Books – Page 62 – artdiamondblog.com

“SEC Rules Demanded Complexity”

(p. 152) Google had considerable experience with pleasing users, but in the case of the auction, it could not create a simple interface. SEC rules demanded complexity. So the Google auction was a lot more complicated than buying Pokémon cards on eBay. People had to qualify financially as bidders. Bids had to be placed by a brokerage. If you made an error in reg-(p. 153)istering, you could not correct it but had to reregister. All those problems led to a few postponements of the start of the bidding period.
But the deeper problem was the uncertainty of Google’s prospects. As the press accounts accumulated–with reporters informed by Wall Streeters eager to sabotage the process– the perception grew that Google was a company with an unfamiliar business model run by weird people. A typical Wall Street insider analysis was reflected by Forbes.com columnist Scott Reeves, who concluded that Google’s target price, at the time pegged to the range between $ 108 and $ 135 a share, was excessive. “Only those who were dropped on their head at birth [will] plunk down that kind of cash for an IPO,” Reeves wrote.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

Taxpayers Work, Save and Invest More When Taxes Are Low

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

(p. 15) The 1980s boom was launched on the simple insight that, by lowering tax rates and regulatory hurdles and juicing the incentives to produce, innovate and take risks, the animal spirits of the American free-enterprise system would revive. Two seminal books hatched the supply-side revolution. The first was Jude Wanniski’s “The Way the World Works” (1978); the second, George Gilder’s “Wealth and Poverty” (1981).

Almost as influential, coming a few years later, was Lawrence Lindsey’s “The Growth Experiment” (1990). Slightly academic in nature, it was the first book to quantify the economic and revenue windfall of the 1981 Reagan across-the-board tax cuts. Mr. Lindsey’s conclusion was that Reagan’s 1981 tax act quickened the pace of production, which reduced the predicted revenue loss. His research found that although the Reagan tax cuts didn’t “pay for themselves,” the ones at the highest end of the income spectrum “did produce a revenue gain” because of “changes in taxpayer behavior.” He concluded that “the core supply-side tenet–that tax rates powerfully affect the willingness of taxpayers to work, save and invest, and thereby also affect the health of the economy–won as stunning a vindication as has been seen in at least a half-century of economics.”
He has now updated his book, taking us through the booms and busts of the past 20 years. It is a valuable project in part because Mr. Lindsey was a front-seat economic adviser to George W. Bush, serving as director of the National Economic Council and as one of the architects of the often-maligned 2001 and 2003 Bush tax cuts.
Mr. Lindsey’s central claim is that those tax changes saved the economy from the undertow of the financial meltdown at the end of the Clinton presidency.

For the full review, see:
Stephen Moore. “BOOKSHELF; Book Review: ‘The Growth Experiment Revisited’ by Lawrence Lindsey; The 25 years after Reagan’s tax cuts saw unprecedented wealth creation and progress. America’s net worth exploded by $40 trillion.” The Wall Street Journal (Tues., September 10, 2013): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date September 9, 2013, and has the title “BOOKSHELF; Book Review: ‘The Growth Experiment Revisited’ by Lawrence Lindsey; The 25 years after Reagan’s tax cuts saw unprecedented wealth creation and progress. America’s net worth exploded by $40 trillion.”)

The book under review is:
Lindsey, Lawrence B. The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are America’s Best Hope for Recovery. New York: Basic Books, 2013.

SEC Told Google to Delete “Making the World a Better Place” from Document

(p. 150) . . . , the Securities and Exchange Commission was unimpressed by the charms of Page’s “Owner’s Manual.” “Please revise or delete the statements about providing ‘a great service to the world,’ ‘to do things that matter,’ ‘greater positive impact on the world, don’t be evil’ and ‘making the world a better place,'” they wrote. (Google would not revise the letter.) The commission also had a problem with Page’s description of the lawsuit that Overture (by then owned by Yahoo) had filed against Google as “without merit.” Eventually, to resolve this issue before the IPO date, (p. 151) Google would settle the lawsuit by paying Yahoo 2.7 million shares, at an estimated value of between $ 260 and $ 290 million.
That set a contentious tone that ran through the entire process. The SEC cited Google’s irregularities on a frequent basis, whether it was a failure to properly register employee stock options, inadequate reporting of financial results to stakeholders, or the use of only first names of employees in official documents. It acted toward Google like a junior high school vice principal who’d identified an unruly kid as a bad seed, requiring constant detentions.

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

Google’s Bathrooms Showed Montessori Discipline

(p. 124) You could even see the company’s work/ play paradox in its bathrooms. In some of Google’s loos, even the toilets were toys: high-tech Japanese units with heated seats, cleansing water jets, and a control panel that looked as though it could run a space shuttle. But on the side of the stall–and, for men, at an eye-level wall placement at the urinals–was the work side of Google, a sheet of paper with a small lesson in improved coding. A typical “Testing on the Toilet” instructional dealt with the intricacies of load testing or C + + microbenchmarking. Not a second was wasted in fulfilling Google’s lofty–and work-intensive–mission.
It’s almost as if Larry and Sergey were thinking of Maria Montessori’s claim “Discipline must come through liberty…. We do not consider an individual disciplined only when he has been rendered as artificially silent as a mute and as immovable as a paralytic. He is an individual annihilated, not disciplined. We call an individual disciplined when he is master of himself.” (p. 125) Just as it was crucial to Montessori that nothing a teacher does destroy a child’s creative innocence, Brin and Page felt that Google’s leaders should not annihilate an engineer’s impulse to change the world by coding up some kind of moon shot.
“We designed Google,” Urs Hölzle says, “to be the kind of place where the kind of people we wanted to work here would work for free.”

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

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.)

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.

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.

When Google Earned a Profit, Sergey Brin “Felt Like We Had Built a Real Business”

(p. 94) . . . , Google was reaping rewards, and 2002 was its first profitable year. “That’s really satisfying,” Brin said at the time. “Honestly, when we were still in the dot-com boom days, I felt like a schmuck. I had an Internet start-up– so did everybody else. It was unprofitable, like everybody else’s, and how hard is that? But when we became profitable, I felt like we had built a real business.”

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