Entrepreneurship – Page 171 – artdiamondblog.com

Market Entrepreneurs Versus Political Entrepreneurs

“James J. Hill (center) built a great railroad on his own dime.” Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. A17) Let’s bring back the robber barons.

“Robber baron” became a term of derision to generations of American students after many earnest teachers made them read Matthew Josephson’s long tome of the same name about the men whose enterprise drove the American industrial age from 1861 to 1901.
Josephson’s cast of pillaging villains was comprehensive: Rockefeller, Carnegie, Vanderbilt, Morgan, Astor, Jay Gould, James J. Hill. His table of contents alone shaped impressions of those times: “Carnegie as ‘business pirate’.” “Henry Frick, baron of coke.” “Terrorism in Oil.” “The sack of California.”
I say, bring ’em back, and the sooner the better. What we need, a lot more than a $1,000 tax credit, are industries no one has thought of before. We need vision, vitality and commercial moxie. This government is draining it away.
The antidote to Josephson’s book is a small classic by Hillsdale College historian Burton W. Folsom called “The Myth of the Robber Barons: A New Look at the Rise of Big Business in America” (Young America’s Foundation). Prof. Folsom’s core insight is to divide the men of that age into market entrepreneurs and political entrepreneurs.
Market entrepreneurs like Rockefeller, Vanderbilt and Hill built businesses on product and price. Hill was the railroad magnate who finished his transcontinental line without a public land grant. Rockefeller took on and beat the world’s dominant oil power at the time, Russia. Rockefeller innovated his way to energy primacy for the U.S.
Political entrepreneurs, by contrast, made money back then by gaming the political system. Steamship builder Robert Fulton acquired a 30-year monopoly on Hudson River steamship traffic from, no surprise, the New York legislature. Cornelius Vanderbilt, with the slogan “New Jersey must be free,” broke Fulton’s government-granted monopoly.

For the full commentary, see:
DANIEL HENNINGER. “Bring Back the Robber Barons.” The Wall Street Journal (Mon., MARCH 4, 2010): A17.
(Note: the online version of the article is dated MARCH 3, 2010.)

The full reference for Folsom’s book is:
Folsom, Burton W. The Myth of the Robber Barons. 4th ed: Young America’s Foundation, 2003.

Entrepreneur Pleases Dwarfs; Critics Are Appalled

“Yang Jinlu, 18, left, and Zhang Yinghua, 37.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A10) KUNMING, China — Chen Mingjing’s entrepreneurial instincts vaulted him from a peasant upbringing to undreamed-of wealth, acquired in ventures ranging from making electric meters to investing in real estate. But when he was 44, the allure of making money for money’s sake began to wane. He wanted to run a business that accomplished some good.

And so last September, Mr. Chen did what any socially aware entrepreneur might do: He opened a theme park of dwarfs, charging tourists about $9 a head to watch dozens of dwarfs in pink tutus perform a slapstick version of “Swan Lake” along with other skits.
Mr. Chen has big plans for his Kingdom of the Little People. Imagine a $115 million universe in miniature, set amid 13,000 acres of rolling hills and peaceful lakes in southern China’s Yunnan Province, with tiny dogs, tiny fruit trees, a 230-foot-high performance hall that looks like the stump of a prehistoric tree and standard-size guest cabins.
Also, a black BMW modified to resemble a flying saucer, from which dwarfs will spill forth to begin their performances.
“It will be like a fairy tale,” Mr. Chen said. “Everything here I have designed myself.”
. . .
Critics say displaying dwarfs is at best misguided and at worst immoral, a throwback to times when freak shows pandered to people’s morbid curiosity.
“Are they just going there to look at curious objects?” asked Yu Haibo, who leads a volunteer organization for the disabled in Jilin Province in the northeast.
“I think it is horrible,” said Gary Arnold, the spokesman for Little People of America Inc., a dwarfism support group based in California. “What is the difference between it and a zoo?” Even the term “dwarf” is offensive to some; his organization prefers “person of short stature.”
. . .
But there is another view, and Mr. Chen and some of his short-statured workers present it forcefully. One hundred permanently employed dwarfs, they contend, is better than 100 dwarfs scrounging for odd jobs. They insist that the audiences who see the dwarfs sing, dance and perform comic routines leave impressed by their skills and courage.
Many performers said they enjoyed being part of a community where everyone shares the same challenges, like the height of a sink. “Before, when we were at home, we didn’t know anyone our size. When we hang out together with normal-size people, we can not really do the same things,” said Wu Zhihong, 20. “So I really felt lonely sometimes.”
. . .
Supporters and critics agree on one point: the fact that the park is awash in job applications shows the disturbing dearth of opportunities for the disabled in China. Cao Yu, Mr. Chen’s assistant, says she receives three or four job inquiries a week.
“Under the current social situation in China, they really will not be able to find a better employment situation,” she said.
. . .
Mr. Chen said his employees had gained self-respect and self-sufficiency. “It doesn’t really matter to me what other people say,” he said. “The question is whether meeting me has changed their lives.”

For the full story, see:

SHARON LaFRANIERE. “Kunming Journal; A Miniature World Magnifies Dwarf Life.” The New York Times (Thurs., March 4, 2010): A10.
(Note: ellipses added.)
(Note: the online version of the article is dated March 3, 2010.)

“Workers relaxed in the dormitories.” Source of caption and photo: online version of the NYT article quoted and cited above.

An “Entrepreneur’s Visa” to Let the Future Sergey Brin In

(p. A19) . . . , there is one way to create a lot more jobs without spending federal money. Let’s import them. More precisely, let’s import the people who create them: entrepreneurs.

A bipartisan bill that would begin to do just that was introduced on Feb. 24 by Sens. John Kerry (D., Mass.) and Richard Lugar (R., Ind.). Their “Startup Visa Act” would create a new, two-year visa for immigrant entrepreneurs whose firms attract at least $250,000 in financing from American angel investors or venture capital firms.
. . .
Here’s a way to improve on the Kerry-Lugar plan. Create a true “job creator’s visa,” one tied directly and only to job creation by new immigrant entrepreneurs. The visa could be a temporary one for immigrants already here on another visa who establish a business. It could then be extended if the firm hires at least one American non-family resident. The visa should become permanent once the enterprise crosses a certain job threshold (such as five or 10 workers). But it would not be tied to financing.
. . .
Google was founded by Sergey Brin, a Russian immigrant, and American Larry Page by borrowing funds from their own credit cards. Why on earth would we want to create an entrepreneurs’ visa that couldn’t let in the future Sergey Brin?

For the full commentary, see:
ROBERT E. LITAN. “Visas for the Next Sergey Brin; To create more jobs, let’s import more employers.” The Wall Street Journal (Mon., MARCH 8, 2010): A19.
(Note: ellipses added.)
(Note: the online version of the article is dated MARCH 7, 2010.)

At Odds with Academic Culture, Wiki Programmer Adams Released Early and Released Often

(p. 67) Adams did something unexpected for the academic community, but common in open source culture–release early and release often. Within weeks of its launch, one of the biggest annoyances of Wikipedia was resolved directly by the software’s author. It was not because of monetary compensation or any formal request, but simply because the author was interested in solving it on his own time, and sharing it with others. It was the hacker ethos, and it had crossed from the domain of tech programmers into the world of encyclopedias.

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

When Wales Earned “Enough”

(p. 22) By 1998, the business was good enough that Wales wanted to leave not just the world of Chicago Options Associates but the city of Chicago too. As a trader, he had made enough money to live comfortably for a while, or as he would say, “I made out OK” and earned “enough.” With no incentive to stay in the Windy City, and with the warmer weather of California calling, Wales and Shell decided they could relocate to San Diego and run the business from there. Wales and his wife, Christine, made the move in 1998.

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

Brin Plays Google’s “Ethical Trump Card”

“Co-founder Sergey Brin has been active in Google’s dealings with China.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A8) As a boy growing up in the Soviet Union, Sergey Brin witnessed the consequences of censorship. Now the Google Inc. co-founder is drawing on that experience in shaping the company’s showdown with the Chinese government.

Mr. Brin has long been Google’s moral compass on China-related issues, say people familiar with the matter. He expressed the greatest concern among decision makers, they say, about the compromises Google made when it launched its Chinese-language search engine, Google.cn, in 2006. He is now the guiding force behind Google’s decision to stop filtering search results in China, say people familiar with the decision.
. . .
The move is the clearest manifestation yet of a tension that has always existed at Google.
The Internet company, on one hand, is analytical: It built its core search business on algorithms that determine the relevance of Web sites and has tried to apply quantitative analysis to traditionally subjective parts of a business, such as hiring decisions. On the other hand, Mr. Brin and co-founder Larry Page have passionately touted Google’s ability to spread democracy through access to information, and adopted the unofficial and now-famous motto, “Don’t Be Evil.”
“At its best, Google is data-driven with an ethical trump card,” said Larry Brilliant, who headed up the company’s philanthropic efforts until 2009. Always it was the founders, Messrs. Brin and Page, who could play that card, he added.

For the full story, see:

BEN WORTHEN. “Soviet-Born Brin Has Shaped Google’s Stand.” The Wall Street Journal (Sat., MARCH 13, 2010): A8.
(Note: ellipsis added.)
(Note: the online version of the article had the date MARCH 12, 2010 and has the slightly longer title “Soviet-Born Brin Has Shaped Google’s Stand on China.”)

Wikipedia Works in Practice, Not in Theory

(p. 20) Jimmy walked into the offices of Chicago Options Associates in 1994 and met the CEO Michael Davis for a job interview. Davis had looked over Wales’s academic publication about options pricing.

“It was impressive looking,” says Wales wryly about the paper. “It was a very theoretical paper but it wasn’t very practical.” But Davis was sufficiently intrigued, as he wanted someone like Wales to pore over the firm’s financial models and help improve them. So he took on young Wales, who seemed to be sharp and had acumen for numbers. Little did either of them know they would have a long road ahead together, with Wikipedia in the future.
Wales’s first job was to go over the firm’s current pricing models. “What was really fascinating was that it was truly a step beyond what I’d seen in academia,” he recalls. “It was very practical, and didn’t have a real theoretical foundation.” Wales was intrigued that the firm traded on principles that worked in practice, not in theory. (This is something he would say about his future endeavor Wikipedia.) “Basically they just knew in the marketplace that the existing models were wrong.”

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

Irritation is “the Source of Serious Innovation”

(p. 299) Innovation Source No. 1 is Pissed-Off People.

Irritation. Anger. That’s the number one source of serious innovation. Which must, of course, be coupled with spine–a willingness to take on the powers that be. And risk it all.

Source:
Peters, Tom. Re-Imagine! London: DK, 2003.
(Note: italics, bold, and larger size font, in original.)

The Entrepreneurial Epistemology of Wikipedia

Source of book image: http://kellylowenstein.files.wordpress.com/2009/04/wikipedia-revolution1.jpg

Wikipedia is a very unexpected and disruptive institution. Amateurs have produced an encyclopedia that is bigger, deeper, more up-to-date, and arguably of at least equal accuracy, with the best professional encyclopedias, such as Britannica.
I learned a lot from Lih’s book. For instance I did not know that the founders of Wikipedia were admirers of Ayn Rand. And I did not know that the Oxford English Dictionary was constructed mainly by volunteer amateurs.
I also did not know anything about the information technology precursors and the back-history of the institutions that helped Wikipedia to work.
I learned much about the background, values, and choices of Wikipedia entrepreneur “Jimbo” Wales. (Jimbo Wales seems not to be perfect, but on balance to be one of the ‘good guys’ in the world—one of those entrepreneurs who can be admired for something beyond their particular entrepreneurial innovation.)
Lih’s book also does a good job of sketching the problems and tensions within Wikipedia.
I believe that Wikipedia is a key step in the development of faster and better institutions of knowledge generation and communication. I also believe that substantial further improvements can and will be made.
Most importantly, I think that you can only go so far with volunteers–ways must be found to reward and compensate.
In the meantime, much can be learned from Lih. In the next few weeks, I will be quoting a few passages that I found especially illuminating.

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

The Entrepreneur as the Agent of Creative Destruction

(p. 132) . . . the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. Railroad construction in its earlier stages, electrical power production before the First World War, steam and steel, the motorcar, colonial ventures afford spectacular instances of a large genus which comprises innumerable humbler ones–down to such things as making a success of a particular kind of sausage or toothbrush. This kind of activity is primarily responsible for the recurrent “prosperities” that revolutionize the economic organism and the recurrent “recessions” that are due to the disequilibrating impact of the new products or methods. To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and, secondly, because the environment resists in many ways that vary, according to social conditions, from simple refusal either to finance or to buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.

Source:
Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper and Row, 1950.
(Note: ellipsis added.)

Determination, Not Education, Is Key to Success at McDonald’s

(p. 189) McDonald’s is a real melting pot.

The key element in these individual success stories and of McDonald’s itself, is not knack or education, it’s determination. This is expressed very well in my favorite homily:

“Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.”

Source:
Kroc, Ray. Grinding It Out: The Making of McDonald’s. Chicago: Henry Regnary Company, 1977.