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123. Sergio Alberich on Capital Structure and Capital Flexibility

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The proper selection of a firm’s financial source does not guarantee its success, but the wrong one assures its failure.

Austrian capital theory delivers actionable insights for business. Austrian theory emphasizes capital’s economic role in generating customer revenue flows. Since these flows are variable, entrepreneurial capital must exhibit a capacity for agile and flexible combination and re-combination to keep revenue flows refreshed and current, Since capital structure plays an important role in entrepreneurial judgment, decisions, and action, it must support fast, flexible and unconstrained decision making. Businesses can benefit from their understanding of capital through this Austrian lens. Sergio Alberich helps the Economics For Business podcast listeners, and business practitioners in all kinds of businesses at all stages for their development, to Think Austrian in matters of capital structure.

Download The Episode Resource “Austrian Capital Financing” (PDF) – Download

Key Takeaways & Actionable Insights

Entrepreneurs designing a firm’s capital structure should view their choices through the twin lenses of ownership and control.

Ownership and control are tradeable assets for the entrepreneurial firm. In order to obtain capital financing, one or the other or both might be offered up by the entrepreneur or requested by the financier.

How will shared ownership play out now and in the future? Will ownership imply only a share in any future returns? How great a share is the entrepreneur willing to trade? What will it feel like to receive only a portion of the return the entrepreneur worked for? How much more ownership will be given up in future financing rounds?

Can ownership be traded without any loss of control over decision-making and future investments? Alternatively, how much control should be traded? A board seat? An investment committee? The financier wants the entrepreneur to be free to make the decisions for which he or she is best-informed and most capable, and yet wants to be protected from managerial error.

There are many factors that can stand in the way of capital flexibility, and organizational issues of ownership and control become paramount.

Debt and equity are the basic choices as building blocks of capital structure.

Debt and equity are basically different kinds of contracts between the individuals managing / operating a project and those funding it. Debt is a fixed claim with a known annual return to the debt holder. Typically, the debt holder has no control over management decisions and is not involved in managing the company (although there are some covenants that can be written to provide some distant control).

The return on equity for the financial investor is residual, after debt repayments are made, leaving entrepreneurs relatively free to allocate costs and direct operations. But equity holders typically hold voting rights, and can therefore exercise some control in some circumstances. They may also exert strong influence on management decisions based on relationships. For example, family and friends investors may exert special relationship influence.

There are some debt-equity hybrids — most notably convertible notes, debt that is convertible into equity at some future stage or event. The negotiation of this instrument brings more complexity to the ownership-control debate, while giving the entrepreneur leeway to consider issues of valuation in the future rather than at the current financing.

Entrepreneurs must also consider human factors, especially the number of people in the capital structure.

Another major consideration for entrepreneurs is whether to raise debt or equity from a few people or many (e.g., via IPO or a bond that hedge fund investors can buy). Raising capital from large numbers of investors creates categorically different situations for the entrepreneur. An IPO, for example, can not be a highly tailored instrument. Institutional conventions and regulatory rules impose many requirements about how entrepreneurs and their managers communicate, how they frame financial risk, and about the nature of widespread shareholder engagement they take on. Just think of the interaction of Elon Musk on Twitter, with the SEC, and with short sellers.

In general, the fewer the number of investors, the greater the operating flexibility for the entrepreneur. There are fewer people to convince when business seeks to make a major change, or to pivot.

Sergio Alberich outlined 4 levels of consideration for the financial investor providing capital to the entrepreneurial firm.

Level 1: How are the factors of production combined in the firm, and how might the combination change in the future? Elements of this level of consideration include the stage of business in its growth journey and the assessed maturity of its business model, industry, and competitive set; the nature of the business’s relationship with partners, suppliers, channels and customers; and the state of knowledge regarding product, service and market development.

Level 2: What is the nature and scale of cash flows now and in the future? Are there mature, reliable cash flows? Is one part of the business a drain on cash resources? Is cash coming in from investments for operating expenses (which are not really flexible).

Layer 3: What are the possibilities for returns? Both entrepreneurs and investors seek profit – not just accounting profit on the P&L but returns on equity. At an early stage, a company may worry about generating future cash flows and less about the cost of equity (in terms of sacrificed future returns) to finance growth. A more mature company with cash flows in the present pays much more attention to the cost of equity, and to cost of capital in general, seeking to preserve as much return as possible.

It is often the case that entrepreneurs give up too much equity in order to secure early stage venture capital funding, whether directly of via convertible loans. To keep the entrepreneur motivated with equity that promises future returns, it is best for them to deal with just a few investors who understand this motivation.

Organizational design is relevant, too. For example, a law firm with 100 partners, each of whom own 1 share, and limit their business model collaboration to sharing real estate costs and IT expenses, while effectively running 100 projects, might be creating a politicized nest of vipers. A partnership with shared equity in one business, where everyone stands to lose a lot if there is a bad decision, is likely to be much more collaborative, conducting a unified business, rather than acting as a co-operative of individuals sharing costs.

In the end, subjectivism in entrepreneurship prevails.

As we emphasized in episode #108 (see Mises.org/E4B_108), businesses perform best when entrepreneurs are free to make subjective decisions. The proper source of capital is one that most enables this subjective freedom, which may not be the optimum source based on spreadsheet calculations. Subjectivity and entrepreneurial judgement are not math. The best economic role of capital finance lies in helping entrepreneurs make better human subjective decisions. This is the essence of the means-ends calculation for both entrepreneurs and investors. Austrian economics gives by far the best guidance on this economic role of capital.

Additional Resources

“Austrian Capital Financing” (PDF): Download PDF

“Austrian School vs. Neoclassical School” (PDF): Download PDF

89. Jeff Booth: How Entrepreneurs Can Harness The Power Of Technological Deflation

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What is technological deflation, and how can entrepreneurs take advantage of it? By combining already available and easily accessible technologies to facilitate the accelerated information flows that constitute value in the 21st Century: higher quality, faster speeds, lower costs. Jeff Booth explains.

Download The Episode Resource Value Then vs. Value Now PDF – Download

Key Takeaways and Actionable Insights

Technology reduces the labor factor, lowers costs, and frees up time.

These are the components of deflation: less labor and effort for any unit of output, faster speed, lower material costs, and re-allocation of time to from lower to higher productivity activities.

The speed at which this technological change is happening is “staggering” in Jeff Booth’s words, and will accelerate. More and more time will be freed up to allocate to higher uses.

The result is deflation: higher quality for lower cost at faster speeds.

The only reason price deflation is not pervasive throughout the economy is the status quo governmental system.

Federal Reserve money printing, more and more debt, lower interest rates – these are actions designed to drive price inflation. This scheme defies the natural order of technological deflation. It is the great fight of our time, says Booth, to end the inflationary scheme.

But for entrepreneurs, the right action is to embrace and harness tech deflation.

There is tremendous leverage for entrepreneurs in the current economy of technological change.

Jeff uses his “folding analogy”. If you could fold a piece of paper 50 times, it would reach the sun. Technological change is at the early folding stage today, but each new fold doubles the growth rate and the impact.

The way for entrepreneurs to put this folding analogy to work for them is by combining technologies. Several folds at once.

One of Jeff’s examples is Elon Musk. In Jeff Booth’s words, Musk forecast three exponentials: the exponential improvement in battery technology, the exponential increase in the role of software in automotive engineering, bringing information flow into the vehicle, and the exponential improvement in A.I. to bring self-driving features to automobiles. Taken together, these three widely available technologies made Tesla a revolutionary venture, surpassing GM in market capitalization.

The same “crazy opportunities” are available to all entrepreneurs.

We don’t all have to be Elon Musk. The possibility to increase customer value and reduce costs at the same time are available to all entrepreneurs. One of the keys to success is to direct technology towards increasing data capture: more and more data signals to drive deep learning via algorithms, leading to better and better and faster and faster decision-making. Data collection platforms managed with A.I. algorithms can generate the exponential growth that Jeff refers to.  Google and Amazon are the examples everyone talks about; but here on E4E, in episode #84, Bob Luddy talked about sensor-based data collection in his CaptiveAire restaurant ventilation systems, feeding performance data back to the central platform for increased learning and improvement. The opportunity is available to all types of business.

Value looks different today than in the past, and it will look different again in the future.

“What will value look like in the future?” is one of the questions Jeff Booth urges all entrepreneurs to ask for themselves and their business.

He cited one example from history: the Blockbuster video rental business. To Blockbuster’s owners and managers, value looked like the convenience for consumers of movie entertainment of 9000 stores across the country, each with a huge selection of videotapes to choose from. Their idea of adding value was to provide popcorn and candy in the checkout aisles. But when Netflix came along, value starts to look different. It’s the convenience of streaming movies directly to your digital TV or tablet in your home or on the go, with constant additions to the offering, both of original content and content from other channels. The 9000 Blockbuster stores no longer look so convenient. Information flow and digitization make value look different.

Another example Jeff cited is the university education business. Traditionally, its value is based on real estate – an exclusive set of physical buildings in one specific place to which students must travel (or rent a dorm room) in order to access an exclusive faculty of high-reputation teachers. Now, with technology and information flow, the core knowledge is accessible anywhere / anytime, and is tending towards free. Offline educational ventures can hire the teachers to make video classes available to the world, and virtual reality will make the experience even more vivid and more enjoyable. The knowledge is the same. Students’ questions are probably the same. The cost structure is totally different.

Three principles for entrepreneurs to facilitate new value in the future.

Given these examples, and given the trends of accelerating digitization, data flow, multiplicative combinations, and algorithmic analysis and intelligence, what are the principles for business to follow to be able to facilitate new value for customers?

1) Aim for 10X improvement in the customer experience.

The rate of acceleration is so fast, and the exponential potential of new combinations of technology is so great, that innovators must aim for a 10X improvement in customer-perceived benefit to command attention, turn heads and dislodge customers from their current choices. (Curt Carlson made the same point in episode #37.)

2) Make your thinking boundaryless.

One of the great restrictions on entrepreneurial creativity is the institutionally and historically imposed tradition of thinking in silos, and thinking that industries have boundaries. Universities have their faculty departments and corporations have their divisions, and they tend to put silos around thinking. But the Elon Musk example of batteries + software + A.I. crosses industry boundaries, technology boundaries, performance boundaries, and financial boundaries. Boundaryless thinking can open up endless new possibilities. Entrepreneurial economics teaches the re-combination of assets, not necessarily the creation of new ones. Busting silos can lead to new combinations.

3) Forecast the exponential.

Where in your frame will exponential change occur? Use your imagination to try to forecast it. The future can’t be predicted but it can be imagined. The challenge is to imagine the next fold of the paper and the next one and the next one; and the next combination of two or three or four or more new technologies. The idea of the exponential can be applied everywhere.

Free Downloads & Extras From The Episode

Value Then vs. Value Now PDF: here.

Get Jeff’s Book The Price of Tomorrow here.

“The Austrian Business Model” (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

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87. Professor Matthew McCaffrey: The Austrian Definition of Capital and its Application for the Health of Your Business

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Key Takeaways and Actionable Insights

An understanding of the Austrian definition of capital is tremendously useful to all business owners and managers.

What is capital? Austrian economics has a precise and distinctive definition — unlike business schools and most business publications, books, and columnists. Among those entities, the term capital tends to be used very imprecisely. You might see sentences like, “Entrepreneurs must ensure they have sufficient capital to get their new product to market”, or “to get to break-even”. Such usages imply that capital is a cash reserve to be “burned off” in the process of launching and scaling a business.

Recently, it has become fashionable to coin terms such as human capital, or brand capital, or relationship capital, or even spiritual capital or street capital. All of these terms are sloppy definitions of capital from an Austrian point of view.

And it’s important to note that capital is not the same as capital goods, which are “produced means of production”. Capital is not a means of production, it is a consequence of production.

What, then, is the precise Austrian definition of capital?

On the E4E podcast #87, Professor Matthew McCaffrey gives us this definition:

Capital is the monetary value of a business’s claims to income. This includes all of its marketable assets, whether they are tangible or intangible. It’s a sum of individual values. These values are ultimately determined by consumers, because the value of a firm’s assets and the value of its income streams ultimately depend on how consumers value the final product. Crucially, capital is distinct from what are called capital goods or production goods, which are the physical goods used in production. Those are also vital for understanding how entrepreneurship works in practice, but they are not capital in the sense in which we mean it.

In summary:

  • Capital is a flow (rather than a stock)
  • Coming into your business
  • From consumers
  • Reflecting the value consumers perceive in your company’s services.

B2B businesses can substitute the term “final purchasers” for consumers if producing goods and services purely for business customers. But it is important to remember that the value of capital always eventually reflects the valuations of goods and services by consumers. The software or professional services your B2B business provides to a business customer will command less of a claim to income if that business customer faces a change in preferences and a decline in market demand from their consumer population. When forecasting future income flows, every business must bear in mind the climate among ultimate consumers.

What are the implications for entrepreneurs and business managers?

  • Flows can be generated via tangible or intangible assets.
  • Consumers’ valuation of services is the key variable.
  • Entrepreneurs must be able to appraise which assets — in which combinations — are generating the flow.
  • The flow can change — even disappear — when consumer preferences change: entrepreneurs must be able to adjust.
  • Large flows can result from a low asset base — and vice versa.
  • Appraisal — predicting future prices and flows — is the vital skill to determine what to invest in, how to organize, and what to produce.
  • Cash flow is the measurement variable.
  • Use cash flow to calculate asset productivity.
  • Update appraisals continuously based on cash flow.

What about capital goods?

  • Capital is NOT the same as capital goods.
    • But capital goods can be generators of capital flows.
  • IF consumers value their output.
  • Austrians stress HETEROGENEOUS capital goods, both tangible and intangible.
    • A jigsaw puzzle to assemble, disassemble, and reassemble in the right combination, based on consumers’ valuations.

What actions should entrepreneurs take as a consequence of the Austrian view of capital?

  • Always focus on the value you are facilitating from consumers.
    • They, in turn, will generate your capital flow.
  • Measure the flow in dollars — especially the trend.
  • Be a master appraiser: know your asset productivity.
  • Set up your assets for flexibility — be fully able to disassemble and reassemble capital combinations.
  • Experiment frequently with different combinations.
  • Become comfortable with continuous change in asset combinations.

Free Downloads & Extras From The Episode

Professor McCaffrey made reference to Frank Fetter’s role in defining capital in his online discussion, “Frank Fetter and the Austrian Tradition in the United States”: View Online Discussion

Professor Peter Klein explains why metaphors like Human Capital are unhelpful to entrepreneurs in his article, “A Note on Human Capital“: View Article

“The Austrian Business Model” (video): https://e4epod.com/model

Start Your Own Entrepreneurial Journey

Ready to put Austrian Economics knowledge from the podcast to work for your business? Start your own entrepreneurial journey.

Enjoying The Podcast? Review, Subscribe & Listen On Your Favorite Platform:

Apple Podcasts, Google Play, Stitcher, Spotify

38. Per Bylund on The Laws Of Agile: A welcome step towards the Austrian vision, but not quite all the way there.

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The management methods and practices that have been gathered under the term Agile claim the status of a Copernican Revolution. Agile reverses the traditional view of business revolving around the firm, instead placing the customer at the center and viewing all other elements as revolving around the customer.

This is a welcome development – but just a step towards the Austrian vision of consumer sovereignty and the concept of value as created by the consumer, not the producer.

Key Takeaways And Actionable Insights

The management methods and practices that have been gathered under the term Agile claim the status of a Copernican Revolution. Agile reverses the traditional view of business revolving around the firm, instead placing the customer at the center and viewing all other elements as revolving around the customer.

This is a welcome development – but just a step towards the Austrian vision of consumer sovereignty and the concept of value as created by the consumer, not the producer.

We examined the three Laws Of Agile proposed by Stephen Denning in his book The Age Of Agile, and Per Bylund noted the elements that are useful for entrepreneurs, and the extra insights provided by Austrian Economics that can help entrepreneurs to perform at a higher level in facilitating value experiences for their customers and consumers.

The Law Of The Customer

  • Agile recognizes that the one valid definition of business purpose is to create a customer.
  • The customer – with mercurial thoughts and feelings – is at the center, and demands to be delighted.
  • What the firm thinks it produces is less important than what the customer thinks he / she is buying – what they consider “value”.
  • Everyone in the firm must view the world from the customer’s perspective, and share the goal of delighting the customer.
  • The firm must have accurate and thorough knowledge of the customer.
  • Continuous innovation is a requirement to delight customers.
  • The firm’s structure changes with the marketplace.
  • Speed of response becomes crucial and time is a strategic weapon.

Austrian Enhancements

  • The Austrian concept of Customer Sovereignty is even more powerful for entrepreneurs  – customers create firms, in the sense that customers decide what is produced by buying / not buying, and therefore which firms are successful.
  • Value is subjective – and so customer preferences can change rapidly and frequently.
  • Responsiveness is not enough – the goal is to imagine the customer’s future needs, and involve them in the production of future value.

The Law Of Network

  • Collaborative network of competence replaces hierarchy of authority.
  • The network has no leader, but it does have a shared, compelling goal.
  • The network is the sum of the small groups (rather than individuals) it contains.
  • Each group has an action orientation.
  • The network’s administrative framework stays in the background. No bureaucratic reporting.

Austrian Enhancements 

  • Agile is based on too narrow a view of the economic network. It’s still producer-centric.
  • The true network is the market – which includes customers (of which there are many more than firms, and who exert more economic influence than firms).
  • Networking the production side of the firm is an incomplete act.
  • A fully-functioning network includes customers and consumers with equally valid connections to the firm, not just collaborative production partners.

The Law Of Small Teams

  • Big and difficult problems are disaggregated into small batches and performed by small cross functional teams – scaling down the problem.
  • 7 +/- 2 is a good rule of thumb for team size.
  • Each team is autonomous, and works in small batches and short cycles.
  • Each team aims to get to “done” – it’s binary: either done or not done, never almost done.
  • No interruption.
  • Radical transparency.
  • Customer feedback each cycle.
  • Retrospective reviews.

Austrian Enhancements

  • A pure focus on short term execution can divert attention away from longer-term considerations – especially, imagining the future, which is the core component of entrepreneurship.
  • Focus on creating value for the future, while ensuring no loss of current reputation and relationship.
  • Administration – and therefore “bureaucracy” –  can’t be eliminated entirely without a reduction in customer value.
  • Required services can be a component of value creation – such as compliance, operations management, etc.

DOWNLOADS & EXTRAS

The Laws of Agile Meet Austrian Economics PDF: Our Free E4E Knowledge Graphic

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Austrian Capital Theory Provides Principles Of Capital Allocation Every Entrepreneur Can Apply Right Now.

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Why do we make the case that Austrian Economics is the best resource an entrepreneur can use to grow their business? Because the principles of Austrian Economics are clear, precise and can be activated immediately in any business decision.

Here’s an example: how to allocate capital in your business. Most of the capital that’s free to allocate comes from your cash flow, and it might also come from investors and lenders. Whatever the source, you must allocate it to grow your revenue and profit. How do you make the decision? Here are five principles:

Zero-based capital allocation.

Austrian Capital Theory prizes responsiveness to market changes – your capital structure should reflect the preferences of your customers, and those preferences are in continuous change. Therefore, zero–base all your capital allocation decisions. Don’t allocate based on what you’ve done in the past. Allocate based on where revenues and profits can be generated in the future. Sometimes this is called agility. Whatever term you use, make sure you are not allocating capital today simply to continue or repeat what you’ve done in the past.

Fund strategies, not projects.

Austrian Capital Theory directs entrepreneurs to focus on long term value creation. This means funding strategies not projects. Identify strategies that will produce growth, and then make sure you allocate sufficient capital to foster that growth. Projects can be initiated once the strategy is determined and launched. If you fund projects, the economic calculation can always be gamed – creating a spreadsheet justification for any project.

Continuously assess which strategies are creating value, and fund them from strategies that are not.

Capital does not have to be rationed. It should be allocated to those strategies that create value and deliver growth. There is always a source – strategies that are not creating value. It’s simple portfolio management.

No tolerance for bad growth.

Customers determine which strategies are delivering value for them and therefore delivering growth for you. The customer decides what grows. They won’t tolerate any offering from you that falls below their value threshold. And you should not tolerate the continuation of any strategy that falls below your growth threshold.

Know the value of assets.

Austrian Capital Theory identifies the value of assets as the future revenue and profit streams they generate from customers. When that changes, the value of the asset changes, and economic calculation must adjust. You should be continuously asssessing the value of your assets with this calculation.

Here is an example of these principles of Austrian Economics being served up in business language, from Credit Suisse. The authors make it sound analytical and strategic, but really it’s the expression of established principles that every entrepreneur can apply.

https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=em&document_id=1066007811&serialid=yKerDV9lV5lbOxhMTMaFhAZ9MZ8nzrqd4M0N8V3Gv9c%3d

Get insights like this every week from the Economics For Entrepreneurs podcast.

19. Per Bylund: ACT! How To Apply Austrian Capital Theory In Modern Organizational Design, Contemporary Business Structure, and A High Response Business Model

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Austrian Capital Theory (ACT) sounds arcane, academic and complicated. In fact, it’s the key to modern organizational design, cutting edge business structures, and the high-response business models leading entrepreneurs deploy to win in today’s business environment.

Show Notes

Austrian economics recognizes that capital and resources are so varied and different today that agile entrepreneurs can combine them and recombine them in ways that are highly differentiated – even unique. Every firm is a capital structure that is in continuous flux, as the entrepreneur changes and adjusts to create new value in response to marketplace and environmental changes. Therefore, the whole economy is a changing, rapidly evolving capital structure, generating economic growth. It is the appreciation of the need to continually shuffle the firm’s capital combinations, and the mastery and agility in doing so, that marks the Austrian Entrepreneur. He or she is an orchestrator of capital, buying and selling capital goods and combining them with new and retrained workers to change production processes, scale up to new levels of efficiency, and to solve customers’ problems in new ways.

The purpose of the orchestration function is to achieve the highest return on capital by creating the most customer value. The value of capital is the future revenue streams it generates from customers, and revenues are a reflection of value created. Entrepreneurs examine every piece of capital, and every capital combination, to measure how much value creation it contributes. Could it do more? Can the entrepreneur render the capital more productive in maximizing value at the end of the production chain?

How can entrepreneurs assess whether their combination of capital assets is right? The managerial accounting of Austrian entrepreneurs is not identical to formal financial accounting. A conventional balance sheet is not going to tell the truth about the money-value of assets, since it is not based on assessing future revenue streams. And this year’s P&L is of little use since it is static and backward-looking. How can entrepreneurs differentiate between assets that it merely feels good to own and assets that genuinely create consumer value and future revenue streams? It’s not easy, but there are two useful steps, both of which focus you single-mindedly on the consumer.

  • Root out those assets that clearly do not contribute directly to consumer value, or clearly contribute very little. An office building might be one such example. It’s nice to have a central office, but couldn’t your employees contribute as much from a remote location, so that you can eliminate the cost of centralization?
  • Examine capital combinations that could contribute more if they are rearranged. A server + software + trained personnel is a productive combination. What if the entrepreneur could ditch the server and rent computing power from AWS? What if the savings could be reinvested in more training for the person or better software? Would this rearrangement contribute more to consumer value? Renting rather than owning assets is one way to add dynamic flexibility to the firm.

Austrian Capital Theory Diagram

The entrepreneur should focus the firm on what it alone can uniquely do for its consumers and customers. Outsource everything else. The firm is a necessary vehicle for the entrepreneur to take ideas to market to earn a profit. It is at its most efficient when it is 100% focused on what it does uniquely: its unique brand, its unique processes, its unique recipe, its unique design, its unique functional and emotional benefits for the consumer. Everything else should be stripped away. The necessary infrastructure can be rented or outsourced. If you own 10 computers and have 10 people sitting at them every day, it’s hard to identify what productivity you are getting out of each of them every day. If you don’t own them, and you are thinking rigorously about the future streams of consumer value your firm is producing, you won’t feel locked in to your current capital structure.

A “capital-lite” structure in no way reduces the market value of the firm – in fact, it can increase it. In the past, companies were valued based on the assets they owned, as captured on the balance sheet. But this valuation method was based on an assumption that the assets were owned because they produced consumer value and contributed to profits. What if the assets are not contributing to future profit? They become a liability. Firms like GE are finding this out today – they own a lot of non-contributing assets and face major transaction costs in shedding them.

There is no need to own consumer value-producing assets. You need to control then and have the rights to utilize them to produce value, but not to own them. In venture capital markets, it is common to see firms change hands at a price that represents a high multiple of revenues or of earnings, even if the traditional capital base is insignificant. Assets that don’t appear on the balance sheet, like brand and a loyal customer base, are more important than those that do.

ACTIONABLE INSIGHT: The Austrian Entrepreneur reviews combinations of capital and labor and non-capital resources at every moment, seeking ways to improve that combination for the consumer’s benefit.

The single-minded focus is on consumers and their changing preferences and the consequent implications for responsive change in the capital structure of production.

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