What's behind rich people pretending to be self-made?
theguardian.com
theguardian.com
After doing a little more research, I found that the author grew up in a wealthy east coast family, is a close blood relative to Sheryl Sandberg, went to an Ivy League school (likely aided by privileged upbringing and family connections), landed at a prestigious finance/VC firm straight from college (probably made possible again by an Ivy league pedigree/family connection), and could easily make the "jump" to doing something that paid nil for 2 years due to this enormous safety net of family wealth that most people simply don't have.
If there's one thing about the Travis Kalanick saga I wish the media would've told is that he is a rare successful founder who legitimately grew up in a middle class family and struggled for many years post-college trying to get to ramen-profitability on a series of failing startups before hitting it big. This is strictly in contract to the Zucks and Spiegels of the world who grew up very wealthy and went to the best schools and could take on the big risks associated with entrepreneurship because if everything failed they still had that big safety net to fall back on.
I’d love to see a list of all the successful founders who came from extreme poverty. Middle class startuppers have one or two shots at it if they live at home with a relative. The rich kids can keep trying and learning from their mistakes until well they become richer.
Such is life.
The potential failure is more of an issue. People don't want to look stupid.
The "What will the neighbors think?" question is asked a lot in peoples minds.
What you're saying is what I was trying to get at.
So, in Belgium, despite knowing that you could fail and that wouldn't be completely detrimental to your financial life, you're saying that there's an aversion to risking it with a startup due to social consequences?
In terms of different outcomes as a result, I have absolutely zero hard data on it, but my intuition would be as follows:
Rags-to-successful-job-creating-entrepeneur stories are a lot more common, and by that metric success rates are higher, but rags-to-riches is still relatively rare by simple virtue of the fact that greater success != rich because success rates and broader competition mean very big wins are rarer in general. Market regulation also affects this somewhat: it's harder to dominate.
Extra disclaimer: the above is intuition, would love to see actual data, whether it contradicts or correlates.
I tried to look up some of the past HN comments and the like I was looking at. While many complained about some missing SV style elements (missing VC, tougher working regulations) there were also mentions of different ways of doing things such as risk aversion or the style of business being more consensus-based (Sweden).
Here in the US, when thinking of dominate European innovative companies, I guess Skype (pre-acquisition), SAP, and even toss in IKEA would be ones that dominated (or in Skype's case, created) their markets.
Anyway, this was all speculative off the dawhizkid's premise of 'would a solid safety net create more entrepreneurs?' and, given we have good examples of that in Europe, I thought it worth taking a shot at.
* Well-off parents who funded their education, allowing them to start off without the huge debt ball-and-chain most of us start off with.
* Well-off family who can act as a safety net / backstop for failed risk-taking. Baseball is easy if you can keep swinging until you hit the ball.
* Well-connected family or friends who helped with that critical first job, which often can set an entire career's trajectory.
* Pre-populated contact list of well-off or well-connected people, drawn from family or Ivy league classmates.
I don't think you can honestly call yourself self-made with these advantages.
EDIT: spelling
Although even they have, at least, access to the public infrastructure of the nations that they live in. France, Kenya, China, Argentina, the US etc.
It's not much... but it's something.
No one; everyone starts off in a particular social context with a particular set of assets and opportunities and limitations.
There's no need to draw a line; there's no valid binary classification here.
We’re penny-wise and pound-foolish with our dispensation of public funds.
Do you really think there's someone out there who wouldn't be aware of this fact without that added clarification?
When something is "free", it's always means free (of charge) for the recipient, and it's always enabled by something else.
It's a matter of choice (hence the taxes, hence the politics), of governance, of sight.
Now, if you believe free healthcare and education for everyone does not benefit the society as a whole, then say so (and flesh out the historical facts that support your view).
http://www.businessinsider.com/warren-buffett-on-the-ovarian...
It's difficult to have the perspective it takes to admit that your success may be more due to a privileged starting position and luck than solely the hard work, especially when it's so easy to claim all your success is self-made and the hero worship of self made people in the United States
It's not necessarily a bad thing, but the fact that we're conditioned to think that a non level playing field is bad no matter what (vs a societal expectation that those with the most must give back the most), asking with a fetishistic of monetary success, really warps our outward facing behavior.
I'm not sure you even realize, but that's the exact opposite of the definition of meritocracy.
Meritocracy rewards those who do the most. But those who can do the most are those who are the most well endowed.
This is separate from an even more perverse system where those who don't do the most are rewarded the most.
I believe you are misunderstanding the definition of a meritocracy.
My point being that someone can honestly believe they are suffering at least relatively, if not absolutely. Each person has their own level of experience they consider "suffering".
If you can’t say that, you’re not truly self-made. The “rags-to-riches” tale has to actually be rags to riches.
There’s still doing great work and making something of yourself, but it’s very different when you do it from scratch.
There’s always chance, but I see a distinction.
"I am not a self-made man.
Every time I give a speech at a business conference, or speak to college students, or do a Reddit AMA, someone says it.
“Governor/Governator/Arnold/Arnie/Schwarzie/Schnitzel (depending on where I am), as a self-made man, what’s your blueprint for success?”
They’re always shocked when I thank them for the compliment but say, “I am not a self-made man. I got a lot of help.”
And it is the thousands of choices from early years through middle age that separate those with rarified skills and high wages from those with common skills and envy for their higher paid, lesser working (now) friends.
It does not matter where you start. When you spend most of your life studying or smoking dope, the end is predictable.
At least, I feel that way..
Yes, if you smoke dope all the time your outcomes in life will probably be worse than if you study some "rarified" skill, to borrow your phrase.
But studying takes resources, and time, and those are bought through money and social connections and luck. And increasingly, despite what we read about MOOCs and the new educational order, it doesn't matter if we study and learn, what matters is that we have a certificate of studying, a placeholder. And those placeholders are not the same as our knowledge, or one's ability to learn, and are subject to corruption and greasing like every other placeholder.
And in the end, what does this say about how much value we should place on that rarified skill? Does our society really allocate financial reward according to actual value? Does Amazon really improve my life that much compared to the plumber or electrician who fixed my house? Is Facebook a net benefit to society? If it disappeared tomorrow, would nothing replace it? Could our healthcare be delivered under a different provider structure? Do I pay my ISP because it's the best of many choices, or because it's acceptable enough to not go without internet access? Is Amazon successful because of Bezos in particular? If Bezos was going around spouting all the ideas in his head, marshaling an army of imaginary workers, without any actual labor, would we still have Amazon?
The point of this article is it's trivial to point out that hard work should and often is compensated. The problem is that the compensation structures in many fields are completely absurd in many cases relative to the actual value created.
And thousands of others did the exact same but didn't make it out. That's the entire point of this conversation. Hard work isn't a sufficient condition. If it were tons of people would easily make it out. But instead it's a lot of luck along with it.
If it was easy to be a hedge fund manager, more people would do it. It's easy to cherry pick these professions that seem overpaid, but in a free market, people tend to make what the market values them at.
You could say that teachers are so important that they should be paid more and in a free market education system they might be paid differently than they are now.
I'm a CFA, I have grades, never got a look in for fund manager jobs. Pivoted to computing at the age of 30 where I "look the part" or whatever.
Don't kid yourself about this stuff. I'm not from an underprivileged background by any stretch of the imagination and nor do I have any time for socialism and socialist posing.
Young Dennis will get a game somewhere and put up compelling numbers and will likely get to the NBA. The equivalent can't be said for young potential fund managers who won't get a chance to impress. Positive discrimination is not the answer to this, but neither is the ostrich strategy.
OTOH, professional sports leagues are about winning intense competition, and skill is much more important. Even then, coaches and owners play favorites.
It's not a binary system, it's a spectrum, and professional sports are towards one end of the spectrum and hedge fund management and VC founding are towards the other end.
Even if J. Random put all their training into building and managing relationships it would likely not amount to anything of note. (They will have fewer resources and be excluded from some social circles.)
There are many necessary components of huge success.
TLDR: the vast majority of markets are demand-bound. So if you are producing marginal supply, you're are simply hurting everyone and at best will do as well as the others.
Unless, of course, you cheat, which is what these connections do.
Needless to say, there is a global fiction that everybody seems to believe that this is not true, both on the left and (especially) on the right. It is so ignored on the right that this situation is actually left out of economics education.
What is the present value of a teacher's pension? How much would you have to save to produce an investment stream that cannot be exhausted no matter how long you live? What value is attached to having it guaranteed by the government instead of being subject to market returns?
I'm not against the general mindset the author is telling, but this garbage thought process needs to stop. This isn't about working harder, but smarter and you can easily provide 271 times more value through decisions that higher ups are tasked with than a bottom level individual contributor.
***Anecdotal***
Now, are these people self made? That's more open to debate but every C*O and SVP has been with the company for at least 10 years and most VPs also have also been here for that long/have an amazing track record. You generally don't get 10+ years of promotions providing nothing.
I've made a small jump in socio-economic class, and I try and keep it in perspective. I try and remember the bits of help I got a long the way. And at the same time I'm trying to let go of my resentment about people whose parents set them up with cars, tuition and house deposits - because one day I hope to be that parent.
Especially now that social responsibility has decoupled from privilege.
Such duty and stewardship helped justify and bring balance to their privilege in days past. No longer.
That said, whom are some people that really did 'make it' from rags to riches? What can we learn from them? I'll start:
Andrew Carnegie
Jack London
George Soros
Larry Ellison
Ursula Burns
Ingvar Kamprad
JK Rowling
Sam Walton
Oprah
The only thing that I can think of that all of them had in common was that they were really hard workers that got lucky. That hard work was the price of the lotto ticket. What am I missing here?
I'll never give to a rich pricks charity knowing what I know now.
https://nypost.com/2016/10/02/bill-clintons-executive-suite-...
(the story goes that back when executive compensation was highly taxed in the first part of the 20th century, many companies took out services for their executives which were tax free advantages. Things like yachts. Walt Disney is famous for building out a business for exactly that sort of thing : https://en.wikipedia.org/wiki/Club_33 )
> Clinton isn’t the only former president to include a residence in his library. George H.W. Bush’s library at Texas A&M University in College Station and Jimmy Carter’s in Atlanta both have them.
> Meanwhile, few who make the “I did it all myself” argument question the absurdity of seeing earnings as a measure of grit and moral worth. Does anyone really think that a CEO, whose pay is on average 271 times greater than that of his typical worker, works 271 times harder than his employees, who might actually be doing strenuous physical labor?
The implication is clear that some people are rewarded less for the same effort. Well not all effort is equally valuable. Anyone can sweep a floor, so the effort of doing so isn't worth much.
What I mean is, yes, everyone can sweep, the compensation is lower, but there is less power also. As you move up the hierarchy, you are not only potentially going up in skill, but also in the amount of power afforded and compensation enjoyed.
Let's take a hypothetical case where all employees are equally skilled. Just for argument. Now you create positions of more and more power. By definition, there will be fewer positions of greater power, otherwise those higher positions would not have so much power. Because of the power those positions afford, there will be more competition for positions of more power, under the assumption that people want more power. Because those workers are all equally skilled, though, something other than skill must determine success in gaining those positions. And once they have those positions, they can use that power to increase their compensation relative to other employees. They can also use that power, consciously or subconsciously, to create or shape a narrative that they deserve that compensation more than others.
This is hypothetical, and reality involves something in between the "floor sweepers get paid pennies because everyone can sweep" and "CEOs are randomly assorted into positions of unlimited power" but the point is that there are properties accrued by the inherent nature of power structures, and those properties lead to inequities just as much as supply and demand of skills.
I can't believe that in the US the power structure side of reality is ignored so much in favor of the supply and demand side of reality, even when it's staring us in the face and glaringly obvious. And that you can't see society as complex and nuanced, and have to choose to be either a rabid capitalist or socialist.
Perhaps because that's how employers typically exhort their staff to greater productivity? Never once have I had an employer say 'there's a fat bonus waiting for someone who can figure out a clever shortcut through this problem' or the like. For people who genuinely start at the bottom, personal initiative is often discouraged rather than rewarded and the benefits of innovation or exceptional performance often accrue to the nearest manager rather than the eager beaver.
Arguably, the units are dollars. A dollar's worth of work is worth a dollar.
While algorithms are increasingly prevalent in Wall Street, at the end of the day there's a human who either writes them or reads their output before making a decision, and that person is not easily replaceable.
Beyond that, for every successful Hedge Fund there are countless that failed catastrophically, so any analysis of "how much a Hedge Fund manager makes" is subject to severe survivorship bias. [0]
The disparity between the CEO of a public company and its hordes of workers is even clearer. Very few people possess the combination of skills that make a high-caliber CEO successful, which is why very few people are rewarded like them. LeBron James also doesn't work 1,000 times harder than a factory worker.
Finally, it's worth remembering that 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third. [1] I wouldn't lose any sleep over rich kids who feel troubled about their "entitlement".
[1] http://time.com/money/3925308/rich-families-lose-wealth/
When the business does well people say it's due to the CEO, but when they fail people argue about how bad it might have been. There's no way to know. It seems more like a scam vs investors or employees than some measurements skill that actually merits compensation
It's perfectly possible Mayer did unique work that paid her compensation and much more in savings. Without the counterfactual, we cannot judge her.
If we can't judge them for failures then we shouldn't be able to judge them for successes as well and they shouldn't be able to pull out the "rare skills" argument
Do you have any data to back that up? In the meantime I'd rather believe the null hypothesis that CEOs are blamed for bad performance just as often as they are commended for successful results.
It is laughable to think people have that much extra value. Those are teachable skills, and the cost of that education is not nearly as much as is being spent.
This cartoon illustrates it well: http://thewireless.co.nz/articles/the-pencilsword-on-a-plate
We can, however, empower kids and foster an environment that is at a minimum good enough to let them achieve more than their parents did.
Regardless of the causes of such inequality, the fact is the CEO is more prepared than the janitor and is paid more accordingly.
At the least, please create a category for naked politics. No, hide doesnt work very well (multiple devices, times out, etc).
One time a mod told me that articles with no link to tech got deleted. That really doesn't appear to be the. This is yet another capitalist vs communist (literally, the labor theory of value was a Marx thing) diatribe that has no relation to the tech oriented stuff many came here for. There are plenty of other political sites for stuff like this.
I often wonder, if you could vote down stories, these would probably have a severe split and maybe not make the front page or stay there. Only being able to upvote let's a small contingent push something up (just ask the bitcoin people).
Just because you can flag isn't carte blanche to post anything. I like the site much better (and I'm sure many others too) when it stays in its technical oriented wheelhouse.
Just because you have certain preferences isn't carte blanche to launch off-topic diatribes in threads on articles that don't adhere to them about how you prefer HN should be focussed.
> I like the site much better (and I'm sure many others too) when it stays in its technical oriented wheelhouse.
That is neither the official focus [0] nor, evidently—from what the community submits and keeps on the front page—the consensus of the community.
[0] From the guidelines: “On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.” Obviously, whether any particular article meets they standard is subjective, which is why we have upvotes and flags and algorithms taking them and other factors (e.g., the flamewsr detector) into account.