31 ms·

Parents' income, not smarts, key to entrepreneurship

• theinverseidea 6y ago
  You ever try making an assessment like this in regular conversation?
• PaulHoule 6y ago
  My father-in-law got together with his brother to buy a bulldozer and ran a business putting in curbs and sidewalks. Today my wife teaches people to ride horses. Thus she had a precedent in her family of someone who succeeded at self-employment and she wound up doing something similar in work. John Kenneth Galbraith would say that that sort of self-employed person is highly exploited, etc., that it isn't a realistic vision for many people to get ahead. But I know many people who've succeeded that way. I've known a number of successful academics (like Galbraith), but I met them in grad school or after they were successful. 2000+ years before Marx the greeks talked about "class" as being networks of families that gravitate to towards certain family wells and that is alive and well today.
• JoeAltmaier 6y ago
  I've known this for decades. When Bill Gates started publishing Smart Basic (or whatever) in magazines, I got a copy and saw what crap it was. I could do better. Why didn't I? That was my very first thought. The reason was, I had to work halftime to pay tuition and buy food. I was mired in working to live. Ol Bill had a family to support him as he bought resources (ads in magazines etc), recruited staff, took meetings etc. Always a hot meal on the table when he got home from a big day. One result of a Basic Income: more folks can be entrepreneurs, if they're willing to live off that few dollars a month. It could make all the difference.
  • fred_is_fred 6y ago
    Bill's high school also had a PDP terminal connected to UW. Basically no other high school had that - which gave him an early head start.
    • elliekelly 6y ago
      This was mentioned in Outliers, I think. I wonder what the equivalent one-in-a-billion “head start” technology is for kids today.
      • adenozine 6y ago
        Call me crazy, but I think if there's any HS classes or earlier, teaching algorithmic thinking, those kids are have a crazy head start if they choose CS. I don't mean these classes where they get out and write class Dog(Animal): def bark(self): print("a Dog is barking!") but if there's young people being taught the difference between quadratic/exponential/polynomial algorithms, that's going to stew in their brains and ferment into gray matter that will ACTUALLY make them better programmers. I'm not an educator, nor am I educated ABOUT education, but it's just my hunch. I've seen many a young buck come around with a fancy degree or whatever, and not be able to see a skip-list shaped hole for his skip-list shaped peg. That's hard to deal with at a meta scale. I can't develop a way to quickly train people OTJ how to think algorithmically. They either learned to think about the problems that way, or they learned to rely on some stupid Haskell/Python/Elixir/Kotlin/Blub thing, and can't get any meaningful work done quickly.
        • DC1350 6y ago
          There’s already a trend in certain high schools where kids start doing competitive programming, hackathons, blog writing, etc. way before university starts. By the time they’re college freshmen they’re ahead of the average new grad already when it comes to interview skills. These kids end up interning for FAANG or unicorns in freshman or sophomore year. There’s thousands of them.
        • 908B64B197 6y ago
          > teaching algorithmic thinking Even outside of CS this will give them a huge head start. Functional decomposition is one of the most valuable skill one can have. Knowing what an interface is and being able to see a system as a series of layers of abstraction is too.
      • 6y ago
  • birdsbirdsbirds 6y ago
    As a programmer, it's possible to do the same, just one decade later. Jack Ma argues in some talk that people should gain experience before starting a company. This mirrors the numbers that show that older founders have a much higher success rate. After having worked for a decade, there can be enough money to handle some years without income. Bill Gates was not successful because he started young, but because his mother had the connections to IBM (see some other comment). That cannot be replicated with basic income.
    • Bakary 6y ago
      No aspect of a massively successful person's path can be meaningfully analyzed and replicated other than in general principles that are already obvious (be ambitious, proactive, etc.)
    • nomay 6y ago
      What Jack Ma didn't tell you is that those things don't matter that much, it's more of a lip service to burnish his image, a victory lap. His father is well-connected both in business and politics and provided him access and opportunities plebs counld dream of. Hell he didn't even have any tech experience, he was a english teacher. And Alipay would have been killed a million times as it infringes the state monopoly on finance, had him not been shielded by the quagmire of local and central politics.
  • SilasX 6y ago
    Or all the UBI money would pump up rents to the point that living costs make it infeasible again.
    • epistasis 6y ago
      Rents only get pumped up if we don't have enough housing to go around... in which case regular incomes do the same thing.
      • iguy 6y ago
        But we do have lots of housing, it's just located in places people don't want to live. Rents are high in places they do want to be, and that's partly a positional thing -- if you want to live where the top-10% of earners live, you need to bid against them for housing.
        • epistasis 6y ago
          From this angle, a UBI is even more powerful, in that it will go a lot further in areas that are less economically productive, and let us use "surplus" housing there. Ideally we'd just let more people live closer together like they want to, but the elites won't let more people get close to them.
        • rubicon33 6y ago
          Exactly. The high costing of housing really has more to do with the type of person you've living around/near, than the house.
        • PeterisP 6y ago
          Thing is, requirement for on-site employment requires you to live where lots of people live; only the very wealthy can afford to live in places without jobs nearby - as UBI decouples income from where you live, then it would be a pressure to equalize rents, as underemployed people - the demand for whose labor is decreasing and will decrease further - can afford live in the many places which are currently shedding population because of lack of jobs despite being actually very nice to live in.
  • abhiyerra 6y ago
    Healthcare and Basic Income would do a lot to encourage entrepreneurship. I had to also wait till I paid off my student loans. There are a whole lot of shackles if you come from a humble background to starting a company full time. On the other hand it has never been cheaper to start a side hustle.
    • war1025 6y ago
      > Healthcare and Basic Income would do a lot to encourage entrepreneurship. I have a dream that Healthcare will someday be decoupled from employment. So much waste is tolerated simply due to the fact that the majority of the expense is borne by your employer before the number they put on your paycheck. I can live on a part time salary without issue, but health insurance, which is already $200/wk for my family with my employer chipping in, would jump to more like $600/wk, which is just completely untenable. There is no sane reason why health insurance should be my single largest expense each month.
      • nemo136 6y ago
        That is more or less what we have in France, it comes with other issues... like really high taxes. But we have many start-ups, which usually migrate to the US as soon as they grow big.
      • danilocesar 6y ago
        You know that your dream is actually the standard in every developed nation except the US right?
        • war1025 6y ago
          That's what makes it seem achievable.
      • Someone1234 6y ago
        They could even do this without too many major changes. Just three in fact: - Increase HSA Contribution Limit - Allow both Traditional & High Deductible insurance premiums to be paid with the HSA - Ban employers from directly providing/choosing insurance (ex. US Military) Essentially everyone goes out onto the open market and buys their insurance using pre-tax HSA contributions (similar to tax benefits to employers now). Employers can continue to "help" be providing dollars to HSA/HSA match, rather than picking your insurance for you. There are more radical and arguably better solutions, but if you want to see a large improvement with minimal changes/the least controversy this is it. Most insurance companies could likely just convert existing employer provided policies into employee direct ones paid via HSA.
  • theinverseidea 6y ago
    I cant wait for basic income, because I cant wait to quit my job and focus on my ideas.
    • AnIdiotOnTheNet 6y ago
      I wouldn't hold my breath if I were you. As much as it is discussed and promoted in certain circles, it has basically no traction in national politics and its hard to see that it ever will since national level politics is currently pre-occupied with trying to figure out if crimes are actually illegal when their own party does them.
      • theinverseidea 6y ago
        You can tell from the downvotes that proponents of this idea believe people like me do not exist. We do. I welcome UBI and I will quit my job.
    • koverda 6y ago
      If you can't wait, start focusing on your ideas now. Chip away, one hour a day, every day.
      • theinverseidea 6y ago
        Of course, I'm not complaining. Just stating plainly I welcome the opportunity to do it full-time.
  • methyl 6y ago
    > pay tuition Going to college is not required to become a successful entrepreneur.
    • danilocesar 6y ago
      While you have a few examples of drop outs (Zuck, gates, etc) the vast majority of those famous entrepreneur went to college. Not a requirement, but increases your chances a lot.
      • JKCalhoun 6y ago
        Never mind the 99% (a guess here) of successful people that are not "entrepreneurs" but wealthy, successful. Unless we are only talking about Bill Gates.
      • aksss 6y ago
        Why are we only talking about the small percentage of entrepreneurs that become famous? Most are not and never will be, nor is that a requirement for entrepreneur success. That bar is entirely irrelevant to any conversation about how to encourage entrepreneurship.
  • narrator 6y ago
    The problem with most welfare schemes is they have big welfare cliffs. You make one dollar more than a certain amount and you lose thousands in benefits. It's the virtual equivalent of a greater than 100% marginal income tax. Also, countries with greater welfare programs don't have greater entrepreneurship. The opposite is somewhat true. Probably due to higher taxes and it's very hard to go out of business once you're in business and to fire employees in other countries.
    • yardie 6y ago
      I know that France is the butt of many jokes about work, "no French word for entrepreneurship," but in my experience almost every business I interacted with around socialist Paris was a small, independent business. This was the unintentional consequence of labor laws. <50 employees fall under one set of labor laws, >50 employees you're in a tight spot until you're >1000 employees. Then the additional overhead of benefits for those employees is subsidized by economies of scale.
      • sjg007 6y ago
        Having UBI could loosen job protection rules and labor laws too.
        • yardie 6y ago
          UBI and single-payer HC may be fastest way to unlocking capital to the lower and middle class. I know far too many smart people who stick with a job they hate simply because the group healthcare is the only thing keeping the individual or family from bankruptcy.
    • Knufferlbert 6y ago
      I don't think those reasons are true for the "lack of entrepreneurship". I'd love to know some numbers actually, I know EU doesn't have as many unicorns like Uber, Google, Amazon, etc. But that is a tiny amount of people who started those (and now employ a staggering number of people). I think there are two reasons why that may be: - Generally larger regulatory barriers. GDPR is an obvious recent one, but also market complexity with EU countries regulations/laws differing more than US states. I think (without knowing). That coupled with "first to market" advantage of US companies. - Money isn't as big as a driver for Europeans. "Rags to riches" is a pretty American thing. "Get educated and live well" is closer to our lookout I think.
  • Abishek_Muthian 6y ago
    I knew Bill Gates's family was well to do when he started with his endeavors, but I recently came to know Bill Gates Sr. was a prominent personality from Howard Schultz's account of him. The story goes like this - When Howard was offered Starbucks for US$3.8 million by original founders, he was working to raise funds for that and his current investors went over his back to buy Starbucks. Howard was introduced to Bill Gates Sr.(Lawyer) by a friend, who took Howard to the building where those investors were straight away and threatened them out of it immediately.
    • hogFeast 6y ago
      Gates was also introduced to Warren Buffett through his dad.
      • aksss 6y ago
        Isn’t this a really bad comparison though? Most entrepreneurs own small (I mean small) businesses providing services and employment to a mostly local area. Bill Gates and his dad are not representative of most small business owners, and seem rather immaterial to a conversation about entrepreneur success.
      • rasz 6y ago
        and to IBM CEO thru his mother. https://www.pcworld.com/article/243311/former_ibm_ceo_john_opel_dies.html https://www.pcworld.com/article/243311/former_ibm_ceo_john_o... "it was Opel who met with Bill Gates, CEO of the then-small software firm Microsoft, to discuss the possibility of using Microsoft PC-DOS OS for IBM's about-to-be-released PC. Opel set up the meeting at the request of Gates' mother, Mary Maxwell Gates. The two had both served on the National United Way's executive committee."
  • Vaslo 6y ago
    While there will be a few folks that will prosper from basic income, I can’t say I’m interested in paying people to pursue things that are more like hobbies. For every entrepreneur or community volunteer that makes a difference, I fear 9 others will set their sights on being gaming streamers or will just sit around writing blogposts. If you aren’t adding value somewhere and are able minded and able bodied, I don’t want to invest my money in you.
    • AnIdiotOnTheNet 6y ago
      > For every entrepreneur or community volunteer that makes a difference, I fear 9 others will set their sights on being gaming streamers or will just sit around writing blogposts. Providing entertainment and insight has no value to society?
      • caskstrength 6y ago
        People who provide good entertainment and valuable insight already collect money through subscriptions.
    • bumby 6y ago
      I really appreciate Jack Goldstone’s perspective on this. Instead of perpetual UBI, he’s in favor of a larger single lump sum paid out after a period of time post-civil service. The idea being instead of the slow morphine drip of $1k a month for life, you can get, say, $25k-$50k in a lump sum after serving a year or two in the Peace Corps, AmeriCorps etc. The advantage being service builds a stronger sense of community and gives you more skin in the game. Additionally, a larger single lump sum is more conducive to helping start a business as well as being cheaper long term. It parallels the GI Bill in a lot of aspects.
      • aksss 6y ago
        I’m not sure that’s a good plan with such a huge dependency on financial wisdom. Look at Alaska - they have the PFD every year (well, mostly) and people just use it to buy TV’s, quads, and all the rest. You could say it frees up other income to pay bills, but I think generally people indulge themselves with lump sums of cash unless they are really struggling and have some good sense. In Alaska there are people who would favor switching the PFD to a monthly stipend rather than a lump sum to discourage this behavior.
  • Aunche 6y ago
    In that case, you would except a lot more entrepreneurs from Saudi Arabia. Instead, you have a bunch of freeloaders who outsource their work to foreigners. They started a UBI program a few years ago. Before that, they had a jobs program that essentially functioned as UBI, since it was nearly impossible to fire a Saudi citizen.
    • AZRS 6y ago
      Not really, it can be multi factor, with a set of minimum values in several metrics being required before parental wealth becomes the dominant factor. To be glib, some people leave millions to their cats but I don't see any entrepreneur kittens..... That is, the baseline genetic, cultural, and environmental potential for entrepreneurship probably needs to be in place before familial wealth becomes so important. Given that Saudi Arabia has entirely different ethnic groups, with an extremely different culture, and a very different climate and business environment, I am not surprised at all that the principle factor in north American derived populations entrepreneurship isn't that in the Saudi Arabian population.
  • omgwtfbyobbq 6y ago
    This, times a large number. It doesn't have to primarily be UBI either. Given where we are technologically, it could be PV/wind/demand management/batteries on every roof, a semi-automated garden in every yard, etc... With a little bit of UBI for whatever people aren't able to do at home (eg TP).
  • snarf21 6y ago
    This is all very true but UBI isn't the solution. The middle class can win this game with a perspective change. Instead of saddling their kids with school loans and pressuring them to "get a job" right out of school, they should give them 5 years where they "angel" them in their own houses for a stake in the company. Get four young sharp kids a couple of years with no bills to pay and I bet they could create something viable. This is the difference. Entrepreneurs need funding and encouragement. Parents could play this role instead of VCs and they could bank big when funding comes. You don't need $MM to fund a start-up if you approach it will bootstrap principles.
    • remirk 6y ago
      This works with the assumption that parents have enough disposible income to fully maintain their children well into their 20's. Which isn't always the case.
    • JoeAltmaier 6y ago
      Making the rich, richer and the poor just stay where they are.
    • ilaksh 6y ago
      That's the point though. You do need money for a startup and rich kid's parents give it to them.
  • anovikov 6y ago
    Thing is, elites are hereditary. They always will be. If we enable entrepreneurship (or education) for that matter for the poor, other social mechanisms will appear that will make both of these irrelevant so that elites are preserved. Which in particular? I'd rather not find it out.
  • Geminidog 6y ago
    I mean who didn't know this? It's quite obvious that if you're in debt or are poor you're not in a position to start a startup. Meanwhile if mommy and daddy are billionaires you can start up a business and fail with no worries. Look at the extremes and the outcomes of the extremes. If the outcomes are opposite then it's quite likely that a gradient exists in between.
  • danenania 6y ago
    It definitely makes a huge difference to have savings if you want to be an entrepreneur. But these days, a decent programmer can save up a year or more of runway and build industry connections just by working for a few years and not spending outlandishly. If the startup doesn't work out, a new cushy job is waiting for you. So yeah, startups are risky and favor the wealthy, but let's not overstate the case. I'm in favor of basic income and I agree it would be a boon to entrepreneurship, but people with the skills to build a tech startup have already won the lottery. We're not the ones in need.
    • advisedwang 6y ago
      Realistically a startup needs more than a year or two of runway for one person. It requires several years of runway for several people, plus paying for infrastructure, legal work, marketing etc.
      • deleted 6y ago
        [deleted]
    • pastage 6y ago
      That means some extra years/decades off from your career, to get to the same level of security. So this is not overstating it, it just basically says if there is capital available ambitious ventures will succed at a more frequent rate.
    • mhh__ 6y ago
      Whereabouts? I guess this might be true in the valley but in the UK for example I'd imagine you'd have to live off nowt for years to be able to do that - i.e. salaries are pretty horrific in some industries.
    • pipipzz 6y ago
      Also, getting a job after a startup failure might be easy in the US or other developed countries, but this will not be the situation in a country like India, where the supply of cheap labor far exceeds the demand and only people from elite university titles will be able to get back to a job better than their last one.
  • Axsuul 6y ago
    Why are we using Bill Gates as an example here? He is an extreme outlier that is far beyond the goal post of what most entrepreneurs would see success as. It doesn't require the seminal upbringing and kismet growth environment of Bill Gates just to get into entrepreneurship.
    • Arainach 6y ago
      ....but it helps a huge amount. That's the point of this article. It's much easier to risk doing a startup when you know that no matter what, you won't have to go hungry or homeless because there's family who will help you. You're a lot less worried about pouring dollars into your 401k at age 22 if you know that you stand to eventually inherit a few million from your parents, so whatever.
      • Axsuul 6y ago
        I'm not denying it helps and isn't significant. But why do you need to inherit a few million just to feel secure enough to pursue entrepreneurship? Being an entrepreneur doesn't mean you have to go big or go home. There is just as much entrepreneurship with immigrants as there is with the US-born, with the former less likely to have a comfortable safety net.
        • Arainach 6y ago
          Opportunity cost and time value of money. In general, if person A puts $5K a year into a 401k between ages 25-35 and then stops, while person B puts in $5K a year between ages 35-65, at age 65 person A will have a larger retirement balance despite having put in only 1/3 as much principal. This generalizes to the rest of your net worth (salary+stock) as well. If you win the lottery and manage to have significant equity in a startup worth millions, congratulations. If not, you're faced with the prospect of being older and having minimal (or at least far fewer) assets. This is a big problem if you want to raise a family or even if you want to advance your status in life. The economics of software are simply different. Someone good enough to start a business that brings in $10-20K MRR and barely survive is almost certainly good enough to get hired and paid $200K+ by any number of companies. If you're not going big or going home, it doesn't make sense to do a software startup these days. Even in other industries, starting and running your own business is a LOT of work. If your goal isn't to (try to) get rich, you can almost always make more money climbing some corporate ladder for a lot fewer hours.
  • terryf 6y ago
    I am a son of a single mother, who was a teacher at the time. In a country that was just recently liberated from the soviet union. Trust me, I was not rich. Started my first company at 20, after dropping out from university. (mom wasn't exactly happy) Sorry, your excuse doesn't apply. Unless you want to claim that going to a state-funded university is a privilege, in which case I guess everyone in all the countries where universities are free are privileged?!?
    • mgkimsal 6y ago
      The term 'privileged' almost becomes meaningless when comparing between different countries/cultures. Yes, compared to many in the US, you were 'privileged' with respect to education, because you had free university-level education provided. This is something that is outside the reach of many who want it here, and for some who get it, they get it with burdensome financial strings attached. So..., in that respect, you were privileged. People in the US are 'privileged' in other respects compared to your circumstances. But using the word 'privileged' as some sort of singular distinctive quality doesn't make much sense.
  • nec4b 6y ago
    For one Bill Gates there are probably a million of other successful entrepreneurs who likely started poorer than you.
  • mhh__ 6y ago
    On top of the basic income idea I also would be perfectly happy to have the government fund little businesses in a similar manner - not a corporate basic income, but the next great business might be in the head of someone working for minimum wage in shop. Give them a few quid, keep an eye on them, see where it goes.
  • complexmango 6y ago
    This is amazing - just ignore Steve Jobs, Larry Ellison, Andrew Carnegie and several other of the richest people of all time who came from humble beginnings, just because they don’t fit your narrative. For the past 15 years I have worked with wealthy people for a living, hundreds of them. Two things stand out: 1. Most of them came from humble beginnings, typically as immigrants 2. Most of them stress their kids won’t be as successful because of having it too easy It’s alarming to me how much ignorance there is about real life outside of tech on hackernews, and how insidious academic leftist propaganda is.
    • ilaksh 6y ago
      Well, forgive me for giving more credence to a scientific study than to your impressions of self-reported humble beginning from wealthy clients.
• elliebike 6y ago
  I suspect a large part of this is due to the fact that those with wealthy parents are more likely to have a) family money to fall back on if things go wrong and b) family investment in the early days Everyone else has to seriously consider the (high) risks of their startup failing and not being able to afford rent, or whether their idea is worth burning their life savings.
  • HarryHirsch 6y ago
    You forgot the family network. Zuckerberg père is a prominent Westchester dentist. Easier to find decent lawyers and accountants when you grow up in that sort of environment. Apparently, Zuckerberg met Sandberg at a party, hosted by a mutual friend.
  • michaelbrave 6y ago
    I would also bet family connections and introductions.
  • polote 6y ago
    If you had read the article, you would have seen that it's exactly what they say : “A strong economic base may benefit those interested in setting up a start-up, providing an economic safety net in the event of failure,”
  • brundolf 6y ago
    Your parents don't even have to be wealthy. Just having parents who are financially stable, own their house, could literally keep you off the streets and give you food if you fell on truly hard times, makes an enormous difference compared to not having that.
  • cmrdporcupine 6y ago
    It's also highly cultural; if the people around you that you see as role models are serious about business, connections, management, etc. that's what you pursue. And higher management comes more naturally to people who have spent their childhood in an ethical framework that divides people into manageable units, too. My working class / middle class parents just didn't have room in their worldview for having employees, nor would they feel comfortable delegating their household aspects to maids and the like. When we had kids my wife and I couldn't imagine having a nanny (despite being able to afford it) while many of those around us didn't blink at it. I remember working at a startup in the 00s and having to peel out of the office every day at 5:30 to get my daughter from daycare and my (silver spoon raised) boss saying something like "we need to pitch into get you a nanny" and it struck me then how that kind of thing was really tied to "entrepreneurship." I didn't _want_ a nanny, I liked my daughter's daycare, and I very much enjoyed picking her up and getting my hug at the end of her day of play and learning with a group of kids. Connections, money, yes, but also a managerial/directive ethic, no qualms about telling other people what to do and paying as little as possible for it.
• LatteLazy 6y ago
  I've been self employed on an off for the last 4.5 years. I spend 4 years working a job I hated (plus all the time building up to that job) to save the money to take a year off and do my own thing. The first 2 years went amazingly well, I was very lucky. The last 2 have been pretty rough. A combination of government crackdowns (I'm a brit) on self employed people, brexit and now covid has pretty much done for me. I have enough cash for 3 more months. I wish I could have started 2+ years earlier with a loan from mum or dad. I wish I could continue now with the same. But they're poor. I suspect I will be too if I don't get a job or a major sale soon.
• exabrial 6y ago
  Correlation, not Causation The actual cause is more than likely: parents who have high income set a precedent for self-employment.
  • jeffreyrogers 6y ago
    Doesn't fit in with what I've seen personally. Most of the people I know who've started companies have parents in high-paying jobs where they work for someone else, e.g. finance, medicine. Edit: I'm also not saying you need to have family help to be a successful entrepreneur. Maybe the most successful person I know personally did it on his own, but he is unusual.
    • p2501 6y ago
      From my anecdotical experience: more children from well off families are optimistic and have more tolerance to economic risks. It's not that they need the family's money to start a venture, but that they know they can fall back on it, if it doesn't go well
    • AlchemistCamp 6y ago
      Fields like finance and medicine require both a good amount of intelligence and an exceptional work ethic. Perhaps if the source of the parents' money were lottery winnings, the correlation with entrepreneurial success would vanish.
      • jeffreyrogers 6y ago
        Yes, except I'm mostly talking about Harvard grads, so everyone is smart with a good work ethic.
        • akhilcacharya 6y ago
          "Everyone"? Isn't that the community college that Jared Kushner went to?
• jcadam 6y ago
  All my attempts at entrepreneurship have been via moonlighting, and have failed. There just aren't enough hours in the day. But I can't just quit my day job and take my income down to $0 to pursue a startup.
  • wegs 6y ago
    My experience as well, until the first time I got funded. After a success under your belt, it's easy to keep going and get more funding. There's no shortage of capital looking for people to fund right now (it goes through spells). The first time I got funded, it was through a rich elite idiot's social connections (CEO). CEO was a sleazeball, and got all the financial and most of the branding benefit of the venture, despite doing no work. I launched a successful business with CEO as the figurehead, and in the process, I got: 1) Connections and network 2) Visibility and branding 3) Stepping through the process once. Moonlighting can be enough time if you're efficient (which you can't be if you're muddling through figuring stuff out) It was a stepping stone towards financial stability, and I'm much closer. Socioeconomic mobility is a process. Some people get lucky, of course, but for the most part, there's a pathway from: 1) Unskilled labor; to 2) Professional labor loaded with student loan/mortgage debt; to 3) Financial stability; to 4) Being able to launch high-risk high-reward ventures That's possible, but it generally takes a few generations: * It's possible for someone without an education to send kids off to college through public schools, but they'll have a hard time competing with kids who were exposed to advanced tutoring, math, STEM, makerspaces, etc. from an early age (children of professionals) * It's possible for first-generation professionals to network into power networks and achieve financial stability, but they won't be in a place to quit a job and launch a new venture. * And it's possible for children of professionals to then (finally) engage in a few high-risk high-reward projects until one pays off....
    • germinalphrase 6y ago
      How are defining ‘financial stability’ here?
      • wegs 6y ago
• tolbish 6y ago
  Wired covered the "myth of meritocracy" as it pertains to entrepreneurship and Silicon Valley 8 years ago: https://www.wired.com/2013/11/silicon-valley-isnt-a-meritocracy-and-the-cult-of-the-entrepreneur-holds-people-back/ https://www.wired.com/2013/11/silicon-valley-isnt-a-meritocr...
  • yunesj 6y ago
    > But if the tech scene is really a meritocracy, why are so many of its key players, from Mark Zuckerberg to Steve Jobs, white men? I disagree with the author that Jobs and Zuckerberg are evidence that meritocracy is a myth. According to Wiki: > ... Zuckerberg excelled in classes. After two years, he transferred to the private school Phillips Exeter Academy, where he won prizes in mathematics, astronomy, physics, and classical studies. > By the time he was ten, Jobs was deeply involved in electronics and befriended many of the engineers who lived in the neighborhood. He had difficulty making friends with children his own age, however... Later in life, they had great ideas, took huge risks (both dropping out of school), and worked hard.
    • JKCalhoun 6y ago
      It is a meritocracy, but some get to start at a chute, and some start at a ladder.
    • mywittyname 6y ago
      Also, Steve Jobs is biologically half-Arab. Making him kind of a weird pick for such a claim.
    • ampdepolymerase 6y ago
      Are you aware of how much Phillip Exeter costs?
      • yunesj 6y ago
        That’s not really relevant. Zuckerberg didn’t outperform his peers at an expensive high school because he was white. But, “for families with incomes under $75,000, Exeter is free. We pick up the cost of tuition, books and academic supplies, and we provide a stipend ... We meet 100 percent of our admitted students’ demonstrated financial need. [1]” Sadly, the idea that we live in a meritocracy is so politically incorrect that GSIs (TAs at Berkeley) are taught to interrupt a conversation where they hear a student saying “America is the land of opportunity” or “I believe the most qualified person should get the job. [2]” [1] https://www.exeter.edu/admissions-and-financial-aid/tuition-financial-aid/am-i-eligible-financial-aid https://www.exeter.edu/admissions-and-financial-aid/tuition-... [2] http://gsi.berkeley.edu/media/tool-recognizing-microaggressions.pdf http://gsi.berkeley.edu/media/tool-recognizing-microaggressi...
• OneGuy123 6y ago
  Or they have it completely upside-down: Those parents who adopt a more enterprenurial mindset are able to make more money. Thus they pass on this enterprenurial mindset on their children. Children of middle class workers are indoctrinated into a 8 hour job. In the same way one can think that children of enterprenurs are indoctrinated into entreprenurship. Obviously being a company owner will net you much more money than being a worker. Most middle class people are feeling guilty just for asking for a raise. Children of enterpreneurs think completely differently.
  • dudul 6y ago
    Not all middle class workers are salaried. My electrician/plumber/etc own their businesses but they're closer to the middle class than the 1%. And while I have a salaried job I probably make twice their salary. "Owning a company" is much broader than the SV startup scene.
• cblconfederate 6y ago
  Those kids just made the smart choice of parents
  • dennis_jeeves 6y ago
    Couldn't upvote you more that once :) Moral - choose your parent carefully, or if you miss that boat marry rich.
• ksec 6y ago
  I still remember the tweet [1] PG strongly disagree with that and arguing with Matthew Prince. [1] https://twitter.com/paulg/status/1129897694984646657?s=20 https://twitter.com/paulg/status/1129897694984646657?s=20
  • the-smug-one 6y ago
    PG should remind himself that statistical outliers exist. A short quip on Twitter does not mean anything when you have quantitative data against you.
    • polote 6y ago
      People should be reminded that PG is a VC investor and so he wants the most people as possible to create companies
  • staunch 6y ago
    > The next time someone claims that starting startups is for rich kids, remind them that Airbnb happened because its founders literally could not pay their rent. Starting startups is not just for rich kids. But it is dominated by rich kids to an extreme that Paul Graham is completely blind to, living in the bubble he has his whole life. Depending on your definition of rich, of course. Most of the benefit is being in the upper class, that's what "rich" means to people living in the lower classes. To upper class people, being "rich" means having a private jet. Almost every major tech founder fits the profile of having had the benefit of SAT prep and tutors to game entry into an "elite" school and parents able to provide free food/shelter/funding. Many parents have connections to draw upon. Steve Jobs is one of the very few exceptions. And, to my mind, it's not a surprise that he's the best tech founder that ever will be. Airbnb founder Nathan Blecharczyk was definitely a rich kid. "He grew up in an upper-middle-class family in Boston, Massachusetts. He attended Boston Latin Academy." "He was also on the business staff of The Harvard Crimson during his time at Harvard." https://en.wikipedia.org/wiki/Nathan_Blecharczyk https://en.wikipedia.org/wiki/Nathan_Blecharczyk The others maybe not. It's hard to know how much money a family has. But they moved to SF and rented an expensive apartment with no jobs. This isn't something most poor kids do. Who co-signed their lease, given that they had no income? Likely it was a parent ready to bail them out if they ran out of credit cards.
• Scoundreller 6y ago
  Reminds me of a newspaper writeup on a recentlyish murdered billionaire where the murderer is still on the loose, and one of the sons had a writeup about his alibis. One proof of his whereabouts was an iPhone picture of his crypto seed he took while in another country. Bad opsec, ugh. The child was running a nothing special b&m chain business, but they had a “loan” from the billionaire to acquire and expand the business. I’m like, okay, at least a loan has to be paid back. Then half-way through the article, there’s a shareholder agreement involved and I’m like, it doesn’t even need to be paid back!!!!, ugh. How is Joe Schmoe supposed to compete in a sector where the competition has that kind of financing?
• rchaud 6y ago
  I've heard a great deal about Bill Gates in my lifetime, but it wasn't until I read Paul Allen's 2011 autobiography that I learned that Bill's mother (a director at a bank) introduced him to IBM chairman John Opel in 1980. They both sat on the board for United Way[0]. It really struck me how these kinds of connections are less of a twist of fate, and more about environment and proximity. Even now it feels remarkable that someone with Gates' intellect and access to rich district school computers (in the '70s) benefited so massively from being born into a connected family. [0] https://www.cnbc.com/2020/08/05/how-bill-gates-mother-influenced-the-success-of-microsoft.html https://www.cnbc.com/2020/08/05/how-bill-gates-mother-influe...
  • osullivj 6y ago
    Not surprising to a British reader. Sutton Trust research [1] finds that positions of influence in the UK, and the professions generally, are dominated by the 7% who were privately educated. Conclusion: networks and connections are everything. [1] https://www.suttontrust.com/our-research/elitist-britain-2019/ https://www.suttontrust.com/our-research/elitist-britain-201...
    • xapata 6y ago
      The UK is probably worse off for having such an obvious clue that someone is high class. Accents are harder to switch than clothes and a haircut.
      • JKCalhoun 6y ago
        Maybe. Growing up in the U.S., my obvious lack of straight teeth (single mother could not afford braces for my sister or me) gave away my pedigree.
        • ska 6y ago
          I suspect the main difference between the US and UK this way is the honesty of the process. In the US a ton of money an energy is spent on social signalling and class definition, but also on maintaining a fiction that "class" isn't really a thing. I do think the US class system is easier to fake, as it relies a bit more on superficial signifiers than institutions and history than the UK. The myth of the "self made man" is also held dear, so you can do ok if you play to that story; you'll still may never really belong but your kids probably will.
• jl2718 6y ago
  > income of someone’s parents is the factor that correlates most to entrepreneurship, with higher wealth connected to a greater likelihood of being a start-up founder So which is it: income, or wealth?
• dawsmik 6y ago
  Middle class in the US goes up to about $120k. I dont know any licensed tradespeople that work for themselves that make less than this.
  • iso1631 6y ago
    Electricians $50-60k: https://www.indeed.com/career/electrician/salaries https://www.indeed.com/career/electrician/salaries https://www.salary.com/research/salary/alternate/electrician-experienced-salary https://www.salary.com/research/salary/alternate/electrician... Plumbers: $60k https://www.salaryexpert.com/salary/job/plumber/united-states https://www.salaryexpert.com/salary/job/plumber/united-state... https://www.salary.com/research/salary/alternate/licensed-plumber-salary https://www.salary.com/research/salary/alternate/licensed-pl... Now those aren't self employed, but "What Kind of Money Can a Self-Employed Master Plumber Make Annually?" Suggest maybe 20% more for self employed https://bizfluent.com/info-12088771-kind-money-can-selfemployed-master-plumber-make-annually.html https://bizfluent.com/info-12088771-kind-money-can-selfemplo... "The salary for a master plumber with more than 20 years of experience ranges from $43,790 to $74,700 a year" Do you have any data rather than your self-selecting annecdote?
    • JKCalhoun 6y ago
      Maybe you hit upon it: "work for themselves". For every painter that owns his own company, a dozen guys are climbing ladders and slinging paint buckets for him.
    • ska 6y ago
      > Now those aren't self employed, but This is probably key. If GP's comment is accurate, I suspect it has more to do with "small business owner" than "tradesman". Of course they may just have a inaccurate view of real net, also. I know a few guys who would brag about "I made X last year" as a self-employed sub, but on a little interrogation it became clear they were very handwavy between company gross revenue and "I made".
• orange_tee 6y ago
  So everything is at it should be. People who cannot afford to risk big, should not risk big. It is a simple fact that being wealthy allows one to risk more, financially. Even if you gave poor promising candidates free money with no strings attached, they would still be better of going into a stable career path with stable growth, rather than try to start a startup because of the opportunity costs. And, why should smarts and entrepreneurship be correlated, anyway?
  • AnIdiotOnTheNet 6y ago
    It's because we like to believe we live in a meritocratic society, where the people who have wealth have earned and deserved it. There is a strong incentive for the successful to ignore all the many advantages they had in getting where they are in order to believe they 'pulled themselves up by their bootstraps' and that anyone as hard working or intelligent as they are could do the same. By convincing themselves of this, they are able to believe that they deserve everything they have and poor people deserve to be poor, and, being inherently superior, it is therefore ok to exploit their lessers. This thinking is a hallmark of prejudice. White supremist have long held that black people and other races are genetically inferior, less intelligent, lazier, more prone to violence or criminality, etc. to justify their position. I have less experience with it, but it seems the same sort of rationalization is at work with the Indian caste nonsense too. P.S. While your question seems to be meant in the objective sense of "why would one expect that intelligence and entrepreneurship are correlated?", it is apparently being interpreted as "why should society function such that entrepreneurship is a path available to anyone with enough intelligence?".
• CalRobert 6y ago
  One thing that confuses me, though - if having a strong safety net to fall back on is important to enable entrepreneurship, why does it seem like Europe is so bad at it?
  • nemo136 6y ago
    We have a lot of small start-ups, the successful ones go to the US to get more financing and less taxes.
  • iso1631 6y ago
    Europeans may be more risk averse too -- perhaps more YOLOs in America because there's nothing to lose, where as in Europe you can still have a normalish life, but it's not just a strong safety net either though -- many unicorn concepts were done in Europe, but they didn't become big globally. Maybe the lack of VC to scale - a lot of money sloshing around in SF. Maybe there's less of an culture of thinking "my way is the best" that Americans have more than others[0], maybe the smaller cultural market (there are 350 million Americans, only 30 million Spaniards). Maybe could be Americans are more into Consumer Ethnocentrism and less likely to buy into foreign things than Europeans too (the number of American flags waving around in the states is shocking). I wouldn't expect to see "Designed in Finland" if I bought a nokia phone. The US market has always been far harder for europeans - even Brits - to crack than the other way round. [0] https://infographic.tv/wp-content/uploads/2019/06/Map-Who-thinks-their-country-is-the-best-in-758x397.jpg https://infographic.tv/wp-content/uploads/2019/06/Map-Who-th...
    • JKCalhoun 6y ago
      Your first point is interesting to me. I have a friend that made a crazy call on some stock options that seemed to me like 10 to 1 odds. When I asked him why he said essentially, it's the only way I'll ever have a chance to get rich. I think a lot of Americans may be driven to entrepreneurship because, short of the lottery, it may seem to them the only way to climb the ladder. Countries where life is a little more ... comfortable? ... may have fewer people willing to roll the dice (so to speak).
    • 6y ago
• maskys 6y ago
  In other news, the sun rises in the east and sets in the west.
• Abishek_Muthian 6y ago
  'If You're So Smart, Why Aren't You Rich?' Every now and then an article about research on that topic pops up which attributes success from 'Chance'[1] to 'Personality'[2] and everything in between[3]. [1]https://www.technologyreview.com/2018/03/01/144958/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ https://www.technologyreview.com/2018/03/01/144958/if-youre-... [2]https://www.bloomberg.com/opinion/articles/2016-12-22/if-you-re-so-smart-why-aren-t-you-rich https://www.bloomberg.com/opinion/articles/2016-12-22/if-you... [3]https://www.forbes.com/sites/rogerkay/2015/02/02/if-youre-so-smart-why-arent-you-rich/?sh=237f532349f3 https://www.forbes.com/sites/rogerkay/2015/02/02/if-youre-so...
  • orange_tee 6y ago
    I think this falls more in the category of "being rich is actually better than being poor", of which there are an equal number of articles that routinely pop on the frontpage.
• ed25519FUUU 6y ago
  The causation v correlation here just raises more questions, wouldn’t “smart” people inclined towards entrepreneurship become smart parent and reinforce the tradition?
  • raizinho 6y ago
    It's even hinted at in the article: "A significant connection between the parents’ level of education and entrepreneurship was also noted." The clickbait title confirming people's priors isn't surprising though. If I had to guess at the causal graph it would something like: smart -> income smart -> entrepreneurship entrepreneurship -> income income -> entrepreneurship And even without the last two connections the smart confounding variable would induce a relationship between income and entrepreneurship.
• PragmaticPulp 6y ago
  I've worked with a few university programs that help some students sidestep these issues by wrapping entrepreneurship opportunities inside of their course load. Students use much of their junior and senior year time working on business plans, pitching investors, and trying to get their businesses started. It's a great model for leveling the playing field. Anecdotally, local entrepreneurship circles are absolutely full of young people from wealthy backgrounds who think they're going to leverage their parents' connections and capital into personal riches. They almost all fail the same way: They focus too much on quick-flip opportunities and the get-rich-quick schemes. They view entrepreneurship as collecting capital from investors and giving it to contractors to produce a business for them. They don't actually want to grind out years of work to get a business off the ground. They burn out after a year or two.
• Taylor_OD 6y ago
  Sure. Even more so a safety net allows for entrepreneurship. My parents are not wealthy but they have always had a large enough home and enough extra income that I knew if I needed to move home and live when them I could comfortability for 3 months or more. I'm not much of an entrepreneur risk taker anymore but every time I've had to make a difficult risk decision in the past I knew the absolute worst case scenario was that I would end up broke living in my parents basement. It's carpeted so it never seemed that bad.
• ramoz 6y ago
  'Why haven't you sold a startup by now? ... go do your own thing...' Because, Since I was young, I've been hammering a cinderblock away that can grow 3 new heads at random intervals
  • wing-_-nuts 6y ago
    >Because, Since I was young, I've been hammering a cinderblock away that can grow 3 new heads at random intervals English is my first language and I still have no idea what this means?
    • ramoz 6y ago
      cuffed to my leg*
• zests 6y ago
  Intelligence is overrated. It's one piece of the puzzle. If we look for "one factor" that's responsible for success we are going to be searching for a long time. Income is a more robust metric because it is a somewhat natural combination of many personal characteristics.
• caturopath 6y ago
  This seems to be interpreted as a meritocracy vs. oligarchy sort of thing. I agree with the basic takeaways there (about opportunity, resources, discrimination, network effects, etc.), but even if we had a meritocracy, I'm not sure this would be an unexpected outcome. Since when did anyone think the smartest people, those with the best booklearnin learning acquisition, would be the best entrepreneurs? I don't know that the biggest Ayn Rand cultist would have that expectation. It's equally plausible that the traits that lead to entrepreneurship are heritable but not learning-related.
• anonuser123456 6y ago
  Income is also correlated with deferred gratification and risk appetite. Did these studies normalize for those confounding variables, because both are heritable.
  • fwip 6y ago
    Ironically, the type of studies you're citing make the same mistake in not controlling for the effects of income. One reason that poor children are likely to "fail" the marshmallow test is because growing up in poverty means that promises made to you are less likely to work out - so, having learned from experience, they make the rational choice. https://bigthink.com/mind-brain/new-marshmallow-experiment https://bigthink.com/mind-brain/new-marshmallow-experiment
• blackcats 6y ago
  You need money to make money. No surprise here.
• chaganated 6y ago
  Correlates? Sure. Causes? I strongly doubt it. Drop a million bucks on Joe Blow and see how things turn out. I see the milieu of having semi-affluent parents--being steeped in the ins-and-outs of business, law, assets, broader social ties, and higher social standing--as a far more powerful edge than a wad of cash.
  • fwip 6y ago
    Drop a small loan of a million dollars on an idiot, and he ends up being President for 4 years.
    • chaganated 6y ago
      1) This is ideological bullshit rather than a good faith argument. 2) Adjusted for inflation, I'm sure this description fits more than one president, so you'll need to be more specific. 3) Whichever example it may be, I'm sure that president also had a wealth of credentials, connections, shibboleths, etc. of greater value than a mere one-million fiats.
• m-i-l 6y ago
  Certainly within London, you'll have a hard time finding a startup founder who doesn't have a privately-educated upper-middle class accent, i.e. who doesn't have wealthy parents. And while there are startup accelerators focusing on helping groups like female entrepreneurs and black entrepreneurs (which is great don't get me wrong), there aren't any that focus on helping lower or lower-middle class entrepreneurs, i.e. those who don't have wealthy parents.
• m463 6y ago
  makes sense. If you're concerned about paying for living expenses, you will find it an uphill climb to risk entrepreneurial things. If your living expenses are taken care of, you can think more strategically, look to higher goals, and look for meaning in them. I can definitely say my life changed the first time I got ahead of my bills instead of reacting to them. I would imagine a similar sort of change with a sense of set for life (although it could also work against you)
• steveBK123 6y ago
  UBI takes care of the financial risk component, less so the parental knowledge of the rules of the game, connections or free capital to invest. I think this is all obvious if you dig just below the surface of most ultra successful people in NY/CA Finance & Tech space. These people are largely smart, well educated, but also raised in a particular way with connections that you only have from being in the top 5% at birth. There is the financial backing that allows these people to take large risks because they aren’t worried about a paycheck, the capital to invest in their ventures, and the connections to clients/partners/other investors. The founder of the last firm I worked told a story about his father giving him the option of a big party when he came of age in middle school or to have the cash value of the party to invest. He chose to invest, and that is how he launched his investment career, he told us proudly. Cool story, until you inflation adjust the dollar figure was something like $100k at the age of 14. So he started his young adult life +$100K whereas my wife&I started our adult lives (post college) -$100K in debt. Another place I worked the founder started in his 20s with $1M equivalent in capital... etc etc
  • steveBK123 6y ago
    I would add that simply having been raised rich doesn’t guarantee any sort of success, it just makes it easier if the aptitude is there.. which is why so many of the ultra ultra rich come from ultra rich families who came from rich families who... Capital accumulates over time as long as the inheritor has some aptitude. I live in a condo in NYC that is owned almost equally by three groups - investors, trust funders, rich worker bees. The trust funders are an interesting lot to observe. We have the child of a minor politician in an oil rich countries in one of our most expensive units. My neighbor has never to my knowledge had any sort of a job in his life, but owned 4 apartments before age 30, before selling all of them at a loss in the last year. We have people in their 20s with job titles like “makeup artist”, “political organizer/activist”, “personal assistant”, “journalist”, etc living in paid-off $1M apartments. Even the “investor” units are interesting as more than half of them are owned by some combination of the developer, the developers children, the developers silent partner, the developers lawyer, etc..
• SMAAART 6y ago
  I find the discussion here more interesting than the article. I'd like to see the same study conducted in the US and - separately - in Europe as well.
• k__ 6y ago
  All entrepreneurial people in my age (35), that I know, have (at least) better off parents. Most of their success stems from the fact that they could live with their parents for an extended amount of time and found&crash a bunch of companies before they were 25. Even the most average person knows how to run a company after they tried and failed often enough. People joke around how Trump got "a small loan of one million dollars" from his dad. But it doesn't even have to be that much money, just enough so you don't have to work for 2-3 years.
• czbond 6y ago
  ha ha ha ha ha. Ok. As a grizzled founder, who is becoming numb to the entitlement that is easy startups, easy funding, easy results. I know many founders - and they were broke, broke, broke (and went broke to bootstrap). This 'finding about your parents' can make those straight out of college who don't stick with it feel better. Reality is... entrepreneurship is an incredibly hard game that takes years of grinding away after hours, or eating away at your own savings and your free time. Founders I know (including myself): - One worked years on the side to grow it enough just to get seed. With newborn kids, then quit his CompSci job to live off his teachers wife salary for years. - One was on foodstamps for 6 years, and kids on medicaid to pull his shop through - One saved for years, and spent most of his money to get through the rough spots and is coming out the other side just now. - One failed 4 times - each attempt taking a few years, entered bankruptcy to try on a 5th attempt. - One lived at poverty means for years with a family while bootstrapping. So.... lets stop the entrepreneurship is easy pr0n. It sucks so hard you'll hate your life. If blowing all your time and money getting there isn't worth the suffering you'll feel - don't try.
  • mmmBacon 6y ago
    I’m sure if you came about entrepreneurship at the highest difficulty setting, it’s hard to shake your own perspective. As a person who has tried twice and failed both times, I totally agree there is no easy path. There are however, lower difficulty paths and those paths lead to better outcomes for entrepreneurs. If you keep at it, are smart, have good ideas and execute, I think you can probably build an equivalent network over time that leads to success. I always like to think that investors fund people more than ideas.
    • czbond 6y ago
      Totally agree with your perspective. I'm now on a lower difficulty - but still rewarding path - that can still scale over time.
• everdrive 6y ago
  I'm not sure how you hope to avoid this problem. People with more resources can accomplish more. This is true even in a strict meritocracy. All that's modified in a meritocracy is who the top performers are. It doesn't level out the playing field for everyone.
• jrexilius 6y ago
  People are extrapolating way too much from a study in Israel about their market, culture, and system. While it is a truism that starting a company is easier with money than without, that doesn't explain the abundance of poor immigrants (here in the US) who build businesses. Nor is any of it a clear indicator that shifting policy towards blanket money hand-outs would be an efficient means of increasing entrepreneurship. The left-tech's attachment to universal hand-outs looks much more like a guilt-salve than reasoned, efficient policy.
• jdoliner 6y ago
  Paul Graham wrote about what YC looks for in startup founders in 2010 [0]. The first thing he notes is that intelligence wasn't anywhere near as important as they expected it would be. And I think pg had a much better definition of intelligence than "academic achievements and standardized test scores." So I don't think this paper is really making a strong-man case for parent's income being the most important factor in entrepreneurship, they've ignored all 5 aspects that experts like pg think are the actual most important factors and focused on one that he thinks isn't as important as people think it is. [0] http://paulgraham.com/founders.html http://paulgraham.com/founders.html
• snicker7 6y ago
  The clear solution is to make Jeff Bezos everyone's dad.
• Solar19 6y ago
  Social psychologist here. The article doesn't back the headline. They never mention the effect size, how much parental finances matter. The mention that smarts "explain 11% of the gap" or something, but they don't provide the number for parental finances, so we're left to just have some vague impression that this variable is "key" to entrepreneurship. This was a government study, where the government researcher is explicitly talking about how the findings must have specific policy implications. I would bet that they advocated for those policies before ever conducting the study, and that any result would have been used to advance such policies. All we know is that the effect was north of 11% in variance explained. So, is 12%? 17%? 25%? What is it? And at which threshold does this variable become "key" to entrepreneurship? (Also, what would people have predicted in advance? And does the reality alter their policy prescriptions?) They're also doing potentially invalid things with the stats in not using continuous variables, but rather dichotomizing them. And their slices are arbitrary. They're comparing the top 20% on one thing to the bottom 60% on another, for example, and it's not clear why they chose those specific slices. It could be the it was specifically those arbitrary slices that gave them the story they wanted to tell. Also, parental finances will correlate with lots of variables, including culture, values, all sorts of behaviors and social norms, as well as concrete domain knowledge in things like business and banking. There could be a disposition effect where the children of people who are more likely to be entrepreneurs are themselves more likely to become entrepreneurs, which is almost trivial right? Or there might be a culture effect where these kids are exposed to the phenomenon of entrepreneurship in a way that is less likely or less strong for other kids. What I mean is that starting a business doesn't even occur to some people, for various reasons. Like no one they ever knew growing up had a business, compared to someone growing up in Silicon Valley where starting a business or being employee # ≤12 at a startup is almost as common as having two arms. I noticed this kind of cultural difference in the US. I'm a Mexican-American from Arizona, but I've lived in Silicon Valley and the American South (North Carolina). When I lived in Chapel Hill, I ended up knowing a lot of natives from other areas of the state. They would talk about wealth as something that you got from your family – they just assumed that's where you got money. So if they meet someone and notice something expensive they have, like a car or pricey jewelry, or even housewares that seem high end, they might ask others afterward "Does she come from money?" I had never heard that expression elsewhere in the US. Does so and so "come from" money? It didn't make any sense. No one talks like that in Silicon Valley. People don't come from money here – they make it. They talk that way in Mexico though, where entrepreneurship of this sort is rare and poverty and class structures abound. So I think people who grow up affluent are more likely to think about starting a business because it's just kind of obvious or normal to them – it's what people do. It's a natural part of their choice space, something to think about and consider, whereas for others it's totally not, and wouldn't even come up in their thinking, planning, etc. The effect of having affluent parents could mostly be about the literal money situation, like people here are thinking, which is about having access to funding, or it could mostly be behavioral/cultural assumptions. I don't have any predictions or opinions about which is the strongest effect. It would take careful research to find out. But their affluence cutoff includes lots of households that wouldn't have nearly enough money to fund most start-ups. Making $125k a year is not the same as being able to provide seed capital for some business. So in that case, it might about networks and knowing people who have more money to invest. That kind of spills over into the cultural aspect of thinking of starting a business as a totally normal and smart thing to do.
• cjbenedikt 6y ago
  Link to the study?