Category: Entrepreneurship

Some Venture Capitalists “Act as Mentors,” Some Install Seasoned Veterans as C.E.O.s, and Some Are “Founder-Friendly,” Allowing Genius “to Do Its Work”

(p. C4) . . . Mallaby never quite settles on the story he wants to tell. He introduces the book by laying out what he intends to do: “to explain the venture-capital mind-set” and “to evaluate venture capital’s social impact.” This mind-set, he says, revolves around the “power law” of his title — the idea that the distribution of phenomena is not “normal” but skewed. Instead of a bell curve, picture a long tail, where “winners advance at an accelerating, exponential rate.” Adapt or die, sink or swim — there’s no middle ground. This is why V.C.s like to talk about “grand slams” and “moon shots”; Peter Thiel says that a fund’s top investment should generate returns so spectacular that it will outperform everything else in the fund put together.

This, clearly, isn’t the kind of logic that has much use for steady, incremental growth, to say nothing of a flourishing middle class. You might therefore wonder about the “social impact” of venture capital, which Mallaby deems to be, on the whole, good. He concedes that “V.C.s as individuals can stumble sideways into lucky fortunes,” or can sometimes do unhelpful things. But he is ultimately bullish on what they have to offer: “Venture capital as a system is a formidable engine of progress — more so than is frequently acknowledged.” That engine, Mallaby reminds us, has funded such ventures as the development of synthetic insulin and, more recently, plant-based alternatives to ecologically damaging meat.

. . .

He gives examples of the different kinds of funds, with their various personalities and philosophies. There are V.C.s who see it as their role to act as mentors and coaches to inexperienced founders. There are V.C.s who insist on installing seasoned outsiders at start-ups to serve as C.E.O.s. There are also “founder-friendly” V.C.s, who promise to be hands-off, allowing genius, no matter how unorthodox or weird, to do its work.

For the full review, see:

Jennifer Szalai. “BOOKS OF THE TIMES; A Funder-Friendly Look at Venture Capital.” The New York Times (Tuesday, February 1, 2022): C4.

(Note: ellipses added.)

(Note: the online version of the review has the date Jan. 31, 2022, and has the title “BOOKS OF THE TIMES; ‘The Power Law’ Is a Funder-Friendly Look at the World of Venture Capital.”)

The book under review is:

Mallaby, Sebastian. The Power Law: Venture Capital and the Making of the New Future. New York: Penguin Press, 2022.

Venture Capital’s “Massive” Role in Funding Innovation

(p. A15) The average venture-capital fund launched in 2011 outperformed the S&P 500 by 7% per year. But that statistic understates the astronomical returns earned by a few top performers—and the mediocre returns earned by the rest. Between 1979 and 2018, the median fund underperformed the S&P 500, while the top 5% of funds nearly tripled the index’s performance.

The investor Bill Gurley, of Benchmark, describes venture capital as a “grand-slam business.” In “The Power Law,” business journalist Sebastian Mallaby argues that venture is defined by its most extravagant successes. A few deals explain the majority of returns, a few funds drive the majority of asset-class performance, a few wild ideas change the world.

Venture’s contribution to innovation and entrepreneurship is massive. Mr. Mallaby notes that between 1995 and 2019 venture-backed companies accounted for nearly half of U.S. nonfinancial IPOs. These firms are orders of magnitude more likely to launch an IPO than startups that don’t receive venture backing. The U.S. economy’s dynamism depends in large part on the Silicon Valley ecosystem.

. . .

Though the book focuses on the winners, Mr. Mallaby doesn’t shy away from criticism, especially in his description of the decline of Kleiner Perkins. The firm was successful in the 1990s, but lead partner John Doerr became more interested in virtue signaling than in profit making. He started a cleantech fund, based on a conversation with his teenage daughter about saving the planet, that put a significant dent in the firm’s long-term track record. And he embarked on a highly publicized gender-equity campaign to hire female partners, only to see some of the most talented women quit and then see the firm be sued by a disgruntled employee for gender discrimination.

. . .

In his closing words in “The Power Law,” Mr. Mallaby warns that it’s “unwise” to bet against venture. But public markets have recently turned against IPOs and other venture-backed companies, sending venture-style portfolios like Cathie Wood’s ETF into steep losses. With the IPO window closing and tech stocks selling off, some venture investors might well be thinking: “There but by the grace of God go I.”

For the full review, see:

Daniel Rasmussen. “BOOKSHELF; Chasing Unicorns.” The Wall Street Journal (Thursday, February 3, 2022): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date February 2, 2022, and has the title “BOOKSHELF; ‘The Power Law’ Review: Chasing Unicorns.”)

The book under review is:

Mallaby, Sebastian. The Power Law: Venture Capital and the Making of the New Future. New York: Penguin Press, 2022.

Large Retailers Chartered Ships to Avoid the Most Crowded Ports

(p. A1) Global supply-chain delays are so severe that some of the biggest U.S. retailers have resorted to an extreme—and expensive—tactic to try to stock shelves this holiday season: They are chartering their own cargo ships to import goods.

Port delays, Covid-19 outbreaks and worker shortages have snarled the flow of products between Asia and North America, threatening the supplies of everything from holiday decorations and toys to appliances and furniture. It is taking roughly 80 days to transport goods across the Pacific, or twice as long as before the pandemic, retail and shipping executives said.

Walmart Inc., Home Depot Inc., Costco Wholesale Corp. and Target Corp. —some of the biggest U.S. retailers by revenue—are among the companies that are paying for their own chartered ships as part of wider plans to mitigate the disruptions, a costly and unattainable option for most companies.

For the full story, see:

Sarah Nassauer and Costas Paris. “Retailers Charter Ships to Ensure Supplies.” The Wall Street Journal (Monday, October 11, 2021): A1 & A6.

(Note: the online version of the story has the date October 10, 2021, and has the title “Big U.S. Retailers Charter Private Cargo Ships Amid Port Delays.”)

To Get “Free” Covid Pills from 60 Miles Away You Pay Private Uber to Deliver

(p. 1) Just after 1 p.m. on Tuesday last week, my phone buzzed with a text message from my mother: “Well, came down with cold, aches, cough etc over wknd.” She had taken an at-home coronavirus test. It was positive.

Having spent the past year writing about Covid-19 vaccines and treatments for The New York Times, I knew a lot about the options available to people like my mother. Yet I was about to go on a seven-hour odyssey that would show me there was a lot I didn’t grasp.

. . .

(p. 3) In the end, my scramble to find a prescriber turned out to be unnecessary. In the early evening, my mother got an unexpected call from a doctor with her primary care provider. She told the doctor about her symptoms and about the Rite Aid I had found with Paxlovid in stock.

The doctor told her that he was surprised that we had been able to track down Paxlovid. He phoned in a prescription to the Rite Aid.

Now we just needed to pick up the pills before the pharmacy closed in about an hour.

Uber came to the rescue. I requested a pickup at the Rite Aid and listed the destination as my mother’s home, some 60 miles away.

Once a driver accepted the ride, I called him and explained my unusual request: He’d need to get the prescription at the pharmacy window and then drive it to my mother’s. I told him I’d give him a 100 percent tip.

The driver, who asked me not to use his name in this article, was game. He delivered the precious cargo just after 8 p.m. My mother swallowed the first three pills — the beginning of a five-day, 30-pill regimen — within minutes of the driver’s arrival.

. . .

. . . the fact that the process was so hard for a journalist whose job it is to understand how Paxlovid gets delivered is not encouraging. I worry that many patients or their family would give up when told “no” as many times as I was.

I was also reminded that even a “free” treatment can come with significant costs.

The federal government has bought enough Paxlovid for 20 million Americans, at a cost of about $530 per person, to be distributed free of charge. But I spent $256.54 getting the pills for my mother. I paid $39 for the telemedicine visit with the provider who told my mother that she would need to visit in person. The rest was the Uber fare and tip. Many patients and their families can’t afford that.

President Biden recently called the Pfizer pills a “game changer.” My experience suggests it won’t be quite so simple.

For the full story, see:

Rebecca Robbins. “A 7-Hour Odyssey to Get My Mom Covid Pills.” The New York Times, SundayBusiness Section (Sunday, January 23, 2022): 1 & 3.

(Note: ellipses added.)

(Note: the online version of the story has the date Jan. 19, 2022, and has the title “When My Mom Got Covid, I Went Searching for Pfizer’s Pills.”)

Less-Ventilated Energy-Efficient Buildings Reduce Indoor Air Quality, Harming Cognitive Performance

(p. D6) A new study shows that poor indoor air quality is associated with subtle impairments in a number of cognitive functions, including our ability to concentrate and process information. The study tracked 302 office workers in commercial buildings in six countries — the United States, Britain, China, India, Mexico and Thailand — for 12 months.

The scientists used monitors to measure ventilation and indoor air quality in the buildings, including levels of fine particulate matter, which includes dust and minuscule particles from smoking, cleaning products and outdoor air pollution that seeps into the building. The workers were asked to use an app to take regular cognitive tests during the workday. The tests included simple math problems, as well as a tricky color and word brain teaser called the Stroop test, in which a word like “blue” or “purple” is printed in green or red ink.  . . .

The study found that the office workers in buildings with the poorest indoor air quality tended to perform worse on the brain teasers. While the effect wasn’t dramatic, the findings add to a growing body of evidence suggesting that the air we breathe affects brain health.

. . .

“This study looked at how several factors in the indoor environment have an immediate impact on our cognitive function and performance,” said Joseph G. Allen, the director of the Harvard Healthy Buildings program and the study’s senior author. “This study shows that the air you’re breathing at your desk at that moment has an impact on how well you think.”

In the past, air quality control in buildings has been mostly focused on energy efficiency and comfort, with little consideration given to infection control or overall worker health.

. . .

Dr. Allen is the co-author of a new book, “Healthy Buildings: How Indoor Spaces Drive Performance and Productivity.” He said he’s been encouraged to see more businesses and individuals taking indoor air quality more seriously as a result of the pandemic. Recently he saw a job posting at a major company advertising for a “head of healthy buildings” in the company’s global real estate division.

“It tells you that serious companies are changing how they approach their buildings, and they’re not thinking about this as a one-off during Covid,” said Dr. Allen.

. . .

“The pressure is coming from employees, parents of kids in school, teachers — there’s a heightened level of awareness and expertise,” said Dr. Allen. “How many people were talking about MERV 13 filters prior to the pandemic? This knowledge that our indoor spaces have been underperforming is not going away. I think people are rightly frustrated and fed up with it.”

For the full story, see:

Tara Parker-Pope. “What Bad Indoor Air Could Do to Your Brain.” The New York Times (Tuesday, September 28, 2021): D6.

(Note: ellipses added.)

(Note: the online version of the story was updated Sept. 28, 2021, and has the title “Is Bad Indoor Air Dulling Your Brain?”)

The book co-authored by Allen, and mentioned above, is:

Allen, Joseph G., and John D. Macomber. Healthy Buildings: How Indoor Spaces Drive Performance and Productivity. Cambridge, MA: Harvard University Press, 2020.

“People Are Now Coming to Their Own Conclusions About Covid”

(p. 3) Lauren Terry, 23, thought she would know what to do if she contracted Covid-19. After all, she manages a lab in Tucson that processes Covid tests.

But when she developed symptoms on Christmas Eve, she quickly realized she had no inside information.

“I first tried to take whatever rapid tests I could get my hands on,” Ms. Terry said. “I bought some over the counter. I got a free kit from my county library. A friend gave me a box. I think I tried five different brands.” When they all turned up negative, she took a P.C.R. test, but that too, was negative.

With clear symptoms, she didn’t believe the results. So she turned to Twitter. “I was searching for the Omicron rapid test efficacy and trying to figure out what brand works on this variant and what doesn’t and how long they take to produce results,” she said. (The Food and Drug Administration has said that rapid antigen tests may be less sensitive to the Omicron variant but has not identified any specific tests that outright fail to detect it.) “I started seeing people on Twitter say they were having symptoms and only testing positive days later. I decided not to see anybody for the holidays when I read that.”

She kept testing, and a few days after Christmas she received the result she had expected all along.

Though it’s been almost two years since the onset of the pandemic, this phase can feel more confusing than its start, in March 2020. Even P.C.R. tests, the gold standard, don’t always detect every case, especially early in the course of infection, and there is some doubt among scientists about whether rapid antigen tests perform as well with Omicron. And, the need for a 10-day isolation period was thrown into question after the Centers for Disease Control and Prevention announced that some people could leave their homes after only five days.

“The information is more confusing because the threat itself is more confusing,” said David Abramson, who directs the Center for Public Health Disaster Science at the N.Y.U. School of Global Public Health. “We used to know there was a hurricane coming at us from 50 miles away. Now we have this storm that is not well defined that could maybe create flood or some wind damage, but there are so many uncertainties, and we just aren’t sure.”

Many people are now coming to their own conclusions about Covid and how they should behave. After not contracting the virus after multiple exposures, they may conclude they can take more risks. Or if they have Covid they may choose to stay in isolation longer than the C.D.C. recommends.

And they aren’t necessarily embracing conspiracy theories. People are forming opinions after reading mainstream news articles and tweets from epidemiologists; they are looking at real-life experiences of people in their networks.

For the full story, see:

Alyson Krueger. “Covid Experts, the Self-Made Kind.” The New York Times, SundayStyles Section (Sunday, January 23, 2022): 3.

(Note: the online version of the story has the date January 21, 2022, and has the title “So You Think You’re a Covid Expert (but Are You?).”)

Asteroids as Another Existential Threat

Do we best prepare for uncertain existential future threats by huge centrally planned government spending, or by allowing the flourishing of general purpose technologies and nimble entrepreneurs?

(p. C4) The most immediate threat isn’t from the largest or smallest asteroids but from those in between. Over the past two decades, asteroid hunters with NASA and other international space agencies have identified and tracked the orbits of more than 20,000 asteroids—also known as near-Earth objects—that pass through our neighborhood as they orbit the sun. Of those, about 2,000 are classified as potentially hazardous—asteroids that are large enough (greater than 150 yards in diameter) to cause local destruction and that come close enough to Earth to someday pose a threat.

The good news is that scientists don’t expect any of these known asteroids to collide with Earth within at least the next century. Some will come pretty close, though: On an unlucky Friday the 13th in April 2029, the thousand-foot-wide asteroid Apophis will pass a mere 19,000 miles from Earth—closer than the satellites that bring us DISH TV.

But here’s the bad news: Hundreds of thousands of other near-Earth asteroids, both large and small, haven’t been identified. We have no idea where they are and where they are going. On Feb. 15, 2013, a relatively small, 60-foot-wide asteroid traveling at 43,000 mph exploded in the atmosphere near the Russian city of Chelyabinsk, sending out a blast wave that injured 1,500 people. No one had seen the asteroid coming.

We need to find and track these unknown invaders as soon as possible. But while NASA’s “planetary defense” budget has been steadily increasing over the past decade, the $150 million allocated in 2019 for asteroid detection, asteroid tracking and related programs amounts to less than 1% of the space agency’s $21.5 billion budget.

For the full commentary, see:

Gordon L. Dillow. “The Asteroid Peril Isn’t Science Fiction.” The Wall Street Journal (Saturday, July 5, 2019): C4.

(Note: the online version of the commentary has the date July 5, 2019, and has the same title as the print version.)

Dillow’s commentary is related to his book:

Dillow, Gordon L. Fire in the Sky: Cosmic Collisions, Killer Asteroids, and the Race to Defend Earth. New York: Scribner, 2019.

Biden’s Cancer “Moonshot Is 100 Percent Hype”

(p. A17) WASHINGTON — President Biden unveiled a plan on Wednesday to reduce the death rate from cancer by at least 50 percent over the next 25 years — an ambitious new goal, he said, to “supercharge” the cancer “moonshot” program he initiated and presided over five years ago as vice president.

Mr. Biden, joined by his wife, Jill Biden, and Vice President Kamala Harris, also announced a campaign to urge Americans to undergo screenings that were missed during the coronavirus pandemic.

. . .

More screenings are not the answer — the only cancers for which screening has indisputably lowered the death rate are colon and cervical. Death rates for other cancers, like breast, have fallen, but a large part of the drop, if not all of it, is because of improved treatment, said Donald A. Berry, a biostatistician at the University of Texas M.D. Anderson Cancer Center who has spent decades studying these issues.

“Everybody loves early detection, but it comes with harms,” he said — principally, the harm of finding and treating tumors that do not need to be treated because they are innocuous. “The harms we know, but the benefits of screening are very uncertain,” he said.

If the age-adjusted cancer death rate were to plunge by 50 percent, it would have to be because cancers were being cured. Some treatments, like a drug that treats chronic myelogenous leukemia, have slashed death rates for that disease, but such marked effects in cancer are few and far between.

. . .

The White House billed the event as a fresh push by the president to “reignite” the moonshot program and “end cancer as we know it.”

. . .

Yet one Wall Street analyst who specializes in biotechnology and pharmaceuticals said that the time, money and effort might be better spent on initiatives to prevent cancer, like reducing smoking and rates of obesity. The Centers for Disease Control and Prevention says being obese increases a person’s risk of cancer. And reducing smoking is a proven way to cut the cancer death rate.

“This moonshot is 100 percent hype; this is the absolute wrong way to do this,” said the analyst, Stephen Brozak, the president of WBB Securities.

Presidents since Richard M. Nixon have sought to tackle cancer, of which there are more than 100 types of disease that can vary in how they grow, spread and respond to treatment. The cancer institute estimates that nearly 40 percent of men and women will be diagnosed with some type of cancer at some point during their lifetimes. The American Cancer Society estimates there will be 1.9 million new cases of cancer in the United States this year, and more than 609,000 cancer deaths.

For the full story, see:

Sheryl Gay Stolberg and Gina Kolata. “President Aims to Cut The Cancer Death Rate In Half Over 25 Years.” The New York Times (Thursday, February 3, 2022): A17.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 2, 2022, and has the title “Biden Presents Ambitious Plan to Cut Cancer Death Rate in Half.”)

Amazon Warehouse Jobs Give “Economic Boost” to English Town

(p. B4) DARLINGTON, England—Many retailers in this old market town have long held Amazon.com Inc. partially to blame for the closures of a raft of local shops in recent years.

Then, Amazon opened a warehouse here.

The facility, which opened in early 2020, employs 1,300 full-time staff, making it one of the town’s biggest employers. It hired 500 additional seasonal workers during the end-of-year holidays. Wages start at £10 (equivalent to $13.25) an hour, above the legal minimum, and benefits include private healthcare and an £8,000 education allowance available in installments over four years.

The new jobs have all delivered an economic boost for the Northern England town of 100,000, while sparking a reassessment of the U.S. e-commerce giant. Nicola Reading, a gift-shop owner, still blames Amazon for the demise of the local retail scene but now sees an upside, too.

“It feels like Amazon employs half the population of Darlington now,” she said.

Already America’s second-biggest employer, after Walmart Inc., Amazon has been advancing in Europe and the U.K., investing €78 billion ($89 billion) since 2010 in a continentwide expansion that has significantly accelerated over the past few years. Amazon employs over 55,000 full-time U.K. staff.

. . .

Local officials in Darlington have applauded Amazon’s arrival, which they say has benefited the town, chiefly by creating jobs. Amazon’s presence is also encouraging young university graduates to stay in the town and attracting other companies, said Mark Ladyman, the Darlington Borough Council’s assistant director for economic growth.

For the full story, see:

Trefor Moss. “The Small Town That Amazon Upended, Then Saved.” The Wall Street Journal (Saturday, January 22, 2022): B4.

(Note: ellipsis added.)

(Note: the online version of the story was updated Jan. 21, 2022, and has the same title as the print version.)

Could Principled Investors Make the Walt Disney Company Great Again?

Robert Nozick defended firms that maximize profits subject to ethical side constraints. Presumably the ethical side constraints include not capitulating to totalitarian governments that suppress free speech. The recent “meme” investors in GameStop and AMC sparked in me the question whether principled investors loyal to ethical side constraints could return the Walt Disney Company to the principled greatness of Walt Disney, the man?

(p. 1) It has been a year since Mat Bowen, who was the pastor of a small church in Gibson City, Ill., had the dream — the one where Elon Musk, the head of Tesla, urged him to buy Dogecoin.

Mr. Bowen had just begun to dabble in investing. He soon discovered WallStreetBets, the online forum on Reddit where throngs of small investors were plotting to buy shares of GameStop, the troubled video game retailer, in a bid to teach Wall Street a lesson. Some hedge funds had bet that shares of GameStop would fall. Instead, they took off, as the investors banded together last January to drive the price up more than 1,700 percent.

Caught up in the frenzy, Mr. Bowen bought GameStop, too. In July [2021], he quit the church to become a full-time trader, convinced he was joining a fight against financial injustice.

The beliefs underpinning last year’s meme stock phenomenon are stronger than ever. For a large number of individual investors, the stock market has become the battleground on which they join forces to right perceived wrongs and fight the powerful. So much so that when the stock market seesawed this past week, many small investors were undeterred. Falling prices were another opportunity to buy more shares of their favorite companies.

“The reason I am still in this, and the reason I am willing to ride these stocks to zero, is for my fellow citizens,” said Mr. Bowen, who received his master’s degree in divinity (p. 7) at the Princeton Theological Seminary. He cast the so-called meme stock fight in moral terms. “The battle of good versus evil is not just limited to the walls of a church or a synagogue or a mosque,” he said.

. . .

Jesus Gonzalez was drawn into the meme stock trade by what he saw as a power imbalance. Mr. Gonzalez, 22, had invested in stocks off and on as a teenager, but “AMC and GameStop are different from any other play in the stock market,” he said. “We have never seen a congregation of retail investors who have collectively come together on the internet and formed the largest, most powerful decentralized hedge fund in the world.”

Mr. Gonzalez, who graduated from Arizona State University with a bachelor’s degree in finance last month, is buying more shares of GameStop and AMC, even though his $220,000 portfolio is off 37 percent from its November [2021] high, he said.

His 34-year-old sister, Ruby Gonzalez, a behavioral health therapist who works at Phoenix Children’s Hospital and is studying to become a nurse, followed her brother’s lead and invested most of her savings in the two companies. “I want to change market manipulation,” she said.

For the full story, see:

Tara Siegel Bernard, Emily Flitter and Anupreeta Das. “How GameStop Turned into a Fight for Good vs. Evil.” The New York Times, SundayBusiness Section (Sunday, January 30, 2022): 1 & 7.

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

(Note: the online version of the story has the date Jan. 29, 2022, and has the title “Buy GameStop, Fight Injustice. Just Don’t Sell.”)

Robert Nozick’s libertarian masterpiece is:

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, Inc., 1974.