 Hi, my name is Hunter Hastings. Austrian principles practically applied. That's what we're gonna talk about for the next 30 minutes. We're gonna introduce a new project of the Mises Institute. I'm gonna give a quick overview of it. And our panelists here are gonna talk about how they apply Austrian principles practically. We're trying to build a bridge from Austrian theory to its application in business. So Peter Klein, you know very well, he occupies the middle of the bridge between academia and business. He consults with a lot of business companies. He's an entrepreneur himself. He advises entrepreneurs. But Greg Morin, who's a living breathing entrepreneur and Bob Luddy, who's our entrepreneur par excellence in the sense of he wrote the book The Entrepreneurial Life. He's built a huge company over 42 years of applying Austrian principles. So they're gonna talk about the real part of this. Economics for Business is a project of the Mises Institute. It's authorized by Lou and the Board. It's resourced by Jeff. You'll see the project team there. We've got a number of excellent team members. Wesley Downs is here today, as is Lena Wong, who's running our marketing along with Ricky and Clay Miller, who are not here today, but our technology geniuses. We've got an academic advisory panel that Peter sits on as well as those other great names you can see there. And we've had a ton of help from the Mises Institute, from a group we rounded up from AERC, presenters and attendees, a lot of Mises U alumni, RBG alumni, other members of the staff are working on this project. And we've got a slack group of supporters, some of you are in the audience today. So this is quite a big team that we've got on this new project. Why are we doing this? The first goal is to expand the reach of the Mises Institute and to get a greater understanding of the merits of Austrian economics. So I put two X in there, I'd be happy for that to be 10 X. So we'll take that by the number of visitors the Mises Aug site has and we need two X of that new people. Who are they? They're the business audience, people in business. Could be anybody in business, starting a business, running a business, owning a business, working in a large corporation and trying to understand entrepreneurship, a professional in law or marketing, whatever it might be. It's the business audience. So it's very expansive. And as we said, it's about applied Austrian theory. Anybody of you who listened to the podcast might have heard us talk about the Austrian school versus business school. It's a theme we've been developing and it's the idea that business school is full of fallacies, but there are more insights in the Austrian school. And we're determined users of the word Austrian. We're trying to popularize that and get people to understand what Austrian is. Which is a bit of an uphill climb because when you Google it, you get a lot of Austrian airlines and holidays and the Alps and things like that. So we're building, which I'm gonna show you in just a second, a platform. So Amazon is a platform, we're a platform. That means you've got at least two sides. On one side, we've got entrepreneurs or the business audience looking for knowledge, looking for tools and looking for a community that they can collaborate with. On the other side, we've got knowledge providers, the people who are providing the content and the output and the advice and so on like that. We'll make it trustworthy through the right authorities and editors and mentors, including the gentlemen here. Sometime in the future, there might be a service exchange on this platform where members of the Muses Institute of Practice Law, for example, might offer their services to other members who are marketers and vice versa and so on like that. But that's in the future. So at econforbusiness.com, we'll establish that URL. If you find us on the web, you will be able to, we'll ask you for a quick registration, which is just to start to build a profile because the artificial intelligence in our platform is trying to get the right content to you as the person who uses it. So I don't have to fill out the form today. It'll take you to what we call the entrepreneurial GPS. So this is a metaphor. The metaphor is that it's a journey. It's a journey of a lifetime. It's a journey to greater mastery. It's a journey to greater success. It's not a linear journey, but you might stop at all of these places. You might be recursive and come back from time to time. But basically, you start at imagination. Peter Klein always tells us there are no objective opportunities out there. It's just the imagination of the entrepreneur. So we'll help with that. You then go to design, then you've got to assemble the resources. You take it to market. One of the big insights of Austrian economics is that value is an experience. We're stressing that very much, an experience in the mind of the consumer, the customer, that subjective value. So it'll be a customer experience development module. And then your business is launched. You've got to manage it. You've got to grow it. And we may even have what we call disposition. If you want to sell it at the end, then we'll help you with that as well. So you can customize your own GPS. Again, we want to know how to help you best. So if you customize it, you'll get the content that you need. You can select a template, and then you'll find yourself at a dashboard. So this particular dashboard just has a lot of articles on the left. I'll explain the right-hand side in a second. We might have some special groups like the Free Market at Medical Association. I want to help understand how to bring entrepreneurship. We conceived something we call the Austrian business model. So you might want to learn about that. We think of business as an ecosystem. So you might want to understand ecosystem management and so on and so on and so on. We might even have financing. So one of our supporters, Dusty Wunderlich, has produced a program about how to get financing from entrepreneurs, fintech as they call it these days. So we've got a lot of content. You can organize the content that you want. The more that you select, the more similar content will come to you. Then in this right-hand bar, we've got a number of things. One is a toolkit. So we said part of application of Austrian principles is tools. So we'll give you tools to help you do that. So fundamental to the Austrian economics is the means and chain. How the hell do you use that in business? Well, here's how you do it. He's a tool of five steps to take you through. How do I identify the highest values that your consumer is pursuing? We talk about opportunity costs. Bob Bloody talks about this a lot, how it helps them in business. What is opportunity cost? Well, you can calculate it. He's an opportunity cost calculator. Now, most of these tools so far are textual or visual, but eventually we're able to digitize them. You can put data in here and it will give you an output. So this is another Peter Klein special. You, Austrians are always talking about empathy that entrepreneurs have empathy. What is that? Well, here's how to collect the information you need for your empathic diagnosis and here's what to do with it. So we have a lot of tools that you can use like that. And then we have another element we call knowledge capsules. So we've got this very dense and tremendously continuous set of Austrian knowledge, but how do you make it consumable in today's day and age? So we have this thing we call the knowledge capsule. We kind of borrowed it from Blinkist, but it's a 10 bullet point summary. So here we're talking about value. There's an introductory paragraph. Why should you know this? What's in it for me? And then we talk about subjective value. We talk about only consumers create value. Here's what the entrepreneur does, et cetera, et cetera. Now this could just as well be an animated video. It could be a virtual presenter. There are many ways to do this. And then at the bottom, there's all of these other links if you want to get more information about that particular topic. So that's our compressed module. And then if you want to go deeper and get into a book, you can go to the Muses Bookstore and get the relevant book. We only seem to have books by Peter J. Klein. You know, Peter J. Klein. Yeah, right. Now, we are going to build some full-on courses. And we have one in the bag already, which we call the Value Learning Process. It's by Dr. Packard from University of Nevada, Reno. It's absolutely original. It's his own thesis about value as a process. And again, that's got 11 downloadable tools that you can take from the course and apply it in your own business. We've got Dr. Rapp, who is going to give us a course on investment theory for entrepreneurs. So again, applying Austrian principles in very specific areas. And then the third element that we want to talk about is the community element. This is not very fully built yet, but the idea is that if we get a few million entrepreneurs here, that they can come into the site, they can ask each other questions. Hey, I've got this problem. What's the answer to it? You've got experience. Tell me how you've done it. Or I need something. I need a patent attorney. Has anyone had a good one? You can recommend to each other and so on like that. So we've got this idea of community. Right now it's Q and A. But eventually we want to see if we can build in a mentoring capability. What if you could reserve half an hour of Greg Morin's or Bob Lutty's time? Well, you got to ask them a good question. You got to put it on the calendar and they'll do some mentoring for you. I'm not volunteering you guys and just talking about the principle here. So the community is there and the service exchange is in our future. So we've got content. We've got tools and we've got community and we're looking to build those as robustly as we can. So I just want to talk about the greatest challenge which is content production. It's Mises.org is the greatest source of Austrian and libertarian literature and content that you can find anywhere on the planet. It's been built up over the years and years and years, but now it's definitive. We need to get there. We need a lot of help with content production. It's a different tone. It's a different style maybe, but we're looking to build up our production side of content. So with that introduction, let me turn to the panel. I'd like to ask Peter Klein first from the middle of the bridge. You talk to a lot of entrepreneurs. You also teach the theory, Peter. What do you see as the practical challenges that we've got to get over here and what's the great victory from your perspective? Well, thank you, Hunter for the question and thank you for leading this initiative. I'm extremely excited about it, not because it has a lot of Peter Klein books on the side, that's a side benefit, but partly because as most of you know, the Austrian tradition, the Austrian School of Economics, which we believe offers the most complete, accurate and useful way of thinking about the economy, thinking about broader society, is not the dominant viewpoint within the academy or within government, among the media and so forth. And we've been sort of fighting a battle. We Austrian economists have been fighting for many, many decades to develop these theories, to build out these theories, to extend the great insights of Mises and Rothbard and others, but fighting sort of an uphill battle, especially within the universities where other perspectives and economics are much more dominant. Well, at the same time, I think there are opportunities for Austrian economics to grow and flourish and attract more adherents and have more influence in other parts of society beyond the economics department at the university, right? So I have spent most of my career teaching in business schools, and so I teach undergraduate business students and MBA students and teaching a number of executive education programs where the participants are looking for obviously a theoretical understanding of how the world works, but they're looking for practical insight. They're looking for knowledge that they can apply and use to make a difference in their businesses and their lives and so forth. These audiences are very receptive to Austrian economics. They're very interested in the Austrian approach and they find Austrian economics much more practical and useful on average than what they get from mathematical neoclassical economics or Keynesian macroeconomics or what have you. And moreover, unlike economics departments, which are very sort of territorial and Keynesian economists are very worried about losing their status in the hierarchy and they feel threatened by Austrians and so forth. Many academics, professors, and practitioners who teach in business and management and even in public policy, they're less concerned about those territorial disputes. They're not threatened by Austrians or by Austrian economists. So earlier Hunter had a list of some of the advisors, some of the professors who are advising this platform and most of them are teaching in business schools. They're teaching courses in entrepreneurship or strategic management or human resources or finance and they're using Austrian insights without getting pushed back, right? So I think there's an opportunity for us to market our ideas and develop our ideas within the context of business and its applications. As many of you know, Karl Manger, the great founder of the Austrian School of Economics before he came a professor, before he wrote his great treatise on the principles of economics in 1871 was a journalist. His profession was financial market journalism, right? He was reporting on industrial trends and price movements in different sectors of the economy within the Austro-Hungarian empire. And he developed his pioneering theories of marginal utility and pricing to understand what was going on in the world around him. It wasn't just an intellectual puzzle for Karl Manger. It was an attempt to make sense of the world. Ludwig von Mises, I'm sure you know, was only a part-time theoretician throughout almost his entire career. It wasn't until Mises was at a very mature age that he had a full-time professorial position. He spent most of his career as a bureaucrat within the government of the city of Vienna as sort of the chief economic advisor in Vienna. And so his day job was doing practical analysis of what was going on in industry in Vienna and elsewhere and what was the impact of government policy on the economy. And then nights and weekends, he was writing socialism and liberalism and human action that we could all have those kind of mental powers, right? So the point is Austrian economics was sort of birthed in practical considerations in the milieu of practical analysis of business trends and entrepreneurship and public policy. Austrian economics is also the only kind of school of thought in economics that still places the entrepreneur at the very heart and center of its analysis of markets and the economy, which other approaches in economics don't do. So when you talk to real entrepreneurs like these guys, you know, when they hear the Austrian understanding of how a market works and how industries are created and so forth, their eyes light up. Now these two are also great scholars who have read most of the, you know, that they know Mises and Rothbard's works and so forth, but even people who haven't thought about it at that level when you articulate the Austrian understanding of the entrepreneurial market system, of course it makes complete sense. Unlike what they heard in their econ classes back when they were in school, which didn't make sense. I've sort of lost the thread of your question, Hunter. It's sort of rambling here, but what excites me about this platform is, you know, it's multi-dimensional. It provides outputs that are very useful to business practitioners. It helps to advertise and publicize the Mises Institute and attract more people into our orbit. But it also, you know, provides chances for us to develop the Austrian tradition and develop Austrian doctrine better within the context of practical business problems. Good. So the other end of the bridge is the actual application. I'm gonna jump to Bob at the end, Greg, if you don't mind. And Bob tells me he's been applying these principles and he's grown a fabulous business. He's a leader in his market. He's got incredible strategic capabilities that he's expressed in innovation and so on. So Bob, just tell us a little bit about how you've applied Austrian economics and how you teach it to your managers and your workforce. Yeah, I do teach it to every new engineer, every new person, company, and company. We do teach them Austrian economics and they need to embrace it to survive at Captivira. I'm gonna, in a short story, wrap in Say's law, opportunity cost, consumer choice, comparative advantage, and price. Some of you know Dr. William Peterson, student and colleague of Mises was my mentor, teacher, professor. And one of the things he said was that if he had to get economics down to one word, it would be price. So the story, if you look at any industry today, whether it's education, government, manufacturing, they tend to become more like over time. And if you violate any of the principles within an industry, you are, among other things, a rogue, stupid failure to understand the industry, ditto, ditto, ditto. You're a complete outcast within society, within the industry. Even within our own company, I've had people come to me and said, Bob, you don't understand this industry and we have to bring you along, we have to help you to understand it better. I said, well, I think I understand it, but I'm creating a new industry. So this is directly from Peterson. You can go out and compete in the market for a period of time, but there's other competitors in the market. What the real entrepreneur does is they anticipate the future market. So a brief story on that, circa 1988, the price of stainless steel, which was our prime component that we use raw material, was beginning to rise. And it was up about 10%, I thought it might go up another 10, turned out it actually went up about 40, at least for a period of time. That's a big increase in your raw material. So what the manufacturers did, they raised the price. So I said, well, number one, I'm not going to raise the price because we serve the user. That's our theme. So I began to think about lightweighting. And at that time, they used 16 and 18 gauge, primarily 16 gauge metal, weighs two and a half pounds of square foot. It's very heavy. So we switched the standard from 16, 18 to 18, 20 and translating that, that means we saved 20% of the tonnage or 20% of the cost overnight. And we actually made a better product because it's not that easy to use 16 gauge metal. And we've got this project done in two months. We didn't tell anybody, because we knew if you told anybody in the company, they would be so freaked out, they might just walk out the door. And those things have occurred over the years. So I got to thinking, we just pulled that off so beautifully. There's got to be something else we could do. So I began to question the type of metal. So within the food service industry, there's only one type of metal used primarily, 304 stainless steel. And it's been used for since the beginning of time. So to show you how simple things can be because entrepreneurs don't have to be brilliant. I called up the steel company and I said, if I was going to start the kitchen ventilation industry today, I'm going to know the cheapest metal I can use. That's most cost effective, most cost effective that'll be suitable over a long period of time. They said, well, call you in a week. So they went to their chemist and they said, well, there's a metal called 430. It's primarily used heavily used in Europe, almost not made in the US, but it's made by a German company, Methanox down in Mexico. So we immediately ordered samples. It's complex to switch a metal type because it bends different. Everything's different about it and it's not accepted in the marketplace. So we began our tests and after about two months, I said, we're moving on this thing. We're going to switch. Now we're going to experience a 40% drop in material costs. And you have to put on top that we didn't actually achieve 40% because price went up. So maybe net net we achieved a 10 or 15% price reduction so we could maintain the same price and we can make higher profit. Within the industry, this was so radical that the entire industry moved against Captivere. We were an $8 million, nothing company. Everybody thought we were going to go bankrupt regardless of these changes we made. And so they decided as an industry, we'll just freeze out Captivere. We'll convince the engineers, these guys are rogue and then they'll go away and we'll go back to what we're doing. Well, fast forward to 2003. So approximately 15 years later, Captivere went from $8 million to $100 million and we basically dominated the industry pushing toward 50% of US market share. I'll give you a second version of that. So we continued to gain market share. We continued to integrate. In 2015, our chief engineer who came with me out of College Park, Maryland in 99, now 44 years old, I said, let's just kick everybody out of the building. So if there's a commercial restaurant, there's nobody left but Captivere. And he says, we're gonna do that. So if I went to our sales people and said, we're kicking train out, we're kicking our carrier, we're kicking out all these famous names, they would say that's impossible. We're in phase one of doing that right now. So the message is, think to the future, be bold and don't be afraid to exist within the industry. And if you're wrong, you could be a major loser, that's acknowledged. But if you're right, you're a major winner and that's what entrepreneurs do. Thanks Bob. So as Bob said, if we can teach people properly on the economics for business platform, we can teach them, say his law that what he did in production created its demand. We can teach the value network which is the opposite of competition. It's serving customers and bringing them value. We can talk about the opportunity cost of doing X and not Y, but lots of ways we can put a foundation under that action. Greg, you and I were talking about the way the market is moving based on changing consumer behaviors yesterday. Maybe that's the place to start, but give us your perception as a entrepreneur about how some of the Austrian principles have helped you. Thank you, Hunter. Yeah, we've seen what we were talking about yesterday was with the pandemic, the way some of the trends have changed in my own industry. And my company's a secant laboratory and we manufacture chemical products for aquariums. And traditionally, basically, well, let's get back to the beginning. We've been in business for 40 years and it was a family business. My father started and we continue to grow over the years. But over that whole time span, we've always seen this trend where in the summer months our sales would dip down and in the winter, they would rise up and it always seemed a bit inexplicable. But after many, many years of that, we finally figured out people are going out to the beach, they're going to vacation this summer, and that's why we see that dip. And then in the winter, they're at home, they're nothing else to do, so they start focusing on their aquarium. So during this pandemic, for us, oddly enough, it's been a very positive trend because everyone's been locked up in their homes and so they're very interested in starting a new aquarium or focusing on that. So that really kind of demonstrates that there is consumer demand that's driven by their desire for filling their specific needs, in this case, maintaining an aquarium, but there are exogenous factors as well that kind of influence that. So something as simple as their choices whether they're going to go on vacation or they're going to stay at home and have an impact. So that kind of shows you how consumer preference can really drive a market. And it's the role of the entrepreneur to identify where that trend might be. And sometimes you guess right and sometimes you guess wrong. And I kind of see the role of the entrepreneur is twofold. One is as a, it's mainly a service to mankind. You're serving your fellow man. So we all know that very thank you for your service but that's something that everyone should say to every business that they encounter. We've really felt that during these lockdowns. We've tried to support a lot of more businesses, restaurants that we don't usually go to because we really value it. And it's when you realize that that's going to be taken away you kind of, it brings me to start contrast what people are providing as entrepreneurs. So the other side of that is not only service but solving problems. And that's probably one of the biggest drivers for entrepreneurship that I've seen. It was the impetus for the start of our company. My father basically was looking for a way to solve a specific problem. He was a hobbyist, he'd buy these expensive fish and then they would die. So after you start spending $100 on a fish every other month and they dying, you realize this is a problem. And the existing products that were out there did not solve the problem. They were basically kind of me to products. Well, this will do this, but it really doesn't work. And so he used his knowledge that you have to have that capital structure and that could be human capital structure. So you have your own knowledge of whatever area you're interested in and you can apply that to solving problems that you're seeing. And then when you solve that problem you realize other people are going to be interested in this. I think this is going to resonate with them. And this is something Tom Woods touches on quite a bit trying to monetize something, anything. And the biggest challenge that has always been what is it? What is your niche? Well, to figure out what that niche is look inside towards yourself. Look at what is your experience and what problems do you see that you encountered like thinking I wish somebody would figure this out. Well, you could be that somebody. You can figure that out. And I think that this program to the extent that we can kind of provide those tools to inform people on that insight that you have the capacity to solve these problems. You just have to realize that that's the most efficacious way to serve your fellow man is to draw on your own experience and to move forward in an entrepreneurial role. And then once you've gotten over that hurdle there are many other steps in that process as well. That's a very long chain of sequenced events from figuring out what you're going to sell how you're going to do it. Then just the mechanics of putting it together making people aware of it. That's the other huge challenge marketing. That's an enormous challenge because we've been in the market ourselves for 40 years but we've tried to break into other similar markets pond market, small animal bird. So it seemed like a natural sort of extension but it's a completely different market. You can't just walk in there overnight and suddenly you're at the top. So it is a long steady process but I think that making these tools and these insights available to people will help help people to avoid a lot of the pitfalls that entrepreneurs run into. Thanks Greg. So it's 12.01, I'm going to ask you for one more minute. We can build a whole new business paradigm around Austrian economics. So libertarianism is a new paradigm for how you live in this world. The Austrian paradigm for business can be entirely different. Built on subjectivism which if people understand that both the subjectivism of the customer and the subjectivism of the entrepreneur based on what we call the value network how you create value and customers experience it based on the clarity of Austrian thinking which is much more analytical what Per Ballin calls getting down to the nitty gritty of how markets really work so you can run a better business as an entrepreneur. So we got quite an ambition to create a new business paradigm based on Austrianism. We have a long way to go but we're getting started. We're going to invite some people to be beta users on our site which just means bang around on it and tell us what doesn't work or what you might add or what might be better. So you'll be getting details about that and as we build up the content we'll look to a major launch maybe sometime in the first quarter of next year where we start to try and get those millions of users. So thank you very much.