I would love to know a bit more about mechanism. Is it through family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors and lawyers.
Florence is especially interesting. 15th century Italy had a relatively modern (similar/ancestral to our own) economic-political system. Wealth wasn't all about land-and-title aristocracy. "Merchant" families were the rich powerful instead.
Generally speaking, I'm curious about how all thia works on the individual level. Thomas Picketty's ideas about how wealth dynamics work in the long term are convincing, but, on simple interpretation, it isn't obvious how Bill Gates fits into the picture (other than as an outlier).
> it isn't obvious how Bill Gates fits into the picture (other than as an outlier).
Gates came from a wealthy family, which put him in a much better position to do high-risk, high-reward things (e.g. he could drop out of Harvard to work on his business, knowing that if the company failed his family could afford to send him through again).
I think this is vastly underappreciated. Even myself as a mere middle class kid never worried about what’s if this company goes under or I lose that job. Especially when starting to freelance this insured me from payment delays or going in over my head and needing more time get something finished.
I had the confidence to believe in myself for the long run but also always knew mum and dad would have my back in the short run should anything go awry.
Quite the opposite in my reading: Kildall's place in the history of computing is being the guy who did not become "Bill Gates" despite having all the right skills and being at the right place at the right time. One difference between Gates and Kildall at the time was pedigree, and look how it turned out.
What about Ray Dalio? He dominated his industry almost as successfully as Gates and is about the same age. There is no pedigree benefit there. His dad was a jazz musician.
Drawing a blanket conclusion from a single comparison of only two samples is a hasty generalization. Downvoting somebody out of comfort for your fallacy is kind of assholish.
The existence of rags-to-riches stories elsewhere does not make Bill Gates an example of one. And that's what this whole sub-thread is about: is the riches to even bigger riches story of Bill Gates an example of rags to riches, just transposed upwards, or is it an example of dynastic headstart?
When you look at that pivotal moment when MS and DR were sent off on completely different trajectories by the 800 pound gorilla that IBM was at the time, it's unquestionably the headstart one. While Kildall was just trying to get a good price for their product/expertise (solid middle-class thinking at its best, nothing wrong with that), Gates was already playing the high-level game, brokering between IBM and SCP by merit of a foot in the door via family ties.
I didn’t downvote you, but to honestly answer your edit: you’re not being downvoted because you’re asking for evidence. You’re being downvoted because it seems unlikely your question is being asked in good faith. Do you actually believe there is an empirical basis for the person’s opinion that pedigree played a part, or are you just challenging it becuase you know there is no such empirical evidence for those two specific cases?
Moreover it’s kind of missing the forest for the trees...yes, pedigree might not have literally been the differentiator between these two specific entrepreneurs. But do you have any meaningful critique to the basic idea that people with better than average starts in life have better than average outcomes? That is what is primarily under discussion here, not Bill Gates in particular.
usrusr said "in my reading" and that pedigree was the factor that made the difference. It is therefore fair to ask for a reference.
IBM knew about Gates, and went to Kildall first (in fact, Gates suggested Kildall to them). Why would they have gone if "pedigree" was what they cared about? Kildall had what they wanted, Gates did not. It dropped in Kildall's lap, and he botched it. IBM went back to Gates, and Gates didn't need to be asked twice.
Apparently you have read all the same references as I: without his maternal network, it is quite unlikely that Gates would have ever been in the position to suggest Kildall. Or to later not suggest Paterson as replacement, but instead resell him/his work for the markup that made Microsoft.
Even if that network wasn't actively involved at all (e.g. by notifying Bill of the opportunity to supply BASIC, I think it is highly unlikely that it want involved at least that amount), the buyers at IBM would definitely have been aware of his family ties and unconsciously or not have awarded more default trust than to a random stranger. It is also not unlikely that Microsoft was given a chance in hope of currying favors with a certain person high in their own org chart or in fear of negative repercussions. Both the hoping/fearing and the favors/repercussions don't even have to happen voluntarily or consciously, it's hard enough to suppress those effects when you become aware of them and don't want to be that kind of person.
Even then: the Kildall negotiations evaporated because of superficial formalities (fear of signing an NDA, according to wiki), almost like a language barrier between corporate and upstart. Gates would have either not been given the same lawyer treatment or not have been intimidated by it since that culture was not foreign to him.
NDAs are normal, I sign them all the time, and I have no "pedigree" and never went to Hahvahd and my parents were lower middle class.
The fact is IBM passed over pedigree Gates and went to Kildall FIRST and Kildall was offered the deal FIRST. All Kildall had to do was say "yes". The notion that one had to be born wealthy to get that deal is simply false.
Sure, but why was the NDA not signed? Fear that the big guy would screw over the little guy, inability to tell normal behavior from exploitative. The Kildalls were entering a foreign culture (not by nationality, but by corporateness/class) and blundered. The person who was more at home with the culture then got the deal, despite not even having a product. That's exactly how the family advantage works, not some comically evil "sorry you are not from a sufficiently important family, no contract for you".
You're delving into sheer speculation. Exactly what went wrong at their meeting is not known, many stories about it have circulated, the NDA thing is just one of them.
Kildall was not some ignorant yokel from the backwoods. Besides, titans of the computer industry do deals with yokels all the time.
In fact, Kildall did later make a deal with IBM to sell an IBM branded CPM/86 for the PC. Consumers had a choice between IBM PC-DOS, and IBM CPM/86. The former was $40, the latter $240. People (like me) chose the cheaper one, because nobody could explain what was better about CPM/86. And the rest is history.
You are absolutely right about speculation. But so is the assumption that it all did not matter at all and the WIndows dominance would have happened in just the same way had Gates been a farmboy (I'm exaggerating a bit, you never claimed that). But in dubio pro reo is not applicable, since nobody is accused: it's not a crime to get along better with some group than someone else.
Maybe that is the misunderstanding that kept this discussion alive for so long: I'm not trying to privilege-shame anyone, just questioning the claim that it did not make a difference at all. (Actually I think that privilege-shaming is a really stupid concept, it won't ever achieve more than make its targets bitter or cynical, if it has an effect at all. It's not wrong to take an opportunity, just don't force it through improper means)
I remember reading somewhere that when IBM was looking for an OS and was starting to talk to Bill Gates, John Akers (IBM senior exec, maybe CEO then?) was briefed on it and said, "Isn't that Mary Gates's boy?" Akers and Mary Gates were both on the national board of directors for United Way — and reportedly Mary Gates had talked to Akers about the importance of the newer, smaller companies in the burgeoning computer industry. [0]
Obviously IBM was looking at Gates before noticing he was Mary's son. Don't forget that Gates was already a major player in the microcomputer software business, he didn't need any more "connection" than that. Of course IBM would go knocking on his door.
The point is that Gates' background was hardly a precondition for his success.
Edit: Gary Kildall could have done everything Gates did, and Tim Patterson wrote DOS, not Gates.
Tons of people knew how to program and had access to computers. Computers were not invented in 1975. The lower middle class neighborhood public high school in my neighborhood in 1975 had a computer and offered programming classes.
There's a reason Allen raced to show Gates the Popular Electronics issue - he knew there'd be others doing the same thing right away.
Gates and Allen background was having written a BASIC for the Altair . Allen had also previous experience in programming. Not many (and much less younger) people had this background.
Specifically Gates and Allen were given timesharing access to a DEC-10 at school - which was an incredibly rare privilege in the early 1970s.
Allen had already written an 8008 emulator on the same model of mainframe as the one at Harvard. And that made it possible to update the emulator while at Harvard and then use it as the basis of their version of BASIC.
Any programmer at the time could have written in 8080 emulator. They didn't have to be a kid in school. The DEC-10 was a popular computer. MIT had computers available to students, too. Gates didn't invent BASIC - it was developed by others for use by students.
Edit: There were many thousands of computers at the time, and programmers to run them. The 8080 instruction set is trivial:
and any semi-competent programmer can write an emulator for it in a few hours. The magic ingredient Gates and Allen had was Recognizing The Opportunity, and then Acting On It. There was no technical wizardry involved, and no resources that were not also available to thousands, and soon tens of thousands, of others.
The Jobs and Wozniak story makes this even clearer. Wozniak showed his designs to HP and offered it to them. HP's engineers were utterly uninterested in it. (And remember that the Apple 1 was built with off-the-shelf parts anyone could buy.)
There were few programmers at that time, so few programmers could have potentially reach the market. Compare it with now when you just need to download an open source programming language and compile it on many platforms.
Zhou Qunfei, the founder of Lens Technology, came from a very poor background and dropped out of high school at 16 to work at a factory. She eventually started her own company when the factory closed.
Counterexamples matter a great deal when someone claims that something is a rule without exceptions. They're very nearly pointless when someone states something that has many obvious exceptions but still means something, "men are taller than women", "rich people can take risks that poor people cannot" etc.
Also, it's not just that rich people can takes risks that poor people cannot. It's that they never risk a minimum standard of living. Poor people making decisions like that do.
According to the original argument, that directly contradicts the assertion that only highly priviledged people linked to the elite are able to succeed.
Unless the goalpost is moved further away to the point that middle class is now part of the elite, it's quite clear the original argument doesn't hold water.
Exactly. There is a jealous undercurrent on HN about success. Usually it is around so and so started rich and/or was just lucky.
Is some luck involved? Sure. It also helps greatly to not have to worry where their next meal is coming from, but that is very different than having to start in the elite.
There is a severe discount of what can be best coined “courage” by Aristotle, the balance between brashness and fear, when it comes to startups from people who don’t exercise it. Everything looks so predictable in hindsight that the virtuous quality of taking a chance is voided because someone started life eating better baby food. It’s plain ignorant.
Jobs had no money, no connections, no "pedigree", and was a college dropout. Jobs' parents were blue collar, his dad was a repo man, and their background was poor.
Jobs grew up in San Francisco. His father supported an interest in electronics, and he got an in at HP by being mentored by a neighbour who worked there.
He joined the HP Explorer's Club and got to see world-leading new products ahead of release at a time when HP were creating incredibly impressive calculators and personal computers.
He also attended lectures on the HP campus - which wasn't just educational, but also contributed to his relatively fearless approach to networking.
The family may not have been rich, but it's just plain wrong to say he had no connections and no advantages.
Anybody in that area at the time could have done it. And SV was hardly the only place where adults worked on electronics. HP wasn't the only computer company. DEC was in Massachusetts, for example. Texas Instruments was in, well, Texas. Tektronix was in Oregon. Universities all had electronics schools. Radio Shack and HeathKit made electronics learning kits for kids. Los Angeles had a thriving microcomputer industry at the time.
The notion that Jobs was in some unique position is not correct.
Land in the U.S. isn't available, however, to just "migrate on foot" with your family a few miles into the better school district. We have laws and property has to be bought. As a child who grew up in one of the not-good areas, I can tell you it's a lot harder than you think. :)
I have access to a readily available safety net through marriage (essentially, my in-laws aren't going to let their grandchildren starve). I've made some high-risk, high-reward job changes that have mostly panned out quite well. At one of the low-points of my career (job ending, unable to find a new one in time), the "lowest" I stooped was to reach out to a recruiter. If I didn't know that my family had a safety net available, I would have done more desperate acts—such as widening my search to unskilled jobs and other positions outside of my field; that might have staved off immediate suffering, at the cost of potentially severely stunting my career.
Not just wealthy, but extremely well connected through his mother, who sat on several University of Washington, corporate and charity boards, including the United Way boards through which she knew John Opel (CEO and Chairman of IBM… right around the IBM PC's development).
Let's give some credit to Bill, ok? How many Vanderbilts, Rockefellers, Astors, Rothchilds, Waltons etc etc did what Bill Gates did? Combined, they have thousands of offsprings and had way more money that Gates' father had.
So yeah, Bill cam from a well to-do family but he also was extremely {insert here}...
The group that spawned Bill Gates was smaller than the entire human population; it means he was one in maybe a thousand as opposed to one in seven billion. If anything that should be encouraging to the average person in society because it indicates that there isn't an uncrossable intelligence or otherwise biological gulch between the average person and success (which would be even harder to change than a social one).
If Bill Gates weren’t from such a wealthy family it is likely he wouldn’t have ever attended Harvard. Grooming for Harvard and the ilk start up from an early age. It is also likely no one would know who he is today as well. He might had been that genius principle engineer that would have went on to do absolutely amazing work, but not one to start or lead a company.
Imagine how many potential Bill Gates are majoring in CS from average to good state universities that have the potential to do so much more in academia and industry, but come from poor families/no one to help them. You’ll probably never hear of them/know they exist.
I think that's questionable and downplays his abilities. He won National Merit Scholarship. He scored 1590 out of 1600 in SAT. He had a profitable business running when he was still in school automating some traffic calculations, and he was actually hiring his classmates. You don't see that often. And I think one more important thing happened - he met very bright Paul Allen and together they were very powerful duo. Of course having wealthy family helped not to care about some stuff, but it wasn't just luck.
>I think that's questionable and downplays his abilities. He won National Merit Scholarship. He scored 1590 out of 1600 in SAT.
I think you underestimate how much a proper background can help you in terms of admissions to elite schools. I know someone that scored a 1600 out of a 1600 on their SAT, but came from more of a modest background than Bill. They were denied from Harvard. Harvard receives plently of high SAT scoring, high achieving applicants. Smart people from poor backgrounds have a lot more to overcome in life to get to the same point as others with more resources. A head start with a secure background can make a large difference later in life. I'm sure if my friend didn't go to one of the worst high schools in the state, and went to a better STEM school, they could have been admitted to Harvard. Who knows how that would have changed their life for the better. Now we will never know.
Don't know about Harvard, but I interviewed people for admissions into Oxford CS. If anything, poor background would help you - while we all try to be as objective as possible, if anything we would cut you a bit more slack if you came from a poor background.
In this day and age, I would argue that access to education is actually nearly ubiquitous when it comes to STEM. Lack of encouragement/emphasis on education from parents and the rest of the social circle is a much bigger problem. That, and smart poor kids just don't apply, because they wrongly think they don't stand a chance.
Arguably, a smart kid growing up in a poor family, but with parents that put great emphasis on education, has an advantage over a rich kid - the rich kid is unlikely to have the same kind of drive to succeed.
You're conflating "proper background" with legacy and they are very different things. Harvard (and most/all other Ivy League institutions) dramatically lower the standards of enrollment for legacy applicants. In other words people whose father or mother went to Harvard. This is not how Bill Gates got in. His father went to the University of Washington on the G.I. Bill.
A "proper background", outside of legacy, is generally a negative thing when applying to elite institutions as applicants from 'improper backgrounds' will receive bonus points on their applicant score. All other things being equal the guy who went to Bodunk High is generally going to have a better admittance score better than the guy who went Carnegie College Preparatory Academy.
The one issue of course is that all other things are often not equal. The guy who went to our imaginary prep school is probably going to have had greater resources to enable his endeavors and often a better family life at home. And that's why the guy from Bodunk High is given a boost on his score.
And in my opinion, having been somebody who came from a poor background and was able to go to a top tier university, I don't think it really makes much of a difference. The crazy high overachievers who go on to become the Bill Gates didn't achieve that because of Harvard, and obviously in Bill Gates case as he dropped out - he would have done phenomenal whether he went to Harvard or Party U. It's a similar story with people like Michael Dell. He came from an upper middle class family but nonetheless worked jobs ranging from dish washer to telemarketer. In college at UT he started what would become Dell literally from his dorm room. He would drop out his freshman year once it became clear the business was viable.
Elite universities just have this sort of win-win feedback scenario going for them. They attract all these sorts of individuals and then get to implicitly take some credit for their achievements, which then affirms the university's elite status. Meh. I would fully agree though that if your ambition is just to go send out resumes and gradually work your way up for other people, then an elite university degree would help you eventually end up with a somewhat nicer white picket fence than somebody who went to a less premier institution. But these are not the sort of people we're talking about.
Bill gates himself admitted on Reddit that without his parent's wealth, he probably wont be doing what he would be doing without the proper education foundation provided to him.
>He might had been that genius principle engineer that would have went on to do absolutely amazing work, but not one to start or lead a company.
Exactly! Bill Gates success is tied to much more mundane things like sales strategies and close business relations to major businesses like IBM (thanks to his mother) to the point that Bill Gates decided that he'd be better off just getting contracts at any cost even if it means over-promising and in the end buying software from Tim Paterson and merely ported it over to whatever IBM was selling at the time.
"poor" people go to university. Rich people take advantage of their connections.
I was referring more to potential, as opposed to what he actually did in software development. Per stories from Harvard, he had some mathematical talent. With talent like that he could have essentially pursued whatever intellectual pursuit he wanted and have obtained results in it. Whether that be software development, mathematics, running a business etc. My point is there are others out there like him, we likely won’t know about them because they aren’t from such affluent families.
That had to do with CP/M not being the standard/mainline OS for the IBM PC (and even then, CP/M was supported but released 6 months after DOS and for 6 times the price), it didn't have to do with IBM selecting Microsoft as their OS developer / vendor, especially since microsoft didn't even have an OS when they were selected.
I find this line of thinking interesting and wonder if it can apply to other areas?
For example, if Lebron James wasn't born with such great genetics, it's likely he wouldn't have been a "once in a generation" NBA superstar, and instead just a really good rec league player.
Or, if Marilyn Monroe wasn't so attractive, it's likely she wouldn't have been a cultural icon, and instead just an average D-list actress.
The implicit assumption in the grandparent post is that it's good for society if the most gifted basketball players play in the NBA, the most attractive people act in the best movies, and the most talented engineers lead the top companies. Of course personal talent is a question of luck just as much as parental wealth - a meritocracy will not allocate the top places to those with the most worthy souls any more than a nepotocracy does - but more nepotistic societies are less efficient overall in a way that makes life worse for everyone there than more merit-based ones.
Also career guidance. This is a hugely important ingredient if you want to start ahead of people your age (from what to do on your free time to what summer work you do where, if any, between college years, through what you see on your parents lives, their friends, etc. And it seems very underappreciated on these discussions, that normally turn to accusations of nepotism and corruption, tax avoidance, or other means to transfer wealth and power among generations.
I can't believe that people are arguing that your economic background has no bearing on your chances for being wealthier then average. Thanks for your post.
Here's a few things that produce such a phenomenon, pretty much universally:
1. Everyone alive has a lot of ancestors who lived 600 years ago. Let's say there are about 4 generations per century, so 24 in 600 years. In the extreme you could find about 2^24 = 16 million ancestors from those times. In reality there's some recombination, but you could easily have tens of thousands of (24 times grand)-parents. Some of those were beggars, some were princes.
2. Some societies had mechanisms to preserve wealth concentration within "the family", such as primogeniture [1]. With this arrangement, the majority of the wealth of a family was transferred to only one descended. The outcome was that if you were rich, a few generations down the line one single descendant would be rich, and pretty much all your others will be poor. Just look at Prince Charles in the UK who will one day inherit the crown, and Prince Harry who will be a nobody. Sure, they both have royal weddings, and people follow their various affairs in tabloids, but at the end of the day, Harry's grandsons will have inherited from their queen grand-grand-grand-grand-mother something around zilch compared to one of Charles's grand-sons who will be king.
That reminds me of the story when a reporter asked Gerald Cavendish Grosvenor (the Duke of Westminster) if he had any advice for young entrepreneurs and he replied “Make sure they have an ancestor who was a very close friend of William the Conqueror.”
In a similar vein, I remember reading Proust’s novels some time ago and one of the protagonists was explaining to some other protagonist that you could be seen as a very respected member of the society of that time (think France of the 1800s - the 1900s) only if some of your ancestors had taken part in the crusades as noted (meaning non-anonymous) individuals, ~700-800 years before.
These points are true. And note that 2^24 is larger than the population of Italy at that time.
But you should be extremely cautious about presuming that these 2^24-minus-duplications ancestors were anything like uniformly distributed. Top-10% Florentines today may easily have a majority of their descent from top-10% ones 600 years ago. Because the rich had more kids, in a time of very slow overall population growth.
Well, my guess is that 100% of the Florentines today have easily a majority of their ancestors in the top 10% of the Florentines 600 years ago. Survival of the fittest and stuff ...
But many, many, people are extremely surprised to think that survival of the fittest has any relevance within historical time. Let alone between us and Dante.
> family holdings, individual wealth management, sons of well-to-dos becoming proverbial doctors and lawyers
The last. The article wants to make it sound like this is inherited wealth (alla Picketty) but this isn't really supported. For example, you find much the same pattern even across say the cultural revolution, which I hear was rather rough on inherited nest eggs. The rec. book on this (as in one of the old comment threads below) is Clark, "The Son Also Rises" ( http://amzn.to/2jFnUmZ ).
I'd say that family holdings are definitely a factor, specifically vineyards and olive groves, at least for the very richest. TBH, I can only provide anecdata, but most of the wine and olive producing country around Florence is owned by a few families that have owned it for centuries.
I don't doubt that the rich own nice things (and that their rich ancestors did too) but the question is whether this is causal, and I'm highly dubious, over these long time-scales.
Clark has evidence from lots of countries, and I'm still surprised just how uniform the numbers are. Even in places where private property was all-but-outlawed for 2-3 generations in the middle.
Regarding the first case, the rich don't just own nice things, the rich own assets, which means they get richer. Once you get past a certain level of wealth, you have to try pretty hard to become poor again.
As for the second, the rich have the resources to dodge or mitigate that kind of state action in all but the swiftest and most brutal of cases.
I totally agree that there are plausible mechanisms by which wealth today might help your grandkids stay wealthy. But the empirical question is whether these actually explain much of what we see. Many things which sound plausible to novelists turn out not to be very solid. And I'm trying to tell you that the data is not kind to such explanations here.
Re family status surviving Maoism or whatever: If you posit that there is something besides actual assets which is helps "dodge or mitigate", then I ask why this same something isn't in play in normal times. If it alone can explain the persistence, that weakens the case for assets mattering so much.
The other line of evidence is things like the Georgian land lottery, which elevated some people to quite significant wealth. Their kids lived well. But it's been, I forget, 150 years or something, and their decedents are no longer unusual at all.
This just means that the average spousal wealth doesn't change with marriage (assuming sharing of all assets). It doesn't explain why wealth stays the same over longer periods of time / over generations.
and they were followed by the Fuggers, the Welsers, and finally the Rothschilds.
Interestingly the Medici fall down was caused by the exact same terms of the success of the others: Financing wars. The Medici had just bad luck that their king (of England) lost his war, and the Tories never paid them back (of course). The Germans and then the Rothschilds were more clever, they've won their important wars.
Isn’t the real lesson behind the Rothschild’s generational success that your king is inevitably going to lose a war or two and therefore to diversify beyond a single kingdom?
Assortative mating perhaps? I'm sure the rich kids would have hung out with each other, known who each other were, and so on.
Similar mechanisms keep the business opportunities within certain spheres. Everyone's going to know who has money to help your new startup, and those people get the chance to invest.
Florence is especially interesting. 15th century Italy had a relatively modern (similar/ancestral to our own) economic-political system. Wealth wasn't all about land-and-title aristocracy. "Merchant" families were the rich powerful instead.
Generally speaking, I'm curious about how all thia works on the individual level. Thomas Picketty's ideas about how wealth dynamics work in the long term are convincing, but, on simple interpretation, it isn't obvious how Bill Gates fits into the picture (other than as an outlier).