23 ms·

“It’s hard to take risks if you don’t have a safety net”

548 points by boramalper 7y ago

jacquesm 7y ago
How do countries with good social safety nets factor in here? In EU people are definitely not nearly as likely to start their own business as in the US, and many people that would otherwise be labelled 'jobless' (or on the dole) are 'self employed' instead.
- skrebbel 7y ago
  In many EU countries, the safety net is much better if you had a job than if you had your own company. Eg in NL, if you get fired after working more than x months, you get 70% of your last salary for max 2 years while you can go find a job. But if your company goes to shit, all you can get is "bijstand" which is much lower benefits and you have to sell all your assets (eg if you owned a house, you have to sell it and move to rent, even though that's usually more pricey than the mortgage, etc) before you get it. So if your company goes bust and you come from a middle class (or higher) background, you'll probably prefer to depend on your family for a bit while finding a job (or a freelance gig etc). But if you have nothing like that to depend on, then it means that starting a company is extremely risky (I'm not sure most Dutch Uber drivers realise this). IMO if NL really want to encourage more entrepreneurship, and if they want do so in a way that matches our culture and values, then they should create the same safety net for entrepreneurs and employees. But lots of entrepreneurs are against this because ofc this safety net also means paying more taxes. I think that's stupid. I'd gladly take a 5% pay cut if it helps make my country more entrepreneurial, and me more safe. Plus, now I buy commercial accident insurance (pays out monthly if I can't work ever again), which would also be covered by said safety net, so in effect the cost difference would be smaller than 5%. EDIT: I'm only just seeing who I'm replying to. I think you knew the above already so I must've misunderstood your question.
- gingabriska 7y ago
  I read somewhere most businesses in US are started by immigrants. So only a person with means can immigrate to US, I guess even the people coming from India or China or Eastern Europe do have people back in home backing them financially or in other words they've enough financial moat to take risks through which they are able to jetset themsleves into new businesses. I've this friend in Europe he's working on a startup idea once it's developed and become bit popular he plans to move it to states because of stronger private property rights and less taxes and better benefits for employers there and a bigger market. So maybe a lot of people come to US to start a new businesses once they've some idea and implementation in their mind and enough resources to execute it.
  - faceplanted 7y ago
    Do remember that immigrants aren't usually trying to start the same kinds of businesses as the "natives", small businesses make a lot of sense if you want to be able to rely on yourself and not an employer who might not appreciate that you're just learning the language, and if you're willing to make use of the labour of your entire family rather than just a breadwinner. If you're an immigrant there are small businesses that are closer to stable jobs and you can start immediately with your savings, whereas if you're a native the reason you'd start a business is because you're interested in that thing or you want to be an entrepreneur and grow that business into something bigger.
    - DevX101 7y ago
      55% of billion dollar startups had an immigrant founder. It's not just mom & pop shops.
- KaiserPro 7y ago
  This is demonstrably untrue. Looking at the official docs here: https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf https://www.sba.gov/sites/default/files/advocacy/2018-Small-... for the US and here: https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf https://researchbriefings.files.parliament.uk/documents/SN06... for the UK (both are PDFs) In the USA for the first quarter of 2016, there were 240,000 new companies. So just million in a year, assuming that trend. Also, that is all companies, including those with no employees in 2016 for the UK in the whole year, there fore 416,000 new businesses, all of which had at least one registered employee. The USA, in 2016 only created twice as many companies compared to the UK. Given the gulf between population _and_ economy, I would say the US is significantly underperforming compared to the UK
  - jacquesm 7y ago
    The UK and quite a few other places require gig economy operators to register as an independent business.
    - pjc50 7y ago
      I don't think that applies to this stat, though; gig economy workers are required to register as self-employed for tax and NI purposes, but that's not the same thing as being a business, which I think in those stats requires one of VAT (turnover higher than a threshold of £85k) or PAYE (employing someone else).
    - KaiserPro 7y ago
      A sole trader is not the same as a limited company.
  - vonmoltke 7y ago
    The US number is only counting businesses with at least one employee (owners are not employees, even if they work day-to-day), and may only be counting businesses that incorporate, or are formed via articles of organization. The source is unclear. As someone else noted, the UK number also leaves out certain types of businesses. Therefore, I can't tell that this is actually comparing apples to apples.
- njepa 7y ago
  I does factor in, it is somewhat hard to see because startups will always be marginal. In Sweden both Markus Persson (Minecraft) and Daniel Ek (Spotify) come from non-privileged background, with little university experience. When you see this in the US it is usually that someone got into a well known school first, with the contacts that bring.
  - chongli 7y ago
    Anyone who was born a citizen of Sweden is highly privileged on a global level. Compare with anyone from a developing country and it's easy to see all of the advantages that enabled those fortunes to be made.
    - ptah 7y ago
      that is due to a strong safety net
- hef19898 7y ago
  At least in Germany IMHO the biggest risk of ones own start-up is failure. While the social security network is rather strong, even if it used to be stronger, you can basically ruin your whole future career once potential employers perceive you as a failed entrepreneur. The reasons are many, but mostly cultural. And that is huge risk you take. The state is actually encouraging people to start their own business out of unemployment with various programs and incentives. Not in the most efficient way or at a start-up scale but still.
- Jhsto 7y ago
  My anecdote is from a Finnish perspective: First things first, some people make more money being unemployed than working (though for only short periods of times, to my knowledge max. couple months). This is related to entrepreneurship because owning a company, whether it makes any money or not, labels you to the workforce. This is problematic because it obliterates your unemployment aids. In some circumstances, this can be extended into your close family. Now, if you own a company, you (and in some cases your close family) do not get the same social safety net as others! Bad! This also extends (to the entrepreneur) to other class of social safety net, which is living aid. For entrepreneurs, the living aid is calculated from the (mandatory!) retirement account (which are a mess by itself, the public sector chooses private companies which handle this money, with no control of the individual to seize the money before government defined retirement age) contributions. If you have little to no contributions (e.g., your company makes little money and you rather pay yourself salary), you cannot get living aids. Further, taxes are higher. First, entrepreneurs pay 5% more taxes than the same bracket in income as an employee. Next, if your company becomes profitable, the system incentivizes you to increase your personal income hence the tax bracket, because otherwise, the company gets taxed 20% of the money left into the company. The reality is much like pictured here https://imgur.com/a/o5MGARc https://imgur.com/a/o5MGARc for entrepreneurs. That is, in Finland, we do not need to have this Twitter discussion, because by default entrepreneurship is a viable option for the ones who can patch up the holes in the safety net that the government has removed.
  - ahje 7y ago
    > https://imgur.com/a/o5MGARc https://imgur.com/a/o5MGARc The really bad part is that your spouse will lose most benefits if you start a business (because it's automatically considered to be a family business apparently).
- brohee 7y ago
  Numbers for UK have been given earlier, but in 2017 France had 591k company creations, of which 349k are "classic" (not individual) companies. This would put both France and UK well over the US in per capita creation... (https://www.insee.fr/fr/statistiques/3314444 https://www.insee.fr/fr/statistiques/3314444)
skrebbel 7y ago
It's a nice mini soap opera but the core is that actually they agree but have a different definition of "rich kids".
- rlue 7y ago
  I agree, and would go a step further to say that the response to PG is woefully exaggerated. The fate of the poor is truly deplorable in the US, but that doesn't mean that every conversation about risk, opportunity, and entrepreneurship has to rise to the defense of the disadvantaged. PG is saying you don't have to be rich to launch a successful startup. By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich. I would contend this is at least 90th-percentile rich for US households. His critics suggested he be sensitive to those who literally have no safety net, and could not move back in with their parents if it all came crashing down—I would contend this is at most 40th-percentile "rich" for US households. Can we cut the guy some slack and let him speak to the 50+% of people in the middle? Honestly, that's undoubtedly where the bulk of his target audience resides—people who'd like to launch a startup but worry that they're not sufficiently privileged to do it.
  - njepa 7y ago
    > By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich. The example given literally attended one of the top private art school in the world. The reason people are reacting is likely because of this often damaging non-differentiation of being temporarily and perpetually poor. Many people can't even afford to move to a city these days, let alone start a startup. And if they do it might have negative consequences for years and years.
    - rlue 7y ago
      Fair point, I stand corrected.
    - throwaway55554 7y ago
      > Many people can't even afford to move to a city these days, Or get pushed further away, as the middle class can't even afford it and they too have to move outwards, and have to commute in.
bryanrasmussen 7y ago
I think if Paul G. came out a little less strong at the beginning - without 'bullshit' - this wouldn't be an issue. On the other hand there is the habit nowadays of having to guard and specify ones statements zealously in order not to get called out for something a reasonably lenient reading would allow, but calling something 'bullshit' probably doesn't get you into that other hand category.
- Havoc 7y ago
  Yeah that seemed way over the top
  - 55555 7y ago
    Agreed. I'm guessing they have some personal beef/history. Hence "I would normally..."
    - bryanrasmussen 7y ago
      yeah, hmm I got downvoted, I should probably have started out with my own 'I would normally...'
- adamlett 7y ago
  Idk, it seems to me that PG is just wrong about this. Not categorically and in every single instance, but on the whole. It's like saying women are physically stronger than men, and pointing to some woman who is clearly an outlier. You could word it less strongly and say that some women are stronger than some men. But then what would be your point?
  - rgoulter 7y ago
    I read the two as "You don't need to be rich to be a founder" and "it's very beneficial to be rich to be a founder". This would be more analogous to "you don't need to be a man to be strong", rather than "women are stronger than men". I think PG's concern is if it's understood "you need to be rich to be a founder", then if you're not rich, you think it won't be possible to be a founder.
PandaRider 7y ago
I'm shaking my head right now because I can't believe people at the top is still susceptible to sampling/survivorship bias. I've tried searching but cannot find a good empirical study of privilege and entrepreneurship correlation. However, I've found an essay paper [0] that exactly predicted this twitter drama; that entrepreneurs simultaneously present and erase this conversation about class and entrepreneurship. The paper also concluded: > Whereas gender, together with race, have long been foregrounded in studies of entrepreneurial identity and difference, class may be a more powerful organizing discourse, though certainly one supported by discourses of gender and race. [0] https://journals.sagepub.com/doi/pdf/10.1177/1350508412464895 https://journals.sagepub.com/doi/pdf/10.1177/135050841246489...
- KaiserPro 7y ago
  The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/education-and-tech-entrepreneurship https://www.kauffman.org/what-we-do/research/2009/04/educati... 93% had a degree, with 30% having a masters, That would suggest to me that you'd need a decent wedge of cash. Now, what is interesting, is that in 2016 at least, the US created gross 960k new companies (there is some smoothing here, so +- 100k) The UK created 460k. Seeing as how the UK is 60 million, versus 300 million people, either the US is under performing, or the UK is wildly over performing. (https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf https://www.sba.gov/sites/default/files/advocacy/2018-Small-... and https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf https://researchbriefings.files.parliament.uk/documents/SN06... for stats) Perhaps, as we don't have to worry about healthcare or no competes, that might be a factor.
  - rahimnathwani 7y ago
    Registering a company in the UK, and keeping it running, is both simpler and cheaper than in the US. Registering a company takes a few minutes and costs less than $30. Compulsory annual filing costs less than $20. If your company's revenue is below some threshold, you don't need to register for VAT (similar to sales tax). And there's another (even higher) threshold below which you can file very simple annual accounts (unaudited, and including neither income statements nor cash flow).
AlexTWithBeard 7y ago
I had to borrow money from my mom to pay my taxes I would agree that in some US locations the taxes are a bit too high...
- KaiserPro 7y ago
  or that lump sum taxes are somewhat perverse (see PAYE in the UK)
praptak 7y ago
A poor person betting everything on their startup is definitely good for pg - it increases the pool of people whose work he can profit from. It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.
- AlexTWithBeard 7y ago
  A poor person betting everything... a poor person usually doesn't have much, besides the time and dedication.
  - duchenne 7y ago
    GP's point of view: A poor person can have a small safety net that separates him from absolute poverty and homelessness. If they start their own business, fail, and end up without enough money to pay for the rent, the consequences could be terrible. They also have a finite time to save enough for a descent retirement. Spending several years on a startup with a high fail rate can dramatically reduce the quality of their old days.
  - malux85 7y ago
    There’s a big difference between poor and zero, and a poor person betting on a startup can hit zero really quick. At zero, you cannot pay rent and are likely to get evicted. Once evicted you are potentially NFA, which means you can’t get a bank card posted to you if you have problems with your card. How can you pay for food? Where can you use the bathroom? What about the electricity bill before you got evicted? The electricity bill that was late and now unpaid that’s ruining your credit score? Now you have bad credit and will find it harder getting a flat. The above sentences where not chronologically cohesive because there’s so much working against the poor and those at zero, and I’m on mobile, I couldn’t take an hour to type it all out. How on earth do you expect a poor person to do a startup, when they can barely feed themselves and keep a roof over their head?
    - huffmsa 7y ago
      Same way my great-grandfather did it. He preferred the risks associated with going to America over the known outcome of staying in his little village.
DevX101 7y ago
They're talking past each other. Thing is, they're both right. Paul seems to be saying you don't have to be rich to do a startup. Matthew is saying lots of founder have some resources (family home, savings, great education, i.e. middle-class) that made doing a startup feasible Both these positions are true and aren't incompatible. Being middle class (Matthew's position) and prudent with savings can afford you probably a year of runway. But I'd never recommend someone who was truly destitute or food insecure to do a startup. If you come from a poor family there will also be family/cultural pressure not to do a startup and instead get a good paying job(assuming you have the ability).
- lotsofpulp 7y ago
  It’s a tough calculation to forego a presumably high chance of having a comfortable life and providing a good base for your kids by working a regular job, versus shooting for the moon and possibly losing that comfortable lifestyle.
- emsy 7y ago
  They’re not even talking past each other (that would require a back and forth). Matthew responds to something pg didn't say.
  - lotsofpulp 7y ago
    If that’s the case, then Paul Graham chose a very poor subject as an example.
    - emsy 7y ago
      I agree, and he could and should have anticipated the reactions. But I read his clarifications and it looks like he argued with good intent.
- humanrebar 7y ago
  It's the difference between "a founder can be anyone" and "a founder can come from anywhere" to paraphrase Ratatouille.
DanielBMarkham 7y ago
Twitter wins again. We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is. When we're doing definitions, the key phrase is "necessary and sufficient" In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing. So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?" But that's not as fun to argue about. We oversimplify life and public policy-making at our own peril.
- esolyt 7y ago
  > So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?" I think it's more like whether it brings a 400% boost. It is definitely an important discussion to have. Whether Twitter is the place is another story.
  - DanielBMarkham 7y ago
    I agree. Also note that moving from a 1% chance of success to a 4% chance of success _is_ a 400% boost. It also may be trivial. Moving from .1 to .4 works the same way. Both statements can be true at the same time. These things get tricky quickly. In a different medium, say forcing yourself to 100 characters instead of 280, we would have even more of a difficult time discussing it.
- aestetix 7y ago
  Yep. At this point, to encourage health and respectful public discourse, the first step is to delete your twitte account. And probably facebook too.
- znpy 7y ago
  > We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is. Twitter is cancer and this is why i keep off it.
- njepa 7y ago
huffmsa 7y ago
Easier, sure. Not having a backstop means failure == death. Which isn't for the faint of heart, but that's the story of almost every Americans lineage at some point in the past. It takes a bit of luck, but rarely is it more luck than nose to the grindstone effort. My anecdotes: I have one great-great-grandfather who thought he had an office job in British Columbia, but by the time he sailed from England and crossed the continent the company had folded. But his family was already on their way, so he started working every mining job he could, and invested every spare pence he had into real estate. His sons did the same. My paternal great-grandfather came over from Italy, got harassed out of NYC by the Irish, bought a small farm in Oklahoma, and his children did the same.
- bubblewrap 7y ago
  That seems overly dramatic. Not everybody who loses their job dies. Most people seem to not die in that situation, actually. Failing at your startup would at most be equal to losing your job. You won't die just because of that. Even if you end up in debt, there are insolvency laws. You can just go flipping burgers for a couple of years and be good.
  - huffmsa 7y ago
    Of course it's recoverable. If you're under 35 you can join the miliary as well. There are options. Not glamorous, but survivable. Better to have tried and failed than to never have tried. But when you're an Italian who can't speak English or out west in the late 1800s, it was a case of with your shield or on it.
bubblewrap 7y ago
Most people, even poor people, have parents who would help them out in case of need. They seem to be discussing a pretty low bar here. And of course it is a "privilege" to have supporting parents. So what? If you don't have that privilege, what are you supposed to do? Kill yourself? I think such privilege discussions are rather silly. What's the point? That people should be showered with tax payer money to even out their privileges? Or people with bad parents should be given state assistance (substitute parents)?
- KaiserPro 7y ago
  I'd suggest you think more deeply. All parent, regardless of class/richness want to be supportive. the question is what support can they offer? Sure, a sofa, most people have that. But thats not a long term solution. What if your parents don't have any savings, how will they help you with that debt? They can't Its not an issue of will, its an issue of possibility. Now, I intensely dislike the use of "privilege", as its more often than not tool to stop discourse. But, to assume that every parent is _capable_ of providing long term accommodation, financial, transport or other support is shore sighted at best. I suggest perhaps you might want to expand your social circle, so you can see this sort of thing first hand.
  - bubblewrap 7y ago
    I was thinking of the basic "moving back in with the parents fallback". Of course different people have different advantages and disadvantages. Paul Graham's children will probably have an enormous head start in becoming entrepreneurs. They'll have "startup privilege" en masse. But so what? Should we begrudge them having it? Should we compensate children of other parents for the non-privilege of not being Paul Graham's children? And if so, how? What amount of money would be appropriate? Or should we punish his children to take away their unfair advantage? I just think the whole "privilege" mindset is unhelpful and unproductive. Try to make the most of what you have. Can only PG's children become successful founders? I think not. Maybe your children will only become millionaires if the become founders, and PG'S children will become billionaires. Cry me a river.
- throwaway55554 7y ago
RickJWagner 7y ago
It makes it easier to launch a startup if you've got a strong safety net, but not impossible. I think the article misses the point, though. Look at Bill Gates-- he had rich parents, and so he started Microsoft. Which has gone on to make millionaires of lots of ordinary folks and continues to provide good jobs to many, many people today. It's a good system, it benefits a lot of people.
Entalpi 7y ago
I like to think Swedens extensive social safety nets are a factor to the large number of startups here.
- dudul 7y ago
  How does this large number compare to the US? Genuinely interested. Having lived in a few EU countries before moving to the US, I've always been under the impression that creating a startup in the US was way easier/more common.
CPLX 7y ago
A story where a billionaire downplays the problems created by wealth inequality. How novel.
carlsborg 7y ago
He said hard, not impossible. You're playing with a higher difficulty level, because you need to spend time and effort and divert your focus on mitigating the worst case scenarios instead, and market timing is one of the big factors in getting it right.
slowprogrammer 7y ago
PG and Matthew are talking past each other here. PG is defining "rich kids" as the spawn on the 1% and is arguing that these kids don't have any significant advantages over more normal people when it comes to accessing funding from VCs etc and that such a belief is harmful. Basically that there is a point of diminishing returns to being "rich" and that it's probably lower than you think. Matthew is arguing that being in crushing poverty is probably a barrier to building a successful startup. Both views can be basically correct.
kstenerud 7y ago
It's easy to take risks when there's little to lose. If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.
- grenoire 7y ago
  What seems like "little to lose" to you is "everything" to a lot of people. Breaking even at lower middle class is still something you can lose.
- throwaway55554 7y ago
  > It's easy to take risks when there's little to lose. > If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice. This, in no way whatsoever, resembles the conditions of the poor.
  - kstenerud 7y ago
    That's right. It doesn't.
cbanek 7y ago
Pretty disappointed in PG's response: "I would ordinarily just let your bullshit go, but this myth that you have to be a rich kid to start a startup is terribly dangerous, because it discourages people who aren't from trying it. Brian Chesky's parents were social workers. That is not a rich kid." As if having two parents with stable jobs isn't considered a safety net. I agree, you don't need to be rich, but I also agree if you are struggling to work enough to eat, you aren't really working on making a startup. There are huge swaths of people with a much less stable safety net than the example he provided.
- austhrow743 7y ago
  Paul said you don't have to be rich. Matthew responded as if he'd said that it's not beneficial to have a safety net. That's putting a statement in to his mouth that he did not make. Anything more than a "fuck off" from PG was charitable.
  - casion 7y ago
    The problem is that it gets read as a false dilemma. Talking about rich people and saying "you don't have to be rich to..." is like walking into a room of black people and saying "You don't have to be white to...". Nobody there is going to think that you're talking about asians. The statement doesn't really say anything except that 'being rich' is something that can come from some other non-rich state. It doesn't specify at what level you can be to reach that state. He could be implying that poverty is sufficient, or "middle-class" or that upper class CT is sufficient (and we don't even know if he thinks that means " rich"). It's just a complete non-statement that attempts to pander to an audience that has little choice but to misinterpret it or assume that he's stating the blindingly obvious.
    - Consultant32452 7y ago
      I don't think it matters what we're defining as rich. We can be honest without being destructive. I feel like our culture is constantly telling people they can't do anything with their life if they don't have every box of privilege checked. It's terribly psychologically destructive. Life is a constant struggle,a real river of shit sometimes, but it's one in which our own actions are still the biggest determining factor in our long term outcomes.
Tycho 7y ago
When someone uses the word “privilege” it’s a good indicator that the rest of the discussion is going to be a waste of time.
- sfkdjf9j3j 7y ago
  Can you elaborate on this?
  - crankylinuxuser 7y ago
    Not parent. But in my experience, but "privilege" usually relies on invoking stereotypes (males, females, white, etc) and then shutting down individuals by invoking that their discussion is just 'privilege'. I saw a 'yelling over each other' thread on Facebook in which white feminists were being name-called by black feminists calling them names of various sorts for supporting only white rights. Any modicum of discussion was drowned out by chest-beating of lines of racism and sexism. I believe that thread is still going on. "Mansplaining" is yet another term that does that on sex based grounds. The term "manspreading" is yet another term with a sexist root- as only men can sit down and spread their lags in relaxation.
jkingsbery 7y ago
For whatever it's worth, there was a recent episode of Econtalk in the guest discusses his work with those below the poverty line and how some communities have been successful in entrepreneurship: http://www.econtalk.org/extra/discovering-positive-deviants/ http://www.econtalk.org/extra/discovering-positive-deviants/ I don't know of a quantitative study and obviously the source is biased, but the guest came himself from a "no safety net" situation and now works with others in a similar situation, so his take is interesting even if one disagrees.
snowwrestler 7y ago
PG seems worried that tweets saying you have to be rich to do a startup will discourage non-rich folks from trying a startup. This doesn’t give those folks much credit. It implies that a few tweets will have a bigger impact on their decision-making than their own detailed understanding of the constraints and anxieties of their own lives. I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.
- gist 7y ago
  > I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups. Exactly. And I have been avoiding saying this but keep in mind that from what I remember PG got the idea for YC when he was 'walking through Harvard Yard with Jessica'. https://www.fastcompany.com/3002810/aha-moments-made-paul-grahams-y-combinator-possible https://www.fastcompany.com/3002810/aha-moments-made-paul-gr... All VC's are like this by the way. Even though they know there is a great chance that many ideas they fund will not work they still push the investments because it's not their mess to cleanup. That said there is actually probably more downside for employees. After all a founder with a big startup failure has been marked as someone 'in the mix' and can usually parlay that to other opportunities. Look at even Sam Altman and what happened after Loopt. https://en.wikipedia.org/wiki/Loopt https://en.wikipedia.org/wiki/Loopt Then he goes on having made his mark to running YC.
- ordu 7y ago
  Nicely said. It is an irrational economic decision for a non-rich to begin a startup. Even if memes could change their decision it would make matters worse for them, not better.
- csomar 7y ago
  I'm not an expert on the subject but according to "science", the reason that woman do not go to engineering fields in the US is a byproduct of their environment not a difference in their genetics. If I got it right, Robert Sapolsky claims that the way to make more woman into tech is to make young girls believe that they can do tech. They already have the cognitive capacity. In this same sense, PG might be hitting the nail in the head: The reason poor people don't do startups is because they believe they can't; and that it is a white privilege. If they believe they can't, they will not try. If they don't try, the probability that they succeed is exactly %0. Re-enforcing the myth and further convincing poor people not to try. The only way out is to convince them otherwise and see what the real odds are. Robert Sapolsky also claims that we need to change our speech and views (ie: remove "negativity") in order to level the playing field. PG is doing the same. He thinks that other ideas need to be censored as it is important to maximalize the propaganda. That's a dangerous thinking as it touches on freedom of speech. One might wonder if you can level the social "cognitive" field while also preserving freedom of speech. Educating people is the only way I guess.
tluyben2 7y ago
Everyone from my country (NL) has a safety net to start with (you can screw up but still) and that goes for many EU countries anyway and yet all the entrepreneurs I know from NL are extremely risk averse compared to the US ones. Most of my NL friends are entrepreneurs but more of the lifestyle kind than even wanting to become the #1 in their field with the monetary status that comes with it. I dare to say that I only know Chinese and US entrepreneurs that look beyond getting more than few million on their account and that is it. I wonder why that is.
- kaybe 7y ago
  I wonder too. One idea I have: In these countries you don't really need that much more because you're already cushioned against risk. You also don't need to provide a cushion to anyone around you (since everyone's taxes are already doing that). Which means, below you is not the gaping abyss but a shrub that is a little bit thorny.
- bumby 7y ago
  I've often wondered about this. I wonder how much is a cultural mindset. In other words, is the U.S.'s relatively risk tolerant stance an artifact that many U.S. citizens are the progeny of people willing to take risks to start out as an immigrant in an unknown land and has that artifact become part of the collective mindset? Or possibly does the slow morphine drip of a safety net make one perceive all risks as something to avoid as opposed to a calculated risk? Or is all this based on a nonsense notion of American exceptionalism?
idlewords 7y ago
Let's not forget that Graham has also publicly written he would be loath to choose any woman as a startup founder "who had small children, or was likely to have them soon." The man has a type, and the demographics of YC reflect it.
- _Microft 7y ago
  Do you maybe have a source for it?
  - altaccount1 7y ago
    Footnote 2 of this Paul Graham essay: http://www.paulgraham.com/start.html http://www.paulgraham.com/start.html
    - _Microft 7y ago
      Thanks. I'm sure I had read that before, it's surprising that I didn't notice that yet.
  - deleted 7y ago
    [deleted]
  - idlewords 7y ago
    Search on the verbatim phrase in your search engine of choice.
- badatshipping 7y ago
  I... would too? Startups take over your life, and so does taking care of young kids. Pretty hard to do both at the same time. Not impossible, but pretty hard, which is presumably why he said he’d be reluctant, not absolutely unwilling.
  - idlewords 7y ago
    Leaving aside that there are driven people who work their asses off despite having young children, and that "startups consume your life" is the kind of belief VC have an interest in perpetuating, note that Graham in this statement is treating kids as a women's issue.
mattxxx 7y ago
The reality is that money lets you "take risks," and money gives you options (in this world). To be honest, I don't think that starting your company with the "risk" that you might move back in with your parents if it fails... is at all a meaningful risk.
- zpeti 7y ago
  Psychologically this is not true at all. It's much easier to take risks when you have nothing to lose. How many 18-30 year olds do you see having a swing at it and trying something, vs 30+ people with families and savings to burn?
  - PaulHoule 7y ago
    My trajectory might not be "normal" but for me I have been more inclined to take risks as I've gotten older. There is a sense of urgency (e.g. if I don't do it now I won't get another chance) that counteracts the feeling of "nothing to lose")
  - Timpy 7y ago
    I think everybody in this discussion is working with a different model for the word "risk". This is a problem of concision inherent to a platform like Twitter. I don't think the argument is that 18 year olds are risking less than 30+ year olds with established families. I think the argument is that for young middle/upper class people with social capital, the risk is moving back in with your parents. The conversation stems from the question "are startups riskier for rich kids or not-rich kids?", and not "are startups riskier for 18-30 year olds vs some other demographic?"
  - noelsusman 7y ago
    Having nothing to lose is an advantage, but you also need to consider what the worst case scenario is. That's where the safety net comes in. A lot of people don't have anywhere to go if things truly go south.
  - theplague42 7y ago
    Most successful startup founders are in their 30s and 40s. Providing a link: https://www.kauffman.org/what-we-do/research/2009/04/education-and-tech-entrepreneurship https://www.kauffman.org/what-we-do/research/2009/04/educati...
taytus 7y ago
Fuck the rich kids. And I'm not saying this as an insult. I mean it as "good for them". In terms that I'm 38 years old and I have enough maturity to know that: 1-Life isn't fair 2-Some people start the game 50 tiles ahead of you. None of these reasons are going to stop me (a poor entrepreneur) to build the company I want to build. I think PG's comment is idiotic, but I think he is very smart.
jasonkester 7y ago
Silly Twitter fight aside, the key piece of advice that us regular non-rich folk should take away is this: "Your first goal after university should be to build yourself a safety net." Once you have $10k in the bank, you can start taking risks just like those privileged kids that are starting all the startups with their unfair advantages. Best of all for us, we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.
- idlewords 7y ago
  In the United States, people who don't have significant financial support from their parents graduate from university with a great deal of debt.
  - jasonkester 7y ago
    Indeed. But those are the same people getting those $150k entry-level salaries from companies in the Bay Area. Even after paying down $50k/year in debt one would be hard pressed to spend the rest of that without saving anything. You spend your college years sharing a house with 5 roommates, driving an $800 car and living on Costco pallets of canned chili. Keep that up for another few years after school while pulling down a dev salary and you'll be out of debt reasonably fast. Sadly, most people don't do that, and match their choice of new apartment and new car to exactly equal their new income. That's a shame, but it's also why I gave the advice I did above.
    - bumby 7y ago
      It's probably not the best practice to base arguments on outliers or anomalies. Yes, these numbers may be true for the Bay Area but almost certainly not the norm. The argument unravels quickly if applied to other markets.
    - idlewords 7y ago
      Some people have family to support. Eating all the canned chili in the world is not going to bring down your parents' medical bills. Your advice may work well for you, which is fine, but bakes in a lot of assumptions about social class, which is what we were just trying to avoid. To be young and debt-free and responsibility-free coming out of university is not everyone's lot.
commandlinefan 7y ago
Well, that's not really a risk then, is it?
bettrsocial 7y ago
I don't think anyone else should pay for a startup's safety net. Doing a startup requires calculated risk. It may or may not work. Whoever wants to attempt need to sit down and calculate the costs and the risks and take precautions. This is not the same as someone becoming unemployed because they got laid off, and it's not the same as providing welfare to people in poverty. Startups by their nature are risky and no one else should have to pay for a safety net in case it doesn't work out. The market does well weeding out the bad ideas and companies that aren't actually solving any problems. Creating a safety net might just contribute to perpetual "startupdom" (with everyone else paying for it), when in reality certain ideas and efforts need to just die off.
programminggeek 7y ago
It's not taking a risk if you have a safety net. That is the point of the safety net, to eliminate the risk.
umvi 7y ago
So why aren't highly socialized countries with tons of safety nets meccas of innovation?
gaspoweredcat 7y ago
exactly, its a different matter when that risk isnt "oh ill lose a bit of my buffer" but "if this doesnt work im on the streets" you may have a fantastic idea but if youre working for min wage theres a good chance youre little more than one missed pay cheque from being in serious trouble but those from privilidged backgrounds see it differently, many of them have never been "broke" and i mean truly broke so i guess they simply dont understand what theyre saying, theyve never taken an actual risk in their lives
PorterDuff 7y ago
The original twitter post, twitter responses, and responses here made me muse about how the definition of 'start-up' has changed in the last few decades. Ennui ensued.
majani 7y ago
Actually the headline of this is the takeaway you should get from this story. People with safety nets are the ones who get to do startups. This is logical and how it should be. If you weren't born into a rich family, then make saving up your number 1 financial priority to build that nest egg for yourself. Even the kids from privileged families are mostly in that position because their parents made a series of good financial decisions in regards to savings.
mcguire 7y ago
Is anyone keeping statistics on YC applications? What happens to people who don't get funded (by YC or otherwise)? What happens to those who do get funded but then fail? What proportion succeed, for various definitions of success?
skookumchuck 7y ago
By definition, it's not a risk if there's a safety net.
simplecomplex 7y ago
The world isn’t fair. Pontificating about how the world isn’t fair is useless. It’s a waste of your time. Both Paul and Matthew would be more helpful by providing advice to effectively deal with one’s situation in order to found a company. That would be valuable, instead of engaging in adversity olympics which is what most of Twitter seems to be nowadays.
nemonemo 7y ago
A close cousin of this topic would be the background of new full professors in major universities. Ph.D. is risky, especially considering the slim chance of getting the full professorship and its tremendous opportunity cost. The competition to become a full professor in a major institution is fierce and also it takes longer and longer as the competition heats up. The path is quite comparable to that of the unicorn founders in many ways. I'd wonder how much study has been done around the socioeconomic backgrounds of those prominent professors. I'd also be interested how those backgrounds have been shifted as time goes by. It would be also interesting if not much research has been done about it when some of them are supposed to do such a thing.
RenRav 7y ago
This a common debate point for basic income, providing the safety net for entrepreneurs, startups, artists, etc. Really was expecting a mention but it seems to have shifted toward boring arguments about privilege.
csomar 7y ago
> “It’s hard to take risks if you don’t have a safety net” Okay, here is a twist: How much do poor people spend on lottery/gambling activity? How much is that proportionally to their income? From looking at small casinos, betting shops, lottery and online sites (sports) it seems that poor people are risk takers. One reason, in my opinion, is that they have little to lose. They also have really shitty lives and are looking for an escape. If you were starting a startup alone in Bangladesh vs. starting solo with YC in SF. Building a remote-based startup that sell SaaS online for clients all over the world. Location of clients is everywhere. Technically, the playing-field is equal. You start a C-Corp from Bangladesh and trade your business. But which one do you think will make it? Which one do you think will raise funding? Or succeed if both do not raise funds? You live your life trying the optimize a problem. There is a number of steps that if you take, carefully, you'll become rich in some duration of time. You don't know these steps, so you keep searching. You know gradient descent. Life is like that, if you are moving successfully down, you are probably on the right track and so you keep moving on that direction. However, you start stochastically on a random location and keep trying to find a path that leads somewhere. That's where YC comes in. They help you reduce the surface area of your search. You are less likely to land somewhere futile. What poor people are missing is discovery of this surface area. It is a very complicated problem for them and they lack resources and education to optimize the problem. They are hoping that this lottery ticket will help land them directly on the optimized spot. Their lack of understanding of why this doesn't work explain why they can't navigate the surface area.
- vec 7y ago
  Of course people have different risk appetites, including poor people. The point isn't so much about "risk" per se, it's about whether or not there's a viable Plan B. If I'm working two jobs to barely keep a roof over my head and play the lotto and lose, I'm still keeping a roof over my head (by working two jobs). The odds are long, but the cost of failure is low. If, on the other hand, I have the Best Startup Idea Ever (and all the necessary skills to make it a reality) then I will still be unable to pursue it. Sure, I'm like 80% certain it's going to be a huge success, but in the 20% case I'm fuuuuuuuuucked so taking a swing at it is a nonstarter.
- gubbrora 7y ago
julienfr112 7y ago
It depends also of your lifestyle : if you can't leave without buying expensive stuff, going in vacation in French Polynesia and skiing in Aspen, the safety net should be $100k or $1m. If you can leave in a cheap neighborhood, cook your own food, reading books and HN, doing cheap sport like running or cycling, $10k can take you a long way. The revenue and/or lifestyle of your significant other is also a huge factor.
richardriko 7y ago
If you are in india the emotional blackmail and the pressure to marry before 30 is a huge hindrance. In india a graduate has no real world knowledge when he gets out of college. It takes about 6 to 8 years to get the confidence in coding and creating something. But by the time the marriage is done and no way to take risk. To be honest the salary earned by women is like an additional income and never considered primary income in 99 percent marriages.
beezlebubba 7y ago
“It’s hard to take risks if you don’t have a safety net.” Because suggesting otherwise just makes you sound like a late night infomercial huckster. I have even more respect for Matthew Prince now. I've loved Cloudflare from day one and now I know why.
bg24 7y ago
Experiencing first hand. I hope at this age, I should have saved enough. But, single income and mortgage means better be realistic. I do take risk though, working for startup on cutting edge tech, than for a large company. Basically insurance for future job security. The risk I cannot think of is starting my own business. Related - it is impossible to take risks if you or family have crippling health issues. And when you have both, why even bother to take major risks.
nswest23 7y ago
r/murderedbywords

548 points by boramalper 7y ago

How do countries with good social safety nets factor in here? In EU people are definitely not nearly as likely to start their own business as in the US, and many people that would otherwise be labelled 'jobless' (or on the dole) are 'self employed' instead.

skrebbel 7y ago
In many EU countries, the safety net is much better if you had a job than if you had your own company. Eg in NL, if you get fired after working more than x months, you get 70% of your last salary for max 2 years while you can go find a job. But if your company goes to shit, all you can get is "bijstand" which is much lower benefits and you have to sell all your assets (eg if you owned a house, you have to sell it and move to rent, even though that's usually more pricey than the mortgage, etc) before you get it. So if your company goes bust and you come from a middle class (or higher) background, you'll probably prefer to depend on your family for a bit while finding a job (or a freelance gig etc). But if you have nothing like that to depend on, then it means that starting a company is extremely risky (I'm not sure most Dutch Uber drivers realise this). IMO if NL really want to encourage more entrepreneurship, and if they want do so in a way that matches our culture and values, then they should create the same safety net for entrepreneurs and employees. But lots of entrepreneurs are against this because ofc this safety net also means paying more taxes. I think that's stupid. I'd gladly take a 5% pay cut if it helps make my country more entrepreneurial, and me more safe. Plus, now I buy commercial accident insurance (pays out monthly if I can't work ever again), which would also be covered by said safety net, so in effect the cost difference would be smaller than 5%. EDIT: I'm only just seeing who I'm replying to. I think you knew the above already so I must've misunderstood your question.
gingabriska 7y ago
I read somewhere most businesses in US are started by immigrants. So only a person with means can immigrate to US, I guess even the people coming from India or China or Eastern Europe do have people back in home backing them financially or in other words they've enough financial moat to take risks through which they are able to jetset themsleves into new businesses. I've this friend in Europe he's working on a startup idea once it's developed and become bit popular he plans to move it to states because of stronger private property rights and less taxes and better benefits for employers there and a bigger market. So maybe a lot of people come to US to start a new businesses once they've some idea and implementation in their mind and enough resources to execute it.
- faceplanted 7y ago
  Do remember that immigrants aren't usually trying to start the same kinds of businesses as the "natives", small businesses make a lot of sense if you want to be able to rely on yourself and not an employer who might not appreciate that you're just learning the language, and if you're willing to make use of the labour of your entire family rather than just a breadwinner. If you're an immigrant there are small businesses that are closer to stable jobs and you can start immediately with your savings, whereas if you're a native the reason you'd start a business is because you're interested in that thing or you want to be an entrepreneur and grow that business into something bigger.
  - DevX101 7y ago
    55% of billion dollar startups had an immigrant founder. It's not just mom & pop shops.
KaiserPro 7y ago
This is demonstrably untrue. Looking at the official docs here: https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf https://www.sba.gov/sites/default/files/advocacy/2018-Small-... for the US and here: https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf https://researchbriefings.files.parliament.uk/documents/SN06... for the UK (both are PDFs) In the USA for the first quarter of 2016, there were 240,000 new companies. So just million in a year, assuming that trend. Also, that is all companies, including those with no employees in 2016 for the UK in the whole year, there fore 416,000 new businesses, all of which had at least one registered employee. The USA, in 2016 only created twice as many companies compared to the UK. Given the gulf between population _and_ economy, I would say the US is significantly underperforming compared to the UK
- jacquesm 7y ago
  The UK and quite a few other places require gig economy operators to register as an independent business.
  - pjc50 7y ago
    I don't think that applies to this stat, though; gig economy workers are required to register as self-employed for tax and NI purposes, but that's not the same thing as being a business, which I think in those stats requires one of VAT (turnover higher than a threshold of £85k) or PAYE (employing someone else).
  - KaiserPro 7y ago
    A sole trader is not the same as a limited company.
- vonmoltke 7y ago
  The US number is only counting businesses with at least one employee (owners are not employees, even if they work day-to-day), and may only be counting businesses that incorporate, or are formed via articles of organization. The source is unclear. As someone else noted, the UK number also leaves out certain types of businesses. Therefore, I can't tell that this is actually comparing apples to apples.
njepa 7y ago
I does factor in, it is somewhat hard to see because startups will always be marginal. In Sweden both Markus Persson (Minecraft) and Daniel Ek (Spotify) come from non-privileged background, with little university experience. When you see this in the US it is usually that someone got into a well known school first, with the contacts that bring.
- chongli 7y ago
  Anyone who was born a citizen of Sweden is highly privileged on a global level. Compare with anyone from a developing country and it's easy to see all of the advantages that enabled those fortunes to be made.
  - ptah 7y ago
    that is due to a strong safety net
hef19898 7y ago
At least in Germany IMHO the biggest risk of ones own start-up is failure. While the social security network is rather strong, even if it used to be stronger, you can basically ruin your whole future career once potential employers perceive you as a failed entrepreneur. The reasons are many, but mostly cultural. And that is huge risk you take. The state is actually encouraging people to start their own business out of unemployment with various programs and incentives. Not in the most efficient way or at a start-up scale but still.
Jhsto 7y ago
My anecdote is from a Finnish perspective: First things first, some people make more money being unemployed than working (though for only short periods of times, to my knowledge max. couple months). This is related to entrepreneurship because owning a company, whether it makes any money or not, labels you to the workforce. This is problematic because it obliterates your unemployment aids. In some circumstances, this can be extended into your close family. Now, if you own a company, you (and in some cases your close family) do not get the same social safety net as others! Bad! This also extends (to the entrepreneur) to other class of social safety net, which is living aid. For entrepreneurs, the living aid is calculated from the (mandatory!) retirement account (which are a mess by itself, the public sector chooses private companies which handle this money, with no control of the individual to seize the money before government defined retirement age) contributions. If you have little to no contributions (e.g., your company makes little money and you rather pay yourself salary), you cannot get living aids. Further, taxes are higher. First, entrepreneurs pay 5% more taxes than the same bracket in income as an employee. Next, if your company becomes profitable, the system incentivizes you to increase your personal income hence the tax bracket, because otherwise, the company gets taxed 20% of the money left into the company. The reality is much like pictured here https://imgur.com/a/o5MGARc https://imgur.com/a/o5MGARc for entrepreneurs. That is, in Finland, we do not need to have this Twitter discussion, because by default entrepreneurship is a viable option for the ones who can patch up the holes in the safety net that the government has removed.
- ahje 7y ago
  > https://imgur.com/a/o5MGARc https://imgur.com/a/o5MGARc The really bad part is that your spouse will lose most benefits if you start a business (because it's automatically considered to be a family business apparently).
brohee 7y ago
Numbers for UK have been given earlier, but in 2017 France had 591k company creations, of which 349k are "classic" (not individual) companies. This would put both France and UK well over the US in per capita creation... (https://www.insee.fr/fr/statistiques/3314444 https://www.insee.fr/fr/statistiques/3314444)

skrebbel 7y ago

It's a nice mini soap opera but the core is that actually they agree but have a different definition of "rich kids".

rlue 7y ago
I agree, and would go a step further to say that the response to PG is woefully exaggerated. The fate of the poor is truly deplorable in the US, but that doesn't mean that every conversation about risk, opportunity, and entrepreneurship has to rise to the defense of the disadvantaged. PG is saying you don't have to be rich to launch a successful startup. By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich. I would contend this is at least 90th-percentile rich for US households. His critics suggested he be sensitive to those who literally have no safety net, and could not move back in with their parents if it all came crashing down—I would contend this is at most 40th-percentile "rich" for US households. Can we cut the guy some slack and let him speak to the 50+% of people in the middle? Honestly, that's undoubtedly where the bulk of his target audience resides—people who'd like to launch a startup but worry that they're not sufficiently privileged to do it.
- njepa 7y ago
  > By this, I believe he means private-school, summer-house, frequent-flyer-miles-in-your-early-20s rich. The example given literally attended one of the top private art school in the world. The reason people are reacting is likely because of this often damaging non-differentiation of being temporarily and perpetually poor. Many people can't even afford to move to a city these days, let alone start a startup. And if they do it might have negative consequences for years and years.
  - rlue 7y ago
    Fair point, I stand corrected.
  - throwaway55554 7y ago
    > Many people can't even afford to move to a city these days, Or get pushed further away, as the middle class can't even afford it and they too have to move outwards, and have to commute in.

bryanrasmussen 7y ago

I think if Paul G. came out a little less strong at the beginning - without 'bullshit' - this wouldn't be an issue. On the other hand there is the habit nowadays of having to guard and specify ones statements zealously in order not to get called out for something a reasonably lenient reading would allow, but calling something 'bullshit' probably doesn't get you into that other hand category.

Havoc 7y ago
Yeah that seemed way over the top
- 55555 7y ago
  Agreed. I'm guessing they have some personal beef/history. Hence "I would normally..."
  - bryanrasmussen 7y ago
    yeah, hmm I got downvoted, I should probably have started out with my own 'I would normally...'
adamlett 7y ago
Idk, it seems to me that PG is just wrong about this. Not categorically and in every single instance, but on the whole. It's like saying women are physically stronger than men, and pointing to some woman who is clearly an outlier. You could word it less strongly and say that some women are stronger than some men. But then what would be your point?
- rgoulter 7y ago
  I read the two as "You don't need to be rich to be a founder" and "it's very beneficial to be rich to be a founder". This would be more analogous to "you don't need to be a man to be strong", rather than "women are stronger than men". I think PG's concern is if it's understood "you need to be rich to be a founder", then if you're not rich, you think it won't be possible to be a founder.

PandaRider 7y ago

I'm shaking my head right now because I can't believe people at the top is still susceptible to sampling/survivorship bias. I've tried searching but cannot find a good empirical study of privilege and entrepreneurship correlation. However, I've found an essay paper [0] that exactly predicted this twitter drama; that entrepreneurs simultaneously present and erase this conversation about class and entrepreneurship. The paper also concluded: > Whereas gender, together with race, have long been foregrounded in studies of entrepreneurial identity and difference, class may be a more powerful organizing discourse, though certainly one supported by discourses of gender and race. [0] https://journals.sagepub.com/doi/pdf/10.1177/1350508412464895 https://journals.sagepub.com/doi/pdf/10.1177/135050841246489...

KaiserPro 7y ago
The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/education-and-tech-entrepreneurship https://www.kauffman.org/what-we-do/research/2009/04/educati... 93% had a degree, with 30% having a masters, That would suggest to me that you'd need a decent wedge of cash. Now, what is interesting, is that in 2016 at least, the US created gross 960k new companies (there is some smoothing here, so +- 100k) The UK created 460k. Seeing as how the UK is 60 million, versus 300 million people, either the US is under performing, or the UK is wildly over performing. (https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf https://www.sba.gov/sites/default/files/advocacy/2018-Small-... and https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf https://researchbriefings.files.parliament.uk/documents/SN06... for stats) Perhaps, as we don't have to worry about healthcare or no competes, that might be a factor.
- rahimnathwani 7y ago
  Registering a company in the UK, and keeping it running, is both simpler and cheaper than in the US. Registering a company takes a few minutes and costs less than $30. Compulsory annual filing costs less than $20. If your company's revenue is below some threshold, you don't need to register for VAT (similar to sales tax). And there's another (even higher) threshold below which you can file very simple annual accounts (unaudited, and including neither income statements nor cash flow).

AlexTWithBeard 7y ago

I had to borrow money from my mom to pay my taxes I would agree that in some US locations the taxes are a bit too high...

KaiserPro 7y ago
or that lump sum taxes are somewhat perverse (see PAYE in the UK)

praptak 7y ago

A poor person betting everything on their startup is definitely good for pg - it increases the pool of people whose work he can profit from. It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.

AlexTWithBeard 7y ago
A poor person betting everything... a poor person usually doesn't have much, besides the time and dedication.
- duchenne 7y ago
  GP's point of view: A poor person can have a small safety net that separates him from absolute poverty and homelessness. If they start their own business, fail, and end up without enough money to pay for the rent, the consequences could be terrible. They also have a finite time to save enough for a descent retirement. Spending several years on a startup with a high fail rate can dramatically reduce the quality of their old days.
- malux85 7y ago
  There’s a big difference between poor and zero, and a poor person betting on a startup can hit zero really quick. At zero, you cannot pay rent and are likely to get evicted. Once evicted you are potentially NFA, which means you can’t get a bank card posted to you if you have problems with your card. How can you pay for food? Where can you use the bathroom? What about the electricity bill before you got evicted? The electricity bill that was late and now unpaid that’s ruining your credit score? Now you have bad credit and will find it harder getting a flat. The above sentences where not chronologically cohesive because there’s so much working against the poor and those at zero, and I’m on mobile, I couldn’t take an hour to type it all out. How on earth do you expect a poor person to do a startup, when they can barely feed themselves and keep a roof over their head?
  - huffmsa 7y ago
    Same way my great-grandfather did it. He preferred the risks associated with going to America over the known outcome of staying in his little village.

DevX101 7y ago

They're talking past each other. Thing is, they're both right. Paul seems to be saying you don't have to be rich to do a startup. Matthew is saying lots of founder have some resources (family home, savings, great education, i.e. middle-class) that made doing a startup feasible Both these positions are true and aren't incompatible. Being middle class (Matthew's position) and prudent with savings can afford you probably a year of runway. But I'd never recommend someone who was truly destitute or food insecure to do a startup. If you come from a poor family there will also be family/cultural pressure not to do a startup and instead get a good paying job(assuming you have the ability).

lotsofpulp 7y ago
It’s a tough calculation to forego a presumably high chance of having a comfortable life and providing a good base for your kids by working a regular job, versus shooting for the moon and possibly losing that comfortable lifestyle.
emsy 7y ago
They’re not even talking past each other (that would require a back and forth). Matthew responds to something pg didn't say.
- lotsofpulp 7y ago
  If that’s the case, then Paul Graham chose a very poor subject as an example.
  - emsy 7y ago
    I agree, and he could and should have anticipated the reactions. But I read his clarifications and it looks like he argued with good intent.
humanrebar 7y ago
It's the difference between "a founder can be anyone" and "a founder can come from anywhere" to paraphrase Ratatouille.

DanielBMarkham 7y ago

Twitter wins again. We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is. When we're doing definitions, the key phrase is "necessary and sufficient" In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing. So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?" But that's not as fun to argue about. We oversimplify life and public policy-making at our own peril.

esolyt 7y ago
> So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?" I think it's more like whether it brings a 400% boost. It is definitely an important discussion to have. Whether Twitter is the place is another story.
- DanielBMarkham 7y ago
  I agree. Also note that moving from a 1% chance of success to a 4% chance of success _is_ a 400% boost. It also may be trivial. Moving from .1 to .4 works the same way. Both statements can be true at the same time. These things get tricky quickly. In a different medium, say forcing yourself to 100 characters instead of 280, we would have even more of a difficult time discussing it.
aestetix 7y ago
Yep. At this point, to encourage health and respectful public discourse, the first step is to delete your twitte account. And probably facebook too.
znpy 7y ago
> We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is. Twitter is cancer and this is why i keep off it.
njepa 7y ago

huffmsa 7y ago

Easier, sure. Not having a backstop means failure == death. Which isn't for the faint of heart, but that's the story of almost every Americans lineage at some point in the past. It takes a bit of luck, but rarely is it more luck than nose to the grindstone effort. My anecdotes: I have one great-great-grandfather who thought he had an office job in British Columbia, but by the time he sailed from England and crossed the continent the company had folded. But his family was already on their way, so he started working every mining job he could, and invested every spare pence he had into real estate. His sons did the same. My paternal great-grandfather came over from Italy, got harassed out of NYC by the Irish, bought a small farm in Oklahoma, and his children did the same.

bubblewrap 7y ago
That seems overly dramatic. Not everybody who loses their job dies. Most people seem to not die in that situation, actually. Failing at your startup would at most be equal to losing your job. You won't die just because of that. Even if you end up in debt, there are insolvency laws. You can just go flipping burgers for a couple of years and be good.
- huffmsa 7y ago
  Of course it's recoverable. If you're under 35 you can join the miliary as well. There are options. Not glamorous, but survivable. Better to have tried and failed than to never have tried. But when you're an Italian who can't speak English or out west in the late 1800s, it was a case of with your shield or on it.

bubblewrap 7y ago

Most people, even poor people, have parents who would help them out in case of need. They seem to be discussing a pretty low bar here. And of course it is a "privilege" to have supporting parents. So what? If you don't have that privilege, what are you supposed to do? Kill yourself? I think such privilege discussions are rather silly. What's the point? That people should be showered with tax payer money to even out their privileges? Or people with bad parents should be given state assistance (substitute parents)?

KaiserPro 7y ago
I'd suggest you think more deeply. All parent, regardless of class/richness want to be supportive. the question is what support can they offer? Sure, a sofa, most people have that. But thats not a long term solution. What if your parents don't have any savings, how will they help you with that debt? They can't Its not an issue of will, its an issue of possibility. Now, I intensely dislike the use of "privilege", as its more often than not tool to stop discourse. But, to assume that every parent is _capable_ of providing long term accommodation, financial, transport or other support is shore sighted at best. I suggest perhaps you might want to expand your social circle, so you can see this sort of thing first hand.
- bubblewrap 7y ago
  I was thinking of the basic "moving back in with the parents fallback". Of course different people have different advantages and disadvantages. Paul Graham's children will probably have an enormous head start in becoming entrepreneurs. They'll have "startup privilege" en masse. But so what? Should we begrudge them having it? Should we compensate children of other parents for the non-privilege of not being Paul Graham's children? And if so, how? What amount of money would be appropriate? Or should we punish his children to take away their unfair advantage? I just think the whole "privilege" mindset is unhelpful and unproductive. Try to make the most of what you have. Can only PG's children become successful founders? I think not. Maybe your children will only become millionaires if the become founders, and PG'S children will become billionaires. Cry me a river.
throwaway55554 7y ago

RickJWagner 7y ago

It makes it easier to launch a startup if you've got a strong safety net, but not impossible. I think the article misses the point, though. Look at Bill Gates-- he had rich parents, and so he started Microsoft. Which has gone on to make millionaires of lots of ordinary folks and continues to provide good jobs to many, many people today. It's a good system, it benefits a lot of people.

Entalpi 7y ago

I like to think Swedens extensive social safety nets are a factor to the large number of startups here.

dudul 7y ago
How does this large number compare to the US? Genuinely interested. Having lived in a few EU countries before moving to the US, I've always been under the impression that creating a startup in the US was way easier/more common.

CPLX 7y ago

A story where a billionaire downplays the problems created by wealth inequality. How novel.

carlsborg 7y ago

He said hard, not impossible. You're playing with a higher difficulty level, because you need to spend time and effort and divert your focus on mitigating the worst case scenarios instead, and market timing is one of the big factors in getting it right.

slowprogrammer 7y ago

PG and Matthew are talking past each other here. PG is defining "rich kids" as the spawn on the 1% and is arguing that these kids don't have any significant advantages over more normal people when it comes to accessing funding from VCs etc and that such a belief is harmful. Basically that there is a point of diminishing returns to being "rich" and that it's probably lower than you think. Matthew is arguing that being in crushing poverty is probably a barrier to building a successful startup. Both views can be basically correct.

kstenerud 7y ago

It's easy to take risks when there's little to lose. If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.

grenoire 7y ago
What seems like "little to lose" to you is "everything" to a lot of people. Breaking even at lower middle class is still something you can lose.
throwaway55554 7y ago
> It's easy to take risks when there's little to lose. > If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice. This, in no way whatsoever, resembles the conditions of the poor.
- kstenerud 7y ago
  That's right. It doesn't.

cbanek 7y ago

Pretty disappointed in PG's response: "I would ordinarily just let your bullshit go, but this myth that you have to be a rich kid to start a startup is terribly dangerous, because it discourages people who aren't from trying it. Brian Chesky's parents were social workers. That is not a rich kid." As if having two parents with stable jobs isn't considered a safety net. I agree, you don't need to be rich, but I also agree if you are struggling to work enough to eat, you aren't really working on making a startup. There are huge swaths of people with a much less stable safety net than the example he provided.

austhrow743 7y ago
Paul said you don't have to be rich. Matthew responded as if he'd said that it's not beneficial to have a safety net. That's putting a statement in to his mouth that he did not make. Anything more than a "fuck off" from PG was charitable.
- casion 7y ago
  The problem is that it gets read as a false dilemma. Talking about rich people and saying "you don't have to be rich to..." is like walking into a room of black people and saying "You don't have to be white to...". Nobody there is going to think that you're talking about asians. The statement doesn't really say anything except that 'being rich' is something that can come from some other non-rich state. It doesn't specify at what level you can be to reach that state. He could be implying that poverty is sufficient, or "middle-class" or that upper class CT is sufficient (and we don't even know if he thinks that means " rich"). It's just a complete non-statement that attempts to pander to an audience that has little choice but to misinterpret it or assume that he's stating the blindingly obvious.
  - Consultant32452 7y ago
    I don't think it matters what we're defining as rich. We can be honest without being destructive. I feel like our culture is constantly telling people they can't do anything with their life if they don't have every box of privilege checked. It's terribly psychologically destructive. Life is a constant struggle,a real river of shit sometimes, but it's one in which our own actions are still the biggest determining factor in our long term outcomes.

Tycho 7y ago

When someone uses the word “privilege” it’s a good indicator that the rest of the discussion is going to be a waste of time.

sfkdjf9j3j 7y ago
Can you elaborate on this?
- crankylinuxuser 7y ago
  Not parent. But in my experience, but "privilege" usually relies on invoking stereotypes (males, females, white, etc) and then shutting down individuals by invoking that their discussion is just 'privilege'. I saw a 'yelling over each other' thread on Facebook in which white feminists were being name-called by black feminists calling them names of various sorts for supporting only white rights. Any modicum of discussion was drowned out by chest-beating of lines of racism and sexism. I believe that thread is still going on. "Mansplaining" is yet another term that does that on sex based grounds. The term "manspreading" is yet another term with a sexist root- as only men can sit down and spread their lags in relaxation.

jkingsbery 7y ago

For whatever it's worth, there was a recent episode of Econtalk in the guest discusses his work with those below the poverty line and how some communities have been successful in entrepreneurship: http://www.econtalk.org/extra/discovering-positive-deviants/ http://www.econtalk.org/extra/discovering-positive-deviants/ I don't know of a quantitative study and obviously the source is biased, but the guest came himself from a "no safety net" situation and now works with others in a similar situation, so his take is interesting even if one disagrees.

snowwrestler 7y ago

PG seems worried that tweets saying you have to be rich to do a startup will discourage non-rich folks from trying a startup. This doesn’t give those folks much credit. It implies that a few tweets will have a bigger impact on their decision-making than their own detailed understanding of the constraints and anxieties of their own lives. I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.

gist 7y ago
> I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups. Exactly. And I have been avoiding saying this but keep in mind that from what I remember PG got the idea for YC when he was 'walking through Harvard Yard with Jessica'. https://www.fastcompany.com/3002810/aha-moments-made-paul-grahams-y-combinator-possible https://www.fastcompany.com/3002810/aha-moments-made-paul-gr... All VC's are like this by the way. Even though they know there is a great chance that many ideas they fund will not work they still push the investments because it's not their mess to cleanup. That said there is actually probably more downside for employees. After all a founder with a big startup failure has been marked as someone 'in the mix' and can usually parlay that to other opportunities. Look at even Sam Altman and what happened after Loopt. https://en.wikipedia.org/wiki/Loopt https://en.wikipedia.org/wiki/Loopt Then he goes on having made his mark to running YC.
ordu 7y ago
Nicely said. It is an irrational economic decision for a non-rich to begin a startup. Even if memes could change their decision it would make matters worse for them, not better.
csomar 7y ago
I'm not an expert on the subject but according to "science", the reason that woman do not go to engineering fields in the US is a byproduct of their environment not a difference in their genetics. If I got it right, Robert Sapolsky claims that the way to make more woman into tech is to make young girls believe that they can do tech. They already have the cognitive capacity. In this same sense, PG might be hitting the nail in the head: The reason poor people don't do startups is because they believe they can't; and that it is a white privilege. If they believe they can't, they will not try. If they don't try, the probability that they succeed is exactly %0. Re-enforcing the myth and further convincing poor people not to try. The only way out is to convince them otherwise and see what the real odds are. Robert Sapolsky also claims that we need to change our speech and views (ie: remove "negativity") in order to level the playing field. PG is doing the same. He thinks that other ideas need to be censored as it is important to maximalize the propaganda. That's a dangerous thinking as it touches on freedom of speech. One might wonder if you can level the social "cognitive" field while also preserving freedom of speech. Educating people is the only way I guess.

tluyben2 7y ago

Everyone from my country (NL) has a safety net to start with (you can screw up but still) and that goes for many EU countries anyway and yet all the entrepreneurs I know from NL are extremely risk averse compared to the US ones. Most of my NL friends are entrepreneurs but more of the lifestyle kind than even wanting to become the #1 in their field with the monetary status that comes with it. I dare to say that I only know Chinese and US entrepreneurs that look beyond getting more than few million on their account and that is it. I wonder why that is.

kaybe 7y ago
I wonder too. One idea I have: In these countries you don't really need that much more because you're already cushioned against risk. You also don't need to provide a cushion to anyone around you (since everyone's taxes are already doing that). Which means, below you is not the gaping abyss but a shrub that is a little bit thorny.
bumby 7y ago
I've often wondered about this. I wonder how much is a cultural mindset. In other words, is the U.S.'s relatively risk tolerant stance an artifact that many U.S. citizens are the progeny of people willing to take risks to start out as an immigrant in an unknown land and has that artifact become part of the collective mindset? Or possibly does the slow morphine drip of a safety net make one perceive all risks as something to avoid as opposed to a calculated risk? Or is all this based on a nonsense notion of American exceptionalism?

idlewords 7y ago

Let's not forget that Graham has also publicly written he would be loath to choose any woman as a startup founder "who had small children, or was likely to have them soon." The man has a type, and the demographics of YC reflect it.

_Microft 7y ago
Do you maybe have a source for it?
- altaccount1 7y ago
  Footnote 2 of this Paul Graham essay: http://www.paulgraham.com/start.html http://www.paulgraham.com/start.html
  - _Microft 7y ago
    Thanks. I'm sure I had read that before, it's surprising that I didn't notice that yet.
- deleted 7y ago
  [deleted]
- idlewords 7y ago
  Search on the verbatim phrase in your search engine of choice.
badatshipping 7y ago
I... would too? Startups take over your life, and so does taking care of young kids. Pretty hard to do both at the same time. Not impossible, but pretty hard, which is presumably why he said he’d be reluctant, not absolutely unwilling.
- idlewords 7y ago
  Leaving aside that there are driven people who work their asses off despite having young children, and that "startups consume your life" is the kind of belief VC have an interest in perpetuating, note that Graham in this statement is treating kids as a women's issue.

mattxxx 7y ago

The reality is that money lets you "take risks," and money gives you options (in this world). To be honest, I don't think that starting your company with the "risk" that you might move back in with your parents if it fails... is at all a meaningful risk.

zpeti 7y ago
Psychologically this is not true at all. It's much easier to take risks when you have nothing to lose. How many 18-30 year olds do you see having a swing at it and trying something, vs 30+ people with families and savings to burn?
- PaulHoule 7y ago
  My trajectory might not be "normal" but for me I have been more inclined to take risks as I've gotten older. There is a sense of urgency (e.g. if I don't do it now I won't get another chance) that counteracts the feeling of "nothing to lose")
- Timpy 7y ago
  I think everybody in this discussion is working with a different model for the word "risk". This is a problem of concision inherent to a platform like Twitter. I don't think the argument is that 18 year olds are risking less than 30+ year olds with established families. I think the argument is that for young middle/upper class people with social capital, the risk is moving back in with your parents. The conversation stems from the question "are startups riskier for rich kids or not-rich kids?", and not "are startups riskier for 18-30 year olds vs some other demographic?"
- noelsusman 7y ago
  Having nothing to lose is an advantage, but you also need to consider what the worst case scenario is. That's where the safety net comes in. A lot of people don't have anywhere to go if things truly go south.
- theplague42 7y ago
  Most successful startup founders are in their 30s and 40s. Providing a link: https://www.kauffman.org/what-we-do/research/2009/04/education-and-tech-entrepreneurship https://www.kauffman.org/what-we-do/research/2009/04/educati...

taytus 7y ago

Fuck the rich kids. And I'm not saying this as an insult. I mean it as "good for them". In terms that I'm 38 years old and I have enough maturity to know that: 1-Life isn't fair 2-Some people start the game 50 tiles ahead of you. None of these reasons are going to stop me (a poor entrepreneur) to build the company I want to build. I think PG's comment is idiotic, but I think he is very smart.

jasonkester 7y ago

Silly Twitter fight aside, the key piece of advice that us regular non-rich folk should take away is this: "Your first goal after university should be to build yourself a safety net." Once you have $10k in the bank, you can start taking risks just like those privileged kids that are starting all the startups with their unfair advantages. Best of all for us, we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.

idlewords 7y ago
In the United States, people who don't have significant financial support from their parents graduate from university with a great deal of debt.
- jasonkester 7y ago
  Indeed. But those are the same people getting those $150k entry-level salaries from companies in the Bay Area. Even after paying down $50k/year in debt one would be hard pressed to spend the rest of that without saving anything. You spend your college years sharing a house with 5 roommates, driving an $800 car and living on Costco pallets of canned chili. Keep that up for another few years after school while pulling down a dev salary and you'll be out of debt reasonably fast. Sadly, most people don't do that, and match their choice of new apartment and new car to exactly equal their new income. That's a shame, but it's also why I gave the advice I did above.
  - bumby 7y ago
    It's probably not the best practice to base arguments on outliers or anomalies. Yes, these numbers may be true for the Bay Area but almost certainly not the norm. The argument unravels quickly if applied to other markets.
  - idlewords 7y ago
    Some people have family to support. Eating all the canned chili in the world is not going to bring down your parents' medical bills. Your advice may work well for you, which is fine, but bakes in a lot of assumptions about social class, which is what we were just trying to avoid. To be young and debt-free and responsibility-free coming out of university is not everyone's lot.

commandlinefan 7y ago

Well, that's not really a risk then, is it?

bettrsocial 7y ago

I don't think anyone else should pay for a startup's safety net. Doing a startup requires calculated risk. It may or may not work. Whoever wants to attempt need to sit down and calculate the costs and the risks and take precautions. This is not the same as someone becoming unemployed because they got laid off, and it's not the same as providing welfare to people in poverty. Startups by their nature are risky and no one else should have to pay for a safety net in case it doesn't work out. The market does well weeding out the bad ideas and companies that aren't actually solving any problems. Creating a safety net might just contribute to perpetual "startupdom" (with everyone else paying for it), when in reality certain ideas and efforts need to just die off.

programminggeek 7y ago

It's not taking a risk if you have a safety net. That is the point of the safety net, to eliminate the risk.

umvi 7y ago

So why aren't highly socialized countries with tons of safety nets meccas of innovation?

gaspoweredcat 7y ago

exactly, its a different matter when that risk isnt "oh ill lose a bit of my buffer" but "if this doesnt work im on the streets" you may have a fantastic idea but if youre working for min wage theres a good chance youre little more than one missed pay cheque from being in serious trouble but those from privilidged backgrounds see it differently, many of them have never been "broke" and i mean truly broke so i guess they simply dont understand what theyre saying, theyve never taken an actual risk in their lives

PorterDuff 7y ago

The original twitter post, twitter responses, and responses here made me muse about how the definition of 'start-up' has changed in the last few decades. Ennui ensued.

majani 7y ago

Actually the headline of this is the takeaway you should get from this story. People with safety nets are the ones who get to do startups. This is logical and how it should be. If you weren't born into a rich family, then make saving up your number 1 financial priority to build that nest egg for yourself. Even the kids from privileged families are mostly in that position because their parents made a series of good financial decisions in regards to savings.

mcguire 7y ago

Is anyone keeping statistics on YC applications? What happens to people who don't get funded (by YC or otherwise)? What happens to those who do get funded but then fail? What proportion succeed, for various definitions of success?

skookumchuck 7y ago

By definition, it's not a risk if there's a safety net.

simplecomplex 7y ago

The world isn’t fair. Pontificating about how the world isn’t fair is useless. It’s a waste of your time. Both Paul and Matthew would be more helpful by providing advice to effectively deal with one’s situation in order to found a company. That would be valuable, instead of engaging in adversity olympics which is what most of Twitter seems to be nowadays.

nemonemo 7y ago

A close cousin of this topic would be the background of new full professors in major universities. Ph.D. is risky, especially considering the slim chance of getting the full professorship and its tremendous opportunity cost. The competition to become a full professor in a major institution is fierce and also it takes longer and longer as the competition heats up. The path is quite comparable to that of the unicorn founders in many ways. I'd wonder how much study has been done around the socioeconomic backgrounds of those prominent professors. I'd also be interested how those backgrounds have been shifted as time goes by. It would be also interesting if not much research has been done about it when some of them are supposed to do such a thing.

RenRav 7y ago

This a common debate point for basic income, providing the safety net for entrepreneurs, startups, artists, etc. Really was expecting a mention but it seems to have shifted toward boring arguments about privilege.

csomar 7y ago

> “It’s hard to take risks if you don’t have a safety net” Okay, here is a twist: How much do poor people spend on lottery/gambling activity? How much is that proportionally to their income? From looking at small casinos, betting shops, lottery and online sites (sports) it seems that poor people are risk takers. One reason, in my opinion, is that they have little to lose. They also have really shitty lives and are looking for an escape. If you were starting a startup alone in Bangladesh vs. starting solo with YC in SF. Building a remote-based startup that sell SaaS online for clients all over the world. Location of clients is everywhere. Technically, the playing-field is equal. You start a C-Corp from Bangladesh and trade your business. But which one do you think will make it? Which one do you think will raise funding? Or succeed if both do not raise funds? You live your life trying the optimize a problem. There is a number of steps that if you take, carefully, you'll become rich in some duration of time. You don't know these steps, so you keep searching. You know gradient descent. Life is like that, if you are moving successfully down, you are probably on the right track and so you keep moving on that direction. However, you start stochastically on a random location and keep trying to find a path that leads somewhere. That's where YC comes in. They help you reduce the surface area of your search. You are less likely to land somewhere futile. What poor people are missing is discovery of this surface area. It is a very complicated problem for them and they lack resources and education to optimize the problem. They are hoping that this lottery ticket will help land them directly on the optimized spot. Their lack of understanding of why this doesn't work explain why they can't navigate the surface area.

vec 7y ago
Of course people have different risk appetites, including poor people. The point isn't so much about "risk" per se, it's about whether or not there's a viable Plan B. If I'm working two jobs to barely keep a roof over my head and play the lotto and lose, I'm still keeping a roof over my head (by working two jobs). The odds are long, but the cost of failure is low. If, on the other hand, I have the Best Startup Idea Ever (and all the necessary skills to make it a reality) then I will still be unable to pursue it. Sure, I'm like 80% certain it's going to be a huge success, but in the 20% case I'm fuuuuuuuuucked so taking a swing at it is a nonstarter.
gubbrora 7y ago

julienfr112 7y ago

It depends also of your lifestyle : if you can't leave without buying expensive stuff, going in vacation in French Polynesia and skiing in Aspen, the safety net should be $100k or $1m. If you can leave in a cheap neighborhood, cook your own food, reading books and HN, doing cheap sport like running or cycling, $10k can take you a long way. The revenue and/or lifestyle of your significant other is also a huge factor.

richardriko 7y ago

If you are in india the emotional blackmail and the pressure to marry before 30 is a huge hindrance. In india a graduate has no real world knowledge when he gets out of college. It takes about 6 to 8 years to get the confidence in coding and creating something. But by the time the marriage is done and no way to take risk. To be honest the salary earned by women is like an additional income and never considered primary income in 99 percent marriages.

beezlebubba 7y ago

“It’s hard to take risks if you don’t have a safety net.” Because suggesting otherwise just makes you sound like a late night infomercial huckster. I have even more respect for Matthew Prince now. I've loved Cloudflare from day one and now I know why.

bg24 7y ago

Experiencing first hand. I hope at this age, I should have saved enough. But, single income and mortgage means better be realistic. I do take risk though, working for startup on cutting edge tech, than for a large company. Basically insurance for future job security. The risk I cannot think of is starting my own business. Related - it is impossible to take risks if you or family have crippling health issues. And when you have both, why even bother to take major risks.

nswest23 7y ago

r/murderedbywords