The Startup Dream Is A Lie
Millenials are screwed. Most Americans born after 1982 will live worse than their parents, see less growth in their lifetimes, be generally poorer, and be one bad break away from disaster.
For every young person in America, the chance of living better than your parents is less and less. According to an amazing HuffPost story, 1 in 5 millenials lives in poverty, they carry 300% more student debt than their parents, are half as likely to own a home, and many won’t be able to retire until they’re 75.
This is not because wealth and GDP haven’t risen in the past 35 years. They’ve just been rising in the wrong places.
Let’s say you’re a poor person, in the 10th percentile. For 1980, plot yourself on the grey line. Your income was growing the most (3.2%) so you could look forward to being less poor in the future. For 2014, plot yourself on the red line. For millenial workers, income is actually going down. You can look downward as to the trajectory of your life.
The opposite is true for the very very rich, the 0.0001%. Their huge piles of money weren’t growing much much 34 years ago. Now they’re Scrooge McDucking. They’re swimming in it.
For the bottom 80% of Americans, real incomes are basically flat. Meanwhile things like college education and houses cost astronomically more. The median (inflation adjusted) home value in 1960 was $59,000. In 2000 it was $120,000. Incomes haven’t doubled in that time, but expenses have.
What Does This Have To Do With Startups?
Startups didn’t start the fire, but they’re not fighting it either.
You’re Not Going To Be A Founder
Founding a startup is becoming to college educated millenials what selling crack rock or having a wicked jump shot was to Notorious B.I.G. It’s a pipe dream. It’s a lie. If the economy is bad, there’s no way out of the hood, there’s only a lottery.
Just look at the numbers, [David Friedberg, Climate Corporation] says: “There’s a 0.00006% chance of building a company that will grow to be worth more than a billion dollars. (FirstRound.com)
This is not to say that people can’t create stable small or medium businesses, but the hype that startups provide access to real income growth brackets is a lie. Yes, you hear about startups in the media and there’s tons of advice on Medium, but in reality it’s going to work out for about as many people as gold prospecting. Not many.
But oh yeah, the hype goes on, long after the American Dream of social mobility has gone. The startup dream is this idea that you can — if do these 4 things founders do — somehow move into the top 1%, or even 5%, or simply into a studio apartment in San Francisco. And you can’t. The startup dream is a lie.
You’re Not Going To Get A Job At Facebook
Let’s say you just want to break into the top 25%, have decent healthcare and a home. Don’t startups create decent jobs that didn’t exist before? Yes. Just not many of them.
Relative to major corporations of the early computer revolution, the companies leading the digital revolution have created few employment opportunities: while IBM and Dell still employed 431,212 and 108,800 workers respectively, Facebook’s headcount reached only 7,185 in 2013 [17,000 in 2016]. (Recode)
Technology startups by definition do not create many jobs. They use technology to increase productivity (and revenue) per employee. They further keep costs down by either outsourcing work (like Apple to China) or hiring part-times as a variable cost (like Uber) or getting people to contribute value for free (like Facebook).
It is not that these startups don’t contribute to the economy in many ways, they just don’t create many jobs.
The Economy Is Real. Startups Are Outliers
The average person is borne aloft or under by the greater economy, and right now millenials are going under. Startups are not going to save you. They may make your life as a consumer more awesome, but they are unlikely to lift you into prosperity the way manufacturing or services did for your parents.
Startups are effectively the Hunger Games of the modern economy. A few college dropouts get billion dollar payouts and become legends. Meanwhile their investors — who were in the top 1% anyways — get richer and richer, and people are sedated by the dream. I have ideas. It could be me.
But it won’t be you.
Statistically and realistically, the startup dream is a lie.