We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is.
When we're doing definitions, the key phrase is "necessary and sufficient" In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing. So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?"
But that's not as fun to argue about.
We oversimplify life and public policy-making at our own peril.
It isn't like 3 or 4 percent though. Starting a startup ranges from a largely risk free career move to impossible. Most people today start at negative. Want to live in a decent sized city? That's at least $2k a month. An education? Might very well be $50k in debt. Job security? Need to put in the hours young.
Otherwise there is a very real chances of getting evicted, not being able to find a decent job, not being able to keep your friends or start a family. Plenty of people who are successful today have their parents pay for university, their first apartment and/or a safety net. And that is just to have a normal career.
Speaking of over-reduction, "Does condition X provide a 3 or 4 percent boost?" is pretty much an over reduction - it doesn't even acknowledge that most of these issues aren't even discussed in genuine way - The opposing "sides" are optimizing on different sets of variables. And of course the notions of 2 sides ignores the reality that there are several viewpoints optimizing several different sets of variables and the "left"/"right" distinction is just the result of some sort of really bad clustering algorithm. (Lets temporarily ignore the part where in actual reality, the various groups can't even agree what all the variables are, or how to measure the results).
> So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?"
I think it's more like whether it brings a 400% boost. It is definitely an important discussion to have. Whether Twitter is the place is another story.
> In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing.
You are totally missing the point Matthew Prince is trying to make, that is, you need to have a "safety net" before you can take risks. If one can't even get them fed and not worrying about what the next meal is and where to stay, all bets are off.
If you don't agree with me, name one entrepreneur who has found a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare. Borrowing money from parents doesn't count as living below poverty does it? Having parents or friends or family to lean onto economically means there is a safety net there.
Twitter is one of the worst social media sites, in my opinion, and it makes me concerned how much it's caught on with American politicians (no, I'm not just referring to Trump). It limits discourse and incentivizes "outrage culture" by design. I see more racist and outright intentionally false information content on Twitter than any other social media platform and its only gotten worse with time. They've shown very little to no initiative in preventing this.
I get the impression that the only reason Twitter isn't as heavily scrutinized as Facebook is because their executives are simply more likable, which isn't a high bar to pass when you look at Mark Zuckerberg. I think the same applies to Google, too.
> We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is.
PG seems worried that tweets saying you have to be rich to do a startup will discourage non-rich folks from trying a startup.
This doesn’t give those folks much credit. It implies that a few tweets will have a bigger impact on their decision-making than their own detailed understanding of the constraints and anxieties of their own lives.
I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.
I wish that more people had discouraged non-rich me from launching a startup! I was young and had not yet had time to develop a detailed understanding of the constraints of my life. I had been bathed in pro-entrepreneurship messages throughout my upbringing, and genuinely believed that technical chops and the kind of classical-conservative, small-business-focused money management advice I'd been given were going to be enough to build a successful company. I was wildly wrong about that, and I had no idea how far out of my depth I was. I had no safety net and I got badly hurt. It took years to recover.
> I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.
Exactly. And I have been avoiding saying this but keep in mind that from what I remember PG got the idea for YC when he was 'walking through Harvard Yard with Jessica'.
All VC's are like this by the way. Even though they know there is a great chance that many ideas they fund will not work they still push the investments because it's not their mess to cleanup. That said there is actually probably more downside for employees. After all a founder with a big startup failure has been marked as someone 'in the mix' and can usually parlay that to other opportunities. Look at even Sam Altman and what happened after Loopt.
Nicely said. It is an irrational economic decision for a non-rich to begin a startup. Even if memes could change their decision it would make matters worse for them, not better.
I'm not an expert on the subject but according to "science", the reason that woman do not go to engineering fields in the US is a byproduct of their environment not a difference in their genetics.
If I got it right, Robert Sapolsky claims that the way to make more woman into tech is to make young girls believe that they can do tech. They already have the cognitive capacity.
In this same sense, PG might be hitting the nail in the head: The reason poor people don't do startups is because they believe they can't; and that it is a white privilege.
If they believe they can't, they will not try. If they don't try, the probability that they succeed is exactly %0. Re-enforcing the myth and further convincing poor people not to try.
The only way out is to convince them otherwise and see what the real odds are.
Robert Sapolsky also claims that we need to change our speech and views (ie: remove "negativity") in order to level the playing field. PG is doing the same. He thinks that other ideas need to be censored as it is important to maximalize the propaganda.
That's a dangerous thinking as it touches on freedom of speech. One might wonder if you can level the social "cognitive" field while also preserving freedom of speech. Educating people is the only way I guess.
They're talking past each other. Thing is, they're both right.
Paul seems to be saying you don't have to be rich to do a startup.
Matthew is saying lots of founder have some resources (family home, savings, great education, i.e. middle-class) that made doing a startup feasible
Both these positions are true and aren't incompatible. Being middle class (Matthew's position) and prudent with savings can afford you probably a year of runway.
But I'd never recommend someone who was truly destitute or food insecure to do a startup. If you come from a poor family there will also be family/cultural pressure not to do a startup and instead get a good paying job(assuming you have the ability).
The reality is that money lets you "take risks," and money gives you options (in this world).
To be honest, I don't think that starting your company with the "risk" that you might move back in with your parents if it fails... is at all a meaningful risk.
I'm shaking my head right now because I can't believe people at the top is still susceptible to sampling/survivorship bias.
I've tried searching but cannot find a good empirical study of privilege and entrepreneurship correlation. However, I've found an essay paper [0] that exactly predicted this twitter drama; that entrepreneurs simultaneously present and erase this conversation about class and entrepreneurship.
The paper also concluded:
> Whereas gender, together with race, have long been foregrounded in studies of entrepreneurial identity and difference, class may be a more powerful organizing discourse, though certainly one supported by discourses of gender and race.
> class may be a more powerful organizing discourse
Yes! Yes! Yes!
Other things contribute to class, but it remains a class issue.
I'm reminded of this: "If your feminism isn’t intersectional, it isn't feminism.".
We need something similar for those who think the issue is one-dimensional - "the poor".
Because why someone is poor, and what conditions and circumstances result from being poor... poverty (which includes the psychological impact of being poor)... deeply affect the individuals affected, and some of those factors have wider societal causes (racism, homophobia, xenophobia, perceived sex, sexual identity, etc).
In which direction is causality flowing here, and how do you justify it? We didn't choose our brains––so how do we differentiate the privilege we got from our "class" from the traits we were born with?
Does privilege imply that you got it from your "class"? This seems like a classic nature/nurture fallacy.
Class may also mean you have no examples of entrepreneurship in your environment.
I don't think PG claimed that poor people are as likely as rich people to become successful founders. That's not the same thing. He says you don't have to be rich to succeed.
Why is it surprising? There’s a combination of blindness, and inflated sense of self worth. America romanticizes the “self-made man”, and so any help is discounted. (Famously, a $1M family loan in 1975 (4.8M in 2019 dollars) was described as “small”.) Not coincidentally, these is a strong correlation with ascribing their success to a meritocracy, even though luck has been repeatedly shown more influential factor in success.[0]
Everyone from my country (NL) has a safety net to start with (you can screw up but still) and that goes for many EU countries anyway and yet all the entrepreneurs I know from NL are extremely risk averse compared to the US ones. Most of my NL friends are entrepreneurs but more of the lifestyle kind than even wanting to become the #1 in their field with the monetary status that comes with it. I dare to say that I only know Chinese and US entrepreneurs that look beyond getting more than few million on their account and that is it.
"I would ordinarily just let your bullshit go, but this myth that you have to be a rich kid to start a startup is terribly dangerous, because it discourages people who aren't from trying it. Brian Chesky's parents were social workers. That is not a rich kid."
As if having two parents with stable jobs isn't considered a safety net. I agree, you don't need to be rich, but I also agree if you are struggling to work enough to eat, you aren't really working on making a startup.
There are huge swaths of people with a much less stable safety net than the example he provided.
Typical tech industry nonsense. People stuck in a job because they need the health insurance? People saddled with massive debt because you’ll have a hard time getting hired to manage a McDonald’s without a college degree? Rent increases eating up disposable income? Meh. But being told by some rando on Twitter that you need a safety net to take a risk on a startup? “Incredibly dangerous”! Because if some people who might start a startup instead choose a conventional career, I guess the world will end.
Agreed, "I can't pay rent and I'll have to move to my parents' basement" and "I can't pay rent and I'll have to live on the street" are two very different ways of struggling to pay rent.
I think if Paul G. came out a little less strong at the beginning - without 'bullshit' - this wouldn't be an issue.
On the other hand there is the habit nowadays of having to guard and specify ones statements zealously in order not to get called out for something a reasonably lenient reading would allow, but calling something 'bullshit' probably doesn't get you into that other hand category.
Idk, it seems to me that PG is just wrong about this. Not categorically and in every single instance, but on the whole. It's like saying women are physically stronger than men, and pointing to some woman who is clearly an outlier. You could word it less strongly and say that some women are stronger than some men. But then what would be your point?
Conveniently I just heard this on a podcast, and it's called "escalation of commitment." Basically, people hate to be wrong in public, and the more public person you are, the harder it gets. So instead of admitting a fault, they double-down on what's obviously a false statement.
Easier, sure. Not having a backstop means failure == death. Which isn't for the faint of heart, but that's the story of almost every Americans lineage at some point in the past. It takes a bit of luck, but rarely is it more luck than nose to the grindstone effort.
My anecdotes:
I have one great-great-grandfather who thought he had an office job in British Columbia, but by the time he sailed from England and crossed the continent the company had folded. But his family was already on their way, so he started working every mining job he could, and invested every spare pence he had into real estate. His sons did the same.
My paternal great-grandfather came over from Italy, got harassed out of NYC by the Irish, bought a small farm in Oklahoma, and his children did the same.
It is probably not actually good for PG, because the majority of such people will fail and end up destitute, casting bad publicity (rightly or wrongly, doesn’t matter) on whatever start-up churner generated that outcome.
Additionally, founders who already come from wealth or have political connections, etc., are probably much more likely to succees in the financial senses that PG wants.
The only limited sense in which it’s good for PG is if there is a lottery winner he can claim credit for, a rags-to-riches story to whip up blind support for some ludicrous tech millionaire idealism.
Sure, PG is obviously only driven by his desire to exploit poor people by telling them lies about startups. How could it be any other way. He is rich, so that's what he does, right? Exploiting poor people, that's what rich people do to fill their days.
A close cousin of this topic would be the background of new full professors in major universities. Ph.D. is risky, especially considering the slim chance of getting the full professorship and its tremendous opportunity cost. The competition to become a full professor in a major institution is fierce and also it takes longer and longer as the competition heats up. The path is quite comparable to that of the unicorn founders in many ways.
I'd wonder how much study has been done around the socioeconomic backgrounds of those prominent professors. I'd also be interested how those backgrounds have been shifted as time goes by. It would be also interesting if not much research has been done about it when some of them are supposed to do such a thing.
Silly Twitter fight aside, the key piece of advice that us regular non-rich folk should take away is this:
"Your first goal after university should be to build yourself a safety net."
Once you have $10k in the bank, you can start taking risks just like those privileged kids that are starting all the startups with their unfair advantages.
Best of all for us, we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.
How do countries with good social safety nets factor in here? In EU people are definitely not nearly as likely to start their own business as in the US, and many people that would otherwise be labelled 'jobless' (or on the dole) are 'self employed' instead.
Actually the headline of this is the takeaway you should get from this story. People with safety nets are the ones who get to do startups. This is logical and how it should be. If you weren't born into a rich family, then make saving up your number 1 financial priority to build that nest egg for yourself. Even the kids from privileged families are mostly in that position because their parents made a series of good financial decisions in regards to savings.
For whatever it's worth, there was a recent episode of Econtalk in the guest discusses his work with those below the poverty line and how some communities have been successful in entrepreneurship: http://www.econtalk.org/extra/discovering-positive-deviants/
I don't know of a quantitative study and obviously the source is biased, but the guest came himself from a "no safety net" situation and now works with others in a similar situation, so his take is interesting even if one disagrees.
Fuck the rich kids. And I'm not saying this as an insult. I mean it as "good for them". In terms that I'm 38 years old and I have enough maturity to know that:
1-Life isn't fair
2-Some people start the game 50 tiles ahead of you.
None of these reasons are going to stop me (a poor entrepreneur) to build the company I want to build.
I think PG's comment is idiotic, but I think he is very smart.
It's easy to take risks when there's little to lose.
If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.
[+] [-] DanielBMarkham|6 years ago|reply
We keep reducing these complex multivariate social issues to simple cause-effect situations then beating one another up over what the simple cause is.
When we're doing definitions, the key phrase is "necessary and sufficient" In this case, being rich or poor is neither necessary nor sufficient since we have plenty of examples of things working out with either of these two things being missing. So really the discussion is much more like "Does condition X provide a 3 or a 4 percent boost?"
But that's not as fun to argue about.
We oversimplify life and public policy-making at our own peril.
[+] [-] njepa|6 years ago|reply
Otherwise there is a very real chances of getting evicted, not being able to find a decent job, not being able to keep your friends or start a family. Plenty of people who are successful today have their parents pay for university, their first apartment and/or a safety net. And that is just to have a normal career.
[+] [-] sophacles|6 years ago|reply
[+] [-] esolyt|6 years ago|reply
I think it's more like whether it brings a 400% boost. It is definitely an important discussion to have. Whether Twitter is the place is another story.
[+] [-] devy|6 years ago|reply
You are totally missing the point Matthew Prince is trying to make, that is, you need to have a "safety net" before you can take risks. If one can't even get them fed and not worrying about what the next meal is and where to stay, all bets are off.
If you don't agree with me, name one entrepreneur who has found a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare. Borrowing money from parents doesn't count as living below poverty does it? Having parents or friends or family to lean onto economically means there is a safety net there.
[+] [-] aestetix|6 years ago|reply
At this point, to encourage health and respectful public discourse, the first step is to delete your twitte account. And probably facebook too.
[+] [-] o10449366|6 years ago|reply
I get the impression that the only reason Twitter isn't as heavily scrutinized as Facebook is because their executives are simply more likable, which isn't a high bar to pass when you look at Mark Zuckerberg. I think the same applies to Google, too.
[+] [-] znpy|6 years ago|reply
Twitter is cancer and this is why i keep off it.
[+] [-] snowwrestler|6 years ago|reply
This doesn’t give those folks much credit. It implies that a few tweets will have a bigger impact on their decision-making than their own detailed understanding of the constraints and anxieties of their own lives.
I don’t think PG is in a good position to understand those constraints and anxieties. And he is somewhat incentivized not to, since YC benefits from having more startups to choose from. But YC does not experience significant downside on the startups that they reject or which fail. Unlike: the founders of those failed startups.
[+] [-] marssaxman|6 years ago|reply
[+] [-] gist|6 years ago|reply
Exactly. And I have been avoiding saying this but keep in mind that from what I remember PG got the idea for YC when he was 'walking through Harvard Yard with Jessica'.
https://www.fastcompany.com/3002810/aha-moments-made-paul-gr...
All VC's are like this by the way. Even though they know there is a great chance that many ideas they fund will not work they still push the investments because it's not their mess to cleanup. That said there is actually probably more downside for employees. After all a founder with a big startup failure has been marked as someone 'in the mix' and can usually parlay that to other opportunities. Look at even Sam Altman and what happened after Loopt.
https://en.wikipedia.org/wiki/Loopt
Then he goes on having made his mark to running YC.
[+] [-] ordu|6 years ago|reply
[+] [-] csomar|6 years ago|reply
If I got it right, Robert Sapolsky claims that the way to make more woman into tech is to make young girls believe that they can do tech. They already have the cognitive capacity.
In this same sense, PG might be hitting the nail in the head: The reason poor people don't do startups is because they believe they can't; and that it is a white privilege.
If they believe they can't, they will not try. If they don't try, the probability that they succeed is exactly %0. Re-enforcing the myth and further convincing poor people not to try.
The only way out is to convince them otherwise and see what the real odds are.
Robert Sapolsky also claims that we need to change our speech and views (ie: remove "negativity") in order to level the playing field. PG is doing the same. He thinks that other ideas need to be censored as it is important to maximalize the propaganda.
That's a dangerous thinking as it touches on freedom of speech. One might wonder if you can level the social "cognitive" field while also preserving freedom of speech. Educating people is the only way I guess.
[+] [-] DevX101|6 years ago|reply
Paul seems to be saying you don't have to be rich to do a startup.
Matthew is saying lots of founder have some resources (family home, savings, great education, i.e. middle-class) that made doing a startup feasible
Both these positions are true and aren't incompatible. Being middle class (Matthew's position) and prudent with savings can afford you probably a year of runway.
But I'd never recommend someone who was truly destitute or food insecure to do a startup. If you come from a poor family there will also be family/cultural pressure not to do a startup and instead get a good paying job(assuming you have the ability).
[+] [-] mattxxx|6 years ago|reply
To be honest, I don't think that starting your company with the "risk" that you might move back in with your parents if it fails... is at all a meaningful risk.
[+] [-] PandaRider|6 years ago|reply
I've tried searching but cannot find a good empirical study of privilege and entrepreneurship correlation. However, I've found an essay paper [0] that exactly predicted this twitter drama; that entrepreneurs simultaneously present and erase this conversation about class and entrepreneurship.
The paper also concluded:
> Whereas gender, together with race, have long been foregrounded in studies of entrepreneurial identity and difference, class may be a more powerful organizing discourse, though certainly one supported by discourses of gender and race.
[0] https://journals.sagepub.com/doi/pdf/10.1177/135050841246489...
[+] [-] KaiserPro|6 years ago|reply
93% had a degree, with 30% having a masters, That would suggest to me that you'd need a decent wedge of cash.
Now, what is interesting, is that in 2016 at least, the US created gross 960k new companies (there is some smoothing here, so +- 100k) The UK created 460k. Seeing as how the UK is 60 million, versus 300 million people, either the US is under performing, or the UK is wildly over performing. (https://www.sba.gov/sites/default/files/advocacy/2018-Small-... and https://researchbriefings.files.parliament.uk/documents/SN06... for stats)
Perhaps, as we don't have to worry about healthcare or no competes, that might be a factor.
[+] [-] buro9|6 years ago|reply
Yes! Yes! Yes!
Other things contribute to class, but it remains a class issue.
I'm reminded of this: "If your feminism isn’t intersectional, it isn't feminism.".
We need something similar for those who think the issue is one-dimensional - "the poor".
Because why someone is poor, and what conditions and circumstances result from being poor... poverty (which includes the psychological impact of being poor)... deeply affect the individuals affected, and some of those factors have wider societal causes (racism, homophobia, xenophobia, perceived sex, sexual identity, etc).
[+] [-] coldtea|6 years ago|reply
Why the disbelief? They are the one who are primed to be the most susceptible to that!
[+] [-] Miner49er|6 years ago|reply
So providing more people with safety nets increases entrepreneurship. Having a strong safety net is a form of privilege.
[+] [-] pfortuny|6 years ago|reply
[+] [-] michaelmcmillan|6 years ago|reply
Does privilege imply that you got it from your "class"? This seems like a classic nature/nurture fallacy.
[+] [-] bubblewrap|6 years ago|reply
[+] [-] bubblewrap|6 years ago|reply
I don't think PG claimed that poor people are as likely as rich people to become successful founders. That's not the same thing. He says you don't have to be rich to succeed.
[+] [-] jonathankoren|6 years ago|reply
[0] https://www.fastcompany.com/40510522/meritocracy-doesnt-exis...
[+] [-] tluyben2|6 years ago|reply
I wonder why that is.
[+] [-] cbanek|6 years ago|reply
"I would ordinarily just let your bullshit go, but this myth that you have to be a rich kid to start a startup is terribly dangerous, because it discourages people who aren't from trying it. Brian Chesky's parents were social workers. That is not a rich kid."
As if having two parents with stable jobs isn't considered a safety net. I agree, you don't need to be rich, but I also agree if you are struggling to work enough to eat, you aren't really working on making a startup.
There are huge swaths of people with a much less stable safety net than the example he provided.
[+] [-] mikeash|6 years ago|reply
[+] [-] StavrosK|6 years ago|reply
[+] [-] skrebbel|6 years ago|reply
[+] [-] bryanrasmussen|6 years ago|reply
On the other hand there is the habit nowadays of having to guard and specify ones statements zealously in order not to get called out for something a reasonably lenient reading would allow, but calling something 'bullshit' probably doesn't get you into that other hand category.
[+] [-] adamlett|6 years ago|reply
[+] [-] mbeex|6 years ago|reply
The much more interesting remark is the following part:
"...because it discourages people who aren't from trying it"
This is the soil he makes a living from, eventually. Cui bono, essentially.
[+] [-] kirillzubovsky|6 years ago|reply
Details from the podcast -> https://smashnotes.com/p/this-is-your-life-in-silicon-valley...
[+] [-] Havoc|6 years ago|reply
[+] [-] huffmsa|6 years ago|reply
My anecdotes:
I have one great-great-grandfather who thought he had an office job in British Columbia, but by the time he sailed from England and crossed the continent the company had folded. But his family was already on their way, so he started working every mining job he could, and invested every spare pence he had into real estate. His sons did the same.
My paternal great-grandfather came over from Italy, got harassed out of NYC by the Irish, bought a small farm in Oklahoma, and his children did the same.
[+] [-] praptak|6 years ago|reply
It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.
[+] [-] AlexTWithBeard|6 years ago|reply
[+] [-] ekianjo|6 years ago|reply
[+] [-] mlthoughts2018|6 years ago|reply
Additionally, founders who already come from wealth or have political connections, etc., are probably much more likely to succees in the financial senses that PG wants.
The only limited sense in which it’s good for PG is if there is a lottery winner he can claim credit for, a rags-to-riches story to whip up blind support for some ludicrous tech millionaire idealism.
[+] [-] bubblewrap|6 years ago|reply
[+] [-] nemonemo|6 years ago|reply
I'd wonder how much study has been done around the socioeconomic backgrounds of those prominent professors. I'd also be interested how those backgrounds have been shifted as time goes by. It would be also interesting if not much research has been done about it when some of them are supposed to do such a thing.
[+] [-] CPLX|6 years ago|reply
[+] [-] jasonkester|6 years ago|reply
"Your first goal after university should be to build yourself a safety net."
Once you have $10k in the bank, you can start taking risks just like those privileged kids that are starting all the startups with their unfair advantages.
Best of all for us, we work in software, where socking away your first ten thousand dollars happens automatically after landing an entry level dev gig, provided you don't go out of your way to blow your entire outlandish salary on silly possessions.
[+] [-] jacquesm|6 years ago|reply
[+] [-] majani|6 years ago|reply
[+] [-] jkingsbery|6 years ago|reply
I don't know of a quantitative study and obviously the source is biased, but the guest came himself from a "no safety net" situation and now works with others in a similar situation, so his take is interesting even if one disagrees.
[+] [-] Entalpi|6 years ago|reply
[+] [-] taytus|6 years ago|reply
1-Life isn't fair 2-Some people start the game 50 tiles ahead of you.
None of these reasons are going to stop me (a poor entrepreneur) to build the company I want to build.
I think PG's comment is idiotic, but I think he is very smart.
[+] [-] kstenerud|6 years ago|reply
If the only fallout is wasting some family money and at worst delaying your entry-level career by a couple of years for some experience that many employers consider valuable anyway, there's little downside to throwing the dice.