Entrepreneurship – Page 177 – artdiamondblog.com

Among Academic Economists Interest in Entrepreneurship is “A Quick Ticket Out of a Job”

From McCraw’s discussion of Schumpeter’s “legacy”:

(p. 500) In the new world of academic economics, neither the Schumpeterian entrepreneur as an individual nor entrepreneurship as a phenomenon attracts much attention. For professors in economics departments at most major universities, particularly in the United States and Britain, a focus on these favorite issues of Schumpeter’s has become a quick ticket out of a job. This development arose from a self-generated isolation of academic economics from history, sociology, and the other social sciences. It represented a trend that Schumpeter himself had glimpsed and lamented but that accelerated rapidly during the two generations after his death.

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

Hospitals Lack Hospitality

Source of book image: http://www.simplenomics.com/wp-images/settingthetable-1.jpg

(p. R7) Most successful entrepreneurs like rattling on about how they did it.

The bookshelves have never been more crowded with such exploits from consultants, real-estate moguls and retailers. And publishers say there are more on the way. With layoffs and cutbacks dominating the headlines, demand for advice books based on true-life stories is peaking.
. . .
So what does it take to succeed?
“Pragmatic advice, [a book written by] somebody with a fairly high public profile, and a person who can hit the lecture circuit after the first rush of publicity and keep the book selling,” says Grand Central’s Mr. Wolff.
Those factors have contributed to the staying power of restaurateur Danny Meyer’s book, “Setting the Table: The Transforming Power of Hospitality in Business.”
News Corp.’s HarperCollins Publishers first published 30,000 copies in October 2006. (News Corp. also publishes The Wall Street Journal.) Mr. Meyer’s work, chatty personal anecdotes wrapped around a core message that emphasizes hospitality as the key to creating satisfied customers, proved a hit.
. . .
“The most surprising thing was the interest from the hospital community,” Mr. Meyer says. “That’s an industry in turmoil based on the absence of hospitality. They over-focus on the metrics of stays and cure rates rather than how they make people feel.”

For the full story, see:

JEFFREY A. TRACHTENBERG. “Running the Show; Me, Me, Me; So many entrepreneurs are writing books about how they made it. Their books, though, aren’t nearly as successful.” The Wall Street Journal (Mon., June 16, 2008): R7.
(Note: ellipses added.)

Schumpeter’s Name Forever Linked to Entrepreneurship

From McCraw’s discussion of Schumpeter’s “legacy”:

(p. 496) Because of the importance of entrepreneurship, and because Schumpeter wrote about it with such insight and verve, his name will be forever linked to the idea.

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

New Entrepreneurs Are Encouraged by Good Examples

Source of graphic: online version of the WSJ article quoted and cited below.

(p. B7) One day during Trip Adler’s sophomore year at Harvard University, he saw fellow undergraduates Mark Zuckerberg and Dustin Moskovitz outside their dormitory with suitcases and boxes. When Mr. Adler asked what the two — who happened to be Facebook Inc.’s co-founders — were doing, Mr. Moskovitz lightly replied that they were moving from Cambridge, Mass., to Silicon Valley “to make Facebook big.”
“I was so jealous,” recalls Mr.Adler, now 23 years old. “I thought, ‘I’ve got to find an idea and drop out of Harvard.'”
Mr. Adler didn’t leave school, but after graduating in 2006, he did start an online document-sharing company. San Francisco-based Scribd Inc., employs 12 people and attracts 11.1 million monthly visitors, according to Web-tracking company comScore Inc. It has raised nearly $3.9 million from Redpoint Ventures and other venture-capital and individual investors.
Mr. Adler is just one of the Harvard students who have caught start-up fever since Facebook, founded when Mr. Zuckerberg was at Harvard in 2004, exploded in popularity. Other recent Harvard-born start-ups include Internet companies Kirkland North Inc., Drop.io Inc. and Labmeeting Inc. And Facebook has become a model for these start-ups on many fronts, from the look of company Web sites to their corporate strategies.

For the full story, see:
VAUHINI VARA. “ENTERPRISE; Facebook Ignites Entrepreneurial Spirit at Harvard Students, Graduates Start Firms, Using The Site as a Model.” The Wall Street Journal (Tues., May 20, 2008): B7.

Venter’s Use of ESTs “Leapfrogged” his X-Chromosome Proposal

(p. 82) Venter dubbed the fragments “expressed sequence tags,” or ESTs for short.
. . .
Venter was ecstatic. He had veered wildly off course from his approved plan of research, but the risk had paid off. While the Human Genome Project grant committee was still dragging its feet over his X-chromosome proposal, he had already leapfrogged ahead of that idea and found a way to go forward even faster, using his ESTs. Venter wrote Watson to let him know what he was up to, hoping to win his approval and some funding to continue the EST project.

Reference to book:
Shreeve, James. The Genome War: How Craig Venter Tried to Capture the Code of Life and Save the World. 1st ed. New York: Alfred A. Knopf, 2004.
(Note: ellipsis added.)

At Pixar, “Storytelling is More Important Than Graphics”

Source of book image:
http://bp2.blogger.com/_Sar8IPNlxOY/SClPS33oTxI/AAAAAAAAB_0/B8GjajHtetY/s1600/PixarTouch.jpg

(p. A19) One of Mr. Catmull’s other inspirations was to hire computer animator John Lasseter after he was fired by Walt Disney Co. in 1983. (He had apparently stepped on one too many toes in the company’s sprawling management structure.) Then again, as Mr. Price reports, in the world of computer animators, workplace comings and goings seemed to be part of the job. Mr. Lasseter himself had already quit Disney and then returned before being fired. In the creative ferment of computer animation in the late 1970s and early 1980s, what mattered most was the work itself: Never mind who signs the paychecks – what project are you working on now?
. . .
One of Pixar’s first projects revealed a truth that would point the way to success: Storytelling is more important than graphics firepower. The company created a short film, directed by Mr. Lasseter, called “Tin Toy,” about a mechanical one-man band fleeing the terrors of a baby who wants to play with it. “Tin Toy” made audiences laugh in part because it turned established themes on their heads. The story was told from the toy’s-eye view, close to the floor. The baby, doing what babies do, seemed like a gigantic, capricious monster. “Tin Toy” won the 1988 Academy Award for animated short film.
The upside-down “Tin Toy” point of view seems to fit much of what happened at Pixar afterward. The company made a deal with Disney in 1991: The little animation outfit would produce three movies, and the entertainment behemoth would distribute and market them. With the outsize success of the first movie in the deal, “Toy Story” – it grossed $355 million world-wide – Pixar and Disney were perhaps on an inevitable collision course over control and profits. Mr. Price adroitly depicts the clashes between Mr. Jobs and his nemesis at Disney, chief executive Michael Eisner, and captures the sweet vindication of Mr. Lasseter as the projects he guides outstrip the animation efforts of his former employer.
The sweetest moment in the Pixar saga came two years ago, when Disney bought the company for $7.4 billion in an all-stock deal – one that gave Pixar executives enormous power at their new home. Mr. Jobs sits on the Disney board and is the company’s largest shareholder. (Mr. Eisner left in 2005.) And Mr. Lasseter became the chief creative officer for the combined Disney and Pixar animation studios, where Mr. Catmull serves as president.
The day after the sale was announced, Mr. Lasseter and Mr. Catmull flew to Burbank, Calif., to address a crowd of about 500 animation staffers on a Disney soundstage. “Applause built as they made their way to the front,” Mr. Price reports, “and then erupted again in force” when the two men were introduced. “Lasseter was welcomed as a rescuer of the studio from which he had been fired some twenty-two years before.” In one of their first moves, Mr. Price says, Messrs. Lasseter and Catmull “brought back a handful of Disney animation standouts who had only recently been laid off.” Redemption, after all, is essential to any story well told.

For the full review, see:

PAUL BOUTIN. “Bookshelf, An Industry Gets Animated.” The Wall Street Journal (Weds., May 14, 2008): A19.
(Note: ellipsis added.)

Schumpeter’s Final Thoughts on the Importance of the Individual Entrepreneur

Here is McCraw discussing and quoting Schumpeter’s notes for the Walgreen Lectures that he was preparing to deliver just before he died.

(p. 475) In notes he prepared in 1949 for the prestigious Walgreen Lectures, Schumpeter headed one entire section “The Personal Element and the Element of Chance: A Principle of Indeterminateness.” Here, he wrote that the time had come for economists to face a problem they had long tried to dodge:

the problem of the influence that may be exerted by exceptional individuals, a problem that has hardly ever been treated without the most blatant preconceptions. Without committing ourselves either to hero worship or to its hardly less absurd opposite, we have got to realize that, since the emergence of exceptional indi-(p. 476)viduals does not lend itself to scientific generalization, there is here an element that, together with the element of random occurrences with which it may be amalgamated, seriously limits our ability to forecast the future. That is what is meant here by “a principle of indeterminateness.” To put it somewhat differently: social determinism, where it is nonoperational, is a creed like any other and entirely unscientific.

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.

Google Considers Creative Entrepreneur’s Trial Balloon

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

Apparently the WSJ‘s new owner, Rupert Murdoch, has not yet succeeded in killing the wonderful, quirky, inimitable front page, center column, articles that are part of what makes the WSJ great:

(p. A1) CHANDLER, Ariz. — Jerry Knoblach wants to bring wireless service to millions of rural Americans. His plan: Beam it down from balloons hovering at the edge of space.
This isn’t just hot air. His company, Space Data Corp., already launches 10 balloons a day across the Southern U.S., providing specialized telecom services to truckers and oil companies. His balloons soar 20 miles into the stratosphere, each carrying a shoebox-size payload of electronics that acts like a mini cellphone “tower” covering thousands of square miles below.
His idea has caught the eye of Google Inc., according to people familiar with the matter. The Internet giant — which is now pushing into wireless services — has considered contracting with Space Data or even buying the firm, according to one person.
. . .
Maintaining a telecom system based on gas-filled bladders floating in the sky requires some creativity. The inexpensive bal-(p. A9)loons are good for only 24 hours or so before ultimately bursting in the thin air of the upper atmosphere. The electronic gear they carry, encased in a small Styrofoam box, then drifts gently back to earth on tiny parachutes.
This means Space Data must constantly send up new balloons. To do that, it hires mechanics employed at small airports across the South. It also hires farmers — particularly, dairy farmers.
They’re “very reliable people,” says Mr. Knoblach. They have to “milk the cows 24-7, 365 days a year, so they’re great people to use as a launch crew.” Space Data pays them $50 per launch.

For the full story, see:

AMOL SHARMA “Floating a New Idea For Going Wireless, Parachute Included; Balloon Launch Gets Google’s Attention; Dairy Farmers Can Help.” The Wall Street Journal (Weds., February 20, 2008): A1 & A9.
(Note: ellipsis added.)

“A balloon being launched in Piedmont, Oklahoma.” Source of image: online version of the WSJ article quoted and cited above.

Schumpeter on the Government Execution of an Entrepreneur

(p. 257) Entrenched interests fought tenaciously against mechanization and the factory system. Unlike the Prussian inventor of a ribbon-weaving loom, who was put to death in 1579 by order of the Danzig Municipal authority, “Entrepreneurs were not necessarily strangled,” but “they were not infrequently in danger of their lives.”

Source:
McCraw, Thomas K. Prophet of Innovation: Joseph Schumpeter and Creative Destruction. Cambridge, Mass.: Belknap Press, 2007.
(Note: the phrases in quotation marks are quotations from Schumpeter’s Business Cycles book.)

McCain “Shows a Lack of Understanding of the Insights of Joseph Schumpeter”

I agree with the Karl Rove’s analysis below, that John McCain does not exhibit much understanding of Schumpeter’s process of creative destruction. On the other hand, I have seen no evidence that Barack Obama has any such understanding either. (Nor have I seen any evidence that Rove’s former boss, George W. Bush, has any such understanding, for that matter.)
And, in general, I am still of the belief that, overall, between the two of them, McCain will put fewer obstacles in the path of innovation than will Obama.

(p. A13) This past Thursday, Mr. McCain came close to advocating a form of industrial policy, saying, “I’m very angry, frankly, at the oil companies not only because of the obscene profits they’ve made, but their failure to invest in alternate energy.”
But oil and gas companies report that they have invested heavily in alternative energy. Out of the $46 billion spent researching alternative energy in North America from 2000 to 2005, $12 billion came from oil and gas companies, making the industry one of the nation’s largest backers of wind and solar power, biofuels, lithium-ion batteries and fuel-cell technology.
Such investments, however, are not as important as money spent on technologies that help find and extract more oil. Because oil companies invested in innovation and technology, they are now tapping reserves that were formerly thought to be unrecoverable. Maybe we are all better off when oil companies invest in what they know, not what they don’t.
And do we really want the government deciding how profits should be invested? If so, should Microsoft be forced to invest in Linux-based software or McDonald’s in weight-loss research?
Mr. McCain’s angry statement shows a lack of understanding of the insights of Joseph Schumpeter, the 20th century economist who explained that capitalism is inherently unstable because a “perennial gale of creative destruction” is brought on by entrepreneurs who create new goods, markets and processes. The entrepreneur is “the pivot on which everything turns,” Schumpeter argued, and “proceeds by competitively destroying old businesses.”
Most dramatic change comes from new businesses, not old ones. Buggy whip makers did not create the auto industry. Railroads didn’t create the airplane. Even when established industries help create new ones, old-line firms are often not as nimble as new ones. IBM helped give rise to personal computers, but didn’t see the importance of software and ceded that part of the business to young upstarts who founded Microsoft.
So why should Mr. McCain expect oil and gas companies to lead the way in developing alternative energy? As with past technological change, new enterprises will likely be the drivers of alternative energy innovation.

For the full story, see:
KARL ROVE. “Obama and McCain Spout Economic Nonsense.” The Wall Street Journal (Thurs., June 19, 2008): A13.
(Note: I thank John Pagin and Dagny Diamond for alerting me to Rove’s discussion of Schumpeter.)

African Farmer-Entrepreneurs, and U.S. Companies, Creating Another Breadbasket

(p. A14) ARSI NEGELE, Ethiopia — Babou Galgo, a 61-year-old farmer, proudly showed off his prized harvest from last season: two shiny gold medals from the regional and federal government and a slick certificate praising his “outstanding performance in increasing agriculture production and productivity.”
What he had done was boost his corn yields on his small farm in southern Ethiopia an eye-popping sevenfold over the past several years. Even more impressive, he had boosted the well-being of his family as well: With the added income, they moved out of a traditional mud-brick tukul and into a brick and concrete house furnished with a refrigerator, television and DVD player, rare luxuries for a farmer in one of the world’s poorest countries.
Indeed, not long ago, Mr. Galgo would have had no need for a refrigerator as meager yields had him struggling to feed his family. “It’s the seeds,” he says, noting the reason for his reversal of fortunes. “Hybrids.”
Africa’s nascent push to finally feed itself is turning the clock back to the early part of 20th-century America. It was in the 1930s and ’40s when Iowa-based Pioneer Hi-Bred International popularized hybrid seeds in the U.S., swelling corn yields throughout the Midwest. Seven decades later, African farmers and U.S. companies are trying to recreate the same boom that turned America into the world’s breadbasket, only this time in the harsh climate — environmental and political — of Ethiopia and greater Africa.
. . .
Farmer Galgo is ready for another upgrade. Sitting in his comfortable living room, beneath wall murals of Jesus and a peace dove, he tells Mr. Admassu, “I want to expand my land and buy a tractor. A big tractor, with a lot of power.”

For the full story, see:

ROGER THUROW. “Agriculture’s Last Frontier; African Farmers, U.S. Companies Try to Create Another Breadbasket With Hybrids.” The Wall Street Journal (Tues., May 27, 2008): A14.
(Note: ellipsis added.)