5 ms·

Great point. People think a willingness to take extreme financial risks is somehow a useful personality trait when it comes to entrepreneurship because of selec

Great point. People think a willingness to take extreme financial risks is somehow a useful personality trait when it comes to entrepreneurship because of selection bias. People who take that risk and make it tell that story. People who take that risk and don't make it aren't heard from. People who don't take that risk also aren't heard from. There are lots of people with great ideas and the ability to execute on them who also have a deep sense of financial responsibility that precludes them from going 50k into credit card debt.

mgkimsal 6y ago
> People who take that risk and don't make it aren't heard from when you do, it's often quite heartbreaking. have read a few online, and knew one personally - kept going in to further debt, ended up getting divorced and creating a huge rift in his family, etc.
CerealFounder 6y ago
It's all just legacy from the insane power dynamic that comes from a relatively broke entrepreneur and an investor with money. The only thing that seems to stem true about the myth about "founders should be paid too much" is that when you suddenly have more resources than you ever had, you tend to be exposed to new distractions.
sangnoir 6y ago
And often, getting credit card debt is not a material risk, but a minor embarrassment when they ask their family to bail them out and/or move in the guest house for a few months, rent-free. When poorer folk take the "same" risk, they can be ruined for decades.
- jjeaff 6y ago
  It's also a privilege to even have a significant amount of unsecured credit available to you in the first place.
- santoshalper 6y ago
  At least in the United States, we have a bankruptcy system that blunts the worst outcomes somewhat. Not sure that applies everywhere.
- hpcjoe 6y ago
  Here here. When you empty your 401k to build your business, and don't contribute to it for 15 years while you are building, as you simply don't have the cash, and cannot afford it ... Yeah. The implicit assumptions of the "live in poverty" of the OP, are wrong. I'm 54, and I was financially wiped out at 51. I will not ever recover from this. No family wealth to fall back on. I do not believe I will ever be able to retire. And noting that there is a bit of ageism in this space, makes the threat of potential long term unemployment even worse for folks like me. Sort of an inverse Ozymandias. Gaze upon my flaming cratered company, and beware. Here be demons. That you cannot control. I had skin in the game. And I lost it.
  - jngreenlee 6y ago
    Have you blogged or told your story anywhere? I'm curious to learn more!
    - hpcjoe 6y ago
      Not all of it. I blog here[1]. The post where I talked about the end is here[2]. Note the 'laws' I quote at the end of the post. My first post is here[3]. There I talk about the HPC market, accelerators, and some of our plans. We were working on board level inexpensive accelerators before these were a thing. We gave up trying to get funding for this in 2006. I did say, you have to be at the right place, at the right time. And be lucky. We got 2 of 3. Luck eluded us. [1] https://scalability.org https://scalability.org [2] https://scalability.org/2017/03/requiem/ https://scalability.org/2017/03/requiem/ [3] https://scalability.org/2005/10/venture-capital-and-high-performance-computing/ https://scalability.org/2005/10/venture-capital-and-high-per...
      - infinite8s 6y ago
        Oh man, I remember reading your blog when I was in grad school (mid-2000s) doing molecular simulations on HPC systems (and not really enjoying the science aspect, but I did like working on the tools), thinking that you were a great example of being able to bootstrap a business in the HPC space. Sad to hear it didn't work out.
- adventured 6y ago
  > When poorer folk take the "same" risk, they can be ruined for decades. In the vast majority of circumstances that's an extreme exaggeration. Speaking from past personal experience with poverty (ie being "poorer folk"), you can default on every possible type of debt - wait about seven years (can vary slightly by state, but it's typically around that), and you're free from it. My credit rating went from 800, to 480, back to 760 in that process over eight years, without requiring any special effort. I defaulted on numerous credit cards, I defaulted on medical debt; it all vanished, one after another as time ticked by, and my credit rating jumped as each item fell off. Every negative mark falls off your credit report after N years. It's very unpleasant to have your credit rating wrecked for years. To say that it will ruin you for decades, that's reaching into the land of absurdity. I'm sure it happens, some people get stuck in a vicious cycle for ... decades, however it's not rocket science to properly utilize the negative mark credit cycling to your advantage and reboot. It doesn't take more than an hour or two of reading to self-educate at zero cost about how the system works.
- redisman 6y ago
  If you're actually poor you can't even get a credit card. Because of a lack of credit history the only card I could get at one point was a $300 credit card where I had to send in $300 as a deposit to the bank. Let me just pay a couple of employees a somewhat livable wage on that... I really hate this condescending "if you really wanted it the money shouldn't matter" coming from millionaires.
- sealthedeal 6y ago
  True statements, fact of the matter is, this is not a fair world in which we live in. We are all created equal, but it doesn't mean that we are all given the same privilege.
hpcjoe 6y ago
As one who bootstrapped, took that risk, and lost ... everything ... I've been talking passively about this for a while. I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky. Really, I hate to deflate many many bubbles, but being at the right place at the right time is often the deciding factor for success or failure. IMO moreso than the product, the product market fit, etc. You have to be seen as the sole provider of something the people deem important. Even if this isn't really true. You need influencers to drive carefully staged hype, and then you need to be able to convert small victories into evidence the hype is real. This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best. The greatest lie ever told to entrepreneurs like me is "build a better mousetrap and the world will beat a path to your door." There is soooo much more than that. And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be. If you are lucky, you will have a reasonable exit. Most of the time that doesn't happen.
- sebiw 6y ago
  I understand what you say and I assume you have more experience than me in this field. But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried. To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.
  - hpcjoe 6y ago
    There is a saying in karate. Fall down 7 times. Get up 8. But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals. Do I regret my time building some of the insanest things in market (at the time)? No. It was an itch, I had to scratch.
    - 6y ago

mgkimsal 6y ago

> People who take that risk and don't make it aren't heard from when you do, it's often quite heartbreaking. have read a few online, and knew one personally - kept going in to further debt, ended up getting divorced and creating a huge rift in his family, etc.

CerealFounder 6y ago

It's all just legacy from the insane power dynamic that comes from a relatively broke entrepreneur and an investor with money. The only thing that seems to stem true about the myth about "founders should be paid too much" is that when you suddenly have more resources than you ever had, you tend to be exposed to new distractions.

sangnoir 6y ago

And often, getting credit card debt is not a material risk, but a minor embarrassment when they ask their family to bail them out and/or move in the guest house for a few months, rent-free. When poorer folk take the "same" risk, they can be ruined for decades.

jjeaff 6y ago
It's also a privilege to even have a significant amount of unsecured credit available to you in the first place.
santoshalper 6y ago
At least in the United States, we have a bankruptcy system that blunts the worst outcomes somewhat. Not sure that applies everywhere.
hpcjoe 6y ago
Here here. When you empty your 401k to build your business, and don't contribute to it for 15 years while you are building, as you simply don't have the cash, and cannot afford it ... Yeah. The implicit assumptions of the "live in poverty" of the OP, are wrong. I'm 54, and I was financially wiped out at 51. I will not ever recover from this. No family wealth to fall back on. I do not believe I will ever be able to retire. And noting that there is a bit of ageism in this space, makes the threat of potential long term unemployment even worse for folks like me. Sort of an inverse Ozymandias. Gaze upon my flaming cratered company, and beware. Here be demons. That you cannot control. I had skin in the game. And I lost it.
- jngreenlee 6y ago
  Have you blogged or told your story anywhere? I'm curious to learn more!
  - hpcjoe 6y ago
    Not all of it. I blog here[1]. The post where I talked about the end is here[2]. Note the 'laws' I quote at the end of the post. My first post is here[3]. There I talk about the HPC market, accelerators, and some of our plans. We were working on board level inexpensive accelerators before these were a thing. We gave up trying to get funding for this in 2006. I did say, you have to be at the right place, at the right time. And be lucky. We got 2 of 3. Luck eluded us. [1] https://scalability.org https://scalability.org [2] https://scalability.org/2017/03/requiem/ https://scalability.org/2017/03/requiem/ [3] https://scalability.org/2005/10/venture-capital-and-high-performance-computing/ https://scalability.org/2005/10/venture-capital-and-high-per...
    - infinite8s 6y ago
      Oh man, I remember reading your blog when I was in grad school (mid-2000s) doing molecular simulations on HPC systems (and not really enjoying the science aspect, but I did like working on the tools), thinking that you were a great example of being able to bootstrap a business in the HPC space. Sad to hear it didn't work out.
adventured 6y ago
> When poorer folk take the "same" risk, they can be ruined for decades. In the vast majority of circumstances that's an extreme exaggeration. Speaking from past personal experience with poverty (ie being "poorer folk"), you can default on every possible type of debt - wait about seven years (can vary slightly by state, but it's typically around that), and you're free from it. My credit rating went from 800, to 480, back to 760 in that process over eight years, without requiring any special effort. I defaulted on numerous credit cards, I defaulted on medical debt; it all vanished, one after another as time ticked by, and my credit rating jumped as each item fell off. Every negative mark falls off your credit report after N years. It's very unpleasant to have your credit rating wrecked for years. To say that it will ruin you for decades, that's reaching into the land of absurdity. I'm sure it happens, some people get stuck in a vicious cycle for ... decades, however it's not rocket science to properly utilize the negative mark credit cycling to your advantage and reboot. It doesn't take more than an hour or two of reading to self-educate at zero cost about how the system works.
redisman 6y ago
If you're actually poor you can't even get a credit card. Because of a lack of credit history the only card I could get at one point was a $300 credit card where I had to send in $300 as a deposit to the bank. Let me just pay a couple of employees a somewhat livable wage on that... I really hate this condescending "if you really wanted it the money shouldn't matter" coming from millionaires.
sealthedeal 6y ago
True statements, fact of the matter is, this is not a fair world in which we live in. We are all created equal, but it doesn't mean that we are all given the same privilege.

hpcjoe 6y ago

As one who bootstrapped, took that risk, and lost ... everything ... I've been talking passively about this for a while. I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky. Really, I hate to deflate many many bubbles, but being at the right place at the right time is often the deciding factor for success or failure. IMO moreso than the product, the product market fit, etc. You have to be seen as the sole provider of something the people deem important. Even if this isn't really true. You need influencers to drive carefully staged hype, and then you need to be able to convert small victories into evidence the hype is real. This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best. The greatest lie ever told to entrepreneurs like me is "build a better mousetrap and the world will beat a path to your door." There is soooo much more than that. And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be. If you are lucky, you will have a reasonable exit. Most of the time that doesn't happen.

sebiw 6y ago
I understand what you say and I assume you have more experience than me in this field. But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried. To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.
- hpcjoe 6y ago
  There is a saying in karate. Fall down 7 times. Get up 8. But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals. Do I regret my time building some of the insanest things in market (at the time)? No. It was an itch, I had to scratch.
  - 6y ago