Category: Entrepreneurship

Etsy and Shopify Platforms Enabled Many Small Businesses to Survive the Pandemic

(p. B4) While the year has been a struggle for small businesses, some companies that host their transactions have been soaring.

Shares in Etsy Inc. and Shopify Inc., whose e-commerce platforms primarily cater to small businesses, have surged during the pandemic. Etsy has more than quadrupled this year, while Shopify has tripled.

. . .

For many small-business owners, the technology platforms have served as a lifeline as their companies shift to a focus on online sales.

Matthew Cummings owns a glass-blowing company that makes custom beer glasses in Knoxville, Tenn. He has been on Etsy since 2012, but didn’t move fully online until the pandemic hit and he had to close the doors of his bricks-and-mortar store. He said his Etsy sales are about 10 times higher this year.

Mr. Cummings said that his sales on Etsy have helped him cover his business expenses and that he was able to come out of 2020 with a profit because of his online store. He plans on selling through the platform after the pandemic, with his business now reaching as far as Australia. He has seen a new wave of repeat customers seeking to complete sets of his custom beer glasses.

. . .

One type of sale that might not last beyond the pandemic is masks.

Etsy reported that masks accounted for 11% of overall gross-merchandise sales in the third quarter.

For the full story, see:

Amber Burton. “Sales Platforms Etsy, Shopify Thrive From Small Businesses.” The Wall Street Journal (Thursday, Dec 24, 2020): B4.

(Note: ellipses added.)

(Note: the online version of the story has the date December 23, 2020, and has the title “Etsy and Shopify Buoyed as Covid-19 Boosts Online Sales.”)

22% of U.S. Small Businesses Closed from February to April 2020

(p. B4) In early February [2020], things were looking good for Practice San Francisco, a center offering individual psychotherapy and classes for children and adults that promote physical and mental well-being. Business was so good that owner Nina Kaiser, a psychologist, had just renovated and moved into a bigger space with the goal of doubling revenue.

Then the coronavirus pandemic hit. In early March [2020], Ms. Kaiser moved all her classes and counseling services online. Fairly quickly, however, video fatigue set in. “After a few weeks, we saw a big downturn in attendance across all our programs, even psychotherapy,” she said. Thus began a period of “endless pivoting and troubleshooting.”

Like many other small businesses, Practice San Francisco, which has been around for three years, has essentially become a start-up again, employing a strategy similar to the “fail fast” approach well known in start-up culture: A change is made to some aspect of the business and if it works, it sticks, but if it fails, data is collected and something else is tried.

“There has been a lot of flying by the seat of your pants,” Ms. Kaiser said. “We see what doesn’t work, where we run into trouble, and we course-correct. It’s this constant, iterative process.”

That process is crucial right now for small businesses, whose numbers dropped by 22 percent — 3.3 million — between February and April [2020], according to the National Bureau of Economic Research.

For the full story, see:

Eilene Zimmerman. “Small-Business Owners Pivot and Troubleshoot In Battle to Stay Afloat.” The New York Times (Tuesday, December 1, 2020): B4.

(Note: bracketed years added.)

(Note: the online version of the story was updated Dec. 17 [sic], 2020, and has the title “Can a Start-Up Mentality Save Small Businesses?”)

The published-online-ahead-of-print version of the National Bureau of Economic Research (NBER) working paper mentioned above is:

Fairlie, Robert. “The Impact of Covid-19 on Small Business Owners: Evidence from the First 3 Months after Widespread Social-Distancing Restrictions.” Journal of Economics & Management Strategy (2020): 10.1111/jems.12400.

Pfizer Refused Federal Subsidy so They Could “Liberate” Their “Scientists From Any Bureaucracy”

In September [2020], the CEO of Pfizer, Albert Bourla, appeared on CBS News’s “Face the Nation,” where he was asked about not accepting government funding for development.

“The reason why I did it was because I wanted to liberate our scientists from any bureaucracy,” Bourla explained. “When you get money from someone that always comes with strings. They want to see how we are going to progress, what type of moves you are going to do. They want reports. I didn’t want to have any of that. I wanted them — basically I gave them an open checkbook so that they can worry only about scientific challenges, not anything else.”

“And also,” he added, “I wanted to keep Pfizer out of politics, by the way.”

For the full story, see:

Philip Bump. “No, Pfizer’s Apparent Vaccine Success Is Not a Function of Trump’s ‘Operation Warp Speed.” The Washington Post (online posted Monday, November 9, 2020).

(Note: bracketed year added.)

Are We Right to Experiment on Animals to Save Humans?

I believe that higher animals feel emotions and maybe even have souls, so we should try to treat them humanely. I am deeply conflicted on how far animal experiments are justified in the pursuit of curing human diseases. Whenever possible, animal experiments should have the potential to benefit the animals in the experiments, as well as the human experimenters.

(p. A15) The “title characters” of Brandy Schillace’s admirable biography “Mr. Humble and Dr. Butcher: A Monkey’s Head, the Pope’s Neuroscientist, and the Quest to Transplant the Soul” were one and the same person: Robert J. White, a distinguished neurosurgeon, an accomplished neuroscientist and a man dedicated to searching for the means to transplant souls by transplanting the human brain. If this makes White sound macabre, Ms. Schillace’s account of his life, work and temperament is anything but. She deftly persuades the reader to take White seriously (he wasn’t even eccentric) and to ponder profound medical-scientific-philosophical issues. Best of all, the book is fascinating.

. . .

White felt it was his religious and medical duty to devise techniques for rescuing healthy brains from otherwise diseased and dying bodies. His solution was to transplant heads (containing their brains) onto cadavers that were brain dead but otherwise physiologically viable.

Before he could attempt such surgery on people, White experimented, mostly on monkeys, dozens of times, to ascertain and refine the necessary procedures. In March 1970 he succeeded in transplanting a monkey’s head onto another monkey’s body.

. . .

During the era in which White conducted his experiments, politicians, doctors, journalists and celebrities were becoming deeply and increasingly dismayed by scientific experiments on animals. White ran afoul of the animal-rights advocacy organization People for the Ethical Treatment of Animals (PETA) and was threatened by animal-rights extremists (he remained imperturbable). White prided himself on scrupulously avoiding harm to his animal subjects. But he didn’t believe that animals had souls: For him, Ms. Schillace writes, “the human was more than animal, and equating the two was not only wrong, it was dangerous.” One of White’s rejoinders to those who would halt animal experimentation was, to paraphrase: If you were a surgeon, how would you like to tell parents that their young child is going to die because the operation that might save him or her was impossible to perform, mainly because the necessary animal-dissection research that would have permitted it was forbidden by law or the medical canon of ethics? His foes never had a good answer.

For the full review, see:

Howard Schneider. “A Heart in the Right Place.” The Wall Street Journal (Monday, February 22, 2021): A15.

(Note: ellipses added; italics in original.)

(Note: the online version of the review has the date February 21, 2021, and has the title “Mr. Humble and Dr. Butcher’ Review: A Heart in the Right Place.”)

The book under review is:

Schillace, Brandy. Mr. Humble and Dr. Butcher: A Monkey’s Head, the Pope’s Neuroscientist, and the Quest to Transplant the Soul. New York: Simon & Schuster, 2021.

Inventor of the Cassette Tape Liked CDs Better

(p. A9) Lou Ottens was thinking about convenience and portability when he told his product development team at Philips to come up with something better than reel-to-reel tapes.

He and his colleagues produced the cassette tape, . . .

. . .

“We expected it would be a success but not a revolution,” Mr. Ottens said in the 2016 documentary “Cassette: A Documentary Mixtape.”

. . .

Mr. Ottens later was involved in development of the compact disc, introduced in the early 1980s. He was puzzled by the revival of demand for cassette tapes among young people in recent years. “People prefer a worse quality of sound, out of nostalgia,” he said. As for himself, he told Time magazine in 2013, “I like when something new comes.”

. . .

The idea came to him, he said, one night after he struggled to thread tape through a bulky reel-to-reel player. A colleague quipped that the cassette was inspired by “the clumsiness of a very clever man.”

. . .

In the documentary, Mr. Ottens insisted that he was untroubled by the demise of technology he helped create. “I don’t believe in eternity,” he said.

For the full obituary, see:

James R. Hagerty. “Dutchman Launched Cassette ‘Revolution’.” The Wall Street Journal (Saturday, March 18, 2021): A9.

(Note: ellipses added.)

(Note: the online version of the obituary has the date March 12, 2021, and has the title “Lou Ottens Led Team That Invented the Cassette Tape.”)

Humans Excel at Finding and Using Patterns

(p. 9) At the end of the 20th century, scholars of human evolution proposed a thrilling idea: Humans were special and distinct from all other animals because of a sudden transformational change that occurred around 35,000 years ago. For millions of years our ancestors had trudged through existence with the same simple tool kit, yet in that special moment, there was a flowering of symbolism, of art, of complicated tool use. This was when the modern human mind was born. You could see its traces in the archaeological record.

. . .

In “The Pattern Seekers: How Autism Drives Human Invention,” Simon Baron-Cohen, a psychologist and the director of the Autism Research Center at Cambridge University, contributes a new version of this cognitive revolution. Baron-Cohen argues that humans split off from all other animals to become the “scientific and technological masters of our planet” because we evolved a unique piece of mental equipment that he calls the Systemizing Mechanism. It came into being between 70,000 and 100,000 years ago, and it led to the invention of pretty much everything, bows and arrows, pottery, agriculture, science, skateboards and so on.

. . .

Here’s how the mechanism works: Humans alone observe the world and ask questions that demand why, how and what. They answer their questions by looking for if-and-then patterns, such as, if I boil an egg for eight minutes, then the yolk will be hard, and if I boil an egg for four minutes, then the yolk will be soft. They use those patterns to build theories, which they then repeatedly test, looking always for systems to further employ and exploit.

Grand theories aside, Baron-Cohen is at his most striking when he writes about people with autism, like Jonah, who was slow to talk but who taught himself to read. When Jonah eventually learned to speak, he used language less as a tool for communication than as a system for categorizing the world around him. As a young child, he was endlessly fascinated by how things worked, and he spent hours experimenting, like flipping a light switch on and off to test and retest its effect. At school he showed great brilliance in his observations about the natural world, he was a “born pattern seeker,” but at the same time he was taunted by other children for being so different. In group reading time, which he hated, he would shut his eyes and put his fingers in his ears. Jonah’s weekend hobby as a young man was helping fishermen locate shoals by being able to read the signs from surface waves. Yet despite his incredible talents, Jonah was lonely and frustrated because he couldn’t find a job that would allow him to live an independent life. Baron-Cohen argues with feeling and conviction that society must do a better job of making room for people like Jonah, and that it will benefit enormously when it does.

For the full review, see:

Christine Kenneally. “Systematizers.” The New York Times Book Review (Sunday, December 20, 2020): 9.

(Note: ellipses added.)

(Note: the online version of the review was updated Dec. 9, 2020, and has the title “Does Autism Hold the Key to What Makes Humans Special?.”)

The book under review is:

Baron-Cohen, Simon. The Pattern Seekers: How Autism Drives Human Invention. New York: Basic Books, 2020.

Chinese Atlases Are Shrugging

(p. B4) SINGAPORE—Chinese e-commerce company Pinduoduo Inc.’s founder and chairman, Colin Huang, stepped down from the company on Wednesday [March 17, 2021], even as the five-year-old company overtook Alibaba Group Holding Ltd. to become the country’s largest e-commerce company by annual active buyers.

Mr. Huang, 41 years old, is resigning as China’s powerful internet sector comes under growing government scrutiny. His resignation follows another departure from a major company in the sector: Financial-tech giant Ant Group Co.’s Chief Executive Simon Hu stepped down earlier this month.

. . .

Beijing in recent months has been moving to rein in China’s powerful internet sector including e-commerce companies. Among the hardest hit has been Alibaba, which is under antitrust probe; its fintech affiliate Ant, whose initial public offering was canceled in November [2020]; and its founder Jack Ma.

This month, Chinese regulators fined Pinduoduo, alongside several other e-commerce companies, alleging anticompetitive practices.

For the full story, see:

Keith Zhai. “Head of China’s Giant E-Commerce Firm Quits.” The Wall Street Journal (Thursday, March 18, 2021): B4.

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

(Note: the online version of the story was updated March 17, 2021, and has the title “Pinduoduo Founder Colin Huang Steps Down From Company.”)

The fictional version is:

Rand, Ayn. Atlas Shrugged. New York: Random House, 1957.

Rebates to Formulary Middlemen Are a Growing Part of Drug Costs

(p. B14) To actually sell medication, a drugmaker needs to persuade public and private health plans to place their product on the plan’s formulary, which is a list of drugs the plan is willing to purchase. That means paying middlemen rebates and discounts to choose their drug over any other rival treatments. Failure to secure favorable formulary access could mean low sales even for a highly-effective and safe medication..

. . .

“To secure that formulary position costs us more and more every year,” said Adam Gluck, Sanofi’s head of U.S. corporate affairs, in an interview. The company says that the average list price for its insulin products is up 141% since 2012 but that the net price is down 53% over that same period.

It isn’t just Sanofi facing this dynamic. Merck & Co. said last month that its average U.S. sticker price rose 3.1% in 2020 even as its average net price fell slightly. That is a sea change from recent years: In both 2015 and 2016 Merck’s average list price rose by about 10% while the net price realized by the drug giant rose by 5.5%. Nearly half of Merck’s gross sales went out the door to third parties as discounts last year. A decade ago, that tally was around 27%. Other drugmakers like Bristol-Myers Squibb report similarly high spreads between gross and net sales.

For the full commentary, see:

Charley Grant. “Pharma Giants Are Getting Their Pennies Pinched.” The Wall Street Journal (Saturday, March 13, 2021): B14.

(Note: ellipsis added.)

(Note: the online version of the commentary was updated March 12, 2021, and has the title “Pharma Giants Get Their Pennies Pinched on Drug Pricing.”)

“It’s Taken Me 27 Years to Become an Overnight Sensation”

(p. B1) The flashiest trend in finance traces back three decades to a pair of old law-school buddies. Now, they are finally cashing in.

Investment banker David Nussbaum and lawyer David Miller —known to each other as “Nuss” and “Miller”—invented the special-purpose acquisition company in 1993 to give private firms another way to access everyday investors.

. . .

“It’s taken me 27 years to become an overnight sensation,” said Mr. Nussbaum, a 66-year-old from Roslyn, N.Y., on Long Island, who co-founded the SPAC-focused investment bank EarlyBirdCapital Inc.

. . .

(p. B5) Many on Wall Street were suspicious of SPACs because their predecessors were called “blind pools” and tied to penny-stock fraud in the 1980s.

. . .

In the early 1990s, the Davids spent over a year working with regulators to install protections for investors and other changes to prevent fraud before completing the first blank-check firm. Among them were the right for a SPAC’s investors to get their money back before a merger with a private company goes through. They also beefed up disclosure requirements ahead of such deals. Those features are now touted by blank-check company bulls.

Still, SPACs struggled to compete with traditional initial public offerings and other methods for raising money until splashy names like sports-betting firm DraftKings Inc. started using them to go public in recent years and more startups began using them to make projections to investors—something that isn’t allowed in a traditional IPO.

“It’s become bigger than anyone expected,” said Mr. Miller, a 66-year-old from Queens, N.Y., who is managing partner at law firm Graubard Miller . . .

. . .

“I am really happy for them,” said Arthur Spector, a venture capitalist who ran the first SPAC Messrs. Nussbaum and Miller worked on in 1993. “They put in a huge amount of work and from some people took a lot of grief.”

. . .

Both men said they now plan to work until it is no longer fun.

For the full story, see:

Amrith Ramkumar. “Pioneers of SPACs Reap The Rewards.” The Wall Street Journal (Wednesday, March 10, 2021): B1 & B5.

(Note: ellipses added.)

(Note: the online version of the story was updated March 9, 2021, and has the title “SPAC Pioneers Reap the Rewards After Waiting Nearly 30 Years.”)

Freireich on Chemo-Cocktail Cure for Childhood Leukemia: “I Thought About It and I Knew It Would Work”

(p. A20) Dr. Emil Freireich, a renowned cancer doctor and relentless researcher who helped devise treatments for childhood leukemia that transformed the lives of patients thought to have little hope of survival, died on Feb. 1 [2021] at the University of Texas MD Anderson Cancer Center in Houston, where he had worked since 1965.

. . .

When Dr. Freireich (pronounced FRY-rike) started work at the N.C.I., in Bethesda, Md., in 1955, acute childhood leukemia was considered a death sentence. Entering the ward where the children were being treated, he recalled their hemorrhaging because their blood had virtually no platelets, the disc-shaped cells that clot blood.

. . .

Dr. Freireich, a hematologist and oncologist, tested his hypothesis that the lack of platelets was causing the hemorrhaging by mixing some of his own blood with some of the children’s.

“Would it behave normally?” he said in interview for an N.C.I. oral history project in 1997. “Sure enough, it did.”

Further testing, done to persuade his skeptics at the cancer institute, proved him right.

. . .

. . . Dr. Freireich’s most important and most enduring achievement was in using a combination of drugs to send leukemia into remission. He explored options in chemotherapy with several N.C.I. colleagues, including Dr. Emil Frei III, who was known as Tom.

They made an aggressive assault on childhood leukemia by devising a cocktail of four drugs that would be administered simultaneously — a technique similar to the three-drug regimen used to treat tuberculosis — so that each one would attack a different aspect of the physiology of the cancer cells.

“It was crazy,” Dr. Freireich told Mr. Gladwell. “But smart and correct. I thought about it and I knew it would work. It was like the platelets. It had to work!”

But not without peril and concern. Some of the children nearly died from the drugs. Critics called Dr. Freireich inhumane for experimenting with his young patients.

“Instead, 90 percent went into remission immediately,” he told USA Today in 2015. “It was magical.” But temporary. One round of the cocktail was not enough to eliminate all the cancer, so Dr. Freireich and his team treated them with the drugs monthly for more than a year.

. . .

Dr. Freireich compared his early fight to cure childhood leukemia to being in a battle in which he and the N.C.I. team had an alliance that was “forged under fire.”

To cure cancer, he added: “Motivate people and give them the opportunity. People are innately motivated. Nobody likes to be lazy and do nothing. Everybody wants to be significant.”

For the full obituary, see:

Richard Sandomir. “Emil Freireich, 93, Pioneering Researcher and Cancer Doctor, Is Dead.” The New York Times (Saturday, February 13, 2021): A20.

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

(Note: the online version of the obituary was updated Feb. 8, 2021, and has the title “Emil Freireich, Groundbreaking Cancer Researcher, Dies at 93.”)

Malcolm Gladwell devoted a chapter to Freireich in Gladwell’s book:

Gladwell, Malcolm. David and Goliath: Underdogs, Misfits, and the Art of Battling Giants. New York, NY: Little, Brown and Company, 2013.

Video of Diamond Q&A on Innovation Unbound Posted to YouTube

On 3/17/21 Derek Yonai posted my 3/16/21 live Q&A session related to my “Innovation Unbound” lecture that was recorded on 3/1/21 and posted on 3/9/21. Some of my lecture and some of my answers in the Q&A, were related to my book:

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