> So, as a startup founder in Europe, you'll watch all your highschool friends build houses while you yourself can certainly kiss that particular piece of status-seeking goodbye until the day of your IPO (which probably will never come).

In the US, if you are building a house in any popular area, I assume you have access to generational wealth or earned equity by starting and possibly selling a business. Obviously, some employed people earn enough money to buy land, possibly demolish an existing structure, and build a new one, but very, very, very few percentage wise.

I am mid 30s, and I doubt most of my high school acquaintances have ever been able to afford to buy a house, much less build one, without moving far away.

The "generational wealth" aspect plays into this as soon as your parents are not on board with the idea that starting a startup is a non-crazy thing to do. (The problem is: They don't necessarily watch the same motivational speakers on youtube that their children watch.)

My own personal experience: Most of my highschool friends were able to build houses. As you say, usually the thing that does it is support from parents. For example, the parents might move into smaller/rented accommodation for their retirement and sign over the family home to the children who then take out a loan to fix up the place and live there. That kind of thing.

But the way my parents look at it: Giving money to a child who is trying to do a startup is like giving money to a child who is a drug addict. They see it as a surefire way of destroying wealth, so they hold on to it until I "come to my senses" and get a safe job in a bigcorp.

So, it doesn't matter how cool I and my college friends think it is to start a startup. If I was a conformist, the math just wouldn't add up, as my path to a nice big house is blocked, at least until very late in my life when I've had a successful exit or come into the generational side of the wealth aspect as part of an inheritance.

> Most of my highschool friends were able to build houses. As you say, usually the thing that does it is support from parents. For example, the parents might move into smaller/rented accommodation for their retirement and sign over the family home to the children who then take out a loan to fix up the place and live there. That kind of thing.

In the US, there is a world of difference in cost between building a house and renovating a house. Easily in the hundreds of thousands of dollars. Lots of people can refinance an existing structure and renovate it, very few can afford to demolish and build new.

> …at least until very late in my life when I've had a successful exit or come into the generational side of the wealth aspect as part of an inheritance.

Couldn’t your startup make something that generates income so you can do things like own a house?

Making something that people actually want to pay for isn’t a bad way to earn a living as opposed to waiting on a big payday which may never come.

> In Europe, if you're anywhere in the "self-employed" spectrum, people basically think of you as an insolvency waiting to happen. This is particularly true for banks. So, as a startup founder in Europe, you'll watch all your highschool friends build houses

Living in Europe, I have seen my college peers starting startups or small companies and buy the same housing as employed programmers. It is a bit of distraction from your larger point, but getting mortgage for housing is not actually an issue for founder of a software startup.

...seems we're both overstating our respective points then, when I claim it will definitely be a problem and you claim it's never a problem. Apparently you just had one piece of experience and I had another.

When I moved from the U.K. to Austria to start my "startup", I had to wait several years before I could apply for a credit card from my Austrian bank because I couldn't show them a paycheck from a current employer. (I'm an Austrian national).

When I later moved from Austria to Germany, one bank even rejected me for a basic bank account with no credit facility at all, when the only piece of information that the German consumer credit rating agency (Schufa) had about me was the date when I first appeared on their radar, implying I was a recent "immigrant", and the fact that I ticked the "self-employed" box on my application form. I managed to convince another bank to give me a bank account, though.

In Munich, being an overheated housing market like most of Germany, prospective landlords wanted to see a recent paycheck, and I'd be in a world of pain trying to explain to them that I couldn't show them one but still wasn't really a financial risk for them. Luckily I came across a landlord who, himself, was a small business owner, who rented to me.

Admittedly: Moving around a lot also played a role in my personal experience with consumer credit rating.

I think it illustrates my main point rather well: To a status seeker it is extremely off-putting to think that, when they open a bank account or apply for a mobile phone plan, they might suddenly find themselves in a difficult conversation, even when they're not objectively in financial trouble.

And, I think it even goes so far that people sometimes seek out pre-seed investments and incubator memberships and things like that, even when they don't need the money, because it serves a psychological need for status and validation.

Austria is really bad AFAIK. Trying to push anything through Austrian bureaucracy is an exercise in futility; the country seems to be totally sclerotic, at least on the governmental level.

Former Soviet Bloc countries are more positive towards small business owners.

So how were you not a risk if you were not getting paychecks? Surely statups still pay you a salary, even if relatively small one

It's complicated.

If you're in the early-early stages where you're just funding the startup yourself, you may not want to pay yourself a salary for various reasons (e.g. offsetting your losses against future earnings for tax reasons).

If you do cut yourself a paycheck, the model will probably assume that's all the money you make and won't understand the fact that you're also the owner of some business. So it might backfire, if you try to game the model by paying yourself a very small amount just so you get to be in the employed-category rather than the self-employed category.

...maybe I'm just being stupid for ticking the "self-employed" box rather than try to make it look on paper like there's basically no difference between my situation and that of an employee in a bigcorp. I just don't know.

Statistically, I probably am a risk.

But I've never had an actual credit event, am not planning on having one in the future, and any time I want money, I can just pick up the phone to a freelancing agency, and by next week, I'll be making more money than most of my highschool friends. So in that sense, I'm not a credit risk. There's just no way to explain that to a risk model.

> But I've never had an actual credit event, am not planning on having one in the future, and any time I want money, I can just pick up the phone to a freelancing agency, and by next week, I'll be making more money than most of my highschool friends. So in that sense, I'm not a credit risk. There's just no way to explain that to a risk model.

You know the issue, the risk modeling will never take into account a subjective experience such as "I can pick up the phone and make bank", there's no way to price that in, it's a very edge case that requires some human intervention to understand it.

If you did that consistently over a couple of years and had tax returns to prove you can do it reliably I'm sure some credit models I worked with would use that as a strong signal, right now you are definitely a risk (and you are aware of it), what exactly do you expect risk models to do in your case?

In that, I believe we should leave some room for human intervention in some automated systems; credit models/risk assessment models would be one of those, you should be able to meet a real person, show them how you are not as risky as their modeling says you are and be able to present/defend your case to invalidate their automated assessment.

> what exactly do you expect risk models to do in your case?

I'm not complaining, just responding to others on this thread to whom the connection between consumer credit rating and being a startup founder wasn't so obvious.

> [...] we should leave some room for human intervention [...]

I couldn't agree more, and this is not something we can take for granted. I see a dystopia lurking around the corner where only HNW individuals get the privilege of attention from human bankers and automated decisions can effectively block the path towards ever getting there. But that's a topic all of its own.

> Living in Europe, I have seen my college peers starting startups

Probably, the OP sees a distinction between "bootstrapping", and having the startup funded by someone generous or wealthy. In the latter case, it is possible to give "normal" salaries which banks and landlords will accept.

They were not having generous or wealthy funding. They lived from what they earned from business awarding themselves small nearly minimal salary on the regular and using the rest for the firm. They were able to take money away from the company by giving themselves bonuses as they wished, so they were not actually living on minimal salary.

Their salaries were not "normal" for programmers. But banks had setup for this apparently.

"people basically think of you as an insolvency waiting to happen. This is particularly true for banks."

In CZ, self-employed people get mortgages regularly. You need to show last, I think, two? tax filings and if your income after taxes was OK, you are good to go. So unless you are heavily "tax optimizing", you should get the mortgage. If you go bankrupt anyway, the bank has a priority claim to sell your house.

Getting a business loan is trickier, though. Nothing similar to the SV VC culture exists here.

SV and VC? Whats that?

Silicon Valley Venture Capitalist.