It's incredible to me that graduating college students, many presumably with student debt and little savings, can even consider taking the financial risk of starting a company (e.g. forgoing a salary).
> It's incredible to me that graduating college students, many presumably with student debt and little savings, can even consider taking the financial risk of starting a company (e.g. forgoing a salary).
When I visited the Stanford campus recently, it seemed like many students had the opposite of debt: massive savings indicated by personal electric scooters, Mercedes/Tesla/BMW/Audi in the student parking lots, combined with several FANG internships, it's fairly common for a CS undergrad to have $100K+ in savings when they graduate.
Whether it's family money or not, debt doesn't seem to be the big of a problem for these top students.
Tuition is free at Stanford if your parents make less than $125K. Everything is free if they make less than $65K. 78% of Stanford students graduate debt-free.
It's really important to understand that the elite non-profit private education system functions differently from mainstream higher ed. Elite private schools are already socialist: they jack up sticker prices for high-income parents and solicit their wealthy alumni for donations so that lower-income students who get in can go free. If you get in, you will probably graduate in fairly decent financial shape, particularly considering that many local companies give good internships to Stanford students.
The folks you hear about with six-figure student debt figures are typically products of mid-tier private colleges. These organizations don't have the endowment or wealthy tuition-payers to be able to subsidize lower-income students the way elite institutions can, and so they just put everybody in debt. Then their graduates get out into the working world and are indistinguishable from any other mid-tier private college graduate, and so they get indistinguishable (i.e. low) wages.
The ones you are talking about are those who earned need based financial aid for scholastic achievements. If that’s what you mean by “elite” I guess you’re right in the sense that it’s difficult to manage and they’ve done so, but that’s a strange way to describe hard working students.
> it's fairly common for a CS undergrad to have $100K+ in savings when they graduate.
I had 1 FANG internship, 1 near-FANG internship that paid the same, and 2 not-near FANG internships.
I didn't end up close to that, at all. Pretax for FANG internships is like ~$25k each on the upper end. Even if you do 4 of them you're still under $100k considering tax.
Now if you go to Waterloo and do 6 FANG internships, then maybe but only if you save everything.
I didn't pay for undergrad but I came out with a pretty mediocre positive net worth, unfortunately :/
For someone who's already saddled with $100K in debt, a little extra risk of deferred or lower-than-market compensation is not necessarily a big deal. And if they get into YC, their after that is much lower than with an average startup. On the other hand, what's a better time to start a company than when you have few material obligations and existing long-term investments?
>It's incredible to me that graduating college students, many presumably with student debt and little savings, can even consider taking the financial risk of starting a company (e.g. forgoing a salary).
Someone correct me if I'm wrong, but I would wager that most people interested in this would have strong support structures of family & friends who can bankroll them while the company gets on their feet. I was in this position when I graduated, and so were most of the people I've met throughout my tech career. I still chose to go for a salary, as did most of my friends & peers.
Yeah on second thought I guess I shouldn't really be so surprised here. Anyone who can take this route is in a highly privileged situation and presumably has a strong financial safety net via their parents.
But I think it's incorrect to say "most people interested in this..." when it's really "most people who can do this..." Few children of even middle income parents could do this.
Seems like a highly nihilistic view of the world. Not everyone can afford the risk of trying to make it as an entrepreneur in the present moment, but to say that means they aren't or shouldn't be interested in it is a bit depressing, no?
It is...to not be interested in something because, whether real or imagined, you don't think that thing is "possible" to achieve is a very nihilistic perspective on the world. You are saying you have no interest in something because you feel hopeless to even believe it is possible.
YC funds the company with $150K. You're expected to pay yourself out of that. If you're in Mountain View or Sunnyvale (next to the YC offices), minimum wage is $15/hour = $30K/year. If you really scrimp that's enough for ~2 years, though I think most YC companies are expected to raise more at Demo Days.
It's not a lot of money, but it's more than many grad students make.
Also, most of the colleges that YC presumably recruits out of (Stanford etc.) are free to people whose parents make < $100K/year. You typically don't hold a lot of debt coming out of these elite institutions - either your education is fully paid for by grants, or you come from a social class where your parents will have had assets to pay in full.
There is, but the financial aid formulas are sliding scales, not sharp cut-offs. They just like to publicize the zero-tuition cutoff because it makes for a good press-release.
The formulas (and sticker price, and median income) were pretty different when I went to college, but I had about 2/3 of my tuition paid for by grants when I went to Amherst, almost 2 decades ago. My parents were an elementary-school teacher and a househusband, so we were far from rolling in it. It was expensive, but ultimately affordable. If you're in the situation where it'll cost $100K in loans to go to college, you should shop around, and potentially also try to negotiate them down. Amherst gave me roughly double the financial aid that Middlebury did (ultimately a large factor in deciding where to matriculate), and then tacked on an extra couple grand when I said I was deciding between them and Williams.
The young successful types are like 99% of the time backed by their parents who lay down a fat spread. I get annoyed when people neglect this important attribute. It has a huge bearing on your mental comfort level re risk and failure. If my parents will bail me out, I definitely will fear crashing and burning less.
This is an underappreciated observation for new college students.
For talented graduates in computer science, electing to start a technology company is an extraordinarily dangerous financial decision. In many ways it's transferring technology risk from larger companies to graduates at their expense.
Graduates from top CS institutions command salaries and liquid stock in the $200K-$500K range within their first decade in the workforce, which is a guaranteed payout of $2M-$4M, compounding as their careers advance.
Starting a technology company necessarily involves lower salaries, but also substantial compensation in your own company's equity, which is inherently illiquid compared to larger companies. The vast majority of startups end up going to zero, even those started by top graduates, and you never make back that missing $1M-$2M in your career.
If you’re a top CS employee I think if your startup fails you can just go back to being a SWE at FAANG, possibly with a promotion or two, or switch to product work. Yes you miss some money, but you’re also taking a risk for a lot more... for me, losing a few hundred thousand (pretax...) is worth taking a chance at a business
I’m not so sure. At least, running a does-nothing start-up is not likely to be seen as work experience in terms of applying to standard CS jobs. It may even be seen as a liability (e.g. “they clearly want to be the CEO / develop a product, how sure are we they will be invested in production quality software / craftsmanship / answering PagerDuty on the weekend?”).
I also see a lot of resumes of people just out of college who were rapidly catapulted into some incubator / start-up camp etc.
They often have had endless bullet points about “running a business” for ~2 years basically just burning someone else’s money.
Do they know the first thing about working 40-50 hours per week grinding through Jira tickets and code review? I don’t believe it.
A completely pure new grad who never tried to run a start-up on zero life experience is frankly a lot more likely to put energy and enthusiasm into the basic, unsexy realities of working a real job.
This makes sense to me. I was envisioning more a scenario where you spend some time in the big corporate world before going to a startup, and bringing best practices with you. But I suppose in the context of the thread that’s not exactly relevant.
I think if they were managing other engineers for an extended period and solving difficult technical problems as well, you could make an argument for hiring up to a team lead / senior engineer. Perhaps manager, if they have more extensive experience. Of course at most FAANGy places you will need at least 4-6yoe to be hired into these levels too.
I think the people sending you those resumes probably don’t understand that they should tailor their resumes for the type of job they’re applying for. And yes, if the startup was truly “does-nothing” that’s absolutely a red mark regarding how valuable their experience was. But it could be somewhat valuable for product work, at least at the entry level
It's about risk management. When you're young, there's really not much down-side in starting a company, and the up-side is extremely high. Also, even if the startup is a total failure, the experience combined with the people you've met totally compensate for the few years.
Its more incredible to me that YC would be so interested in the business prospects of new graduates that they would process-ize a system to invest in them. That's not to say that new graduates can't create successful businesses, but they're certainly more rare than experienced founders given the strongest signal for the success of a very young business is the past success of the founders.
But, also, maybe YC just knows that 95% of these investments won't yield huge returns, $150k is pennies, they like the PR, and maybe 1 or 2 of them will actually go big and make it worth it.
It’s also an investment. Perhaps recent grads who sail the first time will do YC again with their next company. If the company is successful, the $300k total invested will be more than worth it
Specifically the ones that are 'fully managed' by talent managers or record producers.
To me it has economic benefits/risks similar to building tech companies with graduates.
There is a lot stamina, creativity and willingness to experiment, that are not present in older/more experienced talent pool... And all, relatively on the cheap.
There are many negatives (copy cats, lack of long term, yet practical vision, lack of experience in dealing with specific business subdomains, relations stability and so on).
However, to me this is a valid business model, for certain market segments, and I fully expect it will spread even more to include participants from well outside Western culture. (and, perhaps, more healthy competition to the few VCs that practice this now).
interesting bits to me, is how culture/brand exports are incorporated into a larger story (where it is not just an individual band, but they are part of larger 'brand')
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[ 3.0 ms ] story [ 90.3 ms ] threadSo here you go everyone, clean version of the article with no ads and no paywall: https://outline.com/znXUsU
When I visited the Stanford campus recently, it seemed like many students had the opposite of debt: massive savings indicated by personal electric scooters, Mercedes/Tesla/BMW/Audi in the student parking lots, combined with several FANG internships, it's fairly common for a CS undergrad to have $100K+ in savings when they graduate.
Whether it's family money or not, debt doesn't seem to be the big of a problem for these top students.
https://news.stanford.edu/2016/02/25/tuition-financial-aid-0...
It's really important to understand that the elite non-profit private education system functions differently from mainstream higher ed. Elite private schools are already socialist: they jack up sticker prices for high-income parents and solicit their wealthy alumni for donations so that lower-income students who get in can go free. If you get in, you will probably graduate in fairly decent financial shape, particularly considering that many local companies give good internships to Stanford students.
The folks you hear about with six-figure student debt figures are typically products of mid-tier private colleges. These organizations don't have the endowment or wealthy tuition-payers to be able to subsidize lower-income students the way elite institutions can, and so they just put everybody in debt. Then their graduates get out into the working world and are indistinguishable from any other mid-tier private college graduate, and so they get indistinguishable (i.e. low) wages.
It really pays to be elite in America.
Also lots of Stanford students have parents who are just rich af, those are probably most of the ones with really nice cars
I had 1 FANG internship, 1 near-FANG internship that paid the same, and 2 not-near FANG internships.
I didn't end up close to that, at all. Pretax for FANG internships is like ~$25k each on the upper end. Even if you do 4 of them you're still under $100k considering tax.
Now if you go to Waterloo and do 6 FANG internships, then maybe but only if you save everything.
I didn't pay for undergrad but I came out with a pretty mediocre positive net worth, unfortunately :/
Someone correct me if I'm wrong, but I would wager that most people interested in this would have strong support structures of family & friends who can bankroll them while the company gets on their feet. I was in this position when I graduated, and so were most of the people I've met throughout my tech career. I still chose to go for a salary, as did most of my friends & peers.
But I think it's incorrect to say "most people interested in this..." when it's really "most people who can do this..." Few children of even middle income parents could do this.
It's not a lot of money, but it's more than many grad students make.
Also, most of the colleges that YC presumably recruits out of (Stanford etc.) are free to people whose parents make < $100K/year. You typically don't hold a lot of debt coming out of these elite institutions - either your education is fully paid for by grants, or you come from a social class where your parents will have had assets to pay in full.
The formulas (and sticker price, and median income) were pretty different when I went to college, but I had about 2/3 of my tuition paid for by grants when I went to Amherst, almost 2 decades ago. My parents were an elementary-school teacher and a househusband, so we were far from rolling in it. It was expensive, but ultimately affordable. If you're in the situation where it'll cost $100K in loans to go to college, you should shop around, and potentially also try to negotiate them down. Amherst gave me roughly double the financial aid that Middlebury did (ultimately a large factor in deciding where to matriculate), and then tacked on an extra couple grand when I said I was deciding between them and Williams.
Maybe that's a bad thing?
For talented graduates in computer science, electing to start a technology company is an extraordinarily dangerous financial decision. In many ways it's transferring technology risk from larger companies to graduates at their expense.
Graduates from top CS institutions command salaries and liquid stock in the $200K-$500K range within their first decade in the workforce, which is a guaranteed payout of $2M-$4M, compounding as their careers advance.
Starting a technology company necessarily involves lower salaries, but also substantial compensation in your own company's equity, which is inherently illiquid compared to larger companies. The vast majority of startups end up going to zero, even those started by top graduates, and you never make back that missing $1M-$2M in your career.
I also see a lot of resumes of people just out of college who were rapidly catapulted into some incubator / start-up camp etc.
They often have had endless bullet points about “running a business” for ~2 years basically just burning someone else’s money.
Do they know the first thing about working 40-50 hours per week grinding through Jira tickets and code review? I don’t believe it.
A completely pure new grad who never tried to run a start-up on zero life experience is frankly a lot more likely to put energy and enthusiasm into the basic, unsexy realities of working a real job.
I think if they were managing other engineers for an extended period and solving difficult technical problems as well, you could make an argument for hiring up to a team lead / senior engineer. Perhaps manager, if they have more extensive experience. Of course at most FAANGy places you will need at least 4-6yoe to be hired into these levels too.
I think the people sending you those resumes probably don’t understand that they should tailor their resumes for the type of job they’re applying for. And yes, if the startup was truly “does-nothing” that’s absolutely a red mark regarding how valuable their experience was. But it could be somewhat valuable for product work, at least at the entry level
But, also, maybe YC just knows that 95% of these investments won't yield huge returns, $150k is pennies, they like the PR, and maybe 1 or 2 of them will actually go big and make it worth it.
Boy Bands (and girl groups). https://en.wikipedia.org/wiki/Boy_band
Specifically the ones that are 'fully managed' by talent managers or record producers.
To me it has economic benefits/risks similar to building tech companies with graduates.
There is a lot stamina, creativity and willingness to experiment, that are not present in older/more experienced talent pool... And all, relatively on the cheap.
There are many negatives (copy cats, lack of long term, yet practical vision, lack of experience in dealing with specific business subdomains, relations stability and so on).
However, to me this is a valid business model, for certain market segments, and I fully expect it will spread even more to include participants from well outside Western culture. (and, perhaps, more healthy competition to the few VCs that practice this now).
There is a podcast [1] on boy band economics, mostly covering Korean K-Pop. https://player.fm/series/series-1504378/what-boy-band-sensat...
interesting bits to me, is how culture/brand exports are incorporated into a larger story (where it is not just an individual band, but they are part of larger 'brand')