Category: Entrepreneurship

Young Back Choi Offers Advance Praise for Openness to Creative Destruction

In this excellent book, Arthur Diamond offers a spirited defense of open and free market system, saying that much of the complaints against capitalism is based on (1) mistakenly conflating free market competition with cronyism, and (2) grossly under-appreciating the innovative entrepreneur’s ability to solve problems in all sorts of areas–in the past and in the future. One of the central claims of the author, based on his understanding of the epistemology of innovation, namely, the necessity of self-funding of all breakthrough entrepreneurs, underlines the need for open and competitive markets if we are to enjoy in the future benefits of innovative dynamism, as we have in the past.

Young Back Choi, Professor of Economics and Finance, St. John’s University. Author of Paradigms and Conventions: Uncertainty, Decision Making, and Entrepreneurship.

Choi’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Persistent Teenage Entrepreneur Sold Truffles to Fine Restaurants

(p. A19) SEATTLE — There is an industrial stretch of 37th Street in Long Island City, Queens, just off Queens Boulevard where you can walk and suddenly be hit with the most incongruous of odors: the pungent, earthy smell of truffles.
You have arrived at the nondescript warehouse of Regalis Foods, which sells fine truffles and other expensive wild foods.
Inside, the truffle smell is more intense and the work pace is on full holiday bustle.
“The week before New Year’s is our busiest of the year,” said the owner, Ian Purkayastha, 26, who started Regalis at age 19 with a cooler in a beat-up minivan. He now supplies many of the finest restaurants in Manhattan — including Eleven Madison Park and Le Bernardin — which are typically packed for New Year’s Eve.
. . .
Mr. Purkayastha grew up in Houston, and Fayetteville, Ark., where an uncle taught him how to forage for mushrooms.
A taste of truffle ravioli at age 14 began the fascination with truffles, and by 15, he was buying small shipments from Europe to sell to fine restaurants his parents would drive him to.
By 17, he moved to New York and began transporting his truffles in a cooler on wheels. He would visit upscale restaurants in Manhattan and try to convince chefs to sample his products.
The renowned restaurateur David Chang, the founder of Momofuku restaurants, recalled being impressed by the tenacity of the teen with fine products.
“He must have been 18 and he was just really persistent,” Mr. Chang said.
“The fact that he was so young was always unnerving to everyone,” he added. “But his product was extraordinary, so I trusted him to get me stuff. He continually got very high-quality products.”

For the full story, see:

Corey Kilgannon. “‘Fulfilling the Demand for New Year’s Eve Caviar, Truffle and Crab.” The New York Times (Saturday, Dec. 29, 2018): A19.
(Note: ellipsis added.)
(Note: the online version of the story has the title “Truffles, Crab and Caviar: Preparing for New Year’s at the Warehouse of Expensive Eats.” The online date is the same as the print date.)

Buyers Trust Amazon’s Delivery Speed

(p. B1) SEATTLE — Olivia Zimmermann started her holiday shopping early this year, buying a Bluetooth speaker from Best Buy for her sister. It was supposed to arrive by Dec. 10 [2018], two weeks before Christmas.
The speaker never showed up — and the post office said it had delivered the package to a different town. Best Buy apologized and offered to reship it. But Ms. Zimmermann, who works in marketing in Chicago, was over it.
“I just want a refund,” she told the retailer, and then added: “At this point, I have already ordered from Amazon because I know for a fact it will be here when they say it will.”
Amazon is far and away the leader in e-commerce, outpacing competitors like Walmart, Target and eBay. But its dominance is never more pronounced than in the nail-biter last-minute sprint before Christmas.
The company, based in Seattle, has had a two-decade-long obsession with shrinking the time from click to doorstep. It has built warehouses in more than 30 states and a sophisticated web of delivery methods, giving it a logistical advantage.
Amazon has used that edge to lead people to expect near instant gratification that, for a while, only it could deliver. The company built trust in its delivery speed with its Prime membership, which costs $119 a year and includes two-day shipping. This year, in the days leading up to Christmas, Amazon’s share of online sales will increase by almost 50 percent — to about half of all digital sales — while most rivals fade, according to the market research firm Rakuten Intelligence.
“Amazon’s ability to fulfill more quickly and effectively than competitors has been a key differentiator back to the earliest days,” said Kenneth Cassar, an analyst with Rakuten Intelligence, which is an independent subsidiary of the Japanese e-retailer Rakuten.

For the full story, see:
Karen Weise. “‘For Christmas, All They Want Is From Amazon.” The New York Times (Saturday, Dec. 22, 2018): B1 & B7.
(Note: bracketed year added.)
(Note: the online version of the story has the date Dec. 21, 2018, and has the title “Last-Minute Shoppers Increasingly Trust Only Amazon to Deliver.”)

Big Data Crushes “Intuition, Skill and Experience”

(p. 14) Drawing on an eclectic bunch of anecdotes and studies, Tenner makes his way through four sectors in which “intuition, skill and experience” have been effectively crushed by “big data, algorithms and efficiency”: media and culture, education, transportation and medicine.
A few of his examples:
Search algorithms have extended the ability to find scientific journal articles and books dating to the 19th century. In principle, this means scholars may encounter a broad range of research and discovery, dredge up forgotten work and possibly connect important dots. But in reality, as one sociologist found after studying citations in 35 million scientific journal articles from before and after the invention of the internet, researchers, beholden to search algorithms’ tendency to generate self-reinforcing feedback loops, are now paying more attention to fewer papers, and in general to the more recent and popular ones — actually strengthening rather than bucking prevailing trends.
GPS is great for getting from one point to another, but if you need more context for understanding your surroundings, it’s fairly useless. We’ve all had experiences in which the shortest distance, as calculated by the app, can also be the most dangerous or traffic-clogged. Compare the efficiency of GPS with the three years aspiring London cabdrivers typically spend preparing for the arduous examination they must pass in order to receive their license. They learn to build a mental map of the entire city, to navigate under any circumstance, to find shortcuts and avoid risky situations — all without any external, possibly fallible, help. Which is the more efficient, ultimately, the cabby or Google Maps?
In the early 2000s, electronic medical records and electronic prescribing appeared to solve the lethal problem of sloppy handwriting. The United States Institute of Medicine estimated in 1999 that 7,000 patients in the United States were dying annually because of errors in reading prescriptions. But the electronic record that has emerged to answer this problem, and to help insurers manage payments, is full of detailed codes and seemingly endless categories and subcategories. Doctors now have to spend an inordinate amount of time on data entry. One 2016 study found that for every hour doctors spent with patients, two hours were given over to filling out paperwork, leaving much less time to listen to patients, arguably the best way to avoid misdiagnoses.
Faced with all these “inefficiently efficient” technologies, what should we do? Tenner wants more balance.

For the full review, see:
Gal Beckerman. ” Kicking the Geeks Where It Hurts.” The New York Times Book Review (Sunday, June 30, 2018): 14.
(Note: the online version of the review has the date June 4, 2018, and has the title “What Silicon Valley Could Use More Of: Inefficiency.”)

The book under review, is:
Tenner, Edward. The Efficiency Paradox: What Big Data Can’t Do. New York: Alfred A. Knopf, 2018.

Drones Bringing Vaccine May Be Interpreted by Some as Cargo Cult Vindication

(p. A10) In the village of Cook’s Bay, on the remote side of the remote island of Erromango, in the remote South Pacific nation of Vanuatu, 1-month-old Joy Nowai was given shots for hepatitis and tuberculosis that were delivered by a flying drone on Monday.
It may not have been the first vial of vaccine ever delivered that way, but it was the first in Vanuatu, which is the only country in the world to make its childhood vaccine program officially drone-dependent.
“I am so happy the drone brought the stick medicine to Cook’s Bay as I don’t have to walk several hours to Port Narvin for her vaccines,” her mother, Julie Nowai told a Unicef representative. “It is only 15 minutes’ walk from my home.”
.. . .
. . . , about 20 percent of Vanuatu’s 35,000 children under age 5 do not get all their shots, according to the United Nations Children’s Fund.
So the country, with support from Unicef, the Australian government and the Global Fund to Fight AIDS, Tuberculosis and Malaria, began its drone program on Monday. It will initially serve three islands but may be expanded to many more.
In the future, that expansion may run into some unusual turbulence — Vanuatu is one of the few places where “cargo cults” are still active, and the drones match their central religious dogma: that believers will receive valuable goods delivered by airplane.
That will have to be handled carefully, a Unicef representative said.
. . .
. . . : Vanuatu still has adherents of the John Frum movement, one of the South Pacific cargo cults whose adherents pray for valuables arriving from the sky.
The cults date back more than 100 years, but reached their zenith during and after World War II.
Islanders whose ancestors had been kidnapped by whites to work on plantations in Australia and Fiji watched “silver birds” flown in by the Japanese and American militaries disgorge vast amounts of “cargo” — food, medicines, tools and weapons — which was sometimes shared with them.
The legend spread that the cargo was gifts from the ancestors, but that it had been intercepted and stolen by the foreigners. After the war ended, the cults built airstrips and model planes to lure the “birds” back.

For the full story, see:
Donald G. McNeil Jr. “‘A Buzzing Thing in the Sky’ Delivers Vaccines to Vanuatu.” The New York Times (Tuesday, Dec. 18, 2018): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date Dec. 17, 2018, and has the title “An Island Nation’s Health Experiment: Vaccines Delivered by Drone.”)

Entrepreneurial Farmers Benefit from Global Warming

(p. A1) LA CRETE, Alberta–The farm belt is marching northward.
Upper Alberta is bitter cold much of the year, and remote. Not much grows other than the spruce and poplar that spread out a hundred miles around Highway 88 north toward La Crete. Signs warn drivers to watch for moose and make sure their gas tanks are filled. Farms have produced mostly wheat, canola and barley. Summers were so short farmer Dicky Driedger used to tease his wife about wasting garden space growing corn.
Today, Mr. Driedger is the one growing corn. So are many other northern-Alberta farmers who are plowing up forests to create fields, which lets them grow still more of it. The new prospect of warmer-weather crops is helping lift farmland prices, with an acre near La Crete selling for nearly five times what it fetched 10 years ago.
One reason is the warming planet and longer growing seasons. Temperatures around La Crete are 3.6 degrees Fahrenheit warmer on average annually than in 1950, Canadian federal climate records show, and the growing season is nearly two weeks longer.
“A few degrees doesn’t sound like much,” said Mr. Driedger, 56, who has farmed for three decades in the area roughly as far north as Ju-(p. A6)neau, Alaska. “Maybe it doesn’t make such a big difference on wheat or canola, but on corn, it sure does.”
. . .
Agricultural giants such as Bayer AG , Cargill Inc., DowDuPont Inc. and Bunge Ltd. are pushing to develop hardier crops, plan new logistics networks and offer new technologies designed to help farmers adapt. DowDuPont, maker of Pioneer brand seeds, said its scientists are developing crops that mature faster and in drier conditions for farmers in regions growing hotter. It is marketing weather services to help farmers better anticipate storms and weather-driven crop disease.
. . .
“I look for places that don’t yet grow soybeans, that will eventually grow soybeans,” said Joelle Faulkner, chief executive of Area One Farms, a Toronto investment firm that buys land in partnership with farmers.
On Area One land where farmers have planted soybeans, farmers’ profitability has grown 30% over three to five years, boosting the land’s value by roughly the same amount, she said. The spread of warmer-weather crops, she said, represents “the less negative effect of climate.”
. . .
Seed and pesticide giant Bayer, which bought U.S. seed purveyor Monsanto this year, is breeding corn plants to be faster-maturing to produce crops in cooler climates. Those efforts help farmers in borderline areas take advantage of climatic shifts.
A decade ago, Monsanto’s fastest-growing corn needed about 80 days to mature for harvesting, said Dan Wright, who oversees Bayer’s Canadian corn and soybean research from Guelph, Ontario. Next year, he aims to begin selling corn that will mature in 70 days, targeting farmers in places like Saskatoon, Saskatchewan and Red Deer, Alberta. For corn and soybeans, the company’s two biggest crops by sales, he said, such areas represent the “edge opportunity.”

For the full story, see:
Jacob Bunge. “Warming Climate Pushes Corn North.” The Wall Street Journal (Monday, Nov. 25, 2018): A1 & A6.
(Note: ellipses added.)
(Note: the online version of the story has the date November 26, 2018, and has the title “A Warming Climate Brings New Crops to Frigid Zones.”)

Berezin Saw Entrepreneurship as Path for Women to Advance in “Male-Dominated Field”

(p. A5) By the time she reached her early 40s, Ms. Berezin was a veteran computer designer who had created an automated reservation system for United Air Lines. Even so, as an extremely rare woman in a male-dominated field, she saw little chance of reaching senior management.
Her only route to the top, Ms. Berezin concluded, was to start a company. In 1969, with two colleagues, she founded Redactron Corp. to design and make computerized typewriters, a category that became known as word processors before being subsumed into today’s more versatile desktop computers.
Ms. Berezin, who died Dec. 8 [2018] at the age of 93, served as president of Redactron, whose sales pitch was “Free the secretary,” suggesting an escape from drudgery into more challenging work. Initially lacking screens, the devices featured IBM Selectric typewriters hooked up to boxy computers allowing texts to be edited, stored and printed.
Based in Hauppauge, N.Y., the company sold machines as far afield as Australia and had more than 500 employees by 1975. A recession and high interest rates created a financial crisis that forced Ms. Berezin to sell Redactron to Burroughs Corp. in January 1976.
Once Burroughs acquired Redactron, she lost control of product development and watched as others made decisions that she said doomed her word processor.

For the full obituary, see:
James R. Hagerty. “Butting Heads With Men Suited Computer Pioneer.” The Wall Street Journal (Saturday, Dec. 15, 2018): A5.
(Note: bracketed year added.)
(Note: the online version of the obituary has the date Dec. 14, 2018, and has the title “Evelyn Berezin Pioneered Word Processors and Butted Heads With Men.”)

Mitch Daniels Views Higher Education as a “Racket” (Health Care Too)

(p. A11) Mr. Daniels, 69, is the most innovative university president in America.
. . .
Mr. Daniels kicks off our conversation with a morality tale: “I’ll speak to an audience of businesspeople and say: Here’s the racket that you should have gone into. You’re selling something, a college diploma, that’s deemed a necessity. And you have total pricing power.” Better than that: “When you raise your prices, you not only don’t lose customers, you may actually attract new ones.”
For lack of objective measures, “people associate the sticker price with quality: ‘If school A costs more than B, I guess it’s a better school.’ ” A third-party payer, the government, funds it all, so that “the customer–that is, the student and the family–feels insulated against the cost. A perfect formula for complacency.” The parallels with health care, he observes, are “smack on.”

For the full interview, see:
Tunku Varadarajan, interviewer. “THE WEEKEND INTERVIEW: College Bloat Meets ‘The Blade’.” The Wall Street Journal (Saturday, Dec. 15, 2018): A11.
(Note: ellipsis added.)
(Note: the online version of the interview has the date Dec. 14, 2018.)

Obsessive Compulsive Disorder Can Enhance Memory

(p. C1) Sharon remembers the first day it happened, in 1952. She was 5 years old and blindfolded while her friends ran around her, laughing, trying not to be caught in a game of blindman’s bluff. But when she whipped off the scarf, panic set in. The house, the street, even the mountains were in the wrong place. She was totally disoriented.
. . .
She eventually learned she had an unusual condition called developmental topographical disorientation disorder, or DTD.
. . .
(p. C2) Not all brain disorders are as detrimental as DTD. Bob, a TV producer from Los Angeles, remembers every day of his life as if it happened yesterday. His perfect memory is a gift, he says: “I don’t have to mourn people after they’ve passed away because my memory of them is so clear.”
The condition was discovered by James McGaugh at the University of California, Irvine, in 2001, after he received a peculiar email from a woman named Jill. “Since I was 11 I have had this unbelievable ability to recall my past,” she said. “When I see a date…I go back to that day and remember where I was, what I was doing, what day it fell on and on and on.”
. . .
A decade later, Dr. McGaugh had a group of around 50 people with HSAM. By scanning their brains while they carried out memory tasks, he discovered that they had an enlarged caudate nucleus and putamen–two areas implicated in obsessive compulsive disorder. Dr. McGaugh concluded that their extraordinary powers of memory are rooted not in their ability to form memories, but in an unconscious rehearsal of their past. They accidentally strengthen their memories by habitually recalling and reflecting upon them–“a unique form of OCD,” he says.

For the full essay, see:
Helen Thomson. “‘Lessons From STRANGE BRAINS.” The Wall Street Journal (Saturday, June 30, 2018): C1-C2.
(Note: ellipses between quoted passages, added; ellipsis internal to a paragraph, in original.)
(Note: the online version of the essay has the date June 29, 2018, and has the title “Strange Stories of Extraordinary Brains–and What We Can Learn From Them.”)

Thomson’s essay is closely related to her book:
Thomson, Helen. Unthinkable: An Extraordinary Journey through the World’s Strangest Brains. New York: Ecco, 2018.

Chinese Entrepreneurs Anxious Over Growing Government Control of Private Enterprise

(p. A15) HONG KONG — The comments were couched in careful language, but the warning about China’s direction was clear.
China grew to prosperity in part by embracing market forces, said Wu Jinglian, the 88-year-old dean of pro-market Chinese economists, at a forum last month. Then he turned to the top politician in the room, Liu He, China’s economic czar, and said “unharmonious voices” were now condemning private enterprise.
“The phenomenon,” Mr. Wu said, “is worth noting.”
Mr. Wu gave rare official voice to a growing worry among Chinese entrepreneurs, economists and even some government officials: China may be stepping back from the free-market, pro-business policies that transformed it into the world’s No. 2 economy. For 40 years, China has swung between authoritarian Communist control and a freewheeling capitalism where almost anything could happen — and some see the pendulum swinging back toward the government.
. . .
China’s leadership turned to entrepreneurs in the late 1970s, after the government had led the economy to the brink of collapse. Officials gave them special economic zones where they could open factories with fewer government rules and attract foreign investors. The experiment was an unparalleled success. When extended to the rest of the country, it created a growth machine that helped make China second only to the United States in terms of economic heft.
Today, the private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group. So pressures on private businesses could create serious ripples.
“The private sector is experiencing great difficulties right now,” wrote Mr. Hu, the retired minister, who as the son of a former top Communist Party leader is often a voice for reform in China, in an essay posted online last Thursday. “We should try our best not to replicate the nationalization of private enterprise in the 1950s and the state capitalism.”
. . .
Private entrepreneurs are loath to speak out for fear of attracting official condemnation. But signs of distress aren’t hard to find.
Last month, Chen Shouhong, the founder of an investment research firm, asked a group of executive M.B.A. students — many of whom already owned publicly listed companies — to choose between panic and anxiety to describe how they feel about the economy. An overwhelming majority chose panic, according to a transcript. Mr. Chen declined to be interviewed.
. . .
Xiao Han, an associate law professor in Beijing, cited one of Aesop’s fables, of a man trying and failing to stop a donkey from going over a cliff.
“Before long,” Mr. Xiao said, “we’ll probably find a body of a China donkey under the cliff.”

For the full story, see:
Li Yuan. “China Muscles In on Its Free-Market Prosperity.”The New York Times (Thursday, Oct. 4, 2018): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 3, 2018, and has the title “Private Businesses Built Modern China. Now the Government Is Pushing Back.”)