4 ms·

So I see a lot of comments here about how it's probably mostly middle class and rich kids together. I find it curious that nobody is mentioning the lesser well

by PakG1 9y ago

So I see a lot of comments here about how it's probably mostly middle class and rich kids together. I find it curious that nobody is mentioning the lesser well off. Is the rags to riches dream a fairy tale now?

averagewall 9y ago
As long as parents do their best to help their own children, rags to riches will be a fairy tale. For poor and rich kids to grow up and do as well as each other, rich parents will have to treat their kids as badly as poor parents do, because the opposite is impossible.
- matt4077 9y ago
  That's a strange equivalence of prosperity and morality... Poor people don't uniformly treat their children poorly. But startup founders profit from three advantages only rich people can provide: (1) the money for an Ivy League education, (2) the knowledge that there's some security to fall back on in case of failure, and (3) the knowledge how to make small talk, what to wear etc. when meeting investors and other stakeholders. All these can be solved by policy: university scholarships for (1) and, through that, a bit of (3), plus (3) some form of social safety net that allows everyone to fail without fearing to starve.
disantlor 9y ago
possibly always was, but definitely is mostly a fairy tale now. not that people won’t or shouldn’t strive
mac01021 9y ago
Well, there's Jack Ma. But he's a rarity.
- PakG1 9y ago
  I think that's a funny example because he's on record saying that if you're not rich, it's your own fault. Which is of course absurd, just thought it was a funny coincidence given my question and your reply. https://news.ycombinator.com/item?id=8377924 https://news.ycombinator.com/item?id=8377924 edit: Apparently, Alibaba put out a statement saying that this oped with the tone-deaf statement was not written by Jack Ma. https://news.ycombinator.com/item?id=8378020 https://news.ycombinator.com/item?id=8378020
  - heedlessly2 9y ago
    he said if you're poor at 35, then its your fault. Big difference between being poor and not rich. If you're middle class, then you're just fine. I do agree with him. Of course, there are edge cases such as disabilities,natural disasters, and other bad luck/dangers etc...
grandalf 9y ago
Those are less likely to be the high status, sexy startups. Surely there are lots of people getting wealthy via alternate paths. I think the startup ecosystem skews toward high status class members mainly because of the ease in obtaining better funding (and more leverage) by doing so (all else being equal) and because of the importance of education networks in hiring for tech.
jdoliner 9y ago
The rags to riches dream was always a fairy tale, at least from a statistical perspective. It was always the exception to the rule.
kxyvr 9y ago
I'm more curious about when this was a reality beyond lifting someone out of direct poverty. Alright, I run a business, so let's talk some numbers in the modern day environment. As a pass-through entity, all business income is considered personal income for the consideration of taxes. In addition, to federal income tax, which can range up to 28% for sub $100k income, business owners pay both halves of their FICA, which is 15.3%. Then, there's state income tax. Now, it's hard to just add tax numbers due to deductions, which will change with the GOP tax rules, but my overall rate last year was 28%. Of course, this doesn't cover things like healthcare. I live in a low cost area, but I pay $447 a month for a policy with an out of pocket max of $2800. That means, that I have to budget around $8k/year right now to account for medical ailments, which means that I have to account for up to a 40% loss of income when factoring in medical and taxes. What does this mean in aggregate? You need to be in a business that makes a fair amount of money before it's possible to be stable financially. Now, is someone who comes from an impoverished situation it a place where they can generate that kind of money from get get go? Probably not. Alright, so we can then work a job and save money in order to create the necessary buffer to start a business. Great, but what kind of jobs pay that kind of money? Generally, one that requires a fair amount of education especially in the modern economy. Getting that degree is difficult and expensive. Fine, so we can take a loan to get the education necessary to get the job necessary to save the money necessary to start the business. However, then we have debt in order to repay when we need to be saving money to bootstrap. Further, the current tax proposal disallows deductions for student loan debt in addition to taxing tuition waivers for graduate students. Of course, instead of bootstrapping, we could raise money from investors in order to start the business. Great, but that's also difficult without the right connections. Where do we get them? There are actually some really good resources in a few select cities that connect business people with tech people. However, generally speaking, these connections are formed by growing up in the right communities or going to school in the right places. I received a wonderful education at a state tech school and keep in good contact with my former classmates. That said, they didn't come from money and are not a resource to draw from for investor money. On the other hand, students that go to Ivy League schools likely have a background that could raise that capital. Anyway, that's a long response to a simple question, but I very much contend that there are significant barriers to entry for becoming successful at business. Technically, it's all doable, but the chance of that happening, especially when coming from poverty, is very small.
jccalhoun 9y ago
Most research I've seen says that you are much more likely to stay in the social class you were born in than you are to significantly rise. Wikipedia has links to some studies https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the...

by PakG1 9y ago

averagewall 9y ago

As long as parents do their best to help their own children, rags to riches will be a fairy tale. For poor and rich kids to grow up and do as well as each other, rich parents will have to treat their kids as badly as poor parents do, because the opposite is impossible.

matt4077 9y ago
That's a strange equivalence of prosperity and morality... Poor people don't uniformly treat their children poorly. But startup founders profit from three advantages only rich people can provide: (1) the money for an Ivy League education, (2) the knowledge that there's some security to fall back on in case of failure, and (3) the knowledge how to make small talk, what to wear etc. when meeting investors and other stakeholders. All these can be solved by policy: university scholarships for (1) and, through that, a bit of (3), plus (3) some form of social safety net that allows everyone to fail without fearing to starve.

disantlor 9y ago

possibly always was, but definitely is mostly a fairy tale now. not that people won’t or shouldn’t strive

mac01021 9y ago

Well, there's Jack Ma. But he's a rarity.

PakG1 9y ago
I think that's a funny example because he's on record saying that if you're not rich, it's your own fault. Which is of course absurd, just thought it was a funny coincidence given my question and your reply. https://news.ycombinator.com/item?id=8377924 https://news.ycombinator.com/item?id=8377924 edit: Apparently, Alibaba put out a statement saying that this oped with the tone-deaf statement was not written by Jack Ma. https://news.ycombinator.com/item?id=8378020 https://news.ycombinator.com/item?id=8378020
- heedlessly2 9y ago
  he said if you're poor at 35, then its your fault. Big difference between being poor and not rich. If you're middle class, then you're just fine. I do agree with him. Of course, there are edge cases such as disabilities,natural disasters, and other bad luck/dangers etc...

grandalf 9y ago

Those are less likely to be the high status, sexy startups. Surely there are lots of people getting wealthy via alternate paths. I think the startup ecosystem skews toward high status class members mainly because of the ease in obtaining better funding (and more leverage) by doing so (all else being equal) and because of the importance of education networks in hiring for tech.

jdoliner 9y ago

The rags to riches dream was always a fairy tale, at least from a statistical perspective. It was always the exception to the rule.

kxyvr 9y ago

I'm more curious about when this was a reality beyond lifting someone out of direct poverty. Alright, I run a business, so let's talk some numbers in the modern day environment. As a pass-through entity, all business income is considered personal income for the consideration of taxes. In addition, to federal income tax, which can range up to 28% for sub $100k income, business owners pay both halves of their FICA, which is 15.3%. Then, there's state income tax. Now, it's hard to just add tax numbers due to deductions, which will change with the GOP tax rules, but my overall rate last year was 28%. Of course, this doesn't cover things like healthcare. I live in a low cost area, but I pay $447 a month for a policy with an out of pocket max of $2800. That means, that I have to budget around $8k/year right now to account for medical ailments, which means that I have to account for up to a 40% loss of income when factoring in medical and taxes. What does this mean in aggregate? You need to be in a business that makes a fair amount of money before it's possible to be stable financially. Now, is someone who comes from an impoverished situation it a place where they can generate that kind of money from get get go? Probably not. Alright, so we can then work a job and save money in order to create the necessary buffer to start a business. Great, but what kind of jobs pay that kind of money? Generally, one that requires a fair amount of education especially in the modern economy. Getting that degree is difficult and expensive. Fine, so we can take a loan to get the education necessary to get the job necessary to save the money necessary to start the business. However, then we have debt in order to repay when we need to be saving money to bootstrap. Further, the current tax proposal disallows deductions for student loan debt in addition to taxing tuition waivers for graduate students. Of course, instead of bootstrapping, we could raise money from investors in order to start the business. Great, but that's also difficult without the right connections. Where do we get them? There are actually some really good resources in a few select cities that connect business people with tech people. However, generally speaking, these connections are formed by growing up in the right communities or going to school in the right places. I received a wonderful education at a state tech school and keep in good contact with my former classmates. That said, they didn't come from money and are not a resource to draw from for investor money. On the other hand, students that go to Ivy League schools likely have a background that could raise that capital. Anyway, that's a long response to a simple question, but I very much contend that there are significant barriers to entry for becoming successful at business. Technically, it's all doable, but the chance of that happening, especially when coming from poverty, is very small.

jccalhoun 9y ago

Most research I've seen says that you are much more likely to stay in the social class you were born in than you are to significantly rise. Wikipedia has links to some studies https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the...