Silicon Valley founders who grew up poor can’t shake “mindset inequality”

Income inequality has long-lasting effects for startup founders.
Income inequality has long-lasting effects for startup founders.
Image: Reuters/Ints Kalnins
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I grew up in poverty–as did my startup co-founder David Tran. So when the talk in Silicon Valley turned to income inequality recently, our ears perked up. For a moment, our two worlds were colliding.

“Closely related to poverty is lack of social mobility,” Paul Graham, who co-founded the startup accelerator Y Combinator, wrote in a post on his website. “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.”

Graham was right. 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 dealing with this issue since starting our company in 2010, and we’ve gotten pretty good at it. Our 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.

Coming to America

When I was 11, I moved from Taiwan to the United States with my dad. I picked up the English language. My dad did not. He also didn’t work, so I started doing all kinds of odd jobs when I was 14. On top of that, I did all the tasks that immigrant kids are familiar with, including translating or simply handling all the business with landlords, bills, government services, and insurance. I was smart, but I wasn’t very good at school. Not knowing the language definitely didn’t help. My standardized test scores were bad enough that when I decided to take my studies 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 say some words in Mandarin while I just demanded that I get put in an honors-level English class.

I got a B in that class, and that was enough for me to start taking some AP courses the next year. I was underprepared and didn’t know how to learn, so 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, 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.

An elite education

You can imagine how lucky I felt when I got into Stanford University on basically a full ride. I spent my first year perpetually awe-struck. All these amazing individuals to talk to. All these great resources to access. Stanford successfully created a physical and financial bubble around me so that, for the first time in my life, I didn’t have to think too much about money. That was extremely empowering. I felt that 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 in contemporary African politics my first quarter and 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 still 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, my political science professor 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 as 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.

The money problem

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 my lack of money to ruin friendships the way it had ruined so many other things before. I spent the next 48 hours stressed until the loan money showed up in my account, and then I paid my friend back. He’s still one of my best friends to this day.

The money problem was hanging over me the entire time I was in school. I’d get calls from home about money, but there wasn’t much I could do other than picking up a tutoring gig on the side. 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 achievements 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. Lockhart and Kleissner 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 that Jeff Bezos announced Amazon Web Services. I ended up finding my niche at Stanford as the co-president of both BASES and AKPsi, a co-ed pre-business fraternity. I worked as a young venture capitalist 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 of 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 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 and built Crowdbooster, and now we’re building PRX, with the goal of offering public relations services on demand.

The persistence of mindset inequality

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

I was lucky that I found I loved 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 into the realities of the challenges I faced and dropped out, or just given up the illusion and adjusted my goals .  Instead, I chose to start a company. Starting a company was the ultimate declaration that I wanted to hold onto the illusion and continue 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 that there’s a real disconnect. The world is clearly not a level playing field. Just from my own personal 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 address over time.

One example of the poverty mindset is to minimize conflict because messing up is costly and opportunities are hard to come by. So it’s been a challenge for me to learn to put my ideas out there and defend them. I often hear about people having intelligent debates at home with their parents. I never even 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 who were trying to tear it apart was new and counterintuitive.

Relatedly, growing up poor made me less confident. My mom, who didn’t go to college, used to say to me, “We’re not meant to be successful, so what you’ve achieved is good enough!” That remark stuck with me. Now imagine walking into a VC office and competing with someone who grew up with well-off parents who said, “If you can believe it, you can achieve it!” He’s been convinced that he can change the world, and that’s going to show in his pitch. You can’t just muster up that kind of confidence on the spot.

Then there’s the issue of 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 got used to opting to spend time rather than money. I had to fix this way of thinking when we raised our first seed round, but it took quite some time. A simple decision to hire a new employee, for example, took a very long time–to the point that it cost us growth.

I’ve also noticed the huge difference having some built-in resources can make. I didn’t have “friends and family” money to get the startup 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 fund your startup, or even some family money to fall back on when you fail, makes it easier to take risks and build the appetite for growth. Most of the time, potential founders who share my background opt instead to work at lucrative jobs in finance or tech. It’s only when they can take care of everyone in their families that they might even dream about taking more risks — if they ever get to that point.

Finally, there’s the constant guilt. If you have a Stanford degree and share my background, you’re likely the only person your family can count on for help. Working a safer and more lucrative career 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 getting past all these hang-ups, you start to sound and act differently from the people you grew up with. You might even get accused of losing your identity.

All of this contributes to the mindset inequality that founders like David and me have to overcome. We think this is one reason why there are so few successful founders who grew up very poor.

Tangible inequalities —such as lack of money or lack of access to high-quality education– get the majority of our attention, and deservedly so. But the inequalities that live in your mind can keep the deck stacked against you even if you manage to make it out of the one-room apartment you shared with your dad.

This is an insidious problem. It’s difficult to discuss, and takes a long essay to explain.

David and I consider mindset inequality a known bug in our brains’ software. We’ve overcome many of these issues, and we’ll keep chipping away at them. We’re living proof that you can change the way you think. Maybe we can help others to do the same.

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