Parents Set Up For-Profit Companies for Quicker Cures

(p. B1) Karen Aiach was working as a management consultant when she learned that her first daughter, Ornella, had Sanfilippo syndrome, a rare disease in which a missing enzyme causes toxic substances to build up in the body.

Ornella was 6 months old, and the prognosis was grim: She would develop mentally and physically to between ages 2 and 4, plateau and then lose whatever she had learned. She would become extremely hyperactive and develop sleeping disorders. Most likely she would not live past 15.
Within two years of the diagnosis, Ms. Aiach, who lives in a Paris suburb, had quit her consulting job to learn everything she could about the disease. She hired a neurobiologist to guide her in the world of medical research. And when she learned that few treatments were in the works, she founded a company called Lysogene to focus on genetic therapy.
Instead of raising money and awareness by setting up a nonprofit foundation, a more typical route, she opted to start a for-profit company to seek treatments, if not a cure. Far from common, what Ms. Aiach and other parents like her are trying is to leverage their wealth, contacts and the hope of sophisticated investors to jump-start research into rare diseases.
. . .
(p. B4) . . . with some rare diseases, where minimal research has been done, a little effort goes a long way.
Nicole Boice, who founded Global Genes, one of the leading rare-disease patient advocacy organizations, said even small investments can have meaningful impacts.
“You can start moving the needle with $3,500,” she said. “That leads you to the next $25,000, and then to innovation grants and funding at $100,000. That starts the interest from biotech.”
Gradually, parents like Matt Wilsey, a technology entrepreneur, have made headway. First, his family spent the better part of four years trying to figure out what afflicted his daughter, Grace, now 6. Even after her genome was sequenced, the first diagnosis turned out to be wrong. Grace, it finally was determined, was the second person in the world known to have a deficiency in the gene known as NGLY1.
“We went around the country,” Mr. Wilsey said. “We were just trying to find one doctor who had seen another patient with these symptoms.” After years of efforts, several dozen children have been found to have the same deficiency.
“Our goal is to find a cure,” said Mr. Wilsey, who lives in the San Francisco area.
“A lot of people in science dismiss that because cures are rare. But when I say cures, they’re not going to be astronauts. They’re going to be leading some sort of independent life. They’re going to be able to eat without choking. They’re going to be able to take a bath without drowning. They’re going to be able to communicate, whether with some assistive device or not.”
These parents also had a successful model to follow. In 1998, John Crowley left his job at Bristol-Myers Squibb to start a biotechnology company to search for a treatment for Pompe disease, a neuromuscular disorder that two of his children had. Within four years, the company, Novazyme Pharmaceuticals, had devised a treatment that he credits with saving their lives. His story was immortalized in the 2010 film “Extraordinary Measures,” starring Harrison Ford. And his company was bought by the pharmaceutical giant Genzyme for $137.5 million in 2001.

For the full story, see:
PAUL SULLIVAN. “Wealth Matters; Parents of Children With Rare Diseases Find Hope in For-Profit Companies.” The New York Times (Sat., DEC. 26, 2015): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 25, 2015, and has the title “Wealth Matters; Building a Company to Treat a Rare Disease.”)

The Bet in Alphabet Is that Autonomy Will Work

(p. B4) To see how Google Inc. Chief Executive Larry Page hopes to turbocharge a growing fleet of speculative projects under a new holding company, look at Nest Labs.
After Google acquired the maker of connected-home devices for $3.2 billion in 2014, Nest kept its own recruiters and its own system for vetting job candidates, skirting Google’s famously deliberate hiring process. Nest still rents computer servers from Amazon.com Inc., rather than use Google’s data centers. Nest co-founder and CEO Tony Fadell also curbed some Google perks, such as free food, to maintain Nest’s scrappy vibe.
Mr. Fadell and co-founder Matt Rogers negotiated unusual autonomy for Nest. Now, as Google reorganizes and creates a new parent company, Alphabet Inc., it is using Nest as a model for running its other startup operations–the “bets” in Alphabet–according to people familiar with the plan.
The restructuring separates Google’s core businesses–including Internet search, the Android operating system and YouTube–from newer unrelated businesses such as Nest, Google Life Sciences and Fiber, the fast Internet service. Mr. Page will remain CEO of the Alphabet holding company, but step back from running Google’s core to oversee the other units, which will operate more independently.
. . .
“If Google can deliver more broadly what it gave Nest, that predicts success for the rest of the Alphabet projects,” said Max Levchin, a co-founder of PayPal Holdings Inc. who spent more than a year at Google after it bought his social startup Slide in 2010.

For the full story, see:
ALISTAIR BARR. “At Google, Breathing Room for New Ideas.” The Wall Street Journal (Fri., Oct. 2, 2015): B4.
(Note: ellipsis added.)
(Note: the online version of the article has the date Oct. 1, 2015, and has the title “At Google, Breathing Room for New Ideas.”)

Koch Employees Motivated by the Fulfillment of Meaningful Work

(p. A11) . . . , Mr. Koch defines “principled entrepreneurship” as the effort to maximize profit by “creating superior value,” as well as by “acting lawfully and with integrity.” What is good for business, he says, is good for society–another aspect of good profit.
The culture of a company is formed, Mr. Koch observes, when employees internalize such principles and practices. Although employees should be urged, he says, to be agents of change, to think critically and, when necessary, to challenge the decisions of their bosses, they will find that their most significant motivation is a sense of accomplishment and fulfillment. “We cannot ignite a passion for creating the greatest value,” Mr. Koch writes, “if there is no meaning in our work.”

For the full review, see:
JOSEPH MACIARIELLO. “BOOKSHELF; The Company He Keeps; Respect means treating people on their merits–not according to the rigid categories of identity politics. Merit will always create value.” The Wall Street Journal (Fri., Oct. 23, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Oct. 22, 2015.)

The book under review, is:
Koch, Charles G. Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies. New York: Crown Business, 2015.

Focused Investing by Entrepreneurs Can Create Illiquid Wealth that Is Large But Precarious

The implications of the point made in the passages quoted below, were boldly drawn out by George Gilder in his article “The Enigma of Entrepreneurial Wealth.”

(p. B4) Wealth-X found that from July 2014 to July 2015, 45 percent of the ultrawealthy in the United States lost some part of their wealth; 11 percent lost more than half of it.

The reasons for the drop in wealth differed. But why so many ultra-wealthy people — defined as those with more than $30 million — lost so much of their wealth so quickly offers lessons in financial management, no matter how much money you have.
Sure, this group still has a lot of money. But those who lost a lot of money made similar mistakes: Too much of their money was tied up in one investment and too little of their money was in cash or some other liquid investment. And too often, they didn’t think enough about the likelihood that something could go wrong.
. . .
“A lot of people have this view that wealth is inherited,” said Mykolas Rambus, chief executive of Wealth-X. “That’s very much not the case.” Most are successful entrepreneurs who built fortunes, he said, “And most of their money is in privately held companies, not your Googles and Facebooks.”
He said 75 percent of the world’s wealth, when real estate is included, was privately held.
In the period examined by Wealth-X, overconcentration and illiquidity were big factors when someone lost a fortune.
Curtis James Jackson III, better known as the rapper 50 Cent, was worth $240 million in May 2014 and about $50 million last month, according to Wealth-X. The precipitous drop was caused almost entirely by the falling values of four of his companies, with interests ranging from clothing to film production. They declined to $7.2 million from $150 million in 12 months, according to Wealth-X’s research.
The same could be said for Mr. Charney, who was ousted from his company American Apparel, which later filed for bankruptcy protection. His share of the company was estimated at over $65 million in May 2014 and is now virtually worthless. At American Apparel’s height, in 2007, Forbes put Mr. Charney’s stake at $550 million.
“Every financial adviser in the United States says you’ve got to diversify,” Mr. Rambus said. “There is a lesson here about volatility and concentration. Rewind to the dot-com crash. There were plenty of folks who were seriously overexposed to tech and lost their shirts.”
But there’s a paradox here. Generally, it was overconcentration in one, illiquid company — whose value rose exponentially — that made people ultrawealthy in the first place.

For the full story, see:
PAUL SULLIVAN . “Wealth Matters; Reversal of Fortunes for Some Superrich.” The New York Times (Sat., DEC. 12, 2015): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 11, 2015, and has the title “Wealth Matters; The Bad Fortune of Some Ultrawealthy People.”)

The Gilder article praised above, is:
Gilder, George. “The Enigma of Entrepreneurial Wealth.” Inc. 14, no. 10 (Oct. 1992): 161-64, 66 & 68.

North Dakota Plans a Drone Silicon Valley

For many years state governments and universities have been trying to plan the creation of new Silicon Valleys in their own backyards. Success has been elusive. Now North Dakota is tying to create a drone Silicon Valley. My take: Silicon Valleys cannot be planned, though they can be encouraged by low taxes and limited regulations.

(p. A1) FARGO, N.D. — “California and New York want what we’ve got,” said Shawn Muehler, a 30-year-old Fargo resident, gazing at a horizon of empty fields, silos, windbreak trees and hardly any people. A winged craft traces the air, mapping a field with pinpoint accuracy for his start-up, a drone software company called Botlink. “They like drones, but they’ve got a steep learning curve ahead.”

For years, entrepreneurs have come here to farm and to drill for oil and natural gas. Now a new, tech-savvy generation is grabbing a piece of the growing market for drone technology and officials want to help them do it here, where there is plenty of open space and — unlike in other sparsely populated states — lots of expertise already in place.
Silicon Valley has the big money and know-how, Mr. Muehler and others say, but North Dakota can take unmanned aerial vehicles, as the officials prefer to call drones, from a fast-growing hobby to an industry. And just as Silicon Valley got its start with military contracts, entrepreneurs and cooperative universities, they believe they can do the same with drones.
“The potential up here is tremendous,” said Jack Dalrymple, the state’s governor. “It’s not about supporting a company or two; it’s creating the leading edge of an industry.”
North Dakota has spent about (p. B7) $34 million fostering the state’s unmanned aerial vehicle business, most notably with a civilian industrial park for drones near Grand Forks Air Force Base. The base, a former Cold War installation, now flies nothing but robot aircraft for the United States military and Customs and Border Protection.

For the full story, see:
QUENTIN HARDY. “A Silicon Valley for Drone Craft in Great Plains.” The New York Times (Sat., DEC. 26, 2015): A1 & B7.
(Note: the online version of the story has the date DEC. 25, 2015, and has the title “A Silicon Valley for Drones, in North Dakota.”)

Entrepreneurs Who Pay Taxes “Expect Services–Like Justice”

(p. B3) ATHENS — Demetri Politopoulos, the founder of a midsize beer producer in northern Greece, says he nearly fainted when he heard the news late one night in October.
The Greek Parliament was planning to pass a law that would increase the tax he paid for each hectoliter of beer he sold by 50 percent.
Just like that, the microbrewery he started 17 years ago would go under, as his new tax bill of 1.6 million euros would wipe out his expected 1.45 million euros in profit for the year.
. . .
He started his business in 1998, but even as demand for his Vergina beer grew, his share of the market stayed in the low single-digits as the market leader did all in its power to prevent shops and restaurants from selling his product.
. . .
In 2005, Mr. Politopoulos took his case to the Hellenic Republic Competition Commission, citing numerous examples of what he said were unfair business practices by Heineken, from persuading retailers to not stock Vergina to more serious examples of bullying and intimidation.
But as is often the case in Greece, his petition went nowhere.
With Greece under unremitting pressure to find new revenue sources, the idea to close the gap between the way small and large brewers are taxed may have seemed a good idea.
That is, until Mr. Politopoulos took the floor in Parliament on Nov. 2.
“We are proud to pay taxes in Greece, but this is going to put us out of business,” he said. “And when we do pay our taxes, we expect services — like justice. Without justice in a society, there is nothing.”
His 10-minute declamation hit a cord. A video of the speech went viral and parliamentary members rallied to his cause.
Indeed, concerns are growing here that in a rush to raise much-needed revenue, Greece and its creditors are placing an unfair burden on an already decimated private sector.

For the full story, see:
LANDON THOMAS Jr. “A Greek Dvid Lands Some Big Punches.” The New York Times (Sat., DEC. 12, 2015): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 11, 2015, and has the title “In Greece, Brewer’s Woes Reflect Struggle of Business Owners.”)

The Filth, Slaughter and Disease, That Was Rome

McCloskey’s “Great Fact” says that life was very bad for tens of thousands of years until the capitalist industrial revolution started to make it better. The tens of thousands of years can be thought of as a horizontal hockey stick handle, with the capitalist industrial revolution represented by a sharply ascending blade. Rome was a bump on the hockey stick handle, but as the last paragraph quoted below suggests, not too much of a bump.

(p. C4) . . . Ms. Beard is competent and charming company. In “SPQR” she pulls off the difficult feat of deliberating at length on the largest intellectual and moral issues her subject presents (liberty, beauty, citizenship, power) while maintaining an intimate tone.

“In some ways, to explore ancient Rome from the 21st century is rather like walking on a tightrope, a very careful balancing act,” she writes. “If you look down on one side, everything seems reassuringly familiar: there are conversations going on that we almost join, about the nature of freedom or the problems of sex; there are buildings and monuments we recognize and family life lived out in ways we understand, with all their troublesome adolescents; and there are jokes that we ‘get.'”
“On the other side, it seems completely alien territory. That means not just the slavery, the filth (there was hardly any such thing as refuse collection in ancient Rome), the human slaughter in the arena and the death from illnesses whose cure we now take for granted; but also the newborn babies thrown away on rubbish heaps, the child brides and the flamboyant eunuch priests.”

For the full review, see:
DWIGHT GARNER. “Early Rome: Its Warts and Wonders.” The New York Times (Weds., Nov. 18, 2015): C1 & C4.
(Note: ellipsis added.)
(Note: the online version of the review has the date Nov. 17, 2015, and has the title “Review: In ‘SPQR: A History of Ancient Rome,’ Mary Beard Tackles Myths and More.”)

The book under review, is:
Beard, Mary. SPQR: A History of Ancient Rome. New York: Liveright Publishing Corp., 2015.

On the hockey stick, see:
Diamond, Arthur M., Jr. “McCloskey’s Great Fact; Review of: McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World.” Journal of Entrepreneurship and Public Policy 1, no. 2 (2012): 200-05.

Behavioral Economists Ignore Biases and Irrationalities of Governments

(p. A4) . . . it is quite a leap between acknowledging markets sometimes fail and arguing they are inherently flawed. Policy makers who work from the second assumption risk overreaching, by seeing market failure where there is none and ignoring their own behavioral biases, in either case leaving people worse off, not better. Public trust in free markets hasn’t wavered notably in the U.S. or Britain from precrisis levels and even in the pope’s native Argentina, attitudes aren’t much more negative than in 2009.
. . .
. . . , consumers don’t seem irrational when they evaluate fuel economy; one study found changes in gasoline prices are closely reflected in the relative prices of less fuel-efficient used cars.
Besides, as Mr. Viscusi and Mr. Gayer note, the government has behavioral biases of its own. Courts and regulators assign more value to the potential harm of a new drug than its potential benefits. Politicians take actions out of proportion to the risks, for example by closing schools during the Ebola scare or imposing onerous airline-security checks to prevent terrorist hijackings.

For the full commentary, see:
GREG IP. “Market Critics Shouldn’t Overreach.” The Wall Street Journal (Thurs., Sept. 24, 2015): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 23, 2015, and has the title “Critics of Free Market Shouldn’t Overreach.” Where there are minor differences between the print and online versions of the article, the sentences quoted above follow the online version.)

The Vicusi and Gayer paper mentioned above, is:
Viscusi, W. Kip, and Ted Gayer. “Behavioral Public Choice: The Behavioral Paradox of Government Policy.” Harvard Journal of Law & Public Policy 38, no. 3 (Summer 2015): 973-1007.

How to Monopolize a Dead Technology

(p. C3) LOS ANGELES — When Quentin Tarantino’s “The Hateful Eight” is released in a special roadshow version (with overture, intermission and additional footage) on Dec. 25, it will represent a feat worthy of the heist in the director’s “Jackie Brown.”
The film is scheduled to open on 96 screens in the United States and four in Canada, all in 70-millimeter projection, a premium format associated with extravaganzas of the 1950s and 1960s.
Yet from a theatrical standpoint, the technology is nearly obsolete. Last year, “Interstellar” opened in 70 millimeter at only 11 comparable locations. There were only 16 in 2012 for “The Master,” which renewed interested in the format. No film has opened with 100 70-millimeter prints since 1992. According to the National Association of Theater Owners, 97 percent of the 40,000 screens in the United States now use digital projection.

. . .
“We looked around for anybody who was selling them,” said Erik Lomis, Weinstein’s president of theatrical distribution and home entertainment. “We tried to keep it as quiet as possible as to why. Eventually word leaked out why we were looking for them, and then the price went up.”
. . .
“We’ve been accused of actually cornering the market on 70-millimeter projectors,” Mr. Cutler said. “It’s probably pretty true. There probably aren’t too many out there that we didn’t find.” Most of them were destroyed, he added, during the conversion to digital projection.
. . .
Ultra Panavision also produces subtle aesthetic effects, unusual even to viewers familiar with 70 millimeter. The lens “for lack of a better word is a softer lens,” Mr. Sasaki said. During a screening of test footage for the film, he pointed out the impressionistic qualities of the focus and explained how the image catered to our eyes’ natural depth cues.
With projectors found and lenses made, the next hurdle is labor: Most theaters no longer have projectionists with a working knowledge of these machines. Mr. Cutler’s company will provide training for each site. “One way or the other, we will fulfill this need,” he said. “It will be a combination of house staff that we can train, professional projectionists that we can bring in, projectionists that we can find locally, and potentially some technical staff that we’ll bring in.” Every theater showing the film will get a spare set of belts, fuses and light bulbs, and instructions. Mr. Cutler’s staff will also be standing by for calls.

For the full story, see:
BEN KENIGSBERG. “In a World Gone Digital, Room for a Lost Format.” The New York Times (Thurs., NOV. 12, 2015): C3.
(Note: ellipses added.)
(Note: the online version of the story has the date NOV. 11, 2015, and has the title “Tarantino’s ‘The Hateful Eight’ Resurrects Nearly Obsolete Technology.”)

Brits Attack Freedom, the Poor and the Environment, by Taxing Plastic Bags

(p. A4) LONDON — Some warned of “bag rage” by irate shoppers. The Daily Mail predicted, “Plastic Bags Chaos Looms.” Chloe Metzger, a 21-year-old blogger and student, wrote on Twitter: “I understand the whole #plasticbags thing but it couldn’t be more annoying.”
Nerves were rattled, jokes were made and the annoyance of it all was duly noted in Britain this week. Nevertheless, shoppers pulled off something that has also occurred in other cities, states and countries: They began weaning themselves off plastic shopping bags.
Starting this week, the government introduced a 5 pence charge for plastic bags for most groceries, clothes and other purchased items. And while it did not lead to a nationwide mutiny, as some had warned, it did create some tension in cashier lines.
. . .
The TaxPayers’ Alliance, an anti-tax group, said the new measure would burden families struggling to get by.
A 2013 study by the National Center for Policy Analysis in Washington, which champions laissez-faire economics, argued that paper and reusable bags were worse for the environment than plastic bags when it came to energy and water use, and to greenhouse gas emissions. “Every type of grocery bag incurs environmental costs,” wrote H. Sterling Burnett, the author of the study.
Whatever the arguments, the charge has inspired a mix of applause, resentment, fear and humor.
It has also inspired ingenious new ways to try to get around paying the new fee. The Daily Express, a British tabloid, noted that there was “nothing to stop Brits buying loose vegetables, being rewarded with their free plastic bag and ramming it full of the rest of the shopping.”

For the full story, see:
DAN BILEFSKY. “British Begin Attack Aimed at a Scourge of the Realm.” The New York Times (Weds., OCT. 7, 2015): A4.
(Note: ellipsis added.)
(Note: the online version of the story has the date OCT. 6, 2015, and has the title “Charge for Plastic Bags in Britain Draws Applause, Anger and Humor.”)

The 2013 bag report, referred to above, is:
Burnett, H. Sterling. “Do Bans on Plastic Grocery Bags Save Cities Money?” National Center for Policy Analysis, Policy Report # 353, Dec. 2013.

Was “the Naturally Aloof” Washington, an Introvert?

(p. C6) In “The Washingtons,” an ambitious, well-researched and highly readable dual biography, Flora Fraser has worked hard, despite the limited documentation that is available, to portray George and Martha, and their extended family, as fully rounded, flesh-and-blood people, freeing them from the heavy brocade of hagiography.
. . .
Her social graces, . . . , served the naturally aloof George well during his eight increasingly trying years as president. Martha had a way of keeping conversation flowing around her, Ms. Fraser says, while George’s “silences could unnerve the most confident.” An official dinner with the Washingtons could be an ordeal, since George was a terrible conversationalist and was known to sit silently tapping his spoon against the table, obviously impatient for the evening to end.

For the full review, see:
FERGUS M. BORDEWICH. “Domestic Tranquility; Martha kept conversation flowing at dinner; George’s silences ‘could unnerve the most confident.'” The Wall Street Journal (Sat., Nov. 14, 2015): C6.
(Note: ellipses added.)
(Note: the online version of the review has the date Nov. 13, 2015.)

The book under review, is:
Fraser, Flora. The Washingtons: George and Martha, “Join’d by Friendship, Crown’d by Love”. New York: Alfred A. Knopf, 2015.