You say "stuck at (1)" as if most people actually desire this kind of wealth and are trying to become entrepreneurs.
The simple truth is that many people don't want to step into that kind of intensity and uncertainty, or lack the skills to succeed in a cutthroat industry.
The idea that founders are somehow "cheating" is hilarious to me. Anyone in the developed world can easily become a founder, why don't you try it?
I'm saying "stuck" in the sense that their earning potential is completely dependent on how many hours they put in, and how much their annual raise is.
While many don't necessarily value pay as #1, it is important to people. If a regular worker receives a 20% pay increase, that's huge compared to not getting anything, or something which barely covers inflation. Even though the dollar amount may not be much compared to others.
> Anyone in the developed world can easily become a founder, why don't you try it?
Because most of us have families and can barely afford rent and healthcare. Those of us with a bit more success are finding that extended family are falling into poverty and need help (thanks inflation and transition to lower wage jobs!). They cannot work more than 2 jobs and also found a company.
Most newly founded companies fail, so it's an expensive process unless you've a network of FFF or VCs to draw from.
Many founders get nothing out of the process but stress and bankruptcy.
The idea that people don't want financial security or independence is absurd on its face. If you look at people who have founded billion dollar companies, you see that those people aren't a representative cross-section of society. You see factors such as:
1. Coming from a relatively affluent background (eg Bill Gates's father was a successful lawyer);
2. Social status. For example, Sundar Pichai came from a relatively modest socioeconomic background but he's also upper caste;
3. Even having access to a top-tier education (eg Stanford) generally shows a lot of privilege, Social connections, financial security, probably access to a quality education prior, tutors and so on;
4. Even just being white in the US means your family had access to create generational wealth that minorities didn't. The post-WW2 GI Bill famously discriminatory in providing cheap mortgages (as well as subsidized college eduation).
One cannot overstate the opportunities available to you if you are "free to fail". If your family can support you or even you can live at home then you have the option of starting a company and being unpaid for a long period.
As for founders "cheating", well that's a different story but also objectively true. Many companies extracted value by essentially breaking the law and getting large enough before enforcement caught up with them, which allowed them to buy those changes. AirBNB and Uber are good examples of this.
The myth of meritocracy has been so successfully propagandized it's no wonder that so many people see themselves as "temporarily embarrrassed millionaires".
> These days, anyone can get a free K-12 education, and then loans for college. Generational wealth is not required.
Our system is based around competition, where advantage compounds. How do you square this circle? In the case of two identical people, one burdened with student loans and one not, the one without the burden will win in the market due to being able to allocate more capital.
Amortized over a large population, this creates a systemic effect where those privileged with generational wealth will tend to be over-represented in the set of "winners" the system produces. This seems irrefutable to me. Obviously there will be anecdotes of exceptions, as there will be in any amortized system.
Freedom from generational poverty is required. A lot of PoC in the US grow up in dire straights which weighs on their mental health. Their chance at a university education drops rapidly when they have a network that depends upon them working from adolescence onward.
My grandfather worked selling cookies for decades and retired with a pension. My father worked as a professional engineer and midlevel manager at least as long and had less to show for it. I'm trying to work my way into upper management and will likely retire later and with less than either of them.
People feel the walls closing in on them. Telling them to buy more lottery tickets, albeit in the form of founding companies, isn't an answer that scales.
People really do get all up in their feelings on this issue and end up making emotional arguments based on anecdotes. Oprah Winfrey is an anecdote. Somebody's grandfather starting a business in an 8x8 shack is an anecdote.
What isn't an anecdote is slavery, the politcal and economic disenfranchisement of the Reconstruction Era, segregation, redlining, HOAs (which were started to keep black people out [1]), access to free college education (with the GI Bill), access to cheap mortgages to create generational wealth through property, the resulting decay in infrastructure and education thanks to the resultant "White Flight", over-policing and disproportionate outcomes in the criminal justice system.
There are over 1000 billionaires in the US now, most of them homegrown most likely. There are about 14 black billionaires (27 globally, apparently). This includes Oprah, Michael Jordan, Tiger Woods and LeBron James. 15% of the US population is black.
The "just invest in stocks" pseudo-advice is this generation's "let them eat cake" A large percentage of the US population do not have disposable income. They are often working several jobs just to live. The "Millionaire Next Door" is more often than not just some guy who bought a house in the 1980s and sat on it.
> Musk made his fortune out of a $20,000 investment from his dad.
And had a neighbor in the same line of work, who were apparently savy enough to fire him before he tanked the combined company on a useless rewrite. Also committed immigration fraud in the process. A much higher risk activity RN given the thirst for mass deportations.
> Gates made his from $5,000 from his dad.
And his mother's IBM connections, which were far more important than 50K.
Regardless, still cherry picking anecdotes when most folks have to live without such connections or family backups.
Musk arrived in the US with nothing but a suitcase and a few dollars. He stayed in a youth hostel for a while, and then took on minimum wage jobs. He had zero connections in the US.
5K != 50K
Also, Gates was very successful before MSDOS. IBM would have found him anyway.
You're right that connections matter. Smart people build connections. College is a classic way of doing that. People with similar interests tend to find each other.
What doesn't work is sitting in mom's basement playing video games and moaning about how unfair it all is.
Also: Kansas City Chiefs quarterback Patrick Mahomes is well on his way to being a billionaire, assuming he’s not already there. He has natural talent, to be sure, but so do successful startup founders or successful bankers or successful lawyers. He didn’t “earn it”?
The simple truth is that many people don't want to step into that kind of intensity and uncertainty, or lack the skills to succeed in a cutthroat industry.
The idea that founders are somehow "cheating" is hilarious to me. Anyone in the developed world can easily become a founder, why don't you try it?