“It’s hard to take risks if you don’t have a safety net” | Hacker News Reader

“It’s hard to take risks if you don’t have a safety net”

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548 pointsboramalper372 comments

Twitter wins again.

We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is.

When we're doing definitions, the key phrase is "necessary and sufficient" In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing. So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?"

But that's not as fun to argue about.

We oversimplify life and public policy-making at our own peril.

> So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?"

I think it's more like whether it brings a 400% boost. It is definitely an important discussion to have. Whether Twitter is the place is another story.

I agree. Also note that moving from a 1% chance of success to a 4% chance of success _is_ a 400% boost. It also may be trivial. Moving from .1 to .4 works the same way. Both statements can be true at the same time.

These things get tricky quickly. In a different medium, say forcing yourself to 100 characters instead of 280, we would have even more of a difficult time discussing it.

Yep.

At this point, to encourage health and respectful public discourse, the first step is to delete your twitte account. And probably facebook too.

> We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is.

Twitter is cancer and this is why i keep off it.

It isn't like 3 or 4 percent though. Starting a startup ranges from a largely risk free career move to impossible. Most people today start at negative. Want to live in a decent sized city? That's at least $2k a month. An education? Might very well be $50k in debt. Job security? Need to put in the hours young.

Otherwise there is a very real chances of getting evicted, not being able to find a decent job, not being able to keep your friends or start a family. Plenty of people who are successful today have their parents pay for university, their first apartment and/or a safety net. And that is just to have a normal career.

Cost to live in a decent sized city are much less than that in most cities. Sure Silicon Valley is going to be more. Also every city has rich areas that are more. However in most cities there are poor neighborhoods where rent is under $1000, and you can share that with a few roommates. If you tastes are to a stove that you don't need to light with a match, sidewalks that are even, and other nice things: that will cost you.

> in most cities there are poor neighborhoods where rent is under $1000

Average income is about US$11000 a year: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28no...

And most people make less money than that, because the distribution isn't symmetric.

The fact that "rent under $1000" seems low to you indicates that you live in a bubble.

I should have qualified that with US. You can rent a mud hut for few bucks in some remote backward village, but that is obviously not a lifestyle anyone reading this would wish.

> An education? Might very well be $50k in debt.

You can get a perfectly decent degree from your community college for very affordable prices. Likewise you may not be able to live in downtown manhattan, but you can probably live anywhere in a whole bunch of the square states on $1k a month.

How many YC founders went to community college?

Good question.

How many manufacturing founders went to community college?

It's a unique business that rewards socialites and nepotism - right, wrong, indifferent.

While you're not wrong in the strictest sense, I feel like this sentiment is being myopic to the point malice. The network gained from going to a university full of likeminded and talented people as well as living in a city teeming with opportunity is huge. Not to mention generic quality of life improvements of living in a city, doubly so if you happen not to be a cis-het white man.

Starting money is not strictly necessary nor sufficient for success but it sure can smooth over life's pitfalls, which makes risk taking a hell of a lot easier.

For better or for worse, VCs need heuristics to filter the likelihood of you pulling off what you're claiming you can, and prestige and depth of education is one of those factors, as well as employment history which also selects on those education factors.

An associates from a community college isn't going to get you a meeting with a VC, nor is it going to get you past the resume screen at google to run around the education filter.

This is also able to be circumvented by network, which is very easy to do if you are already at a high end university which will hold your hand grooming you for meetings with VCs they introduced you to, or where you can at least just ask your friend from college for an intro.

So, to put simply, VCs are only interested in those who already are full of multi-generational advantages and privileges built off the poor.

No wonder startups are bascially for white guys only.

They're interested in making money, not providing a social service. There's certainly a problem there, but it's not the VCs' responsibility.

You are more likely to succeed in your business if you have the experience of building scalable systems, like at google, and if you have a similar friend group to recruit talent from, which is extremely hard at an early startup unless you already know the kinds of people you disproportionately meet at top universities and tech companies, and if you have family/friends that can help you out while you're struggling at the beginning of the startup, etc.

You are less likely to succeed if you have the financial encumberances that are common outside of the upper middle class, or if you have an unstable family structure that leans weight on you, if you don't have a safety net to lean on to get you through rough periods without personal income, and if you don't have the kind of network that a top school, top company, or connected family brings.

I came from a working class background, taught myself how to build products, made my own connections and raised some money for a startup and had to leave and return the money because there was a nonzero chance I'd have to adopt my nephew to keep him from the foster system, and couldn't possibly do that with the hours and volatility of that game. It is perfectly logical to avoid startups that have those kinds of additional risks when the game is already risky.

We absolutely should try to assuage those biases to improve economic mobility, but the answer isn't just to yell at VCs for trying to make money.

Venture capitalists are only a thing because they siphon off the working class via the exfiltration of surplus. And then they have the gall to demand percentage ownership for that money they "invest". Because they worked hard (stealing from workers) for 'their' money.

My opinion is their money is tainted from the get-go. It amounts to theft from the very people whom made the things.

The people creating the things should be organizing projects for themselves more often.

Those financial encumbrances exist due to VCs taking a larger share of the pie than their efforts are worth, and we can't look at their bank balances now and ignore all context as to how that money got there in the first place.

> it's not the VCs' responsibility

You make some valid points, but I really dislike the above comment. When used it seems like a convenient way to diffuse responsibility, often to selfish ends.

There's lots of examples where this type of single-minded attitude isn't acceptable.

- A civil engineer cannot just have making money be the sole pursuit when designing or building a bridge

- A doctor cannot just have making money be the only goal when treating a patient

- A government worker cannot be only concerned on how to maximize their individual gains when awarding contracts

- A financial adviser is expected to act in their client's best interest, rather than their own

We're used to expecting certain levels of ethical behavior from some professions acting within a larger societal framework. I don't know why investing is so often left off the hook in this regard. Maybe it's naive, but I think we'd be better of if people told themselves it WAS their responsibility when making these decisions.

Leveling society's playing field is a far different scale of responsibility than a civil engineering designing a safe bridge or a doctor looking out for their patient. Societal level problems need societal level organizations to solve, such as governments.

We should be voting for policies that strengthen the nation as a whole. A VC giving up a few % point in return in exchange for betting on poorer people is not going to change anything, other than that VC losing investors. We want to fix families? Well let's guarantee parents have time home with their children, let's guarantee they have sick leave and parental leave and vacation leave to spend with their families. Let's provide more transit and infrastructure and education to communities that need it.

It will require a transfer of wealth.

To be clear, I'm not saying it's VC's job to create a solution of that scale. My position was that it's a weak position to wash one's hand of any responsibility because their stance is that they have a singularly focused job.

I would hope, for instance, that Boeing software engineers wouldn't take the stance that their job is to code to requirements and the safety engineers job to make sure the requirements are safe. I would hope everyone has the onus to look at the greater landscape for the impacts of their decisions rather than using a myopic view to skirt responsibility because it's convenient or easy.

Most VCs I've met do have some kind of value system other than making money that permeates their investment decisions, it's just usually one that is easier to align or at least doesn't run contrary to their business interests, like making large systems more efficient or spreading access to goods and services traditionally restricted to the rich by driving down costs.

Socioeconomic mobility is really much easier to pull on with policy and the education system.

Some people do work on trying to democratize entrepreneurship though, like YC with startup school, or Stripe with Atlas.

They do it by spreading information and reducing barriers, not by giving money to higher risk people though, since that's easier to align with their place in the system.

> They do it by spreading information and reducing barriers, not by giving money to higher risk people though, since that's easier to align with their place in the system.

And it is mostly misguided. The barrier to entry and availability of information is what have already changed. It is everything else that hasn't. Or it has, but in the wrong way. By charging a premium for housing, education and contacts instead of taking it out of the equation. Some day all this friction is going to have consequences.

Yes, sorry. I didn't mean to imply that VCs, on the whole, don't have a more nuanced decision process. I meant that I dislike when ethically questionable decisions are protected by the 'ends justify the means' argument. In this case, where maximizing profit is the only end that gets any weight.

It's similarly strange to me when I hear people like Jim Cramer advocate investing in tobacco companies even if you find their business practices abhorrent because the point of the investment 'game' is to maximize profit. In his case, his solution was to take those profits and donate to a cancer charity. It just seems like a strange set of psychological hoops to jump through to avoid cognitive dissonance. It comes across that excelling at the 'game' is ultimately what's valued more than the ethics of the business decision. Again, maybe naive or poorly placed, but it seems the most moral choice is to make sure all the decisions align with your values, not creating strange workarounds so you can have your cake and eat it too.

Lot's of people of color across the pond too, i.e. China.

You don't need a VC for most types of businesses. Especially not at the beginning.

Furthermore, you can get VC meetings or a job at Google with no college. Many have done it. It's increasingly the case that employers care more about what you've done/built than what college you went to - or indeed if you went at all.

Yes, I actually have gotten VC meetings and work at Google without a compsci degree. I said one of the factors, like that it is a big difference in likelihood of getting past filters, not that it's impossible. It's a statistical effect.

A practical problem with community colleges are the plain fact that high ambition people tend not to be there. People with ambition tend not to be there, or are operating from a disadvantage and community college is the best they can get, at that time in their lives. This defines the initial network of a community college attendee, as well as their operating environment. There is quite a bit of invisible help that arises simply from one's environment being a can-do ambitious place. Not saying community colleges do not have positive environments, but at a university setting becoming a degree professional is the given.

I agree that this is a valid concern, but how do you feel about the statistical part of this sort of problem? Isn't the elite always the top n% (1%, 5%, 10%, etc) You can fatten up the statistics in the middle somewhat, and shrink the poles of the bell curve, but I don't see how you hope to equalize "access to the elite."

It also defines how you get treated.

If you need to use the bathroom, you're very often better off walking into a lawyer's office than walking into a restaurant, because the restaurant workers have the expectation that a certain percentage of customers are going to shit on the floor, and the lawyer's secretary doesn't, so you don't have to work as hard to combat that expectation.

The same thing happens with community colleges, which have all kind of policies designed to protect the college from the students. Everything down to when you can be there and whether you can talk with a friend in the library is subject to much more negative expectations than in a real university. You can get a lot out of community college in terms of learning, but it's generally more of a struggle.

Community college is a great deal. But $12-15k for a bachelor's degree, not to mention any hit to income because your work availability is limited when attending school and doing assignments, is not something every person can wave off as no big deal. That assumes the community college offers a four year degree and is within reasonable travel distance (oh, you do have a car, right? Because that college might not be on the bus route you take to work). If you have to move to attend college, you sacrifice whatever job you currently have, plus all the expenses of moving (but apparently we're expecting them to move across states anyway)

Along with that job, we then talk about health insurance. It's great if you are young enough and have parents with insurance that you can be on, but not one of those criteria can be assumed, so if you aren't working a full-time job, you will have limited access to health-care (plus the issues of paying for it if you have access).

Just because some of the high end cost estimates can be undercut doesn't mean there isn't considerable expense and threat.

Here's a question.. why the fuck is college even a requirement here? I'm not saying it doesn't have value. But, if you are creating a startup and are that young, does college even matter at that point?

The fact is, that for many things, a lot of people are perfectly capable of spending a few hours a day on a project above and beyond actually working a full time job. Yeah, people have advantages and others don't. There are risks and rewards. Are you willing to pay them? (you, being the hypothetical startup creator).

In the end, this is how economics works. This is how you make things happen. Nothing is without risk, and anything that is probably isn't worth much to someone that doesn't already have huge means to live without doing it. Creating something is WORK and means not doing something else.

> Nothing is without risk

This is the whole point of the discussion here: For many people the risk is dramatically higher or lower than other people. Capitalism suffers if we don't let everyone actually participate in roles other than the menial worker.

That is a given though and you cannot be expected to normalize for it. Someone fresh out of secondary school isn't in the same position as someone in their mid 40's with kids. And isn't the same as someone sleeping on a friend's couch.

Depending on what you are trying to do/build also has varying risk/reward. Want to start a new aircraft manufacturing company? Good luck with that, unless you have multi-billionaire parents. Want to start a new SaaS? you have very little excuse not to start/try.

It doesn't take a lot of risk to try in most cases. All the griping in the world doesn't make someone who won't try succeed. Most excuses are just that. I didn't go to an ivy league school... I grew up poor... meh. The fact is that drive, motivation and effort count for more, more often than anything else given a baseline level of skill, intelligence and aptitude.

Do you also want to normalize professional sports? Let short and fat people play in the NBA?

> The fact is that drive, motivation and effort count for more, more often than anything else given a baseline level of skill, intelligence and aptitude.

I don't know if you've failed to follow the point here or are deliberately trying to avoid it. We're not talking about comparing someone "fresh out of secondary school" with someone "in their mid 40's with kids", and we're not trying to compare someone "with drive" to someone just giving excuses.

Fact is, someone with drive and a baseline of money is far, FAR safer when taking risks in capitalism than someone without. I'm not looking for excuses for myself - I'm looking to reap the benefits of a well-functioning market. A market that enables everyone to participate according to their drive, and doesn't expect that they have to sacrifice, health, education, or future ability to be employable to do so.

Today I see a large number of people of above average wealth and opportunities, plus one or two that had plenty of luck while "bootstrapping" themselves all looking down on anyone unable to participate as if they are simply lazy.

We're not trying to get "short and fat" people into the NBA, we're trying to get the people who have to work 60hr/week jobs to somehow have time on the court. "Drive" doesn't begin to cover the problems.

https://www.boredpanda.com/privilege-explanation-comic-strip...

> Fact is, someone with drive and a baseline of money is far, FAR safer when taking risks in capitalism than someone without. I'm not looking for excuses for myself - I'm looking to reap the benefits of a well-functioning market. A market that enables everyone to participate according to their drive, and doesn't expect that they have to sacrifice, health, education, or future ability to be employable to do so.

What you are talking about will ALWAYS be part of the risk equation, unless you are talking about normalizing everything across all nations in the world and one global government, with a single base income for all? I'm not sure that I would want to live in such a world given all the side effects of such a government/system.

There will ALWAYS be more risks for some than for others. Someone who has two parents that would let them live at home vs. and orphan with no supportive family. You can NOT have that level of equality without tyranny. And even if you did, you'd have already removed any or at least most of the rewards for any innovation.

Edit: looking at your cartoon, I definitely was raised closer to the, "disadvantaged" woman on the right. That isn't to say that some don't have advantages, but that will always be true, and isn't a net wrong. Even then drive and input are far bigger indicators, and removing the rewards of others won't increase innovation.

Quality of community colleges vary greatly and these days you're just as likely to find one that's almost as predatory as a for profit college. They promise kids a great future and sign them up for as many student loans as they can. Then they feed them a canned curriculum from one of the major textbook publishers (with expensive digital content). Everyone passes just for asking. It's quickly becoming a racket thanks to "performance" based funding, but hey, they make lots of graduates now.

Even the privileged YC founders seem to have made some sacrifices early on, like living on Ramen, sleeping in their office and sharing a rented space with many people. Must admit that "want to live in a decent city" is not really something that triggers my empathy.

These days you can also do Kickstarters, apply for money from YCombinator, and other ways.

And you don't have to sacrifice everything. You can try the startup for 3 years and still get an education if it fails.

Twitter is one of the worst social media sites, in my opinion, and it makes me concerned how much it's caught on with American politicians (no, I'm not just referring to Trump). It limits discourse and incentivizes "outrage culture" by design. I see more racist and outright intentionally false information content on Twitter than any other social media platform and its only gotten worse with time. They've shown very little to no initiative in preventing this.

I get the impression that the only reason Twitter isn't as heavily scrutinized as Facebook is because their executives are simply more likable, which isn't a high bar to pass when you look at Mark Zuckerberg. I think the same applies to Google, too.

I think the main reason Facebook is under more scrutiny than Twitter is that they are so much more influential, and therefore more dangerous. Between facebook.com, Instagram, and the tentacular reach of Facebook connect, they have the ability to track and influence vastly more people than Twitter.

I agree that Google is not getting nearly enough attention. I think it because they’re better at PR, and have been developing a “respectable” image. Facebook has been much more blunt and careless in their communication, and now they’re paying the price.

I do hope Google gets in more trouble, they have a lot to answer for. Youtube in particular has a disturbing history of propagating toxic content. Their ad division has been very eager to look the other way when their customers engaged in questionable methods. And they are in great part responsible for demolishing the traditional news business and replacing it with the “engagement” business model that fuels clickbait and outrage-inducing content.

Speaking of over-reduction, "Does condition X provide a 3 or 4 percent boost?" is pretty much an over reduction - it doesn't even acknowledge that most of these issues aren't even discussed in genuine way - The opposing "sides" are optimizing on different sets of variables. And of course the notions of 2 sides ignores the reality that there are several viewpoints optimizing several different sets of variables and the "left"/"right" distinction is just the result of some sort of really bad clustering algorithm. (Lets temporarily ignore the part where in actual reality, the various groups can't even agree what all the variables are, or how to measure the results).

> In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing.

You are totally missing the point Matthew Prince is trying to make, that is, you need to have a "safety net" before you can take risks. If one can't even get them fed and not worrying about what the next meal is and where to stay, all bets are off.

If you don't agree with me, name one entrepreneur who has found a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare. Borrowing money from parents doesn't count as living below poverty does it? Having parents or friends or family to lean onto economically means there is a safety net there.

The lore goes that Airbnb was started because the founders couldn’t pay rent.

According to his talk at startup school this was because he quit his job and moved in with his college friend in San Francisco to start a company. His share of the rent was apparently $1150, so seems fairly likely that he could have made that if he wanted to.

https://www.youtube.com/watch?v=ZPLnfUPBXwA&t=115

> that is, you need to have a "safety net" before you can take risks. If one can't even get them fed and not worrying about what the next meal is and where to stay, all bets are off.

To take the other side of this (not to entirely disagree with you) people have a different attitude toward risk and betting the ranch given the exact same safety net or lack of it. Someone with rich parents may not take the risk (for fear of 'I told you so' or being derided) and someone poor might be quite the gambler and think 'I really don't care if I fail and if I can't feed my family this is just right and the time is NOW!'

> If you don't agree with me, name one entrepreneur who has found a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare.

Very possible also that the people giving the funding are not aware of a safety net and therefore think the entrepreneur is less bankable because they actually fear for them failing since they know the chance of failure is quite high. So they pass thinking they are doing them a favor. This (per my above statement) would vary with the amount of a gambler the investor is and/or how much of a conscience they have.

"Rowling has lived a "rags to riches" life story, in which she progressed from living on state benefits to being the world's first billionaire author."

https://en.wikipedia.org/wiki/J._K._Rowling

Oprah's another:

https://en.wikipedia.org/wiki/Oprah_Winfrey

those are examples of government safety net though no?

Both answer the parent's "name one" challenge question. I named two :-)

Both Rowling nor Winfrey took routes to financial success that are more open to poor people than starting a startup is, but it's true that in 1998, 23 years into her career, when Winfrey was already world-famous, she co-founded Oxygen Media, which was eventually acquired by NBC for almost an Instagram. So I don't think that fulfills the stated goal of "a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare".

Neither of them "founded a start-up" while living below the poverty line. Rowling wrote a book in her spare time that eventually got popular. She wasn't putting any money or asking of anyone else's money to fund her book.

Oprah followed the more usual path of "get a job, get promoted, rinse repeat" until she was a household name before she started her own company. Per the article you yourself linked, she was co-anchoring the local evening news at 19. That isn't the same thing as taking a risk on a start-up.

Writing a book while on welfare is certainly a startup. She didn't self-publish the book. The publisher provided the funding to edit, print, market, and distribute the book (which is not trivial money). Rowling pitched the book to several publishers before one decided to fund it.

Oprah bootstrapped herself out of poverty to become a media billionaire. You might say she took the long way by routing through various jobs to get the money, but she still came from poverty, founded companies, and became a billionaire.

I agree with your point. But I think people are looking at the categories differently. You're comparing poverty to middle class, while others are comparing middle class to upper middle class/wealthy. I think Paul G. is saying you don't have to be upper middle class to be a founder. I don't think he's saying you could be living on a park bench with no food and your six kids on Monday, and be a founder on Tuesday.

That would mean that places where nearly everyone has safety nets (countries with welfare) would have a higher amount of entrepreneurship. That is not the case.

Entrepreneurship seems to strive in harsh do or die conditions like in US or Israel.

This is a well-studied concept in labor and migration economics, but it's not about the "do or die conditions". It has more to do with tax competition and relatively lower wages, which tend to attract entrepreneurship, among other things. That's the prevailing theory, anyway.

PG seems worried that tweets saying you have to be rich to do a startup will discourage non-rich folks from trying a startup.

This doesn’t give those folks much credit. It implies that a few tweets will have a bigger impact on their decision-making than their own detailed understanding of the constraints and anxieties of their own lives.

I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.

> I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.

Exactly. And I have been avoiding saying this but keep in mind that from what I remember PG got the idea for YC when he was 'walking through Harvard Yard with Jessica'.

https://www.fastcompany.com/3002810/aha-moments-made-paul-gr...

All VC's are like this by the way. Even though they know there is a great chance that many ideas they fund will not work they still push the investments because it's not their mess to cleanup. That said there is actually probably more downside for employees. After all a founder with a big startup failure has been marked as someone 'in the mix' and can usually parlay that to other opportunities. Look at even Sam Altman and what happened after Loopt.

https://en.wikipedia.org/wiki/Loopt

Then he goes on having made his mark to running YC.

Nicely said. It is an irrational economic decision for a non-rich to begin a startup. Even if memes could change their decision it would make matters worse for them, not better.

I'm not an expert on the subject but according to "science", the reason that woman do not go to engineering fields in the US is a byproduct of their environment not a difference in their genetics.

If I got it right, Robert Sapolsky claims that the way to make more woman into tech is to make young girls believe that they can do tech. They already have the cognitive capacity.

In this same sense, PG might be hitting the nail in the head: The reason poor people don't do startups is because they believe they can't; and that it is a white privilege.

If they believe they can't, they will not try. If they don't try, the probability that they succeed is exactly %0. Re-enforcing the myth and further convincing poor people not to try.

The only way out is to convince them otherwise and see what the real odds are.

Robert Sapolsky also claims that we need to change our speech and views (ie: remove "negativity") in order to level the playing field. PG is doing the same. He thinks that other ideas need to be censored as it is important to maximalize the propaganda.

That's a dangerous thinking as it touches on freedom of speech. One might wonder if you can level the social "cognitive" field while also preserving freedom of speech. Educating people is the only way I guess.

They won't try because the consequences for them could be disastrous. It's not even about how much money is in your bank account, though that obviously helps. It's more about how stable and reliable your support structure is. Without that the consequences of failure can be devastating.

I think it's dangerous to encourage people to gamble their lives on a low probability outcome if they don't have a strong network of friends and family to fall back on. If you have that, then go for it, but don't pretend that anybody can pull themselves up by their bootstraps and do what you did (I'm using the royal you here). That attitude is what the criticism is aimed at.

I wish that more people had discouraged non-rich me from launching a startup! I was young and had not yet had time to develop a detailed understanding of the constraints of my life. I had been bathed in pro-entrepreneurship messages throughout my upbringing, and genuinely believed that technical chops and the kind of classical-conservative, small-business-focused money management advice I'd been given were going to be enough to build a successful company. I was wildly wrong about that, and I had no idea how far out of my depth I was. I had no safety net and I got badly hurt. It took years to recover.

They're talking past each other. Thing is, they're both right.

Paul seems to be saying you don't have to be rich to do a startup.

Matthew is saying lots of founder have some resources (family home, savings, great education, i.e. middle-class) that made doing a startup feasible

Both these positions are true and aren't incompatible. Being middle class (Matthew's position) and prudent with savings can afford you probably a year of runway.

But I'd never recommend someone who was truly destitute or food insecure to do a startup. If you come from a poor family there will also be family/cultural pressure not to do a startup and instead get a good paying job(assuming you have the ability).

It’s a tough calculation to forego a presumably high chance of having a comfortable life and providing a good base for your kids by working a regular job, versus shooting for the moon and possibly losing that comfortable lifestyle.

They’re not even talking past each other (that would require a back and forth). Matthew responds to something pg didn't say.

If that’s the case, then Paul Graham chose a very poor subject as an example.

I agree, and he could and should have anticipated the reactions. But I read his clarifications and it looks like he argued with good intent.

It's the difference between "a founder can be anyone" and "a founder can come from anywhere" to paraphrase Ratatouille.

Rather, the difference between "a founder can be anyone" and "anyone can be a founder."

The problem is PG says that you don't have to be a rich kid, and then takes Airbnb as an example where the founders are definitely rich kids compared to the rest of the nation and world (not rich as in "daddy has a private jet", but definitely in the top couple of percent).

Of course PG is right that you don't need to be a rich kid, but he chose his anecdote poorly.

PS: Also Sam recently said (in the StrictlyVC interview) that most founders at YC are from upper middle class families, so there's your data.

Worldwide, definitely top 0.1% (at approx. 80K annual income).

Worldwide is an unhelpful metric. They're starting up in a specific place, so their wealth should be measured relative to that location.

For example 80K won't get a roof over your head in NYC or Silicon Valley, but could support an entire family in middle-America.

It should be measured within the geographic bounds of where you can relatively freely and easily move within. If you're making 80k, maybe don't live in San Francisco (or do, but then you need to cut back other expenses).

And yes, I know, it's not easy to move for everyone to another city or region because of several reasons, but generally speaking most Americans could move to another region where they would get a similar paying job and more value for their buck.

Edit: Typos

Graham is making a different claim, that you don't have to be from the middle class. Read the entire exchange.

Wait, his claim is that you don’t have to be from the upper middle class.

https://mobile.twitter.com/paulg/status/1130121128033300480

"You literally need six figures in your bank account to do a startup" isn't a thing that people actually argue. Paul might be technically correct but he's arguing against a strawman. In this context, rich is a shorthand for financial privilege, which doesn't tend to come in the form of dollars in your bank account when you're young.

It's difficult to have a meaningful discussion about social issues when words like "rich" can range in meaning from "peer of Warren Buffet" to "some member of your extended family owns property somewhere in the world". This is not made easier when not all parties in a given conversation are using the same definitions and haven't stopped to compare notes.

Fuzzy definitions are great when you're posturing politically. In those cases, you want people to be able to apply their own definitions. But political posturing is antithetical to meaningful discussion, so...

I agree completely. It's one of the biggest problems I have with left-leaning activists, especially on Twitter. They abuse terminology constantly (like using rich to refer to the much broader concept of financial privilege) and it causes a ton of problems. So much online discourse is just people talking past each other using different definitions.

Why not? If you secure investor funding, you could easily pay for your meals.

Like so many things in life, it depends.

I just like PG said "would ordinarily just let your bullshit go". I spit out some water, easily the best thing I've read on twitter this year.

The reality is that money lets you "take risks," and money gives you options (in this world).

To be honest, I don't think that starting your company with the "risk" that you might move back in with your parents if it fails... is at all a meaningful risk.

Psychologically this is not true at all. It's much easier to take risks when you have nothing to lose.

How many 18-30 year olds do you see having a swing at it and trying something, vs 30+ people with families and savings to burn?

My trajectory might not be "normal" but for me I have been more inclined to take risks as I've gotten older.

There is a sense of urgency (e.g. if I don't do it now I won't get another chance) that counteracts the feeling of "nothing to lose")

I think everybody in this discussion is working with a different model for the word "risk". This is a problem of concision inherent to a platform like Twitter. I don't think the argument is that 18 year olds are risking less than 30+ year olds with established families. I think the argument is that for young middle/upper class people with social capital, the risk is moving back in with your parents. The conversation stems from the question "are startups riskier for rich kids or not-rich kids?", and not "are startups riskier for 18-30 year olds vs some other demographic?"

Having nothing to lose is an advantage, but you also need to consider what the worst case scenario is. That's where the safety net comes in. A lot of people don't have anywhere to go if things truly go south.

Most successful startup founders are in their 30s and 40s.

Providing a link: https://www.kauffman.org/what-we-do/research/2009/04/educati...

That's not actually relevant to what I'm saying.

The more relevant question would be, what % of 20-30 and 30-40 year olds start businesses?

I'm not surprised most become successful over 30, it takes time to learn.

You always lose time.

All the risks are skewed to portray a traditionally projected hopeful image when the reality is: the risks are skewed against the average person.

Most start-ups (businesses in general) fail. Hard Work® and Dedication® will only get you so far in this country even though that's the garbage fed to many for generations. A great idea is certainly a good start, then ingenuity/creativity/follow-through go a long way, but many times, success comes down to dumb luck, timing and resources. For evidence, look no further than successful companies that push new product/service lines out which fail and are abandoned--it happens quite often.

The American Dream® often boils down to simply rolling the dice. It turns out, you can roll the dice more times if you have more money/wealth when you start to play the game. Everything that isn't the cost of the admission fee can be manufacturing new dice. Heck, with enough money, one can even purchase loaded/weighted dice from your local politicians but I digress.

For many, it's hard to roll the dice when you have to decide if you want food and housing or to play the game. Yes, rewards require risks, that's what our economic system encourages (and I agree with this approach) so one shouldn't be risk averse, but everyone needs to acknowledge that risk is a very relative/proportional quantity that needs to be considered for each case.

Relative risk for Jeff Bezos starting a local business (let's say a simple coffee shop) is not the same as the relative risk for your local barista turned manager wanting to take their years of Hardwork®, Dedication®, and intimate knowledge of the industry to spin up a business. If Bezos cafe fails, he probably didn't even realize it (a drop in the Olympic sized pool) but if your barista fails, they could be on the streets. Bezos can simply hire others with intimate knowledge and operate at a loss for far longer than your local barista can. They need to eat, perhaps their family does. Perpetuating this oversimplified view isn't good for our society and keeps tossing blame on otherwise productive citizens who simply weren't rewarded the same starting hand of cards and opportunities to seize.

The discussion reminds me of a founder I knew who was very proud that his successful company was bootstrapped and of how much of a risk taker he was. He’d be quick to point out that in order to be truly successful you needed to “lay it all out on the line” and “have skin in the game.” What he wouldn’t tell you, and you had to dig and do a little internet stalking to find out was that this was his fourth attempt, and after each of his past failed businesses, he’d just fall back to his upper middle class family (attorneys), chilling there while he dreamt up his next business idea.

Big risk taker, for sure.

Yes, completely agreed. You distilled it: "you can roll the dice more times if you have more money/wealth"

Yeah it's very different when you are in your 40s with a mortgage and kids.

I'm shaking my head right now because I can't believe people at the top is still susceptible to sampling/survivorship bias.

I've tried searching but cannot find a good empirical study of privilege and entrepreneurship correlation. However, I've found an essay paper [0] that exactly predicted this twitter drama; that entrepreneurs simultaneously present and erase this conversation about class and entrepreneurship.

The paper also concluded:

> Whereas gender, together with race, have long been foregrounded in studies of entrepreneurial identity and difference, class may be a more powerful organizing discourse, though certainly one supported by discourses of gender and race.

[0] https://journals.sagepub.com/doi/pdf/10.1177/135050841246489...

The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/educati...

93% had a degree, with 30% having a masters, That would suggest to me that you'd need a decent wedge of cash.

Now, what is interesting, is that in 2016 at least, the US created gross 960k new companies (there is some smoothing here, so +- 100k) The UK created 460k. Seeing as how the UK is 60 million, versus 300 million people, either the US is under performing, or the UK is wildly over performing. (https://www.sba.gov/sites/default/files/advocacy/2018-Small-... and https://researchbriefings.files.parliament.uk/documents/SN06... for stats)

Perhaps, as we don't have to worry about healthcare or no competes, that might be a factor.

Registering a company in the UK, and keeping it running, is both simpler and cheaper than in the US.

Registering a company takes a few minutes and costs less than $30. Compulsory annual filing costs less than $20. If your company's revenue is below some threshold, you don't need to register for VAT (similar to sales tax). And there's another (even higher) threshold below which you can file very simple annual accounts (unaudited, and including neither income statements nor cash flow).

Agreed, I founded a UK company on a whim one day so I can bill for some freelancing work. It made a few thousand a year and everything was hassle-free, basically "pay $50/yr and file some stuff that tells us you're active, and when you get large enough to afford a good accountant they'll take care of it".

Based on those differences I'd wager that a lot more people in the UK would register their side gigs whereas in the US the trade-offs are rarely worth it unless you intend to make it a "legitimate business" at some point.

Eh, in my state in the US it is like $85 every 2 years for a LLC and essentially no paperwork if a simple pass-thru. Not everyone needs a Delaware C-Corp from day 1.

Nice. That's a lot simpler than CA. Here there's paperwork, more complicated taxes and $800/yr for a single-member LLC.

That's about the process in Texas. Incorporating is a different story, but you don't have to incorporate to register a business (and it's probably a waste of money if you are the sole owner with no employees).

Does the simpler option provide limited liability?

The UK also makes company formation very easy and still slightly advantageous for sole traders, which may be a factor. I did check the criteria and they do include "must be listed for VAT or PAYE", so they're all real businesses to some extent and not just shells.

The US would do well to look at its business licensing requirements to see if they could be simplified in terms of paperwork.

It's also cheap and trivial to form a UK company with bank account - no matter whether UK citizen/resident or not.

Filing for a company was trivial when I did it, but not many banks would give it an account (NatWest/Barclays/etc wouldn't). Has this changed?

There are quite a few non-legacy bank accounts that you can apply for a company account with in a very painless manner. Monzo, Starling and Tide spring to mind. I use Monzo as part of their business banking trial, but I previously have used Tide and (unfortunately) RBS.

Most company formation agents offer a free "bank introduction service". I have no idea how the logistics work, but I was able to open an account with Santander in a matter of minutes.

The smaller businesses can file with a flat-rate VAT (not itemized) which often means 5-10% tax benefit.

The UK also has universal free healthcare for residents, so no need for private insurance when you leave an employer and set-up on your own.

Interestingly, only a quarter of the businesses are employers in UK, so most of the company creation is presumably basically city of London financial engineering :-)

what's with justifying an existence of a company by having employees? If a company is profitable and you as an owner are doing well financially, does it really matter?

I believe the general thought is that at a very simple level, operating as a company provides for a number of protections for the owners/operators. At a societal level, the broad justification for allowing unnatural beings with those benefits is that it still provides a net benefit to society through things like employment opportunities, taxes and the encouragement of economic activity. If the concept of a company no longer provides any non-trivial benefit to society (for example, no jobs or taxes), why should society collectively provide laws that allow them in the first place?

Shell companies are not the same as a person working as a "one man band"

For example a company I worked for had a structure where the employees and customers (~250 employees and £50million turnover) were mostly interacting with the named company, but there were three other companies that "onion skinned" the company with the name.

This was done to manage debt, primarily, which then allowed manipulation of taxes.

For reasons outside my area of expertise, UK companies sometimes divide themselves into numerous sub-companies.

This produces the result that publicly traded company Tesco PLC has a great many sub-companies [1]. This is at odds with a lot of expectations about how companies are counted.

[1] https://beta.companieshouse.gov.uk/officers/uZl4-qVGUWaBK3Jd...

Tax is the usual one. That list also includes a lot of closed or dormant subsidiaries. Perhaps it's best to think of them as being like AWS VMs that get provisioned and de-provisioned, some with short lives. Tesco is complicated by takeovers that haven't been fully incorporated; I see a lot of familiar brand names in that list, and a whole other pile of fragments of Booker (giant wholesalers recently taken over)

I tried https://beta.companieshouse.gov.uk/company/07530494/filing-h... based on "EBT" in the name (tax shelter scheme), but it's a dormant empty shell.

TESCO GREY (2LP) LIMITED https://beta.companieshouse.gov.uk/company/FC027196 registered in the Cayman Islands? Obvious tax shelter of some sort. Also closed.

> For reasons outside my area of expertise, UK companies sometimes divide themselves into numerous sub-companies

One of the common reasons for subdividing firms (in general, not particularly the UK) is to take advantage of liability limitations, which work as well for corporation as shareholder as for natural persons as shareholders. If it is less onerous to set up firms in the UK, you'd expect UK firms to do more of this, because the cost/benefit analysis would favor more of the cost is lower.

Ah, yes, fortunately the source document where I got that stat from discounted all companies with no employees.

1) It's very easy for a sole trader or freelancer to incorporate. There's a slight tax advantage to drawing dividends from a limited company rather than paying yourself a salary, so a lot of these one-man-band companies technically have no employees.

2) A UK limited company is a flexible financial wrapper for all sorts of organisations, many of which aren't businesses in the traditional sense. A significant number of community groups are registered as limited companies rather than charities, even if they are run on an entirely voluntary basis.

3) The extreme convenience of the British system and relatively favourable tax rates mean that a lot of foreign companies choose to incorporate in the UK, even if they have no presence there. Until the introduction of the mini-GmbH in 2008, many German small businesses chose to incorporate in the UK, because dealing with the cross-border issues was easier than dealing with German bureaucracy. If I were a startup founder based in a developing or middle-income country, my first impulse would be to open a UK limited company - it takes about 20 minutes, costs about £20 and gives you a sound basis to operate as an international business.

4) The annual returns for a small limited company are so straightforward that it's often easier to keep a company dormant rather than formally wind it up.

Why do you need "a decent wedge of cash" to have a degree?

There are plenty of universities that are affordable. For instance, City University of New York (CUNY) offers four year undergrad degrees for $6,730 a year [0]. You can get a room share in an outer borough for maybe 500 - 1.5k a month or Jersey for even less [1]. And this is one of the most expensive cities in the world. If you're smart, avoid unnecessary expenses, you can probably get by on 20k a year in expenses, which comes out to 26 hours a week at $15/hr, ignoring taxes. Taxes at about 15% at that low income means you'll probably want to earn closer to 25k to have 20k net which means 31 hours a week. But realistically you'll probably want to work full time or over time during the months school is not in session and closer to 20 hours a week at other times. Or try to find a job that pays more.

Don't know much about health insurance so that's also something you'll have to consider getting maybe through the school or some city program or just go without it.

Or just move to a more affordable city and probably cut everything above in half while hopefully only giving up a bit of the wage you'll earn

[0] https://www2.cuny.edu/financial-aid/tuition-and-college-cost...

[1] https://newyork.craigslist.org/d/rooms-shares/search/roo

So, working a four day week, and studying full time to do a degree. Yes, I can see that allowing lots of time to form a network and come up with business ideas.

I was replying to the specific claim that getting a degree requires a lot of money.

Undergrad programs are what, 3 to 4 years. That means enough money to replace 30 hour per week job for four years. With uncertain healthcare status. That is a lot of money. Over here studies are basically free, about 100 EUR incl. public transport per semester. And even then working full-time to be able to finance all of that is hard.

Health care is not needed. Undergrads are mostly young, and without kids. It is unusual for them to visit a doctor - maybe they get an infection, a $30 visit to a "minute clinic" and $20 in antibiotics, but that is a one time thing.

For the cheaper universities you can support yourself working 30 hours a week, if you make your degree a 5 year program you can cut your classes down enough that you can live on your income and have enough to pay for class. You don't get any "fun money", but all your time is focused on class so that won't matter. You are also living in the cheapest room you can find, and cooking your own meals of rice and beans (the cheapest food).

Maybe you don't want to live that way, but you could.

No health insurance? Sport accidents, serious illness, traffic accident, children,... Honestly, I still can't wrap my head around the fact someone would choose to live without coverage. That some are forced to in developed countries is shitty enough!

I didn't say it was the best idea, but the idea isn't unreasonable. Sports accidents are easy to prevent (don't play risky sports). I said no children as a prerequisite for good reason. While serious illness is possible, it is extremely rare in this age group. You can't afford to drive in my scenario, so traffic accidents are not a big worry.

I'd still want health insurance, but the odds are in your favor if you choose to not have it.

Not sure this is reasonable.

Young people are actually pretty sick which is understandable because time is needed to adapt immune system to external ambient. The lowest period of sickness must be between 30-50 yo (no data, just informed guess).

> Health care is not needed. Undergrads are mostly young, and without kids. It is unusual for them to visit a doctor.

Jesus Christ. Please don't take this as a personal attack but it boggles my mind that in 2019 this is a situation accepted as perfectly normal by a large number of people.

In many countries in the west, this is not even a question that arises. I assume you are based in the US?

That someone has to make a choice between potential financial ruin in case of an unforeseen illness or "saving" on insurance and staying solvent to pay for shelter and food in the most powerful country in the world beggars belief.

So what if I fall down some stairs and get multiple complicated fractures? I can just as well call it a day and shutter all my hopes for making it in life because the hospital bill will be punitive.

Sure, it's unlikely to happen, but the discussion here is about the fact that if a person has money (and insurance) then this would be "merely" a painful experience, whereas if they "saved" on insurance and paid for food, shelter and education instead then they are pretty much done for.

Last I checked, in the US you remained on your parent's heath insurance while in college (or until 25?). Its been that way for years.

It doesn't matter what country you live in, if you are between 15 and 30, and don't have kids: you are extremely unlikely to need a doctor at all. These are the healthiest years of your life.

That would be what I call a bet, a very risky one at that. Especially if you are not filthy rich already.

> Over here studies are basically free, about 100 EUR incl. public transport per semester. And even then working full-time to be able to finance all of that is hard.

Who needs to work full time to afford €200/year?

Housing, food, clothing, etc... Unfortunately that's not included :-)

So studies are tuition free. I suspect university costs are not being compared fairly then, because the loans people take out in the US generally cover most of that as well.

I did exactly this; went to Hunter College CUNY and paid my way through with a part time job. Mom and Dad payed all of freshman year tuition and I did live at home. End result: no student debt. But I still needed that safety net to make that possible.

> Why do you need "a decent wedge of cash" to have a degree?

I can’t shake the feeling, though, that after a certain point, in certain (important) circles, “affordable” degrees (like the one I have) are effectively the same as having no degree at all.

Why is that? Perhaps I don't operate in these supposedly important circles, but I have never found my affordable state degree to be a handicap in anything that mattered. Granted, that's because it's an engineering degree and, as my neighbor and fellow engineer once put it, after your first job people care more about what you've done than where you went to school.

I don't know what kind of life you've lived where you think $6,730 a year is affordable, but it's a lot. Most people I know would have greatly improved prospects if they had that much money to spare. Education would be low on the list. First would be fixing their failing cars/homes.

$560/month to spare would change my life. I already got a good STEM degree on Georgia's HOPE Scholarship (traditional job prospects wiped out by SaaS), so it would go to a good used car, a proper studio computer, and some clothes that aren't years old and falling apart. Plenty of people I know found themselves in debt with degrees no one would hire them for without experience. Not even stereotypically useless degrees. They were pushed into it by everyone they were supposed to be able to trust, sometimes even outright manipulated and lied to by family.

Suggesting one variable explains such differences is incredibly reductive. Plus, The US is not a single country, there is federalism and you should treat all states differently since setting up a business in NY is supposedly a lot harder than in other states.

Indeed, and lots of companies have shells in Delaware. Because its lower taxes & "better" company law.

> Because its lower taxes

Lower taxes is irrelevant unless all your operations are in Delaware. It's a great trick for IP holding "companies" that are just a couple lawyers in Wilmington, but otherwise you are paying taxes to whatever states you actually generate revenue in anyway.

The UK used to (?) be a haven for Ltd creation because of low costs, low bureaucracy and quick reactions. It's what lead to Germany's laws regarding UGs (Unternehmergesellschaft, literally entrepreneur company), much more comparable to the Ltd regarding easier access, much lower startup costs than the typical GmbH.

It will be interesting to see where these numbers move post-brexit.

Why is it surprising? There’s a combination of blindness, and inflated sense of self worth. America romanticizes the “self-made man”, and so any help is discounted. (Famously, a $1M family loan in 1975 (4.8M in 2019 dollars) was described as “small”.) Not coincidentally, these is a strong correlation with ascribing their success to a meritocracy, even though luck has been repeatedly shown more influential factor in success.[0]

[0] https://www.fastcompany.com/40510522/meritocracy-doesnt-exis...

It's romanticized because the majority of Americans had someone in their family throw caution to the wind and get on a boat and cross the Atlantic with zero knowledge of what was going to happen.

many slaves.

That seems pretty silly to me. My family has such stories, from the 1860s. Why should I lionize the self-madeness of someone from almost 200 years ago and pretend that the same social factors are at work?

Well, that was at a time when those places where at war, famine, turmoil, and the US economy was rising. Easy to "throw caution to the wind" when all you have is some small plot of land struck by drought.

Even easier when you know you can go back to whatever job you're currently doing if your entrepreneurial idea doesn't pan out.

And you'd think Americans would think fondly of people who try and do that today, but instead we separate them from their kids then throw them all in internment camps.

You are totally on spot. Survivorship bias is the ban of any honest discussion on this.

Class may also mean you have no examples of entrepreneurship in your environment.

I don't think PG claimed that poor people are as likely as rich people to become successful founders. That's not the same thing. He says you don't have to be rich to succeed.

Sure but he’s making a category error, and it’s so obvious as to be irresponsible coming from a person in his position.

All it takes is one person who succeeds who is not defined as rich for his statement to be technically true, even if every other poor founder fails and dies in poverty.

What do you mean by category error? All he says is that poor people can succeed at startups, too. How is that making a category error?

It’s not all he said. He also included his anecdote about the AirBnB founders.

It’s a category error in that his statement is a binary one i.e. true/false, which he is using to defeat arguments which are about continua.

That is a category error.

It’s also a common method of deceptive persuasion - i.e. a dark pattern, but I don’t think PG was doing that on purpose, hence my assumption that it was an error.

You mean the issue is that the AirBnB founders were not really poor, and the category error is using them as an example for "poor"?

And isn't he just providing one example, it seems too much nitpicking to me to then go on claim he made a categorcial assumption based on an example of one?

Maybe the AirBnB founders were comparatively poor. You can always find somebody poorer, and even too poor to do a startup. Like if you have no money, no arms, can't talk, you may be so poor that doing a startup might become difficult. Yeah - OK. Poverty that makes it impossible to do a startup does exist. Doesn't mean that most people couldn't do a startup.

Ok - so you have just made the claim that most people could do a startup.

That’s much better than PG, and doesn’t fall into the category error because instead of a yes/no, you are talking about a continuum and you have made a claim about one of the bounds.

Your claim is that at least 50% of people are above the level of poverty required to succeed at a startup.

If true this would be very informative guidance.

So - can you justify your claim with any data at all?

> class may be a more powerful organizing discourse

Yes! Yes! Yes!

Other things contribute to class, but it remains a class issue.

I'm reminded of this: "If your feminism isn’t intersectional, it isn't feminism.".

We need something similar for those who think the issue is one-dimensional - "the poor".

Because why someone is poor, and what conditions and circumstances result from being poor... poverty (which includes the psychological impact of being poor)... deeply affect the individuals affected, and some of those factors have wider societal causes (racism, homophobia, xenophobia, perceived sex, sexual identity, etc).

In the US, Class is a pretty good proxy to wealth, far more than say the UK.

I'd say class in the US is solely based on your wealth, whereas int he UK it's based on your heritage/background. There isn't much of an aristocracy in the US.

It's okay to call yourself a feminist if you're not okay with biological males demolishing female sports records. It's okay to not go down the infinite intersectional/deconstructionist rabbithole to the point where it's normative for 8-year-olds to dress in drag and do sexually suggestive stripteases while men throw money. It's okay to retain your common sense.

In which direction is causality flowing here, and how do you justify it? We didn't choose our brains––so how do we differentiate the privilege we got from our "class" from the traits we were born with?

Does privilege imply that you got it from your "class"? This seems like a classic nature/nurture fallacy.

>In which direction is causality flowing here, and how do you justify it? We didn't choose our brains

No, but our privileged parents did contribute to them, and their our upbringing, early months, lack of childhood stress over things as food and war, familial support, good schools, and so on.

Brains is hardly the best contributor to entrepreneurial success. In fact a plot of IQ vs success I've seen plotted looked like random noise except below a certain threshold (obviously seriously cognitive impaired people will have much more trouble becoming entrepreneurs). But aside from that, whether you are 105 or 120 or 150 didn't seem to make much of a difference.

Induction gets you nowhere though: where did our privileged parents get their brains from? You're proving my point here: we inherit roughly 50% of our traits through our parent's genes.

I never claimed IQ was the best measure (surprised it looked like random noise though), but certainly our cognitive traits matter. So to my question: How do you distinguish that privilege from the privilege you got from your "class"?

Edit: Sorry if I came across snarky here, I appreciate your answer!

Where do the other 50% of our genes come from?

You get 50% of your parents genes, the other 50% isn't passed on to you at all. They might be passed on to your siblings.

I guess you're smart enough to realize that was a typo :)

Yes, :)

>Induction gets you nowhere though: where did our privileged parents get their brains from? You're proving my point here: we inherit roughly 50% of our traits through our parent's genes.

Well, of people with equal IQs, isn't a potential 0-50% penalty from nurture/privilege still huge enough to make points about "self-made men taking risks" (and implying that others are "lazy" or whatever) moot?

Privilege is not a trait. You cannot look at a person in isolation and say whether they have it or not. It's a property of how other people relate to them in society.

White skin is something you're born with. White privilege is what happens when you live in a society that assumes that black people are more likely to be criminals than white people, so you get a more favourable reception when you walk in a room.

Do you really think someone's ending point as an adult is largely limited to their "brains"? Like, how are you going to completely exclude the upbringing environment and the scarcity and struggle for resources that some folks face.

It's not "what I think", it's what we know. One of the most well established facts in sociology is that IQ is the best predictor for life success: Firkowska-Mankiewicz, Anna, and Jerzyna Słomczyńska. Intelligence (IQ) as a Predictor of Life Success. https://www.jstor.org/stable/20628656

You reiterate my question in the second sentence: How do we weight these different privileges?

is that IQ is the best predictor for life success

Perhaps, but the paper also concludes "that the importance of the role of IQ in predicting life success should not be overestimated". Furthermore while IQ did to some degree predict objective life success it does not seem to predict subjective life success, ie how happy you are with how your life turned out.

Also, they only compared those who scored very low to those that scored very high. The study says nothing about the predictive power of IQ for those who are within 'normal' ranges. All you can really conclude is that 13-year-olds with a WISC score above 130 tend to do better in life than kids with a WISC score below 85. It says nothing about if we can extrapolate that to conclude the kids scoring 115 do better than kids scoring 95.

You are misinterpreting that research.

It’s the best individual predictor when compared against other predictors, but not very predictive on its own.

I.e. Iq is more predictive than inherited wealth, but iq + inherited wealth is more predictive than either individual factor.

And again we're back at my original question... This is just a never ending loop. My whole point is this: How do we separate our inherited traits from the privilege brought on by our "class"?

IQ is the strongest individual predictor, but much smaller than the aggregate of class traits.

Class traits are of course inherited, but there is a distinction to be made between cultural inheritance and generic inheritance.

Which are you talking about?

A quote from paper that cites the one you link,

>For instance, IQ was believed to be one generic measure of human intelligence, on which Young’s meritocracy was based. But a century of research on IQ and life success has largely dispelled the once widely spread myth about the importance of IQ (Arrow et al., 2000; Gardner, 1983; Goleman, 1995; Gould, 1996; Zhao, 2016). Based on longitudinal studies on IQ and life’s success that lasted multiple decades, researchers conclude that: “the value of the IQ scores should not be overestimated” (Firkowska-Mankiewicz, 2002, p. 41).

https://spssi.onlinelibrary.wiley.com/doi/pdf/10.1111/josi.1...

Besides that, even if an analytical weighting cannot be given, it doesn't mean we can't examine the effects qualitatively.

>The results demonstrate that intelligence is a powerful predictor of success but, on the whole, not an overwhelmingly better predictor than parental SES or grades. Moderator analyses showed that the relationship between intelligence and success is dependent on the age of the sample but there is little evidence of any historical trend in the relationship.

https://www.sciencedirect.com/science/article/pii/S016028960...

IQ is an output of environmental factors.

>I'm shaking my head right now because I can't believe people at the top is still susceptible to sampling/survivorship bias.

Why the disbelief? They are the one who are primed to be the most susceptible to that!

There are studies that show that welfare increases entrepreneurship. https://www.theatlantic.com/politics/archive/2015/03/welfare...

So providing more people with safety nets increases entrepreneurship. Having a strong safety net is a form of privilege.

If you take the word of some gender studies person over his, OK... So fine, don't do a startup. Take up gender studies instead.

Everyone from my country (NL) has a safety net to start with (you can screw up but still) and that goes for many EU countries anyway and yet all the entrepreneurs I know from NL are extremely risk averse compared to the US ones. Most of my NL friends are entrepreneurs but more of the lifestyle kind than even wanting to become the #1 in their field with the monetary status that comes with it. I dare to say that I only know Chinese and US entrepreneurs that look beyond getting more than few million on their account and that is it.

I wonder why that is.

I wonder too.

One idea I have: In these countries you don't really need that much more because you're already cushioned against risk. You also don't need to provide a cushion to anyone around you (since everyone's taxes are already doing that). Which means, below you is not the gaping abyss but a shrub that is a little bit thorny.

I've often wondered about this. I wonder how much is a cultural mindset. In other words, is the U.S.'s relatively risk tolerant stance an artifact that many U.S. citizens are the progeny of people willing to take risks to start out as an immigrant in an unknown land and has that artifact become part of the collective mindset? Or possibly does the slow morphine drip of a safety net make one perceive all risks as something to avoid as opposed to a calculated risk? Or is all this based on a nonsense notion of American exceptionalism?

Pretty disappointed in PG's response:

"I would ordinarily just let your bullshit go, but this myth that you have to be a rich kid to start a startup is terribly dangerous, because it discourages people who aren't from trying it. Brian Chesky's parents were social workers. That is not a rich kid."

As if having two parents with stable jobs isn't considered a safety net. I agree, you don't need to be rich, but I also agree if you are struggling to work enough to eat, you aren't really working on making a startup.

There are huge swaths of people with a much less stable safety net than the example he provided.

Agreed, "I can't pay rent and I'll have to move to my parents' basement" and "I can't pay rent and I'll have to live on the street" are two very different ways of struggling to pay rent.

Exactly. In that in one of them, your landlord isn't likely to cover you, and is likely to kick you out, but your parents probably would cover the shortfall if they are able (at least for a couple of months). And if they aren't, you'll just go back home.

On the other side, many young people end up having to help their parents make rent. They don't have the position to take on any of their own risk.

> On the other side, many young people end up having to help their parents make rent. They don't have the position to take on any of their own risk.

Yup. Dreaming about startups was all fun until I realized that I'm essentially providing for 5 people beyond myself, at which point I got super insecure about keeping my well-paying job.

> On the other side, many young people end up having to help their parents make rent.

I have been in that position since my early 20s (I'm now approaching my 40s), well, since I was 21 or 22, meaning ever since I got my first salary. I didn't have to pay for my parents' rent but I did have to send my parents money regularly, each month, for almost 20 years now, because it's hard to pay your power bills and to buy basic stuff like bread or edible oil well when you live on subsistence agriculture, like my parents do. Paul Graham's view is very US suburban-centric, like most of the products and cultural views coming out of Silicon Valley.

Why is it disappointing to that he points out that "having a safety net" and "being rich" are different things? The whole thread seems to revolve around people trying to misunderstand him deliberately in order to post their "progressive" complaints.

The “rich kids” qualifier came from his own tweet. I think it shows a big disconnect with how average the average potential-startup-entrepreneur is, and how privileged most successful ones are.

What percentage of potential start up founders don't have a 'safety net'?

I don’t live in the US, but some numbers from a quick search for ages ~18-35:

- average pay 35k - 78% of people live paycheck-to-paycheck (zero savings)

In other countries the situation can be a lot worse. Even excluding the 12% below the poverty line, the vast majority can not afford to leave their jobs even for a couple months without going homeless. Being able to experiment with business that has a 90% chance of failure, even for a short while, is out of reach for most people unless sacrifices much larger than “moving back in with parents” are made.

It should be possible to motivate people to be entrepreneurs without being insensitive to reality. “Rich kids” might be a stretch, but hyperbole is an effective form of communication.

He specifically says later in his replies that he's debunking "the meme that you have to be upper middle class to start a startup." But his chosen example is exactly that, three upper-middle-class kids (Harvard and RISD grads).

Paul said you don't have to be rich. Matthew responded as if he'd said that it's not beneficial to have a safety net. That's putting a statement in to his mouth that he did not make.

Anything more than a "fuck off" from PG was charitable.

The problem is that it gets read as a false dilemma.

Talking about rich people and saying "you don't have to be rich to..." is like walking into a room of black people and saying "You don't have to be white to...". Nobody there is going to think that you're talking about asians.

The statement doesn't really say anything except that 'being rich' is something that can come from some other non-rich state. It doesn't specify at what level you can be to reach that state. He could be implying that poverty is sufficient, or "middle-class" or that upper class CT is sufficient (and we don't even know if he thinks that means " rich").

It's just a complete non-statement that attempts to pander to an audience that has little choice but to misinterpret it or assume that he's stating the blindingly obvious.

I don't think it matters what we're defining as rich. We can be honest without being destructive. I feel like our culture is constantly telling people they can't do anything with their life if they don't have every box of privilege checked. It's terribly psychologically destructive. Life is a constant struggle,a real river of shit sometimes, but it's one in which our own actions are still the biggest determining factor in our long term outcomes.

Except not.

Life is obviously not an equally constant struggle for everyone.

Social mobility has been declining for years.

For any individual you can create a counterfactual to suggest that their choices are what created their outcome.

However it’s also unarguable that we are not all facing the same risk/reward choices.

And of course people who take on more risk are going to fail more often. And those without a safety net will end up worse off than where they started.

It wouldn’t be risk otherwise.

Yep, some things are a little bit harder than they might have been in the very recent past for some people, but overall life is better than it has ever been in the history of the world. Telling kids to stay in their lane because it's hard to do otherwise it's terrible leadership in my opinion.

Nobody is telling kids to stay in their lane, so that’s a straw man.

However some people are proving that they don’t understand the risks other people face, and recommending that they take them anyway.

Advising someone to take a risk that you don’t understand is not leadership.

Is high achievement possible for poor people or not? That's the only thing in question here. Arguing that it's harder for people who start off disadvantaged in some way is a tautology, and in context does nothing but discourage people. People don't need you to tell them about their risks, they live them every day. What they need is for people to shine a light on their opportunities. Because that's the part that's harder to see if they aren't in an environment where other people are succeeding.

You’re making a false distinction between risks and opportunities.

A startup is both a risk, and an opportunity.

If you incorrectly judge that risk, you have the potential to end up with fewer opportunities than before.

The poorer you are the worse the impact of this will be.

Therefore it is important for anyone, rich or poor, to have a good assessment of the risk of trying to launch a startup.

How are people who aren’t in an environment where people are succeeding supposed to accurately judge the risk of a startup when that information is not in their environment?

They clearly do need accurate information about the risks associated with startups.

It’s clearly true that it is harder for some people than others.

Arguing against this may be ‘encouraging’, but it’s also arguing against accurate risk assessment which is foolhardy in business.

If Paul Graham want to help poor people take risks, using this binary argument is not the way to go about it. He should use some of his resources to produce some realistic risk assessments so that people know what they are taking on.

Is there a rash of poor people destroying their lives by trying and failing to build a startup? I don't see any. Worst case scenario seems to be they fail and get a regular job with the new skills they built while creating the startup.

I'm curious to know what risks involved in creating an startup the average person in the projects would be incapable of seeing on their own.

If your worst case scenario is that you fail and get a regular job with a bunch of new skills, then you don’t understand much about being poor.

For what it’s worth I strongly believe that entrepreneurship should be encouraged.

I just don’t believe the way to do it is silence discussion about the factors that make it harder for people who have fewer resources.

I think the response was reading more into the meaning behind what pg said than the actual words he used. This makes sense to a degree, since what pg actually said makes little sense unless you read more into it. When people say startups are for rich kids, they probably don't mean you _have_ to be rich to succeed in startups, since there are plenty of examples to the contrary. What they mean is that your chances of success are significantly higher when you already have means.

So pg arguing that startups aren't for rich kids probably isn't just a claim that you don't need to be rich to start a startup, because that would be a response to a claim no one is making. I think this is why it's reasonable (maybe incorrect, but reasonable) for some people to infer that pg is trying to discredit the underlying notion actually meant by such claims as he referenced, which is that building a successful startup is often less of a meritocracy than we'd like to believe.

Of course we could argue all day about the nuances of each argument, and what was said versus what was meant. But we all know this is the problem with any claim made on Twitter; it invites inference, since abbreviated excerpts don't allow for proper context or dialogue.

Graham said you don't have to have a certain class background, and then cited the example of three people with that background. Read the entire exchange. He's talking specifically about upper middle class kids—his words.

Having a safety net is what people mean when they say you have to be rich to found a startup. If you have a place you can always go if things go south, then you are "rich", even if you personally struggle to pay rent on a regular basis.

I was poor in college like a lot of people, but I had a stable family I could rely on. I knew people who didn't have that, and they had to make very different decisions than I did. I didn't have much money in my bank account, but I was rich compared to many of my peers. No matter how badly things went for me, there was no scenario that would have left me homeless or hungry.

If PG's only point is "you don't literally need a six-figure salary to found a startup" then he's arguing against a strawman.

I've had this argument with various people many times.

Until your, and your offspring's, survival as a living human revolves around working 16 hour days to barely hold it together... it's almost impossible to understand.

Poor isn't having 2 loving parents with stable jobs, growing up in a middle-class neighborhood and going to college on your parent's dime/credit.

Only a billionaire can begin to think of that situation as "poor". If that person fails then they just go home and live with their parents, that supported them through adolescence, without any major repercussions.

That situation isn't going to happen, except for extraordinary anomolies, for a person that possibly manages to finish high school with siblings in tow, no parents and already holding down 1+ jobs. This is an extreme example, but it presents the issue further.

"Poor" comes in many flavours: monetary, social, responsibilities, safety, time etc...

Once you're poor in any two areas it becomes life threatening to take risks.

No money? No family/friends? Then taking a risk isn't even possible.

No money? Responsibilities (relatives to care for)? Then you have no time.

Responsibilities? No safety net? Now you're not risking your own welfare, but the welfare of those that you care for.

No time? This is a single limiting factor alone. Yes, there are people with very little to no time, where their ability to spend their time is directly proportional to their survival.

There's even rich people that are poor in multiple areas, which disallows them from ethically taking risks. If you're sitting on a cool $100k beyond what _you_ need a year, but you're also supporting an extended immigrant family then it's irresponsible to go throwing money into a high-risk startup. It might not even be the right thing to do for your bloodline, instead opting to provide a stable life so your offspring can take risks.

I got to grow up very poor, and middle-class and now live upper-middle-class. I only made it here because of grandparents that sacrificed to allow my parents to eventually succeed (big time). Even with that safety net, they had almost zero time. I know my father had big dreams, but he had to spend 12 hours a day working/travel to make sure his kids had a chance. Mother had health issues, which complicated things even further.

As an adult I spent many years working with children in poverse circumstances, and _even as children_ they lacked resources to get an education. No time, no access to resources, often with family responsibilities, sometimes abuse, etc... Carry that on to adulthood and now you have to support yourself. Where's ability to dump a few grand into a shot in the dark?

Anyway, tldr; being poor is unfathomable until you're poor.

Totally agree. I have great ideas of things to work on, but I'm essentially a single income household (my wife is in grad school, and her part time pay barely covers her education and school). I can't quit my job and work on a dream venture, who will pay for my wife's upcoming childbirth and related expenses? Who will ensure we can still make payments on our home and food?

Living with parents is definitely a safety net. If you have dependants, you can't afford to take risks.

This may come off rude, but I certainly don't mean it to be, but you have a choice to make. It sounds like you're chosing to have a kid and your wife go to school. If you want to do the startup, skip the kids, have your wife work and support you while you do the startup. Not everyone can have everything.

So the rich kids get to have their startup and kids. And that definitely tilts the balance for a lot of people.

Here's a little tip: The wife and the kid are far more enriching than anything else you will do in life. So don't jeopardize them.

Be that as it may, having no money for decent life is sure as hell way to lose your wife and your kid and is happening far far more then the opposite.

Maybe I'm inferring the wrong thing, but are you suggesting that creating a startup is more likely to provide the money you need to support a family?

It's not rude but it does miss the point, entirely, and is a little condescending as a result.

You don't have to quit your job.

What is the product/service you want to develop? Do you have a defined potential customer (friend/family)?

It's something you can create putting 1-2 hours per day?

What is the minimum amount of work you need to put in to go and show it to someone (even if it is a mockup)

How many customers do you need to break even?

You can do ALL of this and more without quitting your job.

Completely agree! It is certainly hard motivating to do the work 1-2 hours at a time, but that's how I've been trying to approach it. Unfortunately some things like Unity are not great tools to learn at this pace.

I'm hoping to save enough money to hire a student or novice to get me started... Most of my issues are with complete unfamiliarity with the system... I have 15 years of mostly procedural scripting, not much for game development... But I can quickly pick up code from examples...... Just not many people willing to share source code, especially not in my direction of gameplay (which will be a game closer to solitaire in action mechanics, rather than traditional 2D games).

I've debated some 2D games, I even bought 2 frameworks for 2D games, but everyone recommends using something like Unity for production quality games.

This is a kind of No True Scotsman fallacy. Anyone that is successful was 'advantaged' because her family was rich, or she had two parents, or she had a parent, or she was born in America, or she was born with the right number of chromosomes... The whole conversation strikes me as just snarky and reductive. I don't see the point. Why not try to promote a conversation to lift people up and empower them rather than writing off the hard work and perseverance of others?

Well, yes, that's the conversation of intersectionality. It's important to recognize that the 'lone genius' narrative is largely false in order to have the discussion that empowerment is necessary in the first place. Otherwise the overarching narrative may be that people who suceed do so purely under their own power and therefore there is no systematic mistreatment to address (which perpetuates systematic mistreatment).

It's true that a wide variety of things contribute to someone's success, and many of them are outside of their power. Being able to acknowledge this can be taken to the extreme, but all of your statements are entirely valid assessments to make that have real effects on how realistically difficult a task may have been- or if the task was possible at all.

> Anyone that is successful was 'advantaged'

> Why not try to promote a conversation to lift people up and empower them rather than writing off the hard work and perseverance of others?

I think these two can live together - if you succeed, there was something that allowed that. Whether it was privilege, whether it was luck, or timing, or the right application of hard work and a blend of them all.

It's important to recognise what advantages are best leveraged for success, and then we can optimise to ensure most people have access to it.

In the argument in question, what advantage did Airbnb's founders have that allowed them to take that risk? How did they get the flat they were struggling to pay for in the first place for example? Why did they not skip rent and have to work 3 part time retail shifts to cover it like large swathes of workers in a similar boat.

Identifying privilege is an important piece of the puzzle - noone succeeds solely by hard work alone (otherwise all coal miners would be millionaires, and 996ers would be everywhere), so if we can spot the factors that successful people leverage, we can support others to get there (whether that's better education, cheaper housing, familial support etc...).

I think it's an important conversation to have. What if the story of success is a complex sum of contributing factors but it turns out, certain factors have significantly higher weights than the others. If you don't explore all of the cases, you may perpetuate a narrative that does many a disservice by promoting factors that don't empower but ultimately suppress.

Many may think their chosen set of contributing factors will make them successful and it turns out, those factors might not be all that useful. By ignoring that information and falsely giving equal weight to all factors, you might empower them down a path far more likely of failure than of success. That path could be a good portion of their lives so I think stepping on a few toes in conversation is well worth trying to resolve those problems instead of only speaking in the positive.

I mean if the person is living in Scotland and has a Scottish accent and is wearing a kilt they might be Scottish.

Or, more relevant, if someone is in the dominant social and ethnic group in the richest country in the world and raised in a dual-income white collar family with a degree from an absolutely top-flight internationally recognized college where they met their co-founder, they probably don't fit any reasonable definition of poor.

Typical tech industry nonsense. People stuck in a job because they need the health insurance? People saddled with massive debt because you’ll have a hard time getting hired to manage a McDonald’s without a college degree? Rent increases eating up disposable income? Meh. But being told by some rando on Twitter that you need a safety net to take a risk on a startup? “Incredibly dangerous”! Because if some people who might start a startup instead choose a conventional career, I guess the world will end.

Yeah, Silicon Valley is pretty much a "Cult of Money" now. Maybe I'm way off base here but it doesn't seem like the mentality of creating products and services which genuinely help people while at the same time providing a living for, say, 100 families for the next 20 years is a thing there.

Slightly iterating on and pumping old ideas in social media with the goal of conjuring billion dollar valuations for the next ad platform seems to be the norm.

>“Incredibly dangerous”!

Totally agree about how inane and insufferably out of touch this complaint is. As if today's now-totally-normalized tech company valuations, openly built on nothing more than cash bonfires, aren't dangerous at all.

It's a nice mini soap opera but the core is that actually they agree but have a different definition of "rich kids".

I agree, and would go a step further to say that the response to PG is woefully exaggerated. The fate of the poor is truly deplorable in the US, but that doesn't mean that every conversation about risk, opportunity, and entrepreneurship has to rise to the defense of the disadvantaged.

PG is saying you don't have to be rich to launch a successful startup. By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich. I would contend this is at least 90th-percentile rich for US households.

His critics suggested he be sensitive to those who literally have no safety net, and could not move back in with their parents if it all came crashing down—I would contend this is at most 40th-percentile "rich" for US households.

Can we cut the guy some slack and let him speak to the 50+% of people in the middle? Honestly, that's undoubtedly where the bulk of his target audience resides—people who'd like to launch a startup but worry that they're not sufficiently privileged to do it.

> By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich.

The example given literally attended one of the top private art school in the world. The reason people are reacting is likely because of this often damaging non-differentiation of being temporarily and perpetually poor. Many people can't even afford to move to a city these days, let alone start a startup. And if they do it might have negative consequences for years and years.

Fair point, I stand corrected.

> Many people can't even afford to move to a city these days,

Or get pushed further away, as the middle class can't even afford it and they too have to move outwards, and have to commute in.

Which is a problem in itself: It is getting difficult to appreciate just how rich or poor you are!

- The income gap is growing, creating many more levels of wealth, each considerably richer/poorer than the next.

- A lot of wealth is kinda in the background, like the real estate someone's parents might have that isn't discussed, but will probably be inherited someday?

- Products and services cater to the different wealth tiers and create separation and filter bubbles.

This results in very weathy people innocently betraying their ignorance in various public statements, like

https://www.samefacts.com/2012/01/everything-else/mitt-romne...

https://www.wbur.org/onlyagame/2016/11/18/steve-young-usfl-4...

I also wonder what the consensus definition of "start-up" is. Does it only mean a tech product with high scalability and potential to raise b/millions? What about the landscaper, mechanic, or plumber who is able to scale up a trade, get repeat customers and hire employees? Or do they even factor in a discussion like this

I think if Paul G. came out a little less strong at the beginning - without 'bullshit' - this wouldn't be an issue.

On the other hand there is the habit nowadays of having to guard and specify ones statements zealously in order not to get called out for something a reasonably lenient reading would allow, but calling something 'bullshit' probably doesn't get you into that other hand category.

Yeah that seemed way over the top

Agreed. I'm guessing they have some personal beef/history. Hence "I would normally..."

yeah, hmm I got downvoted, I should probably have started out with my own 'I would normally...'

Idk, it seems to me that PG is just wrong about this. Not categorically and in every single instance, but on the whole. It's like saying women are physically stronger than men, and pointing to some woman who is clearly an outlier. You could word it less strongly and say that some women are stronger than some men. But then what would be your point?

I read the two as "You don't need to be rich to be a founder" and "it's very beneficial to be rich to be a founder".

This would be more analogous to "you don't need to be a man to be strong", rather than "women are stronger than men".

I think PG's concern is if it's understood "you need to be rich to be a founder", then if you're not rich, you think it won't be possible to be a founder.

He's saying more something along the lines of "women can be elite performers too" (and that being genetically/on average less strong shouldn't stop them from trying) - which isn't entirely wrong, especially since we're already talking about like 0.01% of the population (successful entrepreneurs / elite sports(wo)men).

Don't get blinded by the analogy. There's an important difference between it and the problem we're discussing: We can't actually change the fact that woman generally are not as strong as men. We can however as a society change the fact that many people don't have a safety net. I appreciate that Paul G's intended meaning was different, but it's kind of hard not to interpret what he wrote, as no, we don't actually have to change society [which has worked well for me], poor or underprivileged people just have to try harder.

> it's kind of hard not to interpret what he wrote, as no, we don't actually have to change society [which has worked well for me], poor or underprivileged people just have to try harder.

Spot on. He could have said "hey, maybe you're right, privileged is a factor, and I was only thinking in terms of wealth." Instead he was defensive.

Public discourse is a great influencer, provided you have the ability to be influenced. If you don't, then you carve a rough path for yourself, whether you're small time or big time.

You’re just painting your own bias over his words. How about interpreting what he said literally i.e. “even poor people can start businesses” instead of misinterpreting him as “against social nets”?

You’re just painting your own bias over his words

Yes, I agree. But I also think I acknowledged that, when I wrote I appreciate that Paul G's intended meaning was different.

How about _interpreting_ what he said _literally_...

Hmm...

instead of misinterpreting him as “against social nets”

Again, I think I was quite clear about the distinction between Paul G. (probably) meant, and how I (subjectively) interpret it. My point is not that Paul G is a bad person. I just think he is being somewhat obtuse and insensitive. He is making an argument against a position that nobody is defending, namely that one can't or shouldn't take risk if one is poor. The discussion that sensible people were having before, was about whether one's level of privilege might have something to do with one's willingness to take risk.

If you take him literally, I.e. without the social context, then his statements is essentially meaningless.

All it would take is one single example of a poor person being successful while all of the others fail and die in poverty to prove him right.

His example is part of the context, and the fact that his example was not in fact of a poor person demonstrates that he isn’t being responsible for what he says, and deserves the criticism he is receiving.

> I think if Paul G. came out a little less strong at the beginning - without 'bullshit' - this wouldn't be an issue.

The much more interesting remark is the following part:

"...because it discourages people who aren't from trying it"

This is the soil he makes a living from, eventually. Cui bono, essentially.

Conveniently I just heard this on a podcast, and it's called "escalation of commitment." Basically, people hate to be wrong in public, and the more public person you are, the harder it gets. So instead of admitting a fault, they double-down on what's obviously a false statement.

Details from the podcast -> https://smashnotes.com/p/this-is-your-life-in-silicon-valley...

Easier, sure. Not having a backstop means failure == death. Which isn't for the faint of heart, but that's the story of almost every Americans lineage at some point in the past. It takes a bit of luck, but rarely is it more luck than nose to the grindstone effort.

My anecdotes:

I have one great-great-grandfather who thought he had an office job in British Columbia, but by the time he sailed from England and crossed the continent the company had folded. But his family was already on their way, so he started working every mining job he could, and invested every spare pence he had into real estate. His sons did the same.

My paternal great-grandfather came over from Italy, got harassed out of NYC by the Irish, bought a small farm in Oklahoma, and his children did the same.

That seems overly dramatic. Not everybody who loses their job dies. Most people seem to not die in that situation, actually.

Failing at your startup would at most be equal to losing your job. You won't die just because of that.

Even if you end up in debt, there are insolvency laws. You can just go flipping burgers for a couple of years and be good.

Of course it's recoverable. If you're under 35 you can join the miliary as well. There are options. Not glamorous, but survivable. Better to have tried and failed than to never have tried.

But when you're an Italian who can't speak English or out west in the late 1800s, it was a case of with your shield or on it.

A poor person betting everything on their startup is definitely good for pg - it increases the pool of people whose work he can profit from.

It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.

A poor person betting everything... a poor person usually doesn't have much, besides the time and dedication.

GP's point of view: A poor person can have a small safety net that separates him from absolute poverty and homelessness. If they start their own business, fail, and end up without enough money to pay for the rent, the consequences could be terrible. They also have a finite time to save enough for a descent retirement. Spending several years on a startup with a high fail rate can dramatically reduce the quality of their old days.

There’s a big difference between poor and zero, and a poor person betting on a startup can hit zero really quick.

At zero, you cannot pay rent and are likely to get evicted. Once evicted you are potentially NFA, which means you can’t get a bank card posted to you if you have problems with your card. How can you pay for food? Where can you use the bathroom? What about the electricity bill before you got evicted? The electricity bill that was late and now unpaid that’s ruining your credit score? Now you have bad credit and will find it harder getting a flat.

The above sentences where not chronologically cohesive because there’s so much working against the poor and those at zero, and I’m on mobile, I couldn’t take an hour to type it all out.

How on earth do you expect a poor person to do a startup, when they can barely feed themselves and keep a roof over their head?

Same way my great-grandfather did it. He preferred the risks associated with going to America over the known outcome of staying in his little village.

Most of immigration happened during high risk dangerous and unstable times. Most immigrants were not bored of super safe and stable life where they came from. They were running away, because original place was dangerous.

So then you're comparing the know risks of war and famine to the unknown risks in the target country. Which for a lot of American history has been war and crop failure.

Comparing your great grandfather’s situation to a poor person today doesn’t make sense to me.

Their choices, consequences, and access to information are vastly different.

There's less risk today. If your company fails, you're in debt, but you probably won't die in a ditch.

So why not jump feet first into what you want to do? To quote the eminent Shia LeBouf "It's you're life, don't let your dreams be dreams. Just do it"

Its easy to say platitudes from rich people.

When there's little/no social net when you fail, failure is disastrous.

I'm diabetic. I'm nearly chained to a company with a decent medical plan, since our "wonderful" country has little to impetus to fix medicine. So failing means 'not able to go to the doctor and not afford my drugs'.

Failure also means 'not affording rent'.

Failure also means being unemployed, and no way to get unemployment.

So where being a business owner means it could free my way out of poverty, the %success rate for me absolutely must be balanced with the failure rate and the ramifications aforementioned.

Mr LaBeouf comes from a broken home. His father has struggled with drugs and alcohol to self medicate his Vietnam War PTSD. He started performing at age 10, pretended to be his own manager to get signed with an agency. He's exactly the "live without a net" kind of guy we're talking about.

So if we don't struggle like him, and make multiple breaks (read: luck), and get into that career, we don't deserve to have basic needs met?

Rags to riches (read:Horatio Alger) stories should absolutely not be the basis of social assistance. If you want to see what happens to those that don't win, look no further than the "Smoke N Lotto" store at all whom lose the lottery every day.

But also free land, and a reliable market for the goods produced on it.

Heathcare that was provided by employer before and house in low crime area, say.

There is opportunity cost (of a stable industry job) that the educated but poor person is foregoing.

Note that by not foregoing that opportunity cost the poor person can save up enough of a safety net for his children to take a risk.

Generations are important. A poor person with a family is best not taking risks. However they can bring up enough of a safety net for their children.

A poor person not betting on anything is bound to stay poor. Your point is?

Isn't that oversimplifying the whole social issue of why people are poor, stay poor or become poor?

Strawman. I was answering the previous point: betting is probably a reasonable choice when you have not much to begin with. I would not make a 2 lines comment to explain poverty as a whole.

No. Betting is a reasonable choice when you, like a VC can bet on a ton of options and still have cash left for immediate problems. All other times, betting is playing your luck and bound to fail.

First, I don't want to read to much into the OP regarding betting. Because there is something to it. Without risks no rewards. Yet what constitutes a risk and a reward differ significantly based on your resources.

That being said, risking some of your resources, money, time, whatever, to get out of poverty is reasonable. Betting on a start-up might not be. Simply because if it goes wrong instead of rewards there might be debt and even worse poverty.

>Without risks no rewards.

This is a fallacy. The vast majority of people are rewarded for minimizing risk, not taking it. People justify extra risk for disproportionate reward, not reward in general. You have to take risks if you want relatively unbounded returns. Getting out of poverty does not require that at all.

When you're in poverty, getting out of poverty is about risking, but not in a lottery kind of way you're talking about. It's about risking to get away with not spending the money on some immediate emergency and holding it for some bigger emergency in the future.

To you it may seem there is little difference between being poor and being financially wiped out. To the person experiencing it, the difference is huge. Among other things, it can mean the difference between struggling to make rent, and not being able to.

> A poor person not betting on anything is bound to stay poor. Your point is?

And the poor know this. And yet, they still have literally everything to lose if they fail. They don't want to be poor, but being poor is better than being with absolutely nothing.

Some bets are safer than others. A poor person betting everything had better have a sure bet that will pay off quickly. Not many of these exist.

A poor person is safest betting on a stable (if low paying) job and ensuring he keeps it. Taking on a few side projects on the weekend can earn some extra cash, but there comes a time you either need to bet on growing that side business, or not: if you bet on it you better have enough contacts to grow it to a real job quickly, if not you have to start refusing work for the side job - the worst thing you could do is to fall asleep and get fired from the day job while the side job isn't paying enough to live on.

Sure, PG is obviously only driven by his desire to exploit poor people by telling them lies about startups. How could it be any other way. He is rich, so that's what he does, right? Exploiting poor people, that's what rich people do to fill their days.

It is probably not actually good for PG, because the majority of such people will fail and end up destitute, casting bad publicity (rightly or wrongly, doesn’t matter) on whatever start-up churner generated that outcome.

Additionally, founders who already come from wealth or have political connections, etc., are probably much more likely to succees in the financial senses that PG wants.

The only limited sense in which it’s good for PG is if there is a lottery winner he can claim credit for, a rags-to-riches story to whip up blind support for some ludicrous tech millionaire idealism.

Not many people care about startup failures, except high profile ones.

Journalists looking to (justifiably or unjustifiably) undermine start-up incubators or VC firms easily could care.

You could just as lazily & dismissively say nobody cares about failed taxi drivers, and yet there it is on the front page of the most popular Western newspaper in the world.

If there’s an angle to make it a story, people will care. The angle to make it a story about how start-up programs are basically scams exploiting lottery biases of people not in a life position to sustain that risk is very easy, straightforward & compelling to a wide audience.

And hence it’s probably bad for PG & others if people without safety nets are going bust on failed start-ups.

A close cousin of this topic would be the background of new full professors in major universities. Ph.D. is risky, especially considering the slim chance of getting the full professorship and its tremendous opportunity cost. The competition to become a full professor in a major institution is fierce and also it takes longer and longer as the competition heats up. The path is quite comparable to that of the unicorn founders in many ways.

I'd wonder how much study has been done around the socioeconomic backgrounds of those prominent professors. I'd also be interested how those backgrounds have been shifted as time goes by. It would be also interesting if not much research has been done about it when some of them are supposed to do such a thing.

A story where a billionaire downplays the problems created by wealth inequality. How novel.

Silly Twitter fight aside, the key piece of advice that us regular non-rich folk should take away is this:

"Your first goal after university should be to build yourself a safety net."

Once you have $10k in the bank, you can start taking risks just like those privileged kids that are starting all the startups with their unfair advantages.

Best of all for us, we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.

In the United States, people who don't have significant financial support from their parents graduate from university with a great deal of debt.

Indeed. But those are the same people getting those $150k entry-level salaries from companies in the Bay Area.

Even after paying down $50k/year in debt one would be hard pressed to spend the rest of that without saving anything.

You spend your college years sharing a house with 5 roommates, driving an $800 car and living on Costco pallets of canned chili. Keep that up for another few years after school while pulling down a dev salary and you'll be out of debt reasonably fast.

Sadly, most people don't do that, and match their choice of new apartment and new car to exactly equal their new income. That's a shame, but it's also why I gave the advice I did above.

It's probably not the best practice to base arguments on outliers or anomalies. Yes, these numbers may be true for the Bay Area but almost certainly not the norm. The argument unravels quickly if applied to other markets.

Some people have family to support. Eating all the canned chili in the world is not going to bring down your parents' medical bills.

Your advice may work well for you, which is fine, but bakes in a lot of assumptions about social class, which is what we were just trying to avoid. To be young and debt-free and responsibility-free coming out of university is not everyone's lot.

I started at $63k a year. My student loan payments were $1,200 a month. Apartments in my area started at $1,500 a month. Insurance is important to me for my health, and 401k for retirement. Would be nice if that cheap car I got would stop breaking down and failing emissions inspections... Gee, would be nice to not wake up on the floor because your crappy air mattress lost all the air in it during the night. There's no TV to watch because I didn't have one, so the list of basic things to buy is growing.

The reality is, not everyone lives in California. Entry level salaries have certainly increased since I graduated, but they're still not $100k+. Advanced payments are hard to make when you're just getting started and have nothing to stand on.

I'm not arguing that it's not possible, I'm only arguing that your imagination of how much money the average jr developer has to splash is not realistic.

This is exactly faulty set of assumptions being challenged here.

Not everyone gets that $150K offer, and that's increasingly true the further you are from a healthy white middle-class male.

Not everyone wants to move to the Bay Area and unless you're a friendless orphan the further that move is, the more travel expenses you're taking on.

Not everyone has family who are completely self-sufficient and will never need help. (Speaking personally from the “parents have never helped with rent; have helped parents with rent” club)

Not everyone can find 5 roommates they're comfortable with, an $800 car at all much less one that runs perfectly with no maintenance costs as you're assuming. In reality, most people buy newer cars because it's better to have a fixed bill than deal with the missed work and random thousand-dollar service bills which you tend to get with $800 cars.

Not everyone's health is compatible with living on canned chili and even if you don't have any long-term issues, you'll probably want to get some basic nutrition before you develop some.

If this actually worked for you, great. All we're saying is that you should be less quick to forget that other people had it harder. I think that's especially true because when I think about the people who over-spent, they were never starting poor — they grew up comfortable and never had to worry about true disaster.

That is an absurdly broad statement, and incorrect as stated. This is the case for many, but it is far from a guarantee.

> we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.

This is shockingly out of touch with reality, just like PG's original tweet.

There are plenty of people with CS degrees who can't find a job, and plenty more who have jobs that barely pay enough to cover their expenses.

Spend some time reading through something like the CSCareerQuestions subreddit if you want to get a glimpse of life outside your bubble.

> There are plenty of people with CS degrees who can't find a job, and plenty more who have jobs that barely pay enough to cover their expenses.

If anything, this comment is out of touch with reality as it stands for most software developers in the US.

The median salary for a software developer in the US is over $100k. In Silicon Valley MSAs it's even higher of course.

The median income for similar careers like computer programmer is also very high even if it's less than $100k and those careers cover far fewer people anyway.

Yeah, not really. It all depends on where you live. I doubt most developers here in Eastern Europe make the $100k you speak off.

I think that a more charitable interpretation of my comment would be that it's referring to the US considering the currency, the reference to MSAs, and the demographics of HN.

I've edited my comment to clarify.

Average starting salary for CS undergrads today is $57,000. He did say "entry level dev gig".

If you live alone in a major city, have student loans, and don't have great healthcare benefits from your employer, you'd be lucky to save much of anything on that salary. Banking $10k is a pipe dream.

At UMD, a good but normal state school, that figure is a little above $85k.

I would be surprised if the $57k figure was accurate for people living in major cities.

I would also be surprised if the average CS graduate is competitive enough for roles in major cities. The most desirable roles are only going to be realistic for the most qualified candidates.

> At UMD, a good but normal state school, that figure is a little above $85k.

That is probably inflated by many grads getting jobs in NoVa, which is not exactly cheap (unless you want a hellish commute).

UMD is ranked in the top 50 for CS[1] (out of thousands). It is a top-tier CS program, not a normal one.

[1] https://www.niche.com/colleges/search/best-colleges-for-comp...

I made $70k / year for the past 7 years (finally got a raise at the start of this year), so ages 23 - 30. My work health insurance covered me, but not my wife, for most of that. We had our first daughter a week after I turned 27 and twins a week after I turned 29.

MY wife worked at a coffee shop until we had our daughter. Making around $20k / year.

In that time, we grew our net worth to $250k.

That's not a lot by some standards, but it is a hell of a lot more than most people our age have. Even people in similar income brackets as us. All it takes is living below your means.

The median salary for a software developer is over $100k.

In the US, or certain parts of the US, perhaps. In most of the world, software developers often don't make that much as employees even at the peak of their career. Maybe you'd reach it in a big city like London, as a very senior developer, working for a big company, but even then it would be exceptional. For most developers not in a US tech hub, getting to that income level or beyond is going to require going independent at some point.

$10k is hardly a safety net.

if you're living in a tent eating rice and beans and getting your wifi from google fi 10k will last a very long time. I'm not being facetious, a friend went this route.

Yeah I was going to say 10k is a trip to ER after a small accident.

Our terrible health insurance situation makes potential spending any given month very bumpy. $10k should be enough to keep a single, frugal person in an OK situation for a good chunk of a year, at least, but could just as well be blown inside 24hrs by one slip on some ice or any number of other ER-worthy problems, and isn't enough to cover a healthcare plan that removes much of that uncertainty for any length of time while also paying rent and buying food.

Under what conditions?

Depends where you live? Hard to say what diff people in diff situations and in diff places need and/or consider a safety net.

$10k barely covers the premiums + deductible for a health insurance plan on the individual market, or god forbid, COBRA. A safety net should cover expenses if you lose your job, which means losing your health insurance.

You seem to assume US.

Feel free to adjust your numbers if you like. Personally, I have a hard time spending that much in a year.

The idea, though, is to save up enough that you don't need to think about losing your job as an existential threat. That's an easily attainable goal for a software guy, and it puts you in a nice position in a lot of ways.

You are defining a "safety net" that tacitly assumes a privileged middle class life, which makes the problem artificially simple.

For someone that genuinely comes from an impoverished background, creating a safety net can be substantially more complicated because it involves considerably more than just having a bit of money saved. Many poor people have no family whatsoever in any meaningful sense, which makes building a "safety net" more complicated -- there is more to a safety net than money. Most poor people have the social class equivalent of "technical debt" which requires a lot of time and money to eliminate, which is something most people from a middle class background are oblivious to because they've never had to worry about it.

Poor people are not middle class people without money. There is a ton of other baggage correlated with being poor that they have to contend with.

He is referring to people with CS degrees, not lower class people with no life skills. If you made it through college and got a degree, you're basically on track to be middle class.

It's certainly better than 0

Make that $100k+. It sounds like a lot, but it's a maximum of 2 years savings for someone on a low risk, high pay track. It's not the end of the world to be 2 years "behind".

I believe that this is missing a lot of nuances. Just because you have a safety net doesn’t automatically make you more risk-averse.

Going to a relatively poor school where teachers were literally getting beat up and then heading to Berkeley it was sort of a shock psychological. Furthermore, having to pay myself through college with no social safety net was one thing but the feelings of being an outsider, having constant imposter syndrome to having a good job, and feeling somewhat removed from other founders in that regard sticks with you.

It is also hard to really think about startup and yourself when you may be the lifeline for your parents if they need money. A safe job does provides that. This may be the biggest challenge I had to overcome to going on my own. When a person from a comfortable upbringing decides to strike on their own they are really not beholden to others, someone who is poorer has a whole social net that they may have to consider before going out. Furthermore, try getting a loan with no one else underwriting you, it is next to impossible.

So the answer is, no, having $10k in the bank doesn’t automatically make you more likely to start a company because there is both a psychological and sociological aspect of poverty that lingers long after one has left it.

How do countries with good social safety nets factor in here? In EU people are definitely not nearly as likely to start their own business as in the US, and many people that would otherwise be labelled 'jobless' (or on the dole) are 'self employed' instead.

In many EU countries, the safety net is much better if you had a job than if you had your own company. Eg in NL, if you get fired after working more than x months, you get 70% of your last salary for max 2 years while you can go find a job. But if your company goes to shit, all you can get is "bijstand" which is much lower benefits and you have to sell all your assets (eg if you owned a house, you have to sell it and move to rent, even though that's usually more pricey than the mortgage, etc) before you get it. So if your company goes bust and you come from a middle class (or higher) background, you'll probably prefer to depend on your family for a bit while finding a job (or a freelance gig etc). But if you have nothing like that to depend on, then it means that starting a company is extremely risky (I'm not sure most Dutch Uber drivers realise this).

IMO if NL really want to encourage more entrepreneurship, and if they want do so in a way that matches our culture and values, then they should create the same safety net for entrepreneurs and employees. But lots of entrepreneurs are against this because ofc this safety net also means paying more taxes. I think that's stupid. I'd gladly take a 5% pay cut if it helps make my country more entrepreneurial, and me more safe. Plus, now I buy commercial accident insurance (pays out monthly if I can't work ever again), which would also be covered by said safety net, so in effect the cost difference would be smaller than 5%.

EDIT: I'm only just seeing who I'm replying to. I think you knew the above already so I must've misunderstood your question.

I read somewhere most businesses in US are started by immigrants. So only a person with means can immigrate to US, I guess even the people coming from India or China or Eastern Europe do have people back in home backing them financially or in other words they've enough financial moat to take risks through which they are able to jetset themsleves into new businesses.

I've this friend in Europe he's working on a startup idea once it's developed and become bit popular he plans to move it to states because of stronger private property rights and less taxes and better benefits for employers there and a bigger market.

So maybe a lot of people come to US to start a new businesses once they've some idea and implementation in their mind and enough resources to execute it.

Do remember that immigrants aren't usually trying to start the same kinds of businesses as the "natives", small businesses make a lot of sense if you want to be able to rely on yourself and not an employer who might not appreciate that you're just learning the language, and if you're willing to make use of the labour of your entire family rather than just a breadwinner.

If you're an immigrant there are small businesses that are closer to stable jobs and you can start immediately with your savings, whereas if you're a native the reason you'd start a business is because you're interested in that thing or you want to be an entrepreneur and grow that business into something bigger.

55% of billion dollar startups had an immigrant founder. It's not just mom & pop shops.

This is demonstrably untrue.

Looking at the official docs here: https://www.sba.gov/sites/default/files/advocacy/2018-Small-... for the US and here: https://researchbriefings.files.parliament.uk/documents/SN06... for the UK (both are PDFs)

In the USA for the first quarter of 2016, there were 240,000 new companies. So just million in a year, assuming that trend. Also, that is all companies, including those with no employees

in 2016 for the UK in the whole year, there fore 416,000 new businesses, all of which had at least one registered employee.

The USA, in 2016 only created twice as many companies compared to the UK.

Given the gulf between population _and_ economy, I would say the US is significantly underperforming compared to the UK

The UK and quite a few other places require gig economy operators to register as an independent business.

I don't think that applies to this stat, though; gig economy workers are required to register as self-employed for tax and NI purposes, but that's not the same thing as being a business, which I think in those stats requires one of VAT (turnover higher than a threshold of £85k) or PAYE (employing someone else).

A sole trader is not the same as a limited company.

The US number is only counting businesses with at least one employee (owners are not employees, even if they work day-to-day), and may only be counting businesses that incorporate, or are formed via articles of organization. The source is unclear. As someone else noted, the UK number also leaves out certain types of businesses. Therefore, I can't tell that this is actually comparing apples to apples.

I does factor in, it is somewhat hard to see because startups will always be marginal. In Sweden both Markus Persson (Minecraft) and Daniel Ek (Spotify) come from non-privileged background, with little university experience. When you see this in the US it is usually that someone got into a well known school first, with the contacts that bring.

Anyone who was born a citizen of Sweden is highly privileged on a global level. Compare with anyone from a developing country and it's easy to see all of the advantages that enabled those fortunes to be made.

that is due to a strong safety net

At least in Germany IMHO the biggest risk of ones own start-up is failure. While the social security network is rather strong, even if it used to be stronger, you can basically ruin your whole future career once potential employers perceive you as a failed entrepreneur. The reasons are many, but mostly cultural. And that is huge risk you take.

The state is actually encouraging people to start their own business out of unemployment with various programs and incentives. Not in the most efficient way or at a start-up scale but still.

My anecdote is from a Finnish perspective: First things first, some people make more money being unemployed than working (though for only short periods of times, to my knowledge max. couple months). This is related to entrepreneurship because owning a company, whether it makes any money or not, labels you to the workforce. This is problematic because it obliterates your unemployment aids. In some circumstances, this can be extended into your close family. Now, if you own a company, you (and in some cases your close family) do not get the same social safety net as others! Bad! This also extends (to the entrepreneur) to other class of social safety net, which is living aid. For entrepreneurs, the living aid is calculated from the (mandatory!) retirement account (which are a mess by itself, the public sector chooses private companies which handle this money, with no control of the individual to seize the money before government defined retirement age) contributions. If you have little to no contributions (e.g., your company makes little money and you rather pay yourself salary), you cannot get living aids. Further, taxes are higher. First, entrepreneurs pay 5% more taxes than the same bracket in income as an employee. Next, if your company becomes profitable, the system incentivizes you to increase your personal income hence the tax bracket, because otherwise, the company gets taxed 20% of the money left into the company.

The reality is much like pictured here https://imgur.com/a/o5MGARc for entrepreneurs. That is, in Finland, we do not need to have this Twitter discussion, because by default entrepreneurship is a viable option for the ones who can patch up the holes in the safety net that the government has removed.

> https://imgur.com/a/o5MGARc

The really bad part is that your spouse will lose most benefits if you start a business (because it's automatically considered to be a family business apparently).

Numbers for UK have been given earlier, but in 2017 France had 591k company creations, of which 349k are "classic" (not individual) companies. This would put both France and UK well over the US in per capita creation...

(https://www.insee.fr/fr/statistiques/3314444)

Actually the headline of this is the takeaway you should get from this story. People with safety nets are the ones who get to do startups. This is logical and how it should be. If you weren't born into a rich family, then make saving up your number 1 financial priority to build that nest egg for yourself. Even the kids from privileged families are mostly in that position because their parents made a series of good financial decisions in regards to savings.

For whatever it's worth, there was a recent episode of Econtalk in the guest discusses his work with those below the poverty line and how some communities have been successful in entrepreneurship: http://www.econtalk.org/extra/discovering-positive-deviants/

I don't know of a quantitative study and obviously the source is biased, but the guest came himself from a "no safety net" situation and now works with others in a similar situation, so his take is interesting even if one disagrees.

I like to think Swedens extensive social safety nets are a factor to the large number of startups here.

How does this large number compare to the US? Genuinely interested. Having lived in a few EU countries before moving to the US, I've always been under the impression that creating a startup in the US was way easier/more common.

Fuck the rich kids. And I'm not saying this as an insult. I mean it as "good for them". In terms that I'm 38 years old and I have enough maturity to know that:

1-Life isn't fair 2-Some people start the game 50 tiles ahead of you.

None of these reasons are going to stop me (a poor entrepreneur) to build the company I want to build.

I think PG's comment is idiotic, but I think he is very smart.

It's easy to take risks when there's little to lose.

If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.

What seems like "little to lose" to you is "everything" to a lot of people. Breaking even at lower middle class is still something you can lose.

> It's easy to take risks when there's little to lose.

> If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.

This, in no way whatsoever, resembles the conditions of the poor.

That's right. It doesn't.

It makes it easier to launch a startup if you've got a strong safety net, but not impossible.

I think the article misses the point, though. Look at Bill Gates-- he had rich parents, and so he started Microsoft. Which has gone on to make millionaires of lots of ordinary folks and continues to provide good jobs to many, many people today. It's a good system, it benefits a lot of people.

> “It’s hard to take risks if you don’t have a safety net”

Okay, here is a twist: How much do poor people spend on lottery/gambling activity? How much is that proportionally to their income?

From looking at small casinos, betting shops, lottery and online sites (sports) it seems that poor people are risk takers. One reason, in my opinion, is that they have little to lose. They also have really shitty lives and are looking for an escape.

If you were starting a startup alone in Bangladesh vs. starting solo with YC in SF. Building a remote-based startup that sell SaaS online for clients all over the world. Location of clients is everywhere.

Technically, the playing-field is equal. You start a C-Corp from Bangladesh and trade your business. But which one do you think will make it? Which one do you think will raise funding? Or succeed if both do not raise funds?

You live your life trying the optimize a problem. There is a number of steps that if you take, carefully, you'll become rich in some duration of time. You don't know these steps, so you keep searching. You know gradient descent. Life is like that, if you are moving successfully down, you are probably on the right track and so you keep moving on that direction.

However, you start stochastically on a random location and keep trying to find a path that leads somewhere. That's where YC comes in. They help you reduce the surface area of your search. You are less likely to land somewhere futile.

What poor people are missing is discovery of this surface area. It is a very complicated problem for them and they lack resources and education to optimize the problem.

They are hoping that this lottery ticket will help land them directly on the optimized spot. Their lack of understanding of why this doesn't work explain why they can't navigate the surface area.

Of course people have different risk appetites, including poor people.

The point isn't so much about "risk" per se, it's about whether or not there's a viable Plan B.

If I'm working two jobs to barely keep a roof over my head and play the lotto and lose, I'm still keeping a roof over my head (by working two jobs). The odds are long, but the cost of failure is low.

If, on the other hand, I have the Best Startup Idea Ever (and all the necessary skills to make it a reality) then I will still be unable to pursue it. Sure, I'm like 80% certain it's going to be a huge success, but in the 20% case I'm fuuuuuuuuucked so taking a swing at it is a nonstarter.

Here is a crazy thought I had. If you're poor and save a bit money you get less aid. So saving is meaningless. You are stuck in a feedback loop. But if you buy lottery tickets as a way of "savings", you either lose and get full aid, or you win big to achieve poverty escape velocity.

I'm not saying this is true for all poor people, but I wonder if it could be true for some.

The world isn’t fair. Pontificating about how the world isn’t fair is useless. It’s a waste of your time.

Both Paul and Matthew would be more helpful by providing advice to effectively deal with one’s situation in order to found a company. That would be valuable, instead of engaging in adversity olympics which is what most of Twitter seems to be nowadays.

It's not taking a risk if you have a safety net. That is the point of the safety net, to eliminate the risk.

I don't think anyone else should pay for a startup's safety net. Doing a startup requires calculated risk. It may or may not work. Whoever wants to attempt need to sit down and calculate the costs and the risks and take precautions. This is not the same as someone becoming unemployed because they got laid off, and it's not the same as providing welfare to people in poverty. Startups by their nature are risky and no one else should have to pay for a safety net in case it doesn't work out. The market does well weeding out the bad ideas and companies that aren't actually solving any problems. Creating a safety net might just contribute to perpetual "startupdom" (with everyone else paying for it), when in reality certain ideas and efforts need to just die off.

He said hard, not impossible. You're playing with a higher difficulty level, because you need to spend time and effort and divert your focus on mitigating the worst case scenarios instead, and market timing is one of the big factors in getting it right.

So why aren't highly socialized countries with tons of safety nets meccas of innovation?

exactly, its a different matter when that risk isnt "oh ill lose a bit of my buffer" but "if this doesnt work im on the streets"

you may have a fantastic idea but if youre working for min wage theres a good chance youre little more than one missed pay cheque from being in serious trouble

but those from privilidged backgrounds see it differently, many of them have never been "broke" and i mean truly broke so i guess they simply dont understand what theyre saying, theyve never taken an actual risk in their lives

If you are in india the emotional blackmail and the pressure to marry before 30 is a huge hindrance. In india a graduate has no real world knowledge when he gets out of college. It takes about 6 to 8 years to get the confidence in coding and creating something. But by the time the marriage is done and no way to take risk. To be honest the salary earned by women is like an additional income and never considered primary income in 99 percent marriages.

Experiencing first hand. I hope at this age, I should have saved enough. But, single income and mortgage means better be realistic. I do take risk though, working for startup on cutting edge tech, than for a large company. Basically insurance for future job security. The risk I cannot think of is starting my own business.

Related - it is impossible to take risks if you or family have crippling health issues.

And when you have both, why even bother to take major risks.

I had to borrow money from my mom to pay my taxes

I would agree that in some US locations the taxes are a bit too high...

or that lump sum taxes are somewhat perverse (see PAYE in the UK)

Is anyone keeping statistics on YC applications?

What happens to people who don't get funded (by YC or otherwise)? What happens to those who do get funded but then fail? What proportion succeed, for various definitions of success?

This a common debate point for basic income, providing the safety net for entrepreneurs, startups, artists, etc. Really was expecting a mention but it seems to have shifted toward boring arguments about privilege.

The original twitter post, twitter responses, and responses here made me muse about how the definition of 'start-up' has changed in the last few decades. Ennui ensued.

PG and Matthew are talking past each other here.

PG is defining "rich kids" as the spawn on the 1% and is arguing that these kids don't have any significant advantages over more normal people when it comes to accessing funding from VCs etc and that such a belief is harmful.

Basically that there is a point of diminishing returns to being "rich" and that it's probably lower than you think.

Matthew is arguing that being in crushing poverty is probably a barrier to building a successful startup.

Both views can be basically correct.

Well, that's not really a risk then, is it?

Let's not forget that Graham has also publicly written he would be loath to choose any woman as a startup founder "who had small children, or was likely to have them soon." The man has a type, and the demographics of YC reflect it.

Do you maybe have a source for it?

Footnote 2 of this Paul Graham essay:

http://www.paulgraham.com/start.html

Thanks. I'm sure I had read that before, it's surprising that I didn't notice that yet.

Search on the verbatim phrase in your search engine of choice.

I... would too? Startups take over your life, and so does taking care of young kids. Pretty hard to do both at the same time. Not impossible, but pretty hard, which is presumably why he said he’d be reluctant, not absolutely unwilling.

Leaving aside that there are driven people who work their asses off despite having young children, and that "startups consume your life" is the kind of belief VC have an interest in perpetuating, note that Graham in this statement is treating kids as a women's issue.

r/murderedbywords

By definition, it's not a risk if there's a safety net.

When someone uses the word “privilege” it’s a good indicator that the rest of the discussion is going to be a waste of time.

Can you elaborate on this?

Not parent.

But in my experience, but "privilege" usually relies on invoking stereotypes (males, females, white, etc) and then shutting down individuals by invoking that their discussion is just 'privilege'.

I saw a 'yelling over each other' thread on Facebook in which white feminists were being name-called by black feminists calling them names of various sorts for supporting only white rights. Any modicum of discussion was drowned out by chest-beating of lines of racism and sexism. I believe that thread is still going on.

"Mansplaining" is yet another term that does that on sex based grounds. The term "manspreading" is yet another term with a sexist root- as only men can sit down and spread their lags in relaxation.

It depends also of your lifestyle : if you can't leave without buying expensive stuff, going in vacation in French Polynesia and skiing in Aspen, the safety net should be $100k or $1m. If you can leave in a cheap neighborhood, cook your own food, reading books and HN, doing cheap sport like running or cycling, $10k can take you a long way. The revenue and/or lifestyle of your significant other is also a huge factor.

Most people, even poor people, have parents who would help them out in case of need. They seem to be discussing a pretty low bar here.

And of course it is a "privilege" to have supporting parents. So what? If you don't have that privilege, what are you supposed to do? Kill yourself?

I think such privilege discussions are rather silly. What's the point? That people should be showered with tax payer money to even out their privileges? Or people with bad parents should be given state assistance (substitute parents)?

I'd suggest you think more deeply.

All parent, regardless of class/richness want to be supportive. the question is what support can they offer? Sure, a sofa, most people have that. But thats not a long term solution. What if your parents don't have any savings, how will they help you with that debt?

They can't

Its not an issue of will, its an issue of possibility.

Now, I intensely dislike the use of "privilege", as its more often than not tool to stop discourse. But, to assume that every parent is _capable_ of providing long term accommodation, financial, transport or other support is shore sighted at best.

I suggest perhaps you might want to expand your social circle, so you can see this sort of thing first hand.

I was thinking of the basic "moving back in with the parents fallback".

Of course different people have different advantages and disadvantages.

Paul Graham's children will probably have an enormous head start in becoming entrepreneurs. They'll have "startup privilege" en masse. But so what? Should we begrudge them having it? Should we compensate children of other parents for the non-privilege of not being Paul Graham's children? And if so, how? What amount of money would be appropriate? Or should we punish his children to take away their unfair advantage?

I just think the whole "privilege" mindset is unhelpful and unproductive.

Try to make the most of what you have. Can only PG's children become successful founders? I think not. Maybe your children will only become millionaires if the become founders, and PG'S children will become billionaires. Cry me a river.

> Most people, even poor people, have parents who would help them out in case of need.

No, they don't. You're thinking of lower middle class.

I was thinking of the case of "moving back to the parents".

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