WEBVTT NOTE 2007 Mises Entrepreneurship Award 1 00:00:00.000 --> 00:00:29.760 I want to welcome everybody to hear Mr. Robert Luddy, who's going to receive today the Mises 2 00:00:29.760 --> 00:00:33.000 Mises Institute's Award for Entrepreneurship. 3 00:00:33.000 --> 00:00:39.080 This is a new award that we've established this year that's going to go to a business 4 00:00:39.080 --> 00:00:45.760 leader who's shown forth his success as an entrepreneur and also his support of the sorts 5 00:00:45.760 --> 00:00:51.480 of ideas that undergird the free economy and enable entrepreneurship to take place. 6 00:00:51.480 --> 00:00:57.360 And we're going to start by doing a short talk by Dr. Mark Thornton about the importance 7 00:00:57.360 --> 00:01:08.840 Thank you, Lew. We are here to celebrate the entrepreneur, the most necessary and unsung 8 00:01:08.840 --> 00:01:14.880 hero of the market economy. I'd like to begin by noting that we're all acting entrepreneurial 9 00:01:14.880 --> 00:01:20.920 in our lives. We all make decisions which the future is going to affect, and that future 10 00:01:20.920 --> 00:01:26.600 is uncertain. So all of our decisions about the future have risk associated with it and 11 00:01:26.600 --> 00:01:29.960 and certain types of profits and losses. 12 00:01:29.960 --> 00:01:36.200 So we can all kind of understand what the entrepreneur is about, but of course the burden 13 00:01:36.200 --> 00:01:42.120 on the entrepreneur is much greater than on most of us in society. 14 00:01:42.120 --> 00:01:47.080 When you think about the entrepreneur has to not only form a vision of the future, but 15 00:01:47.080 --> 00:01:51.120 also take on a lot of risk associated with that future. 16 00:01:51.120 --> 00:01:57.320 The entrepreneur has to make contracts, has to buy capital, has to hire labor, has to 17 00:01:57.320 --> 00:02:03.000 design products, and has to pay for all of this in advance. Labor has to be paid, capital 18 00:02:03.000 --> 00:02:09.520 has to be paid before any product is produced, before any product is sold, and before any 19 00:02:09.520 --> 00:02:17.560 revenue actually is accrued. So it's a tremendous burden on the entrepreneur and the economy. 20 00:02:17.560 --> 00:02:22.760 And also, it's very important to note how dependent we are on entrepreneurs for our 21 00:02:22.760 --> 00:02:24.760 standard of living. 22 00:02:24.760 --> 00:02:27.280 They are the ones that are producing products. 23 00:02:27.280 --> 00:02:30.780 They are the ones that are driving the cost of production lower. 24 00:02:30.780 --> 00:02:33.780 They are the ones that are inventing new products. 25 00:02:33.780 --> 00:02:39.280 And really, that is the system of the market economy, this web of thousands, millions of 26 00:02:39.280 --> 00:02:46.800 entrepreneurs out there acting in their own self-interest, but doing the bidding of consumers. 27 00:02:46.800 --> 00:02:52.680 So we are tremendously dependent upon entrepreneurs for our standard of living and in the absence 28 00:02:52.680 --> 00:02:56.680 of them our standard of living would plummet. 29 00:02:56.680 --> 00:03:03.040 It's very important to understand that there's no alternative to this system. 30 00:03:03.040 --> 00:03:05.280 There's just no other way of doing things. 31 00:03:05.280 --> 00:03:11.000 We can't use socialism, we can't use communism because those things don't work and that's 32 00:03:11.000 --> 00:03:19.000 The great contribution of Ludwig von Mises is that those means of allocating resources simply don't work. 33 00:03:19.000 --> 00:03:30.000 We can think of other ways of allocating resources, but ultimately if we work through them we'll find that it's either socialism or communism on the one hand, 34 00:03:30.000 --> 00:03:36.000 or something that very much approaches entrepreneurship as we currently have it. 35 00:03:36.000 --> 00:03:49.000 So there's no alternative. This is a point that Austrian economics tries to emphasize and around which we build economic theory and our understanding of the market economy. 36 00:03:49.000 --> 00:03:59.000 Now things of course are much different in the educational system. The entrepreneur simply isn't taught. Entrepreneurship and its role in society simply is ignored. 37 00:03:59.000 --> 00:04:05.240 I was an undergraduate business major, majoring in economics, and entrepreneurship was only 38 00:04:05.240 --> 00:04:10.280 mentioned on one page of one of my textbooks, okay? 39 00:04:10.280 --> 00:04:12.960 That's how much entrepreneurship was discussed. 40 00:04:12.960 --> 00:04:16.060 As a matter of fact, it really wasn't discussed in class. 41 00:04:16.060 --> 00:04:21.920 There was just the phrase, the entrepreneur gets to keep all the profits. 42 00:04:21.920 --> 00:04:25.880 That's all the entrepreneur does, is keep profits. 43 00:04:25.880 --> 00:04:55.880 Even in graduate school, I had a professor who wrote a book on entrepreneurship and that was basically it, the entrepreneur keeps all the profits and of course we never discussed new products, quality of product, advertising, things of that nature, after that one word on the entrepreneurship, everything else after that is the firm does this and the firm does that, nothing about entrepreneurship, I taught undergraduate principles and one of the lectures is about 44 00:04:55.880 --> 00:05:25.880 Post Office and the Problem of Monopoly and one year after that lecture a student came up to me and said that his management professor told him that the post office was the ideal form of business and I was actually so shocked that I couldn't respond to the student but when you think about it in the management academic mentality of things you know the post office has a monopoly they have a 100 percent market share they can exploit their consumers 45 00:05:25.880 --> 00:05:31.680 Entrepreneurs without any disadvantage to themselves and no one ever gets fired, okay? 46 00:05:31.680 --> 00:05:38.440 It's the perfect realm for the management professor academic and the key thing is that 47 00:05:38.440 --> 00:05:44.320 there's no entrepreneur, there's no boss and that's what is so important. 48 00:05:44.320 --> 00:05:50.920 We get the same bad treatment of the entrepreneur in the media, in Hollywood, in the justice 49 00:05:50.920 --> 00:05:58.520 system and in government, they all treat the idea of entrepreneurship and the entrepreneur 50 00:05:58.520 --> 00:06:04.300 badly. The real story is that millions of people around the world start entrepreneurial 51 00:06:04.300 --> 00:06:10.920 adventures every year. Most of them fail. Most of those people who risk all that they 52 00:06:10.920 --> 00:06:20.520 have, they fail. The ones that succeed, most of them have modest incomes, modest rewards, 53 00:06:20.520 --> 00:06:40.520 and modest benefits as a result. It's only a few star entrepreneurs that actually get to become multi-billionaires or multi-millionaires, the stars of entrepreneurs and of course those ultimately become the villains as portrayed in these various other areas. 54 00:06:40.520 --> 00:06:52.520 But the same is true for any leader in an area, the best golfer in the world, the best actor in the world, the best baseball player in the world, all make extremely high rewards. 55 00:06:52.520 --> 00:07:03.520 That's the way the market works. And how do those stars in all of those various professions, but particularly the entrepreneur, how are they chosen? 56 00:07:03.520 --> 00:07:08.580 Was Sam Walton of Walmart, was he chosen by some congressional subcommittee? 57 00:07:08.580 --> 00:07:16.660 Was he chosen by the Governor of Arkansas to become this wealthy, great entrepreneur who changed everybody's lives? 58 00:07:16.660 --> 00:07:26.820 No, Sam Walton was chosen by us, by people like us, thousands of people and then eventually millions of people who decided 59 00:07:26.820 --> 00:07:31.180 that the best use of their money was to spend it at Walmart. 60 00:07:31.180 --> 00:07:41.180 So when we look around at these entrepreneurs who have done great things and who have gotten great rewards, it's we that have chosen them. 61 00:07:41.180 --> 00:07:47.180 And it's the mission of the Ludwig von Mises Institute to teach these lessons about entrepreneurs. 62 00:07:47.180 --> 00:07:54.180 If people don't understand them, if we lose that connection to entrepreneurship and try to change the system 63 00:07:54.180 --> 00:08:04.180 and eliminate the entrepreneur or harm the entrepreneur in a systematic way, we do so at our own harm and economic demise. Thank you very much. 64 00:08:10.180 --> 00:08:22.180 Well, I'm very pleased to be here speaking in honor of Mr. Luddy, because we're talking about entrepreneurship, which is something that I'm happy to theorize about, but that I myself would be absolutely terrified to engage in. 65 00:08:22.180 --> 00:08:28.180 I'm extremely, for all my radical ideas, I'm extremely conservative when it comes to my own property. 66 00:08:28.180 --> 00:08:31.180 I'm terrified of losing it or what if I make the wrong decision? 67 00:08:31.180 --> 00:08:35.180 But these are the types of burdens that the entrepreneur bears. 68 00:08:35.180 --> 00:08:42.180 He risks his own property, puts his own wherewithal at risk in the service of an idea, 69 00:08:42.180 --> 00:08:49.180 in the service of some new good or service that he can provide to people and that he believes people will want. 70 00:08:49.180 --> 00:09:00.180 Now, it happens to be the case, unfortunately, that in our society there are certain people who are held up as models for us, and the entrepreneur, as Mark Thornton indicated, is not one of them. 71 00:09:00.180 --> 00:09:06.180 Everybody else, you can think of, is held up for our emulation, but not the entrepreneur. 72 00:09:06.180 --> 00:09:12.180 Some of this, as Mises suggests, is just a simple result of envy. 73 00:09:12.180 --> 00:09:18.180 A typical school teacher does not want to point to the entrepreneur as the great hero. 74 00:09:18.180 --> 00:09:32.180 The school teacher is often bitter and envious of the fact that he's got a sophisticated education degree that it took him years to get and he's earning X number of dollars, but yet look at all the money Bill Gates is earning and he didn't get as good an education as I did and so on and so forth. 75 00:09:32.180 --> 00:09:39.180 Oftentimes we have base and disreputable motives at the heart of why it is that the entrepreneur is not honored in our society. 76 00:09:39.180 --> 00:09:46.180 But the fact is, as Mark Thornton says, without the entrepreneur, where would we be? At what material level would we be living? 77 00:09:46.180 --> 00:09:57.180 How can we deny, how can we even question the moral foundations of entrepreneurship when we realize that the standard of living that we enjoy today would be impossible without it? 78 00:09:57.180 --> 00:10:13.180 That the life expectancy we enjoy, the fact that so many of our children live and survive to age five, all these things are due to people who took risks and who employed their resources in ways that have benefited their fellow man. 79 00:10:13.180 --> 00:10:17.180 nearly always to a degree greater 80 00:10:17.180 --> 00:10:20.500 than those who claim that they're benefiting their fellow man 81 00:10:20.500 --> 00:10:24.700 through the mechanisms of the state. Now the entrepreneur 82 00:10:24.700 --> 00:10:29.980 is a steward of the things of the earth and if he's a good steward he's rewarded. 83 00:10:29.980 --> 00:10:34.620 If he's a poor steward he is punished. This is one of the great aspects of 84 00:10:34.620 --> 00:10:36.780 entrepreneurship because it guarantees 85 00:10:36.780 --> 00:10:40.380 that the resources we have in this world which are scarce 86 00:10:40.380 --> 00:10:45.380 and that have to be employed to the most urgent ends are in fact so employed. 87 00:10:45.380 --> 00:10:49.380 This is no small matter. 88 00:10:49.380 --> 00:10:54.380 The entrepreneur likewise uses the talents that he has been given 89 00:10:54.380 --> 00:11:00.380 in a way that is not merely self-indulgent, but that permits him to share his gifts with others, 90 00:11:00.380 --> 00:11:04.380 improving their lives through the good or service that he brings to the market. 91 00:11:04.380 --> 00:11:10.900 and the fruits of his work also give him the wherewithal with which to be generous toward 92 00:11:10.900 --> 00:11:17.360 his fellow man and to engage in works of philanthropy, as indeed our honoree today has done. 93 00:11:17.360 --> 00:11:22.160 He shows us that the way to wealth and higher standards of living is not through looting 94 00:11:22.160 --> 00:11:30.280 each other by means of the state, but through creativity and through intelligent risk bearing. 95 00:11:30.280 --> 00:11:36.480 There has developed over the past generation what one might call a theology of entrepreneurship. 96 00:11:36.480 --> 00:11:43.780 For a long time there has been, even in circles that engage in moral reasoning and moral philosophy 97 00:11:43.780 --> 00:11:48.840 and in religious circles, there has been a tendency to disparage the entrepreneur, to 98 00:11:48.840 --> 00:11:53.960 disparage the business community, and to make the businessman feel when he is in church 99 00:11:53.960 --> 00:11:59.160 that he can redeem himself from his iniquity only by putting a large contribution in the 100 00:11:59.160 --> 00:12:03.200 Collection Plate. Well, it is a nice thing to put a large contribution in the 101 00:12:03.200 --> 00:12:07.360 collection plate, of course, but he has nothing to redeem himself from, if in 102 00:12:07.360 --> 00:12:11.560 fact he has not engaged in any disreputable activity. And there is nothing 103 00:12:11.560 --> 00:12:15.840 inherently disreputable about entrepreneurship. To the contrary, there is 104 00:12:15.840 --> 00:12:20.260 much that is moral and to be admired. We should recall from the parable of the 105 00:12:20.260 --> 00:12:25.560 talents that God wishes to reward those who do not simply take what has 106 00:12:25.560 --> 00:12:36.560 who multiply it through their intelligence and through their application of their resources to some greater end. 107 00:12:36.560 --> 00:12:38.560 These are things that should be admired. 108 00:12:38.560 --> 00:12:42.560 As I say, thanks to this development of a kind of theology of entrepreneurship 109 00:12:42.560 --> 00:12:47.560 that recognizes the morality and the justice of what the entrepreneur is engaged in, 110 00:12:47.560 --> 00:12:53.560 perhaps only in our recent years is the entrepreneur beginning to get the recognition he deserves. 111 00:12:53.560 --> 00:13:00.560 I actually presented this award to Mr. Luddie at the wonderful celebration of the anniversary of his company, but this beautiful medal was not ready at that point, and I offered to take it to North Carolina. 112 00:13:23.560 --> 00:13:28.440 He was very kind to offer to come here to receive him. 113 00:13:28.440 --> 00:13:32.080 We've been blessed to have him at the Institute many times. 114 00:13:32.080 --> 00:13:39.680 He's the founder and the CEO of Captive Air, which is the leading producer and very creative 115 00:13:39.680 --> 00:13:44.200 and innovative producer of commercial kitchen ventilation systems. 116 00:13:44.200 --> 00:13:50.840 I know we have some of them, in fact, installed in some of the restaurants in our own area. 117 00:13:50.840 --> 00:13:52.160 He's done a great job with this company. 118 00:13:52.160 --> 00:13:56.640 He's going to tell us a little bit about the job he's done with his company. 119 00:13:56.640 --> 00:14:00.480 He's also been a great philanthropist, both in education, the charter school he runs, a 120 00:14:00.480 --> 00:14:05.280 Catholic private school, and all that he's done for other organizations, and of course 121 00:14:05.280 --> 00:14:07.680 for the Mises Institute as well. 122 00:14:07.680 --> 00:14:12.880 So because of his, again, his success as an entrepreneur and all he's done for society 123 00:14:12.880 --> 00:14:19.880 by being a successful entrepreneur, and because of his generosity and his charity, I'm very 124 00:14:19.880 --> 00:14:25.920 We're glad to present to him this medal, the first one, the Mises Entrepreneur Medal, and 125 00:14:25.920 --> 00:14:36.880 Bob come up and take it and give us a talk. 126 00:14:36.880 --> 00:14:37.880 Thank you very much. 127 00:14:37.880 --> 00:14:41.920 It's a great honor and a privilege to receive that first medal, and I'll always treasure 128 00:14:41.920 --> 00:14:47.880 it and treasure my association with the Mises Institute, and I also want to commend the 129 00:14:47.880 --> 00:14:51.680 and the Mises Institute for the noble work you do. 130 00:14:51.680 --> 00:14:57.200 It takes courage, tenacity and vigilance in this world to stake out the positions that 131 00:14:57.200 --> 00:15:01.440 you do uncompromisingly over a long period of time. 132 00:15:01.440 --> 00:15:06.880 But I will say this, that having been associated with many organizations, as my friend Dr. 133 00:15:06.880 --> 00:15:10.160 William Peterson would say, they're mostly ephemeral. 134 00:15:10.160 --> 00:15:16.120 And in times like this, that are so turbulent when the welfare state is growing, we can 135 00:15:16.120 --> 00:15:22.280 and only look to the Mises Institute for real, good, solid thinking, which they've always 136 00:15:22.280 --> 00:15:25.480 had and often been ignored. 137 00:15:25.480 --> 00:15:32.600 Going back to Dr. Mises and his understanding of entrepreneurship, and I commend Dr. Woods 138 00:15:32.600 --> 00:15:39.480 and Dr. Thornton for your talks today, I wish we could record those. 139 00:15:39.480 --> 00:15:44.780 If every high school student knew that much, it would be a hundred times fold over what 140 00:16:14.780 --> 00:16:31.780 It's evident what they produce, just traveling around the country this week, and you see this abundance of buildings and people and productivities and more technologies than we could ever personally understand, and you see this huge benefit for society and personal growth. 141 00:16:31.780 --> 00:16:39.780 I want to go through just a short history of Captivir, which is a little different entrepreneurial story than some. 142 00:16:39.780 --> 00:16:46.780 We think in terms of entrepreneurs and venture capitalists marrying and having an IPO and living happily ever after. 143 00:16:46.780 --> 00:16:57.780 Captivir was started originally as Atlantic Fire Systems back in 1979 and my total invested capital was $1,300. 144 00:16:57.780 --> 00:17:04.780 And at no time in the history of the company was there any other money invested in the company, no vulture capital, venture capital. 145 00:17:04.780 --> 00:17:20.780 So it was the grinded out type entrepreneurial experience which in many ways I recommend primarily because as a young person in a new industry you certainly don't have all the answers. 146 00:17:20.780 --> 00:17:25.780 And if you have a lot of capital you're going to go down a lot of incorrect roads. 147 00:17:25.780 --> 00:17:32.780 But having no capital you can't afford to go down any wrong roads or you'll not come back. 148 00:17:32.780 --> 00:17:39.680 I initially was a distributor for the Ansel company and I used to have this discussion 149 00:17:39.680 --> 00:17:44.460 with the comptroller because we were always late paying our bill and he says you should 150 00:17:44.460 --> 00:17:47.900 have been properly capitalized and we wouldn't have to go through these discussions and I 151 00:17:47.900 --> 00:17:50.940 said I'm going to prove to you that this is the right way to do it. 152 00:17:50.940 --> 00:17:54.420 It's maybe not the recommended way but I don't have any more capital and this is the 153 00:17:54.420 --> 00:18:00.260 way it has to be done and we've turned out to be the largest customer of Ansel I think 154 00:18:00.260 --> 00:18:04.420 in their history for commercial restaurant systems. 155 00:18:04.420 --> 00:18:06.780 So it did work out in the long term. 156 00:18:06.780 --> 00:18:11.900 By 1979, this little company that I really started to make a living, hoping to be a little 157 00:18:11.900 --> 00:18:17.900 bit more than that, was a million dollars in sales and still had cash flow problems 158 00:18:17.900 --> 00:18:24.300 as we moved into 1981, anybody that can remember that year, 1980 were pretty tough years for 159 00:18:24.300 --> 00:18:27.140 the economy, very austere. 160 00:18:27.140 --> 00:18:30.680 We were able to borrow some money from a bank at that time, but the problem was the interest 161 00:18:30.680 --> 00:18:34.140 rate was 24%. 162 00:18:34.140 --> 00:18:40.020 So it was pretty tough, but I think these are all important parts of the entrepreneurial 163 00:18:40.020 --> 00:18:45.320 experience is that you must go through gut-wrenching, difficult experiences because they're going 164 00:18:45.320 --> 00:18:47.700 to prepare you for future experiences. 165 00:18:47.700 --> 00:18:52.460 And if it's too easy, you're going to make too many mistakes, and in the long run, you 166 00:18:52.460 --> 00:18:55.140 might not make it. 167 00:18:55.140 --> 00:19:00.100 By the early 80s, we were installing some kitchen hoods and decided that maybe this 168 00:19:00.100 --> 00:19:04.020 would be the route to go, not just do the fire system but integrate the whole kitchen 169 00:19:04.020 --> 00:19:05.620 hood systems. 170 00:19:05.620 --> 00:19:10.700 So we bought a little sheet metal shop, started to make some little hoods, crude as they were, 171 00:19:10.700 --> 00:19:13.940 I actually believed that we could be a big player in this industry. 172 00:19:13.940 --> 00:19:18.700 Stupid thought, but I kept it for a long period of time and it worked out. 173 00:19:18.700 --> 00:19:25.260 So I think, thinking high minded, knowing that you're only a speck on the horizon, 174 00:19:25.260 --> 00:19:28.740 you can accomplish amazing things if you're willing to stay with them over a very long 175 00:19:28.740 --> 00:19:30.380 period of time. 176 00:19:30.380 --> 00:19:35.660 So by 1984, we got rid of the fire system company, we continued to install fire systems 177 00:19:35.660 --> 00:19:42.200 in restaurants, and actually by 1984 had some financial stability, which was very unusual 178 00:19:42.200 --> 00:19:43.200 for the company. 179 00:19:43.200 --> 00:19:48.220 If we got to that period at the end of 1981, I think this is instructive. 180 00:19:48.220 --> 00:19:53.880 Five years after the company was started, it was in terrible financial shape, because 181 00:19:53.880 --> 00:19:59.140 people weren't paying their bills on time, cash flow was a problem, and basically we 182 00:19:59.140 --> 00:20:04.740 just hung on and waited for better times, which began in 1982, if you remember the end 183 00:20:04.740 --> 00:20:08.100 of the recession, we started to move upward. 184 00:20:08.100 --> 00:20:14.580 But by 1984 we were stabilized, we had a normal bank loan, and by 1989 we were able to buy 185 00:20:14.580 --> 00:20:20.420 by a little technology company called Aquamatic that makes water wash hoods. 186 00:20:20.420 --> 00:20:25.460 It still has not emerged as the leading technology, but it was another piece of technology that 187 00:20:25.460 --> 00:20:29.820 we had that we could compete for larger projects. 188 00:20:29.820 --> 00:20:35.380 And basically most all of the growth of Captivir has been organic growth, which is typically 189 00:20:35.380 --> 00:20:37.740 of growth companies. 190 00:20:37.740 --> 00:20:46.740 But in 1997, we acquired a small company called Rupp Industries that made makeup air systems. 191 00:20:46.740 --> 00:20:52.320 So now we're not only in kitchen ventilation, makeup air systems, we were gaining more technologies. 192 00:20:52.320 --> 00:20:56.700 So most of our acquisitions were not for sales but for technologies. 193 00:20:56.700 --> 00:21:01.780 And that helped advance the company more quickly than it would have gone otherwise. 194 00:21:01.780 --> 00:21:06.460 One of the things that I do for our salespeople periodically is I list the most important 195 00:21:06.460 --> 00:21:36.460 Decisions over the last 20 years. And then I bring it to their attention, if you had voted on that day in whatever year it was to go with this decision, would have you done it? And universally, I know that they would have all voted no. So one of the things I think we did successfully is said, we don't really want to be part of this industry, we want to change the industry. And we're going to think differently. So we never associated with industry associations or industry norms, basically totally 196 00:21:36.460 --> 00:21:48.460 In the long run, it proved to be correct, because the more you get in tune with the industry, 197 00:21:48.460 --> 00:21:51.460 you become like in the movie Tucker, where the executive said, 198 00:21:51.460 --> 00:21:54.460 well, why would we want to do anything competition hasn't done? 199 00:21:54.460 --> 00:21:58.460 That's the mentality of bureaucrats and industry thinkers. 200 00:21:58.460 --> 00:22:04.460 So by thinking differently and slowly grinding it out and being, on one hand, 201 00:22:04.460 --> 00:22:09.180 On one hand trying to be high growth, on another hand being fairly cautious in those decisions 202 00:22:09.180 --> 00:22:14.740 because one wrong decision essentially is going to take you out. 203 00:22:14.740 --> 00:22:21.180 After we bought Rupp Industries, by 2001 we had achieved $100 million in sales. 204 00:22:21.180 --> 00:22:26.580 What's very interesting, if you went back to 1984 when we were $4 million in sales, 205 00:22:26.580 --> 00:22:30.700 I told our sales team we were going to be a $25 million company and then a $50 million 206 00:22:30.700 --> 00:22:34.380 company and they literally thought it was so funny they couldn't contain themselves. 207 00:22:34.380 --> 00:22:42.700 So what you find along the way is that very few people are going to have the vision, and 208 00:22:42.700 --> 00:22:46.820 then those who have the vision, very few will have the tenacity and basically the courage 209 00:22:46.820 --> 00:22:47.820 to keep going. 210 00:22:47.820 --> 00:22:52.820 And I think those are important lessons for anybody that wants to become an entrepreneur. 211 00:22:52.820 --> 00:22:57.080 It's not going to be easy, but it's fun and it's rewarding. 212 00:22:57.080 --> 00:23:02.580 You see your own growth, you see the growth of your people, and to me that's the most 213 00:23:02.580 --> 00:23:19.580 In 2002 we achieved $100 million in sales, and so as I had always done in the past without any real strategic plan or game plan, I said, well, we're going to double the size of the company, we're going to be $200 million five years out. 214 00:23:19.580 --> 00:23:30.580 And that was another little chuckle because they said, okay, well, you know, you made it to $100 million, there's not that much business left out there, you're not going to make it to $200 million unless you acquire a company. 215 00:23:30.580 --> 00:23:33.780 and now we're going to do it through organic growth well this year we 216 00:23:33.780 --> 00:23:38.340 anticipate achieving 200 million in sales and guess what there's still a lot 217 00:23:38.340 --> 00:23:42.700 more out there because we continue to gain more technologies we have more 218 00:23:42.700 --> 00:23:48.260 expertise in the meanwhile most of the inefficient competitors good economic 219 00:23:48.260 --> 00:23:51.460 lesson they're all out of business they're all gone so who's coming up 220 00:23:51.460 --> 00:23:57.020 tougher competitions coming up which gives us the opportunity to train our 221 00:23:57.020 --> 00:24:00.380 people and be better so you can actually see that process within the industry 222 00:24:00.380 --> 00:24:06.740 in the industry, working exactly as the professors would state it in the textbook. I've witnessed 223 00:24:06.740 --> 00:24:12.740 it. So entrepreneurial growth is a lot of fun. It's very difficult. It's not for the 224 00:24:12.740 --> 00:24:19.580 faint hearted. But I think that that personal development is so rewarding. And I've seen 225 00:24:19.580 --> 00:24:23.460 it with people in the company where they come in at a low level and they grow and they grow 226 00:24:23.460 --> 00:24:28.940 and they're so proud of themselves, how far they've come. And yet I see the other side 227 00:24:28.940 --> 00:24:33.900 where they say you're too tough, you're too demanding, you're asking us things that nobody 228 00:24:33.900 --> 00:24:37.380 would ask us to do and they say well this is the process, this is how it works, it's 229 00:24:37.380 --> 00:24:38.380 not easy. 230 00:24:38.380 --> 00:24:44.740 I also wanted to cover a couple of the top ten things that I think are important to continue 231 00:24:44.740 --> 00:24:46.580 to grow the business. 232 00:24:46.580 --> 00:24:51.340 Our economic professors are probably going to recognize some, so I believe that economic 233 00:24:51.340 --> 00:24:56.420 principles are very important to growing a business and the average business person does 234 00:24:56.420 --> 00:25:02.920 Most of them are not schooled in economics. 235 00:25:02.920 --> 00:25:06.380 Number one is supply creates demand. 236 00:25:06.380 --> 00:25:10.400 If we have the right offering, we're going to have a lot of sales. 237 00:25:10.400 --> 00:25:12.860 And if we don't, we're not going to have sales. 238 00:25:12.860 --> 00:25:13.980 It's just about that simple. 239 00:25:13.980 --> 00:25:17.820 So we have to focus on creating the right offering. 240 00:25:17.820 --> 00:25:21.580 And one of the things that I do around the country is study what will be the emerging 241 00:25:21.580 --> 00:25:51.580 Management is doing things right. Leadership is doing the right things. Well, if your leadership is not picking the right things to do, you're not going to be successful. But there's also an equal challenge, is if you're doing the right things, can you consistently execute? And if you look at the great companies like Starbucks, they consistently 242 00:25:51.580 --> 00:25:59.580 In order to efficiently execute, if you look at McDonald's, 50 years later, everybody would have thought McDonald's is down for the count, they're gone. 243 00:25:59.580 --> 00:26:05.580 Because of execution, McDonald's is on top. They're doing better than they've ever done before. 244 00:26:05.580 --> 00:26:12.580 And they don't have any really serious competitors in their class, even though you could argue, well, you can get a better hamburger anywhere. 245 00:26:12.580 --> 00:26:19.580 But most cheap people choose to go to McDonald's. So it shows the enormous execution capabilities that they have. 246 00:26:19.580 --> 00:26:30.580 Focus on the primary idea and avoid diversions. Entrepreneurs sometimes get a little heady and they think they can do everything better than anybody else, and that's the prescription for failure. 247 00:26:30.580 --> 00:26:41.580 So again, economic specialization is very critical. We try to refocus constantly to make sure that we don't get off on tangents. We've gotten off on a few over the years. 248 00:26:41.580 --> 00:26:46.580 But that specialization is the only thing that's going to allow you to compete in the real long term. 249 00:26:46.580 --> 00:26:53.580 term. Kaizen, which is the Japanese word for cost and improvement, and most people don't 250 00:26:53.880 --> 00:26:57.780 relish it because they want to come to work, get their coffee, everything's okay, you 251 00:26:57.780 --> 00:27:02.620 know, we're doing good here, we're Captivir, we're Starbucks, whatever, but your competitor 252 00:27:02.620 --> 00:27:06.580 is thinking and coming into work saying, I want to get that business, I want to take 253 00:27:06.580 --> 00:27:11.300 down Starbucks, I want to take down Captivir, and if you're not engaged in that Kaizen 254 00:27:11.300 --> 00:27:41.300 and the New Year's Resolution. 255 00:28:11.300 --> 00:28:16.300 If we hit that mark correct, our sales are going to continue to grow at a very rapid pace. 256 00:28:16.300 --> 00:28:18.300 Risk Calculation 257 00:28:18.300 --> 00:28:24.300 We spend a lot of time with spreadsheets so that we understand our costs very well. 258 00:28:24.300 --> 00:28:28.300 And we price from cost up, oftentimes not from market opportunities. 259 00:28:28.300 --> 00:28:32.300 So in a particular market that may put us way under on price, 260 00:28:32.300 --> 00:28:35.300 but we drive the business to that cost structure 261 00:28:35.300 --> 00:28:40.300 so that we consistently are able to have good, consistent, growing earnings over the years. 262 00:28:40.300 --> 00:28:47.300 and the customers over time realize this is a company to go with because they're going to give you a fair price. 263 00:28:47.300 --> 00:28:53.300 They're going to cut price based on cost, which yields enormously good returns over the long term. 264 00:28:53.300 --> 00:29:01.300 You may give up these short term ephemeral opportunities, but the customer knows and they remember who takes care of them. 265 00:29:01.300 --> 00:29:06.300 Be responsible. We try to train everybody to be responsible. 266 00:29:06.300 --> 00:29:11.300 Everybody tries to shed the responsibility. Well, it's not my fault, it's this guy or the other guy. 267 00:29:11.300 --> 00:29:18.300 And hitting people in the face every day, you need to be fully and completely responsible for what you do, is what makes it happen. 268 00:29:18.300 --> 00:29:27.300 And anybody who's not in any given day is going to cause a system fault, you go to Starbucks and you get a cup of coffee that's not right, you recognize it immediately. 269 00:29:27.300 --> 00:29:33.300 Somebody is not being responsible for what they're doing. And that's a battle we continue to fight. 270 00:29:33.300 --> 00:29:37.300 Communications with employees and customers I think is critical. 271 00:29:37.300 --> 00:29:42.300 We do seminars around the country and essentially we paint a vision where the industry is at, 272 00:29:42.300 --> 00:29:47.300 where it's going to go, how we're going to get there, what are the good technologies, what are the bad technologies. 273 00:29:47.300 --> 00:29:52.300 So both communicating to our employees and also to our customers, 274 00:29:52.300 --> 00:29:57.300 we paint the vision and people want to go where there's a vision. 275 00:29:57.300 --> 00:30:02.300 Opportunity cost, obviously allocation of capital which you guys covered so well, 276 00:30:02.300 --> 00:30:09.300 is critical to any entrepreneurial success. If you misallocate your capital, you're out of business. 277 00:30:09.300 --> 00:30:15.300 We see it with government operations daily where they misallocate all capital essentially. 278 00:30:15.300 --> 00:30:21.300 And then lastly, execution is the key to success. We haven't done a sales meeting for about three years. 279 00:30:21.300 --> 00:30:26.300 We're going to do one later this month. And the focus is going to be on execution. 280 00:30:26.300 --> 00:30:42.300 Lawrence Bossidy, who was a great manager with GE and well recognized around the world, wrote a book called Execution, and he said most people know their trade, they know what they're doing, but the question is do they do it and can they consistently get it done well. 281 00:30:42.300 --> 00:30:50.300 So execution is a very, very important part to business, never to be overlooked in any minute of every day. 282 00:30:50.300 --> 00:30:59.840 Creativity depends on the ability to step outside the boundaries of a given problem 283 00:30:59.840 --> 00:31:05.980 and by viewing it in a different light, reconfigure it along here through unexamined lines. 284 00:31:05.980 --> 00:31:18.820 The creative science, for example, dips into the unknown with a firm footing on the known. 285 00:31:18.820 --> 00:31:48.820 These are concerns for the long term. The primary concern is hiring and finding good people, because with the current educational system in this country, any engineer, any teacher that comes out that's good out of the university, out of the college, is going to have a job instantly. Not only a job, a good job, providing that they have a good attitude, they're a good thinker, and they have the other requisite skills. Unfortunately, we're producing too few talented people, and when you get involved with industrial 286 00:31:48.820 --> 00:31:53.660 Federal companies, they need a lot of talented people, there's a lot of technologies involved. 287 00:31:53.660 --> 00:31:57.340 So probably the major concern for the long term is people. 288 00:31:57.340 --> 00:32:03.220 We spend a lot of time trying to develop our people and it's not easy, a comment made earlier 289 00:32:03.220 --> 00:32:08.940 I think by Dr. Thornton that they're not used to taking on complicated tasks. 290 00:32:08.940 --> 00:32:12.660 You teach them, you go through these technologies which essentially they're only learning, they're 291 00:32:12.660 --> 00:32:14.940 not inventing, they're learning them. 292 00:32:14.940 --> 00:32:18.740 They're very challenged to learn these technologies and to remember them three months later. 293 00:32:18.740 --> 00:32:32.740 Converse to my father and my background, who was a mathematician, a bit of a scientist and engineer, that learning was what you did in your life. That was all you did, was you learned and you grew. So that's going to be a big challenge in the future. 294 00:32:32.740 --> 00:32:42.740 In closing, entrepreneurship, it's a great adventure, it's a challenge, there's many obstacles, there's huge risks, but it's worth every second of it. 295 00:32:42.740 --> 00:32:47.740 And if you go around this country and you see the technologies and the people gainfully employed 296 00:32:47.740 --> 00:32:51.740 and the strength of our economy, it's totally mind-boggling. 297 00:32:51.740 --> 00:32:57.740 And it tells us, it confirms that the Mises Austrian School is right, 298 00:32:57.740 --> 00:33:00.740 that free markets produce abundance. 299 00:33:00.740 --> 00:33:04.740 If we got rid of our government, trimmed it down to one-tenth its size, 300 00:33:04.740 --> 00:33:08.740 we would have so much in this abundance in this country, we could support half the world. 301 00:33:08.740 --> 00:33:10.740 We're literally that good at producing. 302 00:33:10.740 --> 00:33:17.580 producing. American people are hard workers, they're good people. So I'd like to close 303 00:33:17.580 --> 00:33:24.580 in again thanking the Mises Institute. You're a very bright light in a very dark area, particularly 304 00:33:24.800 --> 00:33:29.300 when we start talking about government and free trade. And you're really the salvation 305 00:33:29.300 --> 00:33:34.640 in terms of free market and free trade, because everybody else is waffling. They're not quite 306 00:33:34.640 --> 00:33:39.140 with the program. They're not even close, as a matter of fact. So the work you do, even 307 00:33:39.140 --> 00:33:45.780 know you may be attacked often and be told often that you're wrong and you're radical. 308 00:33:45.780 --> 00:33:52.300 It's the right way and it's the way our forefathers envisioned this country. 309 00:33:52.300 --> 00:33:58.540 Someone once told me that their country was formed by geniuses and run by idiots. 310 00:33:58.540 --> 00:34:02.820 And if you look at the current, we're talking about the government, if you look at the current 311 00:34:02.820 --> 00:34:07.660 state of times and you read the papers and the amount of money that's being stolen or 312 00:34:07.660 --> 00:34:13.500 are misallocated and the bureaucracy over bureaucracy or bureaucracy can say, 313 00:34:13.500 --> 00:34:15.620 is this insanity? 314 00:34:15.620 --> 00:34:20.220 So my hope for the future is that we can educate our children in a much better way, 315 00:34:20.220 --> 00:34:24.220 that we can grow the Mises Institute so they have an opportunity to hear this message. 316 00:34:24.220 --> 00:34:26.820 I'm thankful that I heard the message. 317 00:34:26.820 --> 00:34:30.220 Many people never have that opportunity so they're wallowing in ignorance. 318 00:34:30.220 --> 00:34:32.740 It's a pleasure to be with you here today and thank you very much. 319 00:34:37.660 --> 00:34:39.660 Thank you very much.