- The podcast episode discusses the idea that capitalism cannot provide meaning, spirituality, or a sense of belonging.
- The host shares his experience connecting MBA students with entrepreneurs and how he discovered the non-financial motivations of founders.
- The conversation highlights the desire to make a mark on the world and the importance of creating something that can sustain employees and make a difference.
- The host also discusses his own podcast, EconTalk, and the privilege of connecting with listeners every week.
- The guest asks if there are any key economic concepts that can be imparted to startup founders, to which the host responds that some basic economics concepts can be useful.
- The host also mentions that EconTalk has evolved to cover a wider range of topics based on his interests and the feedback he receives from listeners.

- The speaker discusses the usefulness of economic concepts in business, such as opportunity cost and comparative advantage.
- They mention the concept of emergent order, which is the idea that certain problems can solve themselves without explicit control.
- The speaker emphasizes the importance of teaching economics in a way that helps students think critically and apply the concepts to real-world situations.
- They highlight the value of repetition and memorable quotes in conveying economic ideas.
- The speaker discusses their book on Adam Smith's Theory of Moral Sentiments and the misconception that Smith's work is solely about greed.

- The video discusses Adam Smith's book "The Theory of Moral Sentiments" and its insights into human behavior and interactions.
- The central idea is that humans naturally desire to be loved and respected.
- Smith argues that fame, wealth, and power are not the best paths to being loved and respected.
- Instead, being virtuous and wise is a better way to gain respect and honor.
- The video also mentions the focus on measurable aspects in economics and the need to incorporate non-measurable aspects of well-being, such as dignity.

- The speaker discusses the tendency to quantify unquantifiable things, such as happiness and dignity, through surveys and data.
- They argue that there is evidence and understanding about the world that cannot be captured by data alone.
- The speaker emphasizes the importance of non-quantifiable assessments in decision-making and understanding oneself.
- They mention the challenge of unintended consequences for founders of companies, and the pressure to constantly seek growth and success.
- The speaker also discusses the emotional attachment and pride that comes with starting a company, writing a book, or having a child.

The piece discusses the emotional attachment founders have to their creations and the difficulty of relinquishing control to others. It also touches on the issue of growth and the pressure to expand. The author mentions examples from the film industry and the criticism faced by Tim Cook at Apple. The piece concludes by discussing how academic research and interviews on EconTalk can sometimes lead to a change in perspective or the internalization of new ideas.

- The speaker discusses the difficulty of understanding someone's behavior without a baseline or concrete evidence.
- They mention being influenced by Nassim Taleb's advice on deadlifting.
- The speaker reflects on the concept of worship and how people have a desire to be part of something larger than themselves.
- They discuss their religious beliefs and how it helps them cope with the mysteries of life.
- The speaker also mentions their admiration for human striving, creativity, and the ability to confront suffering and death.

- The podcast episode explores the limitations of capitalism in providing meaning, spirituality, and a sense of belonging.
- The host shares his experience connecting MBA students with entrepreneurs and discovering their non-financial motivations.
- The conversation emphasizes the desire to make a difference and create something sustainable.
- The host discusses his podcast, EconTalk, and the privilege of connecting with listeners.
- Economic concepts like opportunity cost and comparative advantage are seen as useful in business.
- The concept of emergent order is discussed, highlighting problem-solving without explicit control.
- Teaching economics should encourage critical thinking and application to real-world situations.
- Adam Smith's Theory of Moral Sentiments is explored, emphasizing the desire for love and respect.
- Non-measurable aspects of well-being, like dignity, should be considered in economics.
- Unintended consequences and the pressure for growth are challenges faced by founders.
- Emotional attachment and pride come with creating something, but relinquishing control can be difficult.
- Understanding behavior requires concrete evidence and a baseline.
- The speaker reflects on the desire to be part of something larger and discusses their religious beliefs.
- Human striving, creativity, and the ability to confront suffering and death are admired.

Russ Roberts is the host of the podcast EconTalk (https://www.youtube.com/channel/UCKAu-mTq7iZtKHK6QiBqKPA
), a research fellow at Stanford’s Hoover Institution, and the author of several books, including How Adam Smith Can Change Your Life.

https://twitter.com/EconTalker
http://www.econtalk.org/
https://podcasts.apple.com/us/podcast/econtalk/id135066958
http://files.libertyfund.org/econtalk/EconTalk.xml
https://www.youtube.com/channel/UCKAu-mTq7iZtKHK6QiBqKPA
https://www.hoover.org/

The YC podcast is hosted by Craig Cannon.

https://twitter.com/craigcannon

Y Combinator invests a small amount of money ($150k) in a large number of startups (recently 200), twice a year.

Learn more about YC and apply for funding here: https://www.ycombinator.com/apply/

***

Topics
00:00 - Intro
00:15 - What are his thoughts on “meaning, spirituality, or sense of belonging” in regards to creating your own company?
3:20 - Capitalism bearing the burden of human nature
3:50 - Why Russ started EconTalk
7:30 - Key economic concepts for founders after 700 EconTalk episodes
13:35 - Helpful methods for teaching economic concepts
17:55 - "Man naturally desires, not only to be loved, but to be lovely" - Adam Smith in The Theory of Moral Sentiments
19:25 - Why Russ wrote How Adam Smith Can Change Your Life - https://www.amazon.com/Adam-Smith-Change-Your-Life/dp/1591847958
24:00 - How EconTalk has changed since the beginning 
26:00 - Steve Adema asks - Russ Roberts has emphasized the limits of "only looking where the light is" when it comes to studying well-being. How can economists incorporate the aspects of well-being that aren't easily quantified?
34:20 - Warren Buffett's gift to his son
35:55 - Founders and unintended consequences 
39:30 - The emotional aspect of giving your company away
44:05 - Anthony Y. asks - Has a guest on his show ever made him change his mind on a topic?
50:40 - Has Nassim Taleb convinced him to deadlift?
52:45 - Russ often quotes David Foster Wallace's speech, “This is Water”. Specifically, he quotes the phrase, “everyone worships.” What does Russ worship?

So you, for those who don't know, are the host of EconTalk, a research fellow at Stanford's Hoover Institution and the author of several books, including How Adam Smith Can Change Your Life.

So to start off the podcast, I want to talk about 1 of your previous episodes, the 1 with Jonah Goldberg.

So you pulled out a passage from his book, The Suicide of the West, where he wrote, capitalism cannot provide meaning, spirituality, or a sense of belonging.

I really enjoyed your conversation, and I kind of want to talk about it in the context of startups.

So what are your thoughts on this meaning spirituality and a sense of belonging in regards to creating your own company?

Well, in a previous life I was at a business school and I, 1 of the things I did there was to connect MBA students with entrepreneurs.

We had something called the hatchery, and entrepreneurs would come in front of the students, present their ideas, and the job for the students was to write a business plan for that idea.

And in the course of doing that I met with a lot of entrepreneurs because obviously we couldn't take everyone who was interested.

I got to find out what they were interested in, what they cared about.

And 1 of the things that was very moving, and I actually stole this and fictionalized it and put it in 1 of my books, was the non-financial motivation that founders have.

And obviously there's a financial motivation.

If you're not gonna make money, it's probably not gonna get investors and It may not keep your attention and eventually you won't be able to pay your workers.

So you do have to make money and you have to make more than you spend to have a viable business.

But I was struck by how much people care about the – what I would call the spiritual part of it.

So I have a memory of an entrepreneur who started a software company and I remember him – I don't know if he choked up or teared up but He definitely had an emotional moment when he said to me, you know, I wish my dad had seen my company because his dad had passed away.

He said, I wish my dad had seen what this product is.

And then he stopped and he was brought up short and he said, I don't even like my dad.

And I thought, well, that's 1 of the deepest things I've ever heard, right?

This incredible primal desire to, first of all, please your father or make your father respect you, earn the respect of your father.

But the role of a startup or anything you create

Anything you create, the mark you make on the world that you want your parents to see is way beyond I think the monetary part of it.

So the money counts, but I think obviously starting a business, creating something that can sustain employees and pay them is debting the world in your own way.

It's just – it's the way we make our mark And I think that's a really beautiful thing.

I think it's a phenomenal thing that in America it's relatively easy to do.

And I think that's really important and part of what makes America what it is.

And was that your intention behind EconTalk?

I just have, before I answer that, I want to go back to the Jonah Goldberg quote about upstream capitalism.

I just, I think it's, you know, I think it's bizarre how capitalism bears the burden of human nature.

So people say, oh, capitalism, that – I mean, the system is based on greed.

You'd say, oh, as opposed to what system doesn't have greedy people in it?

Maybe not greedy, just at least self-interested.

But to go back to your question, you know, when I first started podcasting in 2006, I was invited, before I started, the reason I got into it is somebody invited me to be on their podcast, and I asked them how many people would listen, figuring it'd be 80, 114.

If you told me that at 02:00 tomorrow afternoon we're going to be in a large theater, and there's 2 chairs on that stage, and you can sit in 1 and chat, and these 2,000 people, 2,500 people are going to be interested in what you have to say.

Now, some of course are going to leave before the

Yeah, because they're allowed to leave without you seeing them in the podcast world.

They're going to come and buy a ticket or reserve a space, which is what a download really is.

And then I realized, gee, maybe I can do this.

And I didn't think I'd want to do it every week.

But eventually I realized that if I didn't do it every week, I'd have trouble attracting listeners.

And I didn't know if I could do it every week.

And then as the audience grows, basically you are hanging out in what started as a theater auditorium, then became a basketball stadium, and right now for EconTalk it's a football stadium, of listeners every Monday morning.

I feel blessed and privileged and honored to be able to do it.

And it has this strange piece to it, which is that my listeners know me pretty well.

I have 700 hours of material, of which I'm probably 300 of the 700 hours.

And so I don't talk the whole time, but I talk maybe a little less than half the time.

So somebody who's been listening from the beginning, of which they're a non-trivial number, have hung out with me for 300 hours.

That's a, you know, 1 way to think about that is it's, let's see, it's, I don't know, it's a lot of road trips of intimacy.

They've hung out with me, but I haven't hung out with them.

So that's a strange, beautiful, poignant aspect of this business.

But the bottom line is, to answer your question, the chance to hang out with those people every week is exhilarating to me, and it's wondrous.

To go off on a side for a moment, I have the same experience, and it's often much more focused because at YC we have this thing called Demo Day, right?

Because you did an episode with PG and Sam and they talked about it.

And so before Demo Day, we have this thing called Alumni Demo Day, where people who've gone through the program come and see the company's demo.

And invariably someone will come up to me in the bathroom while I'm at a urinal and pat me on the back and say, hey Craig, really love the podcast.

Craig Dobson But they feel like you're their buddy.

I'm kind of curious if it's possible for you to summarize these key concepts that you've talked about.

I haven't gone back to episode 1, so I don't know what it was in the beginning.

But you have a pretty wide spectrum of guests.

All of our stuff, or in large part, is related to technology in some way.

Listen, are there 2 or 3 key economic concepts that you could kind of impart onto a startup founder after almost 700 episodes of EconTalk?

Normally I'd say I have no idea, but I actually do have an idea.

And the reason I have an idea is not from me, but from those founders that have talked to me and said, I love EconTalk, and I say thank you.

And then they say, it's really helped me with my business.

And I've never, I wouldn't have imagined that.

Was shocked and surprised and taken aback and curious.

And, you know, for me, almost everything I do is I try to have a mix of entertainment and education.

There's a sweet spot between those of what works best or what works better than others.

If it's too entertaining, you don't learn anything.

If it's too educational, nobody listens sometimes.

So the challenge is to find that sweet spot, but the idea that it would be useful to somebody running a business never crossed my mind, literally.

It would never have come to me until I hang out here at Stanford in the summers, and I interact with people with startups and VCs and others and they tell me that they find econ talk helpful and so I ask why.

Some are – there are some basic economics concepts that are useful and I should say that when I started econ talk, the idea was to interview economists about their research.

It's every once in a while, blue moon, it's economists talking about their research.

But now it's – I'm lucky, it's basically

the show really should be called What Russ Roberts is Interested In, which changes over time.

I got tired of talking about Bitcoin and monetary theory and what caused the financial crisis of 2008.

I did, I don't know, 25 or 30 episodes on that topic of the financial crisis and I've learned what I think I can learn from it.

I don't care if there's a really great book on it now that summarizes a bunch of stuff.

I'm probably not going to talk to him because I kind of – it's not that it might not be a great book.

I don't think I'm going to learn enough from it to go through the effort of reading it.

And the same is true with monetary theory and Bitcoin.

I kind of have a rough idea of where we stand.

And the answer is, there's a lot we don't know.

And when we get a little closer, I might do it again.

But I'm not going to do any for a while, even though everyone tells me, I got to interview so-and-so, because he really understands.

So in the early days, it was very economics-focused.

And there are some basic economic ideas I think that are very useful in business.

The idea of opportunity cost, the idea that when you do something, you can't do something else.

That's a good thing for a person in business to know.

And so when you hear that in a podcast, you're, oh, yeah, that's a useful thing to remember.

The idea of comparative advantage, the idea that there are things that are too expensive for you to do for yourself and you should pay someone else to do them for you.

Every founder has to deal with that issue.

When do you hire a director of marketing?

And in thinking about that, I think is useful because I think I wouldn't be surprised if a lot of founders have what I would call a control problem.

And so giving up control is very challenging For a lot of people, especially founders.

And so being forced to think about that is probably a good idea.

But I think that the most interesting thing that people have told me they found useful is the idea of emergent order.

The idea that certain things can solve themselves under the radar and that there are forces that work to work on problems even when you don't explicitly try to control them and solve them.

There's good reasons not to teach it, right?

Most things, you want something done, you got to do it yourself.

Someone's got to get into the kitchen and do the dishes.

You got to roll the garbage to the curb, et cetera, et cetera.

But there are a lot of problems that get solved that you don't have to worry about.

Like, oh, if a lot of Chinese kids move into cities and start using pencils in school because they're not on a farm anymore, and now they're not enough pencils to go around, and how are we going to have pencils in America?

Because the Chinese are going to have them all, and I'm going to show up at Staples and say, could I have a dozen pencils?

And they're going to say, what do you mean?

That doesn't happen, and you don't lose sleep over it, and that's an amazing thing.

I did a poem called It's a Wonderful Loaf, and it's animated online, and It's about the phenomenon that in a major city, everybody goes to bed at night not worrying that when they wake up, is there going to be food for everybody?

If you like whole wheat bagels, you don't have to send a letter to the city hall saying, you know, I just felt we're not getting enough whole wheat bagels this year.

Can you make sure that next year you plant more wheat?

All these things, there's a lot of problems that solve themselves.

And that's generally of interest in the world of public policy.

But in a business, It's also useful because there are problems that your culture can solve.

There are problems – there are things you can outsource.

There are things you can – somebody told me I didn't – I was going to hire – I was going to expand my headcount and I realized I don't have to do that.

This economic concept of emergent order, the idea that there are certain things that are self-regulating or that control themselves, it just forced you to think about it in a different way.

And so I think that's wonderful that anybody found that useful in a practical sense.

But, you know, most of what I do is not useful.

And so, when it comes to communicating these ideas, whether it's to your children or friends or listeners, what are effective methods for actually teaching it in such a way that someone intuits it and really understands it and can put it to use?

So I used to spend a lot more time thinking about some aspects of that because it's very easy to teach a class and to give an exam when you're in the classroom, which I was for 30 years.

It's very easy to teach a class, give an exam, and convince yourself that the students have learned something when, in fact, they've learned almost nothing.

1 of my favorite teacher evaluations I got was I got a 1 out of 5, and the student said, Professor Roberts is a horrible teacher.

He expects us to apply things on the exam that he expects us to apply the material on the exam to things we've never seen before.

Of course, that was the whole goal of the class.

I mean, what's the point of learning to tell me things I can explain to you work that,

Right, So that's not what we're trying to do here.

What we're trying to do is teach you how to think.

And economics, when it's well taught, should be about giving you a lens to understand the world.

So the challenge is, how do you convey material in ways that are memorable and that you can internalize and then apply to things that aren't just the example you got.

And 1 way you do that is through conversation.

It can help you hear the back and forth of a conversation rather than a monologue, which is what a book is.

A conversation replicates maybe your own thinking processes and makes it more likely that the lesson will go in.

The other way you do it, of course, is just through trying to work out the implications of an idea that aren't so obvious what those implications are.

1 of the most important lessons of economics that we talk about on Income Talk is the idea of, and then what?

So you can tell me what's going to happen if you put this policy in place.

What are the next set of consequences that come from changing incentives the way you've done them through, say, price control or a tax or subsidy or tariff?

It's easy to see the first-round direct effects.

The harder thing to see is the indirect effects.

And that's what economics, when it's well-taught, should sensitize you that way.

I mean, the other lesson is most things are just forgettable.

So you've got to convey things in ways that are memorable.

That's why I co-wrote 2 rap videos and wrote that poem I mentioned.

Because what I was trying to do there, among other things, was rhyme is much more easily memorized.

And I was hoping to create ways for people to communicate using quotes from those efforts.

At the end of the Flight of the Century, which is the second rap video I did with John Propolo, the filmmaker, we have the line talking about capitalism, give us a chance so we can discover the most valuable ways to serve 1 another.

And to me, that's a romantic, idealized version of what capitalism can be.

There's crony versions of that, where instead of trying to figure out what makes value to you, my customer, I get the government to keep out a competitor or to get a special payment.

There's all kinds of ugly versions of capitalism.

I could defraud you, I could lie to you, I could deceive you.

If I have competition, it's going to be a lot harder.

But when it works well, that's what it does.

It gives you a chance to discover how to serve, we serve 1 another.

But that's, That is a pedagogical device, that rhyme.

Now, it doesn't mean you understand it, just because you can spit it back to me, right?

There's a lot there, there's a lot there.

So, to fully understand that, you'd have to think through what the consequences of that idea and concept are, but that's another piece of it.

How do you convey it in a way that people are going to remember it, that people are going to have it in front of mind, not in back of mind?

You know, it has to be your most quoted Adam Smith line, man desires not only to be loved but to be lovely.

And it's just like burned into my ears now and into my brain.

And I, by the way, you know, there's a decontact drinking game which you can buy.

If I say that, you know, you drank or you sip, I can't remember.

But those things, I deliberately say them a lot.

And 1 of the reasons I do is that I'd like that to be burned into your mind as a listener.

And of course, the guest has maybe never heard it before.

also want the guest to hear it for the first time.

You know, my other favorite quote is Hayek's, the curious task of economics is to demonstrate to men how little they know about what they imagine, how little they really know about what they imagine they can design.

Most people, it never crosses their minds.

I almost butchered it and I've said it a thousand times.

So, it's not an ideal quote, but it's pretty good and it gets at something and you're right, repetition is important.

But then with your book, How Adam Smith Can Change Your Life, you basically, I mean, my intuiting of it was, here's this incredibly valuable text, it's not well known, and it's also not...

It's about Smith's theory of moral sentiments.

And it's also not necessarily incredibly easy to parse.

And so you kind of took it upon yourself to re-digest it and put it back out there to the world.

And so what, I mean, obviously the title kind of alludes to it, but what was your main objective with the book?

What were the ideas you wanted to communicate?

So I had a few things, you know, 1 is just to honor Smith who wrote this book that nobody reads anymore, and I think is full of insight.

And I think there's a certain tragedy there that people only think of the wealth of nations when they think of Adam Smith.

And in particular, they have a caricatured version of the wealth of nations in their mind that greed is good.

The book's an exploration of the power of self-interest, not greed.

You can be self-interested without being greedy, and you can be charitable when you're self-interested.

But there's all kinds of obvious thoughts there.

But His first book, The Theory of Moral Sentiments, which he wrote in 1759, is all about the virtue of not being greedy and why anybody's not greedy, why people aren't self-interested all the time, why they ever do anything benevolent, why do they ever take other people into—think about other people when they go through the world.

And so that's really interesting, it turns out.

But I think Smith had about a zillion insights into how we interact with others.

And as I read the book, I realized that there was a – that there's a lot of wisdom here that people weren't grasping, that they missed a chance to know.

And so that was – my main goal was to take some of these ideas and apply them to modern examples, from business, to family, and your daily interactions with the people in your circle of friends, associates, intimates, colleagues.

And in particular, I think if I had to say, you know, is there a central idea, that quote you gave, man naturally desires not only to be loved but to be lovely.

And by loved, Smith didn't just mean romantic.

And lovely, he meant worthy of honor, worthy of respect.

Thinking about that as an aspect of a central part of human nature is incredibly powerful.

It gives you insight into why people do some weird things in your life.

And the answer is, oh, yeah, man actually desires not only to be loved, but to be lovely.

Remembering those 2 things doesn't come naturally to most economists.

See all Y Combinator transcripts on Youtube

EconTalk Host Russ Roberts on Key Economic Concepts for Founders