5 ms·

I think there's some truth to the family support part of this. I was just racking my brain trying to think of any founder I knew (and I know a ton of them) that

by vabmit 9y ago

I think there's some truth to the family support part of this. I was just racking my brain trying to think of any founder I knew (and I know a ton of them) that was in the position of "success or potentially homeless". But, I can't. I think there's some variable confounding going on when YC and others talk about people in their early 20's being better positioned to do startups because they're less risk averse due to youth. I think they're less risk averse because it's not such a big deal for them to move back in with their parents if they fail. And, their parents are usually still working and therefor able to handle the strain of that. Nearly every successful founder I know of had either very wealthy parents, very supportive family and friends, or both. I don't see any shame in admitting that it's not about some romanticized risk taker ideal alpha geek, but rather about upper class kids lucky enough to have a bunch of built in risk arbitrage supports that they lucked out on being born with.

harryh 9y ago
I don't really know his story but I think Jan Koum grew up poor. Apparently he signed his FB acquisition papers on the door of a welfare office where he (or his family?) once collected checks. https://twitter.com/khanoisseur/status/606285374068039682?lang=en https://twitter.com/khanoisseur/status/606285374068039682?la...
aaron-lebo 9y ago
Why is it like that, though? If you are single you can live pretty damn well on 40 to 50k (depending on where you are). If you are in a committed relationship with no kids, things get cheaper with scale (food, living expenses, etc). To make 40k a year isn't that difficult when the going rate is a lot higher for a full time job. You scrap together some part time work and then you are able to support yourself and have lots of free time to work on your side project. Granted, that's not possible for all startups or for all individuals, but it doesn't have to be homeless or success.
- vabmit 9y ago
  Well, side projects are different. I wouldn't really call them start-ups. I'm talking about a VC funded start-up or a start-up whose goal is to eventually be VC funded. You have to be all-in on that kind of thing or you will not be successful. That is so much the case that it is actually written into the Terms Sheet (funding contract). Usually, it says something like "100% of professional/employment activities". It's not as important to be in SFBA as it used to be. But, it is still a major factor in success. I consulted for a start-up that had to move there despite not wanting to just because the potential employment pool was so poor in my area (Boston). In SFBA, $40K/yr to $50K/yr is probably not enough to cover just rent, taxes, and utilities. You still need to worry about food, transportation, health insurance, etc. And, you'd have to convince other people to join your "start-up" that was only a part time hobby for you. Attracting the first employees is one of the hardest parts because that is when your ability to cover their paychecks is most uncertain. I imagine it would be very hard to do if they see you're not all-in and absolutely convinced the company was going to be successful. And, who the first employees wind up being is one of the most risky parts... hire the wrong people and you're done. I know a lot more people that founded a start-up and did not do well than I know people that did. The stories about the failures are usually not that bad (but some are terrible). A joke among that circle of friends and I is that a start-up is basically a really really expensive job application to a more successful start-up that someone else pays for. I encourage people to apply to YC. Because, I believe entrepreneurship is good and the people I know that did well did very well. But, be honest with yourself - Do you have wealthy parents/a wealthy spouse/close friend? Will they support you while you get back on your feet? If so, for how long? That's a discussion you can have with them and get a verbal commitment before you just go for it. I had a good long-time friend, that I was supportive of, start a start-up and fail. He wound up sleeping on my couch for an extended period of time. We're around the same age... I have health insurance, a pretty fat 401K and IRA, a vested pension, an emergency fund, and a lot of seniority at my job. He does not have those things. As you get older, the choices you make now will look like they were very very different choices. Don't romanticize them- really think them through.
- SpaceManNabs 9y ago
  That is true, but not everybody has those conditions. Some people have other demands. For example, I would not be able to start a start up for a while even as a recent grad software engineer at a fortune 50 company because: 1. I have to support my mom and siblings every once in a while 2. Am saving up for grad school expenses (even with funding of tuition and such through grants and such, my mother would not be able to support me for the other misc expenses) 3. I can't do part time work as I heavily am depending on the medical insurance my employer provides (nothing life threatening, but I am using all the preventive care now that I never had access to before) 4. Am saving up for a lot of expenses such as cars and such that I will need as I am starting as an adult But yes, in an ideal world, 50k can get you good. I don't have kids, but it would not be easy for me, and a part time job would not be enough! There is some merit in the constraint of initial conditions. Edit: And it is not like I don't have drive. I read papers from astrophysical journals and ML journals all the time, and try to include those ideas in side projects. And I have an idea for a startup once I am more comfortable in my later 20s (after grad school).
  - wskinner 9y ago
    Why do you feel entitled to start a startup? Everything you mentioned aside from your medical expenses is a choice. If you choose to prioritize things that prevent you from starting a startup, then you are choosing not to start a startup.
    - SpaceManNabs 9y ago
      I don't feel entitled. I understood the nature of the discussion as to what barriers there could be. And in lots of America, not having a car is not a choice. And, supporting my family is also not a choice. I could see the grad school stuff as a choice. I also see it as a safe guard against automating away my job because I obtain a higher skill set.
mwseibel 9y ago
I agree that being able to move back in with your parents is a huge luxury that many founders have (I did as well). I also believe that there are a lot of people (not everyone of course) who have that safety net.
- koolkatkool 9y ago
  Yeah something like 1% have wealthy families and something like 99% don't. YC has always been a program by the upper class and for the upper class. There's a reason YC doesn't publish economic diversity stats. It would be an indictment of their systemic bias. You're not better than the all of the 99 other people that didn't go to Yale/YC, you're just lucky that you were granted help instead of them. And yet it never seems to occur to the "elite" YC team that any of them could've been born on the outside of this class system. YC, like most class-based institutions, sits on a fortunate while millions are starved for opportunity. The people that receive its help are those that need it least. Someone with a genuine underdog story needs to create YCs successor. YC is too much the "Harvard of accelerators."
  - mwseibel 9y ago
    I didn't grow up in the 1 percent and the vast majority of people I know in YC didn't either.
    - TACIXAT 9y ago
      I think they minced the argument a bit bringing up the 1%. I didn't grow up in the 1% but I absolutely have a support system if anything in my life were to ever arise.
graycat 9y ago
Yup.
Mz 9y ago
They maybe don't get called "startup founders" because that implies very big business with lots of money on the table, but there are outright homeless entrepreneurs. I have seen stories about it. A quick google turns up this, for example: http://under30ceo.com/from-homeless-to-entrepreneurs-extraordinary-stories/ http://under30ceo.com/from-homeless-to-entrepreneurs-extraor... Not disagreeing with you that "startups" -- these high growth, big money businesses -- are typically started by rich kids, basically.
guimarin 9y ago
My dad was not a successful founder. He quit his job at 40 or so to start a company. He failed miserably, and despite us being fairly well off, went into a downward spiral. He is divorced, alone, and living in a trailer park. Every time I visit him in his doublewide in Campbell, still same furniture as person who died in it had, I expect him to be hanging from the rafters. He was a serial startup employee with over 20 years tech startup experience before starting. His startup destroyed his life. the YC, anyone can become a founder mythology is toxic. My dad was rich from previous exits, had everything going for him, and had a good idea/execution. He just couldn't boil the ocean and it destroyed him.
- jansho 9y ago
  Damn that's hard. Thank you for sharing. Best of luck to you and your family - as optimist, I hope that your dad can find peace soon.
- jondubois 9y ago
  Tech startups are completely random. When you're starting out, it's like playing the lottery. The more you win, the easier it becomes to win; this keeps you playing... Until you suddenly lose everything.
- vabmit 9y ago
  Something similar happened to my dad. He had a pretty successful company providing security guard services mostly on government contracts. It wasn't very lucrative. He wasn't rich. But, it paid the mortgage and the bills and my siblings and I were well taken care of. Then, when I was around 9 or 10 or so, Wackenhut kind of raised a lot of money and became the Amazon of security guard services. They Amazon'd his company and everything he built just kind of slowly disappeared over the next couple years. He could have done OK getting a job as a security guard himself and working his way up or even changing careers (he was reasonably intelligent). But, something about his company failing broke him and he just kind of never did anything after that. My teen years were absolute chaos until I dropped out of high school and got a job driving a fork lift around 17 and moved out. I remember there being absolutely no food in the house for days and days. It was crazy. I've had a bunch of friends/acquaintances that killed themselves (hung/shot/jumped off the GG) after their start-ups failed. But, they all did it during the first boom (90's). I haven't personally known anyone that's done it during this boom, yet. I think the difference might be that the bubble hasn't popped yet this time. People who fail can still easily go find work. Back then all the companies were laying people off. So, if your start-up failed there was basically no where to go but back home. Probably the majority of the people I knew in SFBA back when the bubble popped did that. It was crazy how suddenly highways that were packed with traffic could just be cruised down at the speed limit during rush hour with out touching your breaks until you got to your exit. It seemed surreal.
nostrademons 9y ago
There are a few examples of startup founders who were potentially homeless if it failed (AirBnB is the obvious one...they started it because they were literally a month away from being homeless), but you're right, this is the exception rather than the rule. I think what's frequently overlooked in the "how do I get the resources to found a startup without risking everything?" is that you don't do it in one shot. If you have zero in the bank, your first priority should be to get six months of living expenses in the bank, and that usually means taking a job and saving 25% of your paycheck for two years. Then once you have six months in the bank, your next priority should be to get 3 years of savings in the bank, and that usually means taking a better job and saving 50% of your paycheck for 3 years. Only once you've got about 3 years saved up are you really in a position to found a startup without having run across seed funding from an angel. Few people really understand compound interest or how it works out in practice. It's not just about putting money in a bank account or index fund and letting it grow. It's about having successively larger cash cushions so you can take bigger risks with better risk/reward trade-offs.
- koolkatkool 9y ago
  Was airbnb a month away from being evicted or a month away from asking their parents for another deposit? Lots of rich kids play at being poor all the while knowing they can call home at any point.
  - nostrademons 9y ago
    I don't know the family situation of the AirBnB founders personally, but Wikipedia says both of them were social workers, which isn't exactly what most people would consider a rich kid background. I'm always a bit perplexed by the people who come out of the woodwork to say that startups are a rich kid's game, though. What's the family background of folks on this site? I understand that there's a wide variety of socioeconomic statuses on the Internet, and that wealth is relative and 50% of Americans have zero in savings. But is there actually a huge HN population whose families are worse-off than social workers (Brian Chesky), seed & clothing factory workers (Marc Andreesen), mechanics (Steve Jobs), engineers (Steve Wozniak), college professors (Larry Page), or refugees (Sergey Brin, Jan Koum)? I come from a single-earner (elementary school teacher) family, and usually think of myself as smack in the middle of the socioeconomic spectrum. I could and did move back home after college, but then, a lot of children also have that privilege. Do the demographics of HN skew so much poorer that most folks here do not have parental households they could go back to?
mifeng 9y ago
I understand what you're saying, but are other paths besides being born with a silver spoon. My family was on food stamps when I was a kid. After college, I worked for a long time in finance before joining the tech industry 7 years ago. My savings during the first part of my career gave me the risk tolerance to do startups.

by vabmit 9y ago

harryh 9y ago

I don't really know his story but I think Jan Koum grew up poor. Apparently he signed his FB acquisition papers on the door of a welfare office where he (or his family?) once collected checks. https://twitter.com/khanoisseur/status/606285374068039682?lang=en https://twitter.com/khanoisseur/status/606285374068039682?la...

aaron-lebo 9y ago

Why is it like that, though? If you are single you can live pretty damn well on 40 to 50k (depending on where you are). If you are in a committed relationship with no kids, things get cheaper with scale (food, living expenses, etc). To make 40k a year isn't that difficult when the going rate is a lot higher for a full time job. You scrap together some part time work and then you are able to support yourself and have lots of free time to work on your side project. Granted, that's not possible for all startups or for all individuals, but it doesn't have to be homeless or success.

vabmit 9y ago
Well, side projects are different. I wouldn't really call them start-ups. I'm talking about a VC funded start-up or a start-up whose goal is to eventually be VC funded. You have to be all-in on that kind of thing or you will not be successful. That is so much the case that it is actually written into the Terms Sheet (funding contract). Usually, it says something like "100% of professional/employment activities". It's not as important to be in SFBA as it used to be. But, it is still a major factor in success. I consulted for a start-up that had to move there despite not wanting to just because the potential employment pool was so poor in my area (Boston). In SFBA, $40K/yr to $50K/yr is probably not enough to cover just rent, taxes, and utilities. You still need to worry about food, transportation, health insurance, etc. And, you'd have to convince other people to join your "start-up" that was only a part time hobby for you. Attracting the first employees is one of the hardest parts because that is when your ability to cover their paychecks is most uncertain. I imagine it would be very hard to do if they see you're not all-in and absolutely convinced the company was going to be successful. And, who the first employees wind up being is one of the most risky parts... hire the wrong people and you're done. I know a lot more people that founded a start-up and did not do well than I know people that did. The stories about the failures are usually not that bad (but some are terrible). A joke among that circle of friends and I is that a start-up is basically a really really expensive job application to a more successful start-up that someone else pays for. I encourage people to apply to YC. Because, I believe entrepreneurship is good and the people I know that did well did very well. But, be honest with yourself - Do you have wealthy parents/a wealthy spouse/close friend? Will they support you while you get back on your feet? If so, for how long? That's a discussion you can have with them and get a verbal commitment before you just go for it. I had a good long-time friend, that I was supportive of, start a start-up and fail. He wound up sleeping on my couch for an extended period of time. We're around the same age... I have health insurance, a pretty fat 401K and IRA, a vested pension, an emergency fund, and a lot of seniority at my job. He does not have those things. As you get older, the choices you make now will look like they were very very different choices. Don't romanticize them- really think them through.
SpaceManNabs 9y ago
That is true, but not everybody has those conditions. Some people have other demands. For example, I would not be able to start a start up for a while even as a recent grad software engineer at a fortune 50 company because: 1. I have to support my mom and siblings every once in a while 2. Am saving up for grad school expenses (even with funding of tuition and such through grants and such, my mother would not be able to support me for the other misc expenses) 3. I can't do part time work as I heavily am depending on the medical insurance my employer provides (nothing life threatening, but I am using all the preventive care now that I never had access to before) 4. Am saving up for a lot of expenses such as cars and such that I will need as I am starting as an adult But yes, in an ideal world, 50k can get you good. I don't have kids, but it would not be easy for me, and a part time job would not be enough! There is some merit in the constraint of initial conditions. Edit: And it is not like I don't have drive. I read papers from astrophysical journals and ML journals all the time, and try to include those ideas in side projects. And I have an idea for a startup once I am more comfortable in my later 20s (after grad school).
- wskinner 9y ago
  Why do you feel entitled to start a startup? Everything you mentioned aside from your medical expenses is a choice. If you choose to prioritize things that prevent you from starting a startup, then you are choosing not to start a startup.
  - SpaceManNabs 9y ago
    I don't feel entitled. I understood the nature of the discussion as to what barriers there could be. And in lots of America, not having a car is not a choice. And, supporting my family is also not a choice. I could see the grad school stuff as a choice. I also see it as a safe guard against automating away my job because I obtain a higher skill set.

mwseibel 9y ago

I agree that being able to move back in with your parents is a huge luxury that many founders have (I did as well). I also believe that there are a lot of people (not everyone of course) who have that safety net.

koolkatkool 9y ago
Yeah something like 1% have wealthy families and something like 99% don't. YC has always been a program by the upper class and for the upper class. There's a reason YC doesn't publish economic diversity stats. It would be an indictment of their systemic bias. You're not better than the all of the 99 other people that didn't go to Yale/YC, you're just lucky that you were granted help instead of them. And yet it never seems to occur to the "elite" YC team that any of them could've been born on the outside of this class system. YC, like most class-based institutions, sits on a fortunate while millions are starved for opportunity. The people that receive its help are those that need it least. Someone with a genuine underdog story needs to create YCs successor. YC is too much the "Harvard of accelerators."
- mwseibel 9y ago
  I didn't grow up in the 1 percent and the vast majority of people I know in YC didn't either.
  - TACIXAT 9y ago
    I think they minced the argument a bit bringing up the 1%. I didn't grow up in the 1% but I absolutely have a support system if anything in my life were to ever arise.

graycat 9y ago

Yup.

Mz 9y ago

They maybe don't get called "startup founders" because that implies very big business with lots of money on the table, but there are outright homeless entrepreneurs. I have seen stories about it. A quick google turns up this, for example: http://under30ceo.com/from-homeless-to-entrepreneurs-extraordinary-stories/ http://under30ceo.com/from-homeless-to-entrepreneurs-extraor... Not disagreeing with you that "startups" -- these high growth, big money businesses -- are typically started by rich kids, basically.

guimarin 9y ago

My dad was not a successful founder. He quit his job at 40 or so to start a company. He failed miserably, and despite us being fairly well off, went into a downward spiral. He is divorced, alone, and living in a trailer park. Every time I visit him in his doublewide in Campbell, still same furniture as person who died in it had, I expect him to be hanging from the rafters. He was a serial startup employee with over 20 years tech startup experience before starting. His startup destroyed his life. the YC, anyone can become a founder mythology is toxic. My dad was rich from previous exits, had everything going for him, and had a good idea/execution. He just couldn't boil the ocean and it destroyed him.

jansho 9y ago
Damn that's hard. Thank you for sharing. Best of luck to you and your family - as optimist, I hope that your dad can find peace soon.
jondubois 9y ago
Tech startups are completely random. When you're starting out, it's like playing the lottery. The more you win, the easier it becomes to win; this keeps you playing... Until you suddenly lose everything.
vabmit 9y ago
Something similar happened to my dad. He had a pretty successful company providing security guard services mostly on government contracts. It wasn't very lucrative. He wasn't rich. But, it paid the mortgage and the bills and my siblings and I were well taken care of. Then, when I was around 9 or 10 or so, Wackenhut kind of raised a lot of money and became the Amazon of security guard services. They Amazon'd his company and everything he built just kind of slowly disappeared over the next couple years. He could have done OK getting a job as a security guard himself and working his way up or even changing careers (he was reasonably intelligent). But, something about his company failing broke him and he just kind of never did anything after that. My teen years were absolute chaos until I dropped out of high school and got a job driving a fork lift around 17 and moved out. I remember there being absolutely no food in the house for days and days. It was crazy. I've had a bunch of friends/acquaintances that killed themselves (hung/shot/jumped off the GG) after their start-ups failed. But, they all did it during the first boom (90's). I haven't personally known anyone that's done it during this boom, yet. I think the difference might be that the bubble hasn't popped yet this time. People who fail can still easily go find work. Back then all the companies were laying people off. So, if your start-up failed there was basically no where to go but back home. Probably the majority of the people I knew in SFBA back when the bubble popped did that. It was crazy how suddenly highways that were packed with traffic could just be cruised down at the speed limit during rush hour with out touching your breaks until you got to your exit. It seemed surreal.

nostrademons 9y ago

There are a few examples of startup founders who were potentially homeless if it failed (AirBnB is the obvious one...they started it because they were literally a month away from being homeless), but you're right, this is the exception rather than the rule. I think what's frequently overlooked in the "how do I get the resources to found a startup without risking everything?" is that you don't do it in one shot. If you have zero in the bank, your first priority should be to get six months of living expenses in the bank, and that usually means taking a job and saving 25% of your paycheck for two years. Then once you have six months in the bank, your next priority should be to get 3 years of savings in the bank, and that usually means taking a better job and saving 50% of your paycheck for 3 years. Only once you've got about 3 years saved up are you really in a position to found a startup without having run across seed funding from an angel. Few people really understand compound interest or how it works out in practice. It's not just about putting money in a bank account or index fund and letting it grow. It's about having successively larger cash cushions so you can take bigger risks with better risk/reward trade-offs.

koolkatkool 9y ago
Was airbnb a month away from being evicted or a month away from asking their parents for another deposit? Lots of rich kids play at being poor all the while knowing they can call home at any point.
- nostrademons 9y ago
  I don't know the family situation of the AirBnB founders personally, but Wikipedia says both of them were social workers, which isn't exactly what most people would consider a rich kid background. I'm always a bit perplexed by the people who come out of the woodwork to say that startups are a rich kid's game, though. What's the family background of folks on this site? I understand that there's a wide variety of socioeconomic statuses on the Internet, and that wealth is relative and 50% of Americans have zero in savings. But is there actually a huge HN population whose families are worse-off than social workers (Brian Chesky), seed & clothing factory workers (Marc Andreesen), mechanics (Steve Jobs), engineers (Steve Wozniak), college professors (Larry Page), or refugees (Sergey Brin, Jan Koum)? I come from a single-earner (elementary school teacher) family, and usually think of myself as smack in the middle of the socioeconomic spectrum. I could and did move back home after college, but then, a lot of children also have that privilege. Do the demographics of HN skew so much poorer that most folks here do not have parental households they could go back to?

mifeng 9y ago

I understand what you're saying, but are other paths besides being born with a silver spoon. My family was on food stamps when I was a kid. After college, I worked for a long time in finance before joining the tech industry 7 years ago. My savings during the first part of my career gave me the risk tolerance to do startups.