Category: Entrepreneurship

Rivian Entrepreneur Is “Starkly Different” From Elon Musk, but Both “Are Immersed in the Details of Their Business”

(p. B5) Rivian, a promising and well-funded electric truck maker, plans to sell shares through an initial public offering, the company said Friday [Aug. 27, 2021], just weeks before it expects to deliver its first electric pickups to customers.

. . .

“Rivian is one of the best-positioned electric vehicle start-ups,” Asad Hussain, senior mobility analyst for PitchBook, said by email. “The company’s focus on the relatively untapped premium electric truck market should allow it to gain rapid market adoption.”

The leaders of Rivian and Tesla are also starkly different. Tesla’s chief executive, Elon Musk, has been a brash and combative force in the automotive industry, making big promises and engaging in public feuds with individuals and government agencies. Mr. Scaringe is understated and has been measured in his public statements and promises.

Still, both executives are immersed in the details of their business. Mr. Musk has said he has slept at his company’s main factory in Fremont, Calif., at important moments when Tesla was ramping up production. Mr. Scaringe is also a frequent presence at Rivian’s factory in Normal, Ill., and workers there refer to the color of robots and safety lines directing the flow of people as “R.J. Blue.” He has been known to weigh in on vehicle colors, including one known as “launch green.”

. . .

“In the very beginning, on Day 1, Year 1, the risk of starting a business like this is enormously high, and the likelihood of success was very low,” he said. “That’s just true. And I had to accept that.”

But Mr. Scaringe said he remained confident in his team and in the strategic plan they had assembled: First, raise enough money to develop core technologies — software, battery architecture, mechanical systems — that could support vehicles for both consumers and commercial customers; then raise more capital to mass produce trucks and vans.

Rivian appeared to embark on that second phase a few years ago. In the fall of 2018, Jeff Bezos, the Amazon founder, flew to Michigan to meet Mr. Scaringe and preview the company’s vehicles. By the end of the next year, Rivian had raised nearly $3 billion from investors including Ford and Amazon, which also ordered 100,000 delivery vans.

For the full story, see:

Niraj Chokshi, Noam Scheiber and Lauren Hirsch. “Rivian Set to Go Public as It Prepares to Deliver Electric Pickup Trucks.” The New York Times (Saturday, August 28, 2021): B5.

(Note: ellipses added.)

(Note: the online version of the story was updated Sept. [sic] 13, 2021, and has the title “Rivian, Electric Truck Maker Backed by Amazon and Ford, Files for I.P.O.”)

As Chinese Marxists Limit Liberty, the Young Show “Silent Resistance” by “Lying Down”

(p. 4) Five years ago, Luo Huazhong discovered that he enjoyed doing nothing. He quit his job as a factory worker in China, biked 1,300 miles from Sichuan Province to Tibet and decided he could get by on odd jobs and $60 a month from his savings. He called his new lifestyle “lying flat.”

“I have been chilling,” Mr. Luo, 31, wrote in a blog post in April [2021], describing his way of life. “I don’t feel like there’s anything wrong.”

He titled his post “Lying Flat Is Justice,” attaching a photo of himself lying on his bed in a dark room with the curtains drawn. Before long, the post was being celebrated by Chinese millennials as an anti-consumerist manifesto. “Lying flat” went viral and has since become a broader statement about Chinese society.

. . .

Mr. Ding, 22, has been lying flat for almost three months and thinks of the act as “silent resistance.”

. . .

The ruling Communist Party, wary of any form of social instability, has targeted the “lying flat” idea as a threat to stability in China.

. . .

Mr. Luo was born in rural Jiande County, in eastern Zhejiang Province. In 2007, he dropped out of a vocational high school and started working in factories. One job involved working 12-hour shifts at a tire factory. By the end of the day, he had blisters all over his feet, he said.

In 2014, he found a job as a product inspector in a factory but didn’t like it. He quit after two years and took on the occasional acting gig to make ends meet. (In 2018, he played a corpse in a Chinese movie by, of course, lying flat.)

Today, he lives with his family and spends his days reading philosophy and news and working out. He said it was an ideal lifestyle, allowing him to live minimally and “think and express freely.” He encourages his followers, who call him “the Master of Lying Down,” to do the same.

After hearing about Mr. Luo’s tangping post on a Chinese podcast, Zhang Xinmin, 36, was inspired to write a song about it.

. . .

Mr. Zhang uploaded the song to his social media platforms on June 3, and within a day censors had deleted it from three websites. He was furious.

. . .

Lying down is really good
Lying down is wonderful
Lying down is the right thing to do
Lie down so you won’t fall anymore
Lying down means never falling down.

For the full story, see:

Elsie Chen. “For Young People in China, ‘Lying Flat’ Beats Working.” The New York Times, First Section (Sunday, July 4, 2021): 4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date July 3, 2021, and has the title “These Chinese Millennials Are ‘Chilling,’ and Beijing Isn’t Happy.”)

When Does Selling an Entrepreneurial Vision Cross a Legal or Ethical Line?

(p. B4) I’m angry about start-up founders who over-promise, behave badly and sometimes crater their companies and walk away unscathed.

. . .

I’ve been thinking about this recently because of the glare on two start-up founders, Adam Neumann and Trevor Milton.

. . .

A new book details the ways that WeWork mostly just rented cubicles, burned through piles of other people’s money, treated employees like garbage and made Neumann stinking rich as the company nearly collapsed in 2019. WeWork has stuck around in less outlandish form without Neumann.

And last week, federal authorities charged Milton with duping investors in his electric truck start-up Nikola into believing that the company’s battery- and hydrogen-powered vehicle technology was far more capable than it really was. Among the allegations are that Milton ordered the doctoring of a promotional video to make a Nikola prototype truck appear to be fully functional when it was not.

. . .

Disproportionate rewards go to the entrepreneurs and companies that can sell a vision of billions of users and values in the trillions of dollars.

. . .

Those conditions tempt people to skirt the edges of what’s right and legal. But I also wonder if curtailing the excesses would also curb the ambition that we want. Sometimes the zeal to imagine ridiculously grand visions of the future brings us Theranos. And sometimes it brings us Google. Are these two sides of the same coin?

For the full commentary, see:

Shira Ovide. “Why Do Hucksters Come With the Territory?” The New York Times (Monday, August 9, 2021): B4.

(Note: ellipses added.)

(Note: the online version of the commentary was updated August 4, 2021, and has the title “Innovation Invites Hucksters.”)

The book on WeWork mentioned in the above commentary is:

Brown, Eliot, and Maureen Farrell. The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion. New York: Crown, 2021.

20 Startups Are Developing Senolytics to Slow Cell Senescence

(p. A17) Some species of tortoises, . . ., have a risk of death that doesn’t seem to change with age in adulthood. Though these wrinkly, lumbering beasts might not seem like ideal ambassadors for aging well, by the statistical definition of aging—how fast your risk of death increases with time—these tortoises hardly age at all.

. . .

A secret of the tortoises’ longevity is that their cells can divide more than twice as many times as human cells before becoming aged or “senescent.”

. . .

Already, therapies to combat cell senescence—senolytics—are undergoing human trials. Senescent cells build up in our bodies as we get older and seem to accelerate the aging process as they accumulate. Drugs and genetic modifications that periodically remove them have been shown to make mice biologically younger: They live longer and healthier than untreated mice, with stronger muscles and hearts; delayed cancer, cataracts and cognitive decline; and even plumper skin and thicker, glossier fur.

There are currently at least 20 startups trying to transfer senolytics from the lab to the clinic. These efforts target specific diseases in which senescent cells are known to be key villains. A company called Unity Biotechnology is targeting these cells to combat age-related sight loss, while a team including scientists at the Mayo Clinic who first demonstrated senolytics in mice is working to use the same drug cocktail to treat age-related lung fibrosis.

The average 80-year-old is suffering from five different diagnoses and taking a similar number of medications to treat them.

Senolytics are the vanguard but close behind are dozens of different ways to slow or reverse aging in the lab, ranging from drugs and diets to gene and stem cell therapies. These treatments intervene in the molecular, cellular and biological underpinnings of the aging process, from the smallest scale in our biology (damage to DNA and protein molecules) to the largest (dysfunction across the immune system). They are aimed at slowing down multiple aspects of the process and at wide-ranging rejuvenation.

There have been some high-profile failures in the field. One was resveratrol, found in grapes and other sources. A company working on resveratrol, Sirtris, was acquired by drug giant GSK for $720 million in 2008 but closed down five years later. The path from lab bench to pill is filled with obstacles, and we can expect further setbacks, but with so many different therapies and a deeper understanding of the biology of aging, at least some of the new ideas are likely to succeed.

For the full commentary, see:

Andrew Steele. “The Best Remedy for Our Diseases? Aging Less.” The Wall Street Journal (Saturday, April 10, 2021): A17.

(Note: ellipses added.)

(Note: the online version of the commentary was updated April 10, 2021, and has the same title as the print version.)

Steele’s commentary, quoted above, is related to his book:

Steele, Andrew. Ageless: The New Science of Getting Older without Getting Old. New York: Doubleday, 2021.

Business Formations During Pandemic Are “Off the Charts”

Source: Haltiwanger as reprinted in WSJ article cited below.
Source: Haltiwanger as reprinted in WSJ article cited below.

(p. A4) “Sixty or more years ago, most of us, including me, were altogether too willing to treat the economy as close to fully competitive. I now think that was a mistake,” Nobel Prize-winning economist Robert Solow said in a recent interview. “The economy has grown less competitive and the elements of monopoly power are probably very important for the distribution of income between work and wealth and ultimately across individuals.”

Douglas Holtz-Eakin, president of the American Action Forum, a conservative research group, said he is skeptical of the notion that corporate power has hurt consumers. He and other Republicans say the rise of big companies such as Walmart, Home Depot and Amazon has benefited U.S. consumers by helping to push down prices.

“I take all of this talk with a healthy dose of show me,” Mr. Holtz-Eakin said. While Republicans could likely get behind some of Mr. Biden’s proposals—such as pushing back against firms forcing workers to sign noncompete clauses or states imposing what some workers say are unnecessary licensing requirements on workers—other ideas may go too far.

Some research has found less cause for concern around business consolidation. “There are reasons to be cautious about concluding that market concentration has risen or is a meaningful problem for market competition and consumer welfare,” Nancy Rose, a professor in the economics department of the Massachusetts Institute of Technology, concluded in a 2019 examination of research on the issue, citing measurement challenges among reasons for skepticism.

. . .

With the rise of a few big companies, jobs also have become concentrated there. John Haltiwanger, a University of Maryland professor, finds that the share of U.S. jobs at young, small firms declined to 16% in 2018 from 26% in 1987. During the same period, the share of jobs in older, larger firms rose from 41% to more than half.

Mr. Haltiwanger’s research shows that the U.S. economy became less dynamic during this period, with fewer new jobs created by startup firms, less job-hopping by workers seeking out new opportunities and slower worker productivity growth.

. . .

Mr. Haltiwanger said the competition dynamics might now be changing due to the coronavirus pandemic. Tracking business identification data from the Internal Revenue Service, he spotted a surge in business formations in the second half of 2020, a trend that persisted into 2021.

“It is off the charts,” he said. “I think we discovered during the pandemic that our technological infrastructure is just phenomenal. We can do almost anything we want from anywhere. That leads to lots of market opportunities. I think there is going to be a surge of dynamism. The question is will it be transitory, or true innovation?”

For the full story, see:

Jon Hilsenrath. “Economic Competition Scrutinized.” The Wall Street Journal (Monday, July 12, 2021): A4.

(Note: ellipses added.)

(Note: the online version of the story has the date July 11, 2021, and has the title “Biden Stakes Out Position in Debate Over Power of Big Companies.”)

“Weak Venture Capitalists Who Kowtow to Charismatic Entrepreneurs”

(p. 11) . . . the unbelievability of the rise and fall of a company that marketed itself to investors as a tech enterprise when it actually rented work space to gig-economy freelancers and starry-eyed entrepreneurs is part of the considerable lure of “The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion,” a juicy guided tour through the highly leveraged, not-quite-rags-to-billion-dollar-parachute saga of WeWork and its co-founder Adam Neumann, a startup demagogue who aspired to be a demigod, but got hamstrung by his ego and greed.

. . .

. . ., the book saves its firepower for the cataclysmic combination of Neumann’s gift for salesmanship, addiction to fund-raising and focus on his personal wealth. We meet weak venture capitalists who kowtow to charismatic entrepreneurs as well as mutual fund directors, investment bankers and deep-pocketed benefactors like SoftBank’s Masayoshi Son who enabled Neumann.

For the full review, see:

Katherine Rosman. “Office Space.” The New York Times Book Review (Sunday, August 15, 2021): 11.

(Note: ellipses added.)

(Note: the online version of the review has the date July [sic] 18, 2021, and has the title “‘How to Explain the Rise and Fall of WeWork?”)

The book under review is:

Brown, Eliot, and Maureen Farrell. The Cult of We: Wework, Adam Neumann, and the Great Startup Delusion. New York: Crown, 2021.

“Extrapolate to Doomsday”

(p. B1) The giant tech companies with their power-hungry, football-field-size data centers are not the environmental villains they are sometimes portrayed to be on social media and elsewhere.

Shutting off your Zoom camera or throttling your Netflix service to lower-definition viewing does not yield a big saving in energy use, contrary to what some people have claimed.

Even the predicted environmental impact of Bitcoin, which does require lots of computing firepower, has been considerably exaggerated by some researchers.

Those are the conclusions of a new analysis by Jonathan Koomey and Eric Masanet, two leading scientists in the field of technology, energy use and the environment. Mr. Koomey is now an independent analyst, and Mr. Masanet is a professor at the University of California, Santa Barbara. (Mr. Masanet receives research funding from Amazon.)

They said their analysis, published on Thursday [June 24, 2021] as a commentary article in Joule, a scientific journal, was not necessarily intended to be reassuring. Instead, they said, it is meant to inject a dose of reality into the public discussion of technology’s impact on the environment.

. . .

(p. B3) Exaggerated claims, the pair said, are often well-intentioned efforts by researchers who make what may seem like reasonable assumptions. But they are not familiar with fast-changing computer technology — processing, memory, storage and networks. In making predictions, they tend to underestimate the pace of energy-saving innovation and how the systems work.

. . .

Computer data centers are a case study. The biggest data centers, from which consumers and workers tap services and software over the internet, do consume huge amounts of electricity. These so-called cloud data centers are operated by companies including Alibaba, Amazon, Apple, Facebook, Google and Microsoft.

From 2010 to 2018, the data workloads hosted by the cloud data centers increased 2,600 percent and energy consumption increased 500 percent. But energy consumption for all data centers rose less than 10 percent.

What happened, the authors explain, was mainly a huge shift of workloads to the bigger, more efficient cloud data centers — and away from traditional computer centers, largely owned and run by non-tech companies.

In 2010, an estimated 79 percent of data center computing was done in traditional computer centers. By 2018, 89 percent of data center computing took place in cloud data centers.

“The big cloud providers displaced vastly less efficient corporate data centers,” Mr. Koomey said. “You have to look at the whole system and take substitution effects into account.”

The complexity, dynamism and unpredictability of technology development and markets, the authors say, make projecting out more than two or three years suspect. They critiqued a Bitcoin energy paper that projected out decades, based on what they said were old data and simplified assumptions — an approach Mr. Masanet called “extrapolate to Doomsday.”

For the full story, see:

Steve Lohr. “The Internet Is Eating Up Less Energy Than Expected.” The New York Times (Saturday, June 26, 2021): B1 & B3.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date June 24, 2021, and has the title “The Internet Eats Up Less Energy Than You Might Think.”)

The commentary summarized in the passages quoted above is:

Koomey, Jonathan, and Eric Masanet. “Does Not Compute: Avoiding Pitfalls Assessing the Internet’s Energy and Carbon Impacts.” Joule 5, no. 7 (July 21, 2021): 1625-28.

MSG Seasoning Maker Finds Lucrative Tech Use for MSG Byproducts

(p. B10) The chip shortage is adding extra flavor to a 113-year-old Japanese seasoning company.

Japan’s Ajinomoto is renowned for inventing monosodium glutamate—the controversial flavor enhancer that adds umami to dishes. But it also makes a material that goes into the central processing units of computers around the world.

Ajinomoto manufactures a type of insulation material called Ajinomoto Buildup Film, or ABF. It was once made using byproducts from MSG manufacturing but isn’t any longer. The insulation material in turn goes into a semiconductor component called ABF substrate, which connects microchips to circuit boards.

. . .

Ajinomoto expects ABF shipment volume to grow 67% over the next four fiscal years. And its customers downstream are expanding capacity to meet demand. Ajinomoto said growth this fiscal year may slow but it will pick up again once those expansion plans are realized.

Ajinomoto’s core seasoning business is a less tasty morsel, but the business has still weathered the pandemic well. Even though demand from restaurants dropped, increases in home cooking have helped profits since retail products sell at higher margins.

For the full story, see:

Jacky Wong. “Microchips Punch Up MSG Maker.” The Wall Street Journal (Friday, Aug. 20, 2021): B10.

(Note: ellipsis added.)

(Note: the online version of the story has the date August 19, 2021, and has the title “Is MSG Bad for You? Not if It Comes With a Side of Microchips.”)

Emerson’s Buoyancy and Resilience in Adversity

(p. C5) Life compelled Emerson to become something of an expert on resilience. As a young man he lost the love of his life, his wife Ellen, to tuberculosis when she was just 19. His oldest son, Waldo—a joyful child who seemed to concentrate in himself what was most uninhibitedly life-loving in his father—died of scarlet fever when he was 5 years old.

. . .

In the essay “Power,” Emerson writes that we carefully watch children to see if they possess “the recuperative force.” Those who instinctively retire to their rooms in sorrow when they’re slighted, miss the prize or lose the game will be at a serious disadvantage in adult life. “But,” Emerson continues, “if they have the buoyancy and resistance that preoccupies them with new interest in the new moment,—the wounds cicatrize, and the fiber is the tougher for the hurt.”

When Waldo died, Emerson needed that kind of buoyancy and resistance to overcome the greatest sadness of his life.

. . .

Emerson’s resilience was shaped by his conviction that we are mortal and there is no other life than this. Nothing can redeem the time when you did not plunge forward and do what you had to do. The moral quality Emerson commends above all others isn’t love, faith or patriotism but a commitment to work. “But do your work and I shall know you,” he writes in “Self-Reliance.”

Emerson’s commitment to rapid recovery from loss isn’t gentle or humanitarian. But it is classically American in its insistence on affirming the future over the past. For all our faults, Americans are still people who look ahead, scope the territory, move forward. When we fail at something, we give it one more go and maybe get it half right.

For the full essay, see:

Mark Edmundson. “What Emerson Can Teach Us About Resilience.” The Wall Street Journal (Sat., June 19, 2021): C5.

(Note: ellipses added.)

(Note: the online version of the essay has the date June 18, 2021, and has the same title as the print version.)

Emerson’s most famous essay, “Self-Reliance,” can be found in:

Emerson, Ralph Waldo. Self-Reliance and Other Essays. New York: Dover Publications, Inc., 1993.

George Soros Tells Why Xi Will Fail

(p. A11) I consider Mr. Xi the most dangerous enemy of open societies in the world. The Chinese people as a whole are among his victims, but domestic political opponents and religious and ethnic minorities suffer from his persecution much more. I find it particularly disturbing that so many Chinese people seem to find his social-credit surveillance system not only tolerable but attractive. It provides them social services free of charge and tells them how to stay out of trouble by not saying anything critical of Mr. Xi or his regime. If he could perfect the social-credit system and assure a steadily rising standard of living, his regime would become much more secure. But he is bound to run into difficulties on both counts.

. . .

Mr. Xi is engaged in a systematic campaign to remove or neutralize people who have amassed a fortune. His latest victim is Sun Dawu, a billionaire pig farmer. Mr. Sun has been sentenced to 18 years in prison and persuaded to “donate” the bulk of his wealth to charity.

This campaign threatens to destroy the geese that lay the golden eggs. Mr. Xi is determined to bring the creators of wealth under the control of the one-party state. He has reintroduced a dual-management structure into large privately owned companies that had largely lapsed during the reform era of Deng. Now private and state-owned companies are being run not only by their management but also a party representative who ranks higher than the company president. This creates a perverse incentive not to innovate but to await instructions from higher authorities.

China’s largest, highly leveraged real-estate company, Evergrande, has recently run into difficulties servicing its debt. The real-estate market, which has been a driver of the economic recovery, is in disarray. The authorities have always been flexible enough to deal with any crisis, but they are losing their flexibility. To illustrate, a state-owned company produced a Covid-19 vaccine, Sinopharm, which has been widely exported all over the world, but its performance is inferior to all other widely marketed vaccines. Sinopharm won’t win any friends for China.

To prevail in 2022, Mr. Xi has turned himself into a dictator. Instead of allowing the party to tell him what policies to adopt, he dictates the policies he wants it to follow. State media is now broadcasting a stunning scene in which Mr. Xi leads the Standing Committee of the Politburo in slavishly repeating after him an oath of loyalty to the party and to him personally. This must be a humiliating experience, and it is liable to turn against Mr. Xi even those who had previously accepted him.

In other words, he has turned them into his own yes-men, abolishing the legacy of Deng’s consensual rule. With Mr. Xi there is little room for checks and balances. He will find it difficult to adjust his policies to a changing reality, because he rules by intimidation. His underlings are afraid to tell him how reality has changed for fear of triggering his anger. This dynamic endangers the future of China’s one-party state.

For the full commentary, see:

George Soros. “Xi’s Dictatorship Threatens the Chinese State.” The Wall Street Journal (Saturday, Aug. 14, 2021): A11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 13, 2021, and has the same title as the print version.)

Milton Friedman Will Be Vindicated on China

I was lucky to be able to take Milton Friedman’s Price Theory graduate course the last time he taught a full version of it. (I think he taught an abbreviated version a year or two later.) He was, and remains, one of my heroes. He predicted that China’s move to the market would also lead it to more political freedom. I suspect that he will still turn out to be correct, but with a longer delay than he or I thought likely. A dynamic economy depends on innovative entrepreneurship and innovative entrepreneurship depends on freedom of thought and speech. Xi is systematically destroying freedom of thought and speech in China; the house of cards will fall and Milton will be vindicated in the end.

(p. A15) “I predict that China will move increasingly toward political freedom if it continues its successful move to economic freedom.”

So spoke Milton Friedman in 2003. It seemed a good idea at the time, especially after the transformations of the dictatorships in Taiwan and South Korea into messy but functioning democracies.

. . .

Under Mr. Xi, Beijing has carried out genocide against China’s Uyghur minority, threatened Taiwan with invasion, shut down a pro-democracy newspaper in Hong Kong, covered up the origins of Covid-19, and so on. Even so, China’s economy continues to boom—it grew more than 18% in the first quarter from a year earlier—and Friedman now looks to have gotten it colossally wrong about capitalism and freedom.

For the full commentary, see:

William McGurn. “Milton Friedman Wrong About China?” The Wall Street Journal (Tuesday, June 29, 2021): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date June 28, 2021, and has the title “Was Milton Friedman Wrong About China?”)