Category: Entrepreneurship

Fracking Entrepreneur Aubrey McClendon Was Pressured by Antitrust Indictment on the Day Before Fatal Car Crash

(p. C2) Mr. McClendon, who co-founded Chesapeake Energy Corp. in 1989 and was a key figure in the shale boom that has upended global energy markets, was ousted from the energy company in 2013 over corporate-governance issues. He spent the three years after leaving Chesapeake building a new energy empire, raising more than $15 billion from investors, including major financial firms, to finance his comeback. But in 2014, oil prices plunged and natural-gas prices languished in a glut partly of his making, pressuring several of his new energy companies and making it more difficult for him to raise cash.
. . .
Exacerbating the pressure on Mr. McClendon was a federal antitrust investigation that culminated in his indictment the day before he died, on a single count of conspiring to rig oil-and-gas leases. Mr. McClendon vowed to fight the felony charge; local authorities later ruled they found no evidence of suicide.

For the full story, see:
RYAN DEZEMBER and KEVIN HELLIKER. “Oil Man Delivers for Heirs.” The Wall Street Journal (Weds., Aug. 31, 2016): C1-C2.
(Note: ellipsis added.)
(Note: the online version of the story has the date Aug. 30, 2016, and has the title “Oil-Deal Score Helps Aubrey McClendon’s Heirs Hang on to NBA’s Thunder, for Now.”)

“Cognitive Flexibility” and “Openness to Experience” Promote Creativity

(p. C3) In a 2011 study led by the Dutch psychologist Simone Ritter and published in the Journal of Experimental Social Psychology, researchers asked some subjects to make breakfast in the “wrong” order and others to perform the task in the conventional manner. Those in the first group–the ones engaged in a schema violation–consistently demonstrated more “cognitive flexibility,” a prerequisite for creative thinking.
. . .
Exceptionally creative people such as Curie and Freud possess many traits, of course, but their “openness to experience” is the most important, says the cognitive psychologist Scott Barry Kaufman of the University of Pennsylvania. That seems to hold for entire societies as well.
Consider a country like Japan, which has historically been among the world’s most closed societies. Examining the long stretch of time from 580 to 1939, Dean Simonton of the University of California, writing in the Journal of Personality and Social Psychology, compared Japan’s “extra cultural influx” (from immigration, travel abroad, etc.) in different eras with its output in such fields as medicine, philosophy, painting and literature. Dr. Simonton found a consistent correlation: the greater Japan’s openness, the greater its achievements.
It isn’t necessarily new ideas from the outside that directly drive innovation, Dr. Simonton argues. It’s simply their presence as a goad. Some people start to see the arbitrary nature of many of their own cultural habits and open their minds to new possibilities. Once you recognize that there is another way of doing X or thinking about Y, all sorts of new channels open to you, he says. “The awareness of cultural variety helps set the mind free,” he concludes.
History bears this out. In ancient Athens, foreigners known as metics (today we’d call them resident aliens) contributed mightily to the city-state’s brilliance. Renaissance Florence recruited the best and brightest from the crumbling Byzantine Empire. Even when the “extra cultural influx” arrives uninvited, as it did in India during the British Raj, creativity sometimes results. The intermingling of cultures sparked the “Bengal Renaissance” of the late 19th century.

For the full commentary, see:
ERIC WEINER. “The Secret of Immigrant Genius; Having your world turned upside down sparks creative thinking.” The Wall Street Journal (Sat., Jan. 16, 2016): C3.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 15, 2016.)

The above commentary by Weiner is related to his book, which is:
Weiner, Eric. The Geography of Genius: A Search for the World’s Most Creative Places from Ancient Athens to Silicon Valley. New York: Simon & Schuster, 2016.

The paper mentioned above as co-authored by Ritter, is:
Ritter, Simone M., Rodica Ioana Damian, Dean Keith Simonton, Rick B. van Baaren, Madelijn Strick, Jeroen Derks, and Ap Dijksterhuis. “Diversifying Experiences Enhance Cognitive Flexibility.” Journal of Experimental Social Psychology 48, no. 4 (July 2012): 961-64.

The paper mentioned above by Simonton on Japanese openness, is:
Simonton, Dean Keith. “Foreign Influence and National Achievement: The Impact of Open Milieus on Japanese Civilization.” Journal of Personality & Social Psychology 72, no. 1 (Jan. 1997): 86-94.

Startup Entry and Scaling Are Easier and Faster Due to Internet

(p. B1) The world might be a mess, but look on the bright side: Men’s shaving products are much better than they used to be.
. . .
The same forces that drove Dollar Shave’s rise are altering a wide variety of consumer product categories. Together, they add up to something huge — a new slate of companies that are exploring novel ways of making and marketing some of the most lucrative (p. B7) products we buy today. These firms have become so common that they have acquired a jargony label: the digitally native vertical brand.
These kinds of online brands aren’t new. Dollar Shave is five years old, and Warby Parker, the online eyewear company, began selling glasses over the web in 2010. But over the last few years there’s been a proliferation of such companies — into underwear, children’s clothing, cosmetics and more — and the Dollar Shave deal suggests their growing importance. These firms could become an emerging problem for consumer products conglomerates like Procter & Gamble, and they might also spell trouble for television, which relies heavily on brand advertising for its revenue.
. . .
“We think it’s a unique moment in history where you can create brands that can be scaled quickly thanks to technology, but you can still maintain a one-to-one connection that delivers an elevated level of customer experience,” said Philip Krim, chief executive of Casper, which sells mattresses online.
Mr. Krim and four friends started Casper two years ago after studying the traditional mattress industry. They discovered it was plagued by inefficiencies and annoying gimmicks. Customers had to trudge to a mattress store and awkwardly prostrate themselves on numerous surfaces before choosing one to use for a decade. There were too many choices and brands, and mattresses were expensive.
With Casper, you simply buy the mattress online and it’s shipped to you in a comically small box (the compressed foam expands into a full-sized mattress, like a magic trick). You have three months to try it out, and if you don’t like it, the company will come pick it up free.
Casper’s business model offers a break from the annoyance of offline mattress shopping. It also works out for the company. Casper advertises on social networks, on Google, podcasts and a variety of other places online; the ads are creative, convincing, targeted and cheap. By selling directly rather than through retail middlemen, the company also creates a connection with customers that allows it to test and develop new products — it now sells sheets and pillows, too.
After two years in business, Casper is on track to book $200 million in sales over the next year, but its success isn’t ensured. Precisely because the internet has lowered barriers to entry, Casper is facing a surge of new mattress start-ups like Helix Sleep, Tuft & Needle and Leesa, among others.

For the full commentary, see:
Manjoo, Farhad. “STATE OF THE ART; How Companies Like Dollar Shave Club Are Reshaping the Retail.” The New York Times (Thurs., JULY 28, 2016): B1 & B7.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JULY 27, 2016, and has the title “STATE OF THE ART; How Companies Like Dollar Shave Club Are Reshaping the Retail.”)

Patent Holder of Piggly Wiggly Self-Service Method Sued Hoggly Woggly for Infringement

(p. A11) A typical U.S. supermarket carries 42,000 items: Grab a cart, stroll the aisles and help yourself to an extravagant assortment of goods. Today it’s hard to imagine buying groceries any other way. But self-service was a game-changer when Clarence Saunders opened the first Piggly Wiggly in Memphis, Tenn., 100 years ago this month.
Before then a shopper would hand his grocery list to a clerk, who would fetch the merchandise while the customer lingered up front. That might sound appealing in this era of big-box stores with no help in sight, but at busy times the wait could stretch uncomfortably long.
Saunders, a school dropout who worked as a flour and grain salesman, had observed firsthand the inefficiencies of the rural grocers he supplied. Many of these stores, he became convinced, failed for two reasons: credit losses from customers’ charge accounts (which were then customary), and labor costs from clerks and delivery boys.
. . .
Eager to protect his invention, Saunders applied for multiple patents. His first, for a “Self Serving Store,” was granted in 1917. It wasn’t long, though, before imitators like Handy Andy and Helpy Selfy made their debut. Saunders successfully sued an especially brash copycat, Hoggly Woggly, for infringement.
. . .
Saunders didn’t integrate circuits or sequence the human genome. An observer once noted that coming up with a self-service grocery was “as simple as looking out the window or scratching your ear.” Still, it was Saunders who gambled on the unconventional approach, doggedly spread self-service across the nation and shaped the grocery industry we know today.

For the full commentary, see:
JERRY CIANCIOLO. “The Man Who Invented the Grocery Store.” The Wall Street Journal (Thurs., Sept. 8, 2016): A11.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 7, 2016.)

The only book I could find about Clarence Saunders, is:
Freeman, Mike. Clarence Saunders and the Founding of Piggly Wiggly: The Rise & Fall of a Memphis Maverick. Charleston, SC: The History Press, 2011.

Sutter Headed BHAG Team that Created Boeing 747

Collins and Porras in Built to Last recommend the pursuit of Big, Hairy, Audacious Goals (BHAGs). A prime example is the Boeing 747.

(p. B9) Joe Sutter, whose team of 4,500 engineers took just 29 months to design and build the first jumbo Boeing 747 jetliner, creating a gleaming late-20th-century airborne answer to the luxury ocean liner, died on Tuesday [August 30, 2016] in Bremerton, Wash.
. . .
In less time than Magellan spent circumnavigating the globe, Boeing engineers transformed Mr. Sutter’s napkin doodles into the humpbacked, wide-bodied behemoth passenger and cargo plane known as the 747. The plane would transform commercial aviation and shrink the world for millions of passengers by traveling faster and farther than other, conventional jetliners, without having to refuel.
. . .
“If ever a program seemed set up for failure, it was mine,” Mr. Sutter said in his 2006 autobiography, “747: Creating the World’s First Jumbo Jet and Other Adventures From a Life in Aviation,” written with Jay Spenser.
. . .
Adam Bruckner of the University of Washington’s department of aeronautics and astronautics later described the 747 as “one of the great engineering wonders of the world, like the pyramids of Egypt, the Eiffel Tower or the Panama Canal.”
. . .
“Aviators were more than mere mortals to us,” Mr. Sutter recalled in his autobiography. “They were a different breed, intrepid demigods in silk scarves, puttees and leather flying helmets with goggles.”

For the full obituary, see:
SAM ROBERTS. “Joe Sutter, 95, Is Dead; Guided the Development of Boeing’s 747 Jetliner.” The New York Times (Fri., Sept. 2, 2016): B9.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the obituary has the date Sept. 1, 2016, and has the title “Joe Sutter, Who Led an Army in Building Boeing’s Jumbo 747, Dies at 95.”)

Sutter’s autobiography, is:
Sutter, Joe, and Jay Spencer. 747: Creating the World’s First Jumbo Jet and Other Adventures from a Life in Aviation. New York: HarperCollins Publishers, 2006.

Airline Startups Stall in Bureaucratic Regulatory Headwinds

(p. B4) Mr. Vallas owns California Pacific Airlines, known as CP Air, his latest venture in a peripatetic business career that has included stints in areas as varied as land development and other aviation-related ventures.
CP Air has sat on a metaphorical runway for years — engines idling, ready for takeoff — while awaiting certification by the Federal Aviation Administration.
Mr. Vallas’s patience is wearing thin. After all, he is 95, and he regards the airline as a legacy, an exclamation point to a colorful life.
. . .
. . . then there was that matter with the F.A.A. The agency has repeatedly denied applications. A letter from 2013, one of several from the agency, advised him that the application’s contents were “incomplete, inaccurate and do not appear to have been reviewed for quality.”
. . .
The government shutdown in 2013 and the F.A.A.’s staff reduction did not help matters, the agency acknowledges.
. . .
The process of greenlighting a new airline has become more complicated since Mr. Vallas sold a previous venture, a charter service called Air Resorts, in 1997.
He acknowledges the vast increase in paperwork since that era but contends that the conditions for acceptance have been met.
Mr. Vallas’s airline is not the only one that has encountered bureaucratic headwinds. Other proposed airlines are in limbo for various reasons, including Baltia Airlines, created in 1989 to fly between New York City and Russia, which still lacks the authorities’ blessing.

For the full story, see:
MIKE TIERNEY. “ITINERARIES; A Start-Up Airline Idles on a California Runway.” The New York Times (Tues., APRIL 26, 2016): B4.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 25, 2016, and has the title “ITINERARIES; Start-Up Airline Idles on a California Runway, Stymied by Bureaucracy.”)

Innovations Make It Easier to Form and Run Smaller Firms

(p. B3) Unilever is paying $1 billion for Dollar Shave Club, a five-year-old start-up that sells razors and other personal products for men. Every other company should be afraid, very afraid.
The deal anecdotally shows that no company is safe from the creative destruction brought by technological change. The very nature of a company is fundamentally changing, becoming smaller and leaner with far fewer employees.
. . .
Now it is possible to leverage technology and transportation systems that never existed before. Dollar Shave Club used Amazon Web Services, a cloud computing service started by the online retailing giant in 2006 that encouraged a proliferation of e-commerce companies. Manufacturing now is just as much a line item as is a distribution apparatus. This is the business strategy of many other disruptive companies, including the home-sharing site Airbnb, which upends the idea of needing a hotel. The ride-hailing start-up Uber could never have been possible without a number of inventions including the internet, the smartphone and, most important, location tracking technology, enabling anyone to be a driver.

For the full commentary, see:
STEVEN DAVIDOFF SOLOMON. “Deal Professor; In Comfort of a Close Shave, a Distressing Disruption.” The New York Times (Weds., JULY 27, 2016): B3.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JULY 26, 2016, and has the title “Deal Professor; $1 Billion for Dollar Shave Club: Why Every Company Should Worry.”)

Lack of Control at Job Causes Stress, Leading to Cardiovascular Disease

(p. 6) Allostasis is not about preserving constancy; it is about calibrating the body’s functions in response to external as well as internal conditions. The body doesn’t so much defend a particular set point as allow it to fluctuate in response to changing demands, including those of one’s social circumstances. Allostasis is, in that sense, a politically sophisticated theory of human physiology. Indeed, because of its sensitivity to social circumstances, allostasis is in many ways better than homeostasis for explaining modern chronic diseases.
Consider hypertension. Seventy million adults in the United States have it. For more than 90 percent of them, we don’t know the cause. However, we do have some clues. Hypertension disproportionately affects blacks, especially in poor communities.
. . .
Peter Sterling, a neurobiologist and a proponent of allostasis, has written that hypertension in these communities is a normal response to “chronic arousal” (or stress).
. . .
Allostasis is attractive because it puts psychosocial factors front and center in how we think about health problems. In one of his papers, Dr. Sterling talks about how, while canvassing in poor neighborhoods in Cleveland in the 1960s, he would frequently come across black men with limps and drooping faces, results of stroke. He was shocked, but today it is well established that poverty and racism are associated with stroke and poor cardiovascular health.
These associations also hold true in white communities. One example comes from the Whitehall study of almost 30,000 Civil Service workers in Britain over the past several decades. Mortality and poor health were found to increase stepwise from the highest to the lowest levels in the occupational hierarchy: Messengers and porters, for example, had nearly twice the death rate of administrators, even after accounting for differences in smoking and alcohol consumption. Researchers concluded that stress — from financial instability, time pressures or a general lack of job control — was driving much of the difference in survival.

For the full commentary, see:
SANDEEP JAUHAR. “When Blood Pressure Is Political.” The New York Times, SundayReview Section (Sun., AUG. 7, 2016): 6.
(Note: ellipses added.)
(Note: the online version of the review has the date AUG. 6, 2016.)

The commentary quoted above is distantly related to Jauhar’s book:
Jauhar, Sandeep. Doctored: The Disillusionment of an American Physician. New York: Farrar, Straus and Giroux, 2014.

Andreessen Venture Funds Succeed Modestly

In an Andrew Ross Sorkin column, Sean Parker urged successful entrepreneurs to become serial entrepreneurs, rather than to semi-retire as venture capitalists. In that column, Marc Andreessen was quoted as sympathizing with Parker’s view.

(p. A1) Andreessen Horowitz’s first three venture funds have nearly doubled their investment capital or better since inception, according to documents reviewed by The Wall Street Journal that provide a rare look at the performance of one of Silicon Valley’s top venture-capital firms.
But an analysis of its returns, compared with funds from top rivals and industry averages, shows that Andreessen Horowitz hasn’t yet earned its reputation as an elite firm.
The firm, co-founded by web pioneer Marc Andreessen in 2009, is routinely mentioned among the pantheon of great startup investors with the likes of Sequoia Capital, a status that has allowed it to command higher fees than some of its peers.
Sequoia has separated itself from the pack thanks to its consistently high returns. Its 2003 and 2006 venture funds have both risen eightfold net of fees, according to a person familiar with the matter.
. . .
(p. A2) Venture-capital firms raise money from universities, pension funds and other institutions to wager on startups. They typically raise a new fund every few years, operating a handful at the same time with each expected to wind down after 10 years.
Though they fall short of their top-notch rivals, all three Andreessen Horowitz funds–whose bets include Instagram, Airbnb and Pinterest Inc.–have outperformed the average of venture funds raised in the same years, according to benchmark data from investment adviser Cambridge Associates. The earliest fund, raised in 2009, ranks in the top 5% of venture funds from that year; the second fund, raised in 2010, ranks in the top 50%; and the third from 2012 ranks in the top 25%.

For the full story, see:
Winkler, Rolfe. “Andreessen’s Venture Firm Trails Rivals.” The Wall Street Journal (Fri., Sept. 2, 2016): A1-A2.
(Note: ellipsis added.)
(Note: the online version of the article has the date Sept. 1, 2016, and had the title “Andreessen Horowitz’s Returns Trail Venture-Capital Elite.”)

The views of Sean Parker and Marc Andreessen on venture capital, that I mention at the top, are summarized in:
Sorkin, Andrew Ross. “Dealbook; Taking a Risk, and Hoping That Lightning Strikes Twice.” The New York Times (Tues., July 24, 2012): B1 & B4.

FDA Blocking Stem-Cell Therapies from Those With No Other Hope

(p. D2) Research is exploding into ways stem cells might be harnessed to cure diseases, mend damaged tissue, even grow replacement organs.
. . .
Jeffrey Weiss, a retinal surgeon in Margate, Fla., has treated about 570 patients with retinal and optic nerve diseases with stem cells taken from patients’ bone marrow as part of a study, and says that about 60% have had meaningful improvement. Patients pay $19,000 to $21,000 to receive the injections.
Shawn Rockafellow, a 31-year old truck dispatcher in Chandler, Ariz., started rapidly losing his vision in 2014 to a genetic disease and says he was told to accept that he was going blind. His mother read about Dr. Weiss’s work. Mr. Rockafellow raised the $20,000 fee on GoFundMe, a personal charity website, and had the treatment in both eyes in January.
After three months, the vision in his right eye went from roughly 20/1,000 to 20/400. After six months, it was 20/300. His left eye hasn’t improved as much, so he wants to try the treatment again. His regular ophthalmologist, Scott Markham, says “the fact that he’s not worsening is fantastic.”
. . .
Mark Berman, a Beverly Hills, Calif., cosmetic surgeon who co-founded a network of stem-cell clinics, says “fundamentally, all we are doing is a simple, surgical procedure. This is not witch-doctor stuff. We are repairing cell damage with people’s own stem cells.” He says the member clinics in 25 states have treated about 5,000 patients to date, with no significant adverse events.
SammyJo Wilkinson, a former dot-com executive, developed multiple sclerosis in 1995 and was confined to a wheelchair by 2011. She says her symptoms started to improve almost immediately after receiving a high-dose stem cell treatment at a Houston clinic in 2012. When the FDA blocked access to that form of therapy, Ms. Wilkinson went to Cancún, Mexico, for follow-ups. After a total of five treatments for $90,000, she says she has far less pain, can exercise and walk short distances with the help of a walker.
At the FDA hearing, Ms. Wilkinson, who founded a patient group called Patients for Stem Cells, plans to appeal for a faster approval process for stem-cell therapies and a registry to monitor patient outcomes. “Patients will never get these treatments if they have to go the traditional double-blind placebo-controlled trial route. That takes 10 years and $1 billion,” she says. “There’s got to be a middle ground, where you don’t shut off treatment, you just keep track of it.”

For the full story, see:
Beck, Melinda. “Stem-Cell Treatments Become More Available, and Face More Scrutiny.” The Wall Street Journal (Tues., Aug. 30, 2016): D2.
(Note: ellipses added.)
(Note: the online version of the story has the date Aug. 29, 2016, and has the title “Stem-Cell Treatments Become More Available, and Face More Scrutiny.” There are minor differences in wording between the online and print versions. The sentences quoted above, follow the online version.)