced, however, that it would reject Ford’s bid and pay $169,000 more for the trucks because Ford refused to sign the auto code. As Roosevelt announced at a press conference, “We have got to eliminate the purchase of Ford cars” for the government because Ford has not “gone along with the general [NRA] agreement:”

Source:
Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.
(Note: ellipses in original.)

“We Don’t Lie Out Here; We Just Remember Big”

(p. W11) Americans love a winner and they remember what they want to remember, and so let us now remember the Central Overland California & Pike’s Peak Express Co.–known from the day it began 150 years ago on April 3, 1860, as the Pony Express.

We remember the Pony Express as one of the most enduring and endearing of American stories, a tale of the frontier, a story of bold entrepreneurs, daring young horsemen, true riders of the purple sage and all that. In truth, the venture hemorrhaged money from day one, was doomed by technology (another particularly American story), lasted a mere 78 weeks, ruined its backers and then disappeared into what historian Bernard DeVoto called “the border land of fable.” Across the wide Missouri, fact and fantasy collided and the Pony Express became “a tale of truth, half-truth and no truth at all,” as another historian observed.
. . .
The service was shut down in the flash of a telegrapher’s key when the transcontinental telegraph was completed in October 1861. The records of the business, if there were any records, were lost. That would prove liberating for later chroniclers.
. . .
If the Pony Express continues to thrill and baffle us, consider the words of an old horseman in western Nebraska who advised me when I expressed some concerns about the pedigree of this yarn. “We don’t lie out here,” he explained kindly. “We just remember big.”

For the full commentary, see:
CHRISTOPHER CORBETT. “Real (and Fake) Hoofbeats of the Pony Express.” The Wall Street Journal (Fri., APRIL 2, 2010): W11.
(Note: ellipses added.)

“The GodKing Drives a Hyundai”

(p. 176) As an homage to Wales’s sticking with a low-key style, the community adopted the saying “The GodKing (sic) drives a Hyundai,” making fun of his humble Korean-made car, a brand known more for frugality than flash.

Source:
Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World’s Greatest Encyclopedia. New York: Hyperion, 2009.

If We Want More Jobs, We Need More (Steve) Jobs

(p. A19) Mr. Obama and his advisers need to grasp this essential fact: Entrepreneurs are not just a cute little subsector of the American economy. They are the whole game. They will give us tomorrow’s Apples and the multiplier effect of small businesses and exciting new jobs that go with them. Entrepreneurs are necessary to keep our large multinationals on their toes. It’s no coincidence that the entrepreneurial flowering of the 1970s forced a managerial revolution in large companies during the 1980s and 1990s. Without Steve Jobs, there would have been no Lou Gerstner to reinvent IBM in the ’90s. Entrepreneurs like Steve Jobs make everyone better.

For the full story, see:
RICH KARLGAARD. “Apple to the Rescue?” The Wall Street Journal (Thurs., JANUARY 28, 2010): A19.

“Coase’s Penguin” and the Motives for “Commons-Based Peer Production”

(p. 108) Noted Yale law professor Yochai Benkler has a theory. In a widely circulated and famous essay on the Internet called “Coase’s Penguin,” he offered his thinking on why people participate in efforts such as Linux and other “free” projects. There was already a culture, before Wikipedia, of folks donating their time, effort, and skills to the collective good for no monetary gain or immediate compensation. Benkler observed this part of the hacker ethos and was curious to know what the common thread was.

He dubbed it “commons-based peer production.” It’s a fancy moniker for the phenomenon of people working together toward the same end–creating computer code or content that is free to be copied, distributed, used, and modified by others.
Benkler believes the Internet and the “free culture” movement have allowed individuals to connect and combine their efforts in ways unprecedented in history. The legal academic is not shy to combine scholarship outside his area of training by drawing on economics, sociology, and technology to form his theory.
According to Benkler, if monetary rewards and the creation of corporate firms have been the accepted driving force for human innovation and progress, there has to be something else driving volunteers in Linux, Wikipedia, and other “free” projects that have become so pervasive and monumental in the digital age.
He asserts the motivation comes from two main things other than money: the “socio-psychological” reward of interacting with others, and the “hedonic” personal gratification of the task.
Wikipedia’s magic occurs when these two things come together. One person’s personal affection and indulgence—mapmaking, grammar checking, baseball statistics, history of stamps—easily finds a home in Wikipedia’s amalgam of topics, where it also feeds into and inspires activities by others.

Source:
Lih, Andrew. The Wikipedia Revolution: How a Bunch of Nobodies Created the World’s Greatest Encyclopedia. New York: Hyperion, 2009.

Daniel Pink on What Motivates Workers to Work Well

Source of book image: online version of the WSJ review quoted and cited below.

Daniel Pink’s Free Agent Nation was a provocative account of how the entrepreneur benefits from being an entrepreneur. I enjoyed the book, and reference it frequently.
I have not had a chance to read Pink’s recent Drive, but hope to do so soon.

(p. A17) Science, Mr. Pink says, has shown that we are motivated as much intrinsically, by the sheer joy and purpose of certain activities, as extrinsically, by rewards like pay raises and promotions.

The science that Mr. Pink is referring to rests largely on the work of Edward Deci and Richard Ryan at the University of Rochester and Mihaly Csikszentmihalyi at Claremont Graduate University. These three researchers have found that we do our best work when motivated from within, when we have control over our time and decisions and when we feel a deep sense of purpose. Under such conditions, we can achieve real mastery over whatever it is that we do.
The modern workplace, Mr. Pink laments, is too often set up to deny us this opportunity. Firms that hope to optimize efficiency by making their employees clock in and out, attend compulsory meetings, and receive pay for performance are de-motivating through excessive control. What they should be doing, he argues, is giving workers the chance to do their best work by granting them more autonomy and helping them to achieve the mastery that may come with it.
Mr. Pink cites an Australian software firm, Atlassian, that allows its programmers 20% of their time to work on any software problem they like, provided it is not part of their regular job. The programmers turn out to be much more efficient with that 20% of their time than they are with their regular work hours. Atlassian credits the 20% with many of its innovations and its high staff retention. Companies as large as Google and 3M have similar programs that have produced everything from Google News to the Post-It note.
. . .
. . . : Beyond serving our basic needs, money doesn’t buy happiness. We need a greater purpose in our lives. Our most precious resource is time. We respond badly to conditions of servitude, whether the lash of the galley master or the more subtle enslavement of monthly paychecks, quarterly performance targets and the fear of losing health insurance. Work that allows us to feel in control of our lives is better than work that does not. . . . , these lessons are worth repeating, and if more companies feel emboldened to follow Mr. Pink’s advice, then so much the better.

For the full review, see:
PHILIP DELVES BROUGHTON. “More Than a Paycheck; Workers are more efficient, loyal and creative when they feel a sense of purpose–when work has meaning.” The Wall Street Journal (Tues., Feb. 2, 2010): A17.
(Note: ellipses added.)
(Note: the online version of the review is dated Feb. 5, 2010.)

“Real Innovation in Technology Involves a Leap Ahead”

“GAME CHANGER? After months of anticipation, Apple unveiled its iPad tablet computer last week.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) The more, the better. That’s the fashionable recipe for nurturing new ideas these days. It emphasizes a kind of Internet-era egalitarianism that celebrates the “wisdom of the crowd” and “open innovation.” Assemble all the contributions in the digital suggestion box, we’re told in books and academic research, and the result will be collective intelligence.

Yet Apple, a creativity factory meticulously built by Steven P. Jobs since he returned to the company in 1997, suggests another innovation formula — one more elitist and individual.
This approach is reflected in the company’s latest potentially game-changing gadget, the iPad tablet, unveiled last week. It may succeed or stumble but it clearly carries the taste and perspective of Mr. Jobs and seems stamped by the company’s earlier marketing motto: Think Different.
. . .
(p. 6) Great products, according to Mr. Jobs, are triumphs of “taste.” And taste, he explains, is a byproduct of study, observation and being steeped in the culture of the past and present, of “trying to expose yourself to the best things humans have done and then bring those things into what you are doing.”
His is not a product-design philosophy steered by committee or determined by market research. The Jobs formula, say colleagues, relies heavily on tenacity, patience, belief and instinct. He gets deeply involved in hardware and software design choices, which await his personal nod or veto. Mr. Jobs, of course, is one member of a large team at Apple, even if he is the leader. Indeed, he has often described his role as a team leader. In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better. Their contributions, he adds, are the raw material of “aha” products, which make users rethink their notions of, say, a music player or cellphone.
“Real innovation in technology involves a leap ahead, anticipating needs that no one really knew they had and then delivering capabilities that redefine product categories,” said David B. Yoffie, a professor at the Harvard Business School. “That’s what Steve Jobs has done.”

For the full commentary, see:
STEVE LOHR. “The Apple in His Eye.” The New York Times, Week in Review Section (Sun., MARCH 4, 2010): 1 & 6.
(Note: ellipsis added.)
(Note: the online version of the article is dated January 29, 2010 and had the title “Steve Jobs and the Economics of Elitism.”)

New York Forces Entrepreneur to Subsidize His Competitor

(p. A24) Last year, the State Legislature levied a new tariff on most of the businesses in the New York City region. The metropolitan commuter transportation mobility tax requires employers to set aside 34 cents for every $100 in payroll costs, and hand the money over to a battered, barely breathing patient on the state’s fiscal operating table: the Metropolitan Transportation Authority.

The tax has not worked out so well. So far, its projected revenues are coming in about $400 million below the state’s estimates — which, in part, will mean reduced subway and bus service for New Yorkers starting this summer. It has also prompted a furious backlash from suburban officials who resent bankrolling an agency that, they say, benefits the city at the expense of its surrounding counties.
And then there is William Schoolman, 69, amateur activist, self-described ”prototypical entrepreneur,” and proprietor of the Hampton Luxury Liner bus fleet. In December, he filed a lawsuit in State Supreme Court claiming the tax is unconstitutional and demanding its repeal. The reason?
”Competition,” Mr. Schoolman said in a recent telephone interview, anger rising in his voice. ”This is the first time that I ever had to pay a subsidy directly to my competitor. That’s the thing that really bothers me.”

For the full story, see:
MICHAEL M. GRYNBAUM. “Suing Over a Transit Tax, in the Name of Competition.” The New York Times (Tues., February 16, 2010): A24.