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Agreed. VC's fund companies that target markets that can be served by VC-fundable companies. And most young entrepreneurs from top schools hear that it's easies

by rattray 12y ago

Agreed. VC's fund companies that target markets that can be served by VC-fundable companies. And most young entrepreneurs from top schools hear that it's easiest to Get Rich Quick by founding a VC-funded company. But those aren't the only kinds of companies worth building, and "young entrepreneurs from top schools" aren't the only people who can build good companies. We shouldn't look to them (err, ourselves) as "humanity's only saviors". Which I think this article makes the mistake of doing. A similar problem that I have with this piece is an over-reliance on entrepreneurs - that is, the free market - to solve the problems of "the unexotic underclass". The free market will solve the problems of people (and businesses) who have discretionary income. That's how capitalism works. Capitalism also has a lot of inequality baked-in. He shouldn't be surprised that difficult-to-serve, low-income individuals are failed in America. Keep in mind, too, that the other part of "discretionary income" is "discretionary". Schools, Hospitals, Government Agencies like the VA? They typically have terrible purchase processes (and generally poor management) that make it almost impossible for entrepreneurs to sell to them. I recently folded an Education Technology company because schools are so difficult to sell to and have so little money. Don't blame the entrepreneurs here; blame a government which over-regulates and under-funds schools, the VA, and other services. (And then vote to make a better one!!) All that being said, I do agree that there are opportunities for entrepreneurs in these markets. They may be hard to find, but we're not going to do it by holing up in Tech/Wealth bubbles like SF and NYC. Spending some time in the heartland may be a great way to find those rare business models that could profitably serve the underserved.

marcus_holmes 12y ago
Agree with the "young entrepreneurs from top schools" bit. Going to a top school doesn't correlate with being a good entrepreneur. It maybe correlates with intelligence and drive, but more closely correlates with privilege and connection. There's an interesting correlation between immigrants and entrepreneurship (old-school building a profitable business entrepreneurship, not SV-type scaling an unprofitable business entrepreneurship). My take on this (utterly my own opinion) is that immigrants are less likely to get jobs, so more likely to start their own businesses. So the people who are going to solve these problems are probably not going to be VC's, Ivy leaguers, incubators, or in Silicon Valley. They're probably going to be bootstrapping (nice bonus: if you're used to living on a very low income then bootstrapping is a lot easier). Maybe the problem here then is not the entrepreneurs, but the media and reporting. We only hear about young entrepreneurs building something awesome with technology. Maybe there's an interesting story about poor, underprivileged people dragging themselves out of poverty with technology?
- delg 12y ago
  These are some interesting insights, but I wonder: can "bootstrapped" businesses really tackle big problems? Part of the frustration with SV isn't just the kinds of "problems" they're "solving," but also that they're taking up all the oxygen (read: funding capital) that, if applied differently, could fix more meaningful problems.
  - lsc 12y ago
    >can "bootstrapped" businesses really tackle big problems? Eh, most of your "funded" cash is spent on labor. What does someone working for a funded startup cost? $200K/yr if you skimp on office space? Figure that as a bootstrapped company, you spend 1/3rd of your time earning money to feed yourself (Without dependents, you can live pretty okay off of 1/3rd of a competent coder's salary, even in SV.) Note, it may be easier, say, if there are three of you to rent out one of you as a contractor full-time and use that money to pay everyone else, rather than all of you working for other people 1/3rd of the time. Getting part-time work that pays good is a significant marketing effort, while $90/hr corp to corp full-time work is easily obtainable through the body shops. So to compete with a company funded with a half-million bucks, you and your partners need to be willing to put in almost four years of your time. this is not unreasonable. I've done rather more than that. and there are many advantages; getting contracting work, in my experience, requires a hell of a lot less marketing effort than getting VC money. Of course, the difficulty increases as your funded competitor gets more funding; if, say, your competition has tens of millions in funding, say, rather than just half a million? yeah, that's going to be rather more difficult.
  - marcus_holmes 12y ago
    I'm curious why funding is needed to tackle big problems? Or indeed any problems? What part of the solution does the funding provide? Funding makes it easier to pay your bills while you work on a problem, but can also remove a lot of the urgency about finding a solution that customers will love. If you depend on customers to pay your bills, however...
- enraged_camel 12y ago
  >>There's an interesting correlation between immigrants and entrepreneurship (old-school building a profitable business entrepreneurship, not SV-type scaling an unprofitable business entrepreneurship). My take on this (utterly my own opinion) is that immigrants are less likely to get jobs, so more likely to start their own businesses. As an immigrant, I think it's more that we're more comfortable with taking risks (leaving one's home country and emigrating anywhere is a huge risk, after all), so we don't have a big problem with abandoning steady paychecks and diving (back) into a sea of uncertainty.
thathonkey 12y ago
This isn't a slight on you(r post) but I just wanted to point out that nobody (at least nobody outside of the startup/tech world) believes that SV is a savior of humanity, much less the only savior.

by rattray 12y ago

marcus_holmes 12y ago

Agree with the "young entrepreneurs from top schools" bit. Going to a top school doesn't correlate with being a good entrepreneur. It maybe correlates with intelligence and drive, but more closely correlates with privilege and connection. There's an interesting correlation between immigrants and entrepreneurship (old-school building a profitable business entrepreneurship, not SV-type scaling an unprofitable business entrepreneurship). My take on this (utterly my own opinion) is that immigrants are less likely to get jobs, so more likely to start their own businesses. So the people who are going to solve these problems are probably not going to be VC's, Ivy leaguers, incubators, or in Silicon Valley. They're probably going to be bootstrapping (nice bonus: if you're used to living on a very low income then bootstrapping is a lot easier). Maybe the problem here then is not the entrepreneurs, but the media and reporting. We only hear about young entrepreneurs building something awesome with technology. Maybe there's an interesting story about poor, underprivileged people dragging themselves out of poverty with technology?

delg 12y ago
These are some interesting insights, but I wonder: can "bootstrapped" businesses really tackle big problems? Part of the frustration with SV isn't just the kinds of "problems" they're "solving," but also that they're taking up all the oxygen (read: funding capital) that, if applied differently, could fix more meaningful problems.
- lsc 12y ago
  >can "bootstrapped" businesses really tackle big problems? Eh, most of your "funded" cash is spent on labor. What does someone working for a funded startup cost? $200K/yr if you skimp on office space? Figure that as a bootstrapped company, you spend 1/3rd of your time earning money to feed yourself (Without dependents, you can live pretty okay off of 1/3rd of a competent coder's salary, even in SV.) Note, it may be easier, say, if there are three of you to rent out one of you as a contractor full-time and use that money to pay everyone else, rather than all of you working for other people 1/3rd of the time. Getting part-time work that pays good is a significant marketing effort, while $90/hr corp to corp full-time work is easily obtainable through the body shops. So to compete with a company funded with a half-million bucks, you and your partners need to be willing to put in almost four years of your time. this is not unreasonable. I've done rather more than that. and there are many advantages; getting contracting work, in my experience, requires a hell of a lot less marketing effort than getting VC money. Of course, the difficulty increases as your funded competitor gets more funding; if, say, your competition has tens of millions in funding, say, rather than just half a million? yeah, that's going to be rather more difficult.
- marcus_holmes 12y ago
  I'm curious why funding is needed to tackle big problems? Or indeed any problems? What part of the solution does the funding provide? Funding makes it easier to pay your bills while you work on a problem, but can also remove a lot of the urgency about finding a solution that customers will love. If you depend on customers to pay your bills, however...
enraged_camel 12y ago
>>There's an interesting correlation between immigrants and entrepreneurship (old-school building a profitable business entrepreneurship, not SV-type scaling an unprofitable business entrepreneurship). My take on this (utterly my own opinion) is that immigrants are less likely to get jobs, so more likely to start their own businesses. As an immigrant, I think it's more that we're more comfortable with taking risks (leaving one's home country and emigrating anywhere is a huge risk, after all), so we don't have a big problem with abandoning steady paychecks and diving (back) into a sea of uncertainty.

thathonkey 12y ago

This isn't a slight on you(r post) but I just wanted to point out that nobody (at least nobody outside of the startup/tech world) believes that SV is a savior of humanity, much less the only savior.