 Welcome, everyone, to the evening talk. I'm very pleased to introduce our speaker, Ben Cotter. Ben Cotter was the driving force behind taking food automation service techniques incorporated from its beginnings in his garage 30 years ago to the leading manufacturer of appliance controls exclusively for the food service industry. Throughout his career, he has earned the reputation as a pioneer of process controls for multi-unit restaurants and currently holds more than 30 US and European patents. Ben is an active member of the National Restaurant Association and the International Food Service Manufacturers Association and is former chairman of the Connecticut and New York Council and former director of the American Electronics Association. His entrepreneurial achievements were recently featured in Forbes magazine. He earned a BA degree from Brown University and an MBA in finance from Columbia University. Ben is the Mises Institute's 2023 Entrepreneurship Award winner and our newest Hayek Society member. Tonight, he will speak to us on his entrepreneurial experiences life in the fast lane. Please join me in welcoming Ben Cotter. Thank you very much. It's great to be here. You know, the only reason I'm here is my father, George, was personal friends with Lou and Margaret Mises, Henry Hazlett and the list goes on. And I grew up in a cocoon of free market economics brainwashing me every night. So I want to just share with you some stories about my career. You already told you I went to Brown University. I snuck in by Hooker, by Crook. My high school teacher told me I wasn't college material. I should go into military. I went to Brown and I got into the military at the same time and I did my military service. And I got out and I got a job where I learned how to sell and learned all the basic ropes of doing business. And I picked my wife. She's sitting in the back room hiding back there. So of the lessons I want to share with you tonight, the first thing is get a good education. And I can see you're already working on that. And you'll never be done. You've got to keep learning all the time. And you've got to get a good partner. And that's the most important thing is the partner. So my partner in the back of the room has been with me for, well, we argue about this. I say 64 years. She says 62. I count from the day I met her. That was my sentence for prison. So I'm serving my life sentence. And I'm doing all well. Anyway, so I went to work as a sales guy. And one day her father comes to dinner and he says, you know, the future is going to be in the hands of people who have an MBA. I said, what the hell is that? So I got myself in the Columbia University, moved to New York City. By that time, we had a child. And I got ensconced in a special dormitory for veterans and married people. So my cluster of friends were postgraduate level people, members of the faculty. I didn't really associate with the students, the rest of the student body, because they all came right up from college and they weren't interested in the things that I was interested in. And I wasn't allowed to be interested in the things that these young guys were interested in anymore. So I was stuck in the dormitory or in the professor's homes. I made very good friends with a guy named Martin Anderson. If you don't know the name, look it up, Google it. Martin took his MBA thesis at MIT. And he published it in the name of what was Federal Bulldozer. And it talks about urban renewal and government programs. So anyway, I was at Columbia. And they let me graduate. And I looked around for a strategic job. And whether they found me or I found them, we met each other through The New York Times or the Wall Street Journal. I don't remember which. And a recruiter spent a lot of time talking to me. And I had so many interviews. I couldn't believe what was going on. I said, well, tell me about the job. Finally, they said, OK, well, come on in. And we think we're going to offer you the job. But we want to tell you about what the situation is. I said, OK, well, he said, we have a company that has spent $20 million. That's about $100 million in today's dollars, over $1950. They spent $100 million. And they have zero sales. How many people would take that job? Not many. I did. I said, if they spent $100 million, there's got to be something there I can salvage. It's got to be a gold mine opportunity. Well, most people who are my age lover, they wanted to get on a slide that was running. An easy jump on, scoot along for a couple of years, get a promotion, and jump to the next. No, not me. I like the tough ones. So AMF was ranked 94 out of the Fortune 500 when I took the job. They're gone out of business today. You can see some of their logo in remnant bowling alleys around the country, AMF with AMF in a triangle. When I joined them, they had an incredible cash flow coming into the company from the bowling alley that they leased. So once they had an alley franchised or leased or built, cash flow from every game. It's like a movie theater of people going in, and they play the game, and eat food. So they took that cash flow, and they invested it in lots of businesses. They had Ben Hogan golf clubs. They had bags to carry the ball, uniformed shoes. They'd get into bicycles at what Harley-Davidson motorcycles, and all that stuff. So my idea, they set up a research center in Stanford, Connecticut, similar to what Xerox had in Menlo Park, California. It was an academic place with all kinds of scientific disciplines and economists and sociologists. And the idea was to try to figure out new businesses. And their particular charter was get us a business that is like the bowling machine. We want to automate a high labor-intensive function. We want a lot of opportunity, and we want to make a ton of money. So they said, well, what we'll do is we'll automate restaurants. There's a lot of restaurants. There's more restaurants than there are bowling alleys. And I believe at that time, there were 900,000 eating establishments in the United States. So when I got there, they had under construction a half a dozen of these automated restaurants. And my job was to license more and make it profitable. Well, it didn't take very long to find out that the automated restaurant worked. It cooked great food, and it delivered the food in an organized manner. And it saved labor in the restaurant. Problem was we spent 10 times as much as the labor we saved in technicians and engineers to keep the machines running. So we didn't save the customer any money. And we quickly realized that we're not going to be able to franchise and sell this system. So my job was to figure out what could I get out of there that would make a profit. So I said, well, I think we had an electronic control system that's basically a point of sale function. And the transistor had been invented by now. And IBM and Burroughs and NCR were all fooling around with building electronic machines. There are adaptations of the old mechanical registers to go in department stores to help the department store collect data on sales so they could manage the inventory. So I said, well, we'll take that and we'll downscale it. And we'll put it in a restaurant. NCR had about 90% of the point of sale retail market. There were two or three other small players. Swede was one, R.C. Allen was one. Anyway, the National Retail Federation posted an RFQ for a prototype electronic point of sale machine. And there were three bidders, IBM, NCR, AMF. Nobody thought we had a chance. We won. We were on the cover of Time Magazine. And McDonald's was our test site, Old Brook, Illinois. And I envisioned selling hundreds of these. But we were an R&D function. Now we had to become a business unit. To become a business unit, we had to go to the Chairman's Joint Advisory Committee to make a presentation. Excuse me. So the presentations were held in New York City on Second Avenue. It's a Wednesday of the week, whatever it was. The Chairman always had all of his presenters to a lunch, two martini lunch, cigars, cigarettes, AMF manufactured most of the cigar and cigarette manufacturing equipment, so we all smoked. We go back from the two martini lunch. I used to have to go to these as a junior executive. And when I got back from lunch, I would go to my office, close the door, and lay down on the floor. So I had to go make this presentation at 3 o'clock in the afternoon. I'm looking out over the room. The smoke is so thick you can cut it with a knife. I wondered, I wonder how many people out there are still asleep. And OK, slide goes on. I get up and I make my presentation. And I thought, well, that's slam dunk. They're all going to say yes, because they spent $20 million. They've got to get their money back. In the back of the room, my hand goes up. Gentlemen, I is the largest stockholder in this here company. You bought my company last year and bought. You paid for it with shares. Now, I want you to know in my company, we used to use Freedon calculators and Monroe calculator machines. And we got rid of all that damn fool stuff. And we bought IBM. They are a wonderful company. I love those people. There's no way I'm going to vote yes. As a matter of fact, I say no. And I don't think there's anybody in this room who's going to dare vote against me, are you? You could hear a pin drop. So my boss is tugging at me from behind. Get off the stage. So I go home. Next morning, I walk in the office. And the boss is sitting there behind this big desk. He says, I accept your resignation. I said, sir, I interpreted as that. I was fired. Well, this is not a good place to be. So I thought about my professors back at Columbia. They had offered me a job the year before. This is 1967. They had offered me a job to join their Kabul. Martin Anderson called me on the phone. He said, when you come to New York, call me. I want to have dinner with you. I said, OK, Martin. So we went to dinner. And he said, do you like President Johnson? I said, no. Do you like the war in Vietnam? I said, no. He said, well, then you should join our team. We're going to elect the next president of the United States and then the war in Vietnam. I said, that's terrific. How much are you going to pay me? Oh, he said, you're going to volunteer. I said, wait a minute. I have a wife. I got at least one child. I might have had two. Check with her. The second one was there somewhere. Anyway, I said, we're struggling to put baked beans and hot dogs on the table every week because I have to pay my college tuition, my GI bill, and a mortgage on my house. I don't have any surplus money. You guys, who's on the team? Well, Arthur Burns, who was the chancellor of the university, retired head of the Federal Reserve. Martin Anderson. Sandy Burton, my finance professor. Ray Price, editor of the New York Time magazine. Pat Buchanan from the St. Louis Post-Spatch. I said, you guys all got money. You got big jobs. You're well-known. You do that. I'm going back to work. So here I am. I just resigned. So I called Martin and I said, Martin, I'm available. You got a job for me. Yeah, he said, you can come down and join the advanced staff and we'll assign you to the president's detail. You take care of Nixon and the family. I said, OK. I went back to AMF to my boss. Now, AMF made the Titan missile launch console equipment, the Minuteman launch equipment, and the torpedo launch mechanisms on submarines, and 500-pound bombs that were dropping in Vietnam. So I went to the boss and I said, I have a chance to be on Nixon's staff. He's going to be the next president of the United States. Everybody thought we were nuts, of course. But I said, he just won the primary in New Hampshire. So he is the candidate. And you continue to pay my salary. I'll work for him. I'll do what I can for you. And when he gets elected and I'm at the White House, I'll make sure you keep some of your contracts. Check with the boss on that. I'll check with the boss, of course. Next day, he said, fine, take the job. So I went on the road and I worked for the president and the family, traveled around the country. And he gets elected. So they called me up and they said, would you like to be the advance man for the inauguration? I said, sure. So I went down to Washington and we got everything organized, parade route through the Capitol, swearing in the whole deal. And the night before the election, everybody's in bed, all buttoned down. We're in hotel, security's all around the hotel. Somebody's at the door. I turned to my secret service guy. There was an agent at every turning in hotel. Every door was covered. How did somebody get knocking on our door at 11 o'clock at night? I'm sitting around the table with a, quote, ordered directors, Nixon's family, brother-in-law, Ned Sullivan, and the investment bankers that paid, largely paid for the campaign. So I opened the door and this character comes in to shovel a hat and a beard and old clothes. He smells and reeks of marijuana and everything. I said, my secret service guy, who the hell is that? He said, well, that's our undercover agent inside the SDS in the Weather Underground. And he wants to talk to you immediately. OK, what do you got on your mind? You will cancel the parade for tomorrow morning because it's published in the newspaper and I just came from a meeting. They're going to attack the president's car tomorrow morning. You could hear a pin drop. Everybody, of course, all the brass and the president's family are sitting there. What the hell are you going to do? Think fast. Save your ass. So I said to the secret service guy, or the underground agent, I don't know who you are. I never saw you. You were never here. I can't remember who you are. I'm going to give you one order. You're to leave this room, gather whatever resources you need, take out the threat. You understand what I said? Take it out. There will be no threat tomorrow. You got it? Yes, sir, he goes. I said, well, I look at the table of the board level of people and the next, Ned Sullivan says, Ben, that sounds good, but supposing he screws up and there's an attack. I said, don't worry, I got that figured out. So downstairs in our security area, we have three cars, one for the president, one for Amy Eisenhower and my wife, and one for John Eisenhower and the kids. I said, in the morning, we're going to go downstairs. We're going to put the president in car number two. We're going to put my wife with Amy in car number one. We're going to leave the kids at the end. If they blow up the car one, nobody's going to give a shit. I did not tell my wife. I never told that story until a couple of years ago, actually. So Ned turns around and he says, that's fantastic. You're terrific. What job do you want in Washington? I said, I don't want a job here. I need capital to start a business. So he reached into his pocket and he wrote a check for $10,000. And he said, he went to every guy around the table, write a check for $10,000 or write an IOU and give them to the investment banker. And they all did that. And then he said, now, then you have to write the business plan. And the investment banker has to agree to it. And if he does, you're off and running and make sure you've got plenty of capital. So I went home, told my wife she was very happy. And we started it. We sat down at the IBM Selectric typewriter I had, and she did all the typing. We wrote the business plan. Took the plan to the vulture bankers. So I went frowning 100% of the company in the 90, 80, 70, 60, 50, 40. I don't know how low it got. It got so low where I was thinking of, but I had no choice. I needed the money and I wanted to execute the plan. So finally we agreed to whatever the terms were. And I was supposed to come back the next morning with all the lawyers and accountants and sign all the papers. I went home, took the train in the following morning, got down to the Wall Street big board room. And I'm expecting to walk in with a room of lawyers and accountants and people to stamp the papers and seal all that stuff. There's only one guy in a room. He's standing there like this at the end of the room with his pockets turned inside out. I don't get it. What's going on? He said, didn't you read the Wall Street Journalist? I said, no, I didn't. The stock market fell yesterday 500 points of 10%. He said, we're out of business. Game over. But we appreciate your effort. We'll get a car, Lamo, to take you home. So I took the limousine home and told my wife, I said, well look, I gotta go get a job. We're out of money. She said, no, you're 30 years old. You're gonna go ahead and start the company now. Hook her by crook. If you don't know it now, you never will. So we sat down and we wrote letters to everybody that I had met over the last three years trying to develop this machine. And it was pretty impressive, I guess, when my prototype made the front page of Time Magazine. And so it wasn't long. A guy called me up, a guy named Rod Polly. And he said, would you meet me next week at Bookbinders Restaurant? And I said, sure. What do you want me to do for you? He said, I want you to make me perfect french fries. I thought, I don't know anything about french fries. Oh, he said simple. He said, we had a little machine. And McDonald's. And when you cook a french fry, you have a square rectangular piece. You can put one of those slides up. And when you cook it, the potato expands and takes a lot of space. If you overcook it, it shrivels up. So he said, we need to make sure that we cook our french fries so they're all expanded. So there's really three ways you cook. At that time, 1960s, restaurants cooked by eye or by fixed time. And the basket of french fries always had a different quantity in it because the employee just dumped it. So sometimes you've got a full basket, sometimes you've got a half a basket, sometimes you've got one, sometimes you've got two. Sometimes the fryer's at this temperature, that temperature. So the product is all over the place. But in a fast food restaurant, all of the profit comes from two products. Carbonated beverage and french fries. Everything else is a giveaway. So you have to control your yield on your syrup. You pay so much for the syrup and then you water it down with CO2 and water. That's called the bricks. If you do the right bricks, you control your profit yield on your carbonated beverage. And if you control the french fry, you got your profit on the french fries. So he said, meet me at Bookbinder's restaurant in Philadelphia. I want you to meet the chairman of the board. He said, can you build a machine? Of course I can build a machine. I'm out of work, I need money. What are you gonna say? Yeah, sure. So we had dinner. And Rod had told me a lot about it. I said, yeah, I can do it. So the chairman said, how much? I said, well, it's 10,000 now. 10,000 when I deliver the prototype. And I said, Rod and I have agreed that we'll lease it for $3 a day, including all service. It will pay you a commission on the money coming from the franchisees. You'll get your money back. Rod will get the yield in the french fries. He'll guarantee the profit so you can build a lot of stores. So he got the napkin out. He wrote the terms with a ballpoint pen on the napkin and we both signed it. And Rod took the napkin back to the lawyer and had him write a contract around the napkin. And I went down the next week and signed the contract and got my check. Well, we sat down and we started working on building the machine. And I said, well, I got a little money. I don't have an investment banker. Ned Sullivan stayed with me. Two or three of the guys stayed with me. We went and raised money from friends and family. And I went to the Hartford National Bank in Stanford, Connecticut, which was run by a guy named Bucky Bush who was a Bush family from St. Louis related to the Bushes in Connecticut. And I knew the Bushes in Connecticut because I worked in the Republican Party in Connecticut. And I went into the bank and I said, well, I worked for Nixon. I got this idea. I needed an SBA loan. He said, fine, he goes to the secretary, give him the loan. So I had the loan the next day. I think it was around 300,000. So we had enough money. I hired a couple of engineers. We made the first experiment in the garage. Then we had to get out of the garage and go somewhere else. And I went looking for a building. Well, first I got to go to put the logo up. So I called my old friends at the Nixon campaign, the guy who had made this stylistic Republican elephant you see everywhere today. Up until Nixon came in, we had a lumbering elephant with a long nose. That was the Republican Party image. So Jack Frost, who happened to be a guy in my church that carried the plane on Sunday, I went through the whole campaign. I didn't know that he was doing the advertising. I was doing the advance work. Secret. So he did the logo for Pan American. He did the advertising for American Express. Don't leave home without it. He did a couple of the big ones. And I said, come over for dinner and have a cocktail with me. I gotta tell you about my company and I'm gonna build a front computer and the company's gonna be called Fast Food Automation Service Techniques. So he, after a couple bottles of wine, steak dinner. He comes up with this logo. And it was made that way. I remember his presentation. He said, fast as the name of your company, we're gonna put it in brackets. We're making the F, S and a T. We'll intersect. We're putting a stop period and we're gonna give it a registered trademark and boom. That's it. So that's been the registered trademark all over the world. For the last 50 years. So we had money, we had a team, we had a customer. Most important thing was find and need and fill it. Well, we were originally trying to force our point of sale machine into a market that was really kind of happy with the electromechanical machine. They weren't quite ready for the electronic machine. But this was a machine where the guy, I need it today. So we built the prototype. It took us about 90 days to make the prototype. We put it in a restaurant and rock him out. It worked fine. Within 15 or 20 months, we sold about 6 or 8,000 of those machines. And we leased them for $3 a day. We capitalized in that present value of a five year lease. It was a five year non-cancelable lease. I stole all those ideas from my AMF. That's the way they did it. So I said, it was good for AMF, it's gotta be good for me. So we leased all those machines and we were off and running. And my time is up, so we're gonna have to leave. But over time, we kept adding to the capability of that machine, or those machines or arm machines. We manufacture millions of devices. We're in 139 countries and the machines talk to each other. They talk to the cloud and that we now tell the people in the restaurant in the morning when they walk in. This is what you're gonna cook. This is how much you're gonna cook. This is when you're gonna cook it. This is how long you cook it. This is when you take it out. This is how you post-process it. And if you haven't sold it, we tell them when they have to throw it away. So I guess that's pretty much the story. Find a needed fillet, get a good partner when you start. Make sure it lasts to the end. So you mentioned I had over 30, I really got about 40 patents. And I know you intellectuals are gonna cross this mountain. Should we have patents or not? Well, let me tell you, I understand the intellectual and I'm a libertarian. Nobody's more libertarian than I am. Nobody. But I'll tell you this. I've been on both sides of the battle. I spent millions defending patents and suing people who violated my patent. I've also been sued by a lot of people. I probably spent as much money as I made. I wasted an incredible amount of time. All lawyers are crooks. I would put lawyers, bankers, of all kinds, lawyers and bankers, or all crooked. And they're the two principal forces that create politicians. So there you have the crooked pipeline. And I've worked through all of them. And I've spent a lot of time on the Capitol Hill being an illegal unregistered lobbyist. I worked and I lobbied with my father in Kodak and Ingersoll Rand. We created the Disc Corporation. You remember that? The Domestic International Sales Corporation which gave a tax break to US exporters. And the idea was to level the playing field because our markets in Europe had protections and we were disadvantaged. And so I went to Washington to help put that bill through Congress with the big guys. Big guys needed me as a little guy to prove that the bill was not just another corporate subsidy for Kodak and Ingersoll Rand but it also helped the little guys. And let me tell you, after 50 years of business we just liquidated my wife's. I gave her ownership in that company to keep her employed because I was afraid she was gonna leave me so I had to give her her financial incentive to stick around. So she just liquidated that company. She's got more money than I got. So anyway, you're gonna have that battle but I would tell you this. I wouldn't have been sued in the beginning when somebody tried to stop me because they had a patent. I resisted that patent lawsuit by not using a lawyer. I picked up the telephone call the chairman of the board of the other company and I said, look, I'm innocent. I didn't do anything wrong. Bring your lawyers and your engineers. I'm gonna give you the key to my building. You can stay as long as you want, rummage through everything and then you decide whether I was unethical or not. And they did that and we settled. So I said to the guy, look, now you know I'm innocent but if you need face saving, so you look with your team, I'll give you 5% royalty. He said, no, no, no, we don't need that. You're a good guy. We'll just compete. Go ahead. He cut his price in half. They tried to drive me out of the business by price competition. When I fought him back and I kept inventing better solutions. So I stayed in business. So that's the patent thing. I'm out but I'll also tell you this. I do, I service about 40 to 60,000 restaurants in mainland China. I opened the very first American restaurant in China. God, I can't remember what the year was. Very first one. And one of my sons is the president of a company based in Shanghai. So the Chinese have screwed us out of everything. Clinton was the guy that started. He gave them all of our missile, internet, satellite technology free. They understand patents and I've been in meetings with the Chinese and they said, your patents mean nothing. We're gonna copy everything you have. You have to manufacture here. We won't do business with you. So it's a tough game. So you pursue all your intellectual pursuit but remember at the end of the okay carol it's like showdown. Life's tough and you gotta be ready to pull a trigger. So fortunately I pulled all the right triggers at the right time. Thank you.