 All right, so time for my first session. I'm going to talk about the Austrian economics in business. It's not entirely clear what that means. And some people have asked me about that, too. And it's a little vague in Austrian economics how you use that in a business, or is it an Austrian's view of a business? And the answer is yes. So the important thing is first, if you don't follow me on Twitter, that's the handle. OK. So when we're talking about business, what do we actually mean? I mean, one way of putting it is this. Entrepreneurs create business firms to produce new goods, anticipating turn profits by serving consumers better than other entrepreneurs. What do you think of this? I put the title there, Curious Perspective. How many of you agree that this is a little weird? Thanks, Peter. Anton, great. Everything I say? There's nothing really weird about this, right? It's pretty obvious. That's what we would expect as Austrians, true. Yeah, and it is. I mean, this is basically the Austrian view. So Austrians, we assert that the business firm exists within, and it's part of the market process. There's something dynamic going on. Things are moving all the time. It's heading somewhere. It's changing, things like that. That's the context in which you run a business, in which you start the business, in which you grow the business, and in which you might fail as a business man, too. We see the business as something having a function in production. It organizes production one way or the other. This seems pretty obvious. How many, except for Peter, disagree? OK, good. So we're done. This is how mainstream economists view the business firm. So it's a production function where you combine capital and labor. And those are the inputs. And then out comes goods, spreading out. And your income is simply the price times the quantity, which is equal to the cost of those factors. This is not very helpful when you're running a business. This is in general equilibrium, where cost and revenues are exactly the same, profits are zero. So why would you start a business? And you're not actually doing anything. Everybody else is doing exactly the same thing as you are doing. This doesn't really tell us much about the economy at all. And this is exactly the problem. Economics is not very useful in business. In business practice, you can't really use economics. I'm talking not about Austrian economics, but mainstream economics, of course. Why? Well, because in economics, in equilibrium, there's no entrepreneur. There's no management. There's no heterogeneity. There's no uncertainty. There's no organization, really. There's no differentiation, because the firms are doing the same things. There's no innovation, because that's going to screw up our model. And there are no profits. All of these are wrong. When you're looking at the economy the way the economy actually works, none of this is relevant. So us, as Austrians, we have something to contribute, or at least so I will argue, to how we can understand the economy and how we run businesses. Because any businessman will tell you that, what is this BS? This is not helpful at all. So if we move them from economics into business administration, so move from the economics department to the business school, if you will, on a college campus, what happens? Well, we have these different departments doing different things, but they all sort of recognize that, well, what entrepreneurs do is they start firms. Then the manager is sort of the guy who runs the firm, or it could be the gal. And then firms are in the business of seeking valuable, unique resources so that they get at the upper hand and can make profits. They develop capabilities and that sort of thing. And they seek to differentiate so that they can earn above normal profits. That seems a little more relevant, doesn't it? A little more practice-oriented, doesn't it? So you have different disciplines doing different things. So in entrepreneurship, where I teach and Peter teaches, we talk about how to start a firm. We talk about who starts the firm, when and why you start the firm. We talk about not economics at all. Because in economics, there is no entrepreneur. The entrepreneur has been thrown out of economics as a framework. Then you have a department or a group of strategy professors that talk about different things. They don't talk about starting firms. They talk about running a firm, usually a big firm. They're talking about economics turned upside down. So they're saying, well, if there is an inefficiency, that means that there are profits. How can my firm be the one making those profits? That's practically strategy. So it's economics flipped upside down. Then in the management department, we talk about how we direct human resources, how we organize production, and we talk about psychology, motivation, and the organizational structure, and so forth. And of course, in managerial economics, people would teach you that you need to set price equal to marginal cost, and then you maximize, and then everything's fine. Not very helpful. So where do Austrians stand compared to this? Because our competitors here in business is not only economics, because economics is completely irrelevant. Our competitors are these departments, entrepreneurship, strategy management, and well, not managerial economics. So where do we stand? Well, we've been talking about business, and we've been talking about entrepreneurship since day one. This is from Maynard's principles. He's talking about entrepreneurial activity. And he says, well, that includes obtaining information about the economic situation, economic calculation, the act of will to produce and produce certain goods, like put these factors together and produce whatever goods you're aiming for, the supervision of the process. Suddenly, this sounds a whole lot more relevant. This sounds almost like what a businessman would do. And this is day one. This is from Maynard. Now, so where do Austrians stand today then? Because obviously, we've gone a little further than this. Well, we know from Mises and others that entrepreneurship is what drives the market process. And as Dr. Klein mentioned, we see the market process as a rivalrous process. It's not a static general equilibrium system. It's a process that unfolds, that's finding new ways and new directions. The whole market process, in a sense, pivots back and forth, depending on innovative entrepreneurs. We have all these entrepreneurs trying to find opportunities for how to satisfy people, satisfy consumers in better ways, how to satisfy their wants, because then they might be willing to pay us more. We know that goods are defined by satisfying people's wants. If we produce something that doesn't satisfy anybody's wants, it's not a good. It's just waste. This is something that we did for, well, in retrospect, for fun maybe. But if we did it to make a profit, well, that's a complete loss. We know that production precedes consumption. This might sound a little obvious. Well, it's not obvious if you're a Keynesian, because then you think it's the other way around. If you start consuming something, production will fall pretty much. So when you realize these things, what then are the main issues in business and for business? If you have this Austrian outlook on how the economy functions and how it is this dynamic process that is entrepreneurially driven and that is innovative, that is seeking new ways, that is responding to crisis and forces, of course, but it's also solving new problems, what are the main issues for a business firm, for the business itself? Well, first of all, you produce goods to facilitate consumption. Because when you have produced a good, it is possible to consume it. It's possible for consumers to choose to buy your good when you have produced it, but not before, which is something any entrepreneur knows very well. Now, we profit from facilitating value, not from actually producing goods, but producing goods that satisfy someone's actual wants. And that's an important distinction. So in a sense, it's not really this. This is free market economics, at least according to the cartoonists, where, hey, by exchange, you can satisfy each other better or you can satisfy yourself better. Well, what is missing here? This is not production. This is just trade of what already exists. But allocation of those things that already exist, those goods that have already been produced. Sure, it's a stick and rock, but maybe this stick was growing from a tree or something, so you had to produce it first. Maybe you had to find the rock, right? And if we're talking about advanced goods, then you have to produce those first before you can trade them. You don't trade things that don't exist yet, okay? So what business comes down to from an Austrian perspective is really this, three words. That's all you need to know, so I could stop here, okay? Now, what are we saying here? What we're saying is that, okay, this is how it should be when things work out, when I start a business and it works well. Why? Because the value is higher than the price that the consumer is willing to buy it. The consumer is better off buying my product. And for me as an entrepreneur, I sell it at a price that is higher than my cost, so I make money as well. No contradictions involved, right? As Professor Salerno discussed yesterday, the problem here, of course, is that production goes one direction and valuation the other way. So as an entrepreneur, when you start producing, you can't really know if it's valuable to consumers when you start producing it. The outcome is uncertain, but it has to be uncertain because production precedes consumption, okay? Valuation happens after you produce the whole thing. And actually, it even happens after you've placed the sale because the valuation of the good is in its use. So the consumer is valuing the experience they get from using your good, which is after they've already bought it. They buy it based off of the expectation, right? So what we have here then is two kinds of profits. So the profit for the entrepreneur is in objective terms and money terms is the price minus the cost for the good sold. For the consumer, it's in subjective terms, in satisfactions between the value, the experience they get from using the product and the price they pay, which to them, of course, is what else could they get for the product? What do they think they're missing? What's the opportunity cost? Okay, and in order to make this happen, then someone needs to put this in place. Someone needs to make this happen. And who is that? The entrepreneur. Now to discuss entrepreneurship then, we have entrepreneurship in several different scopes, you could say. So entrepreneurship in the broadest sense, this is from Mises in human action, entrepreneurship in the broadest sense is simply uncertainty bearing. And we've talked about this yesterday. How it's the uncertainty bearing aspect of any action, that's entrepreneurship. That's not super helpful when you're running a business. Like it doesn't really limit the analysis at all. So if you think about it in a little more narrow sense as an entrepreneur instead, well then entrepreneurship, still sort of broadly speaking, but any entrepreneurship is being a speculator on what consumers will value. Note the word will. It's not what consumers value, it's what they will value because production precedes consumption. So I have to produce now hoping to satisfy value in the future. Of course, we have the division of intellectual labor as Professor Salerno talked about earlier today, where many entrepreneurs are competing, they're trying to figure out how to best serve consumers in the future and thereby they're bidding for these resources so you get prices and that lessens the uncertainty. That's what those prices do because you know what the costs are right now when you start. Okay, now here's the case though. There's an even narrower sense of entrepreneurship. The promoter, which Mises talks about, which is really the most important type of entrepreneur in the marketplace, because the promoter is the one who pivots the whole market process, who disrupts the market, who innovates, who creates new things and completely changes consumer behavior and completely wipes out whole industries perhaps. This entrepreneur promoter is the driving force of the economy, the true driving force of the economy. It's not about just trading, exchanging, arbitraging. It's not about allocating resources. It's about creating new things. It's about creating new types of value to satisfy consumers in a new way in the future. Okay, and to show that I'm not just making this stuff up, I'm gonna quote directly from Mises here about the entrepreneur promoter. He says that it's the driving force of the market. The element tending towards unceasing innovation and improvement, that's the promoter. That's what the promoter does. Sounds pretty cool, right? We can all sort of picture a Elon Musk or Steve Jobs or Henry Ford or someone like that, right? Those are the hero entrepreneurs. The promoters are those who are especially eager to profit from adjusting production to the expected changes in conditions. Those who have more initiative, right, they don't just follow, they don't just respond to prices. They have the initiative. They're more venturesome. They take on more risk, they try new things. They have a quicker eye than the crowd. Well, okay. They push and promote, and they are the pioneers of economic development. Really cool guys, right? Superheroes of the marketplace, okay? So, the entrepreneur promoter is very important to understand and to discuss and to think about because the entrepreneur promoter is really causing much of the uncertainty that other entrepreneurs have to bear, too. If you think about it, entrepreneurs overall, they create the prices that are used in economic calculation. We already said that lessens the uncertainty. Well, all it takes is one damn entrepreneur promoter with one disruptive good in the, pfft, that goes to your plans, right? Obviously, all the prices were wrong, whoops, right? So, you might be wiped out. So, the promoter increases the uncertainty for the other entrepreneurs, and it sort of forces you to become a promoter, as well. But again, in Mrs's words, entrepreneur promoter is the unceasing innovation and improvement, that's what the promoter does. There are, so sorry, the pioneers of the economic improvement. They make the great adjustments, and I don't mean great as in whoo, I mean great as in big. Right, well, Mrs means, right? Those are the big shifts creating new things, completely changing our behavior. This is very different from other conceptions of entrepreneurship, like the arbitrage and the alertness of Kersner and the discovery that Hayek is talking about, responding to prices and so forth. Now, if you read Hayek, 1945, the use of knowledge in society, entrepreneurs are there to just, oops, prices go up and then they look somewhere else and they just respond to how prices change, those are not promoters. Promoters create tomorrow. They're in the business of changing the world. That's what they do, okay? Now, the problem here, of course, is that Mrs claims that you cannot really define the promoter praxeologically. He says that this is an empirical observation that we all know that it's really important, but we can't really go there theoretically. Okay, well, that's a bummer. Here we are, Austrians, saying that this is super cool. This is really important. This is, everybody, this is the shit. And then there's Mises saying, yeah, well, we can't really go there. All that sucks. So I've been thinking about this and I think we can go there. So I published a paper last year showing how we can go there simply by saying that Mises was using the evenly rotating economy to define entrepreneurship. Well, the evenly rotating economy doesn't really have any promoters, right? So obviously you can't explain who the promoter is using the evenly rotating economy as a lens or framework or a method. But if you use a different framework, if you use a different imaginary construction, as he calls it, you can separate the promoter from other entrepreneurs. So if you're interested in that, that's the paper and that's the link. Okay, so what are some examples of the problems that we're dealing with here as promoters? Well, here are two guys in black and white. The first one is Henry Ford and this quote is, I love this quote and it's not because it's accurate, because it's not. Because he apparently never actually said this but it's a great quote. So what he supposedly said or didn't say is that if I had asked people what they wanted, they would have said faster horses. This is the problem that entrepreneurs are dealing with when they're launching new products because consumers don't know, right? Consumers don't dream about things and they go, oh, I hope an entrepreneur would produce this thing so I could consume it. That's not what happens. We respond to what is being released and what is being offered to us in stores and what we see in marketing and so forth. And we go, oh, that's not a bad idea. The entrepreneurs are convincing us that this would be awesome. If it's a piece of clothing, this would look awesome on you or this would make your life easier or this would make you really cool and popular among the kids or whatever. All of these things, right? That's what marketers are doing and they can't sell us a lie because then when we use it we go, this sucks and then they can't sell again but they need to figure out how to speak to us through the goods, right? Had Ford actually asked the customers, what do you want? They would have said faster horses or horses that don't poop in the streets or whatever it is, right? They would have used what they have and what they know and they would have taken it a step further but they wouldn't have said, oh yeah, a horseless cart, a horseless carriage. They wouldn't have said that because it was not really in their imagination, right? But Henry Ford imagined that this is something that they would actually enjoy quite a bit. So he said, I'm gonna freakin' do it. And Steve Jobs, much later entrepreneur, he said something similar, right? With the iPhone, a sucky phone that you couldn't place a phone call on the version one, and it was huge and frankly, it sucked as a phone. But he figured, hmm, this would actually be something that people might enjoy and today we all have smartphones. It changed things completely, right? How did he do it? Did he have like a group of people and saying, hey, what types of innovations would you like to buy in the future? No, of course not. And he even says so, right? He says that it's really hard to design products by focus groups. A lot of times people don't know what they want until you show it to them and that's true. It's not until you actually have the good in your hand that you can see that, ooh, this is actually pretty damn cool. I can use this or this would make me look good or whatever, right? But it's not until then, even if you get like a picture saying that I'm thinking of producing this good, what do you think? Hmm, it's not the same, right? So you can't really imagine things until you have a big chunk of that imagination in your hand, okay? So the entrepreneurial production that happens according to Austrian economics is all of this stuff, right? We need entrepreneurial imagination. We need these people thinking about new things to produce, thinking about new ways of making our lives easier, more convenient, any value term that you might like. It's necessarily a speculative investment because they can't know if people will actually accept it. They can't know if you will want it. They can't know if you will value it. And it's always about uncertain market conditions because in the future marketplace where they release the product, what will it look like today or will it look in some other way? You don't know. If there's just one other disruptive entrepreneur, it might look completely different, right? So the future market conditions are necessarily unknown and what they need to do is try to change the consumer's value calculus. It sounds like a weird thing to say, but that is actually what consumers are doing. What we talked about just a minute ago is really this picture. What do consumers do when they value things, when they choose between products? Well, the problem for the business is this what my wife calls the onion model. I don't call it that. So when they value a product, one, the product you're offering, well, I say, okay, yeah, this has to use value. I could use this. That's one. Two is, well, I could use this for a certain want, right? But there are other things I could use to satisfy the same want. Is this actually what I want? Or are the others doing a just as good job or maybe a better job, because then I'm not gonna use this product, right? Think of different types of toothpaste or different types of clothing or anything. They're basically substitutes, right? They satisfy the same want. And then the third layer is, well, do I wanna satisfy this one? Because this is this other good over here that satisfies another want that I have that would make me even better off, but in a completely different way. That's also relevant, because we don't have an abundance of cash. Only the Fed has that. So we wanna use our money in a good way, right? And then, of course, we also have the option of saying, I'm not gonna buy anything today, because I think tomorrow I'm gonna have some really good stuff, right? Or maybe I'm not, I don't feel like satisfying my wants today, which would be a weird thing to say. But as a business, you have to compete with all these four, right? Your product number one, you have to satisfy that want better than other products. You have to satisfy that want in such a way that other wants are not as interesting anymore. And you have to satisfy that want now in a way that the consumer does no longer, it's not really interested in satisfying wants in the future instead. That's how you need to position your good in order to place a sale. In order for that, what we had before, value to be higher than the price they pay, because that's what this means. And then you have to figure out how to keep your costs lower than the price that you think consumers are willing to pay for your product. Okay, so how does this happen? Well, in the marketplace overall, we already know, and professors at Lerner taught us that prices help entrepreneurs with economic calculation. Well, there's no economic calculation like this. Within the firm, you're not figuring out, oh, this guy is this effective and this guy is that effective. And then this machine is super efficient because you don't have market prices. You don't have a direct valuation by the market of these things. Not within the firm. You have of the firm as a whole. So you can tell, oh, this firm is making a profit. Okay, good investment. You can't say, oh, this guy over here, Eric, he made the profit because there's no way I would tell it because Eric is just part of the machinery in the firm. Okay, so what is the firm then? How do we view the firm as Austrians? Well, the firm is whatever the entrepreneur creates in order to produce the good that they imagine will satisfy consumers once. Okay, that's the entrepreneur's role in the economy. They're establishing these new lines of production, this production of new types of goods, then they hire managers because within the firm, you need someone who can go through and maximize operations. Make sure you have the right people hired, make sure that the process is streamlined, make sure you use the right materials and so forth. That's not really the entrepreneur's business. The entrepreneur has a function in the marketplace by establishing and pulling the plugin on lines of production. The manager is completely within the firm and Misa says so too in Human Action. He says that the manager is the junior partner of the entrepreneur. The entrepreneur hires the manager. The problem here for socialists is that they don't really have an entrepreneur. They think of the whole economy in terms of management. So they have these lines of production and all these production facilities and they go, let's manage this stuff. Yeah, and you can probably do that because you already have these lines of production. The real problem is what new lines of production should we have? What new types of goods should be produced for future consumers? Well, that's not a management issue. That's an issue of speculation and imagination. That's not a matter of entrepreneurship. You don't have a whole lot of entrepreneurship in North Korea or in the Soviet Union. Now, this is an opportunity for some of us in academia because as I said, the relationship between the entrepreneur and the manager, well, you can make this into an opportunity for yourself. So this is, I write for Entrepreneur Magazine and this is one of the recent articles. I basically just, well, I copy Mises pretty much, write an article. So here I am teaching entrepreneurs that you're not managers and the manager is not you. And there's a difference between these roles, right? So we can, as Austrians, help practitioners, entrepreneurs, and business people using, in this case, simply Mises, human action. Not by telling them, here, read human action. That's not gonna help them, but by translating it in this sort of simple sense. Okay, so one way of conceptualizing the firm, as I did in my book, The Problem Production, which is downstairs, is to see the firm as a new type of production that the market can't really produce on its own, okay? So you need someone to come in with that imagination and create this new type of production process and make sure not only that the pieces fit, but also create those pieces, educate the workers, produce those machines and put everything in order and then bear the risk of the whole venture, okay? The market can produce and coordinate a lot of things through simple exchange and prices, but you can't price the internals of an imagined solution, not until after the fact, but that's way after and you have to do something first. So that's how I conceive of the firm. Okay, so what does this mean then in terms of how you run a business as an Austrian? Because that's pretty interesting, right? If we have something to say, then we should be able to tell business people how to run a business even better than they're already doing, because our theory is not simply, yeah, this is how it works and that's it, but rather this is how the economy actually works and if you want to exploit this, if you want to be profitable, this is how you should think about it, okay? Well, first of all, everything begins and ends with the consumer. That's where the value is. And production precedes consumption, which that's where the problem is, okay? So the consumer is sovereign, that's what I said, you had to produce the product, offer it to the consumer and the consumer goes, eh. Well, then you're screwed. So you need to figure out what the consumer actually wants or the consumer says, ooh, cool, give me that. And maybe they buy everything you produced in half an hour and you go, crap, I should have known better. I should have figured out that they valued it so much that I should have sold it at a higher price, right? So basically you gave away a lot of profit. That's an idiot entrepreneur, right? Or at least you could have done a whole lot better, okay? You have to realize that the value of the product is not the product itself. It's what the product brings to the consumer. And this is actually a problem for entrepreneurs and why is that? Because they usually think of it in material terms. They think of the product they wanna produce and they think of how the consumer will value that product but it's not the product itself. The product is a means to the satisfaction, okay? It's the experience of getting and having and using the product that is the value to them, which is why a lot of entrepreneurs, they're actually surprised when they sell goods and they have sort of imagined how consumers are going to use this product and how this will change their lives and people buy the products and they're happy and then they talk to some of the customers and go, what? No, no, no, you're using the product wrong. That happens a lot because the customer buys the product and sees some other opportunity in the product than the entrepreneur had actually envisioned, okay? Plenty of products were not products and they tried to sell them as one thing and then consumers started using them in a different way and the companies or the entrepreneur responded by simply changing the positioning a little bit of the product so that more people could realize how valuable this was, okay? A lot of these products are like this. W9 is one of those products. It was used for one thing and then they realized this could be used for freaking everything and employees realized this when they took the product home and started using this for all these different views and different things. So very often the consumer is innovating in the use of your products. Well, you have to figure this out, which means you have to have a relationship with the customer because if there's no feedback, you can continue selling the product in the wrong way. You need to figure out how it's actually being used and where the actual value is. So it's a surprise to the customer when you come with the product and it's a surprise to you when you learn how they use the product. Yet there's value in it, so I'm on it, okay? It also means that you should focus on the whole experience, definitely not the physical product and not just the views that you envisioned, it's the whole experience, right? If the buying process is really slow and tedious and if customer service sucks, that's not good for your product. That lowers the value of your product. Sometimes that works out because you're selling on price like Walmart. So if you get shitty service in a Walmart supermarket store, you're not super upset about it because you sort of expected it. But if you say you call State Farm because you've been in an accident and they treat you like Walmart treats you, you're gonna go, what the hell? Right? It's very different depending on what you expect from the company. And you have to understand this when you're selling the product in your business because it's a whole experience that it's a product. It is only the experience that it's a product, not the product itself. The selling price is part of the product. Okay, we said before, value is higher than the price. Price hopefully is higher than the cost of production. Well, that means that how you price something is going to help you or the opposite of selling it because you need to offer the customer a profit, a psychic profit, right? The value and the price. Well, that depends on what else they can get for that money. What other opportunities the customer sees for that money that they have and are sort of willing to or at least considering spending on your product? Well, the greater the difference, higher the value, the lower the price, the cost to them, the easier it is gonna be to sell it. Well, if you go too far, you're gonna sell a lot, but you're gonna leave money on the table. And the price, that's the top, that's the bar for how much it can cost you in production because your profit is the price minus cost. That's pretty easy to understand, right? So you need to make sure that both are right or you can lose, the customer can lose, and if the customer loses, usually you lose too. And I put cost plus pricing there, which is, if any of you would go into an MBA program, God forbid, they would teach you all this madness, cost plus pricing is one of those. See how that completely contradicts everything I've told you so far about pricing? You just start with cost and say, oh, let's add a profit margin, that's the price. Let's hope there are any customers out there who value it higher. That's stupid. That's really stupid. That's not what you should do, especially as an entrepreneur, but that's unfortunately still what is being taught and how many corporations actually price their products too, which sort of kind of works in a mature market, but for an entrepreneur, that's death. You can't do that. Okay, so furthermore, the Austrian business, in the Austrian business, you prefer prices. That sounds a little weird, but what that means is simply that very often entrepreneurs, they want to have things in-house because then you feel like you have them under control, and then, well, I mean, if we need a little more, if we need to copy a little more paper, it's good to have a copier because then we can just push the button, just in case. Well, as Austrians, we know that the efficient way of allocating resources in the market is through the market prices because they represent the best image of consumer valuations, right? Which means if you can't outsource something, you freaking do it. So if you start a business and you can buy the services from someone else, that means you don't have to bother with it, which means you don't have to bear the uncertainty of using it the wrong way, because you know that price. To an Austrian, this makes sense, right? Suddenly you have the market prices for all these things that you need to include in order to produce the product that you can then sell. It helps you because that means that you can concentrate on the stuff that you cannot price, and that's less of a problem when you buy all this other stuff in the marketplace. Well, this is different from how many others will teach you to be an entrepreneur because they will say, well, I mean, if you need it, you can't really trust the market, perhaps, and well, it's expensive. Cut out the middleman, right? We've all heard that. Well, cutting out the middleman, that also means that you lose that service or you will have to do it yourself. If you have to do it yourself, how do you know you're doing it effectively? How do you know you're doing it cost-effectively? You don't, because there is no market pricing of that service. So if you then can outsource it, even if it costs a little more, it makes your life a whole lot easier as an entrepreneur. It makes it easier for you, not only to respond to changes in the marketplace and pursue a new innovation, it makes it easier to figure out whether what you're doing is actually effective, okay? So the main task of the entrepreneur then is to imagine how to satisfy consumers. That's what entrepreneurs do in the marketplace overall. They place value first, because otherwise you can't really imagine anything about consumers unless you imagine what they might actually value. And then you bear the uncertainty of that speculative production process, producing these Ford Model T instead of carriages with faster horses. You have to do that as an entrepreneur. That's your role, okay? So in a sense, the entrepreneur answers only one question. How can I best serve consumers? How can I maximize the value produced for consumers in the marketplace overall, in the future? Not now, because production precedes consumption. How can I produce now to satisfy consumers the best way possible at whatever time I'm done producing when I actually have the products available? And how can I position that to make sure that consumers actually benefit and that they know that they benefit, that they understand it too. It's a matter of communication as well. Management, the junior partner of the entrepreneur, they try to answer two questions. They answer, how can we strengthen our value proposition to the customer? Which is really, how can we tweak the product that the entrepreneur already figured out there's value with? But how can we tweak it to maybe speak to more consumers? Or maybe a new niche at another market segment selling a different version, maybe a cheaper type of iPhone could attract other types of customers with sort of the same idea, the same entrepreneurial opportunity, if you will. And how can we operate more effectively? So here's the focus on cost. But the entrepreneur focuses on value, how to produce value. Managers focus on costs, cutting costs, when you've already discovered the market value of something. So those are very different roles. Very often in the startup, of course, you can play both roles, but it's important to separate the two. Okay, so let's move from theory to practice. We talked a little bit about how to think as an entrepreneur, as an Austrian entrepreneur, and I think that is really important. But what does it actually look like out there? Well, first of all, like I started out saying, trained economists are, I put semi-useless, but that's probably just to be nice to them. I should probably say totally useless. Because equilibrium is useless. When you're running a business, there is this freaking thing like equilibrium, especially if you're an innovator. But the heck is an equilibrium for your innovation? The only thing that you can do is disrupt the marketplace, which is definitely not equilibrium. We also know that most entrepreneurs fail most of the time. So there are statistics on this and how within just a few years, most entrepreneurs, they already died. Not the person, the business. Okay, and the reason I argue is because they're not Austrians. Because they've made a huge mistake of listening to an economist or because they haven't considered the market in the way in Austrian would view the marketplace. So they might have focused on the product. They might have produced something without a focusing on how it might actually satisfy a want for the consumer or haven't really considered who exactly the consumer is and produced the product basically for themselves first. Well, they're not selling it to themselves. That's a hobby, that's not a business. Okay, successful businesses are always in the business of creating the future. They're always focusing on what can we do over here? Not what does it look like right now? Is there a gap to fill? But what does it look like right now? Is there a gap that I think I can feel and it still exists when I'm filling it? Right, so very often you have entrepreneurs figuring out a new good. And this is the case when I ask my students to think of a new business idea. And you get all these ideas and they're practically the same, all of them. Why? Because we're consumers. We're thinking faster horses. A real entrepreneur doesn't think faster horses, he thinks automobiles. He takes one more step, at least one more step and imagines what it would be for consumers and that's why it's potentially successful. Just one more step, that's already been done. Someone is already doing that when you're thinking of it. I bet you, okay? So you have to think of the future and satisfy people in the future. Now in my experience, successful and experienced entrepreneurs are already Austrians. What I mean by that is not that they've read both human action and many economy in the state. Usually they have not. But if you have exposed yourself to the actual market process, if you have tried to place sales to customers, if you have tried to position your product to sell it to customers, if you've tried to talk to them about how it's actually valuable to them, if you've tried to figure out what the price is for that good or the price that they might be willing to pay for it, you sort of got an idea of how things work. And you have this feeling or this sort of tacit knowledge, if you will, of how the market actually works. You just don't have the theoretical framework and you don't have the words for it, but you understand it on some deeper level. Well, as an Austrian, I can talk to them and I can say, this is how I think of it in words. And they go, that's it. That's exactly what I was thinking. How did you know? Well, I go, Mises, man, but maybe not that. Because we know how the market process works and they do too because they have that experience. So very often it comes, it's really our job to inform them on how to put this in words because very often it's easier to think of things when you have the words for it, right? And then we can talk to more people and influence them and help entrepreneurs become more successful entrepreneurs and not fail most of the time because they already have an understanding for how the market process actually works. So helping them with the terminology, helping them with the theories, helping them to avoid making errors. That's what we can do as Austrians and we can do that very effectively. Thank you.