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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”

#341

Post by kragen »

skookumchuck wrote: post #288
devy wrote: post #281

Earlier quoted context omitted.

> 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…

"Rowling has lived a "rags to riches" life story, in which she progressed from living on state benefits to being the world's first billionaire author." https://en.wikipedia.org/wiki/J._K._Rowling Oprah's another: https://en.wikipedia.org/wiki/Oprah_Winfrey

Both Rowling nor Winfrey took routes to financial success that are more open to poor people than starting a startup is, but it's true that in 1998, 23 years into her career, when Winfrey was already world-famous, she co-founded Oxygen Media, which was eventually acquired by NBC for almost an Instagram. So I don't think that fulfills the stated goal of "a startup that exited successfully(IPO or Acquisition) by now and that the founder(s) were living below poverty line or on social welfare".

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

#342

Post by julienfr112 »

It depends also of your lifestyle : if you can't leave without buying expensive stuff, going in vacation in French Polynesia and skiing in Aspen, the safety net should be $100k or $1m. If you can leave in a cheap neighborhood, cook your own food, reading books and HN, doing cheap sport like running or cycling, $10k can take you a long way. The revenue and/or lifestyle of your significant other is also a huge factor.

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

#343

Post by InitialLastName »

skookumchuck wrote: post #288
devy wrote: post #281

Earlier quoted context omitted.

> 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…

"Rowling has lived a "rags to riches" life story, in which she progressed from living on state benefits to being the world's first billionaire author." https://en.wikipedia.org/wiki/J._K._Rowling Oprah's another: https://en.wikipedia.org/wiki/Oprah_Winfrey

Neither of them "founded a start-up" while living below the poverty line. Rowling wrote a book in her spare time that eventually got popular. She wasn't putting any money or asking of anyone else's money to fund her book.

Oprah followed the more usual path of "get a job, get promoted, rinse repeat" until she was a household name before she started her own company. Per the article you yourself linked, she was co-anchoring the local evening news at 19. That isn't the same thing as taking a risk on a start-up.

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

#344

Post by njepa »

SeanAppleby wrote: post #331
bumby wrote: post #329

Earlier quoted context omitted.

> it's not the VCs' responsibility You make some valid points, but I really dislike the above comment. When used it seems like a convenient way to diffuse responsibility, often to selfish ends. There's lots of examples where this type of single-minded attitude isn't acceptable. - A civil engineer cannot just have making money be the sole pursuit when designing or building a bridge - A doctor cannot just have making m…

Most VCs I've met do have some kind of value system other than making money that permeates their investment decisions, it's just usually one that is easier to align or at least doesn't run contrary to their business interests, like making large systems more efficient or spreading access to goods and services traditionally restricted to the rich by driving down costs. Socioeconomic mobility is really much easier to pu…

> They do it by spreading information and reducing barriers, not by giving money to higher risk people though, since that's easier to align with their place in the system.

And it is mostly misguided. The barrier to entry and availability of information is what have already changed. It is everything else that hasn't. Or it has, but in the wrong way. By charging a premium for housing, education and contacts instead of taking it out of the equation. Some day all this friction is going to have consequences.

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

#345

Post by bumby »

SeanAppleby wrote: post #331
bumby wrote: post #329

Earlier quoted context omitted.

> it's not the VCs' responsibility You make some valid points, but I really dislike the above comment. When used it seems like a convenient way to diffuse responsibility, often to selfish ends. There's lots of examples where this type of single-minded attitude isn't acceptable. - A civil engineer cannot just have making money be the sole pursuit when designing or building a bridge - A doctor cannot just have making m…

Most VCs I've met do have some kind of value system other than making money that permeates their investment decisions, it's just usually one that is easier to align or at least doesn't run contrary to their business interests, like making large systems more efficient or spreading access to goods and services traditionally restricted to the rich by driving down costs. Socioeconomic mobility is really much easier to pu…

Yes, sorry. I didn't mean to imply that VCs, on the whole, don't have a more nuanced decision process. I meant that I dislike when ethically questionable decisions are protected by the 'ends justify the means' argument. In this case, where maximizing profit is the only end that gets any weight.

It's similarly strange to me when I hear people like Jim Cramer advocate investing in tobacco companies even if you find their business practices abhorrent because the point of the investment 'game' is to maximize profit. In his case, his solution was to take those profits and donate to a cancer charity. It just seems like a strange set of psychological hoops to jump through to avoid cognitive dissonance. It comes across that excelling at the 'game' is ultimately what's valued more than the ethics of the business decision. Again, maybe naive or poorly placed, but it seems the most moral choice is to make sure all the decisions align with your values, not creating strange workarounds so you can have your cake and eat it too.

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

#346

Post by paganel »

cbanek wrote: post #123
StavrosK wrote: post #115

Earlier quoted context omitted.

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.

Exactly. In that in one of them, your landlord isn't likely to cover you, and is likely to kick you out, but your parents probably would cover the shortfall if they are able (at least for a couple of months). And if they aren't, you'll just go back home. On the other side, many young people end up having to help their parents make rent. They don't have the position to take on any of their own risk.

> On the other side, many young people end up having to help their parents make rent.

I have been in that position since my early 20s (I'm now approaching my 40s), well, since I was 21 or 22, meaning ever since I got my first salary. I didn't have to pay for my parents' rent but I did have to send my parents money regularly, each month, for almost 20 years now, because it's hard to pay your power bills and to buy basic stuff like bread or edible oil well when you live on subsistence agriculture, like my parents do. Paul Graham's view is very US suburban-centric, like most of the products and cultural views coming out of Silicon Valley.

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

#347

Post by zepto »

Consultant32452 wrote: post #334
zepto wrote: post #323

Earlier quoted context omitted.

Nobody is telling kids to stay in their lane, so that’s a straw man. However some people are proving that they don’t understand the risks other people face, and recommending that they take them anyway. Advising someone to take a risk that you don’t understand is not leadership.

Is high achievement possible for poor people or not? That's the only thing in question here. Arguing that it's harder for people who start off disadvantaged in some way is a tautology, and in context does nothing but discourage people. People don't need you to tell them about their risks, they live them every day. What they need is for people to shine a light on their opportunities. Because that's the part that's har…

You’re making a false distinction between risks and opportunities.

A startup is both a risk, and an opportunity.

If you incorrectly judge that risk, you have the potential to end up with fewer opportunities than before.

The poorer you are the worse the impact of this will be.

Therefore it is important for anyone, rich or poor, to have a good assessment of the risk of trying to launch a startup.

How are people who aren’t in an environment where people are succeeding supposed to accurately judge the risk of a startup when that information is not in their environment?

They clearly do need accurate information about the risks associated with startups.

It’s clearly true that it is harder for some people than others.

Arguing against this may be ‘encouraging’, but it’s also arguing against accurate risk assessment which is foolhardy in business.

If Paul Graham want to help poor people take risks, using this binary argument is not the way to go about it. He should use some of his resources to produce some realistic risk assessments so that people know what they are taking on.

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

#348

Post by sangnoir »

KaiserPro wrote: post #118
buro9 wrote: post #85

Earlier quoted context omitted.

> 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…

In the US, Class is a pretty good proxy to wealth, far more than say the UK.

I'd say class in the US is solely based on your wealth, whereas int he UK it's based on your heritage/background. There isn't much of an aristocracy in the US.

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

#349

Post by badatshipping »

idlewords wrote: post #177
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…

Graham is making a different claim, that you don't have to be from the middle class. Read the entire exchange.

Wait, his claim is that you don’t have to be from the upper middle class.

https://mobile.twitter.com/paulg/status/1130121128033300480

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

#350

Post by badatshipping »

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.

I... would too? Startups take over your life, and so does taking care of young kids. Pretty hard to do both at the same time. Not impossible, but pretty hard, which is presumably why he said he’d be reluctant, not absolutely unwilling.
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