Andy Kessler

WSJ: How to Slay a Tech Giant (Apple)

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https://www.wsj.com/articles/how-to-slay-a-tech-giant-apple-11593375647

When Apple announced last week that it will soon replace Intel processors with its own, I had a flashback to 1993. Morgan Stanley’s technology investment banker Frank Quattrone called me in New York: “John Sculley”—CEO of Apple—“wants to meet with you Friday,” he said. It was Thursday morning. “About what?” I asked. “I don’t know, do your virtual thing.” I booked the 9 p.m. to San Francisco and the redeye home.

Meanwhile, I was on the phone all day with the banking team to help create “the book.” No investment banker worth his salt shows up without a spiral-bound pitch book put together by lowly associates pulling all-nighters, with strategy ideas and suggested transactions (investment bankers’ payday!) to solve the company’s future problems.

Back then I was intrigued by companies organized in horizontal layers attacking vertical behemoths. IBM was a vertical giant and did everything from soup to nuts: chips, hardware, operating system, software, applications, services. They had 50% of the computer industry’s revenue but 90% of its profits. They used FUD—fear, uncertainty and doubt—to freeze out competitors.

But IBM was vulnerable. A loose horizontal confederation threatened its power: Intel processors, Microsoft’s operating system, Western Digital hard drives and Compaq hardware, along with Lotus, Adobe and Microsoft applications, added up to a “Virtual IBM” and eventually toppled the giant. The same thing happened in the late 1990s with AT&T. A horizontal internet of network equipment, browsers and websites created a Virtual AT&T and toppled the vertically integrated telecom.

The team met with Mr. Sculley, his chief financial officer and general counsel, and I got to make the pitch. I recently dug up my dusty copy of that pitch book to remember what I said. Apple had “superior software and ergonomic hardware design” but needed to “focus on mobility as a natural offspring of smaller form-factor computing.” Not bad, in hindsight, though a decade early.

But Apple’s stock, at 14 times earnings, was valued like commodity PC maker Compaq instead of software and platform company Microsoft with its 26-times multiple.

WSJ: A War of Meaningless Words

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https://www.wsj.com/articles/a-war-of-meaningless-words-11592757588

Truth or consequences? “When I use a word,” says Lewis Carroll’s Humpty Dumpty, “it means just what I choose it to mean—neither more nor less.” In other words, anything he wants it to mean. Prescient. Today words are abused and truth has become so debased that no one believes anything anymore.

It started off Art Linkletter-like: Politicians say the darnedest things. You know—the definition of “is,” uranium yellowcake, if you like your doctor, the size of inauguration crowds. Facebook and Twitter now have truth squads trying to discern truths from fakes. Good luck with that. The Post-Truth Era not only has arrived; in three short months, we’ve descended into the depths of dishonesty dysfunction.

Even numbers. Now 2.2 million = 150,000? Imperial College London epidemiologist Neil Ferguson helped force much of the world into lockdowns with his forecast of 2.2 million U.S. deaths. He assumed 268 million of Americans, or 81%, would be infected. So far it’s 2.3 million. As Bob Uecker would say, “Juuust a bit outside.” Mr. Ferguson then put the hip in hypocritical, having his married girlfriend break the stay-at-home order he inspired.

The White House was also math-challenged. Its “15 Days to Slow the Spread” quickly became 30. Which is it? We flattened the curve, and a quarter of the economy. No matter, we’re now on day 90, quarantine crazy and hankering for haircuts.

The World Health Organization declared in March that you don’t need to wear masks, probably because of the world-wide shortage. California now requires them, even outside. Again, which is it? Whacked in the head so many times with untruths, you stop believing anyone.

OK, those were emergency conditions, where anyone could make mistakes. Except, except—our leaders continue to be the worst offenders. “Follow the science!” Los Angeles Mayor Eric Garcetti declared residents could only use the “wet sand” part of the beach to go swim. New York Mayor Bill de Blasio said dry sandy beaches are fine but swimmers would be “taken right out the water.” Not very scientific.

WSJ: A Boy and His Flag (Day)

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https://www.wsj.com/articles/a-boy-and-his-flag-11592153447

June 14 is Flag Day. It happens to be my favorite holiday, perhaps tied with food-and-football-fest Thanksgiving. I’m not rah-rah patriotic—I have as much disdain for those who hide behind the flag as those who trash it—but Flag Day is personal for me. I grew up in central New Jersey, in the township of Bridgewater, some 10 miles up the Raritan River from New Brunswick. I’d leave for school each morning and before turning right to the bus stop, I’d look left, up the hill into a clearing with a flagpole, where a flag flew day and night.

In 1777, Gen. William Howe and 18,000 British troops were occupying New Brunswick. George Washington had 8,000 troops encamped in the Watchung Mountains, uphill from my house, with a commanding view to keep an eye on Howe and stop his march to Philadelphia, the nation’s de facto capital. On June 14, 1777, the Continental Congress adopted the 13-star flag. The Middlebrook encampment, toward which I looked reflexively every morning, was where the Betsy Ross flag flew for the first time.

A sign of the times, the Middlebrook encampment of my youth was in disrepair: a couple of old cannons, lots of wrappers and broken beer bottles, and the flagpole. Until recent decades, it was one of only a few places allowed to fly the flag 24 hours a day.

Today you can have the Stars and Stripes on your underwear and sneakers—though Betsy Ross got bounced off Nike’s Air Max 1 USAs. Canceled. Scrubbed. Too bad. I always think of the flag as a banner of opportunity, for everyone. “America is the land of opportunity,” said Elon Musk, the immigrant founder of Tesla and SpaceX, before last month’s successful space launch. “There is no other country where I could have done this.” Heck, freedom-loving John Hancock was an entrepreneur (OK, smuggler) who hated paying taxes. To me, the flag means only one thing: If you respect freedom enough, anything is possible.

We lived on the right side of the railroad tracks but on the down slope of our town’s economic divide. Generally, doctors, lawyers and businessmen lived uphill, while blue-collar and service workers lived below the foothills, like us. Inequality? Nobody cared. My dad was an engineer, which was less valued back then, and my mom worked with learning-disabled children. But they made enough to send their kids to college.

WSJ: Party Like It’s 1983 - The Reagan Playbook

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https://www.wsj.com/articles/party-like-its-1983-11591560625

“In the grip of the world-wide recession, we must all stick to anti-inflationary, high-productivity policies that adapt new technology, retrain workers, and increase efficiency.” Who said that? Donald Trump? Angela Merkel? Emmanuel Macron? Nope, that was Ronald Reagan in May 1983, speaking on the eve of the Williamsburg Economic Summit of Industrialized Nations.

Now, the off-again, on-again Group of Seven meeting scheduled for June is off until September at the earliest. Too bad. It’s needed more than ever. I spoke with Larry Kudlow, director of the White House National Economic Council and the so-called Sherpa of the meeting’s agenda, and asked what his pitch will be. “It’s the Reagan playbook,” he says. “In some sense, it’s very easy. The same principles apply. You want to reduce tax rates, generate incentives, reignite the animal spirits, and deregulate to remove business obstacles.”

Without Reagan’s principles, the capital investment and innovation since 1983 might still have happened, just more slowly. We’d be getting that original iPhone right about now, delaying improvements in everyone’s living standards. Wait, no Uber?

More than 42 million Americans have filed jobless claims since mid-March, and around 21 million are now unemployed. We need jobs, badly. After the first wave of rehiring, Mr. Kudlow insists, “you must reignite growth—you must. Your car battery is dead because you haven’t used it in three months, so you have to pull out the jumper cables and reignite the battery, which is what we are trying to do with the economy.”

In 1983, the U.S. economy had just gone through the ravages of Paul Volcker’s inflation-slaying recessions. Now it’s zero inflation and lockdowns. Do we need another giant stimulus package? Mr. Kudlow thinks not: “The first tranche was rescue, cash, liquidity, survival. Now we’re transitioning through the reopening, and the third leg has got to be growth incentives. That’s been my mantra internally, and we’re going to press that at the G-7.” He prefers a payroll-tax holiday and capital-gains exclusions for investments through the end of the year.

WSJ: Give Online Learning an Upgrade

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https://www.wsj.com/articles/give-online-learning-an-upgrade-11590954189

School’s out for summer. School’s out forever? A lot of parents are figuring out that remote learning, forced on us by school closings, is mostly the same old, same old—teachers droning on to students, except online. Not much has changed in education since the Little Rascals’ Miss Crabtree’s one-room class in 1930.

And it’s broken. Even before Covid, more than half of incoming students at community colleges required remedial math or English courses. As former Florida Gov. Jeb Bush told me, “Something’s wrong when you have rising high-school graduation rates and rising remediations.” Seriously wrong. Billions are wasted reteaching high school.

All our Zooming may be a spark. Mr. Bush insists, “We need to flip the system on its head so that time is the variable and learning is the constant—which requires a mastery-based system.” OK, a lot to unpack there. For about a decade, many schools have used “flipped” classrooms. A teacher records lectures that students watch at home, and the next day in class students discuss the lectures and do what would’ve been their “homework.” But that model only goes so far. Lectures are still dull. They don’t engage and motivate kids. Even with small class sizes, many students fall behind.

Forget flip; the flopped classroom is coming. Upend teachers, kind of, by creating a robust online learning system, filled with building blocks and snippets that students need to complete before moving on. Not lectures from your ninth-grade history teacher, Mr. Mailitin, but learning from the best teacher in your district or state or country. Many would nominate Sal Khan and his Khan Academy.

This isn’t science fiction, though that’s the inspiration. Neal Stephenson laid out the concept in his 1995 novel ,“The Diamond Age: Or, a Young Lady’s Illustrated Primer.” Before Netscape went public and well before iPads, Mr. Stephenson envisioned learning via adaptive, customized instruction on thin portable devices. Much of the technology now exists and works. Even a voice interface is plausible. Learning can be made fun—see videogame deep dives—even delivered over phones.

When flopped, teachers (probably fewer of them) become coaches, tutors, encouragers, motivators.