Free Enterprise Archives

May 5, 2020May 5, 2020

Change Can Create Opportunity

Some folks have asked me what I think about the Coronavirus situation. Like the rest of you, I’m concerned about loss of life and damage to the economy. But as an entrepreneur, I also think moments like this are where opportunity lives.

In 1975, the brokerage industry switched from fixed to negotiated commissions and, in that moment, a lot more than a decades-old business model was upended. Changing that rule led to the creation of innovative new businesses like Ameritrade. It also fundamentally altered human behavior with individual investors taking control of their own financial futures in a way that didn’t exist before.

The Coronavirus is a lot scarier than negotiated commissions were in 1975, but the same idea is true: change can create opportunity. Already we’re seeing one business after another change how it sells or what it sells to adapt to changing circumstances.

So what does that mean for us as we live through this increasingly challenging time? For some people, it will mean investing in businesses and ideas, even at this moment when everything feels uncertain.

Everyone who invests at a moment like this has his own reason for doing it, but they all share a belief that, in time, things will get better . . . they always have. These people are optimists who are willing to bet on our future. And, at its core, the free enterprise system rewards people who bet on our future because that’s where new jobs, opportunity, and innovation come from.

But not everyone has money to invest, even if they are optimists. A lot of people are just worried about how to make payroll at their business or how to pay their rent. As someone who wasn’t raised with a lot of money and who lived through more than one chapter concerned about making ends meet, I understand what people are going through. And yet for some of them who have the inclination, I’d say think about what new idea can spring from the rapid and dramatic change we’re living through.

Like a lot of people, I am working via video conference for the first time – a new trick for this old dog whose career was spent visiting face-to-face with people. In the high schools I support, the entire classroom has moved online. And people are using social media differently when it’s the only social game in town. I believe changes like these – and dozens more – will have a lasting impact on our society. Exactly what that impact is remains unknown for now. But innovative entrepreneurs are going to find ways to adapt existing businesses to the changed landscape or to invent new businesses for this new era. They’re going to be placing bets on a better future and that will be how we begin to emerge from the current challenges.

April 9, 2020April 10, 2020

Some Thoughts About the Coronavirus (COVID-19)

When you get old enough and have some success in business, people start asking you for your opinion on issues. (In my case, it’s a funny thing because I built Ameritrade on the idea that the advice brokerage firms were peddling wasn’t worth all that much and some people would prefer to make up their own minds about how to manage their financial futures.) So even though I’m not a doctor, people have been asking me what my thoughts, attitudes, and opinions are as we go on with the war against the Coronavirus (COVID-19).

A lot of decisions were made in March reflecting a rapid evolutionary response. At my companies and philanthropies, we’ve been able to keep most of the jobs although I have needed to make some difficult personnel decisions.

My wife and I aren’t young so we haven’t been taking any chances. Whether at home or in my office, I’m effectively self-quarantined with everyone on my payroll who’s able to do so working remotely.

On the Health Front:

As we go through the next 30-60 days, we will learn more about immunity, mortality, and treatments. I don’t think the country will have any large gatherings of any kind until we have a vaccine, and that will not be right away. In the meantime, I think medicines and treatments will be developed that will help to prevent people from getting the virus and to heal those who have acquired it. This spring and summer will be an anxious and tough time for everyone. Hopefully we’ll have a serum soon, and I’m sure there will be an easier and quicker test developed before too long.

On the Business Front:

Globalization is changed forever. Old supply lines will disappear, and new ones will open. Each country has its own culture, so each will experience its own health and business conditions. I think the United States will come out of this war not only the strongest, but stronger economically, somewhat similar to our position coming out of World War II. But this is only if we can get our unemployed back to work. For the long-term economic viability of our country, we need to get people back to work as soon as it’s reasonable to do so. The items mentioned in the Health section above will need to support what’s reasonable. We need to know that we are a nation at work or going back to work soon.

Image of Spanish Flu Nurses and patients

I have lived through four previous severe economic recessions, and I have faith in our Free Enterprise system; so much so that I’m willing to look across the valley of economic downturns to guesstimate how we might come out, take risks, and make investments for what I see as attractive possibilities. However, achieving our health goals and not achieving economic goals will have dire consequences, and we need to be realistic about that as we make trade offs.

We as a country need to develop an attitude and systems for getting the unemployed back to work while continuing to fight this virus. It won’t be an easy path but I am confident we’re up to the challenge.

September 12, 2017March 4, 2020

Why I’m Against Unions At Businesses I Create

It is the Free Enterprise system that has made this country an economically wealthy and powerful nation and I enjoy participating in it. And I like starting businesses that solve problems and create jobs. In fact, I love it.

When a business succeeds, it’s fantastic; fantastic for the people working in the business, and fantastic for consumers who benefit from a new product or service.

But, there’s a tough reality to starting businesses: more of them fail than succeed. In fact, most businesses fail. They fail because it’s hard to build a successful company. There are always powerful forces working against you – e.g., competition, regulation, access to capital, poor execution, poor timing, bad luck. Sometimes it turns out that your idea just won’t work.

And yet, here’s the thing: trying to solve all the problems that a business faces is what’s fun for me, particularly when I’m doing it shoulder-to-shoulder with people who share my passion for building a successful enterprise.

Which brings me to the topic of unions.

There can be no doubt that historically, unions served an important purpose, balancing power between ownership and labor. Indeed, the early days of capitalism were a bumpy ride, and the relationship between ownership and labor was often out of whack in the late 19^th and early 20^th centuries. And yet, 2017 looks a lot different than 1917.

But, I’m neither a historian nor an economist. I’m an entrepreneur, so I’m not going to wax on about the historical imperative of unions and why they do or don’t serve a role in our modern economy. I will, however, tell you what I know, and I know about starting and growing businesses. I know that businesses constantly face a barrage of obstacles to survival – never mind success – and, in the face of that, everyone at the company needs to be pulling together or that company won’t make it. I know that keeping a company growing and thriving requires focus and tireless effort by everyone. Indeed, in my opinion, the essential esprit de corps that every successful company needs can’t exist when employees and ownership see themselves as being on opposite ends of a seesaw. Everyone at a company – owners and employees alike – need to be sitting on the same end of the seesaw because the world is sitting on the other end.

I believe unions promote a corrosive us-against-them dynamic that destroys the esprit de corps businesses need to succeed. And that corrosive dynamic makes no sense in my mind where an entrepreneur is staking his capital on a business that is providing jobs and promoting innovation.

That’s why the type of company that interests me is one where ownership and the employees are truly in it together, without interference from a third-party union that has its own agenda and priorities. I’m not interested in any agenda at any company I start, other than working together to deliver something exceptional to consumers and doing it as everyone pulls shoulder-to-shoulder tackling whatever the marketplace throws at us.

It is my observation that unions exert efforts that tend to destroy the Free Enterprise system.

September 22, 2016March 4, 2020

Why I’m Supporting Future45

You might have read that my wife and I are supporting Future45 in its opposition to Secretary Clinton’s presidential campaign. I didn’t make this decision quickly or lightly. In fact, it’s no secret that I’ve had my concerns about Mr. Trump.

But there’s a stark reality that I can’t ignore: our country is headed down an unsustainable path that is eroding future opportunity. The people walking us down this path have lost sight of the fact that it is the free enterprise system that has produced the opportunity, jobs, and innovation that have made the United States the greatest country in the world. Higher taxes and government orchestrated wealth distribution is a shortsighted and unsustainable strategy. New businesses started by entrepreneurs drive economic expansion, and economic expansion raises the standard of living for everyone in a lasting and meaningful way.

I truly believe that four more years of the Obama-Clinton economic policies will further cripple our economy and the middle class. So while I had my differences with Mr. Trump in the primary, I believe that he and Mike Pence represent a better way forward, especially when teamed with Speaker Ryan and Senator McConnell.

For me, this election comes down to a binary choice between extending the failed Obama-Clinton economic policies and believing that Messrs. Trump and Pence bring fresh thinking to how we can reignite the engines of economic opportunity. Given that choice, I’m supporting the Trump-Pence ticket as well as other leaders who will advance pragmatic, positive financial policies to promote our future prosperity.