Finding The Right Motivation
We just rented an office for $400 or $500 a month — some really tiny little office in Palo Alto. [It] was cheaper than an apartment. And then [we] bought futons that converted into a couch, which was sort of like a meeting area during the day. We would sleep there at night and shower at the YMCA, which was just a few blocks away. That was [an] extremely low burn rate. [It was] way cheaper than a garage. Garages are … expensive. So we were able to … putter along for several months until we got venture funding. – Elon Musk
Ever since reading the Knowledge at Wharton article , (which was actually covered by a previous College Mogul post on burn rates,) I’ve spent quite some time analyzing the correlation between affluent student entrepreneurs and their rates of success. Specifically in comparison with student entrepreneurs from more economically unstable backgrounds and their track record. It is of particular interest because what you can extract from the results is the effecitvenss of a just economic distributive system. That is to say, if the students of inherited wealth are using their financial opportunity to increase their chances of entrepreneurial success. A case can be made for a strong capitalist economic system since their success will lead to greater, broader social progress, somewhat borrowing Adam Smith’s ‘invisible hand’. However if the results instead suggested the wealthier student entrepreneurs were either too entitled or found their motivation too abstract given for the most part they had all the material goods they needed or wanted, then there could be a stronger argument for social redistribution, especially welfare and education funding.
Without examining a overly extensive sample size of data, I went through my rolodex of student entrepreneurs from the Kairos Society, being a student entrepreneur at Babson, neighboring Olin, and just from doing the Boston entrepreneurship events circuit. Some rough statistical analysis later with a fair amount of imperfect information, my results told me there was a strong correlation with ‘poorer’ student entrepreneurs, or ones who had experienced financial hardship previously in their lives, and serious progress in their start-ups. What was even more impressive was the incredibly high correlation between wealthier student entrepreneurs and their stagnation or starting and stopping and restarting without any traction. There are obviously enough studies out there that cite the success of first-generation immigrants, the ability of second-generation to leverage the opportunities provided to them, but the third-and fourth-generation starting to show negative signs of entitlement. It was just to interesting to cite a student entrepreneurship equivalent.
But it makes so much obvious sense. When Elon Musk was working on Zip2 back in the day, his level of determination would have largely come from the hardship of his surroundings. Friends and fellow Babson entrepreneurs, Raul Pellerano and Mikaela Gillette, of BongoBing.com, are working hundred hour weeks because they have no planned accommodation, nor money for it, after the summer so generating revenue or getting funding is pretty vital for their personal sustenance. Motivtion to work hard is so essential to entrepreneurial success, I think even Tim Ferriss would be hard pressed with such as basic statement. The problem with it is it is essentially fairly abstract. However, if your motivation comes from very real pains, that motivation will be far more consistent, much stronger and tapping you on your shoulder everyday reminding you you’re hungry. This is very much a part of Paul Graham’s culture at Y Combinator (here’s a list of other start-up incubators). In this month’s Inc article, he gives insight to the “goop on rice” diet he provides to his entrepreneurs and stresses it’s “the same every week”. And they agree it helps. “That culture of frugality and discipline is really important for the Y Combinator mindset,” says founder of Loopt, Sam Altman. “The start-ups that do well are the ones that are working all the time.”
Fan Bi is a guest blogger and Babson ‘09 Alum who started Blank Label, an e-commerce site for custom dress shirts, with an application to design your own custom dress shirts online.