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Entrepreneurs don’t have a gene for risk – they come from families with money

• rebootthesystem 11y ago
  I'm sorry, I am going to call this nonsense. I am second generation from immigrants who arrived at these shores with nothing but the clothes on their backs. They escaped Genocide and other horrors. When they got here they grabbed whatever job they could. They had nothing. They saved their money. And when they could, they started their own small businesses (yes, both of my grandparents behaved the same way without knowing each other). No, there was no IPO. These were small neighborhood stores. One was a little general store and the other was a shoe repair store. Yet, they had their own businesses and were able to support their family through their own efforts. My parents, in turn, followed a similar path. No, they were not handed money. They worked at my grandparent's stores and learned an entrepreneurial work ethic. As they got older they got jobs working elsewhere, my mom as a clothing designer at a factory and my dad as a salesman at an insurance company. Years later, after saving every penny they made, they decided to launch their own business, a clothing manufacturing business. My childhood memories are filled with moments in this little shop with both my mom and dad slaving away behind industrial sewing machines. Yes, the "factory" was mom and dad for the first year or two in a little 500 square foot industrial unit. Today we might call that a "minimum viable product". Yet the idea was that they where all-in, quit their jobs, found a contract somewhere and did whatever was necessary to deliver, make money and grow. My parents were no strangers to sixteen hour days behind industrial sewing machines while the kids did homework, played and slept in the background. Of course, through hard work and pure grit they eventually grew out of there and, years later, found themselves running a shop that was about 50,000 square feet, with two or three dozen employees and dozens of machines of all kinds. I, as a kid, loved spending time at the factory messing around with stuff. I eventually learned enough about the machinery that, as a young teenager, I could fix the machines better than my dad or the technicians he would hire from time to time. And yes, I also learned to sew and worked the various machines from time to time. In the weekends my dad and I would go to the factory and prepare work for the coming week. The work ethic was strong. We worked. And, no, we were not millionaires. Yes, my parents did well but the clothing industry was disintegrating slowly and they were very aware of this. Also, I think my parents worked so hard that they really didn't have time to develop strategies. Years later the factory had to be shut down due to the impossibility of competing with cheap Chinese imported goods. Dozens of good people lost their jobs and my parents went back to work for others. Funny enough, my mom went to work designing clothes and my dad went back to insurance. Exactly where they started when they were young. Throughout this I never heard them complain about a thing. They did whatever had to be done to take care of the family. I think those were different times. People were tougher. There was real grit out there. Particularly from immigrants or first generation children. Compared to then, today's population seems neutered. Crying foul at the dumbest things. Filing for disability if they pull a muscle. Such bullshit. Such wasted human potential. I watched my parents and grandparents work no matter what. In fact, I can't even remember any of them ever staying home sick. Hero's, in the true sense of the word, at least as it pertains to the families they took care of. When I got older I followed a similar path. I got nothing from my family other than this insane drive to do whatever was necessary to succeed. My first job was washing dishes at one of those companies that delivered food to airplanes (back in the day when they gave you real plates and silverware). I didn't last long because I had other goals in mind. I quit that and got a job at a professional photography lab and studio. I went to school at night while I held down that job. I actually started to function in an entrepreneurial way as I started to do some professional photo work during that time. It was fun work for a young 19 year old because I was going out to do photo shoots with stunningly beautiful models who I later became friends with. It was an interesting time. As my school work in electrical engineering got past the basic requirements and got more into engineering I felt I needed to get a proper engineering job. And that I did. I worked at a company that made industrial robots, did some basic design work and helped with support and maintenance. I saved as much money as I could. I stayed there nine years. And, yes, I did little entrepreneurial things here and there but nothing major. Nine years later I felt I was ready to launch my own business. And I did. It was a moderate success. I launched another and then another. I have done very well, I've gone bankrupt, recovered and have done well again. The basic formula is to be fiscally responsible, patient, save money and be willing to work hard and smart as needed. Success isn't given, it is earned. I don't doubt there are many who are handed tens, hundreds or millions of dollars by their families to start businesses and play "entrepreneur". Those people do exist. And quite a few fail and never try again (or keep burning cash) because they are what I called "neutered" in terms of the grit required to be an entrepreneur. The fallacy in an article such as the one posted is that money isn't the magical pixie dust that makes an entrepreneur or make him or her successful. No, the pixie dust has nothing whatsoever to do with money. Money is a tool. The pixie dust is a combination of many things, including smarts, timing, frugality, boldness, grit, determination, no fear of failure, the ability to get back up when knocked down and more. You don't need to come from a privileged home to learn these things. A mom holding down three jobs to provide for the family is as much of a positive role model as my parents were. She can teach the kids lots of lessons they will never forget. What does not lead to entrepreneurship is a neutered existence where people are afraid of their own shadows, don't take risks, want the government to provide everything and become dependent on mysterious external magic to survive. This is how a lot of people freak out when the power goes out while others see it as an opportunity to do something else with the kids (and entrepreneurs try to figure out what product to come up with to address the problem). In entrepreneurship money makes things easier if and only if the entrepreneurial foundation is there to begin with. That's why shops like YC need multi-founder teams and, even at that, they have to become their virtual parents and role models in order to ensure success and teach them the culture and ways of entrepreneurship. Young single founders without this "grit" would crumble inside of a year, money or not. I would venture to say that the millions of small business entrepreneurs out there do not come from wealthy families. I don't have any data to back this up but it is simply impossible to think that my local ice cream shop, cleaner's, barber shop, AC guy, gardener, etc. fell into their businesses because they got some money from mom and dad. I think the opposite is far more likely to be true. They worked their asses off, saved some money and launched.
  • clavalle 11y ago
    You seem to think that by 'wealth' they mean access to millions of dollars. Even 'sustain comfort' and have a little something leftover levels of wealth is not available to a sizable percentage of people in the US.
    • rebootthesystem 11y ago
      No I don't. As many have pointed out in this thread, the world is full of entrepreneurs who come from very little and make it happen. To me saying "I have nothing" is just an excuse. Particularly in the US. If you want to make something happen, you can, it will not be handed to you, but you can. What these studies never look at (because it is virtually impossible) are the massive numbers of businesses that start from "wealth" and fail miserably. I know people who were handed money and had no worries about failing. And, guess what, most of them fail. Why? Frankly, I don't know the exact mechanism. It has to be similar to folks who win the lottery and proceed to implode within a year or two. Or how about actors who make millions to shoot a movie in a few weeks and the best they can do with their lives in between movies is stuff drugs and alcohol into their bodies? Nah, money may be a factor for some, but if someone doesn't truly want to be an entrepreneur you can throw millions at them and they'll just blow it. Some of my favorite TV shows are "Kitchen Nightmares" with Gordon Ramsay, "The Profit" with Marcus Lemonis, "Make me a Millionaire Inventor" with George Zaidan and Deanne Bell and, of course, "Shark Tank". I actually use them as teaching opportunities for my kids. We record episodes, watch them together and have discussions over dinner. The kids are good enough now that they can identify problems and patterns right away. Now we pause episodes and have discussions prior to the conclusions being revealed. The kids are getting a "virtual MBA" before they finish high school, which is great. A common thread in a number of these shows are people who either inherit their businesses (lots of that in the restaurant show or The Profit) and proceed to run it into the ground. Almost nothing could be a stronger demonstration that money isn't a success factor in entrepreneurship than to see someone quite literally being HANDED a FULL WORKING BUSINESS only to proceed to destroy it. Why? Lack of focus, grit, drive, etc. All the qualities I mentioned in my prior post. I've seen shows where people end-up hundreds of dollars in debt because they simply had no engagement until someone from the outside slapped the shit out of them in a figurative way and got them to actually work on the business. Money is just another tool, like 3D printer or a laptop. Millions of people have very expensive laptops. Most, from an entrepreneurial perspective, utterly waste them on Facebook and playing games. At the other end of the scale, a true entrepreneur with grit and determination can grab a second hand piece of shit PC, load Linux into it, use a bunch of free tools, learn to code and make something happen. Entrepreneurship isn't about money.
• jackgavigan 11y ago
  Previous discussion: https://news.ycombinator.com/item?id=9913774 https://news.ycombinator.com/item?id=9913774
• metasean 11y ago
  I missed it the first time round (https://news.ycombinator.com/item?id=9913774 https://news.ycombinator.com/item?id=9913774). This aligns with Maslow's Hierarchy - https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs In other words, to reach a level where one pursues respect or self-actualization, one has to have their physiological and safety needs met first.
  • tezza 11y ago
    Maslow says that the layers overlap and that one does not need 100% of a lower level before one starts reaching for higher layer. http://psychclassics.yorku.ca/Maslow/motivation.htm http://psychclassics.yorku.ca/Maslow/motivation.htm Degree of relative satisfaction. -- So far, our theoretical discussion may have given the impression that these five sets of needs are somehow in a step-wise, all-or-none relationships to each other. We have spoken in such terms as the following: "If one need is satisfied, then another emerges." This statement might give the false impression that a need must be satisfied 100 per cent before the next need emerges. In actual fact, most members of our society who are normal, are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time.
    • metasean 11y ago
      From the same source (highlighting mine): Human needs arrange themselves in hierarchies of pre-potency. That is to say, the appearance of one need usually rests on the prior satisfaction of another, more pre-potent need. Man is a perpetually wanting animal. Also no need or drive can be treated as if it were isolated or discrete; every drive is related to the state of satisfaction or dissatisfaction of other drives.
• sebastianconcpt 11y ago
  Article's thesis mixes means with cause. Quite poor.
• pkorzeniewski 11y ago
  In other words, starting a business isn't much different than it was in the past - capital and connections are essential. Sure, there're exceptions when someone with little money and hard work managed to grow their business, but they're that - exceptions. The older I am the more I realize how naive thinking "I just need to create something better than my competitors!" really is. You can have a mediocre product but with capital for heavy marketing and connections to acquire early customers you've much bigger chance of success than "just" having a good product.
  • dylanjermiah 11y ago
    No matter how good the product is, if the distribution is poor, it will go no where.
    • metasean 11y ago
      Distribution is crucial, but I think pkorzeniewski was highlighting how marketing and networking can trump product quality, and his disillusionment with realizing how often this happens. For many products distribution is correlated with marketing and networking, this isn't true for all products (e.g. web-apps).
    • UK-AL 11y ago
      The first customers are often people you know well, who need the product. I.E connections.
  • gonzo 11y ago
    > Sure, there're exceptions when someone with little money and hard work managed to grow their business, but they're that - exceptions. My grandfather (and father) were that person.
    • whoiskevin 11y ago
      Hmmm if your grandfather was successful in some significant way then your father benefited from that security which is exactly what the article is about. So claiming both were those exceptions is a bold claim indeed.
• warkid 11y ago
  “This whole bulk of the population is being seduced into thinking that they can just go out and pursue their dream anytime, but it’s not true.” Cool. Know your place, leave enterpreneurship to blue bloods - that's the conclusion?
  • bildung 11y ago
    > “This whole bulk of the population is being seduced into thinking that they can just go out and pursue their dream anytime, but it’s not true.” > Cool. Know your place, leave enterpreneurship to blue bloods - that's the conclusion? No. "When basic needs are met, it’s easier to be creative; when you know you have a safety net, you are more willing to take risks. “ The solution is providing a social safety net that enables that bulk of the population to pursue their dream.
    • warkid 11y ago
      > The solution is providing a social safety net that enables... In other words - "to each according to his needs"?
      • phaemon 11y ago
        No, quite the opposite. A main feature of the Basic Income is that it is not means tested.
      • wavefunction 11y ago
        You've heard a Marxist slogan and thought it was timely huh? Cause it's either evil monolithic collectivism or saintly and righteous fantasy individualistic libertarianism, those are the two options. It's not like we can't recognize that most individual success is predicated on a healthy and functional society, one that is inclusive and takes care of its members, rather than one that caters solely to individuals fortunate enough to be born into families that have existing wealth.
    • thaumaturgy 11y ago
      (To hopefully avoid some arguments I should probably preface this with saying that I am 100% in favor of something like basic income.) > The solution is providing a social safety net that enables that bulk of the population to pursue their dream. I don't think that will make most people into successful businesspeople (let alone "entrepreneurs" in any non-facile sense of the word), and I don't think that was entirely the point the article was trying to make. Even with basic needs supported, you still need capital to get a business off the ground "correctly". Unfortunately, in a basic income environment, I bet the people taking full advantage of it still wouldn't have access to that kind of capital. I've had my own small business for several years now, but I'm looking for work again. The business has several promising irons in the fire, but I lack either the skill or resources to make any of them take off. Having access to basic income wouldn't substantially change my predicament; having access to good credit, capital, or talent would.
• deleted 11y ago
  [deleted]
• radmuzom 11y ago
  Ten years back, when I was fresh out of college, I joined a startup - not as a founder but as the first employee. A lot of it was driven by reading Paul Graham's essays, and I was naive and immature enough to believe that I was doing something great (as an aside, I came from an economically disadvantaged family; and every cent of my assets today is something I have earned and not something which I have inherited or obtained from anyone including my family). Two important things I learned from the experience - 1. The experience as an employee is completely different from being a founder; a lot of my friends have deluded themselves into believing that early employees enjoy as much benefits as the founders. 2. It is very hard to take risks when you are not financially secure; yes, I am pretty sure that there are counterexamples but I believe my statement is true on average. Now after ten years mostly working in large companies, I have some savings which will allow me to last two years in case I lose my job. Also, I like to think that I have enough skills not to die of hunger if it happens. This has resulted in me being much more "entrepreneurial" and I am already working towards starting a company in the next two years. TL, DR; On an average, it is much easier to start a start-up if you have some basic level of financial security in your life.
  • matwood 11y ago
    > TL, DR; On an average, it is much easier to start a start-up if you have some basic level of financial security in your life. I didn't realize this was some secret. Someone who has parents who are doing well and can pay for their college and living expenses indefinitely will be at an advantage. They can take risks others can't. BTW, this is true from the time someone is born. Parents who are well off will send their child to pre-pre schools, pay for the best elementary, middle and high schools. Then their child gets to go to college, likely loan free, and can focus on college and not working to pay the bills. I'm not saying there is anything wrong with this, and I certainly didn't grow up this way. I'm surprised it wasn't common sense.
    • pound 11y ago
      yes, it is common sense and everyone indeed knows it. But many want to believe in SV as some not rest of the world place with equal opportunities for everyone, just be smart. We all want it to be ruled by meritocracy. That's why we keep drinking this koolaid.
• uptown 11y ago
  Previous discussion: https://news.ycombinator.com/item?id=9913774 https://news.ycombinator.com/item?id=9913774
• deleted 11y ago
  [deleted]
• kbutler 11y ago
  The article's assertion is simply that people with a safety net have a reduced risk. Marginal reduction in risk increases entrepreneurship. There's probably also a marginal reduction in reward, as the reward of entrepreneurial success for the poverty-stricken would include safe housing, food, education for children, etc., which the wealthy already have, but it seems we have no problems desiring to spend more than we currently have.
• totallystupid 11y ago
  Friends! If you find someone trying to criticize your achievement as being "just because you are privileged" say "I'm now further from where I started, than where I started was from where you started. So if you couldn't even make it from where you started to where I started, how do you expect that you could have made it from where I started to where I am now?" People may choose to respond to this by saying something that confirms their idea that they are fundamentally more worse off than you. They may call you privilege blind. They may say it is easier if they had X more capital. The may say anything that confirms their hypothesis that without having whatever they credit you with possessing, they are less capable. I implore you, be not discouraged, nor believe your success any the lesser. Recognize that they are disempowering themselves and, that by believing that success is something that must be given to them rather than something they create, they are acting privileged and entitled, the very things they are trying to say you are. Recognize and, if you like, benevolently point out, that this chosen self-disempowerment, this unworkable attitude, is a poverty of the spirit that will disadvantage them ( by their own choice ) far more than any difference between how much they started with, and how much you did. For if at every step of the way, people are looking to those who have more than them and, "proving" to themselves that this difference was all about different starting points rather than about a different sequence of choices, then such people are disempowering the power of choice, and, how likely do you feel such people will be, to ever make a string of choices that leads to success? No, friends, heed not their admonishments, and keep your children away from their siren songs, for they are only the delusional whispers of a people soothing themselves into apathy by telling themselves they never coulda, instead of believing that they fully could have, had they only chosen to take responsibility for success, instead of deluding themselves that it was owed to them. To put it in more general terms : Being a fake victim doesn't work, you just disempower yourself. When you see people better of than you, choosing to be inspired and to acknowledge their achievements works. Choosing to pretend to yourself that success is something that must be given to you, instead of something you create yourself, is just acting privileged and entitled, and it doesn't work and it actually, this attitude, makes it less likely for you to succeed. An attitude that acknowledge the choices that lead to success, and that takes responsibility yourself to create your own success through your own choices, this attitude works, and makes it more likely for you to succeed. Anything else, any stories you choose to tell yourself about how it's so unfair, is just you choosing to substitute the fake payoff of feeling like a righteous fake victim of unfairness, for the real payoff of actually creating results. Trying to spread to others the claptrap that people are powerless, so you can confirm your own delusions that they are, is just incorrectly trying to disempower others, and it's just wrong. TL;DR -- Deluding yourself that success is given, rather than created, is not an attitude that works to help you create your own success. I hope this cleared some things up for some people. Those too far gone in excusing themselves a lack of success due to a fantasy of disadvantage may or may not be beyond the reach of such simple words, and I hope they can be reached. For everyone else I have even more hope. Keep the faith, it is up to you.
• puranjay 11y ago
  Exact same thing I've felt. I've met a number of founders and while there are definitely the ones who had nothing but smarts and a strong degree, the majority had this idea that if things don't work out, there's family to back them up.
• synthmeat 11y ago
  After teenage angst, came a time of value/family fallout for me. At one point, I haven't even been face to face with any of them for a period of almost 2 years. Not that anything was particulary wrong with anyone, mind you. After 100+ hour workweeks slaving for someone else, ending up in ER several times (but still showing up 8AM sharp day afterward), finally burning out, quitting job, breaking up, and living in windowless installation-free underground solid-cement garage for better part of year (life's paraphernalia funded entirely by sale of single iPhone), I've come home. I cannot even describe what sort of relief I felt having my meals provided for, laundry taken care of, having bed to sleep in, someone to talk to, help to, care for... That was when I figured, given this bare essentials provided by family, I have basically nothing to lose by taking much more risks in life and working on what I care about. I like to think I've instilled that appreciation to my siblings, as well as parents. Three months after that, I've found investors, moved to freeload in one of their penthouses, while I work in a high-risk field of game development. We'll see how that turns out, but I have no fear - I have family to fall back on. --- I'm aware not everyone has what I have with my family, but I'm certain many more do not appreciate what they already have.
• paulhauggis 11y ago
  It takes very little money to start an internet company these days. If you dont have the capital, work and save it. Stop making excuses.
  • jchrisa 11y ago
    It took me a couple of years after college working in restaurants etc before I had the skills to pat the bills. The only way I could afford the time to teach myself code was due to the relaxed schedule that comes from knowing you can ask your parents for help.
  • normloman 11y ago
    But not everyone can afford to have a business fail. And most do.
  • s73v3r 11y ago
    Learn some empathy for people who, unlike you, were not born on second base. Wages have stagnated for working class people for decades. People are having to work two jobs to make ends meet. Are you honestly suggesting that these people are lazy or "making excuses"?
• EGreg 11y ago
  This is what I've been saying. The ability to quit college or stay with a startup long enough until it starts succeeding, or better yet, borrowing money to pay off those loans you took on while believing deeply in your startup, depends on being able to ask your parents for money while things are going not-so-good. For everyone else, there's Limited Liability.
• brightball 11y ago
  If the middle class didn't lose so much of its income on taxes, it would be a lot easier to save money for them to start businesses. The tighter you get squeezed, the longer it takes to save money and the more the actual risk increases based on sheer time value. The unfortunate result of that is that in order to start a business that requires more than an investment of spare time and professional skill (programming or a service based business) everything else is left to the mercy of investors. It's an unfortunate reality.
• jasonkester 11y ago
  Entrepreneurs in other industries may need family money. Software Entrepreneurs can use their own. Working in an industry where $120k/year is considered a starting salary, and where you know for a certainty that you are roughly one Twitter post away from having your pick of three companies that will fight to get you, you can feel free to pursue any goofy idea you like without fearing much for your financial safety should things go wrong. Yet another reason this is the best industry to be in right now.
  • manigandham 11y ago
    Not sure about the twitter post thing... but any industry that has constant demand for good workers and high wages would be conducive to this by eliminating a lot of the monetary risk of failure.
  • mtberatwork 11y ago
    Outside of a few hot spots like SV, $120k/year is certainly not starting salary.
    • jasonkester 11y ago
      It's a shame we see so much denial about this. The rational response when shown that you are dramatically underpaid should be to take steps to get one's self back up to the level of the market. Sadly, the more common response is to call whoever filled you in a liar. I've noticed this happening a lot in the last few years, as developer salaries have skyrocketed but guys who had secured jobs before that still quote 2005 numbers as though they were the case today. You don't need to be in Silicon Valley to make six figures as a developer. Taking that on board rather than rejecting it offhand can only lead you to a better place.
      • mtberatwork 11y ago
        You initially mentioned starting salary, now you are just mentioning 6 figure developer salaries in general. Again, $120k starting salary for your average junior developer fresh out of college isn't a reality outside of places like SV.
• yourilima 11y ago
  well that's... discouraging... depressing...
  • kome 11y ago
    but true :) rich people have it easy. because a failure is not really a failure for them... it's an attempt. But for the rest of us a failure is a failure. Deal with it.
• troels 11y ago
  Since no one else is calling it out, I will - This article starts with a radical statement, but when you read it, it seems to be essentially an opinion piece with a couple of studies hand picked to support its claim. That's not very scientific at all. Which is a pity, since I suspect the claim has some truth to it.
• whoiskevin 11y ago
  This is just common sense but amazingly this bit of common sense is ignored in the valley. Probably because too many want to believe in the dream that the successful were "just smart enough" or "just risky enough" when the majority were simply able to gamble with minimal risk.
• alexfisher 11y ago
  Step 1: Spend less than you make. Step 2: Take risks when you have enough of a safety net. Step 3: Fail/retry or succeed. You don't need to be from a rich family to do these things.
  • dionidium 11y ago
    You don't need to be from a rich family to do these things. Of course not. Who said so? The point is that coming from wealth increases the odds that you'll end up being the type of person who will follow that program. It's not simply about having the capital; it's what coming from a place where security is guaranteed does to your psyche.
  • Terr_ 11y ago
    > You don't need to be from a rich family to do these things. P(became_successful_entrepreneur|was_poor) > 0.0000000000 A technically-true statement, but not a useful one.
  • doyoulikeworms 11y ago
    Well, it should be noted that "rich" is something of a relative term. For many people, being able to take a risk and forgo income for a time is, indeed, to be rich.
  • speik 11y ago
    > Step 2: Take risks when you have enough of a safety net. Someone from a rich family has more of a safety net, straight out of the gate, than someone from a poor family.
  • michaelvkpdx 11y ago
    "Step 1: Spend less than you make...You don't need to be from a rich family to do these things." Uh, in the USA 2015, you do. Or you need to be a very lucky lottery winner. Living-wage jobs are not available to all, and you need a modicum of education to secure one. That education is no longer free.
  • s73v3r 11y ago
    Having a moderately wealthy family increases the speed at which #2 will come, if it comes at all. Someone who's working two jobs to make ends meet is likely never going to be able to get to #2.
• gregpilling 11y ago
  Every third world country I have been too is filled with entrepreneurs hustling to make a buck. Having money helps with big scale business; having no money means you are buying a bag of oranges and selling them off individually on the street corner. I do not come from a family with money. I grew up below the poverty line in fact. This article is crap. It is like saying "Entrepreneurs are all white males" because a lot of entrepreneurs are - but it marginalizes all the people, the many many people, who have succeeded as entrepreneurs despite starting from a very small seed (and who weren't white males of privilege). I have a company because I couldn't imagine working for someone else. I have tried a couple times for a few months, but in the end I can't do it. So I work for myself, and have for 25 years. I start companies because I can't not do it. I have too many ideas, and I want to see if they work so I do little experiments that sometimes turn into viable projects. While I agree I can't take on Tesla unless I had a spare billion laying around, that ignores that there are lots of businesses that can be started for a few dollars. This article ignores all of those business too. Not every business has to be the next Uber.
  • imauld 11y ago
    I'm not sure this article is trying to down play successful ventures from non-stereotypical entrepreneurs but it's making the argument that that the image of the bold, risk taking entrepreneur might not be so accurate in the sense that that aren't really risking that much. It doesn't say that all successful entrepreneurs are white, male and privileged. It just says that a lot of them are and that the largest indicator was being white, male and privileged. This comic does an excellent job of summing it up: http://thewireless.co.nz/articles/the-pencilsword-on-a-plate http://thewireless.co.nz/articles/the-pencilsword-on-a-plate
    • gregpilling 11y ago
      I understand this issue perfectly. In the referenced comic strip, I am Paula on the right and my children are on the left side. What is left out in that strip, is that because of the way I grew up, I am left with a drive to accomplish things that I simply do not see in my own children. The hunger, the drive, the ambition are all from a crappy childhood. The drive is where my success came from, it is what gets me off the floor when life knocks me down. It is the drive that provides the "I refuse to lose" mentality. I don't claim that this drive is all good. A lot of times I think it makes me a little obsessive and crazy in my need to succeed and reduces the number of days I relax.
• jasonlfunk 11y ago
  Of course it's true that people with access to capital can afford to be more risky than people who don't. But the majority of the "rich" aren't entrepreneurial and there are plenty of the "poor" who are. There is more to the average entrepreneurial story than simply privilege.
  • merpnderp 11y ago
    Noisy signal, weak effect, usually equals lots of headline grabbing papers.....that end up being disproved. I saw 'paywall' and guess the actual research is hidden.
• themoops 11y ago
  tl;rify: risk is a privilege of capital. I've always thought the framing of capital risk as the primary basis for allocating reward was suspect for this reason.
• bobjordan 11y ago
  I mostly agree with the article in that at some point you must gain access to capital in either cash or credit and then put it at risk. That said, I was born in WV to 17-year-old mother and 20-year-old father. I was their second child. My father was a coal truck driver, mother a secretary, neither college educated. By the time I was four, my father was in prison two years, and my mother was a struggling 21-year-old with two kids and no family support. Anyhow, I worked my way up from that start, became a bootstrapped entrepreneur in 30's after raising $15K seed, no salary for two years, bought back my seed equity, now a millionaire net worth by 40. If sufficiently hard-headed, stubborn, and unwilling to quit trying to find any way to succeed, it can be done without family money.
  • chaz72 11y ago
    Anecdote.
  • ant6n 11y ago
    Within the context of this discussion, one wonders how you paid the bills for two years without salary. (And where the 15K seed came from)
• arielm 11y ago
  Wow, talk about complete BS... I'm an entrepreneur that started because I didn't have access to capital. I'm sure I'm not the only one.
  • s73v3r 11y ago
    Yet, you had access to money to meet your basic needs.
• bobjordan 11y ago
  I mostly agree with the article in that at some point you must gain access to capital in either cash or credit and then put it at risk. That said, I was born in WV to 17-year-old mother and 20-year-old father. I was their second child. My father was a coal truck driver, mother a secretary, neither college educated. By the time I was four, my father was in prison two years, and my mother was a struggling 21-year-old with two kids and no family support. Anyhow, I worked my way up from that start, became a bootstrapped entrepreneur in 30's after raising $15K seed, no salary for two years, bought back my seed equity, now a millionaire net worth by 40. If sufficiently hard-headed, stubborn, and unwilling to quit trying to find any way to succeed, it can be done without family money.
• clavalle 11y ago
  This seems like common sense -- those that have some sort of solid safety net tend to be able to stick to their search for a business model that works longer than someone that doesn't. Obvious. There are examples of people that take other paths but they tend to need more raw luck than people at the other end of the scale. But I also notice that these people need not be from great wealth. They just need to know that they won't starve or go homeless and, perhaps, get a bit of help with business expenses. It just turns out that even that level of wealth is a bit hard to come by and doesn't apply to the majority of people in the US. This is why I advocate for some sort of 'solid floor' socialism in the US. If people knew that they always had a meal and a place to live we'd see a lot more 'risk taking' because we will have removed a risk singularity from the market. We are really, really close to this already -- it would not take that much more to make our 'soft floor' welfare into something people can unquestionably count on. We'd also see a lot more entrepreneurs serving currently underserved populations just because they will be drawn from that population and will know their pain points and how best to serve them.
• mafribe 11y ago
  While it is clear that one's access to capital is an important consideration, the article is weak, because it overlooks several important points, some which have been mentioned here by others. I'll mention two that I haven't seen being pointed out elsewhere in this discussion. I hope they are of interest. 1. The article states: ... and found that most were white, male, and highly educated. “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. Given that the daughters of rich families are just as well-off and educated as the sons, and have as much access to parental/familial capital, having a wealthy family background cannot be the whole story. We can have long discussions about why this is, but the key point is that this disparity really undermines the article, regardless of cause. 2. The article doesn't reflect on the what exactly entrepreneurship is. One could argue that poor people in the developing world are much more entrepreneurial because most of them are in some form or other self-employed, ie. are entrepreneurs: the cigarette and waterbottle seller on the street corner, the coconut seller on the beach, the fisherman fishing with his own boat and net, the garbage picker who sells empty plastic bottles by the kilo for recyling ... They often are not employed. In a sense it's poverty that forces them into Entrepreneurship. It's the absence of large structured firms with the stability of employment that provide that's missing. By cherrypicking specific forms of glamorous entrepreneurs, they arrive at a skewed conclusion that more careful analysis would undermine.
• xhrpost 11y ago
  I can understand the argument of money means you're more likely to start a company. But the article is titled at addressing risk. Perhaps I'm just being pedantic with semantics, but if you have the money then doesn't that actually reduce the risk? "when you know you have a safety net, you are more willing to take risks." If you have a safety net, it's arguably not a risk then. Perhaps a better way to look at it would be, if you have money, what is a risk to someone else is less of a risk to you. I still feel like risk aversion as a whole can hold us back from things we would enjoy in life. What is this? "a 31-year-old woman who runs in social entrepreneurship circles in New York, and asked not to be named, told Quartz" This could be any random person with an opinion on startups. We have no idea what influenced this view point or where she is coming from. Blindly listening to it sounds dangerous.
• dahart 11y ago
  The article is arguing as if Social Darwinism is an accepted theory of business success. Is it really? I don't think so. I followed several of the links the article was using to support the Social Darwinism claim. One only was actually making that claim (inc.com) and it was obvious pseudo-science, it has the wonderful line: "Self-employment income is heritable". To the people taking offense to this because they didn't start out with a lot of money: the article is talking about probability, not possibility. Just because most entrepreneurs start with some money doesn't mean there is no-one who starts without family financial support. And it's talking about genetics vs financial support, and not about the people who challenge the odds with hard work.
  • Terr_ 11y ago
    > I followed several of the links the article was using to support the Social Darwinism claim. One only was actually making that claim (inc.com) and it was obvious pseudo-science, it has the wonderful line: "Self-employment income is heritable". Your post confuses me, because I think you're lumping two very different -- almost contradictory -- claims together under the vague banner of "Social Darwinism". The inc.com article you are referring to suggests a biological mechanism (DNA molecules and genes), while this article refers to a purely social mechanism ($$$, influence of kin, learned behaviors.)
    • dahart 11y ago
      Have you heard of Social Darwinism before? Its not a term I made up, and you've succinctly identified the exact reason it's so questionable. From Wikipedia: Social Darwinism is a modern name given to various theories of society that emerged in the United Kingdom, North America, and Western Europe in the 1870s, which claim to apply biological concepts of natural selection and survival of the fittest to sociology and politics. You seem to be agreeing with me in pointing out the contradiction between some parts of the article and some of the sources the article used to back up its own claims. It was Aimee Groth that used inc.com to make her points, not me. Aimee's article is inferring biological mechanisms, both through her sources, and directly in the language: “Genes probably matter, as in most things in life, but not much.” "..and found that environmental factors (not genetic) most influenced behavior..." Do you read purely social from those uses of the words "genes" and "genetic"? To me they reflect the biology meanings, or at the very, very least are intentionally conflationary.
• zeveb 11y ago
  That makes sense: they have a better tolerance for risk because they inherited their money, and thus are young enough to take slightly foolish chances (someone who has made his money the hard way is more likely to be responsible with it). Which leads one to wonder what the unintended consequences of tinkering with gift, inheritance and other family-related tax rates might be. For that matter, if Mike Markkula had not received all those stock options at Fairchild & Intel and been able to retire, would we all have smartphones and personal computers today, or would we be stuck with an OSI/ITU-type centralised consumer-only network?
• ausjke 11y ago
  Agreed, but nothing really surprised me. It's just some of those start-up pumpers keep ignoring this fundamental truth. It's not entrepreneur gene, however statistically, it's still the gene from your family tree, it normally takes generations to build the foundation for most people to take risks via education and efforts, and most if not all 'rich' families started from their disadvantaged ancestors. Rising from poor like what's in Godfather movies is still possible, but very unlikely.
  • mindcrime 11y ago
    It's just some of those start-up pumpers keep ignoring this fundamental truth. And they should, because it's irrelevant. You can't change your parents, ya know. In the end, you play the hand you're dealt. If you're not from a rich family, maybe you just have to work that much harder, but I don't think the moral is "you were born poor, so just STFU and accept your lot in life". If someone wants to be an entrepreneur, they will find a way, even if they're from a poor family. Note that I'm not saying they'll all build billion dollar Internet companies - the range of what "entrepreneur" encompasses is pretty broad. Rising from poor like what's in Godfather movies is still possible, but very unlikely. So? There's a binary difference between "unlikely" and "impossible". Should we all avoid striving for anything that's "unlikely"? Most kids who play high-school football will never even get a scholarship at a BCS school, much less play in the NFL. Most kids who play football for BCS schools will never play in the NFL. Should kids stop dreaming of being NFL players? What if nobody bothered to dream anymore? What if nobody said "Fuck it, I can overcome the odds and do the unlikely?" Personally, I don't want to live in that world.
    • nostrebored 11y ago
      Football analogy is probably actually pretty apt. You're playing a game where the vast majority don't get what they're hoping for, sacrificing opportunities along the way, while a large percentage get sports related injuries. The opportunity cost and actual cost of football greatly outweigh the likely benefit. Yet still, people think that they are the exception, and that the bad things can't happen to them. I think that your latter point is fair, we do need people who are willing to challenge the squo, and we do need people with good ideas to try to make them realities. But going in blind doesn't help anyone, and ignoring the reality of the situation (which from your other comments, it doesn't seem like you're doing) doesn't let you think of potential solutions.
• Plishar 11y ago
  It's a blanket statement that obviously applies to some, but not all. In my mind, that makes this a click-bait article.
• stabilo 11y ago
  "The average cost to launch a startup is around $30,000..." And how much does YC invest (loan)?
• jmzbond 11y ago
  This is also why I think people should be very careful before comparing two entrepreneurs, or saying something like: "why is ___ so much less busy than you and more successful?" Well, because ____'s parents are literally billionaires. I have to work so much harder because my bank account is actually decreasing everyday!
• ThomPete 11y ago
  I wonder how that explains the fairly high risk averseness in the Scandinavian countries? It's literally safe to fail yet failing is frowned upon. I don't think that article is telling the right story.
  • api 11y ago
    Correct me if I'm wrong, but don't those countries have a massive amount of micromanaging regulations around things like employment practices? If that's the case, that certainly will stifle entrepreneurship even if everything else is in line.
    • ThomPete 11y ago
      Not for startups. For larger institutions with unions etc. sure, but startups aren't regulated very tightly, it's easy to hire and fire too. You can start a company in less than a week. All digital.
  • Apocryphon 11y ago
    Isn't Finland supposed to have a pretty bustling tech scene?
    • ThomPete 11y ago
      Not better than Stockholm but yeah. Still the point is that more should be doing that since the cost of failure financially is much lower (culturally it's ironically higher)
• johanneskanybal 11y ago
  duh
• johanneskanybal 11y ago
  duh
• myth_buster 11y ago
  The risk taken by risk takers (entrepreneurs) is disproportionate as partly expressed in the article. Apart from financial risk, there is the risk of employebility once you are off the radar and are asked for references once you try to join the workforce. For immigrants the risk of maintaining the status to stay in the country. This is perhaps a major reason why graduates go back to their home country to start companies. Additionally there is conscious/subconscious biases at play when startups filter people based on "fit" which is to say "birds of a feather flock together". Hence it could be rather daunting for people from a different demographic to gain relevant experience which paves their way to a successful startup. Once the startup grows, they usually become more accepting in this regard.
• wageslave420 11y ago
  Why would I want to contribute to a society that punishes starving artists trying to complete their masterpiece?
• grandalf 11y ago
  People with more money do more of everything... they have more fun, more sex partners, better sex, more entertaining lives, more meaningful lives, more profound moments, more meaningful relationships, and make more of an impact on humanity. This is not a value judgment. Having access to resources means having more freedom. That's freedom to do what you want, to think about what matters, to exercise, to eat healthy, to take time off to spend with friends, to participate in humanity rather than just working to meet your basic needs. All this is trivially true or full of counterexamples depending on where you draw the line between rich and non-rich.
  • mojuba 11y ago
    Sad and true, and it's because we still live in a survivalist world. We talk a lot about sharing and doing good, but our instincts tell us the opposite. Nobody's going to share their wealth with you except your parents (if at all), that's even natural.
  • cylinder 11y ago
    Well, yeah. Those reasons are exactly why people desire to earn money.
• dummy7953 11y ago
  When you think about it, the whole notion of Entrepreneurs having a "gene for risk" is some serious Social Darwinist bullshit.
• deleted 11y ago
  [deleted]
• known 11y ago
  You need Cash/Caste to succeed as an Entrepreneur in India; http://goo.gl/NFK0A http://goo.gl/NFK0A
  • mangamadaiyan 11y ago
    Cash, yes. Caste - IMHO, not really. Could you substantiate your statement with something other than a change.org link, please?
• ilaksh 11y ago
  For most people there is no risk available for them to take.
• mindcrime 11y ago
  Wow, talk about an article that is completely devoid of value. That stands out as soon as you see "cult of the entrepreneur" in the first sentence. OK, now we know that most entrepreneurs come from "families with money" (according to their definitions anyway). Great, so what do I do with that particular bit of information? I'm most definitely not from a family of means, so do I just quit now? Have I been deluding myself? If so, so what, it's my right to spend my time and money however I want anyway. It's not like I can go back and change my parents. If you're not from a family of means, do things differently. For example: work a day job making a reasonable salary and work on the startup on the side, supporting yourself with your salary until you have a product built. Not every entrepreneurial scenario involves gambling with homelessness. Whatever. I smell bullshit with this article anyway. This is just propaganda from the sect of people who hate individualism, hate capitalism, and will take any opportunity to bash the idea that anyone can advance in life through hard work, grit, determination and moxie.
  • govindkabra31 11y ago
    There are lot of people who fall for the encouragement from PG and such and take risks without being aware of the expected financial impact. Read through comments here and there are some first hand anecdotes. It is hugely more efficient for someone to take into account this research result, rather than learn that after years of toiling, the hard way. Perhaps, it was not as insightful to you personally. But not every piece has to be valuable to everyone for it to avoid being classified as devoid of value.
    • mindcrime 11y ago
      I don't see how you can say it offers any value. There are no actionable insights here. You can't change your family, so in the end, every individual still faces exactly the same choice: pursue the entrepreneurial path, or not. What other people did and what their circumstances were is irrelevant. If the article purported to prove that it is impossible to succeed as an entrepreneur without coming from a rich family, and if there were no counter-examples disproving that assertion, then I could see saying it had value. But we know that's not the case. People do succeed as entrepreneurs despite coming from poor families. There are lot of people who fall for the encouragement from PG and such and take risks without being aware of the expected financial impact. A "lot" of people do that? I'd need to see some evidence to accept that assertion. And even if that is so, this article doesn't help them. They still can't change their backgrounds / families, and they still face the same choice. who fall for the encouragement from PG and such That's some interesting language. You make it sound like encouraging someone to chase their dreams is some kind of scam. Oh, pity the poor gullible fool, who "fell for" the idea of trying to make a better life for him/her-self... A more useful article, to my way of thinking, would have been one that presented the data from this article and then continued by saying "OK, so if you're not from a wealthy family, here are the things you can do to improve your odds of succeeding anyway..." That what I mean by "actionable information. Give people something they can actually use. That would be a valuable article, and a valuable discussion. All I see here is negativity and anti-individualistic rabble-rousing.
• michaelvkpdx 11y ago
  Remember, in the post-WWII USA we live in a feudalist society. If we lived in a true capitalist society, with societal mechanisms in place to keep wealth circulating, this wouldn't be a problem. And we'd still know how to get to the moon, too.
• spacehome 11y ago
  I miss Michael O'Church.
• BurningFrog 11y ago
  That something depends on your family does not rule out a genetic component.
• botswana99 11y ago
  If you work your way through school, you end with ‘deficits’ relative to your peers whose parents paid their way through University (and provided a rich set of ‘cultural’ experiences along the way). It is a tough having tens of thousands of debt for your CS degree, as well having spent all your free time in crummy jobs to pay the bills along the way. Walk through a co-working center in Cambridge or San Francisco – how do all those 23 year olds afford rent in some of the most expensive cities in America? And how can they afford to have a bright shiny two grand MacBook on their desk? If you are like me, a working class kid interested in technology and startups, it can be tough to see your peers with those breaks. I’ve had every startup role from individual contributor to VP, CTO, COO and CEO under my belt. My perspective is that you can always go to a few museums, read a few books, and catch up (or surpass) your well healed peers. Take it from a 51 year old -- if you have worked your way through school and can’t afford to found a company in your twenties don’t despair – you’ll have a long life and many chances. But the determination that drove you to work your way through school is something precious and remarkable. It’s not a deficit at all.
  • patkai 11y ago
    No, in the long term it isn't. In the short term there may be all kinds of deficit, but they will eventually disappear. It has also been a great source of self-esteem for me, the fact that I left home without a penny.
• dlo 11y ago
  Here's how you can simulate coming from a wealthy family. 1) Reduce your personal burn rate. 2) Save money, enough to last more than a year on your reduced burn rate. 3) Develop high-demand, valuable skills so you will always be able to get a job if things go south.
• sklogic 11y ago
  And this is just another great argument for the basic income idea.
• millermp12 11y ago
  I guarantee you that far, far more trustafarians are using their "privilege" to indulge a negro fetish or whatever "social justice" meme happens to be trending rather than risking anyone's equity in something entrepreneurial. You think that a typical person would use the millions they made and plow it back into not one but three hair-brained ventures (Musk with Tesla, SpaceEx, Solar City)? Consider one of the comments below, something like "I would be entrepreneurial too if I didn't have to pay for rent and food." Bullshit. If that poser inherited millions he would scarcely summon the energy to snap selfies at some BLM "protest". Seriously: eugenics can't come fast enough.
  • aeturnum 11y ago
    Nice. So you disagree with the article because there are some number of trust fund kids who aren't entrepreneurs? The article does not make the claim that having money is required for entrepreneurship, simply that it is extremely influential (more influential than any genetic component). That said, maybe this comment is a parody of a viewpoint. If I've missed something, excuse me.
• noobplusplus 11y ago
  this is so true.
• ghufran_syed 11y ago
  This entire thread is the most amazing Rorsach test, on the basis of the flimsiest data. Many of the points made in the comments may be true, but it's a disappointing for a HN thread to have so much impassioned comment but so little critical analysis of the underlying data. The first issue worth noting is that the definition of 'employed'(not discussed in the article or the original paper) vs self-employed incorporated vs self-employed non-incorporated are based on self-reporting from the census [5]: "CURRENT OR MOST RECENT JOB ACTIVITY. Describe clearly this person’s chief job activity or business last week. If this person had more than one job, describe the one at which this person worked the most hours. If this person had no job or business last week, give information for his/her last job or business. Mark (X) ONE box. - an employee of a PRIVATE FOR-PROFIT company or business, or of an individual, for wages, salary, or commissions? ... several other answers elided... - SELF-EMPLOYED in own INCORPORATED business, professional practice, or farm? - SELF-EMPLOYED in own INCORPORATED business, professional practice, or farm?" So if you are getting a salary from your startup, do you think there might be some ambiguity about which one you tick? If you are working at company A, but working on your startup on evenings and weekends, you would mark 'employed' if you followed the instructions. Once you understand where the data came from, you might not infer the same meaning to the underlying paper, whose abstract is here: "We disaggregate the self-employed into incorporated and unincorporated to distinguish between "entrepreneurs" and other business owners. We show that the incorporated self-employed and their businesses engage in activities that demand comparatively strong nonroutine cognitive abilities, while the unincorporated and their firms perform tasks demanding relatively strong manual skills. The incorporated self-employed have distinct cognitive and noncognitive traits. Besides tending to be white, male, and come from higher-income families, the incorporated—as teenagers—typically scored higher on learning aptitude tests, had greater self-esteem, and engaged in more disruptive, illicit activities. The combination of "smart" and "illicit" tendencies as youths accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to past research, we find that entrepreneurs earn much more per hour than their salaried and unincorporated counterparts." So they are using 'incorporated' as a proxy for entrepreneur, by comparing them with 'unincorporated self employed'. Let's see if that makes sense, and if their 'entrepreneur' is the same as what we might call a 'startup founder': - The ratio of unincorporated to incorporated is 2:1 (approx 10 million vs 5 million in 2009 [1]) - The SBA says 600,000 new ventures are started each year (that they know about) [2] - There are around 70000 angel deals in one year (2013) [3] - There are about 4000 venture deals in one year (2014) [4] We can probably agree that the angel and venture deals are 'real' startup entrepreneurs. Some small indeterminate proportion of the incorporated and unincorporated self-employed probably are too. However, doesn't it seem a little silly to analyze the 5 million incorporated self-employed vs the 10 million non-incorporated self-employed, and assume it's telling you anything about start-up entrepreneurs ? [1] http://www.bls.gov/opub/mlr/2010/09/art2full.pdf http://www.bls.gov/opub/mlr/2010/09/art2full.pdf [2] https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf https://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf [3] http://www.angelcapitalassociation.org/data/Documents/Resources/ACA-AngelBackground2014.pdf http://www.angelcapitalassociation.org/data/Documents/Resour... [4] http://nvca.org/?ddownload=1868 http://nvca.org/?ddownload=1868 (2015 NVCA Yearbook) [5] http://www2.census.gov/programs-surveys/acs/methodology/questionnaires/2015/quest15.pdf http://www2.census.gov/programs-surveys/acs/methodology/ques... Edited to fix formatting issues
• orky56 11y ago
  Whether it's your savings or capital from investors, spare cash gives you the leg up to artificially scale faster than you would organically. This increases the risk but also helps you capitalize on timing when an opportunity is short-lived.
• robocat 11y ago
  Let's call it an "orderly" mind, and Austrians and Swiss seem to have it too. A Bosnian recently said that Slovenia was more "Austrian" than Bosnia when talking about this trait to me.
• kseshadri 11y ago
  One cannot be unmindful of risk. Those with family money know they can afford the risk. It is really that simple. I started a venture, and assessed the status after a period, and had kept a stop loss for how much I can afford to lose. I closed at the limit and shut it down. I must of course mention that business schools teach you to a project feasibility report first and then proceed. But quite often, I suspect, misguidance and insincere encouragement makes one launch a project without a strict and impassioned appraisal. K.Seshadri