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Jon Stewart: Lower entrepreneurial risk

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Re: Jon Stewart: Lower entrepreneurial risk

#171

Post by chubbard »

vm wrote: post #133
SomeCallMeTim wrote: post #126

Earlier quoted context omitted.

>I don't think that decreasing risk will result in more entrepreneurship. TOTALLY disagree, as well as with folks who are saying that "risk is an important part!" For one thing, there are a series of studies that show that people who are more risk tolerant actually create worse start-ups (for example, [1]). There is at least one meta-analysis that indicates that there's more risk tolerance in entrepreneurs (though th…

We need to define risk here. Startups are risky and most fail. That doesn't change, even if we gave people free health insurance and other benefits. Jon Stewart is arguing to increase the safety net so that downside of failure is less harsh. It won't make the downside scenario less likely, just not as brutal for those who experience it. But I bet his proposal would INCREASE the risk of failure for precisely that reas…

I was going to retort to your statement about changing failure rates saying that's not side of the equation we're talking about. If we take this as the number of startups we create as:

   numberOfSuccessfulStartups = startupAttempts * successRate
Then Jon Stewarts observation is by lowering risk failure we raise the startupAttempts. Not only do we raise the attempts, but we can recycle the failures to drive startupAttempts up more resulting in a higher number of successful startups is his hypothesis. Adding health benefits, tax credits for loses, etc drive up startupAttempts by lowering risk.

However, your observation that making things cushy for entrepreneurs could lower successRate because you don't have to hustle as much. Sort of a if I fire this gun above your head while you work maybe you'll work harder argument. I say that in some jest because I think there is some merit to your observation just how much I don't think either of us know.

The one counter I can provide to your counter is that lowering risk might have the same effect as lowering incentives for results. Basically support from this work on how incentives can lower success if they are too high. What I'm saying is maybe if risk is too high fewer people attempt and even fewer people succeed because there aren't enough original ideas to copy for scale.

http://carmine.se.edu/cvonbergen/Incentives.pdf

(Couldn't find a better link.)

I think both hypothesis have their points and we need more data to support them.

Re: Jon Stewart: Lower entrepreneurial risk

#172

Post by Nogwater »

goggles99 wrote: post #142
Nogwater wrote: post #12

Earlier quoted context omitted.

I agree that starting a business isn't for everyone. I'm doubtful that I would enjoy it, but I would like to be an early employee at a company. If that company can't afford health coverage, then I can't take that risk for my family. It just baffles me that health coverage is so tied to where you work. What if you could only send your kids to the schools that your employer selected, or eat at the restaurants the your…

>It just baffles me that health coverage is so tied to where you work. What if you could only send your kids to the schools that your employer selected, or eat at the restaurants the your company had a deal with? It's just weird. I don't know if government provided insurance is the solution, but employer provided just doesn't make sense as the only solution. Does it baffle you that the school location for your kids i…

> Does it baffle you that the school location for your kids is so tied to where you live?

No. Kids need to get to school, often by walking/biking. Schools can't afford to bus random kids in from 100 miles away. At least where I live (Ventura County, CA) parents are able to drive their kids to more distant schools if they prefer. As long as schools are a physical location where you have to show up to benefit from, it makes sense for them to be location based. If schools were 100% online, then it wouldn't make sense.

> Does it baffle you that your employer decides how much it wants to pay you as well ... desk ... computer ... 401k ... bonus ... vacation ... etc...

All of those things are either related to the relationship between you and your employer. The 401k thing is a little funny. I'd rather take the cash and manage it myself. I'm assuming your point is that health care plans are just another form of compensation and if you don't like what's offered, quit and work somewhere else that offers something better. The problem is that 1) coverage chosen by the employer can change every year, 2) you can't get the same coverage at the same price on your own or at a small company, and 3) it's non-optimal because it bundles unrelated things and requires you, as a "consumer" of employment, to make your decisions based on the aggregate value instead of individual values of the components.

> Let me ask you though. What if your employer would give you the money they put toward your health care to choose the provider of your choice (even if you had to pay the difference for any shortcoming)?

That seems good to me as long as you had the option to buy the same coverage at the same rates as the big companies.

Re: Jon Stewart: Lower entrepreneurial risk

#173

Post by sstrudeau »

hotpockets wrote: post #25
thaumaturgy wrote: post #5

OK, so, I am ardently socially liberal, and I've had a man-crush on Jon Stewart that hasn't waned ever since his appearance on Crossfire. But. I don't think that decreasing risk will result in more entrepreneurship. I would support a wider social safety net for entrepreneurs -- er, business owners -- on principle alone, because I think what we should be saying is that these people are vitally important to our economy…

Facing a potential health crisis without insurance has got to be one of the biggest disincentives to starting a business. Even if that disincentive is irrelevant to most entrepreneurs, you still have potential entrepreneurs with health issues. If X% of potential entrepreneurs have managed but costly health problems, the disincentive to starting a business must be much higher.

I am in a similar situation. I have thyroid cancer, which is generally a manageable form of cancer but has a small (but not insignificant) risk of recurrence and distant metastasis which could require expensive diagnostic & treatment options. Having a pre-existing condition makes it very difficult to buy insurance on the private market and it is very expensive, if you can buy it at all. I recently hit a point in my life where I'd paid off debts and could have afforded to take a risk and start my own business (and want to), but I am not willing to put my family at risk for bankruptcy if I end up requiring expensive tests and treatments and I'm not willing to forgo those things and risk my own life. My dad faced a similar situation when I was younger. My mom was diagnosed with cancer at a time when he was considering leaving his blue collar job to return to college; he ended up staying in his job to keep his generous union health care plan, my mom got great care and eventually recovered, but he missed a chance to grab new opportunity because the risk again was too great.

Re: Jon Stewart: Lower entrepreneurial risk

#174

Post by cmiles74 »

Vivtek wrote: post #151
vm wrote: post #133

Earlier quoted context omitted.

We need to define risk here. Startups are risky and most fail. That doesn't change, even if we gave people free health insurance and other benefits. Jon Stewart is arguing to increase the safety net so that downside of failure is less harsh. It won't make the downside scenario less likely, just not as brutal for those who experience it. But I bet his proposal would INCREASE the risk of failure for precisely that reas…

I disagree with this. It's one thing to hustle to make your ramen budget. It's another to hustle to succeed before your son needs that kidney transplant. There's hustle, and then there's killing stress. I can only surmise you're young and single.

Agreed. Certainly I can rationalize losing healthcare for a period of time, the risk could very well be worth it. Risking inadequate care for my wife and kid is a much more difficult proposition.

Re: Jon Stewart: Lower entrepreneurial risk

#175

Post by Anechoic »

yummyfajitas wrote: post #161
Anechoic wrote: post #120

Earlier quoted context omitted.

#2 is irrelevant in MA. MA already has Obama/Romneycare. It's not quite that simple. One, the plans offered through the MA Connector may not be as inexpensive as plans negotiated by an employer, so you may wind up paying more for the same coverage. There's alao the issue of finding a plan with doctors in the same network, you may find yourself paying a little more if you have a favorite doctor treating you for a pre-…

There is no gap because COBRA covers you (costs go up precisely 1%) until the next open enrollment. As for "open enrollment", this just means you need to start your business in July. Anechoic is right - anyone claiming they can't start a business in MA due to employer sponsored healthcare is just making excuses. See also "I'm a fatass because I don't have time to exercise", "I have no girlfriend because all the girls…

COBRA covers you (costs go up precisely 1%)

When I was on COBRA, my out-of-pocket costs went up significantly more than 1% (compared to what I was paying for the same policy when I was employed).

Anechoic is right - anyone claiming they can't start a business in MA due to employer sponsored healthcare is just making excuses.

I didn't say that.

Re: Jon Stewart: Lower entrepreneurial risk

#176

Post by zerostar07 »

_delirium wrote: post #65
suresk wrote: post #27

Earlier quoted context omitted.

Countries with much broader safety nets for entrepreneurs are not producing the risky innovative companies that America is. Could this be because countries with broader safety nets also have more regulation and make it hard to fire people? I've always kind of thought a combination of making it easy to hire people and let them go, along with strong safety nets (ie, good unemployment insurance and not having health car…

Denmark has been moving in that direction. Its overall level of safety nets, taxation, infrastructure spending, etc. is much higher than in the U.S. (tax revenues about 2x as high, as a percentage of GDP). But in some ways it's actually more privatized: for example, the bus system in Copenhagen is bid out to private corporations to operate. The government comes up with the fares, set of routes, etc., and then the cor…

Denmark has a reputation for being the most flexible job market in northern europe. I wonder if this strategy has payed dividends basedon your experience

Re: Jon Stewart: Lower entrepreneurial risk

#177

Post by ZachPruckowski »

stretchwithme wrote: post #54
[deleted] wrote: post #41

Earlier quoted context omitted.

[deleted]

If that were true, eliminating all risk would lead to an explosion of risk taking. But it doesn't. Plenty of trust fund babies face no risks and accomplish nothing. Of course, another way to look at things is to realize that taking no risks is the biggest risk of all. If one wishes to sit and wait for life to do whatever to you, you can always do that. Don't go to school, don't strive. Don't ever invest in anything t…

>Plenty of trust fund babies face no risks and accomplish nothing.

Because they face low monetary returns. You or I taking a risk and succeeding means the monetary difference between affording a comfortable lifestyle and a lavish lifestyle. A "trust fund baby" succeeding at a risk means the difference between a lavish lifestyle and a slightly more lavish lifestyle.

Re: Jon Stewart: Lower entrepreneurial risk

#178

Post by bcx »

We can pretty clearly see that lowering risk is increasing the number of software startups. You can see a pretty clear micro example of this just by looking at YC applications.

The number of YC Applicants has increased as the risk of doing YC has gone down.

When someone going into YC had an expected outcome of basically $25000, less people were willing to leave jobs to go start companies. Think about pre 2009 YCombinator.

Now consider post 2009 Ycombinator.

As the process became less risky: more guaranteed capital (the Ron Conway, Yuri Milner portfolio strategy), and more Acquahires. The value of the average company went up, the downsides went down, and the risk to starting a company went down. Thus, more people were willing to apply to YC, and Paul and the YC partners were able to accept more companies.

You could probably argue that this was a function of the popularity of YC. I believe that founders are rational, and the popularity of YC again decreased their risk. How many founders do not quit their jobs until they get into YC? (many)

This is a separate argument from whether or not we need government healthcare, but I think it's pretty clear that risk evaluation is absolutely part of being an entrepreneur.

(As an aside, dealing with healthcare is just one of many things that we as founders have to do that provides very little net benefit to our business. The less of this BS we have to do, the better we will deploy capital and the more focused we will be on important problems)

Re: Jon Stewart: Lower entrepreneurial risk

#179

Post by jamesrcole »

jcromartie wrote: post #9

Countries with much broader safety nets for entrepreneurs are not producing the risky innovative companies that America is. But, as far as I can tell, health insurance really is the biggest factor keeping people from starting new companies. For myself and my peers, with new families and houses and student debt, etc., it's the one thing that scares us more than anything else. The prospect of a business going under is…

> Countries with much broader safety nets for entrepreneurs are not producing the risky innovative companies that America is.

But the fact that they have broader safety nets may have nothing to do with that. Maybe the reason they produce less risky innovation has to do with other ways that they differ from America.

Re: Jon Stewart: Lower entrepreneurial risk

#180

Post by cobrausn »

jeffool wrote: post #94
arohner wrote: post #31

The US already has the most lenient bankruptcy law in the world. It already has the highest "social tolerance" for entrepreneurial failure. I'm in great health, and young, so I'm not worried about saving for retirement (yet). But starting a company is still really damned hard. It's years of hard work, too much time at the office, too much time away from friends and family. Too much fear that tomorrow no customers wil…

Speaking of bankruptcy laws, I wonder how the ballooning student debt (which cannot be dismissed through bankruptcy) plays into that. Anecdotal, but, did (m)any people here on HN graduate and then start a business while still in debt with student loans?

Speaking as someone with over six figures of student debt (doh) and trying to do a startup at the same time, I'll say this much: I will, so long as I am as far in debt as I am, never go without a good paying day job. This means I am restricted to working on my startup for about 20 hours a week, and only after putting in a 40 hour work week. I can probably only pull this off because I have no kids and a fairly independent wife who will tolerate it if I spend every sunday working all day. Progress is slow, but I don't really have another option with student loan minimums over 1k a month.
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