Episode 072: Dr Brian Thompson, DePaul University

Speaker A: Welcome to the Economics and Strategy Podcast, where business plans and market behavior intersect. I'm your host, Rich Mullen. This podcast is brought to you by the Business Strategy and Decision making program at DePaul University's Department of Economics. This month, we welcome Dr. Brian Thompson, clinical professor of economics at DePaul and faculty member in the Business Strategy and Decision Making program. As the son of educators, he takes his role seriously and is very focused and intentional in his preparation and classroom goals. In this episode, we discuss the intersection of economics, business and strategy, and how he uses real world experiences to connect those areas in ways that engage and enlighten his students. He explains how economics and its study of choices in the face of scarcity provide tools to consistently make the best available decisions with the resources at hand. It's a masterclass for sure. Give it a listen.

Speaker B: Dr. Brian Thompson, welcome to the Economics and Strategy podcast.

Speaker C: Thanks for having me.

Speaker B: Of course, for our audience that doesn't know who you are, Dr. Brian Thompson is a clinical professor of economics at DePaul and my friend and also is a. Um, he spreads himself around a little bit. He runs his own shop and also works at an angel investing firm. So, as we always do, we're going to start off by talking a little bit about you and kind of introducing our audience a little bit with, uh, your early years as an adult and trying to figure out who you are and what you want to become, um, and maybe where you're from and some other things like that. So if you could start us off that way, b. That would be great.

Speaker C: Sure, absolutely. Born and raised in the Midwest, um, suburbs of Chicago. Uh, lived in Chicago for a little while. But I kind of like the suburbs. I like my space, I like grass, little bit of land. Um, so I definitely have gravitated, uh, there. Um, it's interesting you bring that up about kind of like, trying to figure out who you are, because I think that during those early years, that probably was difficult for me. Um, we kind of experienced that a little bit with our daughter now, just trying to help her find her way. And I think that that is one of the joys of parenting. And so, uh, yeah, I mean, I learned a lot during that time frame. Uh, kind of learning a little bit about what I'm good at, what I'm not good at. Things, uh, I was interested in things I was passionate about. Um, at the time I didn't probably realize it, but, like, understanding, like, what is needed in the world, um, you know, I wasn't able to convey it, you know, as I am now through an economic lens, but like realizing that, you know, like working in a small business that, you know, like, there's certain things that people want, certain things that they don't want. You stay in business longer if you give people what they want. And so just kind of like figuring those things out and then just kind of figuring. My path, I think was important for me. And, um, that path always connected to education. Uh, you know, both my parents are educators, and so, um, I was involved in education even though at the time when I was younger, I didn't necessarily like school. Um, and again, I think that's part of the pathway of just figuring out, uh, your piece of it. And for me, education became this kind of vehicle for, um, knowledge acquisition and being able to apply it in a way that was meaningful to me. And, um, I'm sure as we'll talk about, that's what I try to do with students in the classroom is I try to help them find what's meaningful to them so that they can apply it.

Speaker B: Why do you think you couldn't, uh, quite figure out your path and be successful in your early academic career? What was lacking, I think at that

Speaker C: time, and I think education has evolved from that time. But during that time it was very cookie cutter, you know, everyone, you know, kind of got the same, you know, kind of education, if you will. And for me, uh, I'm one of those types of people that I need to understand the meaning in something. I need to understand usefulness. Um, and I would enhance my kind of usefulness of it if it applied to something that was relevant to me. And that's just the way I learn. And it's something I often share with students, is that part of learning is learning how you learn. And then once you learn how you learn, then you can learn anything. And so that's what happened to me is that initially I was taking classes that I didn't have interest in. Um, I had to take science class. I always joke with my daughter, it was the one with the rocks. Um, I don't remember what it was called because science is not my thing. It wasn't something that I had interest in. It's important, uh, and I'm thankful for the people that do have interest in it, but it's just, it's not for me. Um, and so once I was able to find this thing called business, uh, things started to click. Um, I wasn't necessarily even super strong in math, but once I connected to finance, you know, Calc two, you know, all the Way up. Like, it. It all became more connected. And I think that that is one of our jobs as educators is to help individuals connect to what they're doing. And so that was, you know, to me, that was kind of the turnout turning point. And then, you know, like, it turned into. With the way I communicate writing, uh, someone shared with me a long time ago, I always share it with students. Is that the way in which you communicate strongly dictate your income. And I believe that to be very true. And so all that came together for me once I found this path called business.

Speaker B: So was that not being able to connect the dots, per se, in your early academic career, was that, um, a you thing, or was that the kind of the teachers that you were exposed to? Or maybe a little bit of both. I mean, I don't know.

Speaker C: I would definitely say it's a little bit of both. Uh, you know, again, I. I think that. That sometimes people don't realize the power you have when you step in front of the classroom. And I think that's a really important aspect to have. Like, you have the ability to shape the way someone thinks about learning. And that's an amazing superpower if you allow it to be. Or it could just be a way to collect a paycheck, or it could just be a way to, um, get through material, which is one, you know, my biggest pet peeves about education. We're just trying to get through material. Like, nobody wants you to get through material. People want you to enhance the way they understand something. And so for me, you know, we have this thing called a syllabus, but I'm more interested in ensuring that you are better at the end than you were at the beginning. And if we don't cover everything that was on the syllabus, then so be it. Um, the reality is, is that, like, we really need to make sure that people understand things. And I think that at that time and at the institutions I was at, that was not, uh, you know, that wasn't the focus. And I think that that was difficult for me. Me, on the other hand, I definitely played a role, and there's no question about it. Uh, you know, I didn't necessarily have a great sense of direction. You know, my father passed away when I was younger, and so I didn't really have kind of someone, you know, really directing me, if you will. Um, and so I think that that's why it took me a little while to kind of find my way in that, you know, in that kind of, uh, domain. But once I did Then I was able to make it happen. And I found mentors outside of, you know, people I've never met. You know, I've got shelves of books here of people who are my mentors that I've never met. And so I think that's really what ended up happening was, is that I found an alternative way in which to generate that path.

Speaker B: So for your, uh, other. Outside of books and other things like that, in your own career, what was the moment at which you really started to feel connected with what you wanted to do? Because your initial career was in trading? What did it. What. What. What lit the fire?

Speaker C: Yeah, I mean, I think the fire was kind of lit towards my, like, the last year or so of my undergraduate, uh, um, you know, time I was at Governor State. And so it was around that time that I really started, you know, taking classes. I found interest in, like, I found interest in finance, I found interest in derivatives, and I found interest in, you know, like. And it's interesting, too, and this is something I always share with students, is that, you know, kind of like, there's, like, unearthed passions that you have. And so, like, for example, all through high school, I did musicals, and I never got a big role. Like, I always had a couple lines. It was nothing spectacular, uh, but I enjoyed the process. I enjoyed being around musicals. And now today, my wife and I, we go to musicals all the time. But underneath all that is this thing called, like, drama. And I view markets like a drama. It's a drama unfolding. It's actors, it's behavior. It's these things kind of going back and forth. And so that all those pieces kind of connected for me in the sense that, like, I. I view business as a way to understand people and behavior and interactions. And then I combine that with kind of going, you know, coming to DePaul and getting my MBA and meeting professor, uh, Tonorio. Like, that's where I started to formalize that type of thought process. But I was doing it prior. I just didn't realize it because I was connecting to something that was relevant to me. This, you know, like, drama. And you look at the financial markets today, it's a drama, you know, no question about it.

Speaker B: Yeah, no question about it. So when you first, you told me a story about walking out onto the, um, open floor of the markets when you first, uh, were introduced to trading. Tell me a little bit about what that experience did for you.

Speaker C: Yeah, when I graduated with my undergraduate degree, I had an opportunity to spend a summer working on the floor of the Chicago Board Options exchange. I don't even know what options, I should say. I didn't know what options were, but I didn't really understand the market making process. You know, I just understood like, you know, what a derivative was, what a component. I understood those things, but I didn't fully understand, like, what market makers do on floor. And I remember I had the interview and I went down there, it was raining, I was lost. I don't, you know, trying to figure out where I was going. And then finally I got to the floor and I'm walking around. It was just, you know, absolute chaos. I mean, this was, you know, 1998, I think, somewhere around there, 99. And, you know, things were really moving along, um, you know, quite a bit in that time frame. And so it was just very exciting to me. Again, I saw it not like the financial piece of it. I saw the, you know, the drama playing out. And that's what excited me. That's what attracted me to it is just this idea of, you know, these interactions and there's, you know, kind of, you know, behavior and there's emotions and like, that's what really got me excited about finance in that way. Um, and then from there I just kind of worked my way up. I started out, you know, as a clerk on the floor, you know, taking an order from, you know, people laugh now, but you're taking an order from the phone and taking it to the floor, uh, to be, uh, to be executed. But that was my job. That's how I got started. And then, you know, kind of graduated from there.

Speaker B: What wasn't they called? Don't they call that runner? The runner.

Speaker C: It was a runner, yeah. Yeah, it was a runner. Then I get to be a floor clerk. And it was just, you know, it was a very different world than today. And, you know, people that don't know that world, you can't. They can't even conceptualize what it means to do those things.

Speaker B: So for our audience, um, take us a little bit through what the CBOE does, what trades on that market, who uses those trades and how they use them. Just a couple of minutes on that.

Speaker C: Yeah, just at a high level. Um, you know, a derivative, you know, kind of think about it mathematically. It's something. Something's value is derived from something else. Right? And so options are essentially a way to hedge risk. Um, they are a way to speculate, they're a way to insure and so forth. Um, they're also a way to make markets more efficient. Um, and that's kind of where the market makers come in is they kind of help to make markets more efficient, uh, based upon pricing and movement of capital. And so, um, essentially on the floor of the Chicago Options Exchange at that time, you would have individual market makers, people that were basically making a market, um, buying and selling and holding securities, managing inventory flow, uh, of securities in an effort to kind of like, act as a conduit, to kind of keep markets functioning. Um, and so over time that, you know, that has evolved into more electronic because that can be done much faster through, uh, technology than through people. And, and also, you know, less costly. And so, you know, like, over time that market evolved. And so, you know, 1999 there was, you know, thousand people or plus on the floor. Now there's, you know, maybe a couple hundred, there's still action on the floor. But they're very, very specific contracts, um, that are very liquid, that trade more specifically, but by and large all that is now electronic. And so, um, the options market, it's a very big market, it's a very important market. Um, and it's probably one of those kind of academic sense. It's probably the market that's less understood. And that's what creates a lot of opportunity for people.

Speaker B: Can you give me an example of one of those contracts? Sure.

Speaker C: So, for example, um, the S&P 500, right? So many people, many of the listeners, uh, to this podcast are directly or indirectly invested in the S&P 500, which is the 500 largest market capitalization companies in the U.S. and so, um, when that moves around, if you are long it, if you own those stocks, you are completely subjected to the ebbs and flows of those valuations over time. Um, if you wanted to more specifically hedge your risk, right? So if you wanted to derive some income, if you expected that the market wasn't going to move very much or that it may move slightly to the downside, uh, or to kind of drift upwards, you could sell calls and collect the premium in. These calls are basically giving you an option, uh, but, um, not being forced to, uh, buy the security in the future. And so that really kind of creates an opportunity for you to either earn income, um, you could also buy a put so that you could guarantee, um, like how much you would lose based on the number of contracts. And so again, it acts as a vehicle to facilitate risk. Um, and again, because there's so many different market participants using these things in so many different ways, that's what makes a market. Some people are just speculating and expecting the S&P 500 to go up tomorrow. So they buy calls hoping that it goes up. Um, what can be tricky.

Speaker B: I'm going to interrupt you there. Just give a definition of what a call is for.

Speaker C: The call is that security that gives you the right, but not the obligation to buy the underlying security in the future. So if you bought 100 shares of Microsoft, you own 100 shares of Microsoft. If you bought one call at the strike price of I don't know what, Microsoft's trading app would just say 150. Um, if the stock never makes it to 150, those calls expire worthless. So you lose all your money. Um, but that's a less expensive way to find out than to own the stock and have it drop 20% in your face. Um, and so it acts as a different vehicle for different people in different ways. And so, um, you know, the speculators using it one way, the market makers using another way, you know, market maker is an inventory holder. Um, you know, they don't necessarily want to bet on a specific direction. They're just trying to make, um, money consistently by managing the inventory flow. Um, some people are just betting on the volatility, Right. The perception of the stock or the underlying security becoming more volatile in the future. And they don't, they don't even want the price movement risk. They just want the perception risk of the volatility. So all these different market makers or all these different market participants use them in different ways. And then that kind of goes back into the strategy piece in the sense that, you know, I was engaging in this kind of strategic thinking long before I knew about business strategy, you know, in the context that I do today.

Speaker B: Right.

Speaker C: Uh, and I think that's what's kind of like one of the life journeys of, like, picking these little pieces up of your career and starting to sum them up at some point and saying, hey, I've got something here. And that's kind of what it was.

Speaker B: Yeah, I mean, it's the value of wandering. To me, the more you can wander around for a little while. I mean, you have to burn time doing it. But the experience of looking around in all these different areas gives you the information to put the pieces together once it clicks for you, you know.

Speaker C: Right. Something I often say in classes, you know, I never, um, took a class on how to manage money during a pandemic. Right. But like, different pieces of things that you've seen over time. Right. Like that, you know, that, that start to help you understand whether it's the financial crisis, 9, 11, like different events that have happened historically, you know, affect the way you see markets move. And then you can extrapolate that information forward and use it, you know, in a way that makes sense.

Speaker B: One more thing. Give our audience a concrete idea of how you would connect all the instruments traded on the CBOE with business operations in general.

Speaker C: Well, I mean, you can kind of think about it as, you know, again, like, the market maker is the one who's helping to facilitate transactions. And so, um, something I often say in class is that information is the currency of the decision maker. So those market makers are trying to aggregate information, whether it's coming from Bloomberg. This is, again, back in that timeframe, the power of the market, right? So if an institutional kind of, um, execution, somebody who's executing orders from an institution steps into the pit and they start executing orders in a certain way. Um, that gives you information about what's going on. So when big money comes into the pit and they start, somebody says, I want to buy 50,000 puts in X, Y and Z. You know, they're not buying that just to see what happens. Like, they have a pretty strong sense of direction on what's going to happen. And so then immediately the volatility starts to reflect that because the market makers say, wait a minute, you know, something I don't know. So then I need to price accordingly because I don't want to find myself in a bad position. And, you know, another thing that you tend to see too, is like, the width of the market, you know, like the difference between the bid and the ask. Well, that's also, again, a wealth of information because in situations where there's greater uncertainty and more risk, um, you know, you don't, as a market maker, you don't want to expose yourself to risk, undue risk, right? You know, your job is to manage risk, but you don't want to put yourself in a position of undue risk. So you, you know, you adjust accordingly. And I think that businesses are doing this today, right? You know, the doing of inflation, right? So you walk into the store and you, you, you, you see situations where the price has gone up and you're like, wait a minute, like, I was just here. Why has the price gone up? Like, well, you know, that's just inflation, and that's what everyone says, but really what they're doing is they're hedging the uncertainty, um, in the future. Um, you know, I did it personally, right? You know, we, we bought new floors for, uh, our house. And, um, you know, these floors are coming from Canada and I bought them, you know. You know, as soon as all this started to kind of unfold, you know, six months ago, um, you know, we bought the floors because I just, I did not want to find ourselves in a position where the floor is going to now cost 20, 30, 40% more because of what was going on.

Speaker B: Yeah, I imagine that was money well spent if you.

Speaker C: Yeah, it's all way more expensive now.

Speaker B: As time passed and you referenced this, the CBOE began to change. How did you see that impacting you and what did you do?

Speaker C: You know, you just started seeing more people graduate upstairs. When I say upstairs, I mean like to an office space where they are doing similar work. They're just doing it at a desk in a room somewhere that is not on the floor. And so I was, you know, part of one of those firms that did that. You know, I worked, you know, I was on the floor and I moved to a firm that, you know, where my position was upstairs. And so I think you just saw more and more people kind of doing that. And then obviously, as that's happening, you need less and less people on the floor servicing, uh, in different ways. And it's interesting too, especially now when you think about the economic impact. You go around that area now while all the businesses or many of the businesses that were there are no longer there because those people provided economic activity to the businesses around, it really does have a pretty significant kind of impact, uh, in those regards. And, you know, like, one thing, it's. There's a lot of positivity that comes from it. I can remember back in the day, you know, if you bought stock, it would not be uncommon for buying, you know, 100 shares of stock to cost you 29.95. A trade like that was. That was an uncommon. That's how it was done. And now that's completely unheard of. Right. Things are, you know, a penny. Many firms offer trading for free. Right. And so that's what, ah, the technology piece has done. The technology piece has made markets more efficient. Um, as part of that process, it's also decreased economic opportunities for many people because of the greater efficiency in those markets.

Speaker B: So do you think this change is solely the, um, byproduct of technological advances or is it competition? What brought about this change? Because as you referenced, the efficiency is great. And market makers, uh, correct me if I'm wrong, but market makers make their money on volume. Um, and so the changes in the markets and the ability to do so much volume is what drove down those prices from, uh, 29.95 to pennies. Um, what were the forces that created that?

Speaker C: Well, I think technology is probably the biggest one still. One thing that's interesting is that when I was interviewing, say, for a position at that time, um, one of the things that they would, um, predominantly seek, they would seek athletes. Right. And they, you know, the belief was that, you know.

Speaker B: Oh, really? Is that right?

Speaker C: Yeah, if you were a tall athlete. Because first of all, if you were tall, you'd be seen more in the pit.

Speaker B: Right.

Speaker C: If you're loud and boisterous, like those things that, you know, that would be helpful. And then the idea is, if you're an athlete, that you'd be more aggressive because that's what was needed, you know, in the pit. Like, you had to be aggressive, you had to be loud, you'd be heard. Um, and so over time, as technology changed, the need for that, that opened up a window of people that didn't have to be like that.

Speaker B: Right.

Speaker C: So you could be somebody who's a computer programmer that maybe didn't like talking to people at all and still be adding economic value to your firm because of the way you think and the way you utilize your skill sets. And so I think that changed as well. Is it just the. The technology changed the type of people that entered the business, and it became a little less about a certain type of person, a little bit more about, um, and probably rightfully so, like what someone should, you know, what someone can add in terms of value. Um, and I think that that continually changes. And quite frankly, I think we're at another changing point again, like in the sense that, like, you know, the last 15, 20 years it's been, you know, the game of computer programmers. You know, if you were a programmer, you were, you know, in a position to better take advantage of, you know, kind of opportunities. But now with AI, anyone can be a computer programmer. So now then that too is increasing the efficiency where, um, it used to be a barrier for people, they didn't understand that now anyone can enter that realm and start organizing and kind of creating their own algorithm type trading. And so that again, will start to evolve and change markets.

Speaker B: Yeah, I have a, um, I have a friend who, a close friend who worked in algorithmic trading. Uh, he's. His career, he's retired now, but his career spanned all of what we talked about through the co location part. And that industry has seen such huge

Speaker C: change now, especially when you start thinking about cryptocurrencies and tokenization, all these different things that are changing markets going forward. Um, I think it's going to be an opportunity for creative thinkers. Specifically the space that we teach in this business strategy and decision making piece. I think it can be really an amazing opportunity when you combine it with just thinking about different ways to structure contracts and to structure interactions and manage and leverage risk. Um, I think that just thinking about doing it different ways and then immediately having the ability to execute it in a language that everyone can use, um, it will only make markets more efficient. At the same time, invite people to the, to the marketplace that couldn't be there before.

Speaker B: So you were in trading right up until about the financial crisis. But interestingly at that time you were already doing some part type teaching. Uh, given that you were raised by educators. Tell us a little bit about them, but also tell us about how your transition into teaching went and what parts of your career path helped in that transition.

Speaker C: Yeah, teaching. You, uh, know, my mother's a teacher and then went into counseling advisor in a high school setting. Uh, father was like a job coordinator, um, kind of administrative position in high school. So very connected to, you know, education. Um, I also ran a martial arts school for, uh, a number of years. And that too was, you know, it's a different type of education. So I've always been involved in education and in some way. And so, uh, it was one of those things where I think, or I thought at the time it would be a retirement job. All right, well, once I'm done doing business, you know, I'll retire and teach. And it just kind of again, came more and more connected to, you know, and it's really what I like to do. I like to bridge the gap between what happens in the classroom, what happens in the real world. And so that opportunity evolved and you know, and it just kind of expanded, um, from there.

Speaker B: So, uh, who or what was most influential in you becoming a teacher?

Speaker C: I think it was probably the students I really do, like, in the sense that, um, I think again, like, if you're an educator and you enjoy what you do and you're good at what you do, um, you're inspirational, um, and you inspire people. And I think that's one of the things I excel at. Um, sound, uh, conceited. But I think it's one of the things I excel is I help people be the better or best version of themselves. Um, and I think that that sometimes can be a little bumpy in the beginning, right, because someone's challenging you to be better. Someone's not accepting what may have been. Okay. Um, but then when you get past that you get to a point where you start to realize that, yes, I can do more, I am capable of more. And I think I've done that with martial arts. I've done that with teaching in finance and economics. I just help people see more of themselves and where they can do more and be more. And I think that that's something that is an important aspect of education that maybe gets less discussed. Um, and I think that that, to me, that's what keeps me going, that's what drives me is just like helping people be better. And, you know, now it's. It's pretty cool. I was on a TV show last week and one of my students, uh, said he was in his office, he flipped on the TV and he's like, you know, there's one of my economics professors. And so, like, it's very, you know, to me, it's very satisfying and gratifying to see students that are out there doing amazing things that we did a case study in class. And I've got students now that have, um, you know, sold companies. I've got students that are, um, that have gone on to do PhDs. Like, it's just, it's pretty cool.

Speaker B: You hedged a little bit in describing what you're like. I will tell you, you are like that. You do present that way. That is who you are.

Speaker C: Uh, so thank you.

Speaker B: Yeah, you're welcome. You and I talked about this kind of in our pre interview a little bit. But what, what are the goals you have for classroom? Not, not solely as you referenced earlier on getting through the syllabus, but more holistically, what is your goals for a classroom?

Speaker C: Yeah, I mean, I think one of the main goals too, you know, for sure, is to help students learn how they learn. Um, you know, to really expose alternative ways to learning. Um, I think that traditional K12 positions us in a way that, you know, tests exams. And again, I don't want to say I don't want to take anything away from testing exams, but, um, you know, like, life is a continual test. Right. And so. And you don't necessarily know when the exam is over with. Right. You don't know what the questions are going to be. And so if we position ourselves to kind of like, you know, take an exam and, you know, just to take the exam, it becomes this memorization activity. Right. And so, um, you know, AI has really made that quite apparent that that skill is less desired in the marketplace. Right. If you go back to kind of, you know, the Venn diagram of kind of like, what Creates a fulfilled career. Um, you know, doing things that you're interested and passionate about, uh, doing things that you're good at and doing things that the market needs. Like, um, if I'm just regurgitating known information, AI is pretty good at that. So I think that's definitely high on the list. Um, expanding students, their lens, being able to see more. Um, I always express to my students that my colleagues in the economics department do amazing things with data. Um, it's all wonderful. Um, I use economics in a completely different way. I, uh, use economics to make the invisible visible. And what I mean by that is there are things happening every day around you that are completely invisible, but with the right mindset and the right lens, you can see them. And that's what happens in this business strategy and decision making program. That's what happens through this kind of education process is that you expand the scope of what you see. And really, to me, I often pose this question to my students in class for the senior seminar. The question is, what does it mean to be educated? And I would say what it means to be educated is to be able to observe more, to be able to see more, um, to be able to understand more. And that can only happen if you're exposed to more. And so I think that that's really what I try to do is I try to expose students to more so that they are better positioned to learn, they're better positioned to make, um, decisions in kind of an evolving market. Um, and I think the last thing too is I think I try to design classes that, um, are unique in their approach, but they are real. And from an experiential standpoint, um, for example, if you're going to learn to be a plumber at, uh, some point, you have to touch a toilet. That's just how it works. You can't write about it, you can't read about it in a book. You gotta touch a toilet. And so, for lack of better words, I try to help students touch toilets in the sense that I want students to be able to do something. And so when we take a project and we diagnose and we analyze things, we're actually doing something real, we're producing something that's real. And by doing that, you're preparing yourself better to enter the workforce than someone that's just kind of like taking an exam, regurgitating information and passing it along like that, that those are important things to me.

Speaker B: You know, I will argue that the will to want to do that experiential stuff, to touch A toilet comes from your moment of walking out the first time on the cboe, it's you trying to do that for others. In me, that's what I see.

Speaker C: I agree. I mean, it's kind of like this too, like the. And again, I'm not a psychologist, uh, by any means, but I think, you know, there's a reason why we, you know, as soon as you smell something that you remember it faster or you taste something because it's experiential, you experience it. And so with that being said, then if we don't experience knowledge acquisition, then we can't expect that, that that information will carry forward with us in the future.

Speaker B: I think I'm going to ask you one last thing on this section and then we're going to move forward. But, uh, you used three words in our pre interview about classroom goals and other things like that and the way you operate. One of them was openness. The other one was connection. The other one was engagement. Give me more examples of how you do that. Do you tell them your story, your early educational story and your struggles, and do you use that information, make it safe for others to kind of be open?

Speaker C: I think of it this way. I was at the mall yesterday and you know, going to malls and the mall was at, was one of the better malls. But like, you know, malls in general, obviously, you know, struggling, right? You know, the quality of stores are going down because it's more challenging. Right? And so you think of it this way, like, and especially the malls that are not, uh, so great are the ones that are disappearing. And so in order to be sustainable as a mall today or a store in the mall, you have to give somebody a reason to come. And I think education at this juncture is no different. It is my job to give you a reason to come because if you don't want to come, you'll get nothing from it. Right? It's really that simple. And so I think that if, in fact I can design opportunities that engage students, that design opportunities for students to open their minds up to new things and see things. Like a question I posed in class the other day. And this is, it's very timely, it's very relevant. Um, and that is, is that, you know, would you work for 8, you know, for, you know, 20% less to have one day off of work, right? So essentially, if you made $100,000, would you take an $80,000 salary and work four days a week? And you know that that's a question because it becomes a question about preferences. Do people now in 2026 prefer leisure over work. And, and the question becomes is, will you be able to do that as prices continue to rise around you? And so it's a multilateral kind of discussion. And like those types of conversations in class, like, that's what, that's our area of opportunity to engage students, to expand them. Because really what that question about is, the question's about is like, you know, how do you see yourself as the world around you is changing? Like the environmental factors are changing, how would you position yourself? Or if you're leading others, how would you position your company along? Um, the choice set of, uh, people as they consider different options. Because if more and more people start to prefer leisure and you don't offer that, then you will, you know, you'll have a deficiency in labor force. And so it's those types of conversations that get students thinking about a different world that they live in today. Um, you know, in my strategy class, we're talking about, you know, smart, um, smart contracts and just kind of thinking about like, well, how the engagement of business will evolve over time. And it's just there's a lot going on that it's our job to expose them, students to those things, um, those types of things and getting to think about those things now so they're better positioned to handle them as they evolve.

Speaker B: I like that question you asked, uh, of your class. It forces them to think about the trade offs that. Yeah, you're nodding. I have to assume that is really good.

Speaker C: Um, well, just one more point on that too. And it also speaks to the work environment because if your employer is going to allow you to work elsewhere, then that, or maybe, you know, start a business on the side and that's okay. Then that gives you more opportunity. So then you may become more product and actually make more money than you would have made otherwise, because you use your time better that 20% than you would otherwise. And so it just becomes this multilateral choice set.

Speaker B: Let's move into our, uh, next section. Uh, so I want you to, I want to talk about the strategy in the classroom and how you teach it. First of all, let's start out with the big thing. How do you define strategy to your class?

Speaker C: Yeah, I've got a pretty specific way actually. Um, so it's kind of a long sentence. And so we'll see if I can put, uh, it into words for you. Um, so first and foremost, I start with the idea of like, knowing how and when. Right? So part of being strategic is knowing how to do something and then when to do it. Because you may know how to do something, but right now may not be the right time. And so being strategic is about knowing how and when, um, and recognizing that, that, that, that's a skill set in itself is recognizing how and when to do something. Um, and then with that, taking that into, uh, solving problems. Right? So you know, every single student I have that forever, um, they, they will remember, they always remember the willingness to pay minus cost equals it in almost every class. Right. Um, but that's because value is so important. Like you and I, we don't pay for stuff, we pay for value. And so if you know how and when to solve problems or to capture opportunities, then you will know how to create value for someone. And that's, that is what someone's really paying you for. If you have a job, they're, you know, they're paying you to solve problems or capture opportunities. There's nothing else. Like I can always take it back to those two things. And that's because those two things lead to value. So kind of recognizing how and when to solve problems or capture opportunities, giving you resources and capabilities, right? So not everyone, you know, has the same resources and capabilities. Uh, you know, I'm 49 years old. I know I don't look it, um, but 49 years old, I could quit doing everything I'm doing and hire Michael Jordan to be my coach. And I'm still not going to make the NBA draft. Right? Because my resource and capabilities do not align with that opportunity. It's somebody's opportunity, it's just not my opportunity. And so that's part of life's journey, is that you can reduce a lot of pain by moving towards opportunities that make sense for you. So that's the resource and capabilities part. And so, uh, once you take those resource capabilities towards the right opportunity, um, then it becomes a situation of, um, given the environment. Because the reality is that what you do today may be very different because the environment around you is changing. So once you've identified what problem or opportunity you're going to create value in, um, you want to make sure that it aligns with the resourcing capabilities and you want to do the right thing given the environment.

Speaker B: Uh, I've always liked your focus on the resource based view, by the way. Uh, you and I, you know, you and I don't interact a lot, but I know that's important to you.

Speaker C: Interact more Rich.

Speaker B: I do like that. I also will tell you that your voice has been kind of, uh, in my head lately. Because I heard, you know, we talked about how you use that value equation repeatedly in class all the time. And I mean, it's like I've heard you in my head over the last couple of weeks after, since our last call. Uh, just so you know, you're living for rent free in my head right now. Um, so why is economics a good platform to study strategy?

Speaker C: Absolutely. So it's funny because most people that don't, you know, I've never taken economics classes or don't really understand economics per se, will assume that economics is a business course. It's related to business. Um, you know, it couldn't be further from the truth. Like, you know, like economics exists because resources are scarce. Now you can have a different perspective around resources, right? You could say that resources aren't really scarce because we could innovate and create different alternatives. And all that's very true. But, uh, given the resources that we have at our disposal today, there's scarcity amongst those resources. And so because of that, it puts us in a position where we have to make choices. And so those choices, um, can be made by random or they can be made thoughtfully. And so economics tries to create this kind of thoughtful process to, um, approach decision making. And so the way we connect that to strategy is that you start to look at the choices that people make make and what drives those choices. Um, you know, like I, for example, I make really good Rice Krispie Treats. And I'm sure, Rich, you'd like my Rice Krispie Treats. But if I go on at least 10,000 square feet on Michigan Avenue for Brian's Rice Krispie Treat Emporium, um, chances are I'm not going to be successful, right? Because I need, I can't get enough income to cover the, uh, the rent. And so that becomes a value. It's like, well, value relative to cost. So you can have a business where you create value, but it's not a business unless you can cover your cost. And that's the difference between, you know, this idea that there's something I like to do or passionate about doing, and, uh, I might even be good at it. But if the market doesn't need it or I can't cover my cost in doing it, it's a hobby, it's not a business.

Speaker B: Yeah, so what you talked about a

Speaker A: business model right there.

Speaker B: But, um, when you teach class, I assume you, you talk about business models. And I want to know what you use for instruction and how you use it. So what business models do you teach in the strategy class? And what do you teach them about this? You know, the, um, strategy of those models to kind of make points in class.

Speaker C: Sure. This is one of the, I think the interesting things about teaching in the kind of information age, if you will, or past the information age, in the sense that, like, we as consumers have experienced all these business models per se. Right. So I'm not necessarily teaching you the business model, I'm helping you understand how it operates. Right. So everyone that engages with Facebook Marketplace, you're engaging in a platform model. You just haven't realized it yet. And so my job in that, uh, kind of instance is to kind of show you, like, well, this is what a platform model is in the sense of, like, you've seen this before. Now let's talk about what makes it work. Well, one of the things that makes a platform model work is trust. If either party, if each party doesn't trust that the party who is controlling the platform doesn't have their best interests in mind, or they don't trust the interactions, then they're not going to come to the platform. And so just those types of nuances become important and then that starts to create kind of this conduit for expansion. And looking at, well, could we do models in a different way? Many of the companies that we've seen today that have been so successful, Airbnb and so forth, they took a traditional model and they found another way to do it. And it actually kind of goes back to what we discussed earlier. Earlier, um, about risk. Right. So you know, it's risky to own all the assets, Right. So if you own a hotel, you have to carry the debt. Um, you know, most people don't pay cash for hotels. And so if you have to finance a hotel with debt, then that puts more of the risk on you because you have this fixed payment, hoping that, you know, people come into rent rooms versus you look at Airbnb's model, that's not how they operate. Right. They disperse the risk to others, which makes their model less risky, which gives them additional opportunities and more flexibility to

Speaker B: pivot when needed in an msp. In a multi sided platform, which you just referenced in Airbnb, or for that matter even kind of the, um, more specific network models that uh, high ground doesn't show up on a balance sheet. So the strength of your network, or for that matter the number of participants in your, um, multi sided platform doesn't show up on a balance sheet. Only your data centers and other things like that do.

Speaker C: I guess one thing it's about that is like, you have to ask yourself then, like, what can be more easily competed away?

Speaker B: Right.

Speaker C: So I look at a platform like, say, LinkedIn, like, you know. Yes. You know, you could say that they don't have all those hard assets, but, like, what they have, that network effect, uh, at this juncture, cannot be easily competed away. Right. Because the switching costs to us as consumers on LinkedIn is pretty high. Right. I mean. Right. There may be other business social networking sites out there. I'm just not aware of them. And so for that reason, um, what they have is pretty stable, even though you can't quantify it in a balance sheet, per se.

Speaker B: Yeah. All right, let's go to our closing section, innovations and threats. Tell me about some innovations you see that are going to move the needle, and then tell me about some threats that you see that could cause some real damage.

Speaker C: Sure. I mean, I think the threat and the innovation is probably the same in this instance. Right. I mean, you know, AI is the topic of the day, um, for consumers, for businesses. Um, it's, you know, it's almost where we, as you know, that are working, education. A day doesn't go by where you don't use the word. Right. That's just kind of where it is. So I think that in this instance, they're probably the same. And so then it becomes a question of, well, how are you going to position yourself accordingly? And I think that, you know, technology evolution has always been amongst us. Um, sometimes slow, sometimes fast. And so then, you know, this feels pretty fast, uh, right now, but, you know, like, how fast it will be, you know, I guess time will tell, but it feels pretty fast right now, for sure. Um, and I think that's really boils down to the asymmetry and information for many people. They don't know much about AI other than it seems like it can replace what they do. Right. It's like, well, I see where it can replace this, it could replace that. Um, but the other side of that is that if you start to engage and understand more, you can start to see, well, it can make me really productive. So, for example, I would spend a lot of time checking spelling and grammar, spelling and grammar on emails and whatnot. And I just run through AI9. It's super fast. And so it just, it makes me faster, at least on that. You know, I got other things slowing me down, but that makes me faster. Um, and so I think that that is, you know, kind of the benefit is, is recognizing, like, well, if I position myself and I change my mindset of to, you know, this is more of an asset than a liability. I think that that could probably position individuals better. Um, but there's also a lot of things out of your control like, you don't know. Like, we look at the stock market today. The stock market is, um. Despite much of the consumer pessimism that you've seen, the stock market continues to grind higher, largely because of company expected productivity gains connected to A.I. uh, um, companies are going to save money. There's no question about it. And so stock prices are connected to future cash flows. So then the question becomes, is, well, when they save that money, where does that position me? And I think that that is. That's why I think every individual needs to have an individual kind of, you know, kind of vision of their future. Like, uh, what that means and what I'd say specifically for students is that, you know, you are not your major, Right. So you may have been a, uh, marketing major. It doesn't mean you can't work in finance. Um, that's what's so amazing about this technology is it increases your productivity and your understanding of things faster. So that means that you can take your skill set and transition them into another space more quickly. And so the longer you kind of, you know, if I keep looking for opportunities where they're no longer there, that's, you know, it's a market need problem. Right. You know, the willingness to adapt. But if I am open to opportunities, going back to a, uh, term you used earlier, if I'm open to opportunities and I'm honest with my willingness to adapt to those opportunities, it's more likely I'll be successful irregardless. But if I'm holding off to the past, saying, you know what, I've always worked in marketing and, you know, in this capacity, that's the only thing I'm going to do well. And, you know, maybe it could be a long road.

Speaker B: Uh, that is an absolutely perfect way to end. I. What I heard when you said that was staying, uh, open and finding connections.

Speaker C: Absolutely.

Speaker B: Which is. Yeah. Which is kind of, you know, one of the thesis I take from, uh, our conversations. Uh, Brian, thanks so much for being on the podcast.

Speaker C: Thank you so much for having me.

Speaker B: And, uh, I hope to see you in the halls around there pretty soon.

Speaker C: Absolutely.

Speaker A: You've been listening to the Economics Strategy podcast presented by the Business Strategy and Decision making program at DePaul University's Department of Economics. This episode was produced, edited and hosted by Rich Mullen. Our music was composed by Liz Folk.