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Some Entrepreneurs Are Motivated by Desire for Personal Wealth

Source of book image: online version of the WSJ review quoted and cited below.

I have read many biographies of innovative entrepreneurs. Like the author of the review of the book discussed in the passages quoted below, I believe that they have a variety of motives. But I am more optimistic than the book author that many of the entrepreneurs, those I call “project entrepreneurs,” are motivated mainly by a desire to ‘make a ding in the universe.’ Among these I would count Walt Disney and Steve Jobs.

(p. A11) Successful entrepreneurs, in my experience, are tenacious, hardheaded and creative. They persist with their ideas long after others might have given up, and they are good at persuading clients, partners and investors to take a chance. Like successful people in any field, they are driven by a powerful inner need, sometimes positive, like the hunger to do something entirely original, but often less appealing: a large chip on the shoulder, a desire for revenge, a distaste for authority and in many cases flat-out greed.
. . .
In “Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value,” Daniel Isenberg, a professor of entrepreneurship at Babson College and before that at Harvard Business School, offers many useful stories of entrepreneurship, culled from his teaching experience. But it isn’t until two-thirds of the way through that he torturously concedes that every entrepreneur needs a streak of Gordon Gekko.
“I have gradually come to the difficult conclusion that the burning desire for extraordinary value capture is almost a sine qua non for the supreme effort required to convert the value from imagined into tangible value,” he writes. “Personal gain is the simplest and most powerful motivation. If a person does not feel deeply that ‘This must pay off for me,’ there will rarely be extraordinary value creation.”

For the full review, see:
PHILIP DELVES BROUGHTON. “BOOKSHELF; Who Moved My Fortune? Some entrepreneurs want to do good. Many more are driven by a chip on the shoulder, a desire for revenge, a distaste for authority.” The Wall Street Journal (Sat., July 31, 2013): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 30, 2013.)

Office Design that Forces Interaction, Causes Exhaustion, Stress, High Errors and Low Productivity

(p. D1) The big push in office design is forcing co-workers to interact more. Cubicle walls are lower, office doors are no more and communal cafes and snack bars abound.
Like most grand social experiments, though, open-plan offices bring an unintended downside: pesky, productivity-sapping interruptions.
The most common disruptions come from co-workers, as tempting as it is to blame email or instant messaging. Face-to-face interruptions account for one-third more intrusions than email or phone calls, which employees feel freer to defer or ignore, according to a 2011 study in the journal Organization Studies.
Other research published earlier this year links frequent interruptions to higher rates of exhaustion, stress-induced ailments and a doubling of error rates.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY; The Biggest Distraction in the Office Is Sitting Next to You.” The Wall Street Journal (Weds., September 11, 2013): D1 & D3.
(Note: the online version of the story has the date September 10, 2013, and has the title “WORK & FAMILY; The Biggest Office Interruptions Are… …not what most people think. And even a 2-second disruption can lead to a doubling of errors.”)

Among the academic papers referred to in the article are:
Wajcman, Judy, and Emily Rose. “Constant Connectivity: Rethinking Interruptions at Work.” Organization Studies 32, no. 7 (July 2011): 941-61.
Altmann, Erik M., J. Gregory Trafton, and David Z. Hambrick. “Momentary Interruptions Can Derail the Train of Thought.” Journal of Experimental Psychology: General (Jan. 7, 2013): 1-12.

Nanny Feds Take Revenge on Zucker for Trying to “Save Our Balls”

Craig Zucker. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A11) Mr. Zucker is the former CEO of Maxfield & Oberton, the small company behind Buckyballs, an office toy that became an Internet sensation in 2009 and went on to sell millions of units before it was banned by the feds last year.

A self-described “serial entrepreneur,” Mr. Zucker looks the part with tussled black hair, a scraggly beard and hipster jeans. Yet his casual-Friday outfit does little to subdue his air of ambition and hustle.
Nowadays Mr. Zucker spends most of his waking hours fighting off a vindictive U.S. Consumer Product Safety Commission that has set out to punish him for having challenged its regulatory overreach. The outcome of the battle has ramifications far beyond a magnetic toy designed for bored office workers. It implicates bedrock American notions of consumer choice, personal responsibility and limited liability.
. . .
In August 2009, Maxfield & Oberton demonstrated Buckyballs at the New York Gift Show; 600 stores signed up to sell the product. By 2010, the company had built a distribution network of 1,500 stores, including major retailers like Urban Outfitters and Brookstone. People magazine in 2011 named Buckyballs one of the five hottest trends of the year, and in 2012 it made the cover of Brookstone’s catalog.
Maxfield & Oberton now had 10 employees, 150 sales representatives and a distribution network of 5,000 stores. Sales had reached $10 million a year. “Then,” says Mr. Zucker, “we crashed.”
On July 10, 2012, the Consumer Product Safety Commission instructed Maxfield & Oberton to file a “corrective-action plan” within two weeks or face an administrative suit related to Buckyballs’ alleged safety defects. Around the same time–and before Maxfield & Oberton had a chance to tell its side of the story–the commission sent letters to some of Maxfield & Oberton’s retail partners, including Brookstone, warning of the “severity of the risk of injury and death possibly posed by” Buckyballs and requesting them to “voluntarily stop selling” the product.
It was an underhanded move, as Maxfield & Oberton and its lawyers saw it. “Very, very quickly those 5,000 retailers became zero,” says Mr. Zucker. The preliminary letters, and others sent after the complaint, made it clear that selling Buckyballs was still considered lawful pending adjudication. “But if you’re a store like Brookstone or Urban Outfitters . . . you’re bullied into it. You don’t want problems.”
. . .
Maxfield & Oberton resolved to take to the public square.On July 27, just two days after the commission filed suit, the company launched a publicity campaign to rally customers and spotlight the commission’s nanny-state excesses. The campaign’s tagline? “Save Our Balls.”
Online ads pointed out how, under the commission’s reasoning, everything from coconuts (“tasty fruit or deadly sky ballistic?”) to stairways (“are they really worth the risk?”) to hot dogs (“delicious but deadly”) could be banned.
. . .
. . . in February [2013] the Buckyballs saga took a chilling turn: The commission filed a motion requesting that Mr. Zucker be held personally liable for the costs of the recall, which it estimated at $57 million, if the product was ultimately determined to be defective.
This was an astounding departure from the principle of limited liability at the heart of U.S. corporate law.
. . .
Given the fact that Buckyballs have now long been off the market, the attempt to go after Mr. Zucker personally raises the question of retaliation for his public campaign against the commission. Mr. Zucker won’t speculate about the commission’s motives. “It’s very selective and very aggressive,” he says.

For the full interview, see:
SOHRAB AHMARI, interviewer. “THE WEEKEND INTERVIEW with Craig Zucker; What Happens When a Man Takes on the Feds; Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.” The Wall Street Journal (Sat., August 31, 2013): A11.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the interview has the date August 30, 2013, and has the title “THE WEEKEND INTERVIEW; Craig Zucker: What Happens When a Man Takes on the Feds. Buckyballs was the hottest office game on the market. Then regulators banned it. Now the government wants to ruin the CEO who fought back.”)

Montessori Taught Larry Page and Sergey Brin to Always Ask Questions

(p. 122) “Their attitude is just like, ‘We’re Montessori kids,'” said Mayer. “We’ve been trained and programmed to question authority.”
Thus it wasn’t surprising to see that attitude as the foundation of Google’s culture. “Why aren’t there dogs at work?” asked Marissa, parroting the never-ending Nerdish Inquisition conducted by her bosses. “Why aren’t there toys at work? Why aren’t snacks free? Why? Why? Why?”
“I think there’s some truth to that,” says Larry Page, who spent his preschool and first elementary school years at Okemos Montessori Radmoor School in Michigan. “I’m always asking questions, and Sergey and I both have this.”
Brin wound up in Montessori almost by chance. When he was six, recently emigrated from the Soviet Union, the Paint Branch Montessori (p. 123) School in Adelphi, Maryland, was the closest private school. “We wanted to place Sergey in a private school to ease up his adaptation to the new life, new language, new friends,” wrote his mother, Eugenia Brin, in 2009. “We did not know much about the Montessori method, but it turned out to be rather crucial for Sergey’s development. It provided a basis for independent thinking and a hands-on approach to life.”
“Montessori really teaches you to do things kind of on your own at your own pace and schedule,” says Brin. “It was a pretty fun, playful environment– as is this.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: italics in original.)

Growth of Labor Safety Net Made Great Recession Deeper and Longer

Source of book image: http://si.wsj.net/public/resources/images/OB-VE881_bkrvre_GV_20121101145828.jpg

(p. 309) [Mulligan’s empirical results suggest] that employment was dropping not only because of declining demand for the employees’ products, but also because employers were substituting capital and other factors for labor. This surprising finding suggests that although a decline in aggregate demand for goods and services was one of the reasons for the decline in labor, other causes were also at play in most sectors of the economy. This fact is consistent with an inward shift in the supply of labor to the marketplace during this period.

In chapter 3, Mulligan introduces the main culprit responsible for this supplycurve shift–the unintended consequences of increases in the social safety net that substantially increased the marginal tax rate on work. In his model, Mulligan operationalizes this force into changes in the replacement rate (the fraction of productivity that the average nonemployed person receives in the form of means-tested benefits) and the self-reliance rate (1 minus the replacement rate), which is the fraction of lost productivity not replaced by means-tested benefits.
His conjecture is that, in a reverse of government policies in the 1990s that made work pay for single mothers by transforming welfare as we knew it into a program that nudged single mothers off the Aid to Families with Dependent Children rolls and into the workforce, “temporary” government program expansions to mitigate the (p. 310) short-run consequences of unemployment and the bursting of the housing bubble made a prolonged paid period of nonwork an offer that many Americans found too tempting to refuse.
Mulligan identifies and incorporates the major expansions in eligibility and benefit amounts for Unemployment Insurance and food stamps into an eligibility index that shows that most of the 199 percent growth in these programs between 2007 and 2009 was due to these changes. He uses this growth rate in a weighted index of overall statutory safety-net generosity to determine the degree to which it has influenced overall employment. He does a similar analysis of the means-tested Home Affordable Modification Program (HAMP), which facilitated substantial lender-provided discounts on home mortgage expenses for unemployment insurance-eligible workers. He finds that these market distortions that increased the marginal tax on work grew substantially in 2008, peaked in 2009–at almost triple their 2007 level–and then modestly fell in 2010 to a level appreciably above the 2007 level.
. . .
But his empirical evidence shows that the implementation of these “recession cures” was primarily responsible for the Great Recession’s depth and duration.

For the full review, see:
Burkhauser, Richard V. “Review of: “The Redistributive Recession: How Labor Market Distortions Contracted the Economy” by Casey B. Mulligan.” The Independent Review 18, no. 2 (Fall 2013): 308-11.
(Note: ellipsis, and words in brackets, added.)

Book that is under review:
Mulligan, Casey B. The Redistribution Recession: How Labor Market Distortions Contracted the Economy. New York: Oxford University Press, USA, 2012.

Messy Offices Encourage Creativity

(p. 12) Forty-eight research subjects came individually to our laboratory, . . . assigned to messy or tidy rooms. . . . , we told subjects to imagine that a Ping-Pong ball factory needed to think of new uses for Ping-Pong balls, and to write down as many ideas as they could. We had independent judges rate the subjects’ answers for degree of creativity, which can be done reliably. . . .
When we analyzed the responses, we found that the subjects in both types of rooms came up with about the same number of ideas, which meant they put about the same effort into the task. Nonetheless, the messy room subjects were more creative, as we expected. Not only were their ideas 28 percent more creative on average, but when we analyzed the ideas that judges scored as “highly creative,” we found a remarkable boost from being in the messy room — these subjects came up with almost five times the number of highly creative responses as did their tidy-room counterparts.
. . .
Our findings have practical implications. There is, for instance, a minimalist design trend taking hold in contemporary office spaces: out of favor are private walled-in offices — and even private cubicles. Today’s office environments often involve desk sharing and have minimal “footprints” (smaller office space per worker), which means less room to make a mess.
At the same time, the working world is abuzz about cultivating innovation and creativity, endeavors that our findings suggest might be hampered by the minimalist movement. While cleaning up certainly has its benefits, clean spaces might be too conventional to let inspiration flow.

For the full commentary, see:
KATHLEEN D. VOHS. “GRAY MATTER; It’s Not ‘Mess.’ It’s Creativity.” The New York Times, SundayReview Section (Sun., September 15, 2013): 12.
(Note: ellipses added.)
(Note: the online version of the commentary has the date September 13, 2013.)

The main academic paper referred to in the commentary is:
Vohs, Kathleen D., Joseph P. Redden, and Ryan Rahinel. “Physical Order Produces Healthy Choices, Generosity, and Conventionality, Whereas Disorder Produces Creativity.” Psychological Science 24, no. 9 (Sept. 2013): 1860-67.

Brazil’s Cardozo Envies England’s Rule of Law

“Michael Palin.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C11) For his most recent project in Brazil, which will go on to become a PBS series, Mr. Palin interviewed former Brazilian President Fernando Cardoso, who is often credited with the country’s economic turnaround. Whereas he says most political leaders are hesitant to say anything controversial, Mr. Cardoso was refreshingly straightforward. “I asked him, ‘Brazil has so many good things going for it–the people are friendly and relaxed, the economy is booming. Is there anything you envy about us in England?’ ” He was surprised by Mr. Cardoso’s answer. “He said straight out, ‘The rule of law.’ He said, ‘Our problem here is we have endemic corruption,’ ” says Mr. Palin. “I just thought it was incredibly honest for a world leader.”

For the full story, see:
ALEXANDRA WOLFE. “WEEKEND CONFIDENTIAL; Michael Palin Takes on the World; The former Monty Python performer is turning his global adventures into comic tales.” The Wall Street Journal (Sat., August 31, 2013): C11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date August 30, 2013.)

Key to Google: “Both Larry and Sergey Were Montessori Kids”

(p. 121) [Marissa Mayer] conceded that to an outsider, Google’s new-business process might indeed look strange. Google spun out projects like buckshot, blasting a spray and using tools and measurements to see what it hit. And sometimes it did try ideas that seemed ill suited or just plain odd. Finally she burst out with her version of the corporate Rosebud. “You can’t understand Google,” she said, “unless you know that both Larry and Sergey were Montessori kids.”
“Montessori” refers to schools based on the educational philosophy of Maria Montessori, an Italian physician born in 1870 who believed that children should be allowed the freedom to pursue what interested them.
(p. 122) “It’s really ingrained in their personalities,” she said. “To ask their own questions, do their own things. To disrespect authority. Do something because it makes sense, not because some authority figure told you. In Montessori school you go paint because you have something to express or you just want to do it that afternoon, not because the teacher said so. This is really baked into how Larry and Sergey approach problems. They’re always asking ‘Why should it be like that?’ It’s the way their brains were programmed early on.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: bracketed name added.)

To Save Lego, CEO Fired Almost a Third of Workers

Source of book image: online version of the WSJ review quoted and cited below.

(p. A15) Only 10 years ago, Lego was posting record losses; retailers were backlogged with unsold Lego toys; and it was unclear whether Lego would survive as an independent company. An internal review discovered that 94% of the sets in its product line were unprofitable. The turnaround story that followed is well told by Wharton professor David Robertson in “Brick by Brick.”
. . .
Upon coming to power, Mr. Knudstorp cut 30% of Lego’s product portfolio, including many of its newer offerings. To stave off financial doom, he also sold the company’s headquarters building and moved into simpler accommodations–and, more painfully, let go almost a third of the workforce.
But how to move beyond the rescue stage and toward growth? Based on input from top retailers and a large customer-research study, Lego executives concluded that even though young fans of buildable toys were a minority, there were enough of them to make a worthwhile market–and their parents were willing to pay premium prices. The company would now organize its innovation efforts around its potentially very profitable core audience.
Mr. Robertson, with the benefit of access to staff at Lego and partner companies, provides unusually detailed reporting of the processes that led to Lego’s current hits (and, inevitably, some misses). Among the hits is the Mindstorms NXT, the second generation of Lego’s robotics set, which hadn’t been updated or advertised since 2001. Mr. Robertson describes how Lego navigated between relying on sophisticated users to determine the product’s design and relying on its own expertise in the creation of building experiences.

For the full review, see:
DAVID A. PRICE. “BOOKSHELF; The House That Lego Built; Lego balked at licensing warlike ‘Star Wars’ toys. But then anthropological research convinced company executives that kids like to compete.” The Wall Street Journal (Tues., July 23, 2013): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 22, 2013.)

The book under review, is:
Robertson, David. Brick by Brick: How Lego Rewrote the Rules of Innovation and Conquered the Global Toy Industry. New York: Crown Business, 2013.

For Innovator It Is Better to Use Wealth to Innovate than to Donate

“Steve Jobs, a founder of Apple, has focused on his work to improve the lives of millions of people through technology.” Source of caption and photo: online version of the NYT article quoted and cited below.

The column quoted below, written before Steve Jobs’ death, asks an important question: should an innovative entrepreneur be a prominent philanthropist? I believe that innovative entrepreneurs can often do the most good by using their wealth to innovate rather than to donate.

(p. B1) Steve Jobs is a genius. He is an innovator. A visionary. He is perhaps the most beloved billionaire in the world.

Surprisingly, there is one thing that Mr. Jobs is not, at least not yet: a prominent philanthropist.
Despite accumulating an estimated $8.3 billion fortune through his holdings in Apple and a 7.4 percent stake in Disney (through the sale of Pixar), there is no public record of Mr. Jobs giving money to charity. He is not a member of the Giving Pledge, the organization founded by Warren E. Buffett and Bill Gates to persuade the nation’s wealthiest families to pledge to give away at least half their fortunes. (He declined to participate, according to people briefed on the matter.) Nor is there a hospital wing or an academic building with his name on it.
None of this is meant to judge Mr. Jobs. I have long been a huge admirer of Mr. Jobs and consider him the da Vinci of our time.
. . .
(p. B4) . . . Mr. Jobs has always been upfront about where he has chosen to focus. In an interview with The Wall Street Journal in 1993 , he said, “Going to bed at night saying we’ve done something wonderful … that’s what matters to me.”

For the full commentary, see:
ANDREW ROSS SORKIN. “DEALBOOK COLUMN; The Mystery of Steve Jobs’s Public Giving.” The New York Times (Tues., AUGUST 30, 2011): B1 & B4.
(Note: ellipsis between paragraphs added; ellipsis within last paragraph, in original.)
(Note: the online version of the commentary has the date AUGUST 29, 2011.)

Frank Lloyd Wright Loved Cars

“In the early 1920s, Wright bought a 1929 Cord L-29, which he praised for its sensible front-wheel drive. Besides, “It looked becoming to my houses,” he wrote in his book “An Autobiography.” He seemed to have a special bond with the Cord. “The feeling comes to me that the Cord should be heroic in this autobiography somewhere,” he wrote.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 9) Frank Lloyd Wright, the architect whose birth in 1867 preceded the gasoline-powered automobile’s by about 20 years, was an early adopter of the internal-combustion engine and an auto aficionado all his life.
He was also eerily prophetic in understanding how the car would transform the American landscape, and his designs reflect this understanding. Wright often designed both for and around automobiles, and his masterpiece, the Guggenheim Museum in New York, owes its most distinctive feature, the spiral of its rotunda, to his love for the automobile.
. . .
Wright was seduced by the combination of beauty, power and speed, whether powered by hay or by gas. He owned horses, and his first car, a yellow Model K Stoddard-Dayton roadster, was the same model that in 1909 won the very first automobile race at the Indianapolis Motor Speedway. Called the Yellow Devil by his neighbors, this was a 45-horsepower car capable of going 60 miles an hour. Wright and his sons seemed to enjoy that horsepower with abandon: “Dad was kept busy paying fines,” his son John observed. So enamored was Wright of his automobile that he installed gas pumps in the garage of his home and studio in Oak Park, Ill.
. . .
In the early 1920s, Wright owned a custom-built Cadillac and later bought a 1929 Cord L-29, which he praised for its sensible front-wheel drive. Besides, “It looked becoming to my houses,” he wrote in his book “An Autobiography.” He seemed to have a special bond with the Cord. “The feeling comes to me that the Cord should be heroic in this autobiography somewhere,” he wrote.
Wright’s Cord can be seen today at the Auburn Cord Duesenberg Museum in Auburn, Ind.

For the full story, see:
INGRID STEFFENSEN. “Frank Lloyd Wright: The Auto as Architect’s Inspiration.” The New York Times, SportsSunday Section (Sun., August 9, 2009): 9.
(Note: ellipses added.)
(Note: the online version of the article has the date August 6, 2009 and the title “The Auto as Architect’s Inspiration.” There are some small differences between the print and online versions, although I think the sentences quoted above are the same in both.)

Wright’s autobiography, mentioned above, is:
Wright, Frank Lloyd. An Autobiography. New York: Horizon Press, 1977.