Entrepreneurship – Page 181 – artdiamondblog.com

Beautiful Downtown Burbank, Runs Amok

Cultural history background for the young: at the beginning of every installment of the "Rowan and Martin Laugh-In" TV comedy review (circa 1968-1973), someone would sarcastically intone that the show was being broadcast from "beautiful downtown Burbank."

Excerpted below is Daniel Pink’s incredible conversation with a Burbank city clerk:

(p. 199) What led me to this 100,000-person city in California’s San Fernando Valley—past the fish fountains, to the steps of City Hall—was a rumor I’d heard that Burbank puts free agents in jail.

. . .

(p. 200) After fifteen minutes of probing, here’s the gist of what he tells me: If I want to write from a home office in Burbank, I first must apply for a home occupation license. The city would examine my application, and then come to my house to inspect the office from which I intended to work. Once the inspector deemed my home office safe for writing and unthreatening to my neighbors, I could begin earning a living, my workplace now officially blessed by the city.

But that was only the beginning. I’d have to pay a special tax. And I’d have to abide by the strictures of Burbank Municipal Code Section 31-672—which, among other things, said: My office couldn’t be larger than four hundred square feet or 20 percent of my home’s square footage. I couldn’t put my home office in a "garage, carport, or any other area required or designated for the parking of vehicles." The only "materials, equipment, and/or tools" I could use to do my work were things used by "a normal household." I couldn’t use my home office to repair cars, sell guns, or operate a kennel. And the only folks who could ever work with me in the office were people who lived with me.

That last provision alarmed me.

Pointing to Section 31-672(c), I ask, "Does this mean I can’t have a meeting at my house?"

"Yep," says the clerk. "You’d have to somewhere else."

"Let me get this straight," I say. "Let’s say I’m a writer collaborating on a screenplay. If my collaborator comes over and we work on the screenplay together, that’s against the law? It’s a misdemeanor to have a meeting at your house?"

"Yep," says the clerk.

"Isn’t California a ‘three strikes and you’re out’ state?"

"Yep."

Burbank, we we have a problem. I hope it’s unlikely that a free agent who has three meetings at her house, and gets caught, prosecuted, and convicted each time, goes to jail for the rest of her life. But the mere possibility reflects a wider problem with America’s legal, policy, and tax regimes. They were built for a (p. 201) work world that has largely disappeared, and are ill equipped for the new world that has arrived.

Source:

Pink, Daniel H. Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

(Note: italics in original; ellipsis added.)

Private Money Can Top Government Money in Space, as in IT

Lots of people are building new IT companies. You can start a company and sell it to Yahoo! or Google in a couple of years. But so can anyone else. Aerospace is different. To paraphrase John F. Kennedy in 1962: We choose to go to the moon not because it’s easy, but because it’s hard.

That’s why, as a long-time investor in IT and Internet start-ups, I’m now spending more and more time on private aviation and commercial space start-ups. I’m trailing an illustrius crew of IT pioneers: Elon Musk (Space-X, rockets, formerly with PayPal), Vern Raburn (Eclipse Aviation, very light jets, formerly at Microsoft, Symantec and Lotus), Jeff Bezos (Blue Origin, rockets, and still at Amazon, too!), Jeff Greason (XCOR, rockets and formerly with Intel) and Ed Iacobucci (DayJet, air taxi operator, and founder of Citrix).

. . .

On the space side, there’s a . . . strong parallel with the world of IT. The establishment in "space" is the government and especially the military, just as it once was (along with academia) for the Internet. I remember the days when commerce on the Internet was considered sleazy—but look at the innovations and productivity it unleashed.

In the same way, the current priests of space are dismayed by the privately funded space start-ups—unsafe, sleazy, frivolous. Imagine: Ads on the side of a rocket ship! Well, why not, if it helps pay for the fuel… and the R&D that designed the thing?

For the full commentary, see:

ESTHER DYSON "New Horizons for the Intrepid VC." The Wall Street Journal (Tues., March 20, 2007): A19.

(Note: ellipses added, except for the ellipsis following the word "fuel" which was in the original.)

Why Starbucks Coffee is a Bargain

(p. 161) These coffee places, most of which didn’t even exist ten years ago, had several virtues. They were always in convenient locations. They permitted, even welcomed, patrons to sit and talk for several hours. And they had tables for spreading out my materials and electrical outlets for plugging in my equipment. In short, they provided a four-hour office rental for the price of a three-dollar latte.

. . .

(p. 162) Starbucks and its caffeinated cousins are part of what I call the free agent infrastructure. The components of this infrastructure, which I’ll review in a moment, include copy shops, office supply superstores, bookstore cafés, overnight delivery services, executive suites, and the Internet. Like America’s system of federal highways, the free agent infrastructures form the physical foundation on which the economy operates. But unlike the federal highway system, which was planned and paid for by the government, this infrastructure emerged more or less spontaneously. Like so many other aspects of Free Agent Nation, it is self-organized. Nobody is in charge of it. That’s why it woks. It works so well, in fact, that few people realize that this collection of commercial Establishments even constitutes an infrastructure.

Source:

Pink, Daniel H. Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

“Free Agent Nation” Still Rings True

Source of book image: http://g-ec2.images-amazon.com/images/G/01/ciu/10/ae/8ca3d250fca0f5b077de4010.L.jpg

Daniel Pink’s 2001 Free Agent Nation has been on my to-read list since it first came out. It finally made it to the top—at least in the author-abridged two-cassette incarnation.

I always found the basic idea appealing: the appeal of the freedom of working for yourself—Harry Browne’s How I Found Freedom in an Unfree World, but for real.

But I also was a little anxious; fearful that the book would place too much emphasis on seeming flash-in-the-pan dot.com labor market phenomena and rhetoric.

To my relief, I can report that little in the book depends on the dot.com over-exuberance. The internet appears, as an infrastructure enabler, but the free agents are mainly doing more standard stuff, but doing it from a home office, and doing it project-by-project.

Pink is not an academic, which has pros and cons. One of the pros is that his prose is pleasant. Another is that he has an ear for a good story and a telling example. Perhaps a con is that he often hasn’t had the time, or the interest, (or maybe the data just don’t exist) to often follow-up with how widespread his examples are.

Still there’s some good stuff here. Like suggesting that free agency is what you would expect more of us to pursue, as we work our way up Abraham Maslow’s hierarchy of human needs. (In college I was enthused enough about Maslow that I was thinking of minoring in psychology, until they told me how many hours I would have to run rats through mazes before I’d be allowed to open a Maslow book.)

And there’s plausible discussion about how in some ways free agency is more secure than a regular job (multiple clients means diversification). And there is more freedom to control your own time, and be your authentic self.

There’s also some good discussion of how the government makes free agency harder through health care and taxation policies.

All-in-all, this book helps make the case that labor can thrive in a Schumpeterian world of creative destruction.

Reference to the book:

Pink, Daniel H. Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live. New York: Warner Business Books, 2001.

DNA Scientist-Entrepreneur Venter at Sea

The projected path of Venter’s Sorcerer II ship in collecting sea organisms. Source of map: http://scrippsnews.ucsd.edu/Releases/?releaseID=706

Craig Venter’s private gene-sequencing effort beat the government’s effort. His new research is being funded by a $24.5 million private grant from the Gordon and Betty Moore Foundation. (For more information beyond the WSJ article excerpted below, see the Scripps Institution of Oceanography press release.)

(p. B1) Marine microbes are among the most abundant life form on the planet and among the most mysterious. Now, results from the first phase of a global expedition are expected to provide a glimpse into this long-hidden world while potentially leading to new drugs and even fighting climate change.

Craig Venter, the brash biologist who helped crack the human genome seven years ago, says he and other scientists have used DNA-analysis techniques to discover millions of new genes and thousands of new proteins in ocean microbes. These microscopic life forms are mainly bacteria and organisms known as archaea.

"Everything we’ve seen is a surprise," Mr. Venter said in a phone interview from his marine research vessel, Sorcerer II, in the Sea of Cortez. The unexpected variety of microbial DNA he’s found overturns earlier notions that the oceans are a homogenous soup of bacteria and other microscopic life. The details are being published today in the Public Library of Science Biology, an Internet-based scientific journal.

A diverse supply of microbial DNA from the oceans could be a rich lode for scientists. Drug companies are hunting for new compounds in sea creatures, especially to attack cancer and neurodegenerative diseases. The new data will also allow researchers to compare the DNA of oceanic bacteria to the genetic code of microorganisms that cause human disease.

"This is the largest DNA sequence ever obtained, and the magnitude of what’s being done is entirely unparalleled," said Douglas Bartlett, professor of marine microbiology at the University of California, San Diego, who isn’t involved in Dr. Venter’s project. Marine microbes "have all kind of metabolic activity. It is expected that [Dr. Venter’s team] will discover new pathways for making drugs and treating infectious disease."

For the full story, see:

GAUTAM NAIK. "Seafaring Scientist Sees Rich Promise In Tiny Organisms." The Wall Street Journal (Tues., March 13, 2007): B1 & B5.

Photo on left shows Venter (on left) on his Socerer II research ship. Photo on right shows a slide of sea bacteria collected by Venter. Source of photos: http://scrippsnews.ucsd.edu/Releases/?releaseID=706

Advice from Charles Koch: A Successful Business Schumpeterian

Source of book image: http://media.wiley.com/product_data/coverImage300/89/04701398/0470139889.jpg

When Charles Koch became the chief executive of Rock Island Oil & Refining after the death of his father in 1967, the company was a moderately successful enterprise based in Wichita, Kan. He renamed it Koch Industries in honor of his father — and over the next 40 years proceeded to transform Fred Koch’s legacy into the world’s largest private company. Koch Industries — now a commodity and financial conglomerate that includes brands such as Stainmaster, Lycra and Dixie cups — has 80,000 employees in 60 countries. Its revenue last year was $90 billion. In one generation, the book value of Koch Industries has increased 2,000-fold. That’s an 18% compounded annual return — comparable with the long-term track record of Warren Buffett’s Berkshire Hathaway.

. . .

At age 71, Mr. Koch clearly feels that the time has come to pass along the business formula that has served him so well. In "The Science of Success," he describes a technique, called Market-Based Management (MBM), that he says evolved from his reading, early in his career, in history, political science, economics and other disciplines. He arrived at an understanding of what allows a free society to prosper, Mr. Koch says, and decided to apply those principles to business.

. . .

. . . He is especially fond of the "Austrian school" of economists, such as Ludwig von Mises and Joseph Schumpeter, who emphasized production processes, technology and the dynamic competitive models of "creative destruction."

For the full review, see:

MARK SKOUSEN. "BOOKS; A Short Course in Long-Term Value." The Wall Street Journal (Weds., March 7, 2007): D8.

(Note: ellipses added.)

Another Effort to Explore the Black-Box of Innovation

(p. 210) Schumpeter argues that innovation can happen endogenously and that its main source is the creative entrepreneur. Schumpeterian innovation is still black-boxed, however, because it is the product of the ingenuity of entrepreneurs and cannot be reproduced systematically.

. . .

The reconstructionist view takes off where the new growth theory left off. Building on the new growth theory, the reconstructionist view suggests how knowledge and ideas are deployed in the process of creation to produce endogenous growth for the firm. In particular, it proposes that such a process of creation can occur in any organization at any time by the cognitive reconstruction of existing data and market elements in a fundamentally new way.

Source:

Kim, W. Chan, and Renée Mauborgne. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Boston: Harvard Business School Press, 2005.

Anti-Wal-Mart is Anti-Free-Choice

Source of logo/header: http://www.muddycup.com/mudlane/img/header.jpg

The article excerpted below reveals the soul of much of the anti-Wal-Mart movement. It is not anti-big; it is anti-competition and anti-free-choice.

How in the world did a guy who started his first coffee shop on Staten Island six years ago and now runs five others in far-flung Hudson Valley towns become the moral equivalent of Wal-Mart and Starbucks? “Well, it’s now official,” he announced last month on the Web site that promotes his Muddy Cup coffeehouses. “I am now head of the evil empire.”

. . .

And now the talk of New Paltz has to do with something far more important than mere marriage — coffee. More specifically it’s whether Mr. Svetz is plotting an act of entrepreneurial imperialism by presuming to open one of his Muddy Cup coffeehouses next door to the ultimate green icon in town, the funky 60 Main coffee shop operated in conjunction with the nonprofit New Paltz Cultural Collective.

. . .

Little did he know. As word filtered out he began receiving a blizzard of e-mail messages from 60 Main proponents, reacting to an urgent appeal from the collective. The messages threatened a boycott and told him to stay home. “If we can stop Wal-Mart we can stop you,” said one.

“We do not want to become yet another small town taken over by huge corporations,” read another.

. . .

Mr. Svetz is still stunned by the whole thing, particularly his sudden status as a giant corporation. He says that just as lots of bars coexist in town, several coffee shops can too. Maybe he’s right. Maybe he’s not. He’s not Wal-Mart, but maybe it’s fair to ask how many artist-friendly coffeehouses the village can support. But it’s hard to argue when he says that even in New Paltz, businesses generally have to compete to survive, not find a way to build a Berlin Wall around town.

“When a community starts building walls and saying you don’t belong here or you don’t think like we do, that can’t be a good thing,” he said.

For the full story, see:

PETER APPLEBOME. "Coffee Puts Laid-Back Town on Edge." The New York Times, Section 1 (Sun., March 4, 2007): 21.

(Note: ellipses added.)

Immigrant Entrepreneurs Thrive in New York City

Manuel and mother Mercedes of the entrepreneurial Miranda family, inspect the corn flatbread called "arepa." Source of photo: online version of the NYT article cited below.

Immigrant entrepreneurship contributes to the vitality and dynamism of New York and the nation. Note the graphic at the bottom of this entry shows that employment increases in the same areas of the city in which immigrant entrepreneurship is thriving.

Manuel A. Miranda was 8 when his family immigrated to New York from Bogotá. His parents, who had been lawyers, turned to selling home-cooked food from the trunk of their car. Manuel pitched in after school, grinding corn by hand for traditional Colombian flatbreads called arepas.

Today Mr. Miranda, 32, runs a family business with 16 employees, producing 10 million arepas a year in the Maspeth section of Queens. But the burst of Colombian immigration to the city has slowed; arepas customers are spreading through the suburbs, and competition for them is fierce. Now, he says, his eye is on a vast, untapped market: the rest of the country.

. . .

“Immigrants have been the entrepreneurial spark plugs of cities from New York to Los Angeles,” said Jonathan Bowles, the director of the Center for an Urban Future, a private, nonprofit research organization that has studied the dynamics of immigrant businesses that turned decaying neighborhoods into vibrant commercial hubs in recent decades. “These are precious and important economic generators for New York City, and there’s a risk that we might lose them over the next decade.”

A report to be issued by the center today highlights both the potential and the challenge for cities full of immigrant entrepreneurs, who often face language barriers, difficulties getting credit, and problems connecting with mainstream agencies that help businesses grow. The report identifies a generation of immigrant-founded enterprises poised to break into the big time — or already there, like the Lams Group, one of the city’s most aggressive hotel developers, or Delgado Travel, which reaps roughly $1 billion in annual revenues.

In Los Angeles, at least 22 of the 100 fastest-growing companies in 2005 were created by first-generation immigrants. In Houston, a telecommunications company started by a Pakistani man topped the 2006 list of the city’s most successful small businesses.

But even in those cities and New York, where immigrant-friendly mayors have promoted programs to help small business, the report contends that immigrant entrepreneurs have been overlooked in long-term strategies for economic development.

. . .

Now, some children of the early influx are trying to build on their parents’ success — success that itself has increased the cost of doing business, by driving up rents and creating congestion.

One example is Jay Joshua, a Manhattan company that designs souvenirs and then has them manufactured in Asia and imported. Jay Chung, who arrived from South Korea in 1981 as a graduate student in design, started printing his computer-graphic designs for New York logos and peddling them to local T-shirt shops. His company is now one of the city’s leading suppliers of tourist items, from New York-loving coffee mugs to taxicab Christmas ornaments.

Mr. Chung’s son Joshua, 26, who was 3 when he immigrated, joined the company after studying business management in college, and recently helped land orders for a new line of Chicago souvenirs. But frustration mixes with pride when the Chungs, both American citizens now, discuss the company’s growth.

“It’s really hard to conduct a business over here as a wholesaler,” Mr. Chung said in the company’s West 27th Street showroom, chockablock with samples. “We get a ticket every 20 minutes, no matter what. We need more convenient places with less rent, less traffic.”

Thirty years ago their wholesale district was desolate. Now hundreds of Korean-American importers are there, said Jay Chung, who is a leader of the local Korean-American business association. They face a blizzard of parking tickets and high commercial rents — nearly $20,000 a month for 1,400 square feet, he said.

For the full story, see:

NINA BERNSTEIN. "Immigrant Entrepreneurs Shape a New Economy." The New York Times (Tues., February 6, 2007): C13.

(Note: the ellipses are added.)

The author of the New York Times article has contributed to a New York Times digital video clip that is based on the article and is entitled "Immigrant Entrepreneurs: A Tour of One Bustling Ethnic Enclave."

Entrepreneur father Jay and son Joshua own a firm that supplies New York City souveniers. Source of photo: online version of the NYT article cited above.

Source of graph: online version of the NYT article cited above.

Middendorf “Studied Under Joseph Schumpeter”

Source of book image: http://basicbooks.com/perseus/book_detail.jsp?isbn=0465045731

William Middendorf was important in the Goldwater campaign for president. Here is a brief excerpt from his recent book about the campaign:

(p. 8) . . ., I became a disciple of the Austrian libertarian school of economics, having studied under Joseph Schumpeter (an odd-man-out at Harvard, later named by the Wall Street Journal as the most important economist of the twentieth century) and Ludwig Von Mises (at New York University). Schumpeter and Von Mises saw entrepreneurship as a major driving force in economic development, considered private property—protected by an independent judiciary—essential to the efficient use of resources, and held that government intereference in market processes was usually counterproductive.

The reference to the book is:

Middendorf, J. William, II. Glorious Disaster: Barry Goldwater’s Presidential Campaign and the Origins of the Conservative Movement. New York: Basic Books, 2006.

International Trade Helps Poor African Cotton Farmer

Left photo shows Dennis Okelo in the grocery store that he opened with savings from growing cotton, and selling it to Dunavant. Right photo shows a Dunavant cotton gin in Zambia. Source of photos: online version of the NYT article cited below.

(p. 1) WHERE is he?” the old woman asks. “Where is he?”

Finding Dennis Okelo used to be easy. The old woman — and most other people in a village outside of Lira, the provincial capital of northern Uganda — went directly to Mr. Okelo’s fields. He was always in one of his “gardens,” with his slacks rolled up above his calves and a short hoe close by. Or he was seated outside of his mud-brick house under a banana tree.

Then cotton growing revived in Uganda, and Dunavant Enterprises came to town about five years ago, paying cash on delivery. After three seasons of growing cotton for Dunavant, the world’s largest privately owned cotton broker and one of the biggest family-owned agribusinesses in the United States, Mr. Okelo, who owns less than three acres and has two wives and a passel of children, had saved $300, about double his annual earnings before Dunavant started buying his cotton.

Last summer, Mr. Okelo opened a grocery store, which is where the old woman finally found him: smiling, standing behind the wooden plank that serves as his service counter in a shop the size of a utility shed. The grocery, one of two in the village, carries dried foods, cooking oil, matches, cosmetics, batteries and candy.

“Before Dunavant, no one came to help us,” says Mr. Okelo, 40, who has farmed a variety of crops in these parts for about 20 years.

. . .

(p. 7) IN his small shop, Mr. Okelo knows nothing of global developments in the cotton trade even though he is a direct beneficiary of them. He started farming during the lean years in Uganda, after the ouster of the country’s notorious dictator, Idi Amin, when the cultivation of cotton lagged so badly that production nearly ceased and farmers treated the crop like a weed.

A few years ago, as Uganda’s production began to revive, Dunavant’s trainers taught Mr. Okelo to grow cotton in straight rows and to use a string to measure precisely the distance between rows, to maximize plantings. Mr. Okelo’s new methods are basic, but in a part of Africa where farmers work the land chiefly with a hoe — and tractors, fertilizer and pesticides are rarities — even basic improvements can lead to large gains in production.

“Cotton is the crop that gives farmers the best money,” Mr. Okelo said. “I want Dunavant to be even closer to me.”