Startups, a rich man’s game

Startups, a rich man’s game

Despite the Silicon Valley echo chamber, starting a company remains easily among the most risky career moves for workers. The stress of the job can easily lead to burnout or long-lasting mental health issues. Failures, despite being lauded in some corners, still too often harm a founder’s future career prospects.

But the greatest risk of building a new company is almost certainly financial. In addition to the opportunity cost of lost wages working on a startup, there is the serious burden of fueling a company’s early expenses before an accelerator or venture capitalist comes in and drops some capital. It is a common form of founder braggadocio to talk about the $20,000 credit card debt that they are carrying to see their dream come to life.

The kerfuffle over the Crunchies this week was just the latest episode of a long fight over access to entrepreneurship. So far, that war has been mostly focused on women and minorities, but there has been far less discussion about financial inequality when it comes to startup founders.

The elite backgrounds of founders is well-known, and underlined in Aileen Lee’s analysis of unicorns. As she wrote, “The vast majority of all co-founders went to selective universities … and more than two-thirds of our list has at least one co-founder who graduated from a ‘top 10 school.’”

That ivy-covered background is perhaps one reason why venture capitalists are always so obsessed with “hustle” when discussing founders. Do you know who has hustle? People who can’t take Fridays off for rest and relaxation because otherwise they won’t be able to afford their rent. For the most pampered workers in the world, it should come as little surprise that we now have a whole conference dedicated to learning how to hustle.

The problem, of course, is that economic growth is just not what it used to be. The manufacturing plant that provided jobs and wages for everyone has been replaced by the in-or-out knowledge economy. Startups are one of the few avenues to rapid economic growth in the United States, but its entrances are mostly blocked to those who could most benefit.

That issue comes out of two reports that were released this week about the state of Silicon Valley and the ability of cities to create high-growth startups. Joint Venture Silicon Valley, a non-profit regional forum, released its annual Silicon Valley Index (PDF version), with dozens of tables and charts analyzing the region’s demographics and employment.

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