5 ms·

I think the main factor is being already rich or being born into a rich/influential family. A lot of problems startups have suddenly disappear when you can ask

I think the main factor is being already rich or being born into a rich/influential family. A lot of problems startups have suddenly disappear when you can ask your dad for a small loan of 1 million dollars or ask your mum for a meeting with the chairman of IBM. Not saying this is the only factor but this "Great Filter" that weeds out those who don't have money or contacts helps others to develop their business with less competition.

ttul 5y ago
Money solves the problem of having enough kicks at the can. Getting product market fit will eventually happen. You’ll just run out of money before then, in most cases.
- nowherebeen 5y ago
  > Money solves the problem of having enough kicks at the can Lots of people don't realize learning to read the market is also a separate skill that can't be learned through working for a company. It takes time and a few failures to wise up.
  - lprubin 5y ago
    Do you have any advice or resources for "learning to read the market"?
    - mehphp 5y ago
      I suspect, unfortunately, that the true answer here is "experience".
      - ttul 5y ago
        ... And confirmation bias.
- throwaway_goog 5y ago
  It doesn't. I semi-retired at 33 and then spent the time since then doing 20+ different startup ideas. Still no success. Bank account is bigger now than when I retired, but startup dreams are effectively dead. Bottleneck is that the market moves on in the time you spend pivoting, and eventually your inside information about what's hot and what's worth building gets stale, along with your technical skills. I know a number of other entrepreneur/retirees in the same boat - 5+ years working on various ideas, often after having a previous exit - and it never seems to result in a big company.
  - alisonkisk 5y ago
    Sounds like you didn't use money to hire staff and tools to accelerate progress.
  - ipaddr 5y ago
    Bootstraping a second one with you as the angel investor and ceo can be difficult. What about buy an existing startup vs bootstraping?
  - tjs8rj 5y ago
    What does your process look like? You can validate or destroy a startup idea in a day with enough conversations (if you can get them).
  - ganeshkrishnan 5y ago
    are you just building stuff and asking customers if they really need it and would pay for it? My startup is growing 5% every week for last 6 months and it took me 3 years to get here. If my bank account was bigger I could have done it in an year. and because I am bootstrapped I am losing my amazing tech team to highly funded companies that can give them 3x salary and stock options
forgingahead 5y ago
Your comment doesn't hold up to real-world facts. Plenty of founders with startup success have come from humble backgrounds, and plenty of rich kids try to start businesses but never make anything viable or profitable.
- whateveracct 5y ago
  Neither of those existential facts refute the premise necessarily
- nytesky 5y ago
  I would be very curious to hear about founders of successful startups from humble backgrounds, and curious what you consider humble? For me, that would be growing up going to a non-elite public high school, college on scholarship, parents who are like plumbers or high school teachers or insurance agent.
  - whytai 5y ago
    Palmer Lucky?
    - nytesky 5y ago
      Well, from Wikipedia his dad worked at a car dealership, but they lived quite well, with a stay-at-home mom, sailing lessons, and gobs of money on equipment. That sounds fairly well to do. "As a child he was homeschooled by his mother, took sailing lessons,[7] and had an intense interest in electronics and engineering.[3][8] He took community college courses at Golden West College and Long Beach City College[5] beginning at the age of 14 or 15, and started attending courses at California State University, Long Beach[1] in 2010.[6] He wrote and served as online editor for the university's student-run newspaper, Daily 49er.[9] During his childhood and teenage years, Luckey experimented with a variety of complex electronics projects including railguns, Tesla coils, and lasers, with some of these projects resulting in serious injuries.[1] He built a PC gaming "rig" worth tens of thousands of U.S. dollars[8] with an elaborate six-monitor setup.[10] His desire to immerse himself in computer-generated worlds led to an obsession with virtual reality (VR)."
ilaksh 5y ago
I agree that easy to access funding of some sort is a huge factor. However, I still think that, given access to funding, the point made by the article stands. Wherever your funding comes from. Because there is a huge difference in the size and enthusiasm of different markets and that is a massive factor in sales. But good point. Many of these articles seem to take things like money and contacts for granted.
lordnacho 5y ago
Good point, but it seems to be more towards who gets to start the startups that succeed, rather than what startup succeeds. I think the point in the article is that the startups that succeed tend to be in hot markets. It's clear that people who have more personal runway get more chances at trying to find the right market.
nostrademons 5y ago
I feel like this is commonly believed by people with neither money nor startup experience. Sometimes it's even believed by people with money, who feel it absolves them of the need to have startup experience, and then their startup fails. Hell, could swear I've worked for a couple of these guys. Money - lots of money, $1M basically just gives you the freedom to tinker on your own time - basically gives you the ability to hire other people to do the actual work of serving customers. If you want a successful startup, you need to know which customers, what work, and how it should be done, in a way that nobody else has figured out yet. An employee is not going to figure it out for you; if they could do that, they'd be off starting their own business. If your competitive advantage is that you have more money than everyone else, you will still fail; people who lack money are unaware of just how much money is floating around in capital markets and how little that differentiates you. Conversely, if you do have a unique insight into an untapped market that's more profitable than any existing way of doing things, financiers will be falling over each other to give you money and take a slice of those profits. In my experience, the key reagents to a successful startup are information, insight, timing, luck, connections, and technical skills, in that order. This is largely reiterating the thesis of the article - "market matters most" - but in terms where it's the entrepreneur's job to find an untapped market, at precisely the moment in time when it's ready to be tapped.
- hnhg 5y ago
  Money gives you more throws of the dice, and often with 'better' dice.
  - Frost1x 5y ago
    Interesting to see this down-voted. This is absolutely correct. Many like to pretend money and capital don't give a competitive advantage when that's entirely far from the truth. I think few people truly believe money guarantees success and that's rarely claimed from my experience. There are plenty of other factors that need to be met to start a successful business, but if you have money, those other factors can be focused on more intensely and you'll be less hamstringed on factors like timing and time to market, innovation/added value, network effects/marketing, and so on. You're working at a disadvantage in most other aspects needed for a successful business if you don't have a certain baseline of capital to work from. Often times more capital infusion beyond that baseline can help. There are certain problems addressed by startups that throwing money at no longer helps and you can reach diminishing returns. That's a nice problem to have. To your point, money can buy you a Monte Carlo (or MCMC for 'better') approach to market exploration for your businesses products/services. You can try, fail, and adapt. For many without piles of money, starting a business can afford only one failure (if they're that lucky) in their lifetime. No retries with refinements.
claytongulick 5y ago
I've personally seen the opposite effect. I've seen startups run by children of very wealthy people that failed because they didn't fundamentally understand the value of the dollar, or what reasonable spending should look like during lean startup times. I've seen the repeated loans of a million dollars, and believe it or not, a million doesn't go very far in startup world. If you don't have revenue to offset your burn, you'll be in endless raise land. This can only go on for so long, regardless of your family's money situation. Conversely, I've seen several startups succed that were run by folks who did the obligatory teenage time working a counter at McDonald's (or equivalent). Part of their success was their ability understand and control costs, especially their lifestyle while in early stages. I've run into many people who want to get into entrepreneurship but are unable to because their lifestyle bills are so high, they'd require a salary level that no reasonable investor is willing to pay during founding.
JamesBarney 5y ago
Being rich helps because you can spend 10 years not making money trying to start something. People way overestimate how much contacts help. We've had meeting with all types of influential people in our industry who were friends or relatives of a founder and they just haven't been that helpful. Our most valuable contacts are people we met along the way, because they really believe in the product. And that means so much more than oh your the son of an ex coworker and you have a startup you want to tell me about during lunch.
jollybean 5y ago
It's not a prerequisite, but up to upper-middle-class and it helps, but not much beyond that. Rich kids are not starting good startups. They're not coming from mega mansions driving ferraris. Their parents are professionals, they live in what look like 'normal homes', like 'TV homes'. Usually stable family environments. They didn't have to worry about stuff and if they got into an Ivy League school they were surely going to go. If they got into trouble, the risk was dampened. So 'privileged' but not 'spoiled rich'. Basically - enough money for the 'good things' that money can get you, while avoiding the 'negative' stuff. Most founders did not use their parents millions to get the business going.
breck 5y ago
I wouldn't correlate it with wealth as much as being born with #ideaPrivilege. Plenty of people born not too wealthy who made it big, but they were born to college professor parents or born in the Valley or Redmond or Cambridge et cetera. If you can get access to great ideas early, then you've got a leg up.
pedalpete 5y ago
Anecdotal, but possibly another way to look at this. I moved to Sydney, Australia about 9 years ago. This city is VERY clqiey. For Sydneysiders, it's all about what school you went to and who you know. But if you're a foreigner, you kinda automatically hack the system, because they don't know anything about the school or people where you're from. It doesn't even come up in conversation that I didn't go to University, like they automatically assume I went somewhere, and that they can't qualify me anyway. This isn't a way to hack the early dollars of a rich parent who can payroll a start-up, but you may be surprised how you can get into the "right places" and meet the right people. At the same time, if you've got the attitude that says everyone else has benefits that I don't have, you'll get that in return. Same if you just go looking for "connections" I suspect.

ttul 5y ago

Money solves the problem of having enough kicks at the can. Getting product market fit will eventually happen. You’ll just run out of money before then, in most cases.

nowherebeen 5y ago
> Money solves the problem of having enough kicks at the can Lots of people don't realize learning to read the market is also a separate skill that can't be learned through working for a company. It takes time and a few failures to wise up.
- lprubin 5y ago
  Do you have any advice or resources for "learning to read the market"?
  - mehphp 5y ago
    I suspect, unfortunately, that the true answer here is "experience".
    - ttul 5y ago
      ... And confirmation bias.
throwaway_goog 5y ago
It doesn't. I semi-retired at 33 and then spent the time since then doing 20+ different startup ideas. Still no success. Bank account is bigger now than when I retired, but startup dreams are effectively dead. Bottleneck is that the market moves on in the time you spend pivoting, and eventually your inside information about what's hot and what's worth building gets stale, along with your technical skills. I know a number of other entrepreneur/retirees in the same boat - 5+ years working on various ideas, often after having a previous exit - and it never seems to result in a big company.
- alisonkisk 5y ago
  Sounds like you didn't use money to hire staff and tools to accelerate progress.
- ipaddr 5y ago
  Bootstraping a second one with you as the angel investor and ceo can be difficult. What about buy an existing startup vs bootstraping?
- tjs8rj 5y ago
  What does your process look like? You can validate or destroy a startup idea in a day with enough conversations (if you can get them).
- ganeshkrishnan 5y ago
  are you just building stuff and asking customers if they really need it and would pay for it? My startup is growing 5% every week for last 6 months and it took me 3 years to get here. If my bank account was bigger I could have done it in an year. and because I am bootstrapped I am losing my amazing tech team to highly funded companies that can give them 3x salary and stock options

forgingahead 5y ago

Your comment doesn't hold up to real-world facts. Plenty of founders with startup success have come from humble backgrounds, and plenty of rich kids try to start businesses but never make anything viable or profitable.

whateveracct 5y ago
Neither of those existential facts refute the premise necessarily
nytesky 5y ago
I would be very curious to hear about founders of successful startups from humble backgrounds, and curious what you consider humble? For me, that would be growing up going to a non-elite public high school, college on scholarship, parents who are like plumbers or high school teachers or insurance agent.
- whytai 5y ago
  Palmer Lucky?
  - nytesky 5y ago
    Well, from Wikipedia his dad worked at a car dealership, but they lived quite well, with a stay-at-home mom, sailing lessons, and gobs of money on equipment. That sounds fairly well to do. "As a child he was homeschooled by his mother, took sailing lessons,[7] and had an intense interest in electronics and engineering.[3][8] He took community college courses at Golden West College and Long Beach City College[5] beginning at the age of 14 or 15, and started attending courses at California State University, Long Beach[1] in 2010.[6] He wrote and served as online editor for the university's student-run newspaper, Daily 49er.[9] During his childhood and teenage years, Luckey experimented with a variety of complex electronics projects including railguns, Tesla coils, and lasers, with some of these projects resulting in serious injuries.[1] He built a PC gaming "rig" worth tens of thousands of U.S. dollars[8] with an elaborate six-monitor setup.[10] His desire to immerse himself in computer-generated worlds led to an obsession with virtual reality (VR)."

ilaksh 5y ago

I agree that easy to access funding of some sort is a huge factor. However, I still think that, given access to funding, the point made by the article stands. Wherever your funding comes from. Because there is a huge difference in the size and enthusiasm of different markets and that is a massive factor in sales. But good point. Many of these articles seem to take things like money and contacts for granted.

lordnacho 5y ago

Good point, but it seems to be more towards who gets to start the startups that succeed, rather than what startup succeeds. I think the point in the article is that the startups that succeed tend to be in hot markets. It's clear that people who have more personal runway get more chances at trying to find the right market.

nostrademons 5y ago

I feel like this is commonly believed by people with neither money nor startup experience. Sometimes it's even believed by people with money, who feel it absolves them of the need to have startup experience, and then their startup fails. Hell, could swear I've worked for a couple of these guys. Money - lots of money, $1M basically just gives you the freedom to tinker on your own time - basically gives you the ability to hire other people to do the actual work of serving customers. If you want a successful startup, you need to know which customers, what work, and how it should be done, in a way that nobody else has figured out yet. An employee is not going to figure it out for you; if they could do that, they'd be off starting their own business. If your competitive advantage is that you have more money than everyone else, you will still fail; people who lack money are unaware of just how much money is floating around in capital markets and how little that differentiates you. Conversely, if you do have a unique insight into an untapped market that's more profitable than any existing way of doing things, financiers will be falling over each other to give you money and take a slice of those profits. In my experience, the key reagents to a successful startup are information, insight, timing, luck, connections, and technical skills, in that order. This is largely reiterating the thesis of the article - "market matters most" - but in terms where it's the entrepreneur's job to find an untapped market, at precisely the moment in time when it's ready to be tapped.

hnhg 5y ago
Money gives you more throws of the dice, and often with 'better' dice.
- Frost1x 5y ago
  Interesting to see this down-voted. This is absolutely correct. Many like to pretend money and capital don't give a competitive advantage when that's entirely far from the truth. I think few people truly believe money guarantees success and that's rarely claimed from my experience. There are plenty of other factors that need to be met to start a successful business, but if you have money, those other factors can be focused on more intensely and you'll be less hamstringed on factors like timing and time to market, innovation/added value, network effects/marketing, and so on. You're working at a disadvantage in most other aspects needed for a successful business if you don't have a certain baseline of capital to work from. Often times more capital infusion beyond that baseline can help. There are certain problems addressed by startups that throwing money at no longer helps and you can reach diminishing returns. That's a nice problem to have. To your point, money can buy you a Monte Carlo (or MCMC for 'better') approach to market exploration for your businesses products/services. You can try, fail, and adapt. For many without piles of money, starting a business can afford only one failure (if they're that lucky) in their lifetime. No retries with refinements.

claytongulick 5y ago

I've personally seen the opposite effect. I've seen startups run by children of very wealthy people that failed because they didn't fundamentally understand the value of the dollar, or what reasonable spending should look like during lean startup times. I've seen the repeated loans of a million dollars, and believe it or not, a million doesn't go very far in startup world. If you don't have revenue to offset your burn, you'll be in endless raise land. This can only go on for so long, regardless of your family's money situation. Conversely, I've seen several startups succed that were run by folks who did the obligatory teenage time working a counter at McDonald's (or equivalent). Part of their success was their ability understand and control costs, especially their lifestyle while in early stages. I've run into many people who want to get into entrepreneurship but are unable to because their lifestyle bills are so high, they'd require a salary level that no reasonable investor is willing to pay during founding.

JamesBarney 5y ago

Being rich helps because you can spend 10 years not making money trying to start something. People way overestimate how much contacts help. We've had meeting with all types of influential people in our industry who were friends or relatives of a founder and they just haven't been that helpful. Our most valuable contacts are people we met along the way, because they really believe in the product. And that means so much more than oh your the son of an ex coworker and you have a startup you want to tell me about during lunch.

jollybean 5y ago

It's not a prerequisite, but up to upper-middle-class and it helps, but not much beyond that. Rich kids are not starting good startups. They're not coming from mega mansions driving ferraris. Their parents are professionals, they live in what look like 'normal homes', like 'TV homes'. Usually stable family environments. They didn't have to worry about stuff and if they got into an Ivy League school they were surely going to go. If they got into trouble, the risk was dampened. So 'privileged' but not 'spoiled rich'. Basically - enough money for the 'good things' that money can get you, while avoiding the 'negative' stuff. Most founders did not use their parents millions to get the business going.

breck 5y ago

I wouldn't correlate it with wealth as much as being born with #ideaPrivilege. Plenty of people born not too wealthy who made it big, but they were born to college professor parents or born in the Valley or Redmond or Cambridge et cetera. If you can get access to great ideas early, then you've got a leg up.

pedalpete 5y ago

Anecdotal, but possibly another way to look at this. I moved to Sydney, Australia about 9 years ago. This city is VERY clqiey. For Sydneysiders, it's all about what school you went to and who you know. But if you're a foreigner, you kinda automatically hack the system, because they don't know anything about the school or people where you're from. It doesn't even come up in conversation that I didn't go to University, like they automatically assume I went somewhere, and that they can't qualify me anyway. This isn't a way to hack the early dollars of a rich parent who can payroll a start-up, but you may be surprised how you can get into the "right places" and meet the right people. At the same time, if you've got the attitude that says everyone else has benefits that I don't have, you'll get that in return. Same if you just go looking for "connections" I suspect.