I disagree with this. It's one thing to hustle to make your ramen budget. It's another to hustle to succeed before your son needs that kidney transplant.

There's hustle, and then there's killing stress. I can only surmise you're young and single.

Agreed. I'm 24 and the overriding reason why I haven't started a startup is that for the past three+ years I've had my hands full supporting my family, who fell on hard times due to the economic downturn. I can't risk my parents being on the streets dying from lack of healthcare. I'm willing to take the risk for myself, but right now my parents have nobody to turn to.

It's exceedingly clear to me that "they would start a startup anyways" takes a very privileged view, as if risks are there to be taken willy-nilly, and the fallout of a failure nothing much in the grand scheme of things. That may be true for the self, but if others depend on you, it's a whole different perspective and some responsibility must be taken.

I completely agree. When you have a family with serious (but treatable) medical conditions health insurance is not an option. Even if starting a business or doing freelance work would lead to a bigger paycheck: it wouldn't offset the loss of employer health insurance.

Agreed. Certainly I can rationalize losing healthcare for a period of time, the risk could very well be worth it. Risking inadequate care for my wife and kid is a much more difficult proposition.

I was going to retort to your statement about changing failure rates saying that's not side of the equation we're talking about. If we take this as the number of startups we create as:

   numberOfSuccessfulStartups = startupAttempts * successRate

Then Jon Stewarts observation is by lowering risk failure we raise the startupAttempts. Not only do we raise the attempts, but we can recycle the failures to drive startupAttempts up more resulting in a higher number of successful startups is his hypothesis. Adding health benefits, tax credits for loses, etc drive up startupAttempts by lowering risk.

However, your observation that making things cushy for entrepreneurs could lower successRate because you don't have to hustle as much. Sort of a if I fire this gun above your head while you work maybe you'll work harder argument. I say that in some jest because I think there is some merit to your observation just how much I don't think either of us know.

The one counter I can provide to your counter is that lowering risk might have the same effect as lowering incentives for results. Basically support from this work on how incentives can lower success if they are too high. What I'm saying is maybe if risk is too high fewer people attempt and even fewer people succeed because there aren't enough original ideas to copy for scale.

http://carmine.se.edu/cvonbergen/Incentives.pdf

(Couldn't find a better link.)

I think both hypothesis have their points and we need more data to support them.

I think some people simply WANT to start businesses. Period. I know I did. It wasn't about trying to become rich; I'd be perfectly happy with a decent "lifestyle business." I just like the control of making my own destiny, and reaping the rewards of my own labor.

If I didn't think I could afford health insurance on my own, I wouldn't do it. I'd suck it up and take a paycheck, hating my work, but I wouldn't feel that I could afford a risk to my own life/health or my family's.

Is there extra motivation for the extra risk? I say no. If you decide to take the plunge and start a business, you're in it to SUCCEED. Extra stress CAN, under some circumstances, improve your odds -- but it can also make you TOO cautious, because the stakes are too high. And I submit that running your own business is enough to get you into the "ideal productivity" stress zone all on its own, without having to worry about whether you're risking your LIFE as well as your savings.

By this 'principle,' measures like eliminating the corporation as a risk management tool, or even imposing artificially severe punishments for business failure, should increase hustle and therefore mean more successful businesses.

Well yes, of course. vm, like many people, misreads "no pain, no gain" to say, "pain == gain."

True. That doesn't mean that there isn't some optimum amount of downside, for optimal progress and human flourishing and whatnot. But an automatic assumption that what we currently have is that optimal amount seems to just be a bias towards the status quo.

>We need to define risk here.

Agreed.

1. Risk to your savings and time. This is what you are always risking when you start a start-up. A safety net would mean that you'd not starve if the company failed and you couldn't get another job right away, but doesn't mean you'd be living your cushy ideal life even if the business failed.

2. Risk to your LIFE. I submit that, UNDER NO CIRCUMSTANCES should starting a business actually put you at risk of DYING. And yet that's exactly what happens if you decide to forego the expense of health insurance (until if & when "no preexisting conditions" takes effect in 2014) and you find out that you have a life-threatening condition.

I think there's plenty of stress and risk in starting a business without worrying about starving or your health. "Failure" is harsh PERIOD. And if you have a family you're trying to support, the above two points will likely prevent you from starting a company if there's no safety net.

So the many people who would be willing to start companies WITH a safety net means more people who would roll the dice. Many would fail, and that's FINE, because the rest would create jobs.

The contrast is Europe and the UK, where they have free health insurance and social safety nets. How many startups do we see there? By definition we should see more startups there and they should be driving forward.

I don't say I don't agree with having national health insurance, just trying to understand why the UK and Europe don't have the same level of startups.

Maybe it is all marketing anyway and maybe it is all access to capital.