Why so few do startups
Aaron Swartz wrote a long missive on why so few people get involved with startups -he starts this way:
What holds them back? The lack of a social safety net. A friend of mine, a brilliant young technologist who's been featured everywhere from PBS to Salon, stayed in academia and the corporate world while all of her friends were starting companies and getting rich. Why? Because she couldn't afford to lose her health insurance. Between skyrocketing prices and preexisting condition exclusions, it's almost impossible for anyone who isn't in perfect health to quit their job. (I only managed because I was on a government plan.)
And goes on to mention health care, child care, and a bunch of similar things. However, he misses the main issue for people my age (40's) who have a spouse and kids: time.
Face it: most people with a spouse and kids don't have the time required for a startup. Our credit and savings are generally better than that a 20 something has, but time is the real problem. A person at a startup is expected to spend "whatever it takes" at the office - 80, 100, 120 hour weeks are not uncommon.
Well.
Try being married with a kid in high school, and explaining to the family that you will be unavailable for anything over the next two years as you try to launch a new business. Sure, there are people who do that - they either have very tolerant spouses, or they end up divorced. However, the vast majority of people in such startups don't have that problem, because they are young and single - burning a year or two at both ends is a worthwhile risk. I'm sure that a lot of people in their 40's make the same calculation about these risks I have - my family is just a lot more important.
The risks are a lot higher when you hit your 40's, and have a family. Aaron is trying to devise a policy solution to a problem that really isn't amenable to such things.
Technorati Tags: startups, vc, time management
Comments
Reality beyond start-ups
[Patrick Logan] June 9, 2008 17:39:03.174
The point about health care *is* real. I am a Type 1 diabetic. Health care, long-term disability, and life insurance can be ^%#@$%@^# expensive. This goes beyond start-ups and extends to even working for a smaller company vs. a larger one. The current system is broken, no matter what policitical philosophy one would like to apply to a solution.
On the one hand, tough luck for me, my costs and risks are different than someone without a genetic problem as severe (or worse - I know there are much worse ones than mine). On the other hand my costs are exacerbated by the current system. I think there could be better.
Sorry, but Aaron's right
[DAR] June 9, 2008 18:18:35.077
... and you're wrong.
I'm a parent of 2 young kids, and frankly it's money keeping me back from a startup, not time. I've got time (and energy) to do more work after the kids are asleep. But I just can't afford to go without pay for a full year while I do this.
Sorry, but he's right. Having to go without pay (and healthcare) prevents all but the wealthiest parents of young kids (or those with rich families) from joining becoming entrepreneurs.
Re: Why so few do startups
[ James Robertson] June 9, 2008 18:48:45.251
Comment by James Robertson
I'm sure there are a smallish number of parents willing to abandon their kids for the ridiculous hours required by a startup. Most, not so much. And no, "putting in a few hours after the kids are in bed" doesn't qualify. I think it's rather absurd that you think it does.
Hostage to Fortune
[Dwight Shih] June 9, 2008 22:00:48.515
"He that hath wife and children hath given hostages to fortune; for they are impediments to great enterprises, either of virtue or mischief." - Francis Bacon
Age of startup founders
[Edward Dorrington] June 10, 2008 10:46:55.074
Have you seen the study that Kauffman put out in May about technology startups? They found that 45% of startup founders were between the ages of 35-44, and 18% were between the ages of 45-54. While they don't outline how many of those founders were married and/or had children, those are the most likely ages where you'd expect to find married people with young children. Their results suggest that the stereotype of the 20-something founder is just that, a stereotype. The report is here: Education and Tech Entrepreneurship.
Re: Why so few do startups
[ James Robertson] June 10, 2008 11:17:08.046
Comment by James Robertson
And those people are making a choice to put way, way more focus on their careers than on their families. As I said in my post, you either have a spouse who's willing to put up with that, or you end up divorced. My main point is that various policy options surrounding the safety net don't change the basic issue: you have to largely bail on your family to start a business. That's a choice that some will make, and others won't - and government policy has very, very little to say about it.
Risk/Reward
[Antony Blakey] June 10, 2008 17:51:45.930
There are plenty of people (nearly always men) who aren't in a startup and yet still sacrifice that amount of time to their job. I think that time may not be a statistically dominant disincentive. Financial risk probably is. However, I think that's as it should be. Given the possible rewards of a startup, it's appropriate that there is significant risk. If society is to ameliorate that risk, then it should also get some of the reward. So IMO a safety net should be matched with higher taxes, especially capital gains taxes.
One needs to carefully consider what social policy objective would be served by reducing the risk of such behaviour, and the effect that less risk has on execution, both positive and negative.
Excuses, not reasons
[Tom Clarkson] June 11, 2008 0:37:50.560
Time, money and risk are actually pretty minor concerns when deciding whether or not to start a business. There are lots of different ways to run a business, so with the right planning you can create a startup that fits into your life appropriately.
The real barrier is the skills required. Lots of people have the skills required for the core activities of the business - a good example would be a programmer starting a software company - but starting a business exposes you to all sorts of stuff that you would never see working for an existing company. I don't think it's all that surprising if only 1% of the population can handle this successfully.
http://www.tqcblog.com/
As a young, single CTO of a startup with an entrepreneur father
[Andrew Badera] June 11, 2008 6:26:38.333
It's not a matter of having or not having time -- it's all in how one chooses to spend it. When I was 11 or so, my father came to the family, one-by-one, asking us if we'd be OK with him starting a business, being busy, etc. etc. Well, frankly, none of us knew what it meant -- the 120+ hour weeks especially. My father destroyed what relationship he had with his three sons, and almost ended up divorced.
I'm about to turn 29. Single, no kids (unless you count the dog and 2 cats.) I spend 12-16 hours a day in front of a screen, between day job, startup, and consulting work. Fortunately, it seems like things are really taking off. Also fortunately, I can afford to have essentially no life, and I'm free of most personal/social obligations in general.
My father cautions me about taking time to enjoy life. I think I'd much rather undergo this process now, unencumbered, than 20 years from now with 3 kids, a wife and a mortgage. I don't know that Aaron was right, though there were certainly some good points in his piece, but when it comes to "time" it's a matter of "choice," and some choices are obviously, more right for some people than others. It's all in what you can live with.