I don’t know about entrepreneurship, but I remember meeting this delightful bohemian set of students in college. Fearless, carefree, they listened to interesting music, they visited interesting countries, and they threw fabulous parties. It took a while for it to dawn on me that they all had rich dads.
While I don't think that entrepreneurs have a "special gene for risk", this article is extremely misleading. It's looking just at the moneyed class of entrepreneurs and declaring that "entrepreneurs come from backgrounds that provide a lot of resources".
But there's another, much larger, group of entrepreneurs that don't come from such a background at all. I've had the good fortune to get to know and work with quite a lot of successful entrepreneurs and I'd say about 25% of them came from a "moneyed" background. The rest were just regular people with regular backgrounds who were obsessive about starting businesses.
I wonder what you consider regular, not because I disagree with you, but because I wonder if the term "moneyed" means something different to you than the author.
I am always fascinated by the normal human bias to assume that a single person's experience is that "average" experience.
To me "moneyed" in terms of being an entrepreneur would mean that if everything failed catastrophically I would have somewhere to go to have a roof over my head and food to eat while I got back on my feet.
My personal bias would lead me to believe that most people have less of a support system then the wonderful people on HN. Most of us have degrees and/or well paying STEM type jobs.
> I wonder if the term "moneyed" means something different to you than the author.
I think the author was using the term to mean people who have enough resources available to them (through family or other support networks) that they don't have to worry too much about survival and have relatively easy access to capital.
I think that you and I define it similarly.
But most entrepreneurs I've known over the decades have had neither of those advantages. Although, I'm thinking of "entrepreneur" in its basic sense, not in terms of just starting tech businesses, and not in terms of people starting business with the goal of becoming anything like unicorns.
> My personal bias would lead me to believe that most people have less of a support system then the wonderful people on HN.
I agree completely. The HN crowd is, generally speaking (there are exceptions), a fairly privileged bunch.
I think you’re taking up semantics at a certain point. Entrepreneurs in our current environment has a much more narrow meaning than auto mechanic who takes over an existing business or starts his own shop after working at another for a decade and building up a client base.
> I'd say about 25% of them came from a "moneyed" background. The rest were just regular people with regular backgrounds who were obsessive about starting businesses.
This is a very similar point to the article though -- the moneyed class is much smaller than 25% of the population, so they are disproportionately represented in even your anecdotal sample. To be clear, that doesn't mean that regular people can't make it though!
There's actually a third group: many folks in poor countries have no option but to start some sort of business as jobs pay very little.
There's a supermarket chain in Uruguay that started from selling vegetables on a street corner.
There's this guy near my house that sells electronics at a traffic light. I've been witnessing his business grow and grow and now he has a car full of stuff parked nearby.
> It's looking just at the moneyed class of entrepreneurs and declaring that "entrepreneurs come from backgrounds that provide a lot of resources".
This is incorrect. For example, here's one of the links in the article:
"We study a sample of individuals who choose either to be employees or to run their own businesses." "we find that the probability of self-employment depends markedly upon whether the individual ever received an inheritance or gift." https://www.andrewoswald.com/docs/entrepre.pdf
Also: “If one does not have money in the form of a family with money, the chances of becoming an entrepreneur drop quite a bit,” Levine tells Quartz.
> I've had the good fortune to get to know and work with quite a lot of successful entrepreneurs
But this is survivorship bias. You also need to consider the people who never became entrepreneurs, or who failed as entrepreneurs due to lack of money.
Note that my quote above says the chances of becoming an entrepreneur drop quite a bit, but it doesn't say the chances drop to zero. So of course the number of non-privileged entrepreneurs will be greater than zero. It's all about the odds.
I'm personally an entrepreneur, not wealthy, but currently doing better than the majority of people. It took me 5 years to establish a sustainable business, and I nearly went broke, burning through my entire life savings (now restored). This never would have been possible if I didn't already have a substantial life savings before I quit my job.
Yes, I read the supporting links but remain unconvinced. My impression is that they're talking about a rather specific kind of entrepreneur and not entrepreneurs in general.
Well, consider the subtext of the article: "We’re in an era of the cult of the entrepreneur."
But it's only the ultra-wealthy entrepreneurs who have a cult following and are worshipped for their "risk taking." Whereas small business owners like me don't have a cult following.
I don't make more money than BigCo engineer employees, so nobody really cares about my risk taking. They only care about "risks" that generate massive, ostentatious rewards.
The cult wouldn't need deprogramming if there was no cult.
Ok, but... your claim that the article its "extremely misleading" seems unjustified. There are two different issues: (1) the motive for the article and (2) the information discussed in the article.
You said, "I read the supporting links but remain unconvinced." Ok, but you obviously can't deny that the supporting links exist. The article does indeed talk about the things you claimed it didn't talk about. You can remain unconvinced, but the claim that "It's looking just at the moneyed class" seems plain false. The issue (1) may be geared towards the moneyed class, but nonetheless (2) is broader.
The fact that you remain unconvinced doesn't mean the article is extremely misleading.
The thing that I consider extremely misleading about it is that it appears to be making the case the you basically have to be at least somewhat privileged in order to be a successful entrepreneur. Perhaps I'm misreading it, but after reading it again, I can't see another way of interpreting it.
> The article does indeed talk about the things you claimed it didn't talk about.
Not entirely. It's not talking about entrepreneurs who start with nothing. No job, no nothing. There's a lot more of those than people think.
> The issue (1) may be geared towards the moneyed class, but nonetheless (2) is broader.
That's fair. I perhaps leaned a bit too far over my skis here.
> The fact that you remain unconvinced doesn't mean the article is extremely misleading.
The fact that I remain unconvinced means that I don't think the reference counters my opinion that the article is extremely misleading.
I'll admit that, like everybody, I am reading this through the lens of my own experiences and worldview, but this read to me like essentially a propaganda piece intended to discourage people who aren't part of a particular class from even trying to start their own business. That's what rubs me the wrong way about it.
> It's not talking about entrepreneurs who start with nothing. No job, no nothing. There's a lot more of those than people think.
How many is "a lot more", and how "successful" are they?
> it appears to be making the case the you basically have to be at least somewhat privileged in order to be a successful entrepreneur. Perhaps I'm misreading it, but after reading it again, I can't see another way of interpreting it.
I'm baffled why you can't see another way of interpreting it, because I already explained another way of interpreting it: "Note that my quote above says the chances of becoming an entrepreneur drop quite a bit, but it doesn't say the chances drop to zero. So of course the number of non-privileged entrepreneurs will be greater than zero. It's all about the odds."
> this read to me like essentially a propaganda piece intended to discourage people who aren't part of a particular class from even trying to start their own business
Wow. I think that's more projection coming from your own mind than from the article. Perhaps the biggest problem with this conspiratorial interpretation is the motive: why would the article author want to discourage entrepreneurship? That just makes no sense to me. And it's certainly not an advice column.
Again, I think the motive for the article is fairly clear, even stated explicitly: to poke holes in the hero worship of rich dudes.
[EDIT:] Here's another article by the same author, about Andrew Yang’s basic income plan: https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan "Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." Does that sound like someone who wants to discourage entrepreneurship?
What I meant was not so much a statement about a parent's influence on a child's entrepreneurial ambitions, but more so that the author's dismissal of a person's inherent qualities would seem laughable to someone that has experience interacting with young children.
I have no way of knowing or proving what is or isn't "genetic". However, there are absolutely proto-entrepreneurial traits, a sort of hustler mentality that is blindingly obvious to see that some kids seem just "have it" and others don't. I would argue that this disposition is identifiable as early as two years old. Does that come from money? I would need much more evidence than the referenced study to believe that.
I think my major gripe comes from the way the article attempts to base this conclusion on the NBER paper. The paper measures material outcomes and rightfully correlates them with the financial opportunities of the participants. This says nothing about the personality traits that make someone an entrepreneur.
I've been building startups for 15 years, volunteered at two accelerators, angel invested and networked a lot. Anecdotally, the majority of the founders that I have gotten to know and lasted more than a year (actually building product and selling it) are middle class, comfortable being frugal, and don't act privileged at all. The few that I know for a fact come from exceptional money do act privileged, kind of egocentric and wasted a lot of money on things that were performative.
I don't doubt lots of people from money go into entrepreneurship, and I'm sure some of them are successful, but from my experience privilege in this way often seems like a disadvantage. The vast majority of success I've seen comes from middle class.
It's anecdotal, but it's in the dozens.
It's very possible to bootstrap a successful business with very little resources. What matters is that you can empathize with people well and at scale and then solve problems pragmatically. Test your hypothesis constantly and don't be afraid of being wrong. Success doesn't come from money spent on good ideas, it comes from understanding other people's actual wants and then focusing on serving what is important and unsatisfied and creating practical economic feedback loops. It involves schlepping, hard work, sacrifice and resourcefulness. Timing matters a lot for startups (technology has developed enough to actually satisfy customers). Seed capital is optional if the founders learn how to build the company themselves. The vast majority of seed capital is wasted, and people from money waste more.
> The few that I know for a fact come from exceptional money
The article is not about people "coming from exceptional money". And I bet a lot of the people you are assuming are "middle class" aren't actually middle class.
There is a really bad habit in this country of assuming that you can have money, but unless you are "movie star rich" then you are middle class. That's not the case.
A lot of people work for a living but are not middle class (nor are they CEOs of fortune 500 companies).
More specifically a lot of the people reading HN right now likely fall into the category the researchers talk about. If you work in tech there is a very, very good chance you are not middle class. Just because you don't think of yourself as rich doesn't make you middle class.
It's something that being in an echo chamber of tech that people easily forget.
Someone can go look up a more precise definition, but if middle class were the middle 50th of household incomes, then if you have a household income (not individual, but combined AGI) that is > $100k you are not in the middle-class.[1] That doesn't mean you have multiple yachts, or act privileged or have exceptional money. It simple means (by that definition) you aren't middle class.
And before someone replies with it, "Cost Of Living" arguments do not change this substantially at all. Look at the AGI tables below, many people who think of themselves as middle class, are not. And if you're on HN reading that post, with a US job in tech, there is a good chance that includes you.
Okay how about this then to cut through the ambiguity of terms.
1)
Someone in their 20s who can live with their parent(s) while they get a startup off the ground has an advantage. It doesn't matter if they are below or above median household income so long as they can allocate majority of their time to it.
2)
Someone who has capital and connections because their family is wealthy has other advantages, but many people coming from this situation also have other disadvantages, because they have often been shielded from discomfort and struggle and a lot of entrepreneurship is being tolerant (and even seeking) discomfort and struggle.
3)
Someone in their 40s who has been frugal and saved by living within their means and has a spouse who works can allocate either part time or full time and be successful.
In the examples above I consider 1&3 as not coming from money but are the most common paths to entrepreneurial success that I have seen anecdotally. My 2nd example I would consider coming from money in the context of the article (a good concrete indicator is access to family seed capital), and this doesn't seem to me to be the most common path to success.
Rich and wealthy and middle class and poor aren't rigorously scientifically defined terms, the only one that is, is that the US Department of Health and Human Services (HHS) has a definition for poverty wages, but even that isn't simply a number.
People that live at the luxury don't necessarily have the money for it. To bring cars into the picture, an older model Mercedes Benz that's a falling apart money pit costs less than a brand new Honda Civic.
In my mind, the line for middle class is how long you can pay your bills at without working. If you've got enough money that the answer is a while, then you're rich. If you have so much that you're able to fund other people's dreams, then you're wealthy. If you're a short order cook at a diner that saved up enough money to have a go at running a food truck, you're scrupulous.
There's all sorts of caveats, and we can be super judgey about how other people are spending their money (and time) on bad/wrong/frivolous things, but I'd bet that most people here still have to work for a living and to me, that's middle class, even if the cars are flashier and vacations are to a different continent rather than a road trip and staying in motels, for those in the upper middle class.
This is one of the best arguments for Universal Basic Income there is.
If your basic needs are met, you don't need to worry that your startup failing will land you hungry in the streets. Startup life is living mostly at work and without frills anyway, but for people with money (or if it existed, UBI), if it fails, they at least will have the basics of housing, food, and healthcare and can continue on with life.
Having UBI for everyone would unleash the talents of the entire range of the populous, not only the prosperous few. Conceivably, the expansion (Cambrian explosion) of new advances could pay for itself in economic growth for society.
What exactly is the point of this article? If you're not a white male and from a wealthy family, you should fall in line and work for someone else because freedom isn't in your cards.
No. Here's the same author with a different article: "A UBI would free Americans to shift from scarcity to abundance mode, which would enable more people to take risks and engage in a greater, more expansive vision for their future. Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan
Another piece that tries to promote the idea that "following your dreams is dangerous" and that success has to do with privilege and not really with hard work. Beware of all these political ideologues trying to convince you that you are a born loser and there's nothing you can do about it.
Success can come from working hard at something. Whether you're comfortable working hard at something depends on the risk of doing so.
Lebron James works hard, spends all day getting better at basketball. He also has a cooking staff, training staff, and house keepers.
If I took the same amount of time playing basketball, the same effort, I'd be broke and homeless.
If I come from money, sure I can spend all day working on the nuances of my startup, to the exclusion of all else. My ability to exist is taken care of.
That is a living situation which would reduce the risk of going of and starting a startup. That person would not have to worry about working and splitting effort and could totally immerse themselves in their startup endeavors.
However, the scope of money the article is talking about (and that we often see in the founder class), no that would not qualify as coming from money.
Coming from money is not just about the reduction of risk, but also the connections formed by having money.
I'm not trying to be reductionist, I'm trying to nail down a precise shared meaning of the terms that our conversation depends on.
I have seen many founders who come from ivy league, with millions in family seed capital and extensive networks with introductions and connections squander them because they don't prioritize what is most important: they don't embrace uncertainty, discomfort, and struggle. They don't lean into bad news. They don't position themselves as servants to the customer.
I just don't buy that these advantages of reduction of risk are the most important variable in the equation. Ive seen them first hand hinder success as much as they enable it. And they definitely do not gatekeep it.
So if "coming from money" means seed capital and family connections then I stand by my point.
But if "coming from money" means living with parents or spouse who can cover basic living expenses with a frugal lifestyle while the founder focuses on building a business, then with that definition I would have to admin it has a big positive impact.
I guess the crux of my argument here is that founder actions matter an order of magnitude more than seed capital or family connections.
This is a misinterpretation of the article and perhaps more of an indication of your own political ideology. Here's the same author with a different article: "A UBI would free Americans to shift from scarcity to abundance mode, which would enable more people to take risks and engage in a greater, more expansive vision for their future. Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan
This idea that there is only one story and one path is pernicious. Paul Orfalea flunked out of school and couldn't hold a job, so instead he built a business that he later sold for around five billion. His book Copy This! is loaded with interesting and potentially useful stories. His is not the most common story but is an example of great business success being unrelated to either identified genes or familial wealth.
Thank you for this article, it's insightful and a much needed reality check for a community like YCombinator. I still think there are exceptions to this like Jensen Huang, to the best of my knowledge. However, it's difficult to think of other examples.
It's fine man. If rich folks can build $1B business, I can surely build something worth $10M.
--
That was a bit of tongue in cheek reaction but I think we all know this already.
What helps is to know that initial advantages compound A LOT : http://web.archive.org/web/20181224131908/https://ofdollarsa...
I don’t know about entrepreneurship, but I remember meeting this delightful bohemian set of students in college. Fearless, carefree, they listened to interesting music, they visited interesting countries, and they threw fabulous parties. It took a while for it to dawn on me that they all had rich dads.
There's a grain of truth to this but I won't take any lessons on social mobility from the media.
In the UK, at least, most are privately educated, did unpaid internships and a lot are sons or daughters of other journalists.
I'd take entrepreneurship over getting a job in the media any day.
While I don't think that entrepreneurs have a "special gene for risk", this article is extremely misleading. It's looking just at the moneyed class of entrepreneurs and declaring that "entrepreneurs come from backgrounds that provide a lot of resources".
But there's another, much larger, group of entrepreneurs that don't come from such a background at all. I've had the good fortune to get to know and work with quite a lot of successful entrepreneurs and I'd say about 25% of them came from a "moneyed" background. The rest were just regular people with regular backgrounds who were obsessive about starting businesses.
I wonder what you consider regular, not because I disagree with you, but because I wonder if the term "moneyed" means something different to you than the author.
I am always fascinated by the normal human bias to assume that a single person's experience is that "average" experience.
To me "moneyed" in terms of being an entrepreneur would mean that if everything failed catastrophically I would have somewhere to go to have a roof over my head and food to eat while I got back on my feet.
My personal bias would lead me to believe that most people have less of a support system then the wonderful people on HN. Most of us have degrees and/or well paying STEM type jobs.
> I wonder if the term "moneyed" means something different to you than the author.
I think the author was using the term to mean people who have enough resources available to them (through family or other support networks) that they don't have to worry too much about survival and have relatively easy access to capital.
I think that you and I define it similarly.
But most entrepreneurs I've known over the decades have had neither of those advantages. Although, I'm thinking of "entrepreneur" in its basic sense, not in terms of just starting tech businesses, and not in terms of people starting business with the goal of becoming anything like unicorns.
> My personal bias would lead me to believe that most people have less of a support system then the wonderful people on HN.
I agree completely. The HN crowd is, generally speaking (there are exceptions), a fairly privileged bunch.
I think you’re taking up semantics at a certain point. Entrepreneurs in our current environment has a much more narrow meaning than auto mechanic who takes over an existing business or starts his own shop after working at another for a decade and building up a client base.
> I'd say about 25% of them came from a "moneyed" background. The rest were just regular people with regular backgrounds who were obsessive about starting businesses.
This is a very similar point to the article though -- the moneyed class is much smaller than 25% of the population, so they are disproportionately represented in even your anecdotal sample. To be clear, that doesn't mean that regular people can't make it though!
There's actually a third group: many folks in poor countries have no option but to start some sort of business as jobs pay very little.
There's a supermarket chain in Uruguay that started from selling vegetables on a street corner.
There's this guy near my house that sells electronics at a traffic light. I've been witnessing his business grow and grow and now he has a car full of stuff parked nearby.
That third group exists in the US, too. They're a large part of who I was thinking of.
> It's looking just at the moneyed class of entrepreneurs and declaring that "entrepreneurs come from backgrounds that provide a lot of resources".
This is incorrect. For example, here's one of the links in the article:
"We study a sample of individuals who choose either to be employees or to run their own businesses." "we find that the probability of self-employment depends markedly upon whether the individual ever received an inheritance or gift." https://www.andrewoswald.com/docs/entrepre.pdf
Also: “If one does not have money in the form of a family with money, the chances of becoming an entrepreneur drop quite a bit,” Levine tells Quartz.
> I've had the good fortune to get to know and work with quite a lot of successful entrepreneurs
But this is survivorship bias. You also need to consider the people who never became entrepreneurs, or who failed as entrepreneurs due to lack of money.
Note that my quote above says the chances of becoming an entrepreneur drop quite a bit, but it doesn't say the chances drop to zero. So of course the number of non-privileged entrepreneurs will be greater than zero. It's all about the odds.
I'm personally an entrepreneur, not wealthy, but currently doing better than the majority of people. It took me 5 years to establish a sustainable business, and I nearly went broke, burning through my entire life savings (now restored). This never would have been possible if I didn't already have a substantial life savings before I quit my job.
Yes, I read the supporting links but remain unconvinced. My impression is that they're talking about a rather specific kind of entrepreneur and not entrepreneurs in general.
Well, consider the subtext of the article: "We’re in an era of the cult of the entrepreneur."
But it's only the ultra-wealthy entrepreneurs who have a cult following and are worshipped for their "risk taking." Whereas small business owners like me don't have a cult following.
I don't make more money than BigCo engineer employees, so nobody really cares about my risk taking. They only care about "risks" that generate massive, ostentatious rewards.
The cult wouldn't need deprogramming if there was no cult.
Yes, exactly. You've put your finger on what I was pushing back against with the article. I wish I could have expressed it as well as you!
Ok, but... your claim that the article its "extremely misleading" seems unjustified. There are two different issues: (1) the motive for the article and (2) the information discussed in the article.
You said, "I read the supporting links but remain unconvinced." Ok, but you obviously can't deny that the supporting links exist. The article does indeed talk about the things you claimed it didn't talk about. You can remain unconvinced, but the claim that "It's looking just at the moneyed class" seems plain false. The issue (1) may be geared towards the moneyed class, but nonetheless (2) is broader.
The fact that you remain unconvinced doesn't mean the article is extremely misleading.
The thing that I consider extremely misleading about it is that it appears to be making the case the you basically have to be at least somewhat privileged in order to be a successful entrepreneur. Perhaps I'm misreading it, but after reading it again, I can't see another way of interpreting it.
> The article does indeed talk about the things you claimed it didn't talk about.
Not entirely. It's not talking about entrepreneurs who start with nothing. No job, no nothing. There's a lot more of those than people think.
> The issue (1) may be geared towards the moneyed class, but nonetheless (2) is broader.
That's fair. I perhaps leaned a bit too far over my skis here.
> The fact that you remain unconvinced doesn't mean the article is extremely misleading.
The fact that I remain unconvinced means that I don't think the reference counters my opinion that the article is extremely misleading.
I'll admit that, like everybody, I am reading this through the lens of my own experiences and worldview, but this read to me like essentially a propaganda piece intended to discourage people who aren't part of a particular class from even trying to start their own business. That's what rubs me the wrong way about it.
> It's not talking about entrepreneurs who start with nothing. No job, no nothing. There's a lot more of those than people think.
How many is "a lot more", and how "successful" are they?
> it appears to be making the case the you basically have to be at least somewhat privileged in order to be a successful entrepreneur. Perhaps I'm misreading it, but after reading it again, I can't see another way of interpreting it.
I'm baffled why you can't see another way of interpreting it, because I already explained another way of interpreting it: "Note that my quote above says the chances of becoming an entrepreneur drop quite a bit, but it doesn't say the chances drop to zero. So of course the number of non-privileged entrepreneurs will be greater than zero. It's all about the odds."
> this read to me like essentially a propaganda piece intended to discourage people who aren't part of a particular class from even trying to start their own business
Wow. I think that's more projection coming from your own mind than from the article. Perhaps the biggest problem with this conspiratorial interpretation is the motive: why would the article author want to discourage entrepreneurship? That just makes no sense to me. And it's certainly not an advice column.
Again, I think the motive for the article is fairly clear, even stated explicitly: to poke holes in the hero worship of rich dudes.
[EDIT:] Here's another article by the same author, about Andrew Yang’s basic income plan: https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan "Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." Does that sound like someone who wants to discourage entrepreneurship?
This reads like it was written by someone that has no children and/or has very little interaction with children.
I'm curious about this take and what you think of https://www.metroparent.com/parenting/tweens-teens/how-to-be...
While it may be true that entrepreneurship means being overly absent in your child's life I think MOST parents are TOO present in their child's life.
What I meant was not so much a statement about a parent's influence on a child's entrepreneurial ambitions, but more so that the author's dismissal of a person's inherent qualities would seem laughable to someone that has experience interacting with young children.
I have no way of knowing or proving what is or isn't "genetic". However, there are absolutely proto-entrepreneurial traits, a sort of hustler mentality that is blindingly obvious to see that some kids seem just "have it" and others don't. I would argue that this disposition is identifiable as early as two years old. Does that come from money? I would need much more evidence than the referenced study to believe that.
I think my major gripe comes from the way the article attempts to base this conclusion on the NBER paper. The paper measures material outcomes and rightfully correlates them with the financial opportunities of the participants. This says nothing about the personality traits that make someone an entrepreneur.
I don't buy this.
I've been building startups for 15 years, volunteered at two accelerators, angel invested and networked a lot. Anecdotally, the majority of the founders that I have gotten to know and lasted more than a year (actually building product and selling it) are middle class, comfortable being frugal, and don't act privileged at all. The few that I know for a fact come from exceptional money do act privileged, kind of egocentric and wasted a lot of money on things that were performative.
I don't doubt lots of people from money go into entrepreneurship, and I'm sure some of them are successful, but from my experience privilege in this way often seems like a disadvantage. The vast majority of success I've seen comes from middle class.
It's anecdotal, but it's in the dozens.
It's very possible to bootstrap a successful business with very little resources. What matters is that you can empathize with people well and at scale and then solve problems pragmatically. Test your hypothesis constantly and don't be afraid of being wrong. Success doesn't come from money spent on good ideas, it comes from understanding other people's actual wants and then focusing on serving what is important and unsatisfied and creating practical economic feedback loops. It involves schlepping, hard work, sacrifice and resourcefulness. Timing matters a lot for startups (technology has developed enough to actually satisfy customers). Seed capital is optional if the founders learn how to build the company themselves. The vast majority of seed capital is wasted, and people from money waste more.
> The few that I know for a fact come from exceptional money
The article is not about people "coming from exceptional money". And I bet a lot of the people you are assuming are "middle class" aren't actually middle class.
There is a really bad habit in this country of assuming that you can have money, but unless you are "movie star rich" then you are middle class. That's not the case.
A lot of people work for a living but are not middle class (nor are they CEOs of fortune 500 companies).
More specifically a lot of the people reading HN right now likely fall into the category the researchers talk about. If you work in tech there is a very, very good chance you are not middle class. Just because you don't think of yourself as rich doesn't make you middle class.
It's something that being in an echo chamber of tech that people easily forget.
Someone can go look up a more precise definition, but if middle class were the middle 50th of household incomes, then if you have a household income (not individual, but combined AGI) that is > $100k you are not in the middle-class.[1] That doesn't mean you have multiple yachts, or act privileged or have exceptional money. It simple means (by that definition) you aren't middle class.
And before someone replies with it, "Cost Of Living" arguments do not change this substantially at all. Look at the AGI tables below, many people who think of themselves as middle class, are not. And if you're on HN reading that post, with a US job in tech, there is a good chance that includes you.
[1] Income in the United States - https://en.wikipedia.org/wiki/Income_in_the_United_States
Okay how about this then to cut through the ambiguity of terms.
1) Someone in their 20s who can live with their parent(s) while they get a startup off the ground has an advantage. It doesn't matter if they are below or above median household income so long as they can allocate majority of their time to it.
2) Someone who has capital and connections because their family is wealthy has other advantages, but many people coming from this situation also have other disadvantages, because they have often been shielded from discomfort and struggle and a lot of entrepreneurship is being tolerant (and even seeking) discomfort and struggle.
3) Someone in their 40s who has been frugal and saved by living within their means and has a spouse who works can allocate either part time or full time and be successful.
In the examples above I consider 1&3 as not coming from money but are the most common paths to entrepreneurial success that I have seen anecdotally. My 2nd example I would consider coming from money in the context of the article (a good concrete indicator is access to family seed capital), and this doesn't seem to me to be the most common path to success.
Rich and wealthy and middle class and poor aren't rigorously scientifically defined terms, the only one that is, is that the US Department of Health and Human Services (HHS) has a definition for poverty wages, but even that isn't simply a number.
People that live at the luxury don't necessarily have the money for it. To bring cars into the picture, an older model Mercedes Benz that's a falling apart money pit costs less than a brand new Honda Civic.
In my mind, the line for middle class is how long you can pay your bills at without working. If you've got enough money that the answer is a while, then you're rich. If you have so much that you're able to fund other people's dreams, then you're wealthy. If you're a short order cook at a diner that saved up enough money to have a go at running a food truck, you're scrupulous.
There's all sorts of caveats, and we can be super judgey about how other people are spending their money (and time) on bad/wrong/frivolous things, but I'd bet that most people here still have to work for a living and to me, that's middle class, even if the cars are flashier and vacations are to a different continent rather than a road trip and staying in motels, for those in the upper middle class.
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This is one of the best arguments for Universal Basic Income there is.
If your basic needs are met, you don't need to worry that your startup failing will land you hungry in the streets. Startup life is living mostly at work and without frills anyway, but for people with money (or if it existed, UBI), if it fails, they at least will have the basics of housing, food, and healthcare and can continue on with life.
Having UBI for everyone would unleash the talents of the entire range of the populous, not only the prosperous few. Conceivably, the expansion (Cambrian explosion) of new advances could pay for itself in economic growth for society.
In theory, I agree with this wholeheartedly.
I have no idea if it's true in practice.
Seems like we should run the experiment
Worst case, everyone ends up with the means to be housed, fed, and have healthcare
That is a lot of hand waving for some very complex and disruptive economic and social changes.
things they didn't teach me at business school
(2015)! "updated in 2022"
Some previous discussions:
2021 https://news.ycombinator.com/item?id=27701218
2019 https://news.ycombinator.com/item?id=20544395
2015 https://news.ycombinator.com/item?id=9913774
See also: Maslow's hierarchy of needs
What exactly is the point of this article? If you're not a white male and from a wealthy family, you should fall in line and work for someone else because freedom isn't in your cards.
No. Here's the same author with a different article: "A UBI would free Americans to shift from scarcity to abundance mode, which would enable more people to take risks and engage in a greater, more expansive vision for their future. Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan
Another piece that tries to promote the idea that "following your dreams is dangerous" and that success has to do with privilege and not really with hard work. Beware of all these political ideologues trying to convince you that you are a born loser and there's nothing you can do about it.
That's orthogonal to the idea of the piece.
Success can come from working hard at something. Whether you're comfortable working hard at something depends on the risk of doing so.
Lebron James works hard, spends all day getting better at basketball. He also has a cooking staff, training staff, and house keepers.
If I took the same amount of time playing basketball, the same effort, I'd be broke and homeless.
If I come from money, sure I can spend all day working on the nuances of my startup, to the exclusion of all else. My ability to exist is taken care of.
What does "come from money" mean to you?
E.g. is a 26 year old still living with parents (firefighter and nurse) with no seed capital but all living expenses covered "coming from money"?
You're trying to be reductionist, but I'll bite.
That is a living situation which would reduce the risk of going of and starting a startup. That person would not have to worry about working and splitting effort and could totally immerse themselves in their startup endeavors.
However, the scope of money the article is talking about (and that we often see in the founder class), no that would not qualify as coming from money.
Coming from money is not just about the reduction of risk, but also the connections formed by having money.
I'm not trying to be reductionist, I'm trying to nail down a precise shared meaning of the terms that our conversation depends on.
I have seen many founders who come from ivy league, with millions in family seed capital and extensive networks with introductions and connections squander them because they don't prioritize what is most important: they don't embrace uncertainty, discomfort, and struggle. They don't lean into bad news. They don't position themselves as servants to the customer.
I just don't buy that these advantages of reduction of risk are the most important variable in the equation. Ive seen them first hand hinder success as much as they enable it. And they definitely do not gatekeep it.
So if "coming from money" means seed capital and family connections then I stand by my point.
But if "coming from money" means living with parents or spouse who can cover basic living expenses with a frugal lifestyle while the founder focuses on building a business, then with that definition I would have to admin it has a big positive impact.
I guess the crux of my argument here is that founder actions matter an order of magnitude more than seed capital or family connections.
This is a misinterpretation of the article and perhaps more of an indication of your own political ideology. Here's the same author with a different article: "A UBI would free Americans to shift from scarcity to abundance mode, which would enable more people to take risks and engage in a greater, more expansive vision for their future. Yang’s freedom dividend would give Americans greater agency to leave codependent relationships, professional or otherwise, and operate as the CEO or entrepreneur of their own lives." https://qz.com/1687957/the-case-for-andrew-yangs-ubi-plan
They want you depending on megacorporations or, even better, the government.
> They want you depending on megacorporations or, even better, the government.
“They” in this case, want megacorporations and government to be the same thing.
This idea that there is only one story and one path is pernicious. Paul Orfalea flunked out of school and couldn't hold a job, so instead he built a business that he later sold for around five billion. His book Copy This! is loaded with interesting and potentially useful stories. His is not the most common story but is an example of great business success being unrelated to either identified genes or familial wealth.
Thank you for this article, it's insightful and a much needed reality check for a community like YCombinator. I still think there are exceptions to this like Jensen Huang, to the best of my knowledge. However, it's difficult to think of other examples.