Hacker News Reader

Comment by regitempus | Hacker News Reader

Bezos got $250K from the Bank of Mom and Dad to start Amazon. Not legitimate?

Bezos was like a VP at DE Shaw, that investment wasn't make or break, it does offload some risk. Someone else stated his parents invested in a later round with professional investors. It's odd how people focus on a parents investment, ignoring he was already probably in the top 1-2% in terms of income and so was his wife.

He only got it initially, that’s not what the parent comment was talking about. Future investments into the company came purely through the company’s success and growth (and VCs attracted to that). Just the initial investment would hardly count as “too much involvement from mom and dad bank”. Especially when that investment managed to grow to $1T+ without any involvement from them since then.

That kind of sum is still within reach of middle class parents

No??? How is a middle class income of 50k/yr gonna raise 250k for a child separate from childcare, college, etc?

50k is not middle class

https://eu.usatoday.com/story/money/2021/10/05/what-middle-c...

"Some experts say you are American middle class if you made between $51,200 to $153,000 in 2020."

what was the middle class income in the year that Bezos got the money?

I guess it seems reasonable to say though that actual median middle class is around 100,000 so the parent poster's question remains, where are they going to get the money. Well probably take a loan on the house for their son's crazy new-fangled internet scheme I guess, that seems unlikely.

If it is reasonable to survive on $51,200 then a family on $100k could reasonably be saving the balance $48,800 a year. Say half of that goes to tax because I'm too lazy to look up the tax rate, it'd take 10 years of savings to save up $250k.

So practically speaking, a small syndicate of middle class families (4-5) could reasonably found Amazon. Probably not one alone. Although I echo corndoge in that anyone describing 50-150k as the middle class income range is being polite rather than realistic about what what the class is.

>If it is reasonable to survive on $51,200 then a family on $100k could reasonably be saving the balance $48,800 a year.

yep, it sure would be possible in theory. Although in practice I don't think that's how it is for most people.

Also in a range of 50 - 150k obviously you have to assume that 50k is in the poorest parts of the country, and of course there is nothing saying that only nuclear families or larger can be middle class so I guess, a young single guy could be middle class.

so let's say

https://www.businessinsider.com/personal-finance/how-much-to...

California $111,206 $80,440

Tennessee $50,629 $56,071

In the case of Tennessee you might be earning enough at 50k a year to be ok, but it seems unlikely that in your region and class you will be getting the chance to invest in Amazon.

on edit: the money per year, first number middle class income in region, second number median income in region

before someone else comes in on it I'll note that families often say "we made x amount last year" while individuals say "I made x amount last year", it is up to whoever is putting the numbers together to determine how they want to deal with it.

At any rate a family I am going to suggest a family of three with 120,000 a year is probably around the same as young single guy with 50,000 a year. Which is just barely middle class.

I don't think the barely middle class is investing in anything (except for the ones with superhuman discipline, which I know some), and the ones who are actually in the middle of the middle class probably aren't going to have enough to fund early Amazon either, my disagreement was basically with the opinion that the middle class was much higher than 50k.

I remember reading an article that stated if you lived in Palo Alto (as opposed to East Palo Alto), and make $175K, you are considered “poor.”

It was a bit over the top, but uncomfortably close to the truth.

You've also got to consider that this is putting _a lot_ of eggs in one basket.

Would 4-5 families really pool all their savings for 10 years to invest in one childs potential business?

Maybe. I think what is more likely is that 250k would represent a portion of the money a family could save and then put at risk. I would say this adds another order of magnitude on the earnings needed to be able to do this.

So I don't think it's worth quibbling over whether 50k or 100k is middle class. To do this I honestly think your parental income needs to be $1M+ a year.

50k is nearly the definition of middle class in the US. Check out "median household income".

In France if a household has >50k€ of yearly income it puts them in the top 10% bracket so it's pretty rich

No. Median family wealth in the US is about 115000 USD, so less than half that.

It's within an order of magnitude. There were parents with 1000x as much wealth as Bezos's parents, did not produce Bezos.

If they have 1000x as much wealth they won't be feeling any need to.

Wealth is not income. Income is usually much lower.

What's the median family wealth of families with adult children?

Keep in mind that was $250k in the late early 90s, which is more like $1-2M today - so I wouldn't really say it is within reach unless the parents are literally betting the farm on the business.

However, IIRC his parents came on as investors in the same round at the same term as other non-family investors. So really it may have been more like Bezos giving his parents access to the deal of the century rather than his parents giving a leg up to Jeff.

> Keep in mind that was $250k in the late early 90s, which is more like $1-2M today

This did not pass the sniff test for me, so I plugged $250k into usinflationcalculator.com, with a year of 1993. It came up with $486k. I think your estimates are off by a factor of 2 to 4.

They might be estimating how tech costs (salaries) have increased rather than general inflation.

According to https://www.usinflationcalculator.com/ $250k in 1995 is $460k now.

I think the sort of person that just has that amount of available cash stretches most definitions of "Middle Class".

Reply on news.ycombinator.com