The article doesn't even begin to support it's claim that family with money is necessary - at most, it seems one needs a frugal lifestyle and a middle class job.
Say you worked a 9-5 for two years saving up $30k. You reach the end of two years and youre going to quit your job, losing all of your income, and then also spend 100% of your savings right away on beginning some new business that could fail at any point?
You are thinking from the perspective of someone from wealth, missing the realities that would be faced by someone actually considering starting a business without a history of even middle class wealth.
Most businesses are not the kind you can start on your off time, as a side project. You cannot keep your salary, you have no investment income, or passive income of any kind.
What happens when you fail? you've spent every last cent of your savings, you have no job, you have a sizeable gap in your resume, and going back to your old career means youll have to take a pay cut compared to what you were making before you left to start the business.
This is a real fear that keeps many people from going out on their own.
If you are from wealth on the other hand, having no savings might not be as big of a deal. You wont become homeless if you have family and friends that have the means to take you in. You wont go hungry, you can even take a few weeks to reevaluate your decisions and decide if you want to start another business with your lessons learned, or if you should return to the job market and get yourself back on your feet.
That's quite a feat, given that I'm not from wealth at all. I've probably got more money than anyone else in my family and I've earned it mainly from salaried employment and personal investments.
The opportunity costs you've described apply equally well to someone who came from wealth - resume gap, time spent not working, no job, etc.
I'm not disputing that startup capital from family would be helpful. I'm disputing the article's implication that the amounts of capital needed are unavailable to regular people, or that only people from wealth can start a business.
If investment income is a relevant part of your income stream, then congratulations - you are among the wealthiest and most financially literate of all americans.
You are now someone who speaks from a position of wealth because of this.
>opportunity costs you've described apply equally well to someone who came from wealth
Oh really?
Because when youre poor and your parents live in a one bedroom apartment and cant afford food for an extra person, maybe youve even been sending them money because they have problems keeping up with their bills and being able to eat everyday.
Thats the same as a stanford grad, whose parents live nearby in a 4 bedroom plus house, can easily afford to send their children money when they need it, let alone allowing them to move back home with free room and board at any time.
If you honestly dont see a difference, from the perspective of starting a business, between these two people, then we have nothing further to discuss.
> or that only people from wealth can start a business.
I have yet to see the article or a single commenter make this claim.
I used "software engineer" as an example because it applies to most of us on HN, that's all.
That's a huge difference in terms of willingness to assume risk. Let's take two people who have each worked seven years saving $30K/year before spending $30K on a business that takes two years to fail. The software engineer could devote themselves full time and still come out with $180K (not counting interest) in their retirement account. The median-income earner can devote only spare time because $30K isn't even enough to live on for two years, and at the end his retirement account is wiped out. One risk is a trivial one that most people would accept. The other is a yawning chasm. As the authors said, willingness to risk that much is strongly correlated with already being pretty wealthy.
There's only one word to describe the idea that risking $30K is no big deal. That word is "privilege" and you should check it.
Also, $30k is easily enough to live on for 2 years, provided you are willing to reduce consumption. Among other things, there are lots of folks consumption below $15k/year (e.g., college students if you ignore the cost of college, some illegal immigrants in regions where they don't get welfare).
Most people simply aren't willing to reduce consumption to college student levels, but that's a matter of willingness rather than ability.
That's the key. Willingness to risk that money increases with the time it took to save it, and not just linearly. When the time increases by almost an order of magnitude, you're going to find darn few willing to risk it.
> that's a matter of willingness rather than ability
It doesn't matter why; the fact stands. Entrepreneurs are far more likely to come from the first and second quintiles than the more populous third through fifth. Sure, people in some parts of the country could live on $30K if they're willing to make severe sacrifices in their quality of life, but treating that as just a matter of slight degree compared to a software engineer who can still live as they please while making the same attempt seems a bit callous. At a certain level of sacrifice it's a qualitative difference between "crazy if you do" and "crazy if you don't".
Also if living like a college student is considered to be "severe sacrifices", does this mean that upper class kids who go to college understand and experience poverty and deprivation? And therefore, when discussing it, they don't need to "check their privilege" and can simply think back to college?
Now, at 50, I could imagine living like they did for a while and even think I might enjoy it, but only because I know I could leave whenever I wanted and go back to living in a nice house etc. I'm in a privileged position now, but at least I'm aware of it. I know it will be far far easier for my daughter to take those kinds of risks than it was for me. Just because it's possible for someone below median income to start a business doesn't mean they'll do so at the same rate as people who are richer. That's the point that you originally said made no sense, no matter how you've changed your position since.
The article does also discuss a correlation between people being white, male and highly educated. I don't dispute this correlation. This correlation does not imply that family money is even useful in starting a business; most people who are white, male and educated have no family money.
If you simply want to claim that there is a correlation between being unwilling to live like a college student and not being wealthy, go for it. All you are suggesting is that wealthy people are more willing to deal with adversity in the pursuit of goals than others.