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“It’s hard to take risks if you don’t have a safety net”

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Re: “It’s hard to take risks if you don’t have a safety net”

#41

Post by hef19898 »

jacquesm wrote: post #2

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.

At least in Germany IMHO the biggest risk of ones own start-up is failure. While the social security network is rather strong, even if it used to be stronger, you can basically ruin your whole future career once potential employers perceive you as a failed entrepreneur. The reasons are many, but mostly cultural. And that is huge risk you take.

The state is actually encouraging people to start their own business out of unemployment with various programs and incentives. Not in the most efficient way or at a start-up scale but still.

Re: “It’s hard to take risks if you don’t have a safety net”

#42

Post by ekianjo »

KaiserPro wrote: post #16
PandaRider wrote: post #8

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…

The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/educati... 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 pe…

Suggesting one variable explains such differences is incredibly reductive. Plus, The US is not a single country, there is federalism and you should treat all states differently since setting up a business in NY is supposedly a lot harder than in other states.

Re: “It’s hard to take risks if you don’t have a safety net”

#43

Post by DanielBMarkham »

esolyt wrote: post #33
DanielBMarkham wrote: post #28

Twitter wins again. 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…

> 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.

I agree. Also note that moving from a 1% chance of success to a 4% chance of success _is_ a 400% boost. It also may be trivial. Moving from .1 to .4 works the same way. Both statements can be true at the same time.

These things get tricky quickly. In a different medium, say forcing yourself to 100 characters instead of 280, we would have even more of a difficult time discussing it.

Re: “It’s hard to take risks if you don’t have a safety net”

#44

Post by KaiserPro »

bko wrote: post #40
KaiserPro wrote: post #16

Earlier quoted context omitted.

The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/educati... 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 pe…

Why do you need "a decent wedge of cash" to have a degree? There are plenty of universities that are affordable. For instance, City University of New York (CUNY) offers four year undergrad degrees for $6,730 a year [0]. You can get a room share in an outer borough for maybe 500 - 1.5k a month or Jersey for even less [1]. And this is one of the most expensive cities in the world. If you're smart, avoid unnecessary exp…

So, working a four day week, and studying full time to do a degree. Yes, I can see that allowing lots of time to form a network and come up with business ideas.

Re: “It’s hard to take risks if you don’t have a safety net”

#45

Post by lurcio »

pjc50 wrote: post #23
KaiserPro wrote: post #16

Earlier quoted context omitted.

The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/educati... 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 pe…

The UK also makes company formation very easy and still slightly advantageous for sole traders, which may be a factor. I did check the criteria and they do include "must be listed for VAT or PAYE", so they're all real businesses to some extent and not just shells. The US would do well to look at its business licensing requirements to see if they could be simplified in terms of paperwork.

It's also cheap and trivial to form a UK company with bank account - no matter whether UK citizen/resident or not.

Re: “It’s hard to take risks if you don’t have a safety net”

#46

Post by lotsofpulp »

DevX101 wrote: post #37

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 probabl…

It’s a tough calculation to forego a presumably high chance of having a comfortable life and providing a good base for your kids by working a regular job, versus shooting for the moon and possibly losing that comfortable lifestyle.

Re: “It’s hard to take risks if you don’t have a safety net”

#47

Post by [deleted] »

ekianjo wrote: post #31
praptak wrote: post #14

A poor person betting everything on their startup is definitely good for pg - it increases the pool of people whose work he can profit from. It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.

A poor person not betting on anything is bound to stay poor. Your point is?

[deleted]

Re: “It’s hard to take risks if you don’t have a safety net”

#48

Post by luckylion »

KaiserPro wrote: post #16
PandaRider wrote: post #8

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…

The only data I can get is this: https://www.kauffman.org/what-we-do/research/2009/04/educati... 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 pe…

The UK used to (?) be a haven for Ltd creation because of low costs, low bureaucracy and quick reactions. It's what lead to Germany's laws regarding UGs (Unternehmergesellschaft, literally entrepreneur company), much more comparable to the Ltd regarding easier access, much lower startup costs than the typical GmbH.

It will be interesting to see where these numbers move post-brexit.

Re: “It’s hard to take risks if you don’t have a safety net”

#49

Post by brain5ide »

ekianjo wrote: post #39
hef19898 wrote: post #34

Earlier quoted context omitted.

Isn't that oversimplifying the whole social issue of why people are poor, stay poor or become poor?

Strawman. I was answering the previous point: betting is probably a reasonable choice when you have not much to begin with. I would not make a 2 lines comment to explain poverty as a whole.

No. Betting is a reasonable choice when you, like a VC can bet on a ton of options and still have cash left for immediate problems. All other times, betting is playing your luck and bound to fail.

Re: “It’s hard to take risks if you don’t have a safety net”

#50

Post by duchenne »

AlexTWithBeard wrote: post #30
praptak wrote: post #14

A poor person betting everything on their startup is definitely good for pg - it increases the pool of people whose work he can profit from. It's not that obvious if it's good for the poor person. I guess that everybody has their own risk aversion threshold.

A poor person betting everything... a poor person usually doesn't have much, besides the time and dedication.

GP's point of view: A poor person can have a small safety net that separates him from absolute poverty and homelessness. If they start their own business, fail, and end up without enough money to pay for the rent, the consequences could be terrible. They also have a finite time to save enough for a descent retirement. Spending several years on a startup with a high fail rate can dramatically reduce the quality of their old days.
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