Category: Entrepreneurship

Uncertainty on Future Government Policies Reduces Firm Investment

(p. A6) A shoe factory owner, Rafeeque Ahmed, says he has put expansion plans on hold until he has more confidence about New Delhi’s policy plans, particularly about minimum wages. The $16 million he was going to invest to boost his production capacity by 20% may now go to setting up facilities in Myanmar or Bangladesh.
“We are afraid to invest,” because the government could suddenly change policies and thus our costs, he said.

For the full story, see:
Anant Vijay Kala. “Uncertainty Dulls India’s Business Appetite.” The Wall Street Journal (Tuesday, November 7, 2017): A6.
(Note: the online version of the story has the date November 6, 2017, and has the title “Apple’s Market Cap Hits $1 Trillion.”)

Origin of “Round Up the Usual Suspects!” at End of Casablanca

(p. C5) David Thomson’s “Warner Bros: The Making of an American Movie Studio” is the latest in the exemplary Yale Jewish Lives series, which now stretches from Jacob the Patriarch to Jacob Wonskolasor, known to the world as Jack L. Warner (1892-1978).
. . .
Jack told Julie Garfinkle that “people are gonna find out you’re a Jew sooner or later, but better later.” Julie became John Garfield. I can’t resist adding that Jack approached Phil and Julie Epstein with the same advice. After turning him down they snuck into his office and stole a piece of stationery. To the newly arrived Don Taylor, a fellow Nittany Lion, they wrote, “All of us at Warner Bros are looking forward to your great career as an actor and to a long and fruitful relationship with you under your new name of Hyman Rabinowitz. Sincerely, Jack L. Warner.”
. . .
(p. C6) As this fine book progresses, Mr. Thomson turns his attention away from the brothers and their studio and onto individual actors and films. These form a remarkable series of critiques and vignettes–cranky, idiosyncratic, sometimes improbable, but always ingenious, and now and then inspiring.
. . .
Of course he has the most to say about “Casablanca,” much of it insightful and cogent. On the one hand, it’s an “adroit masquerade,” yet also part of what it was, and no less is, to be American: “Wry, fond of sentiment yet hardboiled, as if to say we’re Americans, we can take it and dish it out, we’re the best, tough and soft at the same time.” Thus did the qualities of this film, and others, pass “into the nervous system of the country,” making it what it remains to this day.
I am in a position to point out one of the few outright mistakes, not of judgment but of facts, in this book. Mr. Thomson naively accepts screenwriter Casey Robinson’s claim that he created the ending of “Casablanca.” The truth is that the ending was thought up at a red light on the corner of Sunset and Beverly Glen, when Phil and Julie turned to each other, as identical twins will, and cried out, “Round up the usual suspects!” By the time they reached Doheny they knew Maj. Strasser had to be shot and by the time they reached Burbank they knew who was going to get on the plane with whom.

For the full review, see:
Leslie Epstein. “The House That Jack Built; Warner Bros was the smartest, toughest studio, and Jack L. Warner its smart, tough driving wheel.” The Wall Street Journal (Saturday, Aug. 5, 2017): C5-C6.
(Note: ellipses added.)
(Note: the online version of the review has the date Aug. 4, 2017.)

The book under review, is:
Thomson, David. Warner Bros: The Making of an American Movie Studio. New Haven, CT: Yale University Press, 2017.

Steve Jobs’s Apple Is First U.S. Company Valued at $1 Trillion

(p. B1) Apple Inc. on Thursday [August 2, 2018] became the first U.S. company to surpass $1 trillion in market value, underscoring the iPhone maker’s explosive growth and its role in the technology industry’s ascent to the forefront of the global economy and markets.
. . .
Apple’s rise has been propelled by the sustained success of the iPhone developed under late co-founder Steve Jobs, a product visionary who helped revive the company from a death spiral in the late 1990s.

For the full story, see:
Tripp Mickle and Amrith Ramkumar. “Apple Value Surges to $1 Trillion.” The Wall Street Journal (Friday, August 3, 2018): B1 & B5.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Aug. 2, 2018, and has the title “Apple’s Market Cap Hits $1 Trillion.”)

“Entrepreneurs Are Often Driven by Personal Experiences”

(p. B5) Eczema entrepreneurs are often driven by personal experiences that they or their family members have had with the skin condition. Joe Paulo, for example, created Smiling Panda clothing after he had eczema as a teenager.
. . .
Mr. Paulo, 23, has already made some inroads with adults seeking relief with his Smiling Panda brand, which he started after getting eczema on his arms. The eczema appeared after he moved from California to Philadelphia in 2012 to attend college.
His eczema, he said, “got significantly worse” when he had to wear professional clothing during college internships. When even bedsheets began irritating his skin, he started researching the properties of different fibers and how clothing was made. He chose a bamboo-cotton blend for his clothing because bamboo is soft and cotton fibers allow a closer fit, he said. He began cutting and stitching his own shirts, with flat seams and no tags.
When he wore his shirts to bed, he said: “I went from having a really tough time falling asleep to having no trouble at all.”
“I thought there might be other working adults interested in this type of clothing, and that comfortable clothing would help them in the same way it helped me,” he said. He found a small manufacturer willing to make a batch of sizes for women and men. He chose Smiling Panda as the company name and started a website in February 2016.
. . .
Mr. Paulo said he did not know if the company would ever be profitable. “I like doing it because I feel like our products make a difference in our customers’ lives,” he said. “I know from personal experience how miserable clothing can be when you are itching from eczema.”

For the full story, see:
Elizabeth Olson. “Personal Stories Drive Start-Ups In Eczema Products.” The New York Times (Thursday, July 20, 2017): B5.
(Note: ellipses added.)
(Note: the online version of the story has the date July 19, 2017, and has the title “‘The Beginning of a Wave’: A.I. Tiptoes Into the Workplace.”)

Disneyland Opened in “Confusion,” “Disorder,” and “Chaos”

(p. B11) On the mid-July day in 1955 when Disneyland opened in Anaheim, Calif., confusion reigned. More people stormed its grounds than expected, rides broke down, food and beverage supplies ran short, and a plumbers’ strike limited the number of working water fountains.
Out in the park that afternoon, amid the disorder, was Marty Sklar, a 21-year-old college junior who was editing the theme park’s 10-cent newspaper. At one point Fess Parker, in full costume as Disney’s television and big-screen Davy Crockett, complete with coonskin cap, approached him on horseback.
Spotting Mr. Sklar’s name tag, Mr. Parker called out for help.
“Marty,” he said, “get me out of here before this horse hurts someone!”
Disneyland recovered well from the early chaos. And Mr. Sklar went on to spend more than a half-century at the Walt Disney Company, as a close aide to Walt Disney himself and eventually as the principal creative executive of the company’s Imagineering unit, made up of the innovators who blend their imaginations and their technical expertise in devising every element of the company’s theme parks.
. . .
He soon became Mr. Disney’s chief ghostwriter for publicity materials, dedications, souvenir guides, speeches, slogans, presentations and short films, like the one that helped the company win approval to build Walt Disney World and Epcot in central Florida. He also collaborated with Walt and his brother, Roy, on Disney’s annual reports.
“It was pretty heady stuff for someone just closing in on his 30th birthday and only six or seven years out of college,” Mr. Sklar wrote in his autobiography, “Dream It! Do It: My Half-Century Creating Disney’s Magic Kingdoms” (2013).

For the full obituary, see:
Richard Sandomir. “Marty Sklar Dies at 83; Became Trusted Aide And Executive at Disney.” The New York Times (Friday, Aug. 4, 2017): B11.
(Note: ellipsis added.)
(Note: the online version of the obituary has the date Aug. 3, 2017, and has the title “Marty Sklar, Longtime Disney Aide and Executive, Dies at 83.”)

Sklar’s autobiography, mentioned above, is:
Sklar, Martin. Dream It! Do It!: My Half-Century Creating Disney’s Magic Kingdoms. Glendale, CA: Disney Editions, 2013.

“Tesla Is His Baby”

(p. B5) “Tesla is his baby,” said Deepak Ahuja, Tesla’s chief financial officer. “He takes it extremely personally.”
. . .
In preparing the assembly lines, Mr. Musk became convinced that the process should be close to fully automated, using robots rather than humans whenever possible. Doing so, he believed, could make cars move through the factory at one meter per second, 10 to 20 times the speed of existing lines.
So Tesla built a factory with hundreds of robots, many programmed to perform tasks that humans could easily do. One robot, which Mr. Musk nicknamed the “flufferbot,” was designed to simply place a sound-dampening piece of fiberglass atop the battery pack.
But the flufferbot never really worked. It would fail to pick up the fiberglass, or put it in the wrong place, frequently delaying production. It was eventually replaced by factory workers.
Mr. Musk has accepted responsibility for some of these missteps, occasionally with humor. In late June, he wore a T-shirt depicting a robot that passes butter. It was an inside joke, lampooning the notion of technology for technology’s sake.
After the debacle, Mr. Musk tweeted: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”
. . .
“He is absolutely working incredibly hard, but Elon has always worked incredibly hard,” said Mr. Ahuja, Tesla’s chief financial officer. “He’s very tough, too. He can eat glass.”
. . .
“I know that it has been a difficult year for him,” said Gwynne Shotwell, the SpaceX president and chief operating officer. “Not because he’s frowning or throwing things, but because I can tell he’s physically exhausted.”

For the full story, see:
David Gelles. “In Elon Musk’s World, Brakes Are for Cars, Not C.E.O.s.” The New York Times (Wednesday, Aug. 29, 2018): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the story has the date Aug. 28, 2018, and has the title “MARSEILLE DISPATCH; Yes, There Is a French McDonald’s That Is Beloved (by Its Staff).”)

“Progress Isn’t Made by Looking in the Rearview Mirror”

(p. A9) Even in death, Donald Panoz defied convention. His family reported that Mr. Panoz, 83 years old, died of pancreatic cancer Sept. 11 [2018] at his home in Duluth, Ga., after he “enjoyed his last cigarette.”
The red-haired entrepreneur, an apostle of Ayn Rand, founded Elan Corp., which developed technology used in nicotine skin patches used to wean people from cigarettes.
. . .
“I never become hostage to anything I do,” he told the Atlanta paper. “Progress isn’t made by looking in the rearview mirror.”
. . .
His partner in founding Mylan, Milan “Mike” Puskar, once summed up Mr. Panoz this way: “There’s nothing college could have taught him. Don has vision, and you can’t teach vision. He’s not a technical person, but he’s a master salesman. He always wanted to know: Why not?”
Donald Eugene Panoz (pronounced PAY-nose) was born Feb. 13, 1935, in Alliance, Ohio, and grew up in West Virginia and Pittsburgh.
. . .
Mr. Panoz . . . moved his family to Ireland in 1969 to set up Elan, whose research projects included delivery of medicine via skin patches. He chose Ireland partly because it offered lower taxes and less red tape. Elan initially was known for reformulating medicines developed by other companies and later pursued research on drugs for multiple sclerosis and other diseases.
. . .
His business successes, he told the Scotsman newspaper in 2002, were “just about being able to recognize an opportunity.” He added: “We’ve had plenty of failures, too. We just don’t talk about them. It’s best to leave them behind.”
. . .
In line with his libertarian leanings, Mr. Panoz gave out copies of Ayn Rand’s “Atlas Shrugged” to his children and many others.

For the full obituary, see:
James R. Hagerty. “‘Restless Entrepreneur Founded Elan and Mylan.” The New York Times (Saturday, Sept. 29, 2018): A9.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date Sept. 28, 2018, and has the title “‘Don Panoz Hopped From Pharmaceuticals to Wine, Resorts and Race Cars; Entrepreneur helped found Mylan and built Elan before setting up a winery and resort in northern Georgia.” The passages above, after the word “mirror,” appear in the online, but not in the print, version of the obituary.)

The novel by Ayn Rand, mentioned above, is:
Rand, Ayn. Atlas Shrugged. New York: Random House, 1957.

Growing Percent of Firms in Developed Countries Are Zombies

ZURICH–The number of profit-constrained “zombie” firms has risen sharply since the late 1980s, according to research published Sunday by the Bank for International Settlements, a sign of the lingering effects from ultralow interest rates since the financial crisis.
Zombie firms are generally defined as companies that can’t service their debt from profits during an extended period. These types of companies, which first gained attention in Japan decades ago and have since gained prevalence in Europe, steer resources away from healthier parts of the economy, weighing on productivity and economic growth.
“The prevalence of zombie firms has ratcheted up since the late 1980s,” according to a paper published Sunday by the Switzerland-based BIS, a consortium of central banks, in its quarterly review of financial market developments.
Under a broad definition–the ratio of earnings before interest and taxes to interest paid is less than one for three-straight years in companies more than 10-years old–the percentage of zombie companies rose from 2% in the late 1980s to 12% in 2016. The data used by the authors covered 14 developed economies including the U.S., Japan, Germany and France.
And they seem to stay that way for longer. The authors found that whereas in the late 1980s zombie firms had a 60% chance of staying in that condition the following year, the probability reached 85% in 2016. Low interest rates have helped these firms stay afloat by reducing their financial pressure to reduce debt.
“Lower rates boost aggregate demand and raise employment and investment in the short run. But the higher prevalence of zombies they leave behind misallocate resources and weigh on productivity growth,” the authors wrote.

For the full story, see:

Brian Blackstone. “Rise of the Zombies: Ranks of Non-Viable Firms Up Sharply Since 1980s, Study Says; Low rates have helped these firms stay afloat by reducing their financial pressure to reduce debt.” The Wall Street Journal (Sunday, Sept. 23, 2018 URL: https://www.wsj.com/articles/rise-of-the-zombies-ranks-of-non-viable-firms-up-sharply-since-1980s-study-says-1537718401?mod=searchresults&page=1&pos=2
(Note: at least as of Oct. 1, 2018, this article appears only to have been published online.)

The study published in BIS Quarterly Review, and mentioned above, is:
Banerjee, Ryan Niladri, and Boris Hofmann. “The Rise of Zombie Firms: Causes and Consequences.” BIS Quarterly Review (Sept. 2018): 67-78.

Origin of False Memories

(p. A19) Memories are subject to serious flaws, given the limitations and imperfections of the biological and psychological processes of recording, retaining and recalling them. Memories aren’t computer files with exacting recall and retrieval functions. They are often disassembled and stored in “packets” in multiple brain locations. People don’t store the fine details of all daily experiences, because of neuron capacity limitations. Even important details can be missed or lost.
Hence the brain must be selective in which memories it stores and must condense them so that many details are left out. Many eyewitnesses and even victims of crimes don’t take note of the facial features of gun-toting assailants or the make and color of getaway cars.
. . .
My colleague Elizabeth Loftus was able to “implant” false memories in a significant subset of laboratory subjects by showing them an official-looking poster of Disney characters, including Mickey Mouse and Bugs Bunny. Many subjects later remembered meeting Bugs Bunny on a childhood trip to Disneyland. Some of them even reported that Bugs had touched them inappropriately.
That was impossible. Bugs Bunny isn’t a Disney character.

For the full commentary, see:
Richard B. McKenzie. “A Stumble Down Memory Lane; Like Kavanaugh’s latest accuser, people often have ‘gaps.’ They don’t always fill them with truth..” The Wall Street Journal (Tuesday, September 25, 2018): A19.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Sept. 24, 2018.)

The commentary quoted above is partly based on McKenzie’s book:
McKenzie, Richard B. A Brain-Focused Foundation for Economic Science: A Proposed Reconciliation between Neoclassical and Behavioral Economics. Basingstoke, UK: Palgrave Macmillan, 2018..

Visionary Manifesto for Driverless Cars

(p. A13) Not surprisingly, optimism leaps off the pages of Lawrence D. Burns’s “Autonomy: The Quest to Build the Driverless Car–and How It Will Reshape Our World,” a combination of memoir and visionary manifesto. In contrast to “the personally owned, gasoline-powered, human-driven vehicles that have dominated the last century,” Mr. Burns writes, “we’re transitioning to mobility services based on electric-powered and driverless vehicles, paid for by trip or through subscriptions.” These services, he says, will get us around “safely and conveniently.” Meanwhile, we will avoid the “hassles of car ownership” and the time lost in parking and pumping gas, not to mention the costs that having a car entails.
. . .
After leaving GM during its 2009 bankruptcy, Mr. Burns became an ever-more emphatic advocate for the reinvention of the automobile, soon teaming up with Mr. Urmson and other technology pioneers at Google. This front-row seat at the project that popularized autonomous cars informs some of the most lively parts of “Autonomy.” At one point, a milestone goal is thought to be needed, with a payout bonus, so when Larry Page (Google’s co-founder) says, “I want this thing on any street in California to drive one hundred percent autonomous,” the Larry1K challenge is launched. The development of Waymo’s “Firefly” low-speed driverless car takes longer than expected and teaches the Silicon Valley team a new respect for Detroit’s skills. In turned out that “designing a vehicle was comparatively easy,” Mr. Burns writes. What was difficult was ” ‘hardening’ the vehicle’s various components”–making every part work under every driving condition. This was “the process at which Detroit engineering talent excelled.” A deal with Ford Motor Co. fails, but an investment banker and analyst, inspired by one of Mr. Burns’s visionary papers, does join Ford on a driverless-car project. As Mr. Burns recounts, personality clashes eventually blew up Google’s dream team and led to a lawsuit over intellectual-property theft against Uber, which had bought a driverless-trucking company founded by a Waymo veteran.

For the full review, see:
Edward Niedermeyer. “BOOKSHELF; Fast-Tracking A Driverless Car.” The Wall Street Journal (Tuesday, August 28, 2018): A13.
(Note: ellipsis added.)
(Note: the online version of the review has the date Aug. 27, 2018, and has the title “BOOKSHELF; ‘Autonomy’ Review: Fast-Tracking a Driverless Car; A period of remarkable progress seems to be giving way to a host of challenges that can’t be solved with engineering talent alone.”)

The book under review, is:
Burns, Lawrence D., and Christopher Shulgan. Autonomy: The Quest to Build the Driverless Car–and How It Will Reshape Our World. New York: Ecco, 2018.

Wrecking Ball for Bureaucracy That “Is Killing the Country”

(p. B4) America’s big tech companies are facing some of their toughest political challenges as they flirt with or surpass trillion-dollar valuations. Before lawmakers try to rein them in, Reid Hoffman argues government officials better be careful what they wish for.
Mr. Hoffman was chief operating officer of PayPal while it was still a small payments startup before he co-founded the professional social-network LinkedIn.
. . .
WSJ: You’re vociferously opposed to President Trump and even commissioned an anti-Trump card game. Does Silicon Valley have a problem with liberal bias?
Mr. Hoffman: I do think that there is a reflexive bias to liberalism that causes discomfort. I think you have that kind of left bias within the Silicon Valley culture, too, which is, “I’m so convinced that’s idiotic, I’m not listening to anything about it.” And that’s the problem. The problem is not actively listening. But that’s human. It’s not only here. Part of the reason [for strong negative reactions] to Trump is the flat-out lies.
WSJ: When you talk politics with Peter Thiel, PayPal’s co-founder and a well-known Trump supporter, what are those conversations like?
Mr. Hoffman: He’s a friend of mine, but we’ve disagreed about politics since we were college undergraduates. One thing we argue about is how much does Trump lie? I’ve been trying to advance him the case that there’s always been some lying around politicians, but Trump is one or two orders of magnitude worse than ever before. He says Obama is a bigger liar than Trump–based on, for example, the claim that under Obamacare you’d be able to spend as much time with your primary doctor as you did before Obamacare.
Peter thinks that the bureaucracy is killing the country and that you need a wrecking ball to shake it up, and maybe Trump is the only wrecking ball you get. His pro-Trump arguments are that someone needed to stand up to China. Trump at least is, [while] everyone else gave it lip service.

For the full interview, see:
Rolfe Winkler, interviewer. “A Silicon Valley Warning.” The Wall Street Journal (Thursday, Sept. 27, 2018): B4.
(Note: ellipsis added; bolded and bracketed words in original.)
(Note: the online version of the interview has the date Sept. 26, 2018, and the title “LinkedIn’s Co-Founder Warns of Perils in Regulating Big Tech.” The last question and answer quoted above, is included in the online, but not the print, version of the interview.)