

Heirs to Old Money Plunge Into Tech - philipdlang
http://dealbook.nytimes.com/2012/04/04/heirs-to-old-money-plunge-into-tech/?nl=business&emc=edit_dlbkam_20120405 

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davidu
Things to remember:

1) Nobody cares who your parents are. That's one of the key pieces of magic in
Silicon Valley and entrepreneurship in general.

2) Good ideas can't be bought. Everyone faces challenges and mountains to
climb in starting a venture -- access to capital is just one of them. While
having easier access to cash is helpful in the recipe, it's far from a
determinant for success.

~~~
dogprez
I disagree. People with good ideas and small inheritances are more likely to
work for others since they lack the safety net. With them goes their ideas.

People might not care who your parents are but they care how much money you
have and who you are connected to.

~~~
olalonde
> People with good ideas and small inheritances are more likely to work for
> others since they lack the safety net.

This doesn't seem to be the case historically. AFAIK, the vast majority of
successful entrepreneurs in the valley came from middle class backgrounds.

~~~
eli_gottlieb
Counterpoint: I'm only working on something other than my own ideas because I
don't have the capital/savings backing to just chuck down a few hundred to
incorporate and start raising capital, all the while paying rent and buying
food.

~~~
_dps
I ask this honestly because you seem like a sharp guy and I'm genuinely
curious: what's stopping you from working a dev job for 6-12 months, saving
2-3k/month of a 8-10k/month paycheck, and then starting your own thing when
you have 6-12 months of personal runway in the bank?

I re-iterate that this is not meant to be snarky, but I meet several people
who express this idea and many of them seem to be stuck in local optima that
can be easily escaped with a little persistence.

Edit: a bit of nuance. I know most people in the world can't easily get
8-10k/mo salaries. But talented developers in the US (or willing to work
remotely) can. I don't mean to be insensitive to people with more constrained
opportunities.

~~~
eli_gottlieb
> _a bit of nuance. I know most people in the world can't easily get 8-10k/mo
> salaries. But talented developers in the US (or willing to work remotely)
> can._

No, we can't, if we don't live in Silicon Valley. I would call myself
"talented", but the highest salary offer I've ever received was $87k/year. The
lowest was around $72k/year. The average was around $80k/year.

Mind, most of these offers sounded better once you factored in things like
stock options, working for a start-up, or really nice health insurance _with_
stock options, but _still_. Outside of Silicon Valley, it's not at all routine
to earn $120k/year as a programmer, even a reasonably good one.

EDIT: and I don't live in some Hicksville, either. I live in Massachusetts.

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geebee
I'm all for old money getting into tech. However, there was one line in the
article that makes me wonder how successful they'll be...

"While many of them don’t know how to program code, they have a powerful
combination in the start-up scene: wealth, wits and a well-connected family."

I'm not going to dispute that things like money and connections matter, and of
course wits are essential. I'm not going to claim that there's no chance of
succeeding if you can't code, either. But you do put yourself at a
disadvantage if you can't. Having a great idea for an application is a great
way to get started, but I'd put it on a par with having a great idea for a
novel or a movie.

I'll still put my money on hackers in a run down dorm room above heirs to a
fortune looking for someone to code up their next social networking idea.

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gyardley
Reading the comments on that NYT article makes me wonder what's wrong with
humanity. It's like visiting Reddit - nothing but whinging and jealousy.

I know a couple of the people mentioned in that article, and they certainly
haven't gotten a free pass because of their family backgrounds - they have the
same problems executing on their ideas and building a business as the rest of
us.

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mrbgty
The first person they mention left an energy company to focus on making a
service that helps businesses manage their mobile applications.

I don't know, this doesn't excite me. I would be more interested if the people
with the resources focused those resources on improving energy technology.

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Turing_Machine
This has been going on for a while, actually. During the first dotcom boom a
VC guest speaker mentioned that some of the investors in his firm were
European nobility. I don't think the people in this article would qualify as
"old money" by European standards. :-)

~~~
BrainInAJar
Yeah, generally if you know where the money originally came from (great
granddad's widget factory) it's not old money.

~~~
arethuza
Well, for _really_ old money the money comes from land and the land came by
stealing it by force of arms from whoever had it before.

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rwhitman
I recall when Appboy (mentioned in the article) launched it was some sort of
app developer marketplace, then a social network, looks like they made a
pretty substantial pivot now into mobile app marketing infrastructure.

Its rare that independent first time entrepreneurs are given a lot of runway
for a prolonged period of successive pivots, I think thats one thing that
someone of means probably has at their advantage

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philipdlang
This was a great article covering a well-observed trend in startups - many
heirs to "old money" families are getting into the tech space. Do you think it
will last, or is it just a way to have fun for a few years before taking over
the family business?

~~~
wh-uws
I was a little worried when I first thought about it but the more I think
about it they will sink or swim based on how well they can build their
businesses.

Just like anyone of us.

Obviously they'll have a leg up on attaining funding for things but one thing
thats interesting about our industry is that a fair amount of our best and
brightest aren't primarily motivated by money.

They want to work on hard/interesting/big/(pick your own adjective) problems.
Preferably with other people who are just as sharp.

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joshu
Curiously, the Rockafeller family has a storied venture arm: Venrock.

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sneilan
The tech world is becoming more and more competitive as there is less and less
money to be made elsewhere.

I quote: “There’s not much money left to be made in timber or coal.” and
"Harrison LeFrak, the son of the real estate billionaire Richard LeFrak,
started making technology investments after the financial crisis, when many
investors closed their checkbooks."

Wonderful ;)

