Category: Entrepreneurship

Nobody Wanted to Buy Tony Fadell’s Early Inventions

(p. C7) Tony Fadell began his Silicon Valley career in 1991 at General Magic, which he calls “the most influential startup nobody has ever heard of.” He sketches his early persona as the all-too-typical engineering nerd dutifully donning an interview suit only to be told to ditch the jacket and tie before the meeting begins. He started at the bottom, building tools to check the work of others, many of whom just happened to be established legends from the original Apple Macintosh team.

General Magic failed at its ambitious goal: to create demand for its ingenious hand-held computer at a time when most people didn’t know they needed a computer at all. In other words, though the company had a great product, the product didn’t solve a pressing problem for consumers. Mr. Fadell offers candid reasons why such a smart group of people could have overlooked this basic market reality. Relaying the “gut punch of our failure,” he describes what it’s like “when you think you know everything (p. C8) then suddenly realize you have no idea what you’re doing.”

Four years later, Mr. Fadell landed as chief technology officer at Philips, the 300,000-employee Dutch electronics company, where he had a big title, a new team, a budget and a mission: The company was going to make a hand-held computer for now-seasoned desktop users who were beginning to see the need for a mobile device. Using Microsoft Windows CE as the operating system, it launched the Philips Velo in 1997. This was a $599.99 “personal digital assistant”—keyboard, email, docs, calendar, the works—in a friendly 14-ounce package. All the pieces were there, the author writes, except “a real sales and retail partnership.” No one—not Best Buy, not Circuit City, not Philips itself—knew how to sell the product, or whom to sell it to. So here was another “lesson learned via gut punch”: There is a lot more to a successful product than a good gadget, even an excellent one.

. . .

He uses his problem-solution-failure style to share stories about how he built the Nest thermostat and the Nest Labs company—from fundraising, building a retail channel and navigating patent litigation to marketing, packaging and customer support.

The best moments in this section, and perhaps the most difficult for Mr. Fadell to write, are about the acquisition of Nest by Google. He pulls no punches in describing what an outsider might call a botched venture integration. Google paid $3.2 billion for Nest in 2014 but within two years began to consider selling. “In utter frustration,” Mr. Fadell walked away. The lessons in these pages are as much for big companies acquiring startups as they are for the startups being acquired.

For the full review, see:

Steven Sinofsky. “Running The Tortuous ‘Idea Maze’.” The Wall Street Journal (Saturday, June 18, 2022): C7-C8.

(Note: ellipsis added.)

(Note: the online version of the review has the date June 17, 2022, and has the title “‘Build’ Review: Failure Is the Mother of Invention.”)

The book under review is:

Fadell, Tony. Build: An Unorthodox Guide to Making Things Worth Making. New York: Harper Business, 2022.

Gun Inventors Were “Inveterate Tinkerers”

(p. A17) Whenever I hear the name Smith & Wesson, I think of the scene in the film “Sudden Impact” when Clint Eastwood’s Inspector Harry Callahan confronts a group of would-be robbers. “We’re not just gonna let you walk out of here,” Callahan tells them. When one of the crooks asks, “Who’s we, sucker?” Callahan responds, in classic Dirty Harry fashion: “Smith, and Wesson, and me.”

In “Gun Barons: The Weapons That Transformed America and the Men Who Invented Them,” John Bainbridge Jr. chronicles the rise of America’s greatest gunmakers—among them Colt, Remington, Winchester and, yes, Smith and Wesson. Many of these American armorers began as inveterate tinkerers in small workshops along the Connecticut River during the mid-19th century, in a region that could be called early industrial America’s fertile crescent. While some of these inventors were focused on rifles and others on handguns, they all shared the same goal: to design a repeating firearm and a reliable, waterproof cartridge containing bullet, gunpowder and ignition device, making it possible to fire shot after shot without needing to reload.

. . .

. . . there was the Volition Repeater, invented in 1847 by Walter Hunt, the creator of the household safety pin. Hunt’s rifle, in theory, could be loaded with up to a dozen cartridges underneath its long barrel. But the complex loading mechanism “never worked quite right,” so Hunt sold his patent and left it to others to perfect his idea. “With this would-be firearm, Walter Hunt had made the nation’s future but not his own,” Mr. Bainbridge tells us. “Among those who benefited from Walter Hunt’s genius were Oliver Winchester, Horace Smith, and Daniel Baird Wesson. None of these gun barons possessed the broadly inventive mind of Walter Hunt, yet all would eclipse Hunt while taking advantage of his pioneering work in weaponry.”

For the full review, see:

Mark Yost. “BOOKSHELF; Repeat Inventors.” The Wall Street Journal (Thursday, May 19, 2022): A17.

(Note: ellipses added.)

(Note: the online version of the essay has the date May 18, 2022, and has the title “BOOKSHELF; ‘Gun Barons’ Review: Repeat Inventors.”)

The book under review is:

Bainbridge, John, Jr. Gun Barons: The Weapons That Transformed America and the Men Who Invented Them. New York: St. Martin’s Press, 2022.

Miami Mayor Welcomes Private Enterprise with Public Safety, Low Taxes, and Few Regulations

(p. A15) On one side, we have the socialist model: high taxes, high regulation, less competition and declining public services with government imposing itself as the solver and arbiter of all social problems. On the other side, we have the Miami model: low taxes, low regulation and a commitment to public safety and private enterprise. The models present a stark choice on issues ranging from personal freedom, economic opportunity, public safety and the role of government.

. . .

In Miami, many residents have personally experienced the socialist model along with its symptoms of hyperinflation, class resentment and stagnant growth. Four years ago Miami residents elected me to pursue a different path. We reduced taxes dramatically, and our revenue base doubled. We invested in our police, and our crime rate dropped. And last week we reduced taxes to their lowest level in history—cutting costs for residents and promoting economic growth.

Miami is a place where you can keep what you earn, invest what you save, and own what you build. We are meeting the high demand of rent costs by encouraging public-private partnerships, activating underutilized land through zoning reforms, and harnessing free-market forces to build more. It works, and our new residents from New York and California can confirm it.

For the full commentary see:

Francis X. Suarez. “Miami Takes On the Socialist Model.” The Wall Street Journal (Monday, Aug. 22, 2022): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 21, 2022, and has the same title as the print version.)

Anxiety Increases “Ability to Focus”

(p. C1) In a pair of studies published in the journal Emotion by Jeffrey Birk, myself and colleagues in 2011, we induced anxiety in young adults by asking them to vividly imagine being a passenger in a car accident and helping injured people in its aftermath. Compared with a second group who experienced a happy mood induction, the anxious group showed a greater ability to focus and control their attention during a computerized assessment.

Over the past decade, research has also shown something that many scientists didn’t expect: higher levels of dopamine, the “feel good” hormone, when we’re anxious. We have long known that dopamine spikes when an experience is pleasurable and also in anticipation of such rewards, activating brain areas that motivate and prepare us. The fact that anxiety also boosts dopamine levels points to its role in making positive possibilities into reality.

. . .

(p. C2) . . ., there are many ways to use anxiety to create a deeper sense of personal fulfillment. Beginning in 1938, the Harvard Study of Adult Development, one of the longest-running and most comprehensive longitudinal studies ever conducted, asked a fundamental question: What leads to a healthy and happy life? Following over 1,300 people from all walks of life over decades, the study has found that one of the best predictors—better than social class, IQ and genetic factors—is having a sense of purpose.

For the full essay, see:

Tracy Dennis-Tiwary. “In Praise of Anxiety.” The Wall Street Journal (Saturday, May 7, 2022): C1-C2.

(Note: ellipses added.)

(Note: the online version of the essay has the date May 6, 2022, and has the same title as the print version.)

The essay quoted above is adapted from:

Dennis-Tiwary, Tracy. Future Tense: Why Anxiety Is Good for You (Even Though It Feels Bad). New York: Harper Wave, 2022.

Though Visible, Not Everyone Saw the Unexpected Buckyball

(p. A24) Robert F. Curl Jr., who shared the 1996 Nobel Prize in Chemistry as one of the discoverers of remarkably simple but completely unexpected carbon molecules known as buckyballs, died on July 3 at a retirement home in Houston. He was 88.

His death was announced by Rice University, where Dr. Curl was a professor emeritus of chemistry.

Buckyballs, with their round, hollow structure, upended chemists’ notions of what was possible for the shapes of molecules. A flood of scientists started studying them, spurring the nascent field of nanotechnology and dreams of building molecule-size machines.

. . .

The finding was serendipitous, because they had been looking for something else.

“You could argue it wasn’t any of our areas of interest,” James R. Heath, a graduate student of Dr. Smalley’s who performed many of the buckyball experiments, said in an interview.

. . .

For the experiment, Dr. Kroto was interested in molecules containing long chains of carbon that had been observed in interstellar space. He hypothesized that the long-chain molecules were created in the atmospheres of carbon-rich red giant stars.

. . .

At a science conference in 1984, Dr. Kroto ran into Dr. Curl, an old friend. Dr. Curl told him about an apparatus of Dr. Smalley’s that used a laser to create an intensely hot vapor that coalesced into clusters. Dr. Kroto realized that this apparatus could create conditions similar to those in the atmosphere of a red giant.

. . .

. . . Dr. Smalley finally agreed to try it, and the three professors, along with Dr. Heath and two graduate students, started their work.

They indeed discovered the long carbon chains that Dr. Kroto had wanted to find.

They also found something else — the buckyballs.

Dr. Heath said Dr. Curl provided a healthy dose of skepticism during the 11-day whirlwind of discovery.

“All of us were like excitable kids,” Dr. Heath said. “And Bob was like the adult in the room. And he would come up with reasons that we had to go back and test and make sure that this was right or that was correct. We all viewed Bob not like he was a devil’s advocate — more like he was an insurance policy. If Bob agreed with you, you were probably right.”

It turned out that the Exxon experiments had also created small numbers of buckyballs, but those researchers had overlooked them in their data. At Rice, the scientists realized what they had found.

For the full obituary see:

Kenneth Chang. “Robert F. Curl Jr., 88, Nobel Prize Winner in Chemistry.” The New York Times (Thursday, July 21, 2022): A24.

(Note: ellipses added.)

(Note: the online version of the obituary has the date July 20, 2022, and has the title “Robert F. Curl Jr., Nobel Prize Winner in Chemistry, Dies at 88.”

Illegal Entrepreneur “Vagabond” Works Hard to Please Customers

(p. 16) . . . nutcrackers, homemade brews that are not technically classified as to-go cocktails in New York, are still illegal, as is drinking in local parks and beaches.

. . .

Vagabond, who is in his early 30s, has kept his face and name out of articles for fear of getting into legal trouble. He said that he started selling cocktails for $10 to $15 in the park during the summer of 2020 — after his restaurant temporarily shut down — to support his family.

“None of the restaurants were open; the beaches were closed,” he said. “The only places to be were people’s backyards or the park.”

He said that nutcrackers were traditionally “really sweet, really harsh alcohol, and it’s just going to give you a buzz,” but that many sellers found ways to rebrand and shake up the colorful drinks during the pandemic.

Vagabond said that he puts a lot of thought into his cocktails, using specific liqueurs and infusing them with herbs like mint and basil, which requires extra time and effort.

Some people balk at the idea of spending $15 on a nutcracker. But as Mr. Lewis jokes about his drink, “I prefer the gentrified term — ‘craft cocktail.’”

He also said that in the nearly two years since he’s been selling the drinks, he’s never been stopped by the police.

. . .

Vagabond said that an article that featured him in 2020 gave him an uncomfortable amount of exposure.

“Within days of this New York Post article coming out, N.Y.P.D. was looking for my Instagram,” he said. “My worst fear came true. I got caught.”

After being let off with a warning, he decided selling in the park wasn’t worth the heightened risk and effort. Now, he said, he mostly just delivers drinks — occasionally catering events like birthdays and weddings.

“Some people think I just magically appear in the park and I’m just strolling along,” he said. “I think people miss how hard and demanding it is.”

Mr. Lewis also said that he’s hoping Gov. Kathy Hochul and Mayor Eric Adams will consider legalizing the work that nutcracker vendors do around the city.

“Don’t criminalize this, incorporate this,” he said. “I would rather pay a $200 license fee than a $200 fine.”

He said that he’s on cordial terms with the other people who sell drinks in Prospect Park — “there’s enough pie in New York City for everybody.”

The biggest obstacle he usually faces, he said, is the sheer labor involved in dragging the heavy bags of drinks through the park.

For the full story see:

Julia Carmel. “For Bottle Service With a Smile in a Brooklyn Park, He’s the Man.” The New York Times, First Section (Sunday, May 29, 2022): 16.

(Note: ellipses added.)

(Note: the online version of the article has the date May 28, 2022, and has the title “Want a Nutcracker or a ‘Craft Cocktail?’ He’s Your Guy.”

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?”)