Category: Entrepreneurship

Maverick Rickover Was Dedicated to the Project of a Nuclear Powered Navy

Several years ago, a student in my entrepreneurship seminar asked if he could do his paper on Admiral Rickover. I am glad that I finally said “yes.”

(p. C9) . . ., in “Admiral Hyman Rickover: Engineer of Power,” Marc Wortman delivers a 17-gun salute to this short, profane spitfire who pulled a reluctant Navy into the atomic era.

. . .

Though physically courageous, Rickover, according to one of his commanding officers, showed “no outward signs of qualities of leadership.” In the late 1920s, he spent a year studying electrical engineering at Columbia University.

. . .

It can be difficult for landlubbers to grasp the significance of nuclear power to a navy. Freed from the shackles of fuel tenders, a nuclear-powered submarine can “slide into the depths and maintain top speeds for weeks or even months without need for recharging fuel, air, or battery,” Mr. Wortman notes. “Atomic-powered submarines represented a seafaring and naval warfare leap as fundamental as that from sail to steam.”

. . .

[Rickover’s] experience at Columbia imbued him with an unconventional attitude toward authority when he headed the Navy’s nuclear-propulsion group. At the Atomic Energy Commission’s Division of Naval Reactors, “he abolished rank and uniform,” Mr. Wortman writes. “ ‘There is no hierarchy in matters of the mind,’ Rickover said, and he insisted that all were ‘permitted to do as they think best and to go to anyone and anywhere for help. Each person is then limited only by his own ability.’ ”

But he also demanded accountability and was a Captain Bligh to the men he selected to run his reactors. Addressing one group of newly minted engineers, Rickover “jumped his then-seventy-seven-year-old body up on a tabletop, stomped with rage like an angry djinn, and screamed at the top of his lungs, ‘I understand genetics. If you make a mistake with my nuclear plant, it’s because your mother was a street whore who trawled for tricks with a mattress on her back!’ ” His Pattonesque benediction concluded: “On penalty of all you hold dearest, do not fail to live up to my standard of perfection.”

His maverick approach threw off sparks when it rubbed against military structure. “Navy and government officials bristled at Rickover’s rebellious nature, indifference to the chain of command, and frequent workarounds,” Mr. Wortman writes. “He was obstinate, egotistical, and abrasive, a specialized engineer indifferent to and sometimes actively in rebellion against the Navy’s chain of command, protocols, and culture. By pushing the Navy into technology frontiers, his nuclear-power program proved alien to existing thinking.” Passed over for promotion twice, the ill-tempered Rickover relied on supporters in Congress and the White House to move up to admiral and remain in uniform past retirement age.

For the full review, see:

Jonathan W. Jordan. “The Navy’s Atomic Generator.” The Wall Street Journal (Saturday, Feb. 12, 2022): C9.

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

(Note: the online version of the review has the date February 11, 2022, and has the title “‘Admiral Hyman Rickover’ Review: The Navy’s Atomic Generator.”)

The book under review is:

Wortman, Marc. Admiral Hyman Rickover: Engineer of Power. New Haven, CT: Yale University Press, 2022.

Increasing Tax Rates Will Reduce Venture Funding for Cancer Research

(p. A17) In his last year as vice president, Joe Biden launched a “cancer moonshot” to accelerate cures for the disease. It was short-lived, but he did help negotiate an agreement in Congress easing regulation of breakthrough drugs and medical devices.

In February [2022], President Biden revived the initiative, setting a goal of reducing cancer death rates by at least 50% over the next 25 years. It’s ambitious but may be achievable given how rapidly scientific knowledge and treatments are advancing. Other Biden policies, however, are at odds with the goals of this one.

Two pharmaceutical breakthroughs were announced only last week that could save tens of thousands of lives each year and redefine cancer care. Yet the tax hikes and drug-price controls that the Biden administration is pitching would discourage the private investment that has delivered these potential cures.

. . .

Oncologists were blown away by the results reported last week in the New England Journal of Medicine: All 12 patients receiving the drug achieved complete remission after six months of treatment. None needed surgery, chemotherapy or radiation. Although some may relapse, the 100% success rate is unprecedented even for a small trial.

. . .

Last week AstraZeneca in partnership with Daiichi Sankyo reported that Enhertu reduced the risk of death by 36% in patients with metastatic breast cancer with low HER2 and by half for the subset who were hormone-receptor negative. These results blow the outcomes for other metastatic breast-cancer therapies out of the water.

. . .

These treatment breakthroughs aren’t happening because of government programs. They’re happening because pharmaceutical companies have invested decades and hundreds of billions of dollars in drug research and development. It typically takes 10.5 years and $1.3 billion to bring a new drug to market. About 95% of cancer drugs fail.

This is important to keep in mind as Mr. Biden and Democrats in Congress push for Medicare to “negotiate”—i.e., cap—drug prices and raise taxes on corporations and investors. The large profits that drugmakers notch from successful drugs are needed to reward shareholders for their investment risk and encourage future investment. Capital is mobile.

Mr. Biden’s proposal to increase the top marginal individual income-tax rates, including on capital gains, would punish venture capitalists who seed biotech startups, which do most early-stage research on cancer drugs and are often acquired by large drugmakers. At the same time, his proposed corporate global minimum tax would raise costs of intellectual property, which is often taxed at lower rates abroad.

There aren’t many things to celebrate nowadays, but biotech innovation is one. Let’s hope the president doesn’t kill his own cancer moonshot.

For the full commentary see:

Allysia Finley. “Biden May Stop His Cancer Moonshot’s Launch.” The Wall Street Journal (Thursday, June 16, 2022): A17.

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

(Note: the online version of the commentary has the date June 15, 2022, and has the same title as the print version.)

The “Intellect” and “Bravado” Behind the Success of Thiel, Musk, and the “PayPal Mafia”

(p. C7) Next week marks the 20th anniversary of PayPal becoming a publicly traded company. The IPO valued the online payments processor at nearly $1 billion—an eye-opening sum at the time. Back in the day, technology firms marked such occasions with glitzy celebrations. PayPal took a different path. Its youthful employees gathered in the parking lot of their Palo Alto, Calif., office building, where the company’s enigmatic chief executive, Peter Thiel, performed a keg stand and then played 10 simultaneous games of speed chess, winning nine of them.

Jimmy Soni tells that story and many others in “The Founders,” a gripping account of PayPal’s origins and a vivid portrait of the geeks and contrarians who made its meteoric rise possible. His richly reported narrative includes corporate intrigue, workplace hijinks, breakthrough innovation and first-class nerdiness.

. . .

Julie Anderson, one of X.com’s early employees, dropped the company’s California-based telephone customer-service provider and relaunched the service in Nebraska. Why there? Because many of her relatives lived there.

. . .

Confirming a cliché, staffers do spend all night at the office—sometimes sleeping under their desks, though not always. “There’s this massive value that you harness when you’re doing an all-nighter,” says Mr. Levchin, “when you’ve gone for presumably seven or eight hours of work, and you’re really getting up to a point when something’s about to be born—and then you go for eight more hours! And instead of stopping to go to sleep and letting these ideas dissipate, you actually focus on the findings you’ve made in the last few hours, and you just go crazy and do some more of that.”

. . .

Why did PayPal thrive when others—eMoneyMail, PayPlace, c2it—failed? One key was limiting the losses from fraud. If the company had taken a traditional approach, observes a member of the fraud-analytics team, it “would have hired people who had been building logistic regression models for banks for twenty years but never innovated.” Instead it turned to young, open-minded engineers who devised unorthodox methods.

. . .

. . . “The Founders” makes crystal-clear that PayPal’s human capital—a potent cocktail of intellect, bravado and competitiveness, complemented by the occasional keg stand—laid the foundation for success.

For the full review, see:

Matthew Rees. “Making the Future Click.” The Wall Street Journal (Saturday, Feb. 12, 2022): C7.

(Note: ellipses added.)

(Note: the online version of the review has the date February 11, 2022, and has the title “‘The Founders’ Review: Making the Future Click.”)

The book under review is:

Soni, Jimmy. The Founders: The Story of PayPal and the Entrepreneurs Who Shaped Silicon Valley. New York: Simon & Schuster, 2022.

CDC’s “Rigid Checklist” Leads Doctors to Misdiagnose Atypical Cases

(p. A17) In his “memoir of illness and discovery,” Mr. Douthat tells us of his descent into a netherworld of consternation, paranoia and despair after contracting a chronic form of Lyme disease six years ago. Although he experienced physical pain that was often unbearable, he was stonewalled and scoffed at by skeptical doctors who refused to accept the existence of a long-lingering form of Lyme.

. . .

Lyme—a debilitating bacterial disease acquired from deer-tick bites—was ruled out because many of his symptoms didn’t match a rigid checklist drawn up for the ailment by the Centers for Disease Control and Prevention. This “diagnostic standardization,” Mr. Douthat writes, was “supposed to establish a consistent baseline for national case reporting, not rule out the possibility of atypical cases or constrain doctors from diagnosing them.” As a result of such inflexibility, he tells us, doctors miss “anywhere from a third to half of early Lyme cases.”

For the full review, see:

Tunku Varadarajan. “BOOKSHELF; Patient, Heal Thyself.” The Wall Street Journal (Saturday, Oct. 14, 2021): A17.

(Note: ellipsis added.)

(Note: the online version of the review has the date October 13, 2021, and has the title “BOOKSHELF; ‘The Deep Places’ Review: Patient, Heal Thyself.”)

The book under review is:

Douthat, Ross. The Deep Places: A Memoir of Illness and Discovery. New York: Convergent Books, 2021.

Brynjolfsson Made “Long Bet” with Gordon that A.I. Will Increase Productivity

(p. B1) For years, it has been an article of faith in corporate America that cloud computing and artificial intelligence will fuel a surge in wealth-generating productivity. That belief has inspired a flood of venture funding and company spending. And the payoff, proponents insist, will not be confined to a small group of tech giants but will spread across the economy.

It hasn’t happened yet.

Productivity, which is defined as the value of goods and services produced per hour of work, fell sharply in the first quarter this year, the government reported this month. The quarterly numbers are often volatile, but the report seemed to dash earlier hopes that a productivity revival was finally underway, helped by accelerated investment in digital technologies during the pandemic.

The growth in productivity since the pandemic hit now stands at about 1 percent annually, in line with the meager rate since 2010 — and far below the last stretch of robust improvement, from 1996 to 2004, when productivity grew more than 3 percent a year.

. . .

(p. B6) The current productivity puzzle is the subject of spirited debate among economists. Robert J. Gordon, an economist at Northwestern University, is the leading skeptic. Today’s artificial intelligence, he says, is mainly a technology of pattern recognition, poring through vast troves of words, images and numbers. Its feats, according to Mr. Gordon, are “impressive but not transformational” in the way that electricity and the internal combustion engine were.

Erik Brynjolfsson, director of Stanford University’s Digital Economy Lab, is the leader of the optimists’ camp. He confesses to being somewhat disappointed that the productivity pickup is not yet evident, but is convinced it is only a matter of time.

“Real change is happening — a tidal wave of transformation is underway,” Mr. Brynjolfsson said. “We’re seeing more and more facts on the ground.”

It will probably be years before there is a definitive answer to the productivity debate. Mr. Brynjolfsson and Mr. Gordon made a “long bet” last year, with the winner determined at the end of 2029.

For the full story see:

Steve Lohr. “Why Isn’t A.I. Increasing Productivity?” The New York Times (Wednesday, May 25, 2022): B1 & B6.

(Note: ellipsis added.)

(Note: the online version of the story was updated May 27, 2022, and has the title “Why Isn’t New Technology Making Us More Productive?”)

Young Despairing Chinese Adopt the “Run Philosophy”

(p. B1) “I can’t stand the thought that I will have to die in this place,” said Cheng Xinyu, a 19-year-old writer in the southwestern Chinese city of Chengdu, who is thinking of migrating to foreign countries before the government’s iron fist falls on her.

She can’t imagine having children in China, either.

“I like children, but I don’t dare to have them here because I won’t be able to protect them,” she said, citing concerns like pandemic control workers breaking into apartments to spray disinfectant, killing pets and requiring residents to leave the keys in their apartment door locks.

Ms. Cheng is part of a new trend known as the “run philosophy,” or “runxue,” that preaches running away from China to seek a safer and brighter future. She and millions of others also reposted a video in which a young man pushed back against police officers who warned that his family would be punished for three generations if he refused to go to a quarantine camp. “This will be our last generation,” he told the police.

His response became an online meme that was later censored. Many young people identified with the sentiment, saying they would be reluctant to have children under the increasingly authoritarian government.

. . .

(p. B3) The “run philosophy” and the “last generation” are the rallying cries for many Chinese in their 20s and 30s who despair about their country and their future. They are entering the labor force, getting married and deciding whether to have children in one of the country’s bleakest moments in decades. Censored and politically suppressed, some are considering voting with their feet while others want to protest by not having children.

. . .

Doris Wang, a young professional in Shanghai, said she had never planned to have children in China. Living through the harsh lockdown in the past two months reaffirmed her decision. Children should be playing in nature and with one another, she said, but they’re locked up in apartments, going through rounds of Covid testing, getting yelled at by pandemic control workers and listening to stern announcements from loudspeakers on the street.

“Even adults feel very depressed, desperate and unhealthy, not to mention children,” she said. “They’ll definitely have psychological issues to deal with when they grow up.” She said she planned to migrate to a Western country so she could have a normal life and dignity.

Compounding the frustrations, headlines are full of bad news about jobs. There will be more than 10 million college graduates in China this year, a record. But many businesses are laying off workers or freezing head counts as they try to survive the lockdowns and regulatory crackdowns.

. . .

“When you find that as an individual you have zero ability to fight back the state apparatus, your only way out is to run,” said Ms. Wang, the young professional in Shanghai.

For the full commentary see:

Li Yuan. “The New New World; Young Chinese Feel Suffocated.” The New York Times (Wednesday, May 25, 2022): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the commentary has the date May 24, 2022, and has the title “The New New World;‘The Last Generation’: The Disillusionment of Young Chinese.”

Log4j Open Source Bug Created “Endemic” Risk for “a Decade or Longer”

Continuing worries about the Log4j software bug are consistent with my skepticism of open source software, Openness to Creative Destruction. You can find a brief discussion in the chapter defending patents.

(p. A6) WASHINGTON—A major cybersecurity bug detected last year in a widely used piece of software is an “endemic vulnerability” that could persist for more than a decade as an avenue for hackers to infiltrate computer networks, a U.S. government review has concluded.

. . .

“The Log4j event is not over,” the report said. “The board assesses that Log4j is an ‘endemic vulnerability’ and that vulnerable instances of Log4j will remain in systems for many years to come, perhaps a decade or longer. Significant risk remains.”

. . .

Security researchers uncovered last December a major flaw in Log4j, an open-source software logging tool. It is a widely used piece of free code that logs activity in computer networks and applications.

For the full story, see:

Dustin Volz. “‘Endemic’ Risk Seen In Log4j Cyber Bug.” The Wall Street Journal (Friday, July 15, 2022): A6.

(Note: ellipses added.)

(Note: the online version of the story has the date July 14, 2022, and has the title “Major Cyber Bug in Log4j to Persist as ‘Endemic’ Risk for Years to Come, U.S. Board Finds.”)

My book, mentioned above, is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Entrepreneur Turns Invasive Predator Crabs into Tasty Whiskey

(p. A12) CONCORD, N.H. — Care for a hint of crab in your whiskey?

A New Hampshire distillery has come up with its newest concoction called “Crab Trapper” – whiskey flavored with invasive green crabs.

Tamworth Distilling, a maker of craft spirits, is not afraid of pushing boundaries with unexpected flavors. In the past, the distillery produced a whiskey with the secretion from beavers’ castor sacs. Last year, it was turkey over the holidays and before that the notoriously pungent smell of durian.

The company said the body of this peculiar brew has hints of maple, vanilla oak, clove, cinnamon and allspice.

. . .

Searching for a fresh flavor, Tamworth Distilling cast its eye to the sea. Distiller Matt Power said the company heard about the problems caused by the invasive green crabs from the University of New Hampshire Extension’s Gabriela Bradt.

. . .

Bradt, a fisheries extension specialist, said the crabs are “so numerous that they have really impacted shellfish habitats and fisheries because they are also voracious predators.” A good example, she said, was the soft-shell clam fishery, which has suffered millions of dollars in losses.

. . .

The distillery’s sales manager, Jillian Anderson, said the whiskey, available on site, at Philadelphia’s Art in the Age and online, has grown in popularity.

For the full story see:

Michael Casey, The Associated Press. “Invasive Crabs Become Whiskey.” Omaha World-Herald (Sunday, June 30, 2022): A12.

(Note: ellipses added.)

Is Apple’s Lack of New Breakthroughs Due to Lack of Opportunity or Lack of Steve Jobs?

(p. 15) Steve Jobs, Apple’s co-founder and animating spirit, died in 2011, leaving the firm in the hands of Jony Ive, the British-born designer-savant, and Tim Cook, a child of Alabama who’d become a master of supply chains and production costs. “After Steve,” by the New York Times reporter Tripp Mickle, covers Ive’s and Cook’s careers, and how they and the company changed after they took over.

. . .

In the epilogue, Mickle drops his reporter’s detachment to apportion responsibility for the firm’s failure to launch another transformative product. Cook is blamed for being aloof and unknowable, a bad partner for Ive, “an artist who wanted to bring empathy to every product.” Ive is also dinged for taking on “responsibility for software design and the management burdens that he soon came to disdain.” By the end, the sense that the two missed a chance to create a worthy successor to the iPhone is palpable.

It’s also hooey, and the best evidence for that is the previous 400 pages. It’s true that after Jobs died, Apple didn’t produce another device as important as the iPhone, but Apple didn’t produce another device that important before he died either. It’s also true that Cook did not play the role of C.E.O. as Jobs had, but no one ever thought he could, including Jobs, who on his deathbed advised Cook never to ask what Steve would do: “Just do what’s right.”

Ive and Cook wanted another iPhone, but, as Mickle’s exhaustive reporting makes clear, there was not another such device to be made. Self-driving cars were too hard, health devices too regulated, television protected in ways music had not been, and even the earbuds and watch, devices they actually shipped, were peripheral, technically and conceptually, to Apple’s greatest product.

Epilogue aside, the book is an amazingly detailed portrait of the permanent tension between strategy and luck: Companies make their own history, but they do not make it as they please. What happened after Steve was that Cook’s greatest opportunities were in Apple’s future, Ive’s in its past.

For the full review, see:

Clay Shirky. “The Watchmen.” The New York Times Book Review (Sunday, May 29, 2022): 15.

(Note: ellipsis added; italics in original.)

(Note: the online version of the review was updated May 2, 2022, and has the title “Apple Inc., ‘After Steve’.”)

The book under review is:

Mickle, Tripp. After Steve: How Apple Became a Trillion-Dollar Company and Lost Its Soul. New York: William Morrow, 2022.

Well-Financed Fusion Startup Claims to Be a Year Away From Energy Break-Even Point

(p. B4) Zap Energy, a fusion energy start-up working on a low-cost path to producing electricity commercially, said last week that it had taken an important step toward testing a system its researchers believe will eventually produce more electricity than it consumes.

. . .

While many competing efforts use powerful magnets or bursts of laser light to compress a plasma in order to initiate a fusion reaction, Zap is pursuing an approach pioneered by physicists at the University of Washington and Lawrence Livermore National Laboratory.

It relies on a shaped plasma gas — an energized cloud of particles that is often described as a fourth state of matter — that is compressed by a magnetic field generated by an electrical current as it flows through a two-meter vacuum tube. The technique is known as “sheared flow Z-pinch.”

. . .

Advances in stabilizing the magnetic field that is generated by the flowing plasma made by physicists at the University of Washington led the group to establish Zap Energy in 2017. The company has raised more than $200 million, including a series of investments from Chevron.

Recent technical advances in fusion fuels and in advanced magnets have led to a sharp increase in private investment, according to the Fusion Industry Association. There are 35 fusion companies globally, and private funding has risen above $4 billion, including from well-known technology investors like Sam Altman, Jeff Bezos, John Doerr, Bill Gates and Chris Sacca. Mr. Gates and Mr. Sacca invested in Zap’s most recent funding round.

. . .

The Zap Energy physicists and executives said in interviews last week that they believed they were within a year of proving that their approach was capable of reaching the long-sought-after energy break-even point.

If they do, they will have succeeded where an array of research efforts — going back to the middle of the last century — have failed.

The Zap Energy physicists said they had made the case for the “scaling” power of their approach to produce a steep increase in neutrons in a series of peer-reviewed technical papers that documented computer-generated simulations they would soon begin to test.

For the full story, see:

John Markoff. “A Seattle Start-Up Claims a Big Step For Fusion Energy.” The New York Times (Thursday, June 23, 2022): B4.

(Note: ellipses added.)

(Note: the online version of the story has the date June 22, 2022, and has the title “A Big Step Toward Fusion Energy Is Hailed by a Seattle Start-Up.”)

Maine Oyster Harvest in 2021 Was Largest in History, Up 50% from 2020

(p. D9) BRUNSWICK, Maine — Maine is producing more oysters than ever due to a growing number of shellfish farms that have launched off its coast in recent years.

The state’s haul of oysters, the vast majority of which are from farms, grew by more than 50% last year to more than 6 million pounds.

. . .

. . ., the growth of oysters is great news for a state that has been trying to diversify marine industries, said Dan Devereaux, one of the owners of Mere Point Oyster Company in Brunswick.

For the full story, see:

Whittle, Patrick, Associated Press. “‘Like a Wild West Gold Rush’: Maine Oysters Boom.” Omaha World-Herald (Sunday, June 26, 2022): D9.

(Note: ellipses added.)