Ten years back, when I was fresh out of college, I joined a startup - not as a founder but as the first employee. A lot of it was driven by reading Paul Graham's essays, and I was naive and immature enough to believe that I was doing something great (as an aside, I came from an economically disadvantaged family; and every cent of my assets today is something I have earned and not something which I have inherited or obtained from anyone including my family). Two important things I learned from the experience -
1. The experience as an employee is completely different from being a founder; a lot of my friends have deluded themselves into believing that early employees enjoy as much benefits as the founders.
2. It is very hard to take risks when you are not financially secure; yes, I am pretty sure that there are counterexamples but I believe my statement is true on average.
Now after ten years mostly working in large companies, I have some savings which will allow me to last two years in case I lose my job. Also, I like to think that I have enough skills not to die of hunger if it happens. This has resulted in me being much more "entrepreneurial" and I am already working towards starting a company in the next two years.
TL, DR; On an average, it is much easier to start a start-up if you have some basic level of financial security in your life.
I have a very similar story, except I'm on part one. Recent graduate, very modest family, and drank all the Paul G koolaid which got me to jump into the whole scene just to realize I'm mostly surrounded by upper middle class types where there's still risk being taken just not nearly as much. This has taught me to always consider the source of advice more rigorously. I still think he's a great thinker, but some of the advice should come with a disclaimer.
I haven't been turned away from the tech startup world, but I'll be much more calculated if I'm ever to join another one. I also don't plan on staking my career purely in startups and am attracted to bootstrapped business now more than ever.
The lesson from this is don't drink anyone's kool aid consciously. PG has a huge incentive to wax heroic about the "risk takers" "makers" and "founders"; it's the Silicon Valley cargo cult, and should be compensated against in the mind of the reader. Always be brutally critical of applying the question of qui bono-- always, no exceptions, ever.
PG has little incentive to explicitly qualify ideas that are his foundation (regarding the prerequisites for the above), and frankly it'd kind of break up the nice flow his pieces have anyway if he did. His target audience doesn't want to be told that they started life on second base, and honestly it's quite annoying to have someone tell you so with the intention of taking you down a peg.
But claiming someone has privilege isn't a value judgement on the person, or a sin. Its not claiming they did anything wrong, or that its their fault. I'm not sure why people are so offended when others point out their privilege. Saying someone has privilege is just pointing out the state of the world, it isn't a judgment.
People without food allergies have privilege in that they don't have to constantly worry whether what they eat will kill them. The people with privilege often just don't have to think about or deal with stuff that those without do.
> Saying someone has privilege is just pointing out the state of the world, it isn't a judgment.
It could, in principle, be just a claim about the state of the world; in practice, its quite often an ad hominem to dismiss a position they've taken, and often its that with a side of implicit moral judgement that the position is not only invalid because of the claimed privilege, but also that it is maliciously offered as a defense of that privilege at the expense of the unprivileged.
That's not to say that privilege doesn't exist (it does), or that it doesn't at times blind people to others' experiences (it does), or that it doesn't at times lead to people, consciously or not, defending it at the expense of the unprivileged (it does that, too!)
But to pretend that claims of privilege are non-judgemental is ignoring how they are actually used in practice.
>But claiming someone has privilege isn't a value judgement on the person, or a sin...Saying someone has privilege is just pointing out the state of the world, it isn't a judgment.
That is exactly the same argument that bigots use when they talk about {minorities, poor people, immigrants, LGBT people}. "That person fits into category X, and everyone in category X shares some characteristic Y because they're in that category. I'm just saying that because it's true!" It doesn't matter who that generalization is made about, whether they're the dominant group in society or not. It's still a terrible generalization and an intellectually lazy argument and in and of itself carries a judgement. If you grant that something like "white privilege" or "male privilege" exists (and most people that buy into the concept do) then by that logic a homeless, illiterate white man has more privilege than a black woman millionaire CEO.
>People without food allergies have privilege in that they don't have to constantly worry whether what they eat will kill them.
That's absolute nonsense as well. There exist people without food allergies that have other conditions where they constantly have to worry about what they eat, diabetes being an example. So check your cis-gylcemic privilege you fascist!/s Do you see how ridiculous and divisive that sounds?
"PG has a huge incentive to wax heroic about the "risk takers" "makers" and "founders""
To be sure (in the spirt of NY Times "to be sure" statements) [1] PG (who went to Harvard of course as everyone knows) and others always point out the obligatory risks but tend to do so in a way that I think most people perhaps ignore. More or less a "sure it's risky but" as opposed to "you'd be foolish however there's always a small small chance that..."
[1] That is where they (and others in the media) counter something they are saying with the other point of view typically buried 3 quarters down the page as a qualifier.
Agree. The risk of having to run back to mummy and daddy with their tail between their legs is no risk at all. I could be quite entrepreneurial if I didn't also have to pay for my apartment and food every month without fail.
But from a broader social standpoint, isn't it a good thing that people who can afford to take risks are the ones taking the risks? It sucks on an individual basis if you're living paycheck-to-paycheck and can't risk failure, but it's not such a bad thing that the affluent are taking larger economic risks than the poor.
It sorta spits at the idea of social mobility ("the american dream") though. The biggest rewards are only really available to those who can take risks like starting a business, and if you restrict that to only those who are already well-off, you remove most chances for the poor to ascend to the higher classes.
This is why a social security net (ie. Welfare state) can actually be good for the economy. In fact, most western countries qualify as 'welfare states' when compared to 3rd world countries.
But this supports the whole idea of a basic income - if everyone is able to live without working, they can take risks such as going to University, starting a business, etc...
A lack of social net prevents risk taking and severly limits mobility, creating a 'have-not' class and keeping them there for the most part.
This implies that you believe that there is a global elite and there has always been a global elite and that they are all related and there is no way to become a part of that elite.
Because if you say that "if you restrict that to only those who are already well-off", their parents probably weren't or their parents' parents etc.
There are many occupations that really only require hard work and little risk that has big payout.
The end result here is that no, life isn't "fair". But by and large, a person that has the ability to take risk, does and succeeds will create that ability for others to do the same in the future.
There isn't that much social mobility, there's plenty of statistics that prove that. The American dream is just that, a dream. Like most dreams, the odds are long. You can reduce those odds, but don't kid yourself that it will be easy.
Do you have those statistics? I'm not trying to be unreasonable. It's just that I've tried looking for this data before, and all I found was that social mobility (in the US) has remained relatively unchanged for about 50 years, and that's probably the best it's ever been.
I think we could do better, but I'm not sure what you are saying is correct, either.
There's a lot out there spinning the same result different ways; but I think that's the general status -- social mobility hasn't changed in the US for decades.
There's rather clearer data that the gap between rich & poor continues to widen in the US, which makes it a bit more bleak that going from poor to rich is still a rough uphill battle.
It's also fairly disheartening when you think of all the things that have changed in the past 50 years, many efforts that should help social mobility. Attempting to stop pervasive lead poisoning, lots of grants and policies to help get poor kids through basic and into higher education, legal and other sorts of efforts against sexism and racism... all kinds of things intended to hopefully make the playing ground more fair for everyone haven't actually moved this particular needle at all.
For a bit more context, also look outside of the US. If you want to live the American dream, you'll have a much better chance in Denmark. Reference here (though I read about it elsewhere a few years ago... can't remember orig src): https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the...
Of the 9 developed countries in that study, only the UK ranked worse than the US.
In an ideal world would be everyone would be free to take business risks, and customers would reward the ideas that offer a real benefit.
What we have now is a world where hardly anyone is free to take business risks, and the people who are tend to share the same political and social values.
Politically, that makes for caste perpetuation and monoculture - which is the exact opposite of the entrepreneurial mythology.
I would rather see the most able taking the risks, because they'll be the ones most likely to succeed, and we all benefit.
Assigning resources to the most able is, of course, an immensely difficult problem that nobody really knows how to solve. But it should be the goal, and I don't see affluence as a good substitute.
How many people are out there right now with the personal ability to change the world in some large beneficial way, but without the necessary finances? What are the rest of us missing out on because they're stuck working a 9-5 job to pay their rent, while some idiot with money is building Twitter for Cats and talking about how much of a risk taker he is because he's living off $50,000 in savings until the VC money comes in?
In some ways it's good, but in other ways it's worse. One noteworthy change in the last few years compared to say 10 to 20 years ago, most startups are either self-funded or funded through incubators of the already rich, unlike pre-2005 or so when regular investors had a chance getting in relatively close to the ground floor (let's ignore that most everyone lost their shirt!)
I think the negative of this is that most of the wealth created in the technology is going to remain in the pockets of those who are already rich and well connected.
I'm increasingly feeling like as our society becomes more technically advanced, it's almost inevitable that the vast majority of wealth is going to flow up to the top 10%.
You of course are right. Tail between legs is embarrassing but in the end you won't go hungry or homeless.
Problem is in popular culture there are also stories about the 1 out of 1000 guys (just like you) that essentially gambled and came out ahead. Let me say that again. Gambled and won. You hear those all of the time. What you don't hear is about the ones who lost or hit the skids as a result of those chances that they took. Or maybe you do (there are always counter stories floating about) but the shine of the winners typically totally blocks those out.
For example I am sure in response to this thread someone has already mentioned the type of family that Steve Jobs came from.
That's the big fallacy of capitalism. Nobody buy books about the guys who took a risk and lost everything, but everybody buys books about the One Guy who became millionaire after being a drop out.
What you call "popular culture", is just propaganda to make people believe that if they don't became rich is their own fault.
"I did make a bunch of money by winning the Netscape Startup Lottery, it's true. So did most of the early engineers. But the people who made 100x as much as the engineers did? I can tell you for a fact that none of them slept under their desk. If you look at a list of financially successful people from the software industry, I'll bet you get a very different view of what kind of sleep habits and office hours are successful than the one presented here."
*this advice only applies to upper middle class white males based in Silicon Valley(or at least the US), who own trendy startups that have raised some VC funding
I know a lot of Blacks, Asians, and Women born into a lot more privilege than I, who exhibit the same behavior as those white male founders who sometimes get described as egotistical/ self absorbed/ "douchey".
I mean, are you trying to claim there are no upper middle class tech scensters who are Black, Asian, or Female? Or do they get a pass for acting exactly like the white male counterpart because they aren't white males?
Absolutely. What I think some stating that this is all "common sense" miss is that for many people it's NOT. All the advantages some have are advantages they believe that others have. Couldn't go to university because you had to work? Why didn't your parents help you? What? Nowhere to live? What about your old bedroom? You've supported yourself since you were a teenager? Where were your parents! No money left? Huh? No trust or college fund? Not even a savings account that your parents set up for you? What about your credit card? You're afraid to start a business / go into debt / try to "work your way" through college? Why, if you fail you can just move in with your family! Why not get some "friends and family" investors? The list of these tacit assumptions, and by extension that you're just a fool or lazy because you didn't do those things (supported ideologically in this country by all the Just World Fallacy nonsense) is far more widespread than one may think.
It's really amazing just how many people cannot even fathom that others do not have the familial safety net and have been working to support themselves from an age where said people were just starting to think about what school to go to. For many, until they've lived on the razor's edge, they simply do not have the mental framework for understanding what living that way does to people.
Edit: I'd also add that for those of us who have seen the other side (I was upper middle class from 0-9 years old, fell into poverty after and lived that way until my early 20s - riches to rags sucks. Badly. Read all about it here if you're curious: https://medium.com/@opirmusic/why-software-developers-should...) we know what the other side is like. We've seen it. We know what it's like to never worry about transportation, decent food, school supplies, books, tutors, spending money - and the ever-present implicit safety net. We saw our parents' friends go on vacations, buy multiple cars, live in huge houses, etc. So anyone, anyone who says it isn't a huge advantage is delusional or lying.
A million times yes. This is a common mistake of managers/older people assuming younger/inexperienced folks are dumb from their mistakes and lack of experience. The latter need patience and some guidance for the former to grow their "common sense" to become more capable/productive/successful.
The other antipattern is spoiling kids and helicopter parenting, which leads to sheltered/learned-helplessness kids. Letting kids struggle more to learn for themselves and earn things is important because the role of the parent to prepare people to become independent, survive and thrive. Also, expecting them to do more with much less improves their ingenuity out of necessity. People/startups that are broke can often attain what others cannot because they are able to make something awesome out of what other people call "junk" and waste less money.
The world isn't fair or just. But we all control our attitude and our decisions. Some attitudes and decisions get you a house and food. Some do not.
Speaking as somebody who's been there, I'm really concerned with this "poor changes your mind" thing I'm seeing. Buddhists manage to live and be happy not having much at all. For the vast majority of history, great men lived in conditions much worse than the average poor person in the western world does.
I agree that many rich people do not understand poor people. Likewise, many poor people do not understand rich people. But when people say things like "So your startup doesn't work out, why don't you just go live with family", they are not simply showing that they don't understand your situation. They're trying to point out: what's the worse that could happen? I've been homeless, I've lost everything I've owned. You go through a lot of crap an either you sit in the corner feeling sorry for yourself or you start thinking "So I could lose the house? It's not the end of the world." Doesn't mean I'd do it lightly, but I am in control and I have the power to make that decision.
I really don't care who has a private jet or has never worried about food or shelter. Moreso, I find worrying about those things is a good sign my head is in the wrong place for actually making me a better person.
That's great that you had the mental fortitude to make it through that. For many, being broke and homeless is the very bottom and is psyche-destroying (people are so afraid of it, we even have a phenomenon named for it - Last Place Aversion: http://www.scientificamerican.com/article/occupy-wall-street...) You may not like the poor changes your mind thing, and why would anyone? That doesn't make it wrong. For example:
I'm also referring to the incredible narrowing of choices that you're left with (this one I've experienced first-hand, and by a read of these comments many here have experienced it as well), which you are surely well aware of. Don't let "what you don't like" or "what should/should not be" dictate your interpretation of the reality. I don't like that stuff either, but I'm not going to deny its real effects. It's not only callous, it's not correct.
> TL, DR; On an average, it is much easier to start a start-up if you have some basic level of financial security in your life.
I didn't realize this was some secret. Someone who has parents who are doing well and can pay for their college and living expenses indefinitely will be at an advantage. They can take risks others can't.
BTW, this is true from the time someone is born. Parents who are well off will send their child to pre-pre schools, pay for the best elementary, middle and high schools. Then their child gets to go to college, likely loan free, and can focus on college and not working to pay the bills. I'm not saying there is anything wrong with this, and I certainly didn't grow up this way. I'm surprised it wasn't common sense.
yes, it is common sense and everyone indeed knows it. But many want to believe in SV as some not rest of the world place with equal opportunities for everyone, just be smart. We all want it to be ruled by meritocracy. That's why we keep drinking this koolaid.
Life isn't fair, especially when it comes to economics. Whenever you think you've found some sector of industry that is more egalitarian, you've probably either stumbled into something where you haven't identified the advantaged and disadvantaged parties (it's easier to miss when you are part of the advantaged group), or the current social context makes it easier to hide. That said, there are lots of very different industries, and one of them probably advantages you in some way if you can find it.
To be honest, I only want to be ruled my a meritocracy if I can define myself as the most intelligent person in the world. (Or, in the upper 10% or something). A true meritocracy scares me. And this from a guy who was in the upper 10% of my high school (upper 4%). But I've seen much more brilliant people out there.
So who honestly wants a meritocracy either?
Another option would be that whoever works hard is taken care of. That sounds like the 1950s corporate job with a pension. It may be less exciting and sounds like it would produce less motive for innovation, but it is also less scary and a bit more fair than rewards to the affluent risk takers.
I have no idea how to get the best of all systems. So I make do in this one. I'm just pointing out that no system (known to man) is perfect.
I'd be frightened to see the world run by people like me, but I'd love to see the world run by the best of the best, as long as we can somehow select for morality as well as intelligence.
It is a bit of koolaid, but I believe we are closer to a meritocracy than we ever have been. Some people will always have it easier, but in software the capital cost to start a company has approached zero. What's left is time, and that is the main thing my post tried to hone in on.
"I believe we are closer to a meritocracy than we ever have been"
While it has always been true that the strongest factor in a successful life is rich parents, I understand that it is more true today in the US than it has been for the last fifty years. That would suggest that we are further from a meritocracy than we were, and moving away from it.
I don't agree with the money angle. What is hurting the US isn't money, but the complete break down of the family structure. And no, I'm not talking about the religious 1 man 1 woman family, but the 2 parent family. Kids need discipline and someone to guide them to make good choices early on. I don't see that as much anymore and you get to where we are today.
I grew up without much of anything. Neither parent finished college and both worked all the time. Yet somehow they drilled into me hard work, education, and don't get a girl pregnant while in high school. I am by no means rich, but have done much better than my parents.
> It is very hard to take risks when you are not financially secure
There's a caveat here. It depends on your responsibilities. If you have children, fixed expenses, then absolutely.
If you have nothing to your name and no responsibilities, it's very easy to take risks without anything to fall back on. After all, you have very little to lose.
You can always lose your own life, pretty much. If you can go back to your old room at your parent's room while you find a job and start earning again, sure, it's easy to take risks (I've done it this way).
On the other hand, if you come from a rather poor background and have no one to fall back on, finding yourself with a failed company, in debt, maybe kicked out of your place because you can't pay rent, I'd say that rather terrifying.
I'm all for entrepreneurship, but if failing means living in the street, then let's just not start a company for now.
> in debt, maybe kicked out of your place because you can't pay rent, I'd say that rather terrifying.
There are two types of businesses out there. Those that make money from day 1 and simply need to be scaled up. Those that require substantial investment and time before you even make a penny.
For anyone who isn't financially secure, doing the latter is idiotic. There are plenty of business models that you can pursue that don't involve you ending up on the street. A business model where the worst-case scenario is that you wasted some time.
While it is true that you have profitable businesses from day 1 or almost, it still reduces your chances to be able to be an entrepreneur coming from the bottom. This article doesn't say it's impossible. Just that it's less likely/harder. That's a hard truth. You can build around all you want, there is no denying it.
That might (or might not) be true materially; but I would not ignore the psychological effects of growing up financially secure vs. not, and what it tends to do to your capacity to take financial risks specifically. If you don't even hardly know what it feels like to have no safety net at all, if you know you do have a safety net in the form of family that will help you out if things get _really_ bad, at least to keep you off the streets.... it's easier to take risks "without anything to fall back on." If, on the other hand, you know exactly what it really looks like to be at the bottom with truly nothing to fall back on...
I have spoken to a friend who has rich parents, and the psychological effect is that they always know if something goes wrong they can just be supported by their rich parents when they get back on their feet.
Furthermore they know they can bum around until their parents die and get their retirement money in the form of inheritance. You might be surprised how ever-present that thought is to people like that.
But for people without that option, because their parents can't, they make the right decision and don't take a risk because there is nothing to fall back on.
true. there was an interesting text posted here once, about how one of the worse things about poverty is that it kills the will to dream big and make plans. when you're scraping by, it's much harder, and any big plan can easily fall through due to bad luck (some unexpected expenses you cannot cover eat up your small savings, e.g., and ironically, since poverty is not healthy, unexpected expenses are more likely).
> ironically, since poverty is not healthy, unexpected expenses are more likely
Well, that's mostly an US issue, I guess. When you live in a country with even modest public healthcare, such as Germany, things are not that terrible.
Here, if you get ill, no matter how bad, you get the base treatment that you need. Of course you can (and should) pay on top of that for better treatment. But event without money, you don't have to fear to be denied important treatments. (With some unfortunate, but luckily very rare exceptions.)
Thinking of that, I wonder why we Germans are so conservative, despite living relatively secure. A large portion of our people could take a lot of risk without falling too deep. Probably this is because "falling deep" here means to have to rely on social welfare provision, of which people are afraid of. But this is not really falling deep, compared to living on the street in utter poverty.
coincidentally, i live and work in Germany ;) immigrated from Croatia 2 years ago. and i agree, no doubt about it, the system is really functional here and provides a good safety net (although, welfare involves a bit of humiliation everywhere, the money is never just handed out...). from my kinda outsider perspective, Germans seem obsessed with doing the "right" thing. the word "ordentlich" came to mind ;) the culture is a bit conformist, not too much, but noticeably. so, many people play it safe, avoid going too far out on a limb. but i'm still processing the whole experience, and occasional culture shocks, so i don't stand too firmly behind these impressions.
Even that varies based on your ability to find an alternative. If, say, you're a well-spoken geeky-looking white guy with a degree from a decent school, the worst-case scenario from a complete meltdown is something like “I took a job one cube over from Dilbert at <big corp> which has trouble keeping developers”.
The further you deviate from that (not fluent in the right language, from the wrong minority/gender, self-taught, etc.) the more reasonable it is to question how a failure will impact your ability to get jobs at your level or even stay in the field.
I'm guessing "and are prepared to live in a car/cardboard box". Yes it's do-able but the reality is that a founder does need to be able to have the funds to sprint, fail, and sprint again. It's why people bootstrap.
indeed. "Almost everything--all external expectations, all pride, all fear of embarrassment or failure--these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked." - Steve Jobs
TL, DR; It is much easier to do X if you have some basic level of financial security in your life.
Same goes for education. "Rich" people can pursue and education in terms of opportunity costs. Some kids I went to HS with had to work part time to support their own families, having less time to invest in their education ... really sad story.
Your description of being an employee resonates with me, and thank you for giving some insight into how you've approached your career and what you see in the future. Though I came from a financially supportive environment, I was (wisely) cautioned against being a risk-taker with my career due to medical issues that I can't afford to manage without good company sponsored health insurance. My parents urged me to get good skills so that I could be a valuable employee, obtain a nice standard of living, and have some security in the sense that if I had to change jobs, then I would have skills and a good background in order to get hired and retained.
Here's where the correlative kicks in: I always wanted to be a full-time musician, and I still do...but I view success in music a lot like being involved with a start-up. There's the product/service angle (quality and innovation matter, unless they don't), the investor relationship (labels), the marketing budget, and absolutely no guarantees of success. Actually, it's an offhand joke, but being a full-time musician writing originals (e.g. not in a wedding/corporate party cover band) is a lot like choosing poverty up front for a potential windfall later.
Being an employee has been a choice, and one that I'm glad to have made because with patience and investing in myself, I've been able to acquire lots of equipment and spent hundreds - if not thousands - of hours playing, writing and recording music. Because I didn't seek out the 'traditional' channel of label investment and signing away certain rights, I've been able to build a library of my own content which I consider like a savings of sorts. Maybe it's a worthless legacy in dollar terms, or maybe when an opportunity finally arises to do some business with my material, I won't be caught empty handed. The trade-off in security and health isn't glamorous, but it's certainly something I'm proud of choosing and accomplishing thus far.
TL,DR; If your goal is to get a Nolan Ryan rookie card and the guy won't trade it unless you offer the entire roster of the 1989 Oakland As Championship team in trade, then get to work building up what you need to get what you want.
The difference is that today you can build a side project on the side while working in a company and hopefully build something up that way. This wasn't possible 20 years ago in the same way.
In this specific case,
1. Very low salary - just enough to afford housing and food.
2. No equity - though the founders promised that I would get some later (yeah, I know I was an idiot).
3. Working 12 hour days including Saturdays.
The founders were quite rich and they were of course passionate about their own company because of which they worked even more than me, but I could never feel the same enthusiasm. Interestingly, both of them had worked for larger companies, studied in and traveled to various countries for work which gave me the idea that perhaps it is better to be in a start-up once I have experienced what they have.
Thirty-five years back, I went to work as the fourth person in a start-up (that's still in business) and loved the fast-paced environment of a start-up life. Fifteen years ago, I went to work for "BigCo", and while our group was essentially an internally funded start-up, I hated the politics, especially as we acquired other companies and tried to integrate their software products into ours.
The good news is that succeeding at three of the four start-ups left me with enough stock options to fund (my share) of my next start-up with cash. While it's looking like I may not see a return on that investment, the product was certainly something the industry needs/needed. As a small boot-strapped company, it's almost impossible to move an industry.
I'm currently working at a university and we've tailored the culture within our group to be much like you'd find in a start-up (the political machinations of a university can however be brutal). In any case, I think I have a couple more ideas that could be turned into start-ups and enough working years left to build a couple more start-ups. I can't think of anything that's more fun.
In contrast to you, I came from an upper-middle class family with a stay-at-home mom and a go-to-work dad. Things were comfortable when I was at home but I'd have never asked any of my relatives for money to create a start-up and my parents were far more risk averse than I (originally they mildly disapproved of the risks I was taking but seem to have realized I always "left myself an out" so that in the worst possible outcome, I could take care of my wife and kids).
So it might be true that most kids these days have the money to be entrepreneurs, I say it was definitely in my genes. (As an aside, in the '80s I think most of the start-ups I saw were people who were risking almost everything to get started because they had a vision - it's much easier to fail if there are no consequences).
I didn't mean to imply I didn't have advantages ... just being born where I was was a tremendous advantage. On the other hand, I wasn't a legacy dumped into an Ivy League college, I wasn't handed a trust fund or even enough money to even live for a month.
My parents wanted me to follow the "safe path", to be the '50s style company man who would work his 40 years and retire with a good pension. They wouldn't endorse the life I ended up living. I was however encouraged to be curious and the "hack". That was an amazing gift and I am in fact grateful for my privileged upbringing - I'm just not tanned from laying on the beach at the Hamptons.
They think money solves every problem, completely ignoring family stability, risk assessment by family members, advice, a roof over your head, more daylight hours since chores are split up between family members, sanity, etc.
From a disadvantaged family (no initial savings) and perhaps student loans (ill-advised, but not uncommon) -- it's not unthinkable that he hasn't hit "soft retire" numbers after 10 years.
But your sentiment is correct: If you're debt-free, you should be able to "soft retire" after 10 years as a software engineer in today's markets.
Another thing to factor in is being from a lower income area will distort your perception of what a large number is. I come from a town where the per capita income is 20k. My first "real" job was doing tech support at $16/hr. It felt like A LOT of money to me. I thought I was getting overpaid, that sentiment followed me for years. Today making 125k I still feel overpaid, though when I look at the value I produce for the company, and the numbers of my peers I know it's not. It took me many years to get to 125k because each step up the ladder felt pretty big to me even though it probably wasn't compared to my peers.
Pay is very relative. I look at my old high school buddies, they range from 25k-40k. The first time I asked for 100k, I thought it was craziness. Like no human being deserves that amount of money. So it took me several years to build up to that number.
I can completely relate to this. Doing a practice interview with a career counselor we got to the part about negotiating pay. I said I had no idea how to do this. She said ask for 70k as a junior developer. I told her that, that felt like saying "I'll be needing all the money in the world please."
Build a sufficiently large investment portfolio such that annual income from investments approximately equals annual expenses. Note that this may require moving to an area with lower cost of living (eg. working in SFBA for 10 years and then moving to the midwest).
The approximate rule of thumb (not accounting for investment variability, so be careful!) is that you can extract 4% of your investments annually without affecting the basis (while adjusting it for inflation). So if you can live off that 4% (ie. $40k off a $1M investment portfolio), then you can "soft retire."
.... what planet do you live on? That certainly isn't the case for the vast majority of developers, even if their lifestyle involves a studio apartment and ramen noodles.
GDP per capita in Vietnam is $2k. I think you're overestimating how much it costs to retire. Even $500k would be enough that you'd never touch the principle.
I think you're underestimating the social cost of moving halfway around the world to a place where you aren't familiar with the culture or language or people.
If you're single and socially unattached, your proposition is viable. But you can't readily expect someone's SO and/or children to be as willing to cut ties with their home. And if you have a solid group of friends, that's a big thing to give up and to try and rebuild in a foreign land without the benefit of common language and culture.
I am from a third world country myself :) and have always earned in the country's currency. And even though I did start working as a software engineer in the startup I mentioned, I did not eventually continue in the field and do statistical modelling for a living (which pays much more than the average software engineer here).
OK, but how many developers in the US get $100k? Throughout the first 10 years of their career?
And I'm sorry, I should explain - I live and work in the EU, in Germany right now. So I can't compare. In any case, one can certainly save, and I'm not gonna lie, I could certainly spend less without losing too much :) But a claim like "10 years is enough to retire" seems a bit extreme.
You can consistently get $100k in Silicon Valley, New York City, and Washington DC Metro, although you will need Top Secret security clearance for the latter.
It should come as no surprise that the expenses in those areas are much higher. If you settle for a lower salary in an area with lower living expenses, your effective savings rate could be higher.
Also, you don't want those DC jobs. Just say no. The military industrial complex is a soul-eating machine, and it does not respect software professionals.
The problem is that other places have fewer available jobs in the field, and a greater proportion of them are extremely unglamorous. $90k maintaining a stupid, business-line CRUD app may be less attractive than $80k making custom software for medical researchers.
I saved over 80% of my take-home pay when I lived in SF. The rent is expensive, yes, but everything else is cheap and at most jobs you get free food and entertainment.
SV salary levels are not the norm across the industry. Furthermore, these high salaries in places like SV are often displaced by the extreme cost of living.
well, a full answer to the question would also need the percentage of college graduates that land jobs in big companies in the valley...
P.S. I don't think we'll get far with this... i just noticed, e.g., "median household income in the US" - that seems a tricky thing to compare with, given that many ppl in the US don't have health insurance, or live in trailer parks eating off food stamps...
I think almost all my (upper-year) classmates got offers to at least one of Amazon/Microsoft/Google/Facebook/Twitter/Palantir/Uber. And I went to a school in Canada that nobody's ever heard of (University of Waterloo).
From across the pond, I can tell you we do have heard of you.
I don't follow the Shangai listings (because to me they are kinda pointless) but if pressed to list canadian universities, University of Waterloo would definitely be there....
> And I went to a school in Canada that nobody's ever heard of (University of Waterloo).
Erm, that's well-known as an excellent school. Top-tier, really. My only qualms about inviting in a Waterloo man for an interview would be that our work might not be interesting enough.
Outside tech circles most people give me a blank stare or ask me if it's in England or in Belgium. It's certainly not an Ivy League school where my rich parents dropped $200k to ensure my spot in the upper class, like some of these commenters claim.
For sure. Why you're getting my response, and others like it, is because well, this is a tech circle and we're talking about tech jobs, so in this context, it's certainly nowhere close to being a school no one has heard of.
edit: Your original comment (paraphrased) was, 'I go to this school no one's heard of, but my classmate get offers to <top-tier tech companies>', but the reality of this is that all of these top-tier tech companies are without a doubt quite aware of Waterloo and it's quality. The same can't be said for, what, I don't know, Cleveland State University.
Which brings us full circle back to the topic of the article such that its only children of rich parents who graduated from ivies, white "1% rock star programmer" males only, then you don't need the easy cash anyway.
In other words, starting a business isn't much different than it was in the past - capital and connections are essential. Sure, there're exceptions when someone with little money and hard work managed to grow their business, but they're that - exceptions. The older I am the more I realize how naive thinking "I just need to create something better than my competitors!" really is. You can have a mediocre product but with capital for heavy marketing and connections to acquire early customers you've much bigger chance of success than "just" having a good product.
Distribution is crucial, but I think pkorzeniewski was highlighting how marketing and networking can trump product quality, and his disillusionment with realizing how often this happens.
For many products distribution is correlated with marketing and networking, this isn't true for all products (e.g. web-apps).
I think it's quite different in the software startup industry. You usually don't need much capital, it's more that you need to have a failsafe in case you go bust to not end up unemployed and unable to pay bills.
You still need the capital to feed, clothe, and shelter yourself. If you don't have a hereditary source of wealth, you need to work for that, and if you don't have enough wealth to pay for the education necessary for a living-wage job, even working won't be enough.
Software is still made by people, and people have basic needs, and if you don't come from a family with sufficient wealth to support you, you have to work your way through.
In the USA, you have to do that in a nation that does not open doors for you based on birth, despite the myth the feudalist-owned media perpetuates. This is a feudalist society, the most feudalist society ever known to man (at least in the preserved history).
Networking is still invaluable, but capital isn't a necessity in software startups. I do think that either bravery or a nesting egg to fall back on is though.
It depends upon the market. You couldn't really do health-care software without connections or capital, for instance. Same for anything finance related.
Also, the markets that require the least capital/connections tend to be low margin and flooded with competition.
That is certainly true, but you can work the deal on parallel tracks. With the customer (say HSBCor MD Anderson) you spec what you are planning to build, to be installed/deployed in 4 chunks, every six months over two years. Call this a $20M project. Then you go to the investor and say that you need the funding to satisfy the contract.
Now, you usually would need to work this out in advance with the investor. After they've looked over your deal and poked at you some, tell them that you are going to go get a big customer with the permission to declare that funding is lined up pending contract.
It doesn't seem to take much more time out of your day than doing one after the other, and often the investor will get so distracted by the large pending customer that the due-diligence process becomes a pretty cursory check-box affair.
There are a million free or extremely cheap distribution channels on the internet. My current business with 7 figures ARR was launched almost exclusively on industry forums and there are no connections required to create an Adwords account. There are countless businesses that started on Reddit or even here on Hacker News with a $0 advertising budget.
It's a matter of effort/reward. Yes, you can advertise for free or very cheap on the Internet, but it's harder to achieve the same amount of success as if you were paying and requires you to put in more work, like engaging with the community (which is not trivial).
Of course it's possible to get extremely good ROI on free advertising (especially if your product is excellent or unique), but it's the exception, not the rule.
I was responding to the original claim that a distribution channel requires capital or connections, which from my own experience is a false statement.
You are right that free advertising requires work like engaging in the community, but all startups require a considerable amount of work, and if you have a little bit of online savviness engaging with a community is very easy.
I know that from the time I went from $0 to $10,000 MRR I spent about $100 in online advertising, and I know countless other businesses that have done the same. Maybe if your plan is to create the next Facebook it is harder, but if you have a high quality niche startup, being able to effectively and cheaply advertise yourself for free is hardly an exception. You can always broaden your scope later.
Jack Ma had neither when he started Alibaba. And whatever handicap not having connections is now in the west, it was a much larger one a decade ago in China.
Fair enough, but his job at the ministry of foreign trade was after he had made a (for the time) fortune with a different venture. His parents were traditional musicians, not powerful party members. He absolutely was not from a privileged or politically connected background.
Hmmm if your grandfather was successful in some significant way then your father benefited from that security which is exactly what the article is about. So claiming both were those exceptions is a bold claim indeed.
If you work your way through school, you end with ‘deficits’ relative to your peers whose parents paid their way through University (and provided a rich set of ‘cultural’ experiences along the way). It is a tough having tens of thousands of debt for your CS degree, as well having spent all your free time in crummy jobs to pay the bills along the way. Walk through a co-working center in Cambridge or San Francisco – how do all those 23 year olds afford rent in some of the most expensive cities in America? And how can they afford to have a bright shiny two grand MacBook on their desk?
If you are like me, a working class kid interested in technology and startups, it can be tough to see your peers with those breaks.
I’ve had every startup role from individual contributor to VP, CTO, COO and CEO under my belt. My perspective is that you can always go to a few museums, read a few books, and catch up (or surpass) your well healed peers. Take it from a 51 year old -- if you have worked your way through school and can’t afford to found a company in your twenties don’t despair – you’ll have a long life and many chances. But the determination that drove you to work your way through school is something precious and remarkable.
No, in the long term it isn't. In the short term there may be all kinds of deficit, but they will eventually disappear. It has also been a great source of self-esteem for me, the fact that I left home without a penny.
After teenage angst, came a time of value/family fallout for me. At one point, I haven't even been face to face with any of them for a period of almost 2 years. Not that anything was particulary wrong with anyone, mind you. After 100+ hour workweeks slaving for someone else, ending up in ER several times (but still showing up 8AM sharp day afterward), finally burning out, quitting job, breaking up, and living in windowless installation-free underground solid-cement garage for better part of year (life's paraphernalia funded entirely by sale of single iPhone), I've come home.
I cannot even describe what sort of relief I felt having my meals provided for, laundry taken care of, having bed to sleep in, someone to talk to, help to, care for... That was when I figured, given this bare essentials provided by family, I have basically nothing to lose by taking much more risks in life and working on what I care about. I like to think I've instilled that appreciation to my siblings, as well as parents.
Three months after that, I've found investors, moved to freeload in one of their penthouses, while I work in a high-risk field of game development. We'll see how that turns out, but I have no fear - I have family to fall back on.
---
I'm aware not everyone has what I have with my family, but I'm certain many more do not appreciate what they already have.
This is just common sense but amazingly this bit of common sense is ignored in the valley. Probably because too many want to believe in the dream that the successful were "just smart enough" or "just risky enough" when the majority were simply able to gamble with minimal risk.
People with more money do more of everything... they have more fun, more sex partners, better sex, more entertaining lives, more meaningful lives, more profound moments, more meaningful relationships, and make more of an impact on humanity.
This is not a value judgment. Having access to resources means having more freedom. That's freedom to do what you want, to think about what matters, to exercise, to eat healthy, to take time off to spend with friends, to participate in humanity rather than just working to meet your basic needs.
All this is trivially true or full of counterexamples depending on where you draw the line between rich and non-rich.
Sad and true, and it's because we still live in a survivalist world. We talk a lot about sharing and doing good, but our instincts tell us the opposite. Nobody's going to share their wealth with you except your parents (if at all), that's even natural.
This aligns with Maslow's Hierarchy - https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs In other words, to reach a level where one pursues respect or self-actualization, one has to have their physiological and safety needs met first.
Degree of relative satisfaction. -- So far, our theoretical discussion may have given the impression that these five sets of needs are somehow in a step-wise, all-or-none relationships to each other. We have spoken in such terms as the following: "If one need is satisfied, then another emerges." This statement might give the false impression that a need must be satisfied 100 per cent before the next need emerges. In actual fact, most members of our society who are normal, are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time.
Human needs arrange themselves in hierarchies of pre-potency. That is to say, the appearance of one need usually rests on the prior satisfaction of another, more pre-potent need. Man is a perpetually wanting animal. Also no need or drive can be treated as if it were isolated or discrete; every drive is related to the state of satisfaction or dissatisfaction of other drives.
If the middle class didn't lose so much of its income on taxes, it would be a lot easier to save money for them to start businesses. The tighter you get squeezed, the longer it takes to save money and the more the actual risk increases based on sheer time value.
The unfortunate result of that is that in order to start a business that requires more than an investment of spare time and professional skill (programming or a service based business) everything else is left to the mercy of investors.
Wow, talk about an article that is completely devoid of value. That stands out as soon as you see "cult of the entrepreneur" in the first sentence.
OK, now we know that most entrepreneurs come from "families with money" (according to their definitions anyway). Great, so what do I do with that particular bit of information? I'm most definitely not from a family of means, so do I just quit now? Have I been deluding myself? If so, so what, it's my right to spend my time and money however I want anyway.
It's not like I can go back and change my parents.
If you're not from a family of means, do things differently. For example: work a day job making a reasonable salary and work on the startup on the side, supporting yourself with your salary until you have a product built. Not every entrepreneurial scenario involves gambling with homelessness.
Whatever. I smell bullshit with this article anyway. This is just propaganda from the sect of people who hate individualism, hate capitalism, and will take any opportunity to bash the idea that anyone can advance in life through hard work, grit, determination and moxie.
There are lot of people who fall for the encouragement from PG and such and take risks without being aware of the expected financial impact. Read through comments here and there are some first hand anecdotes.
It is hugely more efficient for someone to take into account this research result, rather than learn that after years of toiling, the hard way.
Perhaps, it was not as insightful to you personally. But not every piece has to be valuable to everyone for it to avoid being classified as devoid of value.
I don't see how you can say it offers any value. There are no actionable insights here. You can't change your family, so in the end, every individual still faces exactly the same choice: pursue the entrepreneurial path, or not. What other people did and what their circumstances were is irrelevant.
If the article purported to prove that it is impossible to succeed as an entrepreneur without coming from a rich family, and if there were no counter-examples disproving that assertion, then I could see saying it had value. But we know that's not the case. People do succeed as entrepreneurs despite coming from poor families.
There are lot of people who fall for the encouragement from PG and such and take risks without being aware of the expected financial impact.
A "lot" of people do that? I'd need to see some evidence to accept that assertion. And even if that is so, this article doesn't help them. They still can't change their backgrounds / families, and they still face the same choice.
who fall for the encouragement from PG and such
That's some interesting language. You make it sound like encouraging someone to chase their dreams is some kind of scam. Oh, pity the poor gullible fool, who "fell for" the idea of trying to make a better life for him/her-self...
A more useful article, to my way of thinking, would have been one that presented the data from this article and then continued by saying "OK, so if you're not from a wealthy family, here are the things you can do to improve your odds of succeeding anyway..." That what I mean by "actionable information. Give people something they can actually use.
That would be a valuable article, and a valuable discussion.
All I see here is negativity and anti-individualistic rabble-rousing.
The article summarizes imporant data. Action items I take from the article:
* Plan that most of my competitors are better funded than I am because of family and social strata.
* Compensate for those deficits before engaging in a startup, either as founder or employee. E.g., look for an angel investor (difficult, because there are none associated with my family or friends).
* Stick to my day job.
* Be open to government policy proposals that would even the playing field - not to take it away from the wealthy, but to provide an on-ramp for the non-wealthy. E.g., regulated monopoly universal internet service. Public housing in my town does not provide internet: those kids can't even do their homework, since the teachers *assume* internet access.
Plan that most of my competitors are better funded than I am
That should be your assumption anyway. "Hope for the best, plan for the worst". Besides, most startups aren't killed by competition, they're killed by building a product nobody wants.
Compensate for those deficits before engaging in a startup
Again, anybody founding a startup already knows they are facing an uphill battle. This article doesn't present any data that would change that.
look for an angel investor (difficult, because there are none associated with my family or friends).
You think everybody who ever got angel investment got it because their friends and family knew angels? How about going to entrepreneurial themed events in your area and networking and meeting angels, VCs, and other founders there? Don't live in an area with that kind of thing? Move. (That's what I did, FWIW). Check AngelList and/or scour LinkedIn to find local angels, and find a way to work your way into an introduction to them. Hint: founders of existing startups are often very open to helping new founders network and meet investors and what-not. Cold email celebrity investors (low percentage, but Mark Cuban has done deals that came in as cold emails). Apply to go on Shark Tank.
Be open to government policy proposals that would even the playing field - not to take it away from the wealthy, but to provide an on-ramp for the non-wealthy.
Meh. These kinds of policies may be well-intentioned, but most have unintended consequences that outweigh any good they do.
How about: work at your day job and bootstrap a startup until it's cash flow positive or work as an apprentice for an entrepreneur until you can start your own.
Every successful entrepreneur I know outside of the valley has started in one of those two ways.
The idea of a "startup" having to have funding is looking at entrepreneurship in a complete backwards way.
It's part of the movement toward a more realistic view of "entrepreneurs". Wishing to be a wealthy aristocrat with a sea of sharecroppers isn't a commendable goal, regardless of your background. This article just points out that aristocrats tend to beget aristocrats.
It's part of the movement toward a more realistic view of "entrepreneurs".
I guess that's one way of looking at it. To me, it feels more like an attack on the very notion of entrepreneurship, and a way of discouraging people from pursuing that path. I feel like this kind of article originates with the same people (and the same thinking) that are always proclaiming "it's all luck, nothing you do really matters".
The risk taken by risk takers (entrepreneurs) is disproportionate as partly expressed in the article.
Apart from financial risk, there is the risk of employebility once you are off the radar and are asked for references once you try to join the workforce.
For immigrants the risk of maintaining the status to stay in the country. This is perhaps a major reason why graduates go back to their home country to start companies.
Additionally there is conscious/subconscious biases at play when startups filter people based on "fit" which is to say "birds of a feather flock together". Hence it could be rather daunting for people from a different demographic to gain relevant experience which paves their way to a successful startup. Once the startup grows, they usually become more accepting in this regard.
This seems like common sense -- those that have some sort of solid safety net tend to be able to stick to their search for a business model that works longer than someone that doesn't. Obvious. There are examples of people that take other paths but they tend to need more raw luck than people at the other end of the scale.
But I also notice that these people need not be from great wealth. They just need to know that they won't starve or go homeless and, perhaps, get a bit of help with business expenses. It just turns out that even that level of wealth is a bit hard to come by and doesn't apply to the majority of people in the US.
This is why I advocate for some sort of 'solid floor' socialism in the US. If people knew that they always had a meal and a place to live we'd see a lot more 'risk taking' because we will have removed a risk singularity from the market. We are really, really close to this already -- it would not take that much more to make our 'soft floor' welfare into something people can unquestionably count on.
We'd also see a lot more entrepreneurs serving currently underserved populations just because they will be drawn from that population and will know their pain points and how best to serve them.
Every third world country I have been too is filled with entrepreneurs hustling to make a buck. Having money helps with big scale business; having no money means you are buying a bag of oranges and selling them off individually on the street corner.
I do not come from a family with money. I grew up below the poverty line in fact. This article is crap. It is like saying "Entrepreneurs are all white males" because a lot of entrepreneurs are - but it marginalizes all the people, the many many people, who have succeeded as entrepreneurs despite starting from a very small seed (and who weren't white males of privilege).
I have a company because I couldn't imagine working for someone else. I have tried a couple times for a few months, but in the end I can't do it. So I work for myself, and have for 25 years. I start companies because I can't not do it. I have too many ideas, and I want to see if they work so I do little experiments that sometimes turn into viable projects.
While I agree I can't take on Tesla unless I had a spare billion laying around, that ignores that there are lots of businesses that can be started for a few dollars. This article ignores all of those business too. Not every business has to be the next Uber.
I'm not sure this article is trying to down play successful ventures from non-stereotypical entrepreneurs but it's making the argument that that the image of the bold, risk taking entrepreneur might not be so accurate in the sense that that aren't really risking that much.
It doesn't say that all successful entrepreneurs are white, male and privileged. It just says that a lot of them are and that the largest indicator was being white, male and privileged.
This comic does an excellent job of summing it up:
I understand this issue perfectly. In the referenced comic strip, I am Paula on the right and my children are on the left side.
What is left out in that strip, is that because of the way I grew up, I am left with a drive to accomplish things that I simply do not see in my own children. The hunger, the drive, the ambition are all from a crappy childhood. The drive is where my success came from, it is what gets me off the floor when life knocks me down. It is the drive that provides the "I refuse to lose" mentality.
I don't claim that this drive is all good. A lot of times I think it makes me a little obsessive and crazy in my need to succeed and reduces the number of days I relax.
Agreed, but nothing really surprised me. It's just some of those start-up pumpers keep ignoring this fundamental truth.
It's not entrepreneur gene, however statistically, it's still the gene from your family tree, it normally takes generations to build the foundation for most people to take risks via education and efforts, and most if not all 'rich' families started from their disadvantaged ancestors.
Rising from poor like what's in Godfather movies is still possible, but very unlikely.
It's just some of those start-up pumpers keep ignoring this fundamental truth.
And they should, because it's irrelevant. You can't change your parents, ya know. In the end, you play the hand you're dealt. If you're not from a rich family, maybe you just have to work that much harder, but I don't think the moral is "you were born poor, so just STFU and accept your lot in life".
If someone wants to be an entrepreneur, they will find a way, even if they're from a poor family. Note that I'm not saying they'll all build billion dollar Internet companies - the range of what "entrepreneur" encompasses is pretty broad.
Rising from poor like what's in Godfather movies is still possible, but very unlikely.
So? There's a binary difference between "unlikely" and "impossible". Should we all avoid striving for anything that's "unlikely"? Most kids who play high-school football will never even get a scholarship at a BCS school, much less play in the NFL. Most kids who play football for BCS schools will never play in the NFL. Should kids stop dreaming of being NFL players?
What if nobody bothered to dream anymore? What if nobody said "Fuck it, I can overcome the odds and do the unlikely?" Personally, I don't want to live in that world.
Football analogy is probably actually pretty apt. You're playing a game where the vast majority don't get what they're hoping for, sacrificing opportunities along the way, while a large percentage get sports related injuries. The opportunity cost and actual cost of football greatly outweigh the likely benefit. Yet still, people think that they are the exception, and that the bad things can't happen to them.
I think that your latter point is fair, we do need people who are willing to challenge the squo, and we do need people with good ideas to try to make them realities. But going in blind doesn't help anyone, and ignoring the reality of the situation (which from your other comments, it doesn't seem like you're doing) doesn't let you think of potential solutions.
The article's assertion is simply that people with a safety net have a reduced risk. Marginal reduction in risk increases entrepreneurship.
There's probably also a marginal reduction in reward, as the reward of entrepreneurial success for the poverty-stricken would include safe housing, food, education for children, etc., which the wealthy already have, but it seems we have no problems desiring to spend more than we currently have.
This is also why I think people should be very careful before comparing two entrepreneurs, or saying something like: "why is ___ so much less busy than you and more successful?"
Well, because ____'s parents are literally billionaires. I have to work so much harder because my bank account is actually decreasing everyday!
Here's how you can simulate coming from a wealthy family.
1) Reduce your personal burn rate.
2) Save money, enough to last more than a year on your reduced burn rate.
3) Develop high-demand, valuable skills so you will always be able to get a job if things go south.
While it is clear that one's access to capital is an important consideration, the article is weak, because it overlooks several important points, some which have been mentioned here by others. I'll mention two that I haven't seen being pointed out elsewhere in this discussion. I hope they are of interest.
1. The article states:
... and found that most were white, male, and highly
educated. “If one does not have money in the form of a
family with money, the chances of becoming an
entrepreneur drop quite a bit,” Levine tells Quartz.
Given that the daughters of rich families are just as well-off and educated as the sons, and have as much access to parental/familial capital, having a wealthy family background cannot be the whole story. We can have long discussions about why this is, but the key point is that this disparity really undermines the article, regardless of cause.
2. The article doesn't reflect on the what exactly entrepreneurship is. One could argue that poor people in the developing world are much more entrepreneurial because most of them are in some form or other self-employed, ie. are entrepreneurs: the cigarette and waterbottle seller on the street corner, the coconut seller on the beach, the fisherman fishing with his own boat and net, the garbage picker who sells empty plastic bottles by the kilo for recyling ... They often are not employed. In a sense it's poverty that forces them into Entrepreneurship. It's the absence of large structured firms with the stability of employment that provide that's missing. By cherrypicking specific forms of glamorous entrepreneurs, they arrive at a skewed conclusion that more careful analysis would undermine.
This is what I've been saying. The ability to quit college or stay with a startup long enough until it starts succeeding, or better yet, borrowing money to pay off those loans you took on while believing deeply in your startup, depends on being able to ask your parents for money while things are going not-so-good.
I can understand the argument of money means you're more likely to start a company. But the article is titled at addressing risk. Perhaps I'm just being pedantic with semantics, but if you have the money then doesn't that actually reduce the risk? "when you know you have a safety net, you are more willing to take risks." If you have a safety net, it's arguably not a risk then. Perhaps a better way to look at it would be, if you have money, what is a risk to someone else is less of a risk to you.
I still feel like risk aversion as a whole can hold us back from things we would enjoy in life. What is this? "a 31-year-old woman who runs in social entrepreneurship circles in New York, and asked not to be named, told Quartz" This could be any random person with an opinion on startups. We have no idea what influenced this view point or where she is coming from. Blindly listening to it sounds dangerous.
Of course it's true that people with access to capital can afford to be more risky than people who don't. But the majority of the "rich" aren't entrepreneurial and there are plenty of the "poor" who are. There is more to the average entrepreneurial story than simply privilege.
I mostly agree with the article in that at some point you must gain access to capital in either cash or credit and then put it at risk. That said, I was born in WV to 17-year-old mother and 20-year-old father. I was their second child. My father was a coal truck driver, mother a secretary, neither college educated. By the time I was four, my father was in prison two years, and my mother was a struggling 21-year-old with two kids and no family support. Anyhow, I worked my way up from that start, became a bootstrapped entrepreneur in 30's after raising $15K seed, no salary for two years, bought back my seed equity, now a millionaire net worth by 40. If sufficiently hard-headed, stubborn, and unwilling to quit trying to find any way to succeed, it can be done without family money.
Exact same thing I've felt. I've met a number of founders and while there are definitely the ones who had nothing but smarts and a strong degree, the majority had this idea that if things don't work out, there's family to back them up.
That makes sense: they have a better tolerance for risk because they inherited their money, and thus are young enough to take slightly foolish chances (someone who has made his money the hard way is more likely to be responsible with it).
Which leads one to wonder what the unintended consequences of tinkering with gift, inheritance and other family-related tax rates might be. For that matter, if Mike Markkula had not received all those stock options at Fairchild & Intel and been able to retire, would we all have smartphones and personal computers today, or would we be stuck with an OSI/ITU-type centralised consumer-only network?
One cannot be unmindful of risk. Those with family money know they can afford the risk. It is really that simple.
I started a venture, and assessed the status after a period, and had kept a stop loss for how much I can afford to lose. I closed at the limit and shut it down.
I must of course mention that business schools teach you to a project feasibility report first and then proceed. But quite often, I suspect, misguidance and insincere encouragement makes one launch a project without a strict and impassioned appraisal.
K.Seshadri
Entrepreneurs in other industries may need family money. Software Entrepreneurs can use their own.
Working in an industry where $120k/year is considered a starting salary, and where you know for a certainty that you are roughly one Twitter post away from having your pick of three companies that will fight to get you, you can feel free to pursue any goofy idea you like without fearing much for your financial safety should things go wrong.
Yet another reason this is the best industry to be in right now.
It's a shame we see so much denial about this. The rational response when shown that you are dramatically underpaid should be to take steps to get one's self back up to the level of the market. Sadly, the more common response is to call whoever filled you in a liar.
I've noticed this happening a lot in the last few years, as developer salaries have skyrocketed but guys who had secured jobs before that still quote 2005 numbers as though they were the case today.
You don't need to be in Silicon Valley to make six figures as a developer. Taking that on board rather than rejecting it offhand can only lead you to a better place.
You initially mentioned starting salary, now you are just mentioning 6 figure developer salaries in general. Again, $120k starting salary for your average junior developer fresh out of college isn't a reality outside of places like SV.
Apologies if I wasn't clear. By six figure developer salary, I meant more like $250k. That is in fact achievable as a mid to senior level developer working remotely.
A kid from a good school capable of working for a Facebook or Google would be we'll served by holding out for that unrealistic Bay Area starting salary. It's not as unrealistic as you believe.
> one Twitter post away from having your pick of three companies
Can't concur on that one. I've been looking for more than a year for a job after graduation and getting through those interviews was hard. But maybe it's different here in Europe.
Not sure about the twitter post thing... but any industry that has constant demand for good workers and high wages would be conducive to this by eliminating a lot of the monetary risk of failure.
Since no one else is calling it out, I will - This article starts with a radical statement, but when you read it, it seems to be essentially an opinion piece with a couple of studies hand picked to support its claim. That's not very scientific at all. Which is a pity, since I suspect the claim has some truth to it.
Whether it's your savings or capital from investors, spare cash gives you the leg up to artificially scale faster than you would organically. This increases the risk but also helps you capitalize on timing when an opportunity is short-lived.
Remember, in the post-WWII USA we live in a feudalist society. If we lived in a true capitalist society, with societal mechanisms in place to keep wealth circulating, this wouldn't be a problem.
The article is arguing as if Social Darwinism is an accepted theory of business success. Is it really? I don't think so. I followed several of the links the article was using to support the Social Darwinism claim. One only was actually making that claim (inc.com) and it was obvious pseudo-science, it has the wonderful line: "Self-employment income is heritable".
To the people taking offense to this because they didn't start out with a lot of money: the article is talking about probability, not possibility. Just because most entrepreneurs start with some money doesn't mean there is no-one who starts without family financial support. And it's talking about genetics vs financial support, and not about the people who challenge the odds with hard work.
> I followed several of the links the article was using to support the Social Darwinism claim. One only was actually making that claim (inc.com) and it was obvious pseudo-science, it has the wonderful line: "Self-employment income is heritable".
Your post confuses me, because I think you're lumping two very different -- almost contradictory -- claims together under the vague banner of "Social Darwinism".
The inc.com article you are referring to suggests a biological mechanism (DNA molecules and genes), while this article refers to a purely social mechanism ($$$, influence of kin, learned behaviors.)
Have you heard of Social Darwinism before? Its not a term I made up, and you've succinctly identified the exact reason it's so questionable.
From Wikipedia:
Social Darwinism is a modern name given to various theories of society that emerged in the United Kingdom, North America, and Western Europe in the 1870s, which claim to apply biological concepts of natural selection and survival of the fittest to sociology and politics.
You seem to be agreeing with me in pointing out the contradiction between some parts of the article and some of the sources the article used to back up its own claims. It was Aimee Groth that used inc.com to make her points, not me.
Aimee's article is inferring biological mechanisms, both through her sources, and directly in the language:
“Genes probably matter, as in most things in life, but not much.”
"..and found that environmental factors (not genetic) most influenced behavior..."
Do you read purely social from those uses of the words "genes" and "genetic"? To me they reflect the biology meanings, or at the very, very least are intentionally conflationary.
> the sources the article used to back up its own claims
You've got it all backwards: The article is ARGUING AGAINST the inc.com thesis of an "entrepreneurship gene", calling it a myth:
> New research out this week [...] found that environmental factors (not genetic) most influenced behavior, pointing to the fact that risk tolerance is conditioned over time (dispelling the myth of an elusive “entrepreneurship gene“).
Disagreeing with inc.com assumes that inc.com's Social Darwinism argument has merit in the first place. You are agreeing with me and making the same point I am.
Social Darwinism is literally the most popular belief system in the US (and many other countries) aside from some Christian morality. It is popular among rich, poor, and in between.
Most are thinking to themselves "even though I don't have as many advantages I will still be able to make it some day because deep down I a, special". So that belief system helps rationalize self-worth.
Not better than Stockholm but yeah. Still the point is that more should be doing that since the cost of failure financially is much lower (culturally it's ironically higher)
You don't need to be from a rich family to do these things.
Of course not. Who said so? The point is that coming from wealth increases the odds that you'll end up being the type of person who will follow that program. It's not simply about having the capital; it's what coming from a place where security is guaranteed does to your psyche.
"Step 1: Spend less than you make...You don't need to be from a rich family to do these things."
Uh, in the USA 2015, you do. Or you need to be a very lucky lottery winner. Living-wage jobs are not available to all, and you need a modicum of education to secure one.
Well, it should be noted that "rich" is something of a relative term. For many people, being able to take a risk and forgo income for a time is, indeed, to be rich.
Having a moderately wealthy family increases the speed at which #2 will come, if it comes at all. Someone who's working two jobs to make ends meet is likely never going to be able to get to #2.
I am second generation from immigrants who arrived at these shores with nothing but the clothes on their backs. They escaped Genocide and other horrors.
When they got here they grabbed whatever job they could. They had nothing. They saved their money. And when they could, they started their own small businesses (yes, both of my grandparents behaved the same way without knowing each other).
No, there was no IPO. These were small neighborhood stores. One was a little general store and the other was a shoe repair store. Yet, they had their own businesses and were able to support their family through their own efforts.
My parents, in turn, followed a similar path. No, they were not handed money. They worked at my grandparent's stores and learned an entrepreneurial work ethic. As they got older they got jobs working elsewhere, my mom as a clothing designer at a factory and my dad as a salesman at an insurance company.
Years later, after saving every penny they made, they decided to launch their own business, a clothing manufacturing business. My childhood memories are filled with moments in this little shop with both my mom and dad slaving away behind industrial sewing machines. Yes, the "factory" was mom and dad for the first year or two in a little 500 square foot industrial unit. Today we might call that a "minimum viable product". Yet the idea was that they where all-in, quit their jobs, found a contract somewhere and did whatever was necessary to deliver, make money and grow. My parents were no strangers to sixteen hour days behind industrial sewing machines while the kids did homework, played and slept in the background.
Of course, through hard work and pure grit they eventually grew out of there and, years later, found themselves running a shop that was about 50,000 square feet, with two or three dozen employees and dozens of machines of all kinds. I, as a kid, loved spending time at the factory messing around with stuff. I eventually learned enough about the machinery that, as a young teenager, I could fix the machines better than my dad or the technicians he would hire from time to time. And yes, I also learned to sew and worked the various machines from time to time. In the weekends my dad and I would go to the factory and prepare work for the coming week.
The work ethic was strong. We worked. And, no, we were not millionaires. Yes, my parents did well but the clothing industry was disintegrating slowly and they were very aware of this. Also, I think my parents worked so hard that they really didn't have time to develop strategies. Years later the factory had to be shut down due to the impossibility of competing with cheap Chinese imported goods. Dozens of good people lost their jobs and my parents went back to work for others. Funny enough, my mom went to work designing clothes and my dad went back to insurance. Exactly where they started when they were young.
Throughout this I never heard them complain about a thing. They did whatever had to be done to take care of the family. I think those were different times. People were tougher. There was real grit out there. Particularly from immigrants or first generation children. Compared to then, today's population seems neutered. Crying foul at the dumbest things. Filing for disability if they pull a muscle. Such bullshit. Such wasted human potential. I watched my parents and grandparents work no matter what. In fact, I can't even remember any of them ever staying home sick. Hero's, in the true sense of the word, at least as it pertains to the families they took care of.
When I got older I followed a similar path. I got nothing from my family other than this insane drive to do whatever was necessary to succeed. My first job was washing dishes at one of those companies that delivered food to airplanes (back in the day when they gave you real plates and silverware). I didn't last long because I had other goals in mind. I quit that and got a job at a professional photography lab and studio. I went to school at night while I held down that job. I actually started to function in an entrepreneurial way as I started to do some professional photo work during that time. It was fun work for a young 19 year old because I was going out to do photo shoots with stunningly beautiful models who I later became friends with. It was an interesting time.
As my school work in electrical engineering got past the basic requirements and got more into engineering I felt I needed to get a proper engineering job. And that I did. I worked at a company that made industrial robots, did some basic design work and helped with support and maintenance.
I saved as much money as I could. I stayed there nine years. And, yes, I did little entrepreneurial things here and there but nothing major. Nine years later I felt I was ready to launch my own business. And I did. It was a moderate success. I launched another and then another. I have done very well, I've gone bankrupt, recovered and have done well again. The basic formula is to be fiscally responsible, patient, save money and be willing to work hard and smart as needed. Success isn't given, it is earned.
I don't doubt there are many who are handed tens, hundreds or millions of dollars by their families to start businesses and play "entrepreneur". Those people do exist. And quite a few fail and never try again (or keep burning cash) because they are what I called "neutered" in terms of the grit required to be an entrepreneur.
The fallacy in an article such as the one posted is that money isn't the magical pixie dust that makes an entrepreneur or make him or her successful. No, the pixie dust has nothing whatsoever to do with money. Money is a tool. The pixie dust is a combination of many things, including smarts, timing, frugality, boldness, grit, determination, no fear of failure, the ability to get back up when knocked down and more.
You don't need to come from a privileged home to learn these things. A mom holding down three jobs to provide for the family is as much of a positive role model as my parents were. She can teach the kids lots of lessons they will never forget. What does not lead to entrepreneurship is a neutered existence where people are afraid of their own shadows, don't take risks, want the government to provide everything and become dependent on mysterious external magic to survive. This is how a lot of people freak out when the power goes out while others see it as an opportunity to do something else with the kids (and entrepreneurs try to figure out what product to come up with to address the problem).
In entrepreneurship money makes things easier if and only if the entrepreneurial foundation is there to begin with. That's why shops like YC need multi-founder teams and, even at that, they have to become their virtual parents and role models in order to ensure success and teach them the culture and ways of entrepreneurship. Young single founders without this "grit" would crumble inside of a year, money or not.
I would venture to say that the millions of small business entrepreneurs out there do not come from wealthy families. I don't have any data to back this up but it is simply impossible to think that my local ice cream shop, cleaner's, barber shop, AC guy, gardener, etc. fell into their businesses because they got some money from mom and dad. I think the opposite is far more likely to be true. They worked their asses off, saved some money and launched.
Although your parents built their business from scratch, they benefited from a social, cultural and economic background which led them to more easily attempt and succeed at starting a business.
I am a business owner myself, not coming from a high-income family. I am now part of a network of young entrepreneur/lending scheme for innovative business.
A wild guess: 75% of our alumni come from privileged environment: 50% from very wealthy family, 25% had parents who had intellectual jobs (parents were teachers for instance), and about 25% "others".
It's all anecdotal evidence, as much as your personal experience is.
From your "mother with 3 jobs" example: of course she teaches a lot to her children, of course she has merit!
But their children won't feel like they have a "safety net" around them, be it strictly financial or not, provided by their background.
Wherever I like it or not, I know that if my business fails tomorrow, my family will be there for me. It can be conscious or not, but for many of "us" entrepreneur, we took a risk and consciously or not, we have a safety net.
I think our scale and perspective, by being in tech, can be skewed.
Over 540,000 new businesses are started EACH MONTH in the US. The sheer number of them should be evidence enough that the vast majority are not started in the context of privilege, wealth or perhaps even a safety net that protects the would-be-entrepreneur from failure. I just don't think this world view is correct.
While it is hard to find this data, the following article claims that "472 million entrepreneurs worldwide attempting to start 305 million companies, approximately 100 million new businesses (or one third) will open each year around the world."
That's one hundred million businesses per year world wide launched by nearly half a billion entrepreneurs. I think we can agree there aren't that many wealthy families or entrepreneurs with "I can fail without consequences" safety nets in the world.
Sure, but this being HN, we're interested in the "disrupt an entire industry" type business, which are overwhelmingly started by people with good connections and a top university degree that hasn't burdened them with unsustainable debt. Not to mention overwhelmingly involving people who have chosen to relocate to the highest cost of living parts of the US to try to get on the radar of VCs, and are foregoing the >$100k a year they could easily command in a regular job there.
Obviously there are opportunity costs and expectations associated with starting your own plumbing business too, but entrepreneurially minded tradesmen or professional services providers not only possess a higher chance of success, but also much more willingness to shut it down and get a job if it's not generating revenue quickly.
And by the time you get to "half a billion entrepreneurs" worldwide we're including people offering goods and services to sale not because of the lure of entrepreneurdom but simply because that's pretty much the only opportunity to earn money that exists in their locality.
Someone putting it all on the line is putting it all on the line, it doesn't matter if they are selling flowers at the corner or doing something larger than that. A plumber (or a small or trades entrepreneur) doesn't take failure lightly as you've suggested. Regardless of scale, a failure is a traumatic event and fighting against it can take months or years.
If you've never lived through the anguish of having a business go bad you might not be equipped to understand this. I have. It's not fun. And, no, you don't think "fuck it, I'll just get a job" three weeks into it. Again, you have to have walked in those shoes in order to truly understand it.
I am not trying to insult you, just stating a fact. It is really easy to have all kinds of nice sounding opinions from the outside yet there's only one way to truly understand what it is like to make the decisions to take out a second mortgage on your home to keep people employed, make payroll and try to rescue a business (as I have done).
It is impossible to understand something like that without having had skin in the game at some non-trivial business. Talking to a "well weathered" business person is very different from talking to someone who worked for the government or as an employee in the private sector all of their lives. Their understanding of reality is very, very different. That's how you get people saying things like "you didn't build that", because they simply don't have a clue.
I certainly didn't mean to belittle plumbers, or so-called "lifestyle businesses". Just to point out that the "1 in ten people is an entrepreneur"-type business-founding statistics are filled with people that are less playing VC-roulette and more hoping/expecting they can make more money as a contractor than an employee (I even had the "maybe you should form a limited company for your work on this project" conversation myself this morning). The tech startup bubble, on the other hand, is filled with people that will quite seriously advance the argument that bringing in actual revenue is something that should be postponed until a much later stage even if possible from day one. You tend to need a certain amount of privilege to think like that.
SV survivor-bias success stories are also littered with companies which might well have been allowed to fail if it came down to putting the founders' houses on the line...
As many have pointed out in this thread, the world is full of entrepreneurs who come from very little and make it happen.
To me saying "I have nothing" is just an excuse. Particularly in the US. If you want to make something happen, you can, it will not be handed to you, but you can.
What these studies never look at (because it is virtually impossible) are the massive numbers of businesses that start from "wealth" and fail miserably. I know people who were handed money and had no worries about failing. And, guess what, most of them fail. Why? Frankly, I don't know the exact mechanism. It has to be similar to folks who win the lottery and proceed to implode within a year or two. Or how about actors who make millions to shoot a movie in a few weeks and the best they can do with their lives in between movies is stuff drugs and alcohol into their bodies?
Nah, money may be a factor for some, but if someone doesn't truly want to be an entrepreneur you can throw millions at them and they'll just blow it.
Some of my favorite TV shows are "Kitchen Nightmares" with Gordon Ramsay, "The Profit" with Marcus Lemonis, "Make me a Millionaire Inventor" with George Zaidan and Deanne Bell and, of course, "Shark Tank".
I actually use them as teaching opportunities for my kids. We record episodes, watch them together and have discussions over dinner. The kids are good enough now that they can identify problems and patterns right away. Now we pause episodes and have discussions prior to the conclusions being revealed. The kids are getting a "virtual MBA" before they finish high school, which is great.
A common thread in a number of these shows are people who either inherit their businesses (lots of that in the restaurant show or The Profit) and proceed to run it into the ground. Almost nothing could be a stronger demonstration that money isn't a success factor in entrepreneurship than to see someone quite literally being HANDED a FULL WORKING BUSINESS only to proceed to destroy it. Why? Lack of focus, grit, drive, etc. All the qualities I mentioned in my prior post. I've seen shows where people end-up hundreds of dollars in debt because they simply had no engagement until someone from the outside slapped the shit out of them in a figurative way and got them to actually work on the business.
Money is just another tool, like 3D printer or a laptop. Millions of people have very expensive laptops. Most, from an entrepreneurial perspective, utterly waste them on Facebook and playing games. At the other end of the scale, a true entrepreneur with grit and determination can grab a second hand piece of shit PC, load Linux into it, use a bunch of free tools, learn to code and make something happen.
Money is a tool, sure, but it is the Universal Tool. It can be applied toward nearly every problem in business. Can people still mess up and misuse the tool? Sure. It success a better bet if you have access the Universal Tool? Most definitely.
We can come up with counterexamples all day long, but the question is not whether an individual can succeed without much money or can fail with a ton of money -- I know people that fall into both camps as well -- the question is in aggregate does more money shift the overall curve toward success in entrepreneurship over time?
I disagree. Business is hard. People are what matter.
I started a business in my garage with $5,000. I had the right ideas, market and product. I grew it to a pretty good size, employed lots of people and sold it.
Years later, I started another business with $325,000 of my own cash. I still had the right ideas, market and product. It failed miserably. Why? I didn't know enough about the industry and lost focus. I eventually restarted it (with more money) and got it going nicely.
Money couple with the right people, product and market AT THE RIGHT TIME can light things up in a major way. Money by itself is useless. And not, money does not shift the curve towards success. That's just not a sensible conclusion.
Money does nothing other than allow you to push on the accelerator once you have a formula that is ready for success. This is how money should be used. That's why the mantra in tech circles is to test an MVP with a few thousand dollars (or less if possible). Why? Because if you throw money at something that has no engagement you'll just burn it. It doesn't shift the curve toward success. The curve already has to be shifted in that direction AND THEN you throw money at it.
That's is precisely why so many people with easy access in capital fail. They think exactly as you are proposing: If we just throw money at XYZ we improve our probability to succeed. And then they fail.
Everything you said is true but missing the point.
$5000 is a wad of cash that many, many people don't have access to.
Living on savings while building and selling a product is not an option for many more.
Money just doesn't allow for acceleration but also pays for you to get in the car to begin with.
And that's not a precise statement either: having the ability to live while earning nothing build your business -- something that often takes some amount of cash, is what can mean the difference between success and failure.
I have to take you back to the title of the article:
"Entrepreneurs don’t have a gene for risk – they come from families with money"
That is patently false in but a very small percentage of cases.
The millions of businesses launched every year overwhelmingly do NOT come from families with money. Here, "money" being understood as mid to upper class (financially speaking).
That, in general terms, was my point, lost as it might have become.
We have two groups -- entrepreneurs with money and entrepreneurs without money.
They are part of an overall group -- entrepreneurs.
Picture them as bacteria in a petri dish.
The article simply says that entrepreneurs with money tend to survive longer (by having the freedom to take the risks that allows that survival) in addition to this group entering the petri dish more often because people tend to have a pretty good understanding for their appetite for risk -- an appetite largely dependent on their built in food supply -- available cash. It is not saying that people without money cannot become entrepreneurs or are not good entrepreneurs, just that the petri dish population tends to be covered more by those species that have advantages than those that don't.
People emigrating to escape genocide have a different definition of failure which makes them more risk-tolerant.
When someone whose definition of failure is getting buried in an unmarked mass grave is competing against someone whose definition of failure is sleeping in their car for a few months, that first guy will risk more to win.
I recall from the movie Gattaca, when the natural-genes protagonist had a swimming contest against his engineered-genes brother, and won, the latter demanded to know "How did you beat me?!" and the former responded, "I never saved anything for the swim back." He was prepared to drown, so long as he could win before dying.
Having to go back to square one seems like a failure only to those people who are not aware that there is a square zero. For those people, square one is still one step away from failure.
Genocide isn't a motivation to bust your ass. Genocide is what placed my grandparents and those of many into abject poverty. Their day-to-day motivator wasn't "well, this is better than being in an unmarked grave". That wasn't even in their radar. As in, not at all. Saying "never again" doesn't mean you are going to drown to swim out to a buoy.
Genocide doesn't turn someone into a risk taker. That's a preposterous idea. I couldn't even imagine my grandparents saying "well, I am going to go all out on this because I could have died in the Genocide". It sounds silly just to say it.
No, their motivation was to improve their lives and provide for their families. And lacking the command of the language or much of an education they concluded the best bet was to try to start some kind of a business, any business. And that's what they did.
I didn't say anything about motivation. That sort of hardship redefines the failure threshold.
For most people, who have never had their expectations reset, cramming your whole family into a rented studio apartment and eating mainly ramen and beans and rice might be considered a failure. But in comparison to fleeing halfway around the planet to avoid being murdered for no good reason, it's only the smallest possible success.
When you know that whatever you do, the worst that can happen is that you drop back down to the minimum level of success, you can take more risks. You can start a business, then lose it due to market changes and go back to regular jobs, like in the ancestor post.
Some people never take that risk, because in order to start that business, they would have to put their own retirement fund or their kids' college funds on the line. It never occurs to them that having their kids hunted down by partisan thugs to be killed is worse than having to take out student loans. Their failure threshold is higher.
Your grandparents wouldn't say that. They might say that you take all the great things you have for granted, and that even if you lost most of them, you would still be a success by their definition. And it wouldn't just be because they're your grandparents. It would be because about everyone you encounter in your daily life has a 2000 kcal diet, clean drinking water, flush toilets, high rates of public vaccination, multiple channels of broadcast radio and television, a very broad range of rights that are usually respected, usable public transportation in most cities, and tax-funded public education all the way up through high school.
Even if you lose absolutely everything you own, you can still get all that, with little more effort than putting up with some bureaucratic hassle or some religious preaching. As long as you are not literally insane or a professional criminal, it's not tremendously difficult to just survive in any American city.
So they already provided a better life for themselves and their families. If you can visit a family on public assistance in subsidized housing and still tell yourself that it is better than failing in your country of origin, you can risk every last penny you have on your business, right up until it goes bankrupt, because in America, that's as bad as it gets for anyone willing to follow all the rules.
It isn't just immigrants that take advantage of that lower risk threshold. There are plenty of non-immigrant hustlers that come out of poor areas with their low-investment businesses. Most of their business is technically illegal, such as selling homemade tamales for cash out of your uninspected home kitchen, and not reporting the income. Or selling bottled water in heavy traffic on a hot day. Or braiding hair in your apartment without a beautician's license. Those businesses cannot grow past a certain point, because they usually can't invest in fixed capital or hire employees, but they still exist. And every so often, you get John Paul DeJoria, or Harold Simmons, or Larry Ellison, or Howard Schultz, or Oprah Winfrey.
This entire thread is the most amazing Rorsach test, on the basis of the flimsiest data. Many of the points made in the comments may be true, but it's a disappointing for a HN thread to have so much impassioned comment but so little critical analysis of the underlying data.
The first issue worth noting is that the definition of 'employed'(not discussed in the article or the original paper) vs self-employed incorporated vs self-employed non-incorporated are based on self-reporting from the census [5]:
"CURRENT OR MOST RECENT JOB ACTIVITY. Describe clearly this person’s chief job activity or business last week. If this person had more than one job, describe the one at which this person worked the most hours. If this person had no job or business last week, give information for his/her last job or business.
Mark (X) ONE box.
- an employee of a PRIVATE FOR-PROFIT company or business, or of an individual, for wages, salary, or commissions?
... several other answers elided...
- SELF-EMPLOYED in own INCORPORATED business, professional practice, or farm?
- SELF-EMPLOYED in own INCORPORATED business, professional practice, or farm?"
So if you are getting a salary from your startup, do you think there might be some ambiguity about which one you tick? If you are working at company A, but working on your startup on evenings and weekends, you would mark 'employed' if you followed the instructions.
Once you understand where the data came from, you might not infer the same meaning to the underlying paper, whose abstract is here:
"We disaggregate the self-employed into incorporated and unincorporated to distinguish between "entrepreneurs" and other business owners. We show that the incorporated self-employed and their businesses engage in activities that demand comparatively strong nonroutine cognitive abilities, while the unincorporated and their firms perform tasks demanding relatively strong manual skills. The incorporated self-employed have distinct cognitive and noncognitive traits. Besides tending to be white, male, and come from higher-income families, the incorporated—as teenagers—typically scored higher on learning aptitude tests, had greater self-esteem, and engaged in more disruptive, illicit activities. The combination of "smart" and "illicit" tendencies as youths accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to past research, we find that entrepreneurs earn much more per hour than their salaried and unincorporated counterparts."
So they are using 'incorporated' as a proxy for entrepreneur, by comparing them with 'unincorporated self employed'. Let's see if that makes sense, and if their 'entrepreneur' is the same as what we might call a 'startup founder':
- The ratio of unincorporated to incorporated is 2:1 (approx 10 million vs 5 million in 2009 [1])
- The SBA says 600,000 new ventures are started each year (that they know about) [2]
- There are around 70000 angel deals in one year (2013) [3]
- There are about 4000 venture deals in one year (2014) [4]
We can probably agree that the angel and venture deals are 'real' startup entrepreneurs. Some small indeterminate proportion of the incorporated and unincorporated self-employed probably are too. However, doesn't it seem a little silly to analyze the 5 million incorporated self-employed vs the 10 million non-incorporated self-employed, and assume it's telling you anything about start-up entrepreneurs ?
Friends! If you find someone trying to criticize your achievement as being "just because you are privileged" say
"I'm now further from where I started, than where I started was from where you started. So if you couldn't even make it from where you started to where I started, how do you expect that you could have made it from where I started to where I am now?"
People may choose to respond to this by saying something that confirms their idea that they are fundamentally more worse off than you. They may call you privilege blind. They may say it is easier if they had X more capital. The may say anything that confirms their hypothesis that without having whatever they credit you with possessing, they are less capable.
I implore you, be not discouraged, nor believe your success any the lesser. Recognize that they are disempowering themselves and, that by believing that success is something that must be given to them rather than something they create, they are acting privileged and entitled, the very things they are trying to say you are. Recognize and, if you like, benevolently point out, that this chosen self-disempowerment, this unworkable attitude, is a poverty of the spirit that will disadvantage them ( by their own choice ) far more than any difference between how much they started with, and how much you did.
For if at every step of the way, people are looking to those who have more than them and, "proving" to themselves that this difference was all about different starting points rather than about a different sequence of choices, then such people are disempowering the power of choice, and, how likely do you feel such people will be, to ever make a string of choices that leads to success?
No, friends, heed not their admonishments, and keep your children away from their siren songs, for they are only the delusional whispers of a people soothing themselves into apathy by telling themselves they never coulda, instead of believing that they fully could have, had they only chosen to take responsibility for success, instead of deluding themselves that it was owed to them.
To put it in more general terms : Being a fake victim doesn't work, you just disempower yourself. When you see people better of than you, choosing to be inspired and to acknowledge their achievements works. Choosing to pretend to yourself that success is something that must be given to you, instead of something you create yourself, is just acting privileged and entitled, and it doesn't work and it actually, this attitude, makes it less likely for you to succeed. An attitude that acknowledge the choices that lead to success, and that takes responsibility yourself to create your own success through your own choices, this attitude works, and makes it more likely for you to succeed. Anything else, any stories you choose to tell yourself about how it's so unfair, is just you choosing to substitute the fake payoff of feeling like a righteous fake victim of unfairness, for the real payoff of actually creating results.
Trying to spread to others the claptrap that people are powerless, so you can confirm your own delusions that they are, is just incorrectly trying to disempower others, and it's just wrong.
TL;DR -- Deluding yourself that success is given, rather than created, is not an attitude that works to help you create your own success.
I hope this cleared some things up for some people. Those too far gone in excusing themselves a lack of success due to a fantasy of disadvantage may or may not be beyond the reach of such simple words, and I hope they can be reached. For everyone else I have even more hope.
Yet there's a fundamental difference between "Having just enough for rent" and "Having just enough to start a company". There's something impoverishing to the spirit when you spend your last $5 and its still 1 week to payday. Its often not a choice to feel that way; its disingenuous to say "You could just invest like I did!"
So go out and make another $5. How you expect to make a 1MM if you can't even make $5. Thank you for reading it, and also stop making excuses. Everyone one else commenting please refer to this comment, thanks.
An entrepreneur at the end of their runway, facing the extinction of something they fought and struggled over, experiences depression, anxiety and regret. And gets sympathy for their plight.
A person who's life is made up of 'being at the end of their runway' is shamed for not just 'go out and make another $5'. Nothing disingenuous about this dichotomy?
A person's life is their responsibility. The only thing disingenuous is believing that is not so. A person brings shame upon themselves when they blame others for lack, instead of choosing to create for themselves.
Your fancy words conceal an illogicality of thought. Clear your thought, before you clothe it in fancy words, otherwise you get confused. Stopping making excuses and tolerating that from others, is the way of genuine concern for helping others improve.
Believing differently is your choice, and it won't work. Think more before you write more.
> "I'm now further from where I started, than where I started was from where you started. So if you couldn't even make it from where you started to where I started, how do you expect that you could have made it from where I started to where I am now?"
That is so ridiculously built on false premises that I don't even know where to start. But for starters, you are assuming that the 'effort' (since that's all you think it takes) to get from, say $10K to $100K, is exactly equivalent to the effort to get from $100K to $190K, or whatever. Unlikely to be true.
If you're a real victim, then you have encountered a force unreasonable to overcome on your own, or you've been the victim of a crime, or both, and then it works to have help from something more powerful, like the Law, or the State. And if the State has made you a real victim? Go to another state.
And if there is no higher force to help you -- spiritual victory is one possibility: "Your life is what your thoughts make of it."
You might mean what you say so I'll just point out that your comment seems to be a bit obscure and doesn't really make it seem like you've read the article.
Drag your mouse over it with button depressed - the selected text will be inverted to readable colours. (If you don't mind to change your colour settings.)
It took me a couple of years after college working in restaurants etc before I had the skills to pat the bills. The only way I could afford the time to teach myself code was due to the relaxed schedule that comes from knowing you can ask your parents for help.
Learn some empathy for people who, unlike you, were not born on second base. Wages have stagnated for working class people for decades. People are having to work two jobs to make ends meet. Are you honestly suggesting that these people are lazy or "making excuses"?
I guarantee you that far, far more trustafarians are using their "privilege" to indulge a negro fetish or whatever "social justice" meme happens to be trending rather than risking anyone's equity in something entrepreneurial.
You think that a typical person would use the millions they made and plow it back into not one but three hair-brained ventures (Musk with Tesla, SpaceEx, Solar City)?
Consider one of the comments below, something like "I would be entrepreneurial too if I didn't have to pay for rent and food."
Bullshit. If that poser inherited millions he would scarcely summon the energy to snap selfies at some BLM "protest".
So you disagree with the article because there are some number of trust fund kids who aren't entrepreneurs? The article does not make the claim that having money is required for entrepreneurship, simply that it is extremely influential (more influential than any genetic component).
That said, maybe this comment is a parody of a viewpoint. If I've missed something, excuse me.
> The solution is providing a social safety net that enables that bulk of the population to pursue their dream.
We have a huge "social safety net" here in France and yet we are way less entrepreneurial than in the US. I moved to Peru for 4 years to save some money and then came back to start a business, the entrepreneurial spirit was way strong stronger there even though the social safety net is inexistent.
Fact is, having a social safety net makes people comfortable in their poor economic situation and does not require them to take risks. Even in the US, the number of new companies created each year has decreased as the welfare state has grown.
Peru might have a lot more entrepreneurially minded people, and more self-employed people but France certainly has more successful tech startups (even on a per capita basis).
Just as lack of a safety net biases towards action and self reliance, it also skews the risk/reward ratio of those actions firmly towards those most likely to keep the roof over ones head.
True, but then arguably education (and especially several years of heavily-subsidised tertiary education) is part of the safety net, and the safety net certainly contributes towards choice to pursue that education rather than accepting the first shitty informal sector opportunity that enables them to support themselves.
Obviously there are plenty of other social and economic differences between Peru and France, but the fact that even Peru's relatively small number of highly-educated people is still highly likely to be underemployed doesn't exactly speak wonders for the potential of all these entrepreneurially-minded Peruvians to actually create jobs.
Peru does have public education too so I don't think that's the issue. It's just that people are less educated in general so schools are not that good. South Korea has half of its schools private and they're doing great so I don't think you even need public schooling to be doing great as a country.
I moved to Peru for 4 years to save some money and then came back to start a business, the entrepreneurial spirit was way strong stronger there even though the social safety net is inexistent.
Indeed, the problem is more with the bureaucratic paperwork more than anything else, it takes 6 months to just have the legal paperwork to start a company there.
(To hopefully avoid some arguments I should probably preface this with saying that I am 100% in favor of something like basic income.)
> The solution is providing a social safety net that enables that bulk of the population to pursue their dream.
I don't think that will make most people into successful businesspeople (let alone "entrepreneurs" in any non-facile sense of the word), and I don't think that was entirely the point the article was trying to make.
Even with basic needs supported, you still need capital to get a business off the ground "correctly". Unfortunately, in a basic income environment, I bet the people taking full advantage of it still wouldn't have access to that kind of capital.
I've had my own small business for several years now, but I'm looking for work again. The business has several promising irons in the fire, but I lack either the skill or resources to make any of them take off. Having access to basic income wouldn't substantially change my predicament; having access to good credit, capital, or talent would.
>> The solution is providing a social safety net that enables that bulk of the population to pursue their dream.
> I don't think that will make most people into successful businesspeople (let alone "entrepreneurs" in any non-facile sense of the word), and I don't think that was entirely the point the article was trying to make.
I fully agree! While financial safety is by no means sufficient as a base for successfully starting a business, I do think the article makes a good point of it being necessary, though.
(And I think its important to emphasize that most businesses are not of the venture-backed startup type mostly discussed on this site.)
1. Contrary to justice or a sense of fairness
2. Contrary to laws or conventions, especially in commerce; unethical: unfair dealing and
3. Not kind or considerate.
"Easier to be creative"? Of course. However it does not there is a correlation between having this social safety net vs creativity, or increased economic output, or willingness to take risks.
You've heard a Marxist slogan and thought it was timely huh?
Cause it's either evil monolithic collectivism or saintly and righteous fantasy individualistic libertarianism, those are the two options.
It's not like we can't recognize that most individual success is predicated on a healthy and functional society, one that is inclusive and takes care of its members, rather than one that caters solely to individuals fortunate enough to be born into families that have existing wealth.
No, the conclusion is, people should stop just saying that anybody can do it, that all it takes is willingness to take chances, to dare to fail etc. These are important things, as the article also takes care to clarify, but if you fail to mention the importance of a safety net, or you fail to mention the fact that most entrepreneurs come from well-off backgrounds, then you're implying (probably unwillingly) that people who don't go into startups are simply lazy or cowards. While in reality there exists a pretty good reason why many might not dare to take the leap just yet.
It's basically giving people complexes. And it might be further exacerbated by the need we all have to ascribe our success exclusively to our own work, never to any external factors (luck, rich parents).
