When I look at the likes of Rockefeller, Ford or Edison and compare them with today's success stories at Apple, Facebook or Wall Street, the difference I see, lies in whose weakness they exploit to reach the top.
Today's success stories are all about exploiting every possible customer weakness, while in the good old days it was about exploiting competitor weakness.
Whether its exploiting people's weaknesses to get them to mindlessly consume content to sell ads, or cleverly misguiding them about mortgages and student loans, or tying social standing and aspiration(in the developing world) to the latest trinket in a phone...it makes me conclude that the best way to build the next superstar company, is to find a human weakness as yet unexploited in the ever growing bountiful list that cognitive and behavioral psychology are just beginning to provide and go to town.
You are romanticizing the past. Take a look at the ads in LIFE magazines from the first half of the 20th c. There's consumer exploitation going on that would make Zynga blush.
Yeah, blush in embarrassment at how blatant, transparent and ineffective it was. It was very unsubtle - and shocking to us now because of that.
But they still thought that things were best sold by convincing people that their product was the best. And many though that actually being the best was a cost efficient way to convince people of that.
I agree. But you are forgetting another exploitation - of the worker, which back in the day was the norm. Perhaps still is, depends on how you look at it.
In the good old days they also exploited their workers a fair amount, hired private security to break strikes (e.g. Homestead strike). Nowadays the most profitable businesses need nearly no unskilled labor or if they do, it is usually the subcontractors that mistreat their employees.
I think you're deeply romanticizing the past, certainly with respect to Henry Ford and likely with respect to Rockefeller or Edison. I could be misinterpreting but it sounds like you're basically saying that today's companies get where they are due to predatory marketing, whereas in the Good Old Days everybody just worked hard and did their best and competed solely on quality and price.
That may be an unfairly reductive paraphrasing of your point though. I do think it's fair to say that nowadays marketers have far more different ways to reach people, and they have to be far more nuanced (or sneaky, if you prefer) in their messaging. I think the latter is due to it being much harder to outright lie to consumers, for legal reasons but also because there are many more ways for those consumers to discover and publicize sleazy advertising claims. 100 years ago cigarette companies advertised that you needed to become a smoker because it's healthy for you (they had nothing to back that up with, and plenty of evidence to the contrary). Those were the Good Old Days that you're fondly remembering here. Companies lied through their teeth about their products and each other. Marketers still lie, of course, they just can't be quite so blatant about it. But just because this is true doesn't mean that things are worse now than they were before.
I also wouldn't be so quick to blame people doing things you don't approve of (like taking crappy loans or buying expensive phones as status symbols) as being the result of an evil marketer exploiting a helpless prole. Actual predatory marketing is something that needs to be monitored and regulated, but there is also no shortage of people with lousy values who continually make terrible life choices. There probably always will be. Take away all marketing (not just the blatantly predatory kind, but also the lifestyle marketing that it sounds like you also consider evil), and many of those same people would simply be finding other activities to engage in that you would also not approve of.
Ultimately, who are we to say that some idiot spending way too much money for a status symbol he doesn't need should be prevented from spending his money however he wants? It's a very slippery slope to go down. Once you break open that philosophical seal, you may discover that there's lots of other people who don't approve of something that you do, who also want to tell you what to do in order to save you from yourself. They don't have to be right about it, there just has to be enough of them who agree that you are spending your money inappropriately or reading the wrong books or engaging in dangerous hobbies or whatever.
1. Companies with large profits are spending an enormous amount of money on open market stock buy backs.
2. Buy backs are almost exclusively done for stock manipulation reasons: to stabilize or increase the value of a stock.
3. Most executive compensation is in the form of stock. So the incentive of management is to maximize stock value.
4. Instead, management should be incentivized to engage in activities that increase reinvestment, research, and development. Of which longer-term, more stable employment is one positive effect; increasing U.S. innovation and inventions is another.
My own amateur take on #2 is that it's popular because it's a non-risky, conservative action that management can take. If Company X has a billion dollar profit, spending that on open market buy backs of company stock effectively keeps the the profits within the company, without incurring a tax penalty. Combined with the stabilizing effect on stock prices makes it a no-brainer for many.
Also, having a profit doesn't justify increasing R&D spending, or automatically expanding into new markets. It's only wise to risk an expansion if you have confidence it will generate a return. The author conflates government spending (which is unbound by risk) with private spending (which necessarily must be bound by risk). A billion dollar publicly funded research project that results in no measurable return for society will not bankrupt the government. A risky, unwise, billion dollar private investment that does not generate a return can destroy a company.
I see this delusion pop up all over and I can't help but just shake my head. Trying to tax a corporation is like trying to trap an octopus in a fishing net. They will always find a way to slide out.
You have the perfect collusion of incentives:
1) Pooled self interest in the form of shareholders owning value. When a corporation spends money on the shareholder's behalf on lobbying or fancy tax law specialists, in benefits every single shareholder, because stock returns are apportioned. With the personal income tax, it is not in the immediate self interest for someone in the lowest tax bracket to help lobby for lower taxes on the highest bracket. Pooled self interest makes for higher lobbying power.
2) The corporate tax is not a revenue tax (as is the personal income tax), but rather a revenue-minus-costs tax. And businesses are diverse enough in their business models that you couldn't feasibly enact a revenue tax without unfairly penalizing low margin industries like grocery stores or temp agencies. What this means is that anything that the corporation deems to be a cost is automatically tax deductible. This leads to ridiculous shenanigans like using corporate jets to drop off documents that happen to need to be delivered to the same city as the CEO's daughter's university campus. If you want to enforce rules on corporate taxation, you are going to have to scrutinize every single cost they have on their books. Is it any surprise that the corporate tax has the highest compliance and enforcement costs, and lowest effective-to-nominal ratios of any tax form in the US?
If you want corporations to pay their fair share of taxes, you have to have them distribute the money to their shareholders and then place the burden of taxation on them. Eliminate the corporate tax altogether, and tax capital gains and dividends as personal income.
1) A corporation spends money on tax specialists to benefit itself. Any benefit to the shareholders is usually incidental, and the corporation would eliminate these benefits if it increased the benefit to the corporation.
2) Corporate income taxes are profit taxes. The type of shenanigans you have suggested as a means of increasing expenses are what tax practitioners call "tax evasion schemes" that (a) would not work and (b) would result in heft fines and/or prison sentences for the executives, board members, and accountants involved. The US corporate tax code has the highest compliance costs because it has the most deductions and credits of any code in the world, but every dollar spent on compliance usually results in multiple dollars saved with respect to tax liabilities.
If you want corporations to pay their fair share of taxes, you tax them on their profits. If the tax is levied only on distributions to shareholders, that will simply move the compliance games to the shareholder level. And this plays into enforcement as well--there are thousands of companies, but there are millions of shareholders, and it is magnitudes easier to enforce tax at the corporate level than the shareholder level.
The type of shenanigans you have suggested as a means of increasing expenses are what tax practitioners call "tax evasion schemes"
There's a distinction between tax avoidance and tax evasion, and most of what companies do to (very successfully) avoid paying tax is tax avoidance (i.e. perfectly legal).
> A corporation spends money on tax specialists to benefit itself. Any benefit to the shareholders is usually incidental, and the corporation would eliminate these benefits if it increased the benefit to the corporation.
This doesn't make any sense. Any benefit to the corporation is a de facto benefit to the shareholders of that corporation.
> The type of shenanigans you have suggested as a means of increasing expenses are what tax practitioners call "tax evasion schemes" that (a) would not work and (b) would result in heft fines and/or prison sentences for the executives, board members, and accountants involved.
It is only tax evasion if the code is explicit enough to rule it out as allowable behavior...a feat of endurance for tax authorities. Even then, many legal tax avoidance behaviors would be non-existent or drastically less common if it weren't for corporate taxation.
Employee benefits, for example, only make sense if there is a bulk discount on those benefits sufficient to make sense to buy as a group. Sometimes vendors offer those discounts. But the existence of benefits as tax deductable expenses means an additional 40% discount over individual purchase. If your corporate lunchroom is subsidized (extremely common in mid to large size corporations), it is likely because that subsidy is tax deductible, whereas an individual purchasing their own lunch is not.
Compliance and enforcement costs are roughly proportional to the cartesian product of the complexity of the rules and the number of entities. Sure, pushing taxes onto shareholders increases the number of entities, but drastically reduces the number of rules, due to the fact that personal income tax is not a profit tax. The corporate tax has to have millions of rules and exceptions to rules because businesses are drastically different and legitimate expenses for one business may be illegitimate for another. I totally understand that there are way more shareholders than there are companies, but the difference in the number of rules between corporate taxes and and the marginal increase in rules on personal income taxes easily makes up the difference.
I work as a tax specialist. What you said is categorically not true. You can make as many ideological statements as you like; they have no bearing on how corporate taxation works in reality.
It is only tax evasion if the code is explicit enough to rule it out as allowable behavior...a feat of endurance for tax authorities. Even then, many legal tax avoidance behaviors would be non-existent or drastically less common if it weren't for corporate taxation.
The tax code includes provisions allowing enforcement authorities (generally, the IRS) to take the "spirit" of the law into account when evaluating a transaction, structure, or tax return. This means that something can be completely kosher under the letter of the law but still be treated as tax evasion if it violates the spirit of the law. The 90's off shore tax shelters are probably the most notorious example of these. Nearly all tax evasion schemes are centered around individual taxpayers. Not many people are willing to put their own necks on the line to facilitate widespread corporate tax evasion. (And indeed, individual non-compliance is estimated to be more than 4x the size of corporate non-compliance in the US as a matter of unpaid tax liabilities.)
If your corporate lunchroom is subsidized (extremely common in mid to large size corporations), it is likely because that subsidy is tax deductible, whereas an individual purchasing their own lunch is not.*
Companies absolutely do not subsidize lunches or healthcare for the tax savings that accrue to the employees. They do so because because such subsidies are financially beneficial from a business perspective (i.e., employee recruiting/retention).
Compliance and enforcement costs are roughly proportional to the cartesian product of the complexity of the rules and the number of entities.
Definitely not true. Compliance costs are roughly logarithmic. Scale increases disproportionately at mid-size companies but once you approach multinational status the increase in the number of entities results in significantly less than a linear increase in costs. The advantage of scale is a primary factor in the structure of accounting firms.
Sure, pushing taxes onto shareholders increases the number of entities, but drastically reduces the number of rules, due to the fact that personal income tax is not a profit tax.
Hahahahaha. Pushing taxes onto shareholders increases the number of rules. You see a reduction in statutory laws but a vast increase in non-statutory rules (i.e., court cases and administrative decisions). It's very easy to keep track of statutory law; it's relative a nightmare to track non-statutory rules.
The corporate tax has to have millions of rules and exceptions to rules because businesses are drastically different and legitimate expenses for one business may be illegitimate for another.
This is not how the tax code actually works. A business expense is generally deductible regardless of the industry if the expense is legitimately related to a business need of the enterprise. Very few business expenses are not legitimate, though due to exceptional levels of fraud and abuse "meals and entertainment" and employee vacation expenses (i.e., paid holidays or vacation time) are usually not fully deductible by a business.
I totally understand that there are way more shareholders than there are companies, but the difference in the number of rules between corporate taxes and and the marginal increase in rules on personal income taxes easily makes up the difference.
Nope. Scale matters. It's easier and more efficient for the corporation to determine its tax liability than it is for an individual, and the corporation has greater resources to do so. You trade having a few thousand taxpayers spending an average of 10-1000 hours dealing with compliance with many millions of taxpayers spending 10-100 hours dealing with compliance. Definitely not a net benefit to society.
I know you think that might give some extra authority to your argument, but you aren't fooling me. You are no more an expert on the Economics of Taxation than a Wall Street Financial Analyst is an expert on Industrial Economics. You might see one tiny side of the picture better than most, but it is just one tiny side.
Companies absolutely do not subsidize lunches or healthcare for the tax savings that accrue to the employees. They do so because because such subsidies are financially beneficial from a business perspective (i.e., employee recruiting/retention).
Of course they do it because of recruiting and retention, but you can't possibly be this naive. I know of several companies that explicitly provide certain benefits because it is cheaper for them to provide the benefits than to pay employees more to get those benefits. There is an inherent tax benefit to this scheme compared to the alternative of additional salary. If I have a 40% tax rate, $1000 in revenue, $100 in costs, then providing $100 in lunches only costs me $60. I would normally have a liability of $360, but after providing the lunches, my tax liability is $320. If you just pay your employees more, the tax goes down just as much, but then it is taxed on the individual, and the effective cost of the lunch goes up.
This exact incentive is the reason why employee provided health plans are so compelling. Health care is deductible to the employer, but not to the employee. If you got rid of the corporate tax, corporations would no longer have the incentive to be the payer of health care, because the relative benefit of employer-pays vs employee-pays goes away.
Definitely not true. Compliance costs are roughly logarithmic. Scale increases disproportionately at mid-size companies but once you approach multinational status the increase in the number of entities results in significantly less than a linear increase in costs. The advantage of scale is a primary factor in the structure of accounting firms.
You are only describing compliance costs. Enforcement costs are not the same as compliance costs. There is no economies of scale to enforcement costs.
Hahahahaha. Pushing taxes onto shareholders increases the number of rules. You see a reduction in statutory laws but a vast increase in non-statutory rules (i.e., court cases and administrative decisions). It's very easy to keep track of statutory law; it's relative a nightmare to track non-statutory rules.
Except that those costs already exist because we already have personal income taxes and dividend taxes and captal gains taxes. Taxing dividends and capital gains as personal income would be a rule change, but it wouldn't be an increase in rules.
This is not how the tax code actually works. A business expense is generally deductible regardless of the industry if the expense is legitimately related to a business need of the enterprise. Very few business expenses are not legitimate, though due to exceptional levels of fraud and abuse "meals and entertainment" and employee vacation expenses (i.e., paid holidays or vacation time) are usually not fully deductible by a business.
How much fraud and abuse on meals, entertainment, and travel would exist if the corporation had no incentive to do so? Would your company provide for employee training in the Bahamas if it couldn't be sold to the employees as a vacation? Jesus, when was the last time you hung out with an Enterprise Salesman? Their entire lifestyle can be attributed to the corporate tax.
Any benefit to the shareholders is usually incidental, and the corporation would eliminate these benefits if it increased the benefit to the corporation
What's the difference? That is, where do you draw the line between "a corporation" and the shareholders?
The corporation is the entity. The shareholders are the owners.
The corporate form very specifically exists to be a separate legal person (for the technical meaning of person) that shields its owners from liability for claims against the business. The cost of that separateness is that the corporation is also subject to tax as its own person. If people want to have the benefits of direct taxation of income they are free to choose a flow-through form (i.e., a partnership or LLC).
I was unclear: I know what constitutes a corporation. My question was really what benefits accrue to the corporation that do not (albeit indirectly) also benefit the shareholders?
Whatever form profits are required to be reported to shareholders and potential shareholderes -- tax that calculation.
Bingo, there is no incentive for minimizing it anymore. Since you want to show profits to shareholders and investors.
Plus, you get to save all that money you spent on calculating your taxable income, you only need to calculate it once to report to both investors and the government.
I'm sure the devil is in the details and it would be much more complicated than this with many things to be worked out. But I think just that proposal is evidence that it's not impossible to make corporations actually pay taxes by aligning their interests appropriately.
I think you are forgetting something there. Technology will create less and less need for workers and so the base for taxation through income tax will minimize substantially.
Further more the problem is that many of the types of companies we see in tech are actually capital intensive not salary intensive industries yet they extract a substantially larger part of the economy without giving anything back besides cheaper products.
Even out of self-interest corporations should be interested in paying for their advantage because if they loos the mass market who are they going to sell to?
A good technique would be for the US and UK govts to just slap an extra 10% of income tax on all employees of an evading company (upped to 20% if they're found to be employed by a subsidiary for the purposes of tax evasion). That will bring them to heel overnight.
If you don't want "stock buybacks", do not print money.
The Federal Reserve prints money(Qualitative Easings) for big companies and Governments, and of course companies buy their own stock with their cheap money. Government buy back their own bonds.
Basically they are taking wealth from little savers and giving it to big Government and big companies, in one of the biggest transfer of wealth ever, making the people at the top 1% have a bigger and bigger share of the wealth.
It is not a problem of big companies,but a problem of the Government distortion of the financial world for their benefit(because they are basically broke).
The "lending of last resort" has become the first and normal way of financing for them.
Of course, there are always people that believe, like this man, that the solution is always Central Planning, more Government and more taxes.
QE isn't "money printing for big companies and Governments" and stock buybacks are just another way to return capital to shareholders.
How is it that so many articles devolve into the criticism of banks? Why do people bother commenting on subjects they know little about (and in this case are only tangentially related to the article)?
I agree with this in the sense that I wish companies would stop focusing on short term profits. It'd also be nice if companies would invest in their employees, although there I have an obvious bias.
Still, is it really fair to say that companies should pay less dividends? And while I understand shareholders don't really contribute directly to the success of the company, if nobody paid dividends then what incentive is there for anyone to own shares? I get that the stock price may increase, but if stocks don't provide dividends do they have any inherent value at all?
The bigger point is re-investment in to the scientific infrastructure - in spite of its inefficiencies feds seem to be doing an OK job but are cash constrained. On the other hand big profitable tech companies in spite of lots of cash are still playing the game of paying less for taxes and other financial engineering tricks and are doing basic minimum (which they are entitled to). One may say, its not their job, which is absolutely true. But the outcome here we want is, better investments into the scientific infrastructure so the US remains the dominant player for foreseeable future and that would not be possible with a massive companies sitting on tons of cash and who are unwilling to make investments in to the future because of the perceived "volatility".
We shouldn't be trying to shoehorn entities into jobs that their incentives don't best align with. If the premise is that we want to allocate more capital into scientific infra but the Gov't doesn't have that funding, the solution is to give government the funding, not to somehow get companies to spend their cash the way we want it. Where would this extra money come from? Again, under the premise that we want to re-allocate money towards scientific spending, it would come from higher taxes.
Fundamentally the issue you're describing is "gov't can't perform one of its competencies (scientific investment) well enough due to cash constraints". The cash constraint is a fundamentally political problem, and companies' decision-making vis-a-vis scientific investment is just a red herring.
So, the article is suggesting that everyone who uses GPS technology should be paying a fee.. to the government? Isn't that what we already call 'taxes'?
The government certainly could put a specific tax on sale or use of GPS technology.
But what the OP seems to actually be suggesting is that tax loopholes are closed and high tech corporations are taxed more in general, yeah:
> That’s why a company like Apple should be using a substantial portion of its super-profits to support government investment in the next generation of innovation. Instead, the company runs an entire division devoted to finding ways to avoid taxation.
That's just one of the topics the interview talks about, I encourage readers to skim the others too, not assume the whole article is about taxation, it's not.
Well, in the US even those who don't use GPS technology are subject to taxes. There's a pretty huge difference (in incentives, in outcome, in tax/subsidy burden) between paying for something if you use it and paying for something regardless.
In the case of the technologies mentioned, government made the explicit choice to publicly fund those things through taxes, with the assumption that the value to the economy from unfettered usage would be higher than the cost. That doesn't mean that taxes are equivalent to pay-per-use though.
> in the US even those who don't use GPS technology are subject to taxes
There is no way you don't benefit from the GPS system if you are a US Citizen. It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying.
As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society.
That's the nature of public infrastructure. And the decadent libertarian fantasy that someone should be able to opt out of taxes because of their rugged individualism is just that; a fantasy. There is no such thing as individual success in an advanced technological society and anyone who tells you there is is a parasite on that society.
> There is no way you don't benefit from the GPS system if you are a US Citizen.It's an infrastructure technology that means your roads are safer, your package delivery cheaper, your maps more accurate, your emergency services more effective; and a million other subtle benefits that you would have difficulty quantifying.
> As such it makes sense to fund it from general treasury; and to charge taxes on everyone in proportion to the benefit they get from society ( represented as income, including capital gains ). Since public infrastructure benefits the whole of society.
Yea, duh. If you actually read my comment, there's no disagreement with this: in fact I tend to be more inclined to public funding of things like GPS and transit than most people (whether on HN or in the population at large). I was disagreeing with the contention that paying for something by taxes is the same as charging for it. The way the incentives and the burden falls is NOT the same for those two approaches. You're talking about whether or not this SHOULD be done: an entirely different discussion from the one being had on this subthread.
But the cost of the GPS system does not increase with the number of users and it has to be deployed anyway for military reasons. There's no point in charging users.
1) I intentionally broadened my point to all the technologies mentioned in the article as opposed to just GPS, which was the example you used in your comment. I figured that the broader point was the more interested and more relevant one than that of GPS alone.
2) Less importantly: GPS has characteristics like that which makes it easier to give away for free. However, something having a high fixed cost and then lower on-going cost doesn't mean "there's no point" in charging: it helps defray the initial cost. There are many things that fall into this category (like drug research).
Are you implying that GPS is used directly to track where each node is at? Or just that the ubiquity of GPS enabled devices makes it too easy for individuals to inadvertently share too much of their location?
These are very very different points, and the first one is not really technically possible since GPS is just an ultra precise timestamp broadcast, there is no two way data.
Some good observations but I'm not convinced that the focus on shareholder value is to blame otherwise we'd see non-public companies systematically outperform public ones over the medium and long term.
Also, there isn't much evidence that companies with a focus on short term financial results don't engage in long-term strategic planning. The two basically exist side-by-side.
Oh, please… No, not that what he says is entirely incorrect, but with reasoning like that we could go basically anywhere. Aplle, Google, my grandma — they all benefit from an accumulation of knowledge created by Euclid and Pythagoras, so why we all don't pay taxes to Greece? Seems unfair.
He lost me at "America’s is falling behind other countries when it comes to innovation and technology". What are you talking about? Cheers from Silicon Valley :)
Oh please, pick up a newspaper sometimes instead of getting all your news from TechCrunch. If you honestly think that the extent of cutting-edge work going on in SV is social apps, that's just because you spend your time reading about venture funding rounds instead of the actual interesting R&D going on.
High speed rail like Japan has had for 30 years would be nice. And fiber internet to every home like South Korea has. These are projects that startups, and even large corporations, can't do, but governments can.
That may be why we don't have a line connecting San Francisco and Chicago. It's no excuse for why we don't have a line connecting Boston and DC, or SF and LA.
> I keep my ears to the ground for this sort of thing, but I don't hear much about it.
I'm actually kind of shocked to hear this question. The person I was responding to originally is probably just going for the childishly rebellious "I'm gonna say something contrarian to seem like a deep thinker!!!!", but you don't seem to be saying anything of the sort.
I would be extremely surprised if you hadn't heard of any of this stuff; I think the problem is rather that your definition of what innovation is may be arbitrarily and inappropriately defined with respect to the topic of conversation.
This has been a good few years for AI and there have been some impressive advances recently in voice recognition, computer vision, language understanding, core machine learning research, etc. The AI labs at Google and Facebook alone are an important part of this ecosystem. Silicon Valley has also been producing advancements in diagnostic nanotechnology, space exploration and travel, feasible and long-range electric cars, self-driving cars, power generation and distribution systems, manufacturing efficiency, etc. There's a thriving biotechnology startup scene. Then you get down to less "sexy" (but still very important) innovation in things like datacenter design, distributed systems, software-defined networking, network protocols (like SPDY), etc. Even softer stuff like the work being done on the economics of distribution, or the efficient delivery of compute cycles is seeing a lot of advancement in the last several years, and a lot of it is centered around here.
I fully expect a response from some commenter who hasn't been able to grasp what this conversation is about to claim that a lot of that isn't "true" innovation at the kind of low level one finds in academia, but that's missing the point. It begs the question of whether companies in SV are innovative by defining innovation in for-profit companies as more or less impossible (which is, of course, nonsense). Government-funded academia is an excellent vehicle for fundamental research, just as corporations are good vehicles for the next step in the chain (and occasionally fundamental research). The funny thing is that even if you move the goalposts by restricting yourself to academic advancements, both Stanford and Berkeley are world-class research universities and parts of the SV ecosystem.
I would imagine that many of us working on interesting things are prohibited from telling you about them. No point in letting everyone taste the secret sauce.
Hmm, between the NY Times and the Mercury News the only story I see today that's not in this category is a bit in the Merc about 3D printing body parts. And Silicon Valley is only involved if you consider Stanford University to be part of it.
It sounds like you're making the claim that media coverage is a useful proxy (at all) for innovation occurring in a region. In case I'm not misunderstanding you, do you also think that the stories broadcast on CNN are a useful compilation of the most important global issues right now? I don't really know what else to say about that.
As with other people in this thread, I think your issue here is that one hears about things in their speculative research-study phase (when there's often still 95% of the work to be done for the findings to be actually used), and then lose interest and (somewhat subconsciously) stop classifying it as "innovation". You'll notice that when you do this, literally everything falls through the cracks between "vaporware" and "not interesting anymore and therefore not innovation". In a response to another commenter, I gave a more complete response (of off-the-top-of-my-head general examples): https://news.ycombinator.com/item?id=8988431
EDIT: Ah haha, I just realized that your newspaper comment was in direct response to my allusion to a newspaper. The second paragraph of my comment is still relevant though. As an example, there was a cellular matrix spray that the military was investigating for immediate application to large open wounds which had FANTASTIC potential for promoting the healing process (by sealing things up a lot more quickly without foreign materials and thus lowering chance for infection by an INCREDIBLE amount, etc). Newspapers won't give you constant updates about (e.g.) every step of the process of bringing this to market, because the only way to add new information is to go into technical detail, which will turn off tons of readers.
That doesn't prevent you from seeing the story in the newspaper during its eye-catching vaporware phase, and then following it on your own after that. (Note that even this latter step is unnecessary if you have at least a decent ballpark of what percent of things like that never end up being feasible for actual usage).
EDIT2: To be absolutely clear, I was using the spray-on skin thing as an example of how using the newspaper the way you just did is an incredibly poor way to understand what's happening in a given regional center of an industry. I wasn't implying that that example was from Silicon Valley.
Today's success stories are all about exploiting every possible customer weakness, while in the good old days it was about exploiting competitor weakness.
Whether its exploiting people's weaknesses to get them to mindlessly consume content to sell ads, or cleverly misguiding them about mortgages and student loans, or tying social standing and aspiration(in the developing world) to the latest trinket in a phone...it makes me conclude that the best way to build the next superstar company, is to find a human weakness as yet unexploited in the ever growing bountiful list that cognitive and behavioral psychology are just beginning to provide and go to town.