Category: Labor Economics

Netflix’s Reed Hastings Was Blunt for the Sake of the Project

(p. B1) SANTA CRUZ, Calif. — Long before binge-watching, the streaming wars and “Netflix and chill,” there were two guys barreling down Highway 17 — the California roadway that connects Santa Cruz to Silicon Valley — trying to come up with the next big thing.

One was Marc Randolph, an entrepreneur and marketing specialist who had co-founded a start-up, Integrity QA. The other was Reed Hastings, then the head of the software company Pure Atria.

It was 1997. Mr. Randolph, whose start-up had been acquired by Pure Atria, did most of the pitching. Customized dog food, customized baseball bats, customized shampoo — all sold over the internet and delivered by mail.

Mr. Hastings was the one with the cash and the ability to shoot down ideas without worrying about hurt feelings.

They flirted with the notion of challenging Blockbuster Video with a mail-order videocassette business, only to decide that mailing VHS tapes would cost too much. Finally, they thought they had something: DVDs, sold and rented online and delivered to customers by mail.

Although few people had DVD players at the time, they forged ahead, with Mr. Randolph as the chief executive and Mr. Hastings (p. B5) as the chairman backing the operation.

. . .

Mr. Randolph describes an evening in 1998 when he got a big dose of Netflix’s radical honesty. It happened after a botched investor pitch and a promotion deal with Sony that went horribly wrong. Mr. Hastings asked to see Mr. Randolph alone and subjected him to a PowerPoint presentation detailing the reasons he was no longer fit to remain chief executive.

In the book, Mr. Randolph describes what he said in reaction to the surprise presentation: “‘There is no way I’m sitting here while you pitch me on why I suck.’”

Mr. Hastings closed his Dell laptop. By the end of the talk, Mr. Randolph was bumped down to president, and Mr. Hastings was the new chief executive. As part of the demotion, Mr. Hastings persuaded Mr. Randolph to give up some 650,000 stock shares, which reduced his Netflix stake to 15 percent.

“Doing it with a PowerPoint slide show perhaps wasn’t the most empathetic gesture,” Mr. Randolph said with a laugh. “But he was right.”

The episode, as described in the book, helps form a portrait of Mr. Hastings as someone whose bluntness results more from a sure sense of what a business needs than from an inner ruthlessness.

“What I really want from the book is to paint Reed as a real person,” Mr. Randolph said. “I hope it comes through that I have this tremendous respect and affection for him, as opposed to bitterness. Most people wouldn’t have had the strength to say that. But he recognized it was the right thing for the company.”

For the full review, see:

Nicole Sperling. “Pushing the Red Envelope: A Memoir of Netflix’s Birth.” The New York Times (Thursday, Sept. 19, 2019): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the review has the date Sept. 18, 2019, and has the title “Long Before ‘Netflix and Chill,’ He Was the Netflix C.E.O.”)

The book under review is:

Randolph, Marc. That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea. New York: Little, Brown and Company, 2019.

Pilots of Delivery Robots Benefit from Video Game Skills

(p. B4) Michael Niedermayer used to fly drones for the U.S. Army and the Central Intelligence Agency, gathering real-time, life-and-death intelligence on battlefields in Iraq. Now he pilots delivery robots for a San Francisco Bay Area startup that wants to disrupt burrito delivery.

Postmates, which in mid-August received a permit to operate its Serve delivery robot in San Francisco and is already testing it for food delivery in Los Angeles, employs a growing team of “pilots” to remotely oversee, and at times steer, these four-wheeled food ferries.

“We will probably see a drastic increase in our workforce over the next five years,” says Postmates Chief Executive Bastian Lehmann.

Disrupting “last-mile” delivery—historically the domain of box trucks, bike couriers and personal vehicles—“felt like a great fit for my military background,” says Mr. Niedermayer.

His story is hardly unique. Across industries, engineers are building atop work done a generation ago by designers of military drones. Whether it’s terrestrial delivery robots, flying delivery drones, office-patrolling security robots, inventory-checking robots in grocery stores or remotely piloted cars and trucks, the machines that were supposed to revolutionize everything by operating autonomously turn out to require, at the very least, humans minding them from afar.

Until the techno-utopian dream of full automation comes into effect—and frankly, there’s no guarantee that will ever happen—there will be plenty of jobs for humans, just not ones their parents would recognize. Whether the humans in charge are in the same city or thousands of miles away, the proliferation of not-yet-autonomous technologies is driving a tiny but rapidly growing workforce.

. . .

When Postmates managers interview potential delivery-robot pilots like Diana Villalobos, they ask whether or not they played videogames in their youth.

“When I was a kid, my parents always said, ‘Stop playing videogames!’ But it came in handy,” she says.

For the full commentary, see:

Christopher Mims. “KEYWORDS; Behind ‘Autonomous’ Tech, a Person Playing Robot.” The Wall Street Journal (Saturday, Aug. 31, 2019): B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the same date as the print version, and has the title “KEYWORDS; The Next Hot Job: Pretending to Be a Robot.”)

With Work Ethic, but Not Much Education, “You Can Come Out Here and Still Make Six Figures”

(p. B1) When Mike Wilkinson moved to Midland, Tex., in 2017, he hoped the world’s largest oil field would change his life. His marriage was in tatters. He owed tens of thousands in credit card debt. His morale was broken.

He soon began working as a “hot shot” truck driver, carrying loads for drillers who need pipes or drums in a hurry. The United States is the world’s largest producer of oil, surpassing Saudi Arabia and Russia, and demand for “hot shots” has soared.

The epicenter of the oil boom is the Permian Basin in Texas and New Mexico, a massive layer cake of shale that’s cracked open with a blasting technique known as fracking. The country’s growing energy dominance has created tens of thousands of jobs in this part of the Southwest in recent years, many for people like Wilkinson looking for fresh starts.

. . .

(p. B4) There are now 55,000 people now work in the Permian. Mr. Wilkinson says he’s found a certain camaraderie with other transplants: “They are either escaping debt or family issues or poverty.

. . .

“I have to make money, and this is the best way I can make money,” he said. “If you’re not educated and have a good work ethic, you can come out here and still make six figures.”

For the full story, see:

Clifford Krauss. “Boom Times and Fresh Starts.” The New York Times (Thursday, Sept. 19, 2019): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 10, 2019, and has the title “‘This Is the Most Lonesome Job’: Ride With a ‘Hot Shot’ Trucker in Oil-Rich Texas.” The online version highlights photographs by Tamir Kalifa. The online and print versions have significant differences in wording and ordering. Where there are differences, the passages quoted above, follow the print version.)

45 Is Average Age of Gazelle Founders

(p. B7) It took an entrepreneur to reimagine the mundane home thermostat as an object of beauty — and then to make a fortune based on that vision.

The entrepreneur was Tony Fadell, who had that thermostat epiphany after decades in the tech industry, including at companies like Apple. Mr. Fadell embodied his idea in a new company, Nest, which he started with the help of a colleague from Apple in 2010, at age 41.

The Nest thermostat had a sleek and intuitive design, smartphone connectivity and the ability to learn its owner’s temperature-setting habits. The product was a big hit, and within a few years Google acquired Nest for $3.2 billion.

Mr. Fadell’s deep experience and relatively mature age when he started Nest are typical of superstar entrepreneurs, who are rarely fresh out of college — or freshly dropped out of college. That’s what a team of economists discovered when they analyzed high-growth companies in the United States. Their study is being published in the journal American Economic Review: Insights.

The researchers looked at start-ups established between 2007 and 2014 and analyzed the top 0.1 percent — defined as those with the fastest growth in employment and sales. The average age of those companies’ founders was 45.

For the full commentary, see:

Seema Jayachandran. “ECONOMIC VIEW; High-Flying Tech Has a Touch of Gray.” The New York Times, SundayBusiness Section (Sunday, September 1, 2019): B7.

(Note: the online version of the commentary has the date Aug. 29, 2019, and has the title “ECONOMIC VIEW; Founders of Successful Tech Companies Are Mostly Middle-Aged.”)

The forthcoming article mentioned above, is:

Azoulay, Pierre, Benjamin Jones, J. Daniel Kim, and Javier Miranda. “Age and High-Growth Entrepreneurship.” American Economic Review: Insights (forthcoming).

Medical Paperwork Wastes Resources and Burns Out Physicians

(p. A23) Consider the use of medical scribes, who complete doctors’ electronic paperwork in real time during patient visits. The American College of Medical Scribe Specialists reported that 20,000 scribes were working in 2014, and expects that number to climb to 100,000 in 2020.

I have heard doctors say they need a scribe to keep up with electronic medical records, the mounting demand of which is driving a burnout epidemic among physicians. Scribes allow doctors to talk with and examine patients without having a computer come between them, but at base they are a workaround for the well-known design flaws of electronic medical records.

As a nurse, when I first learned about scribes, I was outraged. On the job, nurses hear repeatedly how health care companies can’t afford to have more nurses or aides to work with patients on hospital floors — and yet, money is available to pay people to manage medical records. Doctors who use scribes tend to see their productivity and work satisfaction increase, but the trade-off is still there: Scribes demonstrate the extent to which paperwork has become more important than patients in American health care.

For the full commentary, see:

Theresa Brown. “Our Jury-Rigged Health Care.” The New York Times (Friday, September 6, 2019): A23.

(Note: the online version of the commentary has the date September 5, 2019, and has the title “The American Medical System Is One Giant Workaround.”)

Median Income Rising More Under Trump Than Under Bush and Obama

Source of graph: online version of the WSJ article quoted and cited below.

(p. A17) President Trump’s critics can’t deny that the economy is doing well, so instead they insist all the benefits have gone to the rich and large corporations. “America’s middle class is under attack,” Sen. Elizabeth Warren asserted in her presidential campaign announcement last December.

The latest data from the Census Bureau monthly surveys tell a different story. Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July. That’s the highest level ever and a gain of $4,144, or 6.8%, since Mr. Trump took office. By comparison, during 7½ years under President Obama—starting from the end of the recession in June 2009 through January 2017—the median household income rose by only about $1,000.

These statistics were published by two former census income-research specialists with 50 years experience who now run Sentier Research, a nonpartisan research group.

For the full commentary, see:

Stephen Moore. “Trump’s Middle-Class Economic Progress.” The Wall Street Journal (Monday, Sept. 30, 2019): A17.

(Note: the online version of the commentary has the date Sept. 29, 2019, and has the same title as the print version.)

A.I. Needs People to Set the Objectives

(p. A2) Although Deep Mind’s Alpha Zero can beat a grand master at computer chess, it would still bomb at Attie Chess—the version of the game played by my 3-year-old grandson Atticus. In Attie Chess, you throw all of the pieces into the wastebasket, pick each one up, try to put them on the board and then throw them all in the wastebasket again. This apparently simple physical task is remarkably challenging even for the most sophisticated robots.

But . . . there’s a more profound way in which human intelligence is different from artificial intelligence, and there’s another reason why Attie Chess may be important.

. . .

The basic technique is to give the computer millions of examples of games, images or previous judgments and to provide feedback. Which moves led to a high score? Which pictures did people label as dogs?

. . .

But people also can decide to change their objectives. A great judge can argue that slavery should be outlawed or that homosexuality should no longer be illegal. A great curator can make the case for an unprecedented new kind of art, like Cubism or Abstract Expressionism, that is very different from anything in the past. We invent brand new games and play them in new ways.

. . .

Indeed, the point of each new generation is to create new objectives—new games, new categories and new judgments. And yet, somehow, in a way that we don’t understand at all, we don’t merely slide into relativism. We can decide what is worth doing in a way that AI can’t.

. . .

. . . , we are the only creatures who can decide not only what we want but whether we should want it.

For the full commentary, see:

Alison Gopnik. “MIND & MATTER; What A.I. Is Still Far From Figuring Out.” The Wall Street Journal (Saturday, March 23, 2019): A2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date March 20, 2019, and has the same title as the print version.)

Alison Gopnik’s comments, that are quoted above, are related to her paper:

Gopnik, Alison. “AIs Versus Four-Year-Olds.” In Possible Minds: Twenty-Five Ways of Looking at AI, edited by John Brockman. New York: Penguin Press, 2019, pp. 219-30.

Some Workers Willingly Forego Higher Pay for Greater Flexibility

(p. 11) In a survey of 11,000 workers and 6,500 business leaders by Harvard Business School and Boston Consulting Group, the vast majority said that among the new developments most urgently affecting their businesses were employees’ expectations for flexible, autonomous work; better work-life balance; and remote working. (Just 30 percent, though, said their businesses were prepared.)

Technology is a big reason for the change. The youngest people entering the work force don’t remember a time when people weren’t always reachable, so they don’t see why they would need to sit in an office to work. (They also say they are more practiced than older colleagues at setting boundaries on how much they use their phones, so it doesn’t become overbearing.)

. . .

. . . more young people, recruiters say, are asking for flexibility upfront, and some prioritize it over pay or seniority. Recruiters who visit college campuses say new graduates no longer see it as something to negotiate for, said Marcee Harris Schwartz, the national director of diversity and inclusion at BDO, the accounting firm: “It’s just assumed it’s part of the deal.”

“Years ago, the interview was, for lack of a better word, a test,” said Kamaj Bailey, who works in recruiting at Con Edison, the power company. “Now it’s a conversation. Yes, I want to show that I’m a good candidate, but I’m also seeing if I’m going to get what I expect.”

John Paul Graff, 34, is a pathologist, as was his father, who worked in private practice at least 12 hours a day. Dr. Graff decided to work in academic medicine, and the No. 1 reason was for work-life balance. He estimated that he gave up about $100,000 a year but said it’s worth it to work 40 hours a week.

For the full story, see:

Claire Cain Miller and Sanam Yar. “Can I Work When I Want?” The New York Times, SundayStyles Section (Sunday, Sept. 22, 2019): 1 & 10-11.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 20, 2019, and has the title “Young People Are Going to Save Us All From Office Life.”)

Broad Knowledge “Prepares Us for the Wickedly Unanticipated”

(p. A13) In his latest book, “Range: Why Generalists Triumph in a Specialized World,” Mr. Epstein makes a well-supported and smoothly written case on behalf of breadth and late starts.

. . .

The book blends anecdotal stories with summaries of academic studies. Many of these studies upend standard-issue advice about finding one’s way in life. We are introduced to the “Dark Horse Project,” based at the Harvard Graduate School of Education, which has collected the oral histories of highly accomplished individuals who took circuitous paths to achievement. The researchers were surprised by how many such individuals, in disparate fields, they were able to find. “What was even more incredible,” said one principal member of the project, “is that they all thought they were the anomaly.”

. . .

Not all of the chapters speak directly to range. In “Learning to Drop Your Familiar Tools,” we learn that many cardiologists are unwilling to forsake their use of stents, despite clear evidence that stents are not only ineffective in preventing cardiac events but also introduce fresh risks of complications. It’s sobering to learn that a 2015 study showed that patients suffering cardiac arrest were less likely to die if they were admitted to a hospital when such cardiologists were unavailable to install the devices.

. . .

The chapter titled “Deliberate Amateurs” is a delight, permitting us to spend time with some exemplars in science and medicine who have stepped outside of their cozy professional nests. One such exemplar is Arturo Casadevall, the chair of the molecular microbiology and immunology program at the Johns Hopkins Bloomberg School of Public Health. A much-cited scientist, Dr. Casadevall has led an overhaul of the curriculum at his school to help broaden the education of specialists. Philosophy, history, logic and ethics are incorporated into interdisciplinary classes. “How Do We Know What Is True?” is one of the course offerings. On the wall in Dr. Casadevall’s office, along with the certificate commemorating his election to the National Academy of Medicine, hangs a community-college degree in pest control, the “practical” expertise his father pressed Dr. Casadevall to acquire.

The advice that Dr. Casadevall dispenses to junior colleagues is “read outside your field, everyday something.” If the world were a kinder learning environment, this would not be needed. But as David Epstein shows us, cultivating range prepares us for the wickedly unanticipated.

For the full review, see:

Randall Stross. “BOOKSHELF; Late Bloomers Bloom Best.” The Wall Street Journal (Wednesday, May 29, 2019): A13.

(Note: ellipses added.)

(Note: the online version of the review has the date May 28, 2019, and has the title “BOOKSHELF; ‘Range’ Review: Late Bloomers Bloom Best; Late specialization demonstrably helped Roger Federer, Vincent van Gogh and Charles Darwin. It can serve the rest of us well, too.”)

The book under review is:

Epstein, David. Range: Why Generalists Triumph in a Specialized World. New York: Riverhead Books, 2019.

Cocoa Beach Thrives During Private Space Race

(p. B6) Jeff Bezos and Elon Musk are racing to send people into outer space and eventually to the moon and Mars. They are already improving the fortunes of a coastal Florida city that is home to their budding space ambitions.

Cocoa Beach, which sits south of Cape Canaveral on the Atlantic coast, was hit hard by the 2009 recession and the subsequent end to the National Aeronautics and Space Administration’s space shuttle program. The economic downturn and space program’s demise led to large-scale layoffs and a reduction in tourism.

Now the city of 11,000 is in the middle of a resurgence as the private space industry’s rocket launches bring jobs and visitors back. Blue Origin LLC has built a rocket factory north of Cocoa Beach. The company—founded by Mr. Bezos, the chief executive of Amazon.com Inc. —plans to launch its New Glenn rocket from Cape Canaveral in 2021. Blue Origin hopes one day to bring people to the moon.

Space Exploration Technologies Corp., known as SpaceX, is holding test launches on the cape and is expected to shoot a rocket with 60 satellites into space this week—and, at some point, send people on a mission to Mars. SpaceX was founded by Mr. Musk, who is also a founder of Tesla Inc.

For the full story, see:

Konrad Putzier. “Florida City Buoyed by Space Race.” The Wall Street Journal (Wednesday, May 22, 2019): B6.

(Note: the online version of the story has the date May 21, 2019, and has the title “Space Rockets Spark Property Boom on Florida Coast.”)

“Bureaucratic Madness Is Choking Growth”

(p. A21) Jean Tirole, who won the Nobel Prize in economics in 2014, says that the study of economics is “simultaneously demanding and accessible.”

. . .

“Economics for the Common Good” offers an ambitious yet accessible summary of his ideas on the proper role of economists and the value of their ideas in informing government, business and social life.

. . .

One of the best chapters in the book deals with the issue of employment law in France. Successive governments have tried to micromanage the agreements between companies and employees to ensure fair treatment and low unemployment. But France’s unemployment rate has remained high, entrepreneurship has been stifled, and companies have become loath to hire people because of the prohibitive costs of firing them. Even if an employee proves useless, it’s nearly impossible to sack him.

On the employee’s side, even if you want to resign, it is more lucrative to wait to be fired, since you get both severance pay and unemployment insurance. To resolve the stand-off between workers who want to quit and companies that want to cut staff, employers and employees now collude through a legal formula called “termination by mutual consent.” The employee resigns and receives unemployment benefits as if he has been dismissed, and the company is spared the legal ramifications and costs of dismissal. In Mr. Tirole’s view, such bureaucratic madness is choking growth.

. . .

Mr. Tirole has a patient, explanatory style. But when riled, he lashes out. The French education system, he writes, purports to be non-selective but favors the affluent and well-educated. It “is a vast insider-trading crime.”

For the full review, see:

Philip Delves Broughton. “BOOKSHELF; What Good Is An Economist?” The Wall Street Journal (Tuesday, December 19, 2017): A21.

(Note: ellipses added.)

(Note: the online version of the review has the date Dec. 18, 2017, and has the title “BOOKSHELF; Review: What Good Is an Economist?; A French Nobel laureate and public intellectual discusses the proper role of the dismal science in government, business and the life of the mind.”)

The book under review is:

Epstein, David. Range: Why Generalists Triumph in a Specialized World. New York: Riverhead Books, 2019.