California Tech Firms Move to Texas for Its “Laissez-Faire Environment”

(p. B1) Moves by high-profile companies to Texas from California are likely to improve the personal finances of executives and offer employees more affordable housing—but make little difference to the firms’ tax bills.

Oracle Corp. and Hewlett-Packard Enterprise Co. are the latest big corporations to announce moves to the Lone Star State. Elon Musk, the chief executive of Tesla Inc., is also moving to Texas, and the electric car company is expanding there.

The announcements have highlighted the vastly different tax and regulatory systems in the country’s two most populous states. California relies more on taxing personal income, particularly of high-income households, and operates a growing regulatory structure. Texas leans on more regressive property and sales taxes and boasts a more laissez-faire environment. The biggest difference: High-paid executives who move can see their state income-tax bills go from 13.3% to nothing.

. . .

(p. B2) Changing addresses or even moving people and facilities doesn’t necessarily change a company’s tax costs on its own.

. . .

The bigger factor—outweighing any change in business taxes—is likely to be the lower cost of employing workers in the state. For most people, that calculation is more about housing costs, said Darien Shanske, a tax law professor at the University of California, Davis. Housing scarcity and land-use regulations are bigger drivers of payroll costs than taxes.

“Moving a headquarters to Austin where people can afford a place to live, that dominates whether they pay the personal income tax, for most people,” Mr. Shanske said.

For the full story, see:

Richard Rubin and Theo Francis. “Lower Costs Draw Tech Firms to Texas.” The Wall Street Journal (Thurs., Dec 17, 2020): B1-B2.

(Note: ellipses added.)

(Note: the online version of the story has the date December 16, 2020, and has the title “Texas’ Tax Advantage Is All About Individuals, Not Business Taxes.”)

“All Seasons Press” Will Publish Books Cancelled by Mainstream

(p. B4) Two veteran book-publishing executives have teamed up to launch a conservative publishing house called All Seasons Press LLC as ideological debates roil a book industry increasingly fueled by demand for political titles.

Louise Burke, the former president and publisher of Simon & Schuster’s Gallery Books Group, and Kate Hartson, whom Hachette Book Group dismissed as editorial director of its Center Street imprint earlier this year, said conservative authors are finding it harder to get published in the post-Trump era.

“I’m increasingly concerned and somewhat outraged about what’s going on in terms of free speech and free press,” said Ms. Burke, who retired in August 2017 after a 40-year career.

. . .

The company’s launch comes as some conservatives allege that much of the nation’s news media, publishers and mainstream social-media platforms are biased against them. They are looking to set up alternatives that they say better support free speech.

For the full story, see:

Jeffrey A. Trachtenberg. “Book Imprint to Serve Conservative Voices.” The Wall Street Journal (Wednesday, June 16, 2021): B4.

(Note: ellipsis added.)

(Note: the online version of the story was updated June 15, 2021, and has the title “New Book Publisher Caters to Conservative Voices.”)

David Ellison Took Flak for Hiring Cancelled Animation Innovator

(p. 1) Mr. Ellison, the son of Larry Ellison, a co-founder of Oracle, sure looked like “dumb money.” That is the Hollywood term for a gullible, affluent outsider bitten by the movie bug, the type of investor that studios have long counted on to keep their assembly lines running, despite it almost always ending poorly (for the newcomer). The young Mr. Ellison couldn’t stop talking about his love of cinema, in particular big-budget spectacles. He had just dropped out of the University of Southern California to act in a $60 million movie called “Flyboys,” a World War I aerial combat tale.

Partly financed with Ellison money, “Flyboys” arrived to a disastrous $6 million in ticket sales. But no matter: The scion was on Hollywood’s radar.

Along with his wallet.

Soon enough Mr. Ellison had given up acting and by 2010 had become a financier and producer for Paramount Pictures, pouring $350 million of equity and debt into movies like “Star Trek Into Darkness” and “Mission: Impossible — Ghost Protocol.” But Hollywood snickered at his effort to be taken seriously as a creative force, as did the news media.

. . .

(p. 10) Mr. Ellison . . . enraged half of Hollywood by abruptly announcing in January 2019 that John Lasseter, co-founder of Pixar, would join Skydance as animation chief. Mr. Lasseter (“Toy Story,” “Cars”) was radioactive at the time, having resigned seven months earlier as Disney’s chief creative officer amid #MeToo complaints about unwanted workplace hugging and imperious behavior. (Mr. Lasseter had apologized for “missteps” that made some Disney-Pixar staff members feel “disrespected or uncomfortable.”)

People like Mr. Ellison typically sulk off to some luxury hideaway at this point in the script to nurse their wounds. (Lanai, the Hawaiian island owned by his father, would do nicely.) Accustomed to floating through life, they seem unable to cope with anything less, especially if it means admitting missteps.

Instead, Mr. Ellison served up a major plot twist.

He raised $275 million by selling 10 percent of Skydance to investors like RedBird Capital, a private investment firm, and CJ Entertainment, the Korean company behind the Oscar-winning “Parasite.” He lined up $1 billion in revolving credit through JPMorgan Chase. And Skydance made a sharp turn toward streaming, selling attention-getting content to whichever service wanted to pay the most.

So far, the result has been nothing short of remarkable, in part because Mr. Ellison’s timing was fortuitous. The pandemic supercharged home entertainment.

For the full story, see:

Brooks Barnes. “Not Such ‘Dumb Money’ After All.” The New York Times, SundayBusiness Section (Sunday, June 20, 2021): 1 & 10-11.

(Note: ellipses added.)

(Note: the online version of the story has the date June 16, 2021, and has the title “Dumb Money No More: How David Ellison Became a Hollywood High Flier.”)

Government Cover Ups

(p. 230) It’s hard enough to find out about the things the universe prefers to keep hidden without our government, which somebody you know must have voted for, covering up what has already been found. Sometimes, of course, it hides things to save its own neck and sometimes seemingly just for the hell of it.

Norman Maclean’s musings, quoted above, are from his wonderful prize-winning account of the Mann Gulch fire in which Wag Dodge spontaneously invented a way to save his life from the wall of fire speeding toward him:

Maclean, Norman. Young Men and Fire. Chicago: University of Chicago Press, 2017 [first edition 1992].

Entrepreneur Pan Leaves Communist China After Xi Arrests Human Rights Defender and Friend

(p. B1) China’s economy is on a tear. Factories are humming, and foreign investment is flowing in. Even so, the wealthy and powerful people atop some of the country’s most prominent companies are heading for the exits.

The latest are Pan Shiyi and Zhang Xin, the husband-and-wife team that runs Soho China, a property developer known for its blobby, futuristic office buildings. In striking a deal this week to sell a controlling stake to the investment giant Blackstone for as much as $3 billion, Mr. Pan and Ms. Zhang are turning over the company as high-profile entrepreneurs come under public and official scrutiny in China like never before.

. . .

(p. B5) “For big tycoons in China, nowadays they need to be careful in general,” said Ling Chen, who studies state-business relations in China at the School of Advanced International Studies at Johns Hopkins University.

. . .

Mr. Pan was . . . one of the first Chinese business leaders to recognize the power of the internet in marketing and public relations. He wrote a popular blog in the 2000s. Then, when the Twitter-like social media platform Weibo came along, he quickly became one of its most influential voices, amassing more than 20 million followers.

. . .

He was never too pointed in expressing his opinions. But he wanted China to learn from its mistakes, such as its cruel treatment of the moneyed and educated classes during the Cultural Revolution.

After Mr. Xi took office as China’s top leader in 2013, the authorities began going after businesspeople and intellectuals with big online followings. The police that year arrested Wang Gongquan, a friend of Mr. Pan’s and supporter of human rights causes, on charges of disrupting public order.

Mr. Pan and Ms. Zhang began selling off property holdings in China and spending more time in the United States.

For the full story, see:

Raymond Zhong. “A Chinese Power Couple Cashes Out.” The New York Times (Friday, June 18, 2021): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story has the date June 17, 2021, and has the title “As China Scrutinizes Its Entrepreneurs, a Power Couple Cashes Out.”)

To Extort U.S. Firms, Xi Passes Laws that Firms Cannot Obey

(p. B1) Doug Guthrie spent 1994 riding a single-speed bicycle between factories in Shanghai for a dissertation on Chinese industry. Within years, he was one of America’s leading experts on China’s turn toward capitalism and was helping companies venture East.

Two decades later, in 2014, Apple hired him to help navigate perhaps its most important market. By then, he was worried about China’s new direction.

China’s new leader, Xi Jinping, was leaning on Western companies to strengthen his grip on the country. Mr. Guthrie realized that few companies were bigger targets, or more vulnerable, than Apple. It assembled nearly every Apple device in China and had made the region its No. 2 sales market.

So Mr. Guthrie began touring the company with a slide show and lecture to ring the alarm. Apple, he said, had no Plan B.

“I was going around to business leaders, and I’m like: ‘Do you guys understand who Xi Jinping is? Are you listening to what’s going on here?’” Mr. Guthrie said in an interview. “That was my big calling card.”

His warnings were prescient. China has taken a nationalist, au-(p. B3)thoritarian turn under Mr. Xi, and American companies like Apple, Nike and the National Basketball Association are facing a dilemma. While doing business in China often remains lucrative, it also increasingly requires uncomfortable compromises.

That trend raises the question of whether, instead of empowering the Chinese people, American investment in the country has empowered the Chinese Communist Party.

. . .

Mr. Guthrie’s career arc and evolving view of China tell the story of Western industry’s complicated dance with the country over the past three decades. Mr. Guthrie and many executives, politicians and academics had bet that Western investment in China would lead the country to liberalize. It is now clear that they miscalculated.

“We were wrong,” said Mr. Guthrie, who left Apple in 2019. “The wild card was Xi Jinping.”

In recent years, China shut down Marriott’s website after it listed Tibet and Taiwan as separate countries in a customer survey. It suspended sign-ups to LinkedIn after the site failed to censor enough political content. And the Communist Party urged a boycott of Western apparel companies that criticized forced-labor practices in Xinjiang, a Chinese region where the government is repressing Uyghurs, the country’s Muslim ethnic minority.

. . .

In 2014, China’s so-called dispatch labor law went into effect, limiting the share of temporary workers in a company’s work force to 10 percent. From Day 1, Apple and its suppliers were in violation.

At a Foxconn plant in Zhengzhou, China, the world’s biggest iPhone factory, temporary workers made up as much as half of the work force, according to a report by China Labor Watch, an advocacy group. After the report, Apple confirmed that the factory broke the law.

Apple executives were concerned and confused, Mr. Guthrie said. They knew the company couldn’t comply because it needed the extra workers to meet periods of intense demand, such as the holidays.

. . .

“‘This is the point. You are supposed to be out of compliance,’” he said he had told them. “‘Not so they can shut you down, but so you’ll figure out what they want you to do and figure out how to do it.’”

Mr. Guthrie, who is often tucking his long, graying hair behind his ears, began giving his lecture on Apple’s risk in China around that time. Its extreme reliance on the country left it with little leverage to resist.

Apple continued to grapple with demands from the government.

. . .

To measure the success of their lobbying, Apple executives looked to the government’s annual corporate social responsibility scores, a proxy for the Communist Party’s view of a company.

. . .

Apple’s score steadily improved. From 2016 to 2020, its ranking among all companies in China rose from No. 141 to No. 30.

Apple didn’t always successfully resist the government’s demands. Over that period, Mr. Cook had agreed to store his Chinese customers’ private data — and the digital keys to unlock that data — on computer servers owned and run by the Chinese government.

For the full story, see:

Jack Nicas. “A Warning On China Is Prescient For Apple.” The New York Times (Friday, June 18, 2021): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date June 17, 2021, and has the title “He Warned Apple About the Risks in China. Then They Became Reality.”)

The Promise of Gene Editing Is Greater Than the Peril

(p. C1) The Berkeley biochemist [Jennifer Doudna] had helped to invent a powerful new technology that made it possible to edit the human genome—an achievement that made her the recipient of a Nobel Prize in 2020. The innovation was based on a trick that bacteria have used for more than a billion years to fight off viruses, a talent very relevant to us humans these days. In their DNA, bacteria develop clustered, repeated sequences (what scientists call CRISPRs) that can recognize and then chop up viruses that attack them. Dr. Doudna and others adapted the system to create a tool that can edit DNA—opening up the potential for curing genetic diseases, creating healthier babies, inventing new vaccines, and helping humans to fight their own wars against viruses.

. . .

(p. C2) . . . the advances in CRISPR technology, combined with the havoc wrought by the Covid-19 pandemic, have pushed me to be more open to gene editing. I now see the promise of CRISPR more clearly than the peril. If we are wise in how we use it, biotechnology can make us more able to fend off lethal viruses and overcome serious genetic defects.

After millions of centuries during which evolution happened “naturally,” humans now can hack the code of life and engineer our own genetic futures. Or, for those who decry gene editing as “playing God,” let’s put it this way: Nature and nature’s God, in their wisdom, have evolved a species that can modify its own genome.

For the full commentary, see:

Walter Isaacson. “What Gene Editing Can Do for Humankind.” The Wall Street Journal (Saturday, Feb. 20, 2021): C1-C2.

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

(Note: the online version of the commentary has the date Feb. 19, 2021, and has the same title as the print version.)

Isaacson’s commentary is related to his book:

Isaacson, Walter. The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race. New York: Simon & Schuster, 2021.

Nanosatellites May Be a General Purpose Technology

(p. B4) Scientists who track the health of Adélie penguins on the ice-covered wastes of Antarctica are managing their cameras from thousands of miles away—via tiny satellites orbiting above our heads.

Energy companies are exploring using the same technology for monitoring hard-to-reach wind farms; logistics companies for tracking shipping containers; and agribusiness companies for minding cattle. It even helped National Geographic track a discarded plastic bottle from Bangladesh to the Indian Ocean.

In the near future, it isn’t unreasonable to imagine this evolving satellite technology could put a distress beacon in every automobile, allow remote monitoring of wildlife in any environment on earth, and track your Amazon shipment—not just when it’s on a truck, but backward, all the way to the factory that produced it. And it could be done at a fraction of the cost of earlier satellite tracking systems.

These novel networks of nanosats—aka cubesats—are a result of a number of factors.

First, the satellites themselves are smaller, cheaper and more capable than ever. The smartphone industry has miniaturized all electronics, benefiting everything from cars to drones. Then there are falling launch costs, due to companies like SpaceX, active national space programs like India’s, and an array of new launch technologies, from reusable boosters to 3-D-printed engines.

Just as important, there’s the rollout and adoption of new long-distance, low-power wireless communication standards that can work just as well in outer space as they do on the ground.

Like so many innovations in their early days, from the internet to the smartphone, no one is quite sure what low-cost, low-power data relays from space will enable—or whether there will be enough demand to sustain the many companies jostling to provide it. In the next year, hundreds of satellites from more than a dozen companies are set to launch.

For the full commentary, see:

Christopher Mims. “A March of Penguins and Progress.” The Wall Street Journal (Saturday, Jan. 9, 2021): B4.

(Note: the online version of the commentary has the date January 8, 2021, and has the title “The Tiny Satellites That Will Connect Cows, Cars and Shipping Containers to the Internet.”)

Covid-19 Patents Provide Funding for Development of Future Vaccines

(p. A25) South Africa and India have petitioned the World Trade Organization to suspend some intellectual property protections from Covid-19 drugs, vaccines and diagnostic technologies. In support of the effort, Doctors Without Borders began a social media campaign urging governments to “put lives over profits,” warning of “pharma profiteering” and urging support for “#NoCovidMonopolies.”

. . .

Intellectual property rights, including patents, grant inventors a period of exclusivity to make and market their creations. By affording these rights to those who create intangible assets, such as musical compositions, software or drug formulas — people will invent more useful new things.

Development of a new medicine is risky and costly. Consider that scientists have spent decades — and billions of dollars — working on Alzheimer’s treatments, but still have little to show for it. The companies and investors who fund research shoulder so much risk because they have a shot at a reward. Once a patent expires, generic companies are free to produce the same product. Intellectual property rights underpin the system that gives us all new medicines, from psychiatric drugs to cancer treatments.

. . .

Eroding patent protections has far-reaching consequences.

Take “messenger RNA,” the technology platform that supports the vaccines from Pfizer-BioNTech and Moderna. Ozlem Tureci and Ugur Sahin, the wife-and-husband team at the helm of BioNTech, began exploring the use of mRNA more than 25 years ago and founded their company in 2008. Theoretically, mRNA can instruct the body to engineer proteins, including ones that increase immunity against infectious pathogens, cancers and rare genetic conditions. But the Covid-19 vaccines are the first truly successful applications of this technology. Scientists eager to explore future uses of mRNA will struggle to find investment if intellectual property protections are snatched away when others deem it necessary.

For the full commentary, see:

Thomas Cueni. “The Risk in Suspending Vaccine Patent Rules.” The New York Times (Saturday, December 12, 2020): A25.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 10, 2020, and has the same title as the print version.)

Silent Monks Keep Chartreuse Recipe Secret for Centuries

A firm may not need to patent its invention if it can keep the invention’s construction secret because its workers are isolated loners who view each other as brothers. Otherwise, good luck.

(p. 6) The Chartreux, also known as Carthusians, embrace a deeply ascetic existence in the western French Alps, observing customs that have barely changed since their order, one of Christianity’s oldest, was founded. They pass the days alone, praying for humanity and listening for God in the silence that surrounds them.

. . .

The Carthusians sustain this isolated lifestyle largely through the production and sale of Chartreuse, a liqueur the monks developed centuries ago. Like its mountainous namesake and the hue named after it, Chartreuse is sharp, bright, profoundly herbal.

. . .

The year was 1084, and seven men in search of isolation and solitude took refuge in southeastern France’s Chartreuse Mountains — “the emerald of the Alps,” as the French writer Stendhal called them.

According to legend, centuries later, in 1605, the order’s monastery near Paris received an alchemist’s ancient manuscript for a perfectly concocted medicinal tonic of about 130 herbs and plants: the “Elixir of Long Life.”

. . .

Today, the order sells about 1.5 million bottles of its three hallmark products annually, with the yellow and green liqueurs going for about $60, and cask-aged versions for $180 or more. About half its production run is sold in France, with the United States the largest export market.

. . .

Remarkably, among them, only two monks know the full 130-ingredient recipe.

“The secret of Chartreuse has long been the despair of distillers, just as the natural blue of forget-me-nots has been the despair of painters,” reads an 1886 document referred to in a recent history of the company and order. Father Holleran spent five years overseeing the distillation process, ordering ingredients and planning its production schedules. When he departed the site in 1990, he became the only living outsider to know the liqueur’s ancient formula.

“It’s safe with me,” he said. “Oddly enough, they didn’t make me sign anything when I left.”

This trade secret is both a marketing coup and a potential catastrophe. “I really have no idea what it is I sell,” a Chartreuse Diffusion president told The New Yorker in 1984. “I am very scared always. Only three of the brothers know how to make it — nobody else knows the recipe. And each morning they drive together to the distillery. And they drive a very old car. And they drive it very badly.”

Beyond the two monks who now protect it, all the others — Carthusian or not — involved in the production of Chartreuse know only fragments of the recipe.

. . .

Along its five-week distilling process, and throughout the subsequent years of aging, those two monks are also the ones who taste the product and decide when it is ready to bottle and sell. “They are the quality control,” said Emmanuel Delafon, the current C.E.O. of Chartreuse Diffusion.

. . .

Since 1935, the city of Voiron has served as the liqueur’s main manufacturing site. But in 2011, Mr. Delafon said, regional officials tightened distilling regulations, mostly aimed at the hazards — fires and vapor-fueled explosions, notably — of making such high-proof alcohol. After all, at 138 proof, the Elixir barely escapes the International Civil Aviation Organization’s threshold for dangerous goods.

Officials, more or less, deemed the Chartreuse distillery a refinery dangerously close to schools and homes. “It was the Eiffel Tower of Voiron, and then it became a problem,” Mr. Delafon said. “Completely unsupportable.”

Chartreuse looked for a new production home, and settled on a plot of land previously owned and farmed by the Carthusians starting in the 16th century. In 2017, they officially moved the distillation from Voiron to rural Aiguenoire, a 15-minute drive from Chartreuse’s mountainside headquarters and three kilometers from the source of wa-(p. 7)ter used to make the liqueur.

“The Carthusians came home,” Mr. Delafon said.

. . .

Over their nearly thousand-year history, the order has recovered from natural disasters, government expulsions, pestilence, poverty and impostors.

“Every time they’ve lifted themselves up, recovered and redefined themselves,” Ms. Druzkowski, the documentary maker, said.

That willingness to transform while remaining loyal to the order’s legacy is both a luxury and a safeguard during times of turmoil, Mr. Delafon said.

“When you have roots this deep,” he said, “it allows you to forget the short term and project your vision far in the future.”

For the full story, see:

Marion Renault. “Where Life, And an Elixir, Are Timeless.” The New York Times, SundayBusiness Section (Sunday, December 20, 2020): 6-7.

(Note: ellipses added.)

(Note: the online version of the story has the date Dec. 17, 2020, and has the title “An Elixir From the French Alps, Frozen in Time.”)

Entrepreneur Roger’s Reward for Solving a Puzzle: “A Bigger and More Complicated Puzzle”

(p. C6) Growing up in Battle Ground, Wash., James Rogers wanted to be an inventor.

. . .

Some 25 years since those afternoons with his “invention journal,” Mr. Rogers, 35, is now promoting a scientific discovery that could improve the global food-supply chain. His company, Apeel, applies an edible, plant-based coating to fruits and vegetables that extends their shelf life without refrigeration.

Apeel-treated avocados, limes, apples and cucumbers are already in some of the largest grocery chains in the U.S. and Europe. The startup now plans to expand into markets in Asia, Africa and Latin America, thanks to a $30 million investment from the International Finance Corp., the World Bank’s private-sector arm. The company Mr. Rogers launched in 2012 as a Ph.D. student is now valued at more than $1 billion.

. . .

Mr. Rogers has had to prove that more time not only reduced waste but also boosted sales. According to the Edeka Group, which runs more than 11,000 grocery stores in Germany, a pilot launch of Apeel avocados in nearly 3,000 stores in 2020 resulted in 50% less waste and a 20% rise in sales. Edeka swiftly agreed to carry Apeel avocados, oranges and clementines across all of its stores.

. . .

Mr. Rogers had been a student all his life when he launched Apeel at age 27. Did his youth and inexperience create problems? “It may have helped,” he says. “I didn’t know what I didn’t know, so I wasn’t overwhelmed.”

He has discovered, for example, that every fruit and vegetable has its own idiosyncratic supply chain, and Apeel works to pinpoint where time has the most value. He has also learned that delivering avocados to Europeans throughout the year means working with lots of different countries (Chile, Israel, Morocco, South Africa, etc.), each of which has its own unique supply chain, regulatory hurdles and distinct avocado.

“Working at a startup, you just have to really love puzzles,” he says. “Your reward for solving your current puzzle? A bigger and more complicated puzzle.”

For the full story, see:

Emily Bobrow. “WEEKEND CONFIDENTIAL; James Rogers.” The Wall Street Journal (Saturday, Jan. 9, 2021): C6.

(Note: ellipses added.)

(Note: the online version of the story has the date January 8, 2021, and has the title “WEEKEND CONFIDENTIAL; Apeel CEO James Rogers Wants to Extend the Shelf Life of Your Avocados and Oranges.”)