Category: Entrepreneurship

Jack Ma Worries that Heavier Chinese Government Regulations Risk “Destroying Innovation”

(p. B3) SHANGHAI–Chinese e-commerce tycoon Jack Ma used a government-sponsored forum to suggest regulators take a lighter touch in dealing with technology companies, saying the market should be allowed to decide how new industries such as artificial intelligence develop.
“I personally think that the government has to do what the government should do, and the companies do what companies should do,” Mr. Ma said at the World Artificial Intelligence Conference in Shanghai on Monday, recalling a conversation he said he had last year with U.S. Secretary of Transportation Elaine Chao about self-driving cars.
“Protecting the backward forces who are crying out loud will be the most important factor in destroying innovation,” Mr. Ma said.

For the full story, see:
Yoko Kubota. “Jack Ma Urges Beijing to Ease Up.” The Wall Street Journal (Tuesday, September 18, 2018): B3.
(Note: the online version of the story has the date Sept. 17, 2018, and has the title “Alibaba’s Jack Ma Says Government Should Stick to Governing.”)

“Outsider Status” of Surgeons “Permitted Greater Risks and Leaps of Faith”

(p. A19) . . . as Arnold van de Laar reminds us in “Under the Knife: A History of Surgery in 28 Remarkable Operations,” a collection of hypervivid anecdotes and oddities, it was only recently that surgeons were considered the equals of what we would now call internists–doctors who diagnose, prescribe medicine and prognosticate.
. . .
. . . , it has been both the bane and the secret glory of surgery as a vocation that it was relegated for so long to the margins of “decent” intellectual or professional life. Its dodgy, outsider status perhaps permitted greater risks and leaps of faith than were available to nonsurgical physicians, who still found themselves making inchworm progress from the dictates of Hippocrates and Galen. Surgeons worked fast to beat pain and gangrene (so fast that in one case, Scottish surgeon Robert Liston cut off a man’s testicles in a rush to amputate his leg). They used whatever materials seemed to make sense–in some cases gold thread, costly but long-lasting; in other cases branding irons.

For the full review, see:
Laura Kolbe. “The Kindest Cuts.” The Wall Street Journal (Saturday, November 15, 2018): A19.
(Note: ellipses added.)
(Note: the online version of the review has the date Nov. 14, 2018, and has the title “BOOKSHELF; ‘Under the Knife’ Review: The Kindest Cuts.”)

The book under review, is:
van de Laar, Arnold. Under the Knife: A History of Surgery in 28 Remarkable Operations. New York: St. Martin’s Press, 2018.

Musk Jabs the SEC as “the Shortseller Enrichment Commission”

(p. B1) Elon Musk risked reigniting a battle with federal securities regulators on Thursday when he appeared to openly mock the Securities and Exchange Commission only days after the Tesla Inc. chief executive settled fraud charges with the agency.
Seemingly without prompt, Mr. Musk sent a tweet in the early afternoon that suggested the SEC was enriching investors betting against the electric-car maker. “Just want to [say] that the Shortseller Enrichment Commission is doing incredible work,” Mr. Musk tweeted. “And the name change is so on point!”

For the full story, see:
Tim Higgins and Gabriel T. Rubin. “Tweet by Elon Musk Takes Jab at the SEC.” The Wall Street Journal (Saturday, October 5, 2018): B1 & B4.
(Note: the online version of the story has the date Oct. 4, 2018, and has the title “Elon Musk Tweet Mocks the Securities and Exchange Commission.”)

Lean Supply Chains Fail to Scale Quickly

(p. A1) American factories are running short of parts.
Suppliers of everything from engines to electronic components aren’t keeping up with a boom in U.S. manufacturing, which has lifted demand in markets such as energy, mining and construction. As a result, some manufacturers are idling production lines and digesting higher costs.
. . .
(p. A4) Years spent making supply chains as lean and efficient as possible are hurting big customers now as demand climbs, industry consultants said.
“Suppliers have not been willing to jump on adding capacity because they’ve been burned badly before,” said Shiv Shivaraman, a managing director at consultant AlixPartners LLC who advises auto and machinery makers on supply chains and production processes. “You will see many people limping for a while.”
Some companies are stockpiling parts to head off future challenges, potentially exacerbating the supply pressures.
“We built some inventory last quarter because we had seen the lead times extend and we are trying protect our customers,” said Andrew Silvernail, CEO of Idex Corp. , a maker of pumps, valves and meters that is based in Lake Forest, Ill.

For the full story, see:
Doug Cameron and Austen Hufford. “Parts Makers’ Shortages Tap Brakes on Industrial Boom.” The Wall Street Journal (Saturday, Aug. 11, 2018): A1 & A4.
(Note: ellipsis added.)
(Note: the online version of the story has the date Aug. 10, 2018, and has the title “Parts Shortages Crimp U.S. Factories.”)

Bezos Richer than Rockefeller in Real Wealth

(p. A2) With a fortune exceeding $150 billion, Amazon founder Jeff Bezos was recently declared the richest person in modern history.
But is he?
The answer depends on how you account for the wealth of past contenders for the title.
There are at least five ways to do that, and each provides a different result, according to Samuel H. Williamson, an economist and president of the website Measuring Worth.
Real wealth, the most familiar yardstick, accounts for the relative purchasing power of a particular sum by adjusting it for inflation based on the Consumer Price Index.
Using that measure, the fortune of John D. Rockefeller, America’s first billionaire and Mr. Bezos’ stiffest competition among latter day aristocrats, would equal only $24 billion today.
Working in reverse, Mr. Bezos’ fortune would amount to about $6.5 billion in 1916, when Rockefeller’s riches first hit the $1 billion mark.

For the full commentary, see:
Jo Craven McGinty. “THE NUMBERS; Bezos vs. Rockefeller, a Rich History Lesson.” The Wall Street Journal (Saturday, Aug. 11, 2018): A2.
(Note: the online version of the commentary has the date Aug. 10, 2018, and has the title “THE NUMBERS; Is Jeff Bezos Really the Richest of Them All?”)

“New York Needs to Embrace Entrepreneurs, Not Repel Them”

(p. A15) For centuries New York has evolved. With its deep port, the city dominated U.S. trade through the late 1800s. But that wasn’t enough to employ the swarms of immigrants coming through Ellis Island. So the city transformed, creating higher-paying jobs. By 1910 some 40% of all New York workers were employed in manufacturing–the garment industry, sugar refining, publishing and even bread making. My grandfather was in the millinery business. Manufacturing lasted even through the 1960s. I remember seeing shirts made in the Empire State Building. Total employment in the city peaked in 1969.
As post-World War II technology drove transportation costs down, manufacturing moved to the suburbs (and eventually Asia). Most large American cities stagnated. But New York transformed itself again, this time into a service economy with high-paying jobs in finance, media, fashion, law, accounting and health care. It also remained home to the most important stock market in the world. Today well over 90% of New York employment is in services, according to the New York state government.
But the city has arrived at a nasty inflection point again. New York risks becoming another Detroit. New York needs to embrace entrepreneurs, not repel them.

For the full commentary, see:
Andy Kessler. “Can New York Reinvent Itself Again? It risks becoming another Detroit if it keeps repelling entrepreneurs.” The Wall Street Journal (Monday, Sept. 11, 2017): A15.
(Note: the online version of the commentary has the date Sept. 10, 2017.)

Rage at Malfunction Led to Invention

(p. B15) A business contemporary of Raymond A. Kroc, who built the McDonald’s chain into the industry leader, Mr. Edgerton started Burger King with $12,000 after managing Howard Johnson’s restaurants in Miami and Orlando, Fla.
. . .
In a 1998 memoir, “The Burger King: Jim McLamore and the Building of an Empire,” Mr. McLamore described Mr. Edgerton as a creative conceptual thinker but also as someone who “never focused very much on details, particularly those concerning financial matters.”
Early on, Mr. Edgerton estimated that profits were running at an eye-popping 28 percent of sales. But the “books” he was looking at turned out to be an assortment of papers stuffed into a peach basket showing that Insta Burger had actually lost money in its first few months.
It was hard for the partners at first. “We were losing our butts,” Mr. Edgerton said in a 2014 interview for this obituary. Paying himself $50 a week, he added, “We starved together.”
A major problem was the frequent breakdowns of the Rube Goldberg-like Insta broiler they had inherited. One day, Mr. McLamore wrote, “the machine began to malfunction just at the moment Dave was standing in front of it,” and the grinding of its metal parts sent him into a rage.
By Mr. McLamore’s account, Mr. Edgerton “reached into his toolbox and grabbed a hatchet” and sank it into the stainless steel mechanism, destroying it. He then shouted, red-faced, “I can build a better machine than this pile of junk!”
Three weeks later, Mr. Edgerton and a mechanic who ran a machine shop had produced a continuous-chain broiler, which would set a standard for all Burger King broilers and become a model for equipment in the industry.
. . .
The business took off, and by 1967 it had more than 400 units in about 20 states, particularly in the East and California, as well as in a few other countries. Its success drew an offer from the Pillsbury Company to buy Burger King.
“I really didn’t want to sell out,” Mr. Edgerton said, but he went along because he had found Mr. McLamore to be “a golfer first and foremost” who wanted more time to indulge his passion and who had no real need to keep working, being married to a woman of wealth.
. . .
He complained that the company, which had a series of jolting ups and downs over subsequent decades, let its menu get too big, and that its plethora of chief executives — “bookkeepers,” he called them — had rarely had experience in the restaurant business.
Asked in the 2014 interview if he regretted walking away from an industry on the verge of a boom that could have made him a billionaire, he pondered the question for a moment and then said, “That’s hindsight.”

For the full obituary, see:
Robert D. Hershey Jr. “David Edgerton, 90, a Burger King Founder Who Sold His Stake for a Bargain, Dies.” The New York Times (Tuesday, April 17, 2018): B15.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the obituary has the date April 16, 2018, and has the title “David Edgerton, a Founder of Burger King, Is Dead at 90.”)

The memoir mentioned above, is:
McLamore, James W. The Burger King: Jim McLamore and the Building of an Empire. New York: McGraw-Hill, 1997.

Stephen Moore Offers Advance Praise for Openness to Creative Destruction

An invaluable reminder that all human progress derives from innovation, entrepreneurship and inventiveness. Wealth creation depends on creative destruction.

Stephen Moore, economist at the Heritage Foundation, economics commentator on CNN. Co-author of It’s Getting Better All the Time, and other works.

Moore’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Openness to Creative Destruction: Sustaining Innovative Dynamism

My book Openness to Creative Destruction: Sustaining Innovative Dynamism, is forthcoming from Oxford University Press in June 2019.
The book shows how life has improved through innovation, how innovation has occurred through the efforts of inventors and innovative entrepreneurs, how workers on balance benefit from a system of innovative dynamism, and how policies can be crafted to encourage the innovative entrepreneur to bring us more innovations.
A PDF of a handout that includes the current draft of the Table of Contents of my book can be found on the first page of artdiamond.com.
Several scholars have graciously looked at an advance copy of my book, and offered me early praise for it. During the next several weeks I occasionally will present some of their comments. (These will be presented roughly in the order in which I received them.)

Videogames Help ADHD Children

(p. A9) It isn’t often that children are encouraged to play videogames.
But a group of Boston Children’s Hospital researchers have developed videogames for children with conditions such as attention deficit hyperactivity disorder (ADHD) and anxiety, or those who just need to learn how to control their emotions better.
The videogames track a child’s heart rate, displayed on the screen. The games get increasingly difficult as the player’s heart rate increases. To be able to resume playing without extra obstacles the child has to calm themselves down and reduce their heart rate.
“What we’re trying to do is build emotional strength for kids,” said Jason Kahn, co-founder and chief scientific officer of Mighteor, a Boston-based company and spinoff of Boston Children’s Hospital. BCH runs an accelerator and funded some of the research and development of the products. They retain a small piece of ownership of Mighteor. Dr. Kahn worked as a developmental psychologist at Boston Children’s for seven years and maintains an affiliation there but launched the company in November [2016].
The games help children “build muscle memory,” he said. So once they are able to reduce their heart rate over and over again the response of physiologically calming themselves down becomes more automatic.

For the full story, see:
Sumathi Reddy. “‘When Videogames Can Help.” The Wall Street Journal (Tuesday, July 18, 2017): A9.
(Note: bracketed year added.)
(Note: the online version of the story has the date July 17, 2017, and has the title “YOUR HEALTH; When Children Can Benefit From Playing Videogames.”)

When Government Mandates a Technology

(p. A20) In 2011, after a lengthy competition among automakers, Mayor Michael R. Bloomberg announced that the Nissan NV200 would become the “Taxi of Tomorrow” with most yellow cab owners required to purchase the boxy, bright yellow van. Eventually, the vehicle was expected to make up 80 percent of New York City’s fleet of over 13,000 cabs.
At the time, city officials touted the NV200’s increased leg room, USB charging ports and sunroof as amenities that would be attractive to riders who had long complained about cramped travel in less than spotless back seats.
But it turns out that tomorrow lasted only seven years.
Last week, the Taxi and Limousine Commission reversed the requirement, expanding the option for drivers beyond the Nissan NV200 to a smorgasbord of over 30 vehicles, including popular, fuel efficient models like the Toyota Camry.
. . .
. . . there are drivers like Sergio Cabrera, 60, who owns his vehicle and the expensive medallion needed to have it on the road, who said the NV200 has given him many headaches.
. . .
“There hasn’t been a worse car for the taxi industry than the NV200,” he said. “It’s not easy for older people to get into. Mechanically it’s one of the worst made cars I’ve ever owned.”
Mr. Cabrera complained that owning the Nissan has been expensive, in part because of regulations that he and other yellow cabdrivers say subjects them to more maintenance rules than drivers for ridesharing apps.
The Taxi and Limousine Commission requires yellow taxis to undergo a 200-point inspection every four months. Each time his Nissan has been inspected, Mr. Cabrera said he has had to shell out at least $1,500 in repairs in order to pass.

For the full story, see:
Tyler Blint-Welsh. “Time Is Up for ‘Taxi of Tomorrow’.” The New York Times (Wednesday, June 13, 2018): A20.
(Note: ellipses added.)
(Note: the online version of the story has the date June 12, 2018, and has the title “It Was Billed as the ‘Taxi of Tomorrow.’ Tomorrow Didn’t Last Long.”)