Missing: Working Class Founders
sifted.eu
sifted.eu
Having enough personal savings to afford to work on a project without pay for some time does not directly relate to background unless you have never work before and rely in mum and dad... It relates to your capacity to save, i.e. your previous job, which in turns usually relates to you education level/degree (which also impacts what type of business you are likely to start).
So, again, it boils down to investing in education for all. Meritocracy, not class background.
"unless you have never work before"
What?! Consider these quotes "You’ll need two years of savings" and "I want to see you put £500,000 from your own pocket, friends and family — and then I’d tag along".
You think most people can manage to live for 2 years on savings?
I can, but that's because we've been saving up for years to buy a house, and we would have to draw from that nest eggs.
And ... £500,000? Who's more likely to have friends and family which can afford that - working class, or professional class?
I come from a working class family - farmers and machinists, a reporter; and pastors and missionaries, who also aren't known for their wealth. I was the first on either side of my family to be in a PhD program.
There's no way I could ever have raised £500,000. For that matter, I went to an in-state state school because my parents couldn't even afford extra money for a better out-of-state college that I was accepted to, even with a 50% tuition waver.
Meritocracy my ass.
£500k means you already have made your money, perhaps through a previous business or a career. It's not an amount that 99% of people have in cash at the bank, even if they are well off, even if they ask family. This is not representative and does not inform on any debate on 'diversity'.
Now, if you do have access to that kind of money from your personal wealth or family and friends then use it and delay getting VC money.
To live 1-2 years on savings is quite different and one can do it with £30k (minimum wage in the UK is about £15k pa), which is an amount you can save in a few years if you have a job in tech/well paid job in general (we're back to your study and degree). Personally I had close to EUR100k cash savings within 5 years of graduating with an engineering master degree without help from anyone (who couldn't help anyway).
All that being said, it is quite reasonable for an investor to want you to have skin in the game and to ensure you can live with little to no pay for some time.
Tell me, who has more skin in the game in the following scenario: B and C both get into the same school. B comes from a family with two parents making $150K/year each. C comes from a family with two parents, one making $50K/year and the other staying at home to raise the kids.
Both get into the same school, take the same classes, and pass with the same grades. (Set aside that B is more likely to have had test prep help, college admissions help, etc. than C - I stipulate they are of equal merit.)
The main difference is that C graduates with $35K [1] in debt, while B has no debt because B's parents could pay for college.
Both B and C have equally good ideas, and look for angel funding.
B can come in with $150K of F&F funding. And if the venture doesn't work out, the family has a other money saved up. C can get $50K of F&F, but is still $35K in debt, accruing interest, and that $50K is about all the F&F can afford; cutting expenses to the bone. They are really hoping for C to make it big.
The angel 'D' decides to fund each for $250,000. D's stocks alone make $1M/year and D is angel investing partly as a hobby after taking early retirement.
So, who has more skin in the game: 'C' who's all-in committed, 'B' who can chalk up a failure to a learning experience, ... or 'D', who has the most money but for which losing even $500K won't have a big impact?
I argue that the concept of "skin in the game" = "money" is a rich person's way to prioritize money over real skin-in-the game; the limited time we have on this planet, and the chance to enjoy it.
Why would you choose 'B', who might flake out on you and lose focus or direction because failure is not that big of a deal, instead of 'C', for whom financial success is a much more serious matter?
[1] $35K is roughly the US average - https://www.cnbc.com/2018/02/15/heres-how-much-the-average-s... - the UK is different, but I'm from the US so that's what I know. Given the numbers you listed, it would have taken you about 2 years to pay off that debt, giving "B" an extra couple of years experience over "C" in the startup scene.
[2] On a more personal note, my father had a stroke when I was 25 and in grad school. He was on disability for the rest of his life. Once I started making industry money, some of that money went to my parents, like to buy a car that didn't leak oil and break down often (a family friend owned a garage so we get free labor, which helped), and pay for new siding for their house. "B" likely wouldn't have had to worry about needing to support family anything like "C" would.
Meritocracy my ass.
Why would a 'working class' person put in sweat equity and take on risk to make a VC much richer when they can bootstrap the sort of lifestyle business no VC would touch, working for themselves?
If so, I don't think he could have gotten where he is now without the involvement of Kleiner Perkins or Jim Clark, and he's much richer for it.
That's the Silicon Valley dream, yes?
(Note however that Andreessen is a special case in that he didn't have to worry about time to MVP or for market fit discovery, because both of those steps had already been done on UIUC's dime[3].)
[1] My friends in the trades are independent because they like it, and I suspect none of them would do well with a board. The fellow who did the most to teach me my trade (unused until now, but compare https://news.ycombinator.com/item?id=24273707 ) used to say life was too short to bother with poor job sites, because every evening, all his tools rolled home with him on his truck.
[2] which is a lapse, as normally my "middle class" is almost exactly defined as "able to go several years, but not indefinitely, without earned income"
[3] I'm not feeling too sorry for UIUC. I've heard that some notable fraction of their endowment is traceable to Mosaic. Not all of the people from that period made out like bandits, but from my small transect, in attempting to do good, most wound up doing well.