Entrepreneurs Aren’t a Special Breed – They’re Mostly Rich Kids

Those fucken rich kids. Immigrants too, who conventionally start out at the other end of the class spectrum: they are 13% of the population, yet start a quarter of all new businesses. Of course, they come from places where subsisting on the proverbial ramen isn&#x27;t a temporary insult, but a way of life.<p><a href="https:&#x2F;&#x2F;www.inc.com&#x2F;magazine&#x2F;201502&#x2F;adam-bluestein&#x2F;the-most-entrepreneurial-group-in-america-wasnt-born-in-america.html" rel="nofollow">https:&#x2F;&#x2F;www.inc.com&#x2F;magazine&#x2F;201502&#x2F;adam-bluestein&#x2F;the-most-...</a><p>I&#x27;m in Canada, and a friend and I walked into once of these sketchy looking African Immigrant bars for a beer. We sat down, we didn&#x27;t get to pay for our beer, someone bought them for us.<p>We invite the guy to sit down with us and he talks (in broken English) about how he came to Canada 5 years ago as a refugee from Somalia, started working in a tire shop, learned a bit about cars, then started buying junkers on Kijiji, fixing them up and reselling them at a profit, and how he&#x27;s looking for a place to open up his own shop.<p>He had nothing but good things to say about Canada and the opportunities it&#x27;s given him and kept thanking us.<p>It&#x27;s like no, don&#x27;t thank us, we&#x27;re just a couple of spoiled white whiny millenials. This country was built by people like you (And my great grandparents, who also came here and made something out of nothing a long time ago).

Mark Zuckerberg made this point in his Harvard Commencement speech earlier this year, and he associated that &quot;cushion&quot; with an endorsement for Basic Income.<p><a href="https:&#x2F;&#x2F;www.voicetube.com&#x2F;videos&#x2F;52098" rel="nofollow">https:&#x2F;&#x2F;www.voicetube.com&#x2F;videos&#x2F;52098</a><p>I have several reasons for not starting a company. I need a work visa, and that means I need a job. I also need to collect years of work experience in order to be eligible for Permanent Residency in future.<p>On the other hand, my job doesn&#x27;t keep me busy. I have a lot of time when I must sit in the office, but actually have no useful projects to do for the company. So I work on my own personal projects (and I have many ideas).<p>The problem with personal projects is that my visa won&#x27;t allow me to have a second source of income, so everything must be free. That&#x27;s fine, I like open source.<p>The budget for these personal projects is zero, though, and that means I can&#x27;t do marketing. I struggle to get even a little bit of feedback, and I have a tendency to move on to other new ideas when I realise that nobody cares.<p>Although providing the finance for me to pursue my dream would be great, I don&#x27;t think it&#x27;s enough. It takes a community where it&#x27;s easy to share project ideas and get useful feedback.<p>Example project in question: a Chinese-to-Pinyin word by word translator.<p><a href="https:&#x2F;&#x2F;pingtype.github.io" rel="nofollow">https:&#x2F;&#x2F;pingtype.github.io</a>

Entrepreneurship is like one of those carnival games where you throw darts or something.<p>Middle class kids can afford one throw. Most miss. A few hit the target and get a small prize. A very few hit the center bullseye and get a bigger prize. Rags to riches! The American Dream lives on.<p>Rich kids can afford many throws. If they want to, they can try over and over and over again until they hit something and feel good about themselves. Some keep going until they hit the center bullseye, then they give speeches or write blog posts about &quot;meritocracy&quot; and the salutary effects of hard work.<p>Poor kids aren&#x27;t visiting the carnival. They&#x27;re the ones working it.

I worked for a startup for 2 years. The CTO was one of the nicest, realest people I&#x27;ve met. Very down to earth. But I just knew part of the reason he could stick his neck out far was because of his family. Even if the startup exploded and crashed (it&#x27;s not doing great last I checked) he would be fine as he was part inheritor of a $300 mil fortune. For many of the employees they had invested years of their lives, many hours away from their family and more importantly, a possible later retirement due to lower income and lack of matching retirement. We also lost many quality candidates due to this fact.<p>I often felt like I was just part of some rich person&#x27;s game, where win or lose the stakes were so much higher for myself than for anyone who stood to make the real money if we ever went public. If we went bust I stood to lose big, while the people who ran the company would go off and do something else.

Having started now a couple of businesses, one of which is doing well, I can say:<p>There is a ridiculously high bar to vault in order to break through to a self-sustaining income valuable enough to employ multiple people. This is why vcs&#x2F;investors hold so much power in the equation, and maybe why the studies are skewed wealthy.<p>Trying to do this is indeed a risk, as it is not only a lot of work but it could very easily change you and your personality. It could put your personal dollar reserves in jeopardy. In my case, it cost me a wife. I don&#x27;t blame the work for that, I recognize that I am a very different man than I was before I took the leap.<p>I do think it is unfair though to say that only the wealthy are entrepreneurs, because that wealth came at some point through someone themselves making the jump. At the same time, I also think the barrier to entry needs to be looked at somehow.

It&#x27;s shocking how class-based Silicon Valley is. You would assume investors look for innovative ideas and capable people to execute on them, but nope. Ideas don&#x27;t matter and it turns out when investors say &quot;team&quot; they mean &quot;what club memberships does your team have?&quot;<p>Silicon Valley investors basically just invest randomly in people based on their membership in a club. It&#x27;s only because a small percentage of them turn out not to be complete idiots that it works at all. The smartest of the 99% receive no funding, while the entirety of the 1% wealthiest do.<p>It&#x27;s an insider&#x27;s club built around the &quot;top schools&quot; (as they call themselves). You&#x27;re either in the club or you&#x27;re an outsider, and only a handful of token outsiders are needed for display purposes.<p>If you want help in Silicon Valley, you must have either: 1) a rapidly growing business (traction) 2) been accepted into a &quot;top school&quot; (pedigree)<p>It&#x27;s not a conspiracy per se, it&#x27;s just a result of rampant cronyism and nepotism. How do you think investors get their jobs after all...<p>Some notable examples of non-rich founders, that the rest of us can hope to emulate: Steve Jobs, John Carmack, Palmer Luckey, Linus Torvalds, Larry Ellison.

I recall that Kik co-founder Ted Livingston tried to take a step toward changing this. He said he never would have been able to start his company without CAD$25,000 from his grandfather, so he donated CAD$1M to a local university, so they could give out CAD$25,000 to a student team every term (so, three times a year).

This answer will get me negative points but I must speak my mind. (1) Yes, coming from a rich family helps. A lot. You get the cushion and above all you get the right life advice. Your probability of success increases. (2) Yes, coming from a poor family hurts. You get neither the cushion nor the advice. But that&#x27;s it. These factors simply impact the probabilities for success. They do not eliminate your chance or hope for success. Agreed that if you come from a middle-class or poor family you have to work harder and sacrifice more when compared to rich kids. And I know life is not fair. But guys, for god&#x27;s sake, do not think for a second that you can&#x27;t do it. There are enough examples of middle-class kids doing amazingly well. Think about AirBnb founders.<p>Please do not quit trying just because rich kids have a better chance than you!

There&#x27;s an old saying &quot;you gotta have money to make money.&quot; It&#x27;s absolutely true. As I get older the more money I have the easier it is to make more. It actually feels like the game is rigged.<p>That being said, just having money doesn&#x27;t guarantee you&#x27;ll make money, of course. It takes skill, knowledge, ambition, and luck.<p>Wasn&#x27;t it Mitt Romney that said something like &quot;anyone can start a business, just borrow $20,000 from your family?&quot;

While the headline is true, I think the important factors to consider are:<p>- Doing something that has a high probability of failure is also likely something that is highly leveraged, meaning that if it does not fail the person doing it is much better off than if he&#x2F;she had chosen a less risky alternative.<p>- Sadly, VC selection processes (including YC) are heavily biased toward wealth signals such as ivy league enrollment. Attendance at the ivies is strongly dominated by one factor alone, which is the wealth of one&#x27;s parents.<p>- The reason YC and others bias toward ivies and wealthy parents is not because it doesn&#x27;t work. Raising an angel round and being able to truly give a startup 100% of one&#x27;s life energy is something that is much easier when you have parents willing to support it financially and possibly via networking connections with other wealthy family members.<p>- The interesting statistic would be this: Of all the rounds YC has participated in, how many have been participated in by relatives of the founder. My guess is that this number is over 80%.<p>- But on the other hand, being rich increases the chances that a kid will have received a top quality education and will be prepared to face the many challenges and blows to the ego that doing a startup can entail, and will be friends with others who can become key hires because they too had a top quality education.<p>- Ironically, dropping out of college makes even more sense when your K-12 education was so good that you realize that you already have the tools needed to pursue higher goals.<p>- The punchline is that in an ideal world we&#x27;d all be rich and have the good education, supportive family, and ability to take risks that rich kids do. So the descriptive fact that many entrepreneurs happen to be rich is along the same lines as the descriptive fact that many well-educated people happen to have had well-off upbringings.<p>Why bother achieving wealth if it can&#x27;t buy these kinds of very obvious and very useful luxuries?

It also stands to reason that the children of wealthy parents are also taught how to handle money, etc. See the book &quot;Rich Dad Poor Dad&quot; by Kiyosaki. It&#x27;s really too bad that public schools teach nothing about accounting, finance, the time value of money, the basics of how business operates, stock market fundamentals, taxes, etc. They graduate kids who are wholly unequipped to function in a free market economy.

Our public schools are designed to make people work jobs, not take risks.<p>And who&#x27;s going to these schools? The rich?<p>If you look at who&#x27;s an entrepreneur where there is no public education, you will see plenty of poor people. They haven&#x27;t been trained to sit, obey and avoid risk.<p>I think the entrepreneur is the natural state of man. What is hunting and gathering if not a hustle?<p>For that matter, what is every wild animal doing? Exploiting every opportunity that comes along or waiting for some to tell them what to do?

A key point is that it often takes inherited wealth to start a company early in life. In earlier eras, people tended to start up companies much later. After they&#x27;d had a career with a big company, they&#x27;d go off on their own.<p>Silicon Valley started that way. Look up the history of Fairchild Semiconductor and its successors. That&#x27;s because they were doing something really hard technically, and they needed senior technical people to make it go.

It&#x27;s interesting that the speculation (the hope?) that the internet could allow entrepreneurs to create businesses that don&#x27;t rely on these connections, that could sustain themselves just by reaching out to enough consumers directly, seems to have been wrong.<p>It seems that the well-connected and savvy old guard has proven better at reaching ordinary people than an unconnected newcomer entrepreneur can, no matter how good the product may be.

This is an opinion article. No sources made for the claims in the article what-so-ever.<p>I was in Techstars. There were some founders who came from prominent families, but there were others from the working class.

First of all I don&#x27;t think most entrepreneurs that pass the 2 year mark on a business are kids, they are probably middle aged.<p>Second while access to capital is clearly a requirement for many business types, it is not for others. If you don&#x27;t have money to start something, use charm, motivation and time, and maybe take early investment at worse terms. In short, hustle. You can always start another business under better capital availability conditions later. Branson is a great example of a hustler.<p>Personally I worked instead of going to university then started my first business with $30k and lots of time (years) living in a (very) cheap place. A few ventures later, I am self funded and probably spend half of that a month. While this is still paltry versus what many SV startups spend, it&#x27;s a lot more than most people can afford, and I am both personally aware and deeply thankful for the opportunity to develop ideas and lead a team.<p>My gut feeling is that people who feel everyone starting a business is an entitled prick haven&#x27;t met many entrepreneurs.

It&#x27;s a psychological bar that&#x27;s easier for people with money to cross. If you always feel like you&#x27;re lacking then it&#x27;s hard to make the jump towards entrepreneurship. You don&#x27;t necessarily need to be a rich kid but you have to have the confidence that ultimately you won&#x27;t end up homeless and penniless.<p>If you were raised in an affluent&#x2F;economically protected home it so much easier to start a business - even if you don&#x27;t have the contacts.

Capitalism requires the illusion of social mobility and equality but it is inherently wealth favoring, hence the name, a perfect system for the feudals to advocate as it maintained their power and influence via accumulated wealth.<p>The modus operandi is to highlight a few successes to create an illusion while millions fail or fall by the wayside. Those who succeed are too invested in the system and celebrating themselves and become perfect advertisements for the illusion. Immigrants who are desperate with nothing to lose and a few who grow essentially via a long struggle and trade are old favorites.<p>But let&#x27;s look at software. The average company could take a minimum of 2-5 years, just building the product or service could take a year or more at the minimum. Outreach, marketing and trying to build a user base and customers is going to take significantly longer. And you need some luck. Thinking of revenue is premature. Either you need ample savings to sustain for this kind of period without any certain outcomes or a secure family background.<p>The stress without a secure family background is going to be overwhelming, you need to be fit and healthy to put in long hours without interruption for sustained periods without any family or health issues. Any single incident here can completely derail you. Your life is going to be at a complete standstill while you make this attempt.<p>Your immediate family and relationships are going to take a huge toll as you struggle single mindedly to build something from scratch, relationships are going to be under intense strain. If you have kids you should ask yourself whether you can even afford to take this kind of risk and devote years to something with completely uncertain outcomes. If you don&#x27;t you certainly can&#x27;t afford them now or the next 5 years. A significant chunk of your life is at stake.<p>That&#x27;s why the only realistic way is to have a rich background or have a VC. And you need a pretty decent education, experience and profile to begin with ie some level of privilege to interest a VC. So mobility and entrepreneurship is not as clear cut as it looks.

What are some Silly Valley entrepreneurs who hit the big time and came from complete and utter poverty?<p>Also your rich parent social networks (other rich people) are going to fund your startup. A personal example my uncle through marriage... his brother was a CEO of a huge well known company and he had TONS of money but would never give me the time of day...my startup was even pursued by Google for potential buy out. Yet his friends invested in Elizabeth Holmes&#x2F;Theranos and so did he(lol).

I have a different perspective on entrepreneurship, having done full time work, consulting, and ran a small business employing others.<p>When you are an employee, you sell your time for money.<p>When you are a contractor, you take more risk but you have more freedom. You can charge based on how much value you provide, by virtue of the fact that you can name different prices for new clients.<p>When you run your own shop, you can productize you services reap the benefits of re-using everything. Not only that, but you provide employment others, who do the actual work.<p>But all these are not the best way to accumulate a lot of wealth. Instead, if you can partner with some capital, some expertise, and in general launch a rocketship, do it. Start a startup and give away enough equity to make sure it succeeds. Make sure to only do it if the startup a decent salary from the beginning. Keep doing this until you hit a big exit. Then you have it set.<p>You can keep doing this without being rich. What you need is to have access to capital. Preferably capital that&#x27;s looking to fund ideas.<p>There is more and more of that capital every day. Such as crowdfunding. You lose very little to make a camapaign or an ICO.

Yep. Deep down everyone knows this but wants to hold onto the delusion that their &quot;unique&quot; skills and ideas are what made&#x2F;will make them rich.

I think wealthy parents will teach their children to be wealthy. Perhaps its easier to have a giant safety net when starting a big company.. but I wouldn&#x27;t listen to this article unless the writer is himself a successful entrepreneur. It&#x27;s probably better to case-study people who were broke when they started. Who cares about statistics.. if it&#x27;s possible, just harder, for you to be a wealthy entrepreneur, still you should do it!

It also has a lot to do with &quot;being born into context&quot; [0] of money. I can imagine kids observing good skills (like money management or business communication) of their parents will develop these skills for themselves rather easily.<p>[0] Quote from Alan Kay&#x27;s talk for YC <a href="https:&#x2F;&#x2F;youtu.be&#x2F;1e8VZlPBx_0" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;1e8VZlPBx_0</a>

I don&#x27;t think anyone really mentioned how important that safety net is to when it comes to high risks ventures and failure

Bill Gates had to pay rent hire employees and pay for expensive computer equipment. Not to mention servers for the old website. Facebook would have had similar challenges in the beginning.<p>Nowdays, I could serve one million requests for a functional product over AWS lambda for around $5-$10.

Entrepreneurs are good so I guess we need more rich kids. I&#x27;ll assume that was the conclusion.

So I see a lot of comments here about how it&#x27;s probably mostly middle class and rich kids together. I find it curious that nobody is mentioning the lesser well off. Is the rags to riches dream a fairy tale now?

It’s easier to swing from one vine to the next vine, than to one 5 vines in front of you.

Rich kids with some brain and brawns. I just want to be fair with the rich kids

I would say strictly speaking from the title, that would make them exactly a special breed. There aren&#x27;t many of them.

Well it depends if you are saying &quot;all western people are rich&quot;.

Fine, but some of us aren’t so...what?

Does it matter who entrepreneurs are? They exist to serve society by providing new products and services that didn&#x27;t exist before. We pay the winners well to motivate them to do that. It&#x27;s not charity for their own good so it doesn&#x27;t matter if there&#x27;s bias in choosing them or some classes of people are excluded. It&#x27;s not for them.

There are 13,000,000 millionaires in the world.<p>They have children. A representative distribution of them create more wealth with the resources they already have which can have a disproportionate impact than the same distribution of attempted wealth creators that start off with less.<p>Did that really need to be spelled out?

What if having born to rich parents is correlated with genetic disposition to higher intelligence and risk taking? Evolution endows offspring of successful parents with successful traits. From an evolutionary perspective, the findings are totally expected.

Seems like selection bias. Anecdata, but most entrepreneurs I&#x27;ve ever met were regular middle class joes with the drive to do the journey. Even most YC founders, as far as I can tell, are not exactly Winklevosses, they&#x27;re just regular people who are in a privileged position to be able to take a couple of years off and live on savings or very meager early stage funding to test if their business model will work.

Let&#x27;s say this is 99% true--that 99% of the successful entrepreneurs are rich kids and 1% are self-made.<p>If you look at this stat and decide not to start a business, that&#x27;s fine, because that&#x27;s what most people do.<p>But those who don&#x27;t care about this stat--maybe because they care so much about what they&#x27;re trying to build, or maybe because they&#x27;re irrationally confident that they can succeed--I think it&#x27;s fair to say they are a special breed. Special isn&#x27;t always great, but all great things are special.