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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”

#251

Post by 6DM »

jasonkester wrote: post #225
idlewords wrote: post #217

Earlier quoted context omitted.

In the United States, people who don't have significant financial support from their parents graduate from university with a great deal of debt.

Indeed. But those are the same people getting those $150k entry-level salaries from companies in the Bay Area. Even after paying down $50k/year in debt one would be hard pressed to spend the rest of that without saving anything. You spend your college years sharing a house with 5 roommates, driving an $800 car and living on Costco pallets of canned chili. Keep that up for another few years after school while pulling…

I started at $63k a year. My student loan payments were $1,200 a month. Apartments in my area started at $1,500 a month. Insurance is important to me for my health, and 401k for retirement. Would be nice if that cheap car I got would stop breaking down and failing emissions inspections... Gee, would be nice to not wake up on the floor because your crappy air mattress lost all the air in it during the night. There's no TV to watch because I didn't have one, so the list of basic things to buy is growing.

The reality is, not everyone lives in California. Entry level salaries have certainly increased since I graduated, but they're still not $100k+. Advanced payments are hard to make when you're just getting started and have nothing to stand on.

I'm not arguing that it's not possible, I'm only arguing that your imagination of how much money the average jr developer has to splash is not realistic.

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

#252

Post by zepto »

michaelmcmillan wrote: post #240
zepto wrote: post #231

Earlier quoted context omitted.

You are misinterpreting that research. It’s the best individual predictor when compared against other predictors, but not very predictive on its own. I.e. Iq is more predictive than inherited wealth, but iq + inherited wealth is more predictive than either individual factor.

And again we're back at my original question... This is just a never ending loop. My whole point is this: How do we separate our inherited traits from the privilege brought on by our "class"?

IQ is the strongest individual predictor, but much smaller than the aggregate of class traits.

Class traits are of course inherited, but there is a distinction to be made between cultural inheritance and generic inheritance.

Which are you talking about?

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

#253

Post by idlewords »

_Microft wrote: post #211
idlewords wrote: post #170

Let's not forget that Graham has also publicly written he would be loath to choose any woman as a startup founder "who had small children, or was likely to have them soon." The man has a type, and the demographics of YC reflect it.

Do you maybe have a source for it?

Search on the verbatim phrase in your search engine of choice.

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

#254

Post by abhiyerra »

jasonkester wrote: post #213

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 thous…

I believe that this is missing a lot of nuances. Just because you have a safety net doesn’t automatically make you more risk-averse.

Going to a relatively poor school where teachers were literally getting beat up and then heading to Berkeley it was sort of a shock psychological. Furthermore, having to pay myself through college with no social safety net was one thing but the feelings of being an outsider, having constant imposter syndrome to having a good job, and feeling somewhat removed from other founders in that regard sticks with you.

It is also hard to really think about startup and yourself when you may be the lifeline for your parents if they need money. A safe job does provides that. This may be the biggest challenge I had to overcome to going on my own. When a person from a comfortable upbringing decides to strike on their own they are really not beholden to others, someone who is poorer has a whole social net that they may have to consider before going out. Furthermore, try getting a loan with no one else underwriting you, it is next to impossible.

So the answer is, no, having $10k in the bank doesn’t automatically make you more likely to start a company because there is both a psychological and sociological aspect of poverty that lingers long after one has left it.

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

#255

Post by jandrewrogers »

jasonkester wrote: post #234
fucking_tragedy wrote: post #221

Earlier quoted context omitted.

$10k is hardly a safety net.

Feel free to adjust your numbers if you like. Personally, I have a hard time spending that much in a year. The idea, though, is to save up enough that you don't need to think about losing your job as an existential threat. That's an easily attainable goal for a software guy, and it puts you in a nice position in a lot of ways.

You are defining a "safety net" that tacitly assumes a privileged middle class life, which makes the problem artificially simple.

For someone that genuinely comes from an impoverished background, creating a safety net can be substantially more complicated because it involves considerably more than just having a bit of money saved. Many poor people have no family whatsoever in any meaningful sense, which makes building a "safety net" more complicated -- there is more to a safety net than money. Most poor people have the social class equivalent of "technical debt" which requires a lot of time and money to eliminate, which is something most people from a middle class background are oblivious to because they've never had to worry about it.

Poor people are not middle class people without money. There is a ton of other baggage correlated with being poor that they have to contend with.

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

#256

Post by gaspoweredcat »

exactly, its a different matter when that risk isnt "oh ill lose a bit of my buffer" but "if this doesnt work im on the streets"

you may have a fantastic idea but if youre working for min wage theres a good chance youre little more than one missed pay cheque from being in serious trouble

but those from privilidged backgrounds see it differently, many of them have never been "broke" and i mean truly broke so i guess they simply dont understand what theyre saying, theyve never taken an actual risk in their lives

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

#257

Post by vostok »

radcon wrote: post #247
vostok wrote: post #235

Earlier quoted context omitted.

> There are plenty of people with CS degrees who can't find a job, and plenty more who have jobs that barely pay enough to cover their expenses. If anything, this comment is out of touch with reality as it stands for most software developers in the US. The median salary for a software developer in the US is over $100k. In Silicon Valley MSAs it's even higher of course. The median income for similar careers like compu…

Average starting salary for CS undergrads today is $57,000. He did say "entry level dev gig". If you live alone in a major city, have student loans, and don't have great healthcare benefits from your employer, you'd be lucky to save much of anything on that salary. Banking $10k is a pipe dream.

At UMD, a good but normal state school, that figure is a little above $85k.

I would be surprised if the $57k figure was accurate for people living in major cities.

I would also be surprised if the average CS graduate is competitive enough for roles in major cities. The most desirable roles are only going to be realistic for the most qualified candidates.

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

#258

Post by theplague42 »

zpeti wrote: post #175
mattxxx wrote: post #171

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.

Psychologically this is not true at all. It's much easier to take risks when you have nothing to lose. How many 18-30 year olds do you see having a swing at it and trying something, vs 30+ people with families and savings to burn?

Most successful startup founders are in their 30s and 40s.

Providing a link: https://www.kauffman.org/what-we-do/research/2009/04/educati...

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

#259

Post by Someone1234 »

grenoire wrote: post #116
shafyy wrote: post #105

Earlier quoted context omitted.

The problem is PG says that you don't have to be a rich kid, and then takes Airbnb as an example where the founders are definitely rich kids compared to the rest of the nation and world (not rich as in "daddy has a private jet", but definitely in the top couple of percent). Of course PG is right that you don't need to be a rich kid, but he chose his anecdote poorly. PS: Also Sam recently said (in the StrictlyVC inter…

Worldwide, definitely top 0.1% (at approx. 80K annual income).

Worldwide is an unhelpful metric. They're starting up in a specific place, so their wealth should be measured relative to that location.

For example 80K won't get a roof over your head in NYC or Silicon Valley, but could support an entire family in middle-America.

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

#260

Post by blacktonystark »

SeanAppleby wrote: post #206
vorpalhex wrote: post #185

Earlier quoted context omitted.

> An education? Might very well be $50k in debt. You can get a perfectly decent degree from your community college for very affordable prices. Likewise you may not be able to live in downtown manhattan, but you can probably live anywhere in a whole bunch of the square states on $1k a month.

For better or for worse, VCs need heuristics to filter the likelihood of you pulling off what you're claiming you can, and prestige and depth of education is one of those factors, as well as employment history which also selects on those education factors. An associates from a community college isn't going to get you a meeting with a VC, nor is it going to get you past the resume screen at google to run around the ed…

So, to put simply, VCs are only interested in those who already are full of multi-generational advantages and privileges built off the poor.

No wonder startups are bascially for white guys only.

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