Avowed Capitalist Also Points Out Need to Do Good

Published in UT San Diego, April 21, 2014

What does it mean to “do good”? This was the question posed to a recent class in the Wharton MBA program by one of its most famous professors, Kent Smetters, who holds a doctorate in economics from Harvard.

I wanted to share some of his thoughts with our readers because they moved me greatly. While Smetters strongly believes in non-coerced charity, he is also an avowed capitalist. Maybe greed itself is not good, but making money is not a sin and free enterprise stands tall. But his warning is simple: “Don’t become a greedy capitalist pig — at least not without doing good.”

This exploration intrigued me because one of the reasons people start companies is to make money. My personal take is that entrepreneurs are motivated neither for fame nor fortune, but rather they do it for revenge. It is the “I am going to show you” syndrome. Mark Zuckerberg, who according to popular lore, started Facebook because his girlfriend thought he was jerk, famously demonstrated this. And $37 billion later, I guess he showed her.

In contemporary society, one point of view says, “there really is no inherent right or wrong, good or bad. It really is a world of might makes right.” This argues for nothing more than a close view of risk and reward, and if you think the balance arm is tilted in your favor, you go for it. To that way of thinking, please consider all the purveyors of financial legerdemain who now sit in prison. So this “expected gain” calculation is not as easy as it looks.

Since Wharton is at the University of Pennsylvannia, Smetters offers a quote from Ben Franklin. “Money never made a man happy yet, nor will it. There is nothing in its nature to produce happiness. The more a man has, the more he wants.”

So the tension is always between personal satisfaction and finding and building good relationships. But in the startup world particularly, relationships are not about sacrifice or community — they are transactional. When the cost exceeds the benefits, we bail out. We pivot. Even worse, we rank ourselves; we measure ourselves against one another. “The goodness of family, friends and relationships is fundamentally lost in the modern age,” said Smetters. It is often more closely correlated to the deal, the series A financing, the exit.

And Smetters goes on to challenge us with what he calls the “veil of ignorance.” He says we look the other way, we do not ask the hard questions, we make minimum assumptions about the decency of people, and then we are surprised, even shocked, when the rats are caught red-handed. (You may substitute politicians for financiers in this thesis.)

We turn a blind eye, we assume, because looking too deeply can be very disconcerting. The Ferrari in the driveway just showed up — not sure how it got there.

When is enough enough? Smetters illustrates this thinking with a painful story about Tom Brady, the New England Patriots quarterback, who has won three Super Bowl rings. After Denver knocked New England out this year, Brady was asked which team he was rooting for in the Super Bowl. He responded that he didn’t care and was not even going to watch the game. His last response to the question which ring was his favorite, he said, “the next ring.”

As you start your companies, as you seek fame, fortune and riches, take a moment to contemplate “doing good.” Mix it with a bit of religious faith (any one will do) and try to remember to run the race simply because it is a joy to run.

Own the race instead of the race owning you.

Rule No. 350

Enjoy the honesty of introspection. It is an unforgiving mirror, but a true one.

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