Category: Creative Destruction

Bezos Built Amazon with Methodical Patience

(p. B1) There is a simple explanation for Amazon’s rise, and also a second, more complicated one. The simple story involves Amazon Web Services, the company’s cloud-computing business, which rents out vast amounts of server space to other companies. Amazon began disclosing A.W.S.’s financial performance in April, and the numbers showed that selling server space was a much bigger business than anyone had realized. Deutsche Bank estimates that A.W.S., which is less than a decade old, could soon be worth $160 billion as a stand-alone company. That’s more valuable than Intel.
Yet the disclosure of A.W.S.’s size has obscured a deeper change at Amazon. For years, observers have wondered if Amazon’s shopping business — you know, its main business — could ever really work. Investors gave (p. B11) Mr. Bezos enormous leeway to spend billions building out a distribution-center infrastructure, but it remained a semi-open question if the scale and pace of investments would ever pay off. Could this company ever make a whole lot of money selling so much for so little?
As we embark upon another holiday shopping season, the answer is becoming clear: Yes, Amazon can make money selling stuff. In the flood of rapturous reviews from stock analysts over the company’s earnings report last month, several noted that Amazon’s retail operations had reached a “critical scale” or an “inflection point.” They meant that Amazon’s enormous investments in infrastructure and logistics have begun to pay off. The company keeps capturing a larger slice of American and even international purchases. It keeps attracting more users to its Prime fast-shipping subscription program, and, albeit slowly, it is beginning to scratch out higher profits from shoppers.
. . .
Why is Amazon so far ahead? It is difficult to resist marveling at the way Mr. Bezos has built his indomitable shopping machine, and the very real advantages in price and convenience that he has brought to America’s national pastime of buying stuff. What has been key to this rise, and missing from many of his competitors’ efforts, is patience. In a very old-fashioned manner, one that is far out of step with a corporate world in which milestones are measured every three months, Amazon has been willing to build its empire methodically and at great cost over almost two decades, despite skepticism from many sectors of the business world.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; Long Game at Amazon Produces Juggernaut.” The New York Times (Thurs., NOV. 19, 2015): B1 & B11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date NOV. 18, 2015, and has the title “STATE OF THE ART; How Amazon’s Long Game Yielded a Retail Juggernaut.”)

Those Who Try Japanese Toilets, Praise Them with “Cultish Devotion”

(p. D12) Last year, Bennett Friedman, who owns a plumbing showroom in Manhattan called AF New York, took a business trip to Milan. On the morning of his return he faced a choice: stop in the bathroom there or wait until he got home. The flight was nine hours. He waited.
The move seems almost masochistic. But in his home and office bathrooms, Mr. Friedman had installed a Toto washlet. To sit upon a standard commode, he said, would be like “going back to the Stone Age.”
“It feels very uncivilized,” he said.
For those who own Japanese toilets, there is a cultish devotion. They boast heated seats, a bidet function for a rear cleanse and an air-purifying system that deodorizes during use. The need for toilet paper is virtually eliminated (there is an air dryer) and “you left the lid up” squabbles need never take place (the seat lifts and closes automatically in many models).
. . .
Most washlet owners, then, are converted after trying one out in the world. At a boutique hotel, say, or on a trip to Asia.
Such was the case with Robert Aboulache. Before he and his family went on a vacation to Japan, he said, friends who had visited the country told him he would love the toilets. “I thought, ‘How great can the toilets be?'” Mr. Aboulache said. “They were amazing. Some have noisemakers to cover up the sound. You can pivot that little sprayer. The water can be heated or not. We got home, and I thought, ‘This is not the same.'”
Three days later, Mr. Aboulache went online and bought a Toto washlet, which he installed in the shared upstairs bathroom of his home in Los Angeles as a surprise for his wife and son.
“We’ve been delighted,” he said. “It’s our favorite toilet.”
. . .
Mr. Friedman, too, is an enthusiastic proselytizer for washlets, in his showroom and out in social situations, something you gather he would do even if he didn’t sell them.
Whenever he talks about their virtues, he said, “I feel like one of the Apostles passing the word of God.”

For the full story, see:
STEVEN KURUTZ. “For Its Devotees, the Seat of Luxury.” The New York Times (Thurs., NOV. 19, 2015): D12.
(Note: ellipses added.)
(Note: the online version of the story has the date NOV. 18, 2015, and has the title “The Cult of the Toto Toilet.”)

Transistors Did Not Completely Destroy the Vacuum Tube

(p. D11) . . . , just as nothing quite matches the ambience created by an incandescent bulb dimmed low, nothing quite sounds like a good tube amp. Audiophiles will argue about whether a solid-state or tube amp is superior. However, it’s best to think of tubes as an aesthetic choice–akin to applying a vintage filter to a pristine snapshot.
Tubes are well suited for musical passages that can sound grating over modern equipment–for example, a classical violinist digging into her instrument during a dramatic passage. Although its overall sound may not be as crisp, a good tube amp will take that shrill edge off.
More and more music lovers are downsizing their sound systems these days, and some tube-amp makers are following suit. Miniature models, like the ones shown here, use a combination of tubes and solid-state technology to minimize bulk. A few are also surprisingly affordable and versatile. You can hook them up to pretty much any audio source, like a smartphone, computer or CD player. Then just add a pair of headphones or speakers.

For the full story, see:
MICHAEL HSU. “Groove Tube.” The Wall Street Journal (Sat., Oct. 24, 2015): D11.
(Note: ellipsis added.)
(Note: the online version of the article was dated Oct. 21, 2015, and has the title “The Miracle of a $150 (or Less) Tube Amplifier.”)

For Movies, Film Option Survives Digital Advance

(p. B1) Faced with the possible extinction of the material that made Hollywood famous, a coalition of studios is close to a deal to keep Eastman Kodak Co. in the business of producing movie film.
The negotiations–secret until now–are expected to result in an arrangement where studios promise to buy a set quantity of film for the next several years, even though most movies and television shows these days are shot on digital video.
Kodak’s new chief executive, Jeff Clarke, said the pact will allow his company to forestall the closure of its Rochester, N.Y., film manufacturing plant, a move that had been under serious consideration. Kodak’s motion-picture film sales have plummeted 96% since 2006, from 12.4 billion linear feet to an estimated 449 million this year. With the exit of competitor Fujifilm Corp. last year, Kodak is the only major company left producing motion-picture film.
. . .
Film and digital video both “are valid choices, but it would be a tragedy if suddenly directors didn’t have the opportunity to shoot on film,” said Mr. Apatow. director of comedies including “Knocked Up” and “The 40 Year-Old Virgin,” speaking from the New York set of his coming movie “Trainwreck,” which he is shooting on film. “There’s a magic to the grain and the color quality that you get with film.”

For the full story, see:
BEN FRITZ. “Movie Film, at Death’s Door, Gets a Reprieve.” The Wall Street Journal (Weds., July 30, 2014): B1 & B8.
(Note: ellipsis added.)
(Note: the online version of the article was dated July 29, 2014.)

Challenging Videogame Improves Attention and Memory in Seniors

(p. R1) Neuroscientist Adam Gazzaley and his colleagues at the University of California in San Francisco have found that playing a challenging videogame upgrades our ability to pay attention.
As reported in the journal Nature in 2013, the Gazzaley lab trained 60- to 85-year-old subjects on a game called NeuroRacer. The multitask version involves simulated driving along a winding road while quickly pressing keys or a game controller to respond to a green sign when it appears on the roadside. As a control, some subjects played a single-task version of the game that omits the winding road and involves only noticing and responding to the green sign. To ensure that subjects were genuinely challenged but not discouraged, the level of game difficulty was individualized.
After 12 hours of training spread evenly over a month, multitasking subjects were about twice as efficient at shifting attention as when they started, a huge improvement by any standard. Remarkably, their new scores were comparable to those of 20-year-olds not trained on NeuroRacer. The subjects still tested positive six months later.
The multitaskers also got an unexpected brain bonus. Their sustained concentration and working memory (briefly holding information such as a phone number) improved as well. The training had targeted neither of these functions, but the general benefits emerged nonetheless.

For the full commentary, see:
PATRICIA CHURCHLAND. “MIND AND MATTER; A Senior Moment for Videogames as Brain-Boosters.” The Wall Street Journal (Sat., Oct. 3, 2015): C2.
(Note: the online version of the commentary has the date Sept. 30, 2015, and the title “MIND AND MATTER: Videogames for Seniors Boost Brainpower.”)

The Gazzaley article mentioned above, is:
Anguera, J. A., J. Boccanfuso, J. L. Rintoul, O. Al-Hashimi, F. Faraji, J. Janowich, E. Kong, Y. Larraburo, C. Rolle, E. Johnston, and Adam Gazzaley. “Video Game Training Enhances Cognitive Control in Older Adults.” Nature 501, no. 7465 (Sept. 5, 2013): 97-101.

The Cure for Technology Problems Is Better Technology

(p. D2) The real lesson in VW’s scandal — in which the automaker installed “defeat devices” that showed the cars emitting lower emissions in lab tests than they actually did — is not that our cars are stuffed with too much technology. Instead, the lesson is that there isn’t enough tech in vehicles.
In fact, the faster we upgrade our roads and autos with better capabilities to detect and analyze what’s going on in the transportation system, the better we’ll be able to find hackers, cheaters and others looking to create havoc on (p. B11) the highways.

. . .
“What happened at Volkswagen had to do with embedded software that’s buried deep in the car, and only the supplier knows what’s in it — and it’s a black box for everybody else,” said Stefan Heck, the founder of Nauto, a new start-up that is introducing a windshield-mounted camera that monitors road conditions for commercial fleets and consumers. The camera uses artificial intelligence to track traffic conditions; over time, as more vehicles use it, it could provide users with traffic and safety information plus data about mileage and other automotive functions.
The end goal for intelligent-car systems, said Dr. Heck, is to create an on-road network with data that is constantly being analyzed to get a sharper picture of what’s happening on the road. Sure, companies might still be able to cheat. But with enough independent data sources coming from different places on the road, it would become much more difficult.
He said there really isn’t any going back — software in cars is responsible not just for driver comforts like in-dash navigation, but also for critical safety and performance systems, many of which improve the car’s environmental footprint.

For the full commentary, see:
Farhad Manjoo. “STATE OF THE ART; Our Cars Need More Technology.” The New York Times (Thurs., Oct. 1, 2015): B1 & B11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 30, 2015, and the title “STATE OF THE ART; VW Scandal Shows a Need for More Tech, Not Less.” )

Bicycles Emancipated Women

BicycleWomanIn1890s.jpg

“A portrait from the 1890s at the Smithsonian Institution’s National Museum of American History. Susan B. Anthony said cycling did more to emancipate women than anything else in the world.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D1) . . . , Twain promoted the new sport of cycling with characteristic rhubarb tartness. “Get a bicycle,” he urged readers. “You will not regret it, if you live.”
. . .
The full-bore bicycle fever was brief, and by the early 20th century it had given way to fascination with the automobile. Yet, as a new exhibit at the Smithsonian Institution’s National Museum of American History makes clear, the impact of the bicycle on the nation’s industrial, cultural, emotional and even moral landscape has been deep and long lasting.
In addition to air-filled rubber tires, we can thank the bicycle for essential technologies like ball bearings, originally devised to reduce friction in the bicycle’s axle and steering column; for wire spokes and wire spinning generally; for differential gears that allow connected wheels to spin at different speeds.
And where would our airplanes, tent poles and lawn furniture be without the metal tubing developed to serve as the bicycle frame? “The hollow steel tube is a great form,” said Jim Papadopoulos, an assistant teaching professor of mechanical and industrial engineering at Northeastern University in Boston. “It’s tremendously structurally efficient, light and strong, and it came into being for the bicycle.”
. . .
(p. D4) Bicycles also gave birth to our national highway system, as cyclists outside major cities grew weary of rutted mud paths and began lobbying for the construction of paved roads. The car connection goes further still: Many of the bicycle repair shops that sprang up to service the wheeling masses were later converted to automobile filling stations, and a number of pioneers in the auto industry, including Henry Ford and Charles Duryea, started out as bicycle mechanics. So, too, did the Wright brothers.
“The pre-story is so important,” said Eric S. Hintz, a historian with the Smithsonian’s Lemelson Center for the Study of Invention and Innovation. “You don’t get automobiles unless you first have bikes.”
. . .
By the mid-1890s, some 300 American companies were churning out well over a million bicycles a year, making the safety bike one of the first mass-produced items in history. Among the most exuberant customers were women, who discovered in the bicycle a sense of freedom they had rarely experienced before.
. . .
Bicycles allowed young men and women to tool around the countryside unsupervised, and relationships between the sexes grew more casual and spontaneous. With a bicycle at her disposal, a young woman could also venture forth in search of work.
Small wonder that Susan B. Anthony said of cycling, “I think it has done more to emancipate women than any one thing in the world.”

For the full story, see:
NATALIE ANGIER. “Basics; A Ride to Freedom.” The New York Times (Tues., JULY 14, 2015): D1 & D4.
(Note: ellipses added.)
(Note: the online version of the story has the date JULY 13, 2015, and has the title “Basics; The Bicycle and the Ride to Modern America.”)

The Dynamism of Venturesome New Yorkers: “If You Want Country Living, Move to the Country”

(p. A18) One cannot live any closer to the terminals of La Guardia Airport than the residents of East Elmhurst, Queens. Some homes sit only a few hundred yards away from the control tower, on the opposite side of the Grand Central Parkway. The new $4 billion airport hub envisioned for the site, announced this week by Gov. Andrew M. Cuomo and Vice President Joseph R. Biden, would be even closer.
So it might be assumed that the promise of years of heavy-duty construction and the associated noise, traffic and dust would fill residents with dread.
Not quite.
“We live in New York City, honey,” said Michele Mongeluzo, 56, whose house sits on a rise just south of the parkway, offering an unobstructed view of the airport and the proposed construction site. “If you want country living, move to the country.”
In interviews this week along the blocks closest to the airport, residents almost universally said that they not only had no trepidation about the construction but that they also actually welcomed it. Improvements, they said, were long overdue.
Furthermore, they suggested, what was a little construction on top of the aural challenges — the roaring jet engines, the chop of helicopter rotors, the incessant highway traffic — that they had already contended with and apparently overcome?
“If it’s noisy, I’m used to it,” said Freddy Fuhrtz, 75, who retired as an employee in the cargo division of Pan Am and still lives in the two-story house on 92nd Street where he grew up and raised his children. “It’s progress.”

For the full story, see:
KIRK SEMPLE. “Construction Plans Don’t Faze Airport Neighbors.” The New York Times (Fri., JULY 31, 2015): A18 & A21.
(Note: the online version of the story has the date JULY 30, 2015, and has the title “Construction Plans for La Guardia Airport Don’t Faze Its Neighbors.”)

Dynamism “in Danger of Being Stultified by Planners”

(p. A25) . . . , the attempt to tame the market will end up stultifying it. Everybody knows that capitalism’s creative destruction can be rough. But over the last few decades, a ragged version of global capitalism in places ranging from China to Nigeria has brought about the greatest reduction in poverty in human history. America’s fluid style of capitalism attracts driven and talented immigrants and creates vast waves of technological innovation. This dynamism is always in danger of being stultified by planners who think they can tame it and by governing elites who want to rig it. We should not take it for granted.
The coming debate about capitalism will be between those who want to restructure the underlying system and those who want to help people take advantage of its rough intensity. It will be between people who think you need strong government to defeat oligarchy and those who think you need open competition.

For the full commentary, see:
David Brooks. “Two Cheers for Capitalism.” The New York Times (Fri., July 31, 2015): A25.
(Note: ellipsis added.)

Cultural and Institutional Differences Between Europe and U.S. Keep Europe from Having a Silicon Valley

(p. B7) “They all want a Silicon Valley,” Jacob Kirkegaard, a Danish economist and senior fellow at the Peterson Institute for International Economics, told me this week. “But none of them can match the scale and focus on the new and truly innovative technologies you have in the United States. Europe and the rest of the world are playing catch-up, to the great frustration of policy makers there.”
Petra Moser, assistant professor of economics at Stanford and its Europe Center, who was born in Germany, agreed that “Europeans are worried.”
“They’re trying to recreate Silicon Valley in places like Munich, so far with little success,” she said. “The institutional and cultural differences are still too great.”
. . .
There is . . . little or no stigma in Silicon Valley to being fired; Steve Jobs himself was forced out of Apple. “American companies allow their employees to leave and try something else,” Professor Moser said. “Then, if it works, great, the mother company acquires the start-up. If it doesn’t, they hire them back. It’s a great system. It allows people to experiment and try things. In Germany, you can’t do that. People would hold it against you. They’d see it as disloyal. It’s a very different ethic.”
Europeans are also much less receptive to the kind of truly disruptive innovation represented by a Google or a Facebook, Mr. Kirkegaard said.
He cited the example of Uber, the ride-hailing service that despite its German-sounding name is a thoroughly American upstart. Uber has been greeted in Europe like the arrival of a virus, and its reception says a lot about the power of incumbent taxi operators.
“But it goes deeper than that,” Mr. Kirkegaard said. “New Yorkers don’t get all nostalgic about yellow cabs. In London, the black cab is seen as something that makes London what it is. People like it that way. Americans tend to act in a more rational and less emotional way about the goods and services they consume, because it’s not tied up with their national and regional identities.”
. . .
With its emphasis on early testing and sorting, the educational system in Europe tends to be very rigid. “If you don’t do well at age 18, you’re out,” Professor Moser said. “That cuts out a lot of people who could do better but never get the chance. The person who does best at a test of rote memorization at age 17 may not be innovative at 23.” She added that many of Europe’s most enterprising students go to the United States to study and end up staying.
She is currently doing research into creativity. “The American education system is much more forgiving,” Professor Moser said. “Students can catch up and go on to excel.”
Even the vaunted European child-rearing, she believes, is too prescriptive. While she concedes there is as yet no hard scientific evidence to support her thesis, “European children may be better behaved, but American children may end up being more free to explore new things.”

For the full story, see:
JAMES B. STEWART. “Common Sense; A Fearless Culture Fuels Tech.” The New York Times (Fri., JUNE 19, 2015): B1 & B7.
(Note: ellipses added.)
(Note: the online version of the story has the date JUNE 18, 2015, and has the title “Common Sense; A Fearless Culture Fuels U.S. Tech Giants.”)