Privilege and inequality in Silicon Valley

Why “few successful startup founders grew up desperately poor”

My co-founder David and I both grew up in poverty and can call ourselves “battle-tested” when it comes to both life and startups, so when the talk in the Valley turned to income inequality, our ears perked up. For a moment, our two worlds were colliding. Here’s a quote from Paul Graham that got our attention.

“Closely related to poverty is lack of social mobility. I’ve seen this myself: you don’t have to grow up rich or even upper middle class to get rich as a startup founder, but few successful founders grew up desperately poor.” (link)

Graham was right, and it’s a truth we’re intimately aware of as startup founders. Not only are the cards stacked against us to even have the opportunity to found a startup, but building and sustaining a company that is “designed to grow fast” is especially hard if you grew up desperately poor. David and I have been fighting this very idea since starting our company in 2010, and we’ve gotten pretty good at it. The main problem is what David and I call mindset inequality. To really understand it, I need to put you in my shoes. Let me take you on a personal journey.

How I got here

When I was 11, I moved to the United States with my dad. We were broke in Taiwan. I picked up the English language. My dad did not. He also didn’t work, so I started working when I was 14 by doing all kinds of odd jobs. On top of that, I did all the things immigrant kids are familiar with, like translating or simply handling all the business with landlords, bills, government services, insurance, etc. I was smart, but I wasn’t very good at school, and not knowing the language definitely didn’t help. My standardized test scores were bad enough that when I decided to take school more seriously in high school, my counselor actively discouraged me from taking even just one honors-level course. I had to bring my dad to the office the next day and told him to pretend to say some words in Mandarin while I just demanded that I get put in an honors-level English class.

I remember getting a B in that class, and that was enough to start taking some AP courses the next year. Unlike a lot of my peers at Stanford, high school was no joke for me. I was so underprepared and didn’t know how to learn that I basically committed to sleeping only three hours a night and re-read the same chapters in the textbook three times to force myself to memorize the material. I came to school every day with blood-shot eyes. One time I got a stress-induced bald spot that was pretty embarrassing, so I learned to develop a sense of humor.

I found out about the SATs in 10th grade. I took a mock test and scored around a 900 (out of 1600) and panicked. I took the money I made, and instead of helping to pay the bills, I paid for a few SAT classes at Elite Education Prep in my neighborhood. When it came time to renew, I told them I couldn’t pay anymore, but the amazing folks at Elite decided to just let me take classes for free and supplied me with all the study materials. I ultimately scored high enough that they put my picture up on the window to market to more students.

You can imagine how lucky I felt when I got into Stanford on basically a full ride (Go Card!). I spent my first year perpetually awe-struck. All these amazing individuals to talk to. All these great resources to access. Stanford successfully created this physical and financial bubble around me that, for the first time in my life, I didn’t have to think too much about money. That was extremely empowering. I felt like I was just like my peers and that I could do anything. I can’t emphasize this enough so I’m just going to say it again. During my first year at Stanford, I felt so empowered I believed I could do anything.

Of course, that was an illusion.

Reality quickly set in. I took an “elective” course about Contemporary African Politics my first quarter and I received a C+ despite grade inflation. I didn’t know how to talk in a small discussion-based class of 12 students. I was scared. I was quiet. I didn’t know how to read or skim the volume of reading we were given, so I was stupidly trying to read Week 1 materials word-for-word during Week 4. I didn’t know how to think critically about what I was reading. At one point, Professor Weinstein sat me down during office hours to ask me what was wrong and how he could help. I didn’t even know what to tell him. In the dorm, where I was constantly inspired by my peers, I noticed that everyone I talked to played an instrument, which made me feel out of place. Instead of moving on, I surveyed the rest of my dorm to see who else played an instrument only to learn that I was the odd one out. Just a poor kid out of place. Not good enough.

Sophomore year was when it all fell apart. Like many of my peers, I didn’t know what I wanted to do, so like them, I decided to do everything. I joined a bunch of clubs while the classes got harder. Soon enough I fell into a slump. When you’re in a slump, you start to look around and find even more ways to show yourself that you’re not good enough. I’d go to the same classes with friends and dormmates, but then I’d notice how fast they were learning the concepts while I was struggling. I asked one of them to tutor me, and even then I wasn’t keeping up. On top of that, the extracurricular commitments I picked up totally overwhelmed me, so I shirked many of my club duties. I also noticed that, in order to keep up socially, I had to spend money to participate in a lot of activities like going out to movies or dorm ski trips — and that was on top of having to buy my own books. I remember having to borrow a few hundred bucks from one of my best friends while I applied for another loan to cover the expenses. I remember running to the student loan office crying because I felt so bad. I told the loan officer I needed the money as soon as possible because I didn’t want the lack of money to ruin friendships the way it had ruined so many other things before. I spent the next 48 hours basically stressed as fuck until the loan money showed up in my account and I paid him back. He’s still one of my best friends to this day.

The money problem was hanging over me the entire time in school. I’d get calls from home about money, but there wasn’t much I could do other than picking up a side tutoring gig. I remember lashing out at my dad on the phone because I didn’t want to carry him around as baggage while I was trying to get through Stanford like a “normal” student. I didn’t want to have a lesser, second-rate experience. I so desperately wanted to maintain the illusion that I was on equal footing. I wanted to believe that there wasn’t anything holding me back from achieving and that I’d get through this.

I did.

I went on a trip led by Kimber Lockhart and Andi Kleissner to visit social enterprises in the Bay Area. I learned about entrepreneurship through companies like Kiva and World of Good. The two of them suggested that I join BASES, the Stanford student group for entrepreneurial minds. Then I fell in love. I attended Y Combinator’s Startup School the same year Jeff Bezos announced Amazon Web Services. I ended up finding my niche at Stanford as the co-president for both BASES and AKPsi, a coed pre-business fraternity. I worked as a young VC at Alsop Louie Partners, where Stewart Alsop gave me my first Apple product (his old Macbook), then I interned at Eventbrite, where Kevin Hartz saw something in me that I wasn’t even aware myself. I started working on side projects with a very impressive individual I met named David Tran. I became “that guy” on campus who was the most gung-ho about entrepreneurship. I learned how to execute, and then I learned how to lead. Our side project became a startup that got funded by Y Combinator. We raised money, built Crowdbooster to profitability, and now we’re building PRX, which is an even bigger idea to offer PR services on demand. It’s well on its way. We can talk about that in my next post.

Mindset inequality

With that story in mind, now let me explain mindset inequality and why “very few successful founders grew up desperately poor.”

I was lucky that I found something I loved in entrepreneurship, which helped me focus my energies away from academic classes. I was lucky I found out that I was good with people and loved organizing and leading teams to achieve great things. I was lucky there were no other traumatic events that knocked me further into the deep end. I could’ve easily given in to to the realities, dropped out, or just given up the illusion and adjusted my goals — except I chose to start a company. Starting a company for me was the ultimate declaration that I wanted to hold on to the illusion and continued to believe that I could do anything.

But because I fought hard to maintain this illusion for myself all through Stanford and while building the startup, I’m extremely aware of the disconnect. The world is clearly not a level playing field. Just with myself and my experience, I can see a lot of buggy code in my mind’s operating system that isn’t conducive to building a successful startup. Here are some of the issues with my default mindset that I’ve had to fix over time.

One example of a poor mindset is to minimize conflict because fucking up is costly and opportunities are hard to come by, so it’s been a challenge putting my ideas out there and defending them. I often hear about people having intelligent conversations at home with their parents. I never ate at the dinner table because we didn’t have one in the one-bedroom apartment that I shared with my dad. You can imagine how this translates to pitching your startup. The idea of putting my grand idea out there and vigorously defending it to investors trying to tear it apart was new and counterintuitive.

Related to that, a poor founder tends to be less confident. My mom, who didn’t go to college, used to say this to me, and it bothered me a lot. She’d say, “We’re not meant to be successful, so what you’ve achieved is good enough!” Compare that level of confidence to a kid with successful parents who’d say something along the lines of “If you can believe it, you can achieve it!” Now imagine walking into a VC office having to compete with that kid. He’s so convinced that he’s going to change the world, and that’s going to show in his pitch. You can’t just muster up that confidence on the spot.

Then there’s knowing how to manage resources. Being poor makes you suck at using money as a resource. My time was always cheaper growing up, so I’d rather spend time than spend money. I had to fix this when we raised our first seed round, but it took quite some time. A simple decision to hire, for example, took a very long time to the point that it cost us growth. Then there are also human resources, networks of people who can help you. Again, growing up poor meant that there weren’t successful aunts and uncles who could show me the ways of the world or even give me a little nudge in the right direction. I’ve had to learn to work the room, to talk to and talk like a successful person, and to know how to ask for help.

I’ve also noticed the huge difference having some built-in resources can make. I don’t have “friends and family” money to get going. In fact, I’m sending money to my dad every month from the measly income I take out from my startup. Knowing that you have “friends and family” money to get going or even some family money to help you when you fail makes it that much easier to be more risk-seeking and build the appetite for hyper-growth startups. Most of the time, potential founders who share my background tend to work at lucrative jobs in finance or tech until they can take care of everyone in their families before they even dream about taking more risks — if they ever get there.

Finally, there’s the constant guilt. If you have a Stanford degree and share my background, you’re likely the only one they can count on at home. You most likely would have the opportunity to work at safer and more lucrative careers that would be of more immediate help to your family. It’s very irresponsible to pursue the startup path, and even if you do succeed in upgrading your mind software to get rid of all the bugs I mentioned above, you start to sound and act differently from the people you grew up with. You might even get accused of losing your identity. This is why successful rappers are told they’re turning their backs on their communities all the time.

All of this contributes to the mindset inequality that founders like David and me have to overcome. We think this is the reason why poor founders tend not to be successful. Fortunately for us, we consider this the biggest chip on our shoulders. Known bug in our mind software. We’ve overcome so many of these issues, and we’ll keep chipping away at it until we win. But for others, I think it’s important to note this: Tangible inequalities — that which can be seen and measured, like money or access — get the majority of the attention, and deservedly so. But inequalities that live in your mind can keep the deck stacked against you long after you’ve made it out of the one-room apartment you shared with your dad. This is insidious, difficult-to-discuss, and takes a long essay to explain.

David and I are living proof that if we can upgrade and improve the way we think, and overcome our mindset inequality, then maybe we can help others do the same. For me, that starts with sharing my story so far. Stay tuned.

Thanks to David Tran, Yin Yin Wu and Gaby Gulo for reading drafts of this.