This is why startups are a game for rich kids. If you know you can’t really lose, then you can just try again and again until you hit the three cherries.
I think rich kids will often lack the inner motivation and discipline to see a startup through. That's the flip side of knowing you can fail and it won't impact your life negatively. Startups are really hard, if you don't have that burning desire and fear of failure driving you forward, I don't think too much of your chances.
Anyone rich, or not can try again and again, it will just be harder for people who also need to figure out how to pay the bills.
Agree. And richkid can only found X startups in their lifetime.
If they play the VC game, returns are still extremely variable.
If they play a bigger game, then they start to be playing the same game as other players that the public can invest in (directly or indirectly) i.e. no advantage.
if you look at many startups that had successful outcomes, you'll generally find people who, if not rich, at least come from affluence. Affluence affords them the ability to take on more risk than say someone from a modest background, saddled with student loan debt. Generally, just because someone comes from wealth, it doesn't mean they won't work hard. I believe your comment is targeted more towards the trust-fund babies, who go through life having mommy and daddy pay for everything. Why work, when it'll all come to you?
This is something that bugs me about companies like Google just acquiring companies one after another. It's bound to work because it's a sheer number game. One that few can afford to play, one that practically can't be lost and one that will continually snuff out the chances for others to grow to that point and turn into serious competition.
But for any reasonable investment, you can’t know your odds are above 1 (or well above one for long term investments).
We see smart investors fail all the time (VC returns are highly variable, even though each VC is diversifying their risk across many investments).
All VCs together as a segment do not make enough return.
And the OP is wrong because you can only make a limited number of investments - because each takes time and most have a minimum stake. E.g. Buffett has so much capital to manage that he doesn’t invest in small businesses even if they might give 1000% return. And it disregards the problem that investors often concentrate their investment e.g. real estate mogul making a billion dollar bet with everything they own, or e.g. mom and pop putting retirement fund into one stock.
Exactly. It’s a about a capacity for risk. Rich kids have plenty of capacity since they’re essentially backstopped. A poor kid has one shot, and if it doesn’t start paying out quick, that kid starves.
