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July 2013

"ArsDigita: From Start-Up to Bust-Up"

By Philip Greenspun. Interesting throughout, but two items particularly interested me.

Why was Microsoft so successful? Maybe because of this:

Software products is a rough business because it moves fast and attracts smart people. Furthermore you have companies like Microsoft where people work nights and weekends backed up by a cash hoard of $20 billion and a global brand. As an investor, you never want to send your company up against the Microsofts of the world unless your managers are smart, hard-working, and have the right experience. If they don't, you need to look for a less competitive business. Maybe you can offer training or admin services for a Microsoft or Oracle product. Or maybe you should get out of the IT business altogether and apply your capital and employees to something like party equipment rental (you don't see too many table and chair rental companies with $20 billion in the bank and MIT PhDs working nights and weekends trying to put their competitors out of business).

What contributes to the success of MIT graduates? Maybe this:

But for most of this year Chip, Peter, and Allen didn't want to listen to me. They even developed a theory for why they didn't have to listen to me: I'd hurt their feelings by criticizing their performance and capabilities; self-esteem was the most important thing in running a business; ergo, because I was injuring their self-esteem it was better if they just turned a deaf ear. I'm not sure how much time these three guys had ever spent with engineers. Chuck Vest, the president of MIT, in a private communication to some faculty, once described MIT as "a no-praise zone". My first week as an electrical engineering and computer science graduate student I asked a professor for help with a problem. He talked to me for a bit and then said "You're having trouble with this problem because you don't know anything and you're not working very hard."

For more tales of business failure see "33 Startups That Died Reveal Why They Failed".

"The Perverse Effects of Rent Regulation"

By Adam Davidson, Peabody and Polk award-winning reporter and NPR maven, in the New York Times

The problem, though, is that these programs actually make the city much less affordable for those unlucky enough not to live in a rent-regulated apartment, [Columbia Business School housing economist] Mayer says. The absurdity of New York City’s housing market has become a standard part of many Econ 101 courses, because it is such a clear example of public policy that achieves the near opposite of its goals. There are, effectively, two rental markets in Manhattan. Roughly half the apartments are under rent regulation, public housing or some other government program. That leaves everyone else to compete for the half with rents determined by the market. Mayer points out that most housing programs tie government support to an apartment unit, not a person. “That is completely nuts,” he says. It creates enormous incentive for people to stay in apartments that no longer fit their needs, because they have had kids or their kids have left or their job has moved farther away. . . . 

For this to appear in the Times is progress, of a small sort.