Paul Graham interview on Econtalk - Start-ups, Innovation, and Creativity (opens in new tab)

Two of my favorite topics, entrepreneurship and economics, being discussed by leaders in each respective field.

It's when you get crossovers such as this when you get into the field that Joseph Schumpeter and Clayton Christensen really mainstreamed: 1. "Creative Destruction": The concept of new technologies destroying the older ones. 2. Innovation as the driver of creative destruction.

My only real critique of Y Combinator and Graham's model in general is that it's still very tech/web-oriented. I get the cost and exit benefits, but the noise around this sector has changed people's ideas of startups: Lemonade stands, clothing lines, etc.

Most surprising takeaway is at the end, where once again immigration limitations are shown to stifle economic creativity and growth.

EconTalk is one of my favorite podcasts. Seriously every entrepreneur would do well subscribing to it (and listening through the back catalogue).

Very much enjoyed listening to this. Graham's enthusiasm is palpable and infectious, and his knowledge of the subfield is clearly second to none.

The discussion of biotech was interesting. It made clear that Y Combinator is replicating the biotech model of mass production of innovation.

Paul said (more or less) that the risk investing in Biotech was in some ways lower (because it's easier to identify the 20 leading scientists from whom the next wonder-discovery will emerge). I think this correct, but the comparison between that and what YC does is misguided.

Those leading scientists are like the companies who've already been through YC, presented on a platter for the big money to get at.

So what's the YC equivalent? Paul said it himself - grad school.

For Biotech, a PhD program is the way to mass-produce seed-funded innovation. You give someone a few years, let them attack a problem and generate data. The best PhDs coming out get labs and professorships (equivalent to venture funding worth $1-$2 million), etc.

Hacking is not science. Therefore a seed-funding model that works for science does not work well for software innovation. YC is the replacement - it's your PhD in software innovation. People go in, work with mentors (I meet my PhD supervisor once a week, and regularly hear talks from the best in the field, just like YC founders). The best innovators come out and get funded for $1-$2 million and hopefully go on.

one of the things mentioned towards the end is that they "don't get" the time sink application. that is because they are producers. the internet has made visible the vast unproductive masses. paul doesn't like timesinks because his time is valuable, most people's time is not valuable.

I've enjoyed Cafe Hayek, Russ Roberts' blog, for some time http://cafehayek.com/

I simply loved listening to this. It was more like a fascinating conversation with Paul Graham that we got to listen in on than an interview and it was extremely exciting.

Thanks for the fascinating insights, essays and interviews Paul.

By far, the most important statement (although it was all quite interesting) was this: "There's nothing better than to have sophistocated users. And conversely, it's dangerous to build a product for giant corporations or, god help you, for the defense department, because then the stupidity of your customer will make you stupid. You want to build a product for clever, impoverished outsiders."

Gives me hope that they'll see that in my startup's YC application.

"worse than random" - great way to describe the likely result of big-corp/government investment in IT projects. The YC model (and VC model to some extent) works precisely because of the unpredictable nature of innovation - it is hard to predict 'the next big thing', 'the next google' etc. but you can increase your chances by investing thinly across many startups. The returns for those that succeed will far outweigh the cost of those that don't.

The net result was interesting, but the interviewer's frequent interruptions made it more grating than it had to be.

Very nice talk. Paul sounds very passionate and down to earth. One of the things we should all work on is decreasing timesinks.