Category: Entrepreneurship

“Vinyl Rose from the Ashes”

(p. A10) LODENICE, Czech Republic — He was a businessman, not a clairvoyant. Zdenek Pelc did not really foresee, a generation ago, that vinyl records would one day make a return from near extinction.
But he was smart enough to keep a vinyl record factory here, a relic of the Communist era, through all those years when albums gave way to CDs and then to iTunes and streaming, and to be ready when vinyl suddenly got hot again.
And that is why this village of 1,800, nestled in a lush furl of the Bohemian hills, improbably finds itself a world leader in the production of vinyl albums.
“I realized when I came to the company 33 years ago that vinyl would be finished one day,” said Mr. Pelc, 64, who now owns GZ Media and serves as president. “But I wanted our company to be the last one to stop making them.”
The trajectory of the company — and the village it once dominated — traces the Czech Republic’s transition to quirky capitalist colt from cranky Communist nag, all played to the kind of rock soundtrack that accompanies many modern Czech tales.
Instead of getting rid of the old equipment and moving CD-making machines into their space — as most music production companies around the world did in the late 1980s and early ’90s — Mr. Pelc kept only enough machines running to meet the dwindling demand, moving the rest into storage and cannibalizing their parts as needed.
“Frankly, if someone had told me back then that vinyl would return, I wouldn’t have believed it,” he said.
. . .
“Vinyl rose from the ashes,” Mr. Pelc said happily.
. . .
“From around 2005, the demand for vinyl grew steadily,” said Michael Sterba, GZ Media’s chief executive. “Then, it really took off in the last two or three years, like, whoosh.”
. . .
“Only an idiot thinks this can go on forever,” Mr. Sterba said. “Maybe making vinyl is a fashion that will disappear in a few years. Who knows? No one predicted this.”

For the full story, see:
RICK LYMAN. “LODENICE JOURNAL; Long-Playing Czech Company Rides a Resurgence to the Top.” The New York Times (Fri., AUG. 7, 2015): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date AUG. 6, 2015, and has the title “LODENICE JOURNAL; Czech Company, Pressing Hits for Years on Vinyl, Finds It Has Become One.”)

Inventor’s Semiconductor Background Was Source of New, Safer Lithium Battery

(p. B1) SAN FRANCISCO — Mike Zimmerman likes to shock his guests by using a hammer to drive a nail through a solid polymer lithium metal battery.
Nothing happens — and that’s a good thing.
Mr. Zimmerman’s battery is a new spin on lithium-ion batteries, which are widely used in products from smartphones to cars. Today’s lithium-ion batteries, as anyone who has followed Samsung’s recent problems with flammable smartphones may know, can be ticking time bombs. The liquids in them can burst into flames if there is a short circuit of some sort. And driving a nail into one of them is definitely not recommended.
With that in mind, Mr. Zimmerman’s demonstration commands attention.
His Woburn, Mass., start-up, Ionic Materials, is at the cutting edge of an effort to design safer batteries. The company is working on “solid” lithium polymer batteries that greatly reduce their combustible nature.
A solid lithium polymer metal battery — when it arrives commercially — will also allow electronics designers to be more creative, because they will be able to use a plasticlike material (the polymer) that allows smaller and more flexible packaging and requires fewer complex safety mechanisms.
“My dream is to create the holy grail of solid batteries,” Mr. Zimmerman said.
After four years of development, he believes he is nearly there and hopes to begin manufacturing within the next two years. Ionic Materials is one of a new wave of academic and commercial research ef-(p. B4)forts in the United States, Europe and Asia to find safer battery technologies as consumers demand more performance from phones and cars.
. . .
Mr. Zimmerman’s background is in the world of semiconductors; he worked at Bell Labs and then a company called Quantum Leap Packaging. Several university researchers who have worked with the company believe that has lead him to a technology that will be more manufacturable than competing polymer and ceramic battery technologies now being explored.
“What is so intriguing about Mike and his folks is they are using known production techniques borrowed from the semiconductor packaging industry,” said Jay Whitacre, a Carnegie Mellon University physicist who was involved with Ionic Materials when it first started and who now is chief scientist at Aquion Energy, a maker of home storage and industrial batteries based in Mt. Pleasant, Pa.
The new progress has led a number of technologists in the field to believe that batteries may finally be getting out of their rut.
“We’re in a golden age of new chemistry development which probably hasn’t been seen in thirty or 40 years, since the last energy crisis,” said Paul Albertus, a program manager at the Department of Energy’s Advanced Research Projects Agency-Energy. “It’s a pretty exciting time to be developing energy storage technology.

For the full story, see:
JOHN MARKOFF. “Creating a Safer Phone Battery (This One Won’t Catch Fire).” The New York Times (Mon., DEC. 12, 2016): B1 & B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 11, 2016, and has the title “Designing a Safer Battery for Smartphones (That Won’t Catch Fire).”)

Tinkerer Won Nobel for Gene Targeting

(p. B15) Oliver Smithies, a British-born biochemist and inveterate tinkerer who shared a Nobel Prize for discovering a powerful tool for identifying the roles of individual genes in health and disease, died on Tuesday [January 10, 2017] in Chapel Hill, N.C. He was 91.
. . .
Dr. Smithies’s discovery, known as gene targeting, allows scientists to disable individual genes in mice to understand what the genes do. The loss of a gene typically brings about changes in the appearance or the behavior of the mice, providing important clues about the gene’s function.
. . .
In addition to gene targeting, Dr. Smithies invented a method of separating proteins with a jelly made from ordinary potato starch, a major advance that was cheaper, easier and more precise than existing technologies. His invention, called gel electrophoresis, is in wide use today.
Behind Dr. Smithies’s breakthroughs were ingenious homemade contraptions cobbled from everyday objects and junk. He thought of himself as an inventor and toolmaker and acknowledged that he could not pass a rubbish bin without pausing to inspect the contents — a trait he said he shared with his paternal grandfather, who used to pick up nails and straighten them for later use.
His tinkering did not go unnoticed. Colleagues at Oxford University, where Dr. Smithies pursued his graduate studies, set aside their discarded equipment for him, labeling it, “NBGBOKFO,” or “No bloody good but O.K. for Oliver.”
. . .
To Dr. Smithies, the process of invention was straightforward. “You use whatever is lying around, and you see something that needs to be done, and you try to do it,” he said. “I think it is making things work, you know, somehow.”

For the full obituary, see:
DENISE GELLENE. “Oliver Smithies, Tinkerer Who Transformed Genetics and Won a Nobel, Dies at 91.” The New York Times (Thurs., JAN. 12, 2017): B15.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date JAN. 11, 2017.)

Price Gouging Rewards Conservation and Increases Supply

(p. B1) On its face, the very idea of price gouging, especially during a natural disaster, feels outrageous. Indeed, 34 states have anti-gouging laws meant to protect consumers.
However, in a small slice of the world of economists and businesses, there is a fascinating debate about the topic — with many arguing that price gouging is actually a good thing.
. .
(p. B6) “Price caps discourage extraordinary supply efforts that would help bring goods in high demand into the affected area,” Michael Giberson, an instructor with the Center for Energy Commerce in the Rawls College of Business at Texas Tech University, wrote in an opinion piece from several years ago that was widely circulated around parts of Wall Street this weekend. Meanwhile, he suggested, “You discourage conservation of needed goods at exactly the time they are in high demand.”
He added, “In a classic case of unintended consequences, the law harms the very people whom lawmakers intend to help.”
Consider this scenario, as described by Matt Zwolinski, the director of the Center for Ethics, Economics, and Public Policy at the University of San Diego: If a hotel that normally charges $50 per room were allowed to double the price to $100 a night during an emergency, “a family that might have chosen to rent separate rooms for parents and children at $50 per night will be more likely to rent only one room at the higher price, and a family whose home was damaged but in livable condition might choose to tough it out if the cost of a hotel room is $100 rather than $50.”
The result, he contended in a paper titled “The Ethics of Price Gouging,” is that allowing higher prices “increases the available supply — as a result of consumers’ economizing behavior, more hotel rooms are available to individuals and families who need them most.”

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK; Price Gouging Can Aid Victims? Why Some Economists Say Yes.” The New York Times (Tues., Sept. 12, 2017): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Sept. 11, 2017, and has the title “Hurricane Price Gouging Is Despicable, Right? Not to Some Economists.”)

The article by Zwolinski, mentioned above, is:
Zwolinski, Matt. “The Ethics of Price Gouging.” Business Ethics Quarterly 18, no. 3 (July 2008): 347-78.

For Kiva Funding, Entrepreneurs Must First Convince Friends or Family

(p. B6) Lending platform Kiva.org is scrapping its traditional approach to microfinance in the U.S. and instead is turning to something it calls social underwriting.
Before businesses can gain access to a no-interest crowdfunded loan of up to $10,000, Kiva is asking them to get 10 to 20 friends, family members or others to put up at least $25 each.
Kiva, a non-profit organization better known for providing financing in some of the world’s poorest countries, has found that this new approach improves repayment rates and believes it will provide a much-needed boost to its U.S. operation, where growth has been challenging.
. . .
Kiva said about 30% of entrepreneurs who start the private fundraising process can’t get enough people to vouch for them, while 92% of those who overcome that hurdle raise the money they seek. If the program in the U.S. succeeds, Kiva said it may export the private-fundraising model worldwide.

For the full story, see:
Ruth Simon. “Microfinancing Model With a Personal Twist.” The Wall Street Journal (Thurs., Dec. 17, 2015): B6.
(Note: ellipsis added.)
(Note: the online version of the story has the date Dec. 16, 2015, and has the title “Kiva Sets New Rules for U.S. Borrowers to Get Crowdfunded Loans.”)

Ann Arbor Recovers from Borders Bankruptcy “with Remarkable Speed”

(p. B6) ANN ARBOR, Mich. — A patch of sidewalk on the south side of East Liberty Street, four blocks from the main University of Michigan campus, has returned from the dead with remarkable speed.
At almost any hour of day, and especially at mealtimes, a mix of bargain-seeking undergraduates, white-collar tech workers and middle-class townies weave in and out of the restaurants, coffee shop and bank that now line the corridor.
The foot traffic is almost enough to make many in this city feel lucky that the single previous occupant of this red brick low-rise building on the 600 block went bankrupt five years ago. Almost, that is, because that previous tenant was the flagship Borders store.
“In some ways, the neighborhood is stronger and more interesting and more vibrant than it was when Borders was here,” said Susan Pollay, executive director of the Ann Arbor Downtown Development Authority. “As much as I loved Borders — and I mean, I loved it — in the evolution of this building, it’s better than it was.”
Such talk is probably still sacrilege for some local nostalgics, who remember that the store was started by a pair of brothers and Michigan graduates before it turned into an international book chain, but it is difficult to argue on a dollars-and-cents basis with the transformation.
For more than 70 years, the site in this pivotal city block was occupied by a single-business anchor, first a regional department store, Jacobson’s, and then, for decades, Borders.
The chain’s bankruptcy — which, by 2011, was almost overdue as customers had long since turned en masse to the internet to buy books — created a once-in-a-generation release of a large piece of real estate. Suddenly available: a 50,000-square-foot former bookstore that fronts a full block of busy Liberty Street and a 45,000-square-foot adjacent building that previously housed Borders’ corporate headquarters.
There were many ideas about how to use all that space, but one option was immediately taken off the table: installing another anchor tenant.
“We wanted, on purpose, to have a multipurpose building,” said Ron Hughes of Hughes Properties. “I think it’s better for the city as well.”

For the full story, see:
STEVE FRIESS. “Square Feet; Going Small Energizes a Downtown.” The New York Times (Weds., NOV. 9, 2016): B6.
(Note: the online version of the story has the date NOV. 8, 2016, and has the title “Square Feet; At the Former Home to Borders Books, a Tech Hub Now Sprouts.”)

“I Believe in Free Markets and Open Skies”

(p. B1) DELHI — When the fast-growing Malaysian carrier AirAsia wanted to expand, India looked like the ideal frontier.
. . .
Then, AirAsia discovered the difficulties of doing business in India.
While it benefited from a recent loosening of restrictions on foreign investment in airlines, AirAsia India has contended with a web of red tape and regulations for new entrants that have added significant cost and complexity to its operations.
. . .
(p. B7) . . . Mr. Chandilya acknowledges that he misjudged India’s regulatory environment, which is uniquely stringent for airlines.
Taxes on aviation turbines are higher than almost anywhere else in the world. Every airline, even those with just a few planes, is also required to fly regularly to remote regions, where flights often run half full. And new entrants like AirAsia India are prohibited from flying lucrative international routes until they are five years old and have at least 20 aircraft, the so-called 5/20 rule.
“I believe in free markets and open skies, but if you look at the policies we have in place, I don’t think we have that at all,” Mr. Chandilya said.
. . .
Each Indian state controls its own taxes on aviation turbine fuel, and in many places it is kept as high as 30 percent. More than half of AirAsia India’s operating costs are fuel-related.
High taxes also extend to maintenance and Indian airlines often choose to take their aircraft to nearby countries for that work. AirAsia India plans to send its planes to Malaysia or Singapore for servicing once they’ve been operational for two years.
“I talk to ministers and policy makers about how they can help the industry and promote growth, but it is very difficult to get them to understand that reducing these taxes will probably boost their states’ economies,” Mr. Chandilya said.

For the full story, see:
MAX BEARAK. “India’s Restricted Airspace.” The New York Times (Tues., JUNE 23, 2015): B1 & B7.
(Note: eilipses added.)
(Note: the online version of the story has the date JUNE 22, 2015, and has the title “AirAsia Faces Red Tape and Tough Competition in India.”)

The “Grit” of the Successful Consists of “Passion and Perseverance”

(p. A11) Most people would think of John Irving as a gifted wordsmith. He is the author of best-selling novels celebrated for their Dickensian plots, including “The Cider House Rules” and “The World According to Garp.” But Mr. Irving has severe dyslexia, was a C-minus English student in high school and scored 475 out of 800 on the SAT verbal test. How, then, did he have such a remarkably successful career as a writer?
Angela Duckworth argues that the answer is “grit,” which she defines as a combination of passion and perseverance in the pursuit of a long-term goal. The author, a psychology professor at the University of Pennsylvania, has spent the past decade studying why some people have extraordinary success and others do not. “Grit” is a fascinating tour of the psychological research on success and also tells the stories of many gritty exemplars, . . .
. . .
Ms. Duckworth first realized the importance of grit as a teacher. Before she became an academic, she worked as a seventh-grade math teacher at a public school in New York. Some of her students were more inherently gifted with numbers than others. But not all of these capable students, to her surprise, got the best grades. Those who did weren’t always “math people”: For the most part, they were those who consistently invested more time and effort in their work.
Ms. Duckworth decided to become a research psychologist to figure out what explained their success. One of her first studies was of West Point cadets. Every year, West Point enrolls more than 1,000 students, but 20% of cadets drop out before graduation. Many quit in their first two months, during an intense training program known as Beast Barracks, or Beast. The most important factor in West Point admissions is the Whole Candidate Score, a composite measure of test scores, high-school rank, leadership potential and physical fitness. But Ms. Duckworth found that this score, which is essentially a measure of innate ability, did not predict who dropped out during Beast. She created her own “Grit Scale,” scored using cadets’ responses to statements like “I finish whatever I begin” or “New ideas and projects sometimes distract me from previous ones.” Those who scored highest on the Grit Scale were the most likely to make it to the end of Beast.
. . .
Grit may be defined by strenuous effort, but what drives that work, Ms. Duckworth finds, is passion, and a great service of Ms. Duckworth’s book is her down-to-earth definition of passion. To be gritty, an individual doesn’t need to have an obsessive infatuation with a goal. Rather, he needs to show “consistency over time.” The grittiest people have developed long-term goals and are constantly working toward them. “Enthusiasm is common,” she writes. “Endurance is rare.”

For the full review, see:

Emily Esfahani Smith. “BOOKSHELF; The Virtue of Hard Things; A study of Ivy League undergraduates showed that the smarter the students were, as measured by SAT scores, the less they persevered.” The Wall Street Journal (Weds., May 4, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the review has the date May 3, 2016.)

The book under review, is:
Duckworth, Angela. Grit: The Power of Passion and Perseverance. New York: Scribner, 2016.

Simple App Takes Entrepreneur from Rags to Riches

(p. B1) When Facebook bought WhatsApp for more than $19 billion in 2014, Jan Koum, a founder of the messaging company, arranged to sign a part of the deal outside the suburban social services center where he had once waited in line to collect food stamps.
Mr. Koum, like many in the tech industry, is an immigrant. He was a teenager when he and his mother moved to the San Francisco Bay Area in the early 1990s, in part to escape the anti-Semitic tide then sweeping his native Ukraine. As Mr. Koum later told Forbes, his mother worked as a babysitter and swept floors at a grocery store to survive in the new country; when she was found to have cancer, the family lived off her disability payments.
Tales of immigrant woe are not unusual in Silicon Valley. But Mr. Koum’s story carries greater resonance because his app has quietly become a mainstay of immigrant life. More than a billion people regularly use WhatsApp, which lets users send text messages and make phone calls free over the internet. The app is particularly popular in India, where it has more than 160 million users, as well as in Europe, South America and Africa.
. . .
(p. B7) One of the secrets to WhatsApp’s growth has been a focus on simplicity. The app is purposefully unflashy, and it does just a few things — texts, voice calls and video calls. As a result, it is supremely easy to use even for people who are neophytes to digital technology. This is one reason immigrants find it so powerful; it has given them access to a wider set of relatives who might have shunned the social networks that came before.
Adoption of WhatsApp often follows a curious pattern — older relatives often suggest it to younger ones, rather than the other way around.
“My aunt, who’s in her late 70s, was the one who really pushed me to get on it,” Ms. Reef said. Now, she said, she uses it nearly every day; lately she’s even gotten her children to use it.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; A Shared Lifeline for Millions of Migrants.” The New York Times (Thurs., DEC. 22, 2016): B1 & B7.
(Note: eilipsis added.)
(Note: the online version of the commentary has the date DEC. 21, 2016, and has the title “STATE OF THE ART; For Millions of Immigrants, a Common Language: WhatsApp.”)

Tech Startup Rejects Gig Economy

(p. 1) SEATTLE — When Glenn Kelman became the chief executive of his online real estate start-up, he defied the tech industry’s conventional wisdom about how to grow.
Instead of hiring independent contractors, he brought in full-time employees and put them on the payroll — with benefits. That decision over a decade ago made Mr. Kelman and his company, Redfin, iconoclasts in the technology world.
Many tech start-ups lean on the idea of the “gig economy.” They staff up rapidly with freelancers, who are both cheaper to hire (none of the insurance, 401(k) and other expenses) and more flexible (they can work as much or as little as needed). It’s the model Uber has used to upend the taxi business.
. . .
Mr. Kelman argues that full-time employees allow him to offer better customer service. Redfin gives its agents salaries, health benefits, 401(k) contributions and, for the most productive ones, Redfin stock, none of which is standard for contractors. Redfin currently employs more than 1,000 agents.
Now with his company on a stronger footing, Mr. Kelman says he believes his approach has been vindicated. He has even (p. 5) become an informal counselor to other tech entrepreneurs exploring a shift to employees from contractors.
. . .
A number of technology companies have switched or are in the process of switching their contractors to employees for reasons similar to those of Redfin, including Shyp, a parcel shipping service; Luxe Valet, which offers a valet parking app; and Munchery, a food delivery service. Honor, an on-demand service for home health care professionals, is making the move to improve training.

For the full story, see:
NICK WINGFIELD. “A Start-Up Shies Away from Gig Economy.” The New York Times, SundayBusiness Section (Sun., JULY 10, 2016): 1 & 5.
(Note: ellipses added.)
(Note: the online version of the story has the date JULY 9, 2016, and has the title “Redfin Shies Away From the Typical Start-Up’s Gig Economy.”)