[sadface]

I have another suggestion for the decline in startup rates: health care and college expenses.

The historically "prime" years for entrepreneurship are in one's late 30's to early 50's, years when one typically has a family in need of healthcare, college tuition, and hopefully retirement at some point down the line. In the 70's and 80's someone could leave the security of their big company, get relatively affordable private insurance for them and their family, and sleep moderately well knowing that even if their new venture fails their children will at least be able make it through a state school working part time. Now, they'll have to pay through the nose for healthcare and we all know how much schools cost these days.

Given the increased failure rates of new ventures these days it's not so hard to see why more mid-career individuals are remaining in corporate jobs instead of venturing out on their own: it's getting too expensive to roll those dice.

[madengr]

You nailed it. I also add that the government (probably varies allot by state) makes it very difficult to hire employees. My wife and I hired a nanny a few years ago, doing everything by the book regarding taxes and insurance. Still got fined twice for some infantile amount owed on something, even after three calls to the state office resulted in three separate amounts of what we owed. I'll NEVER take on an employee again. The game is rigged to favor those who can afford the lawyers and accountants.

[gohrt]

1. Was the fine large enough to matter?

2. You can hire an "nanny tax" accountant for ~$500 a year (maybe was more expensive a few years ago)

[madengr]

1) No, it was a fine for an amount owed under $100, which we paid, but then received a bill for another fine, since it now said we owed $150. Three calls to separate state offices resulted in three amounts owed. We just picked the highest of the 3 and paid the damn thing. This is in KS which is supposed to be "business friendly". I should have just done as the politicians and hired an illegal alien under-the-table.

2) Yes, but it's the principle. I have to hire an accountant (zero added value for me) just to hire someone who actually does provide value to me. It shouldn't be this complicated. It was easier setting up an LLC, and if we could do that, we should not need an accountant for a nanny; guess not.

[lesterbuck]

Sounds like a great business opportunity for a SaaS app that nails the details of nanny accounting in all fifty states.

[madengr]

No sh!t it is! If you can develop that for the tax codes in all 50 states, you'd have a winner! I think it's impossible to do though, unless you are Quicken.

[ganeumann]

But you could get 2/3rds of the US population operating in just 15 states. 1/3rd in just 4 states.

[erichocean]

1/3 of the population and likely 2/3 or 3/4 of the regulations. The big states have WAY more regulations than the smaller ones.

[madengr]

Yes, good point.

[foobarian]

https://www.care.com/homepay

[jusben1369]

I'm 100% with you. When I left my job to do my startup to maintain my health plan at current levels was $1400 per month. That's $18,000 or so a year pre tax dollars. Basically the first $25,000 a year you pay yourself is going to just having healthcare! Assuming you want a decent plan. When we were 4 people all making just enough bootstrapping before we raised 35% of our costs went to healthcare. It was never raised much if at all during the HC debates but affordable, company independent healthcare should make a meaningful difference to how many people take a chance.

[mcdougle]

I grew up with parents who worked in healthcare (my dad, specifically, has a ton of connections within the health and life insurance industry), I've sold health insurance, I now have a full-time job in a hospital system, and I'm working on launching a health insurance-related product (to augment Obamacare benefits for small businesses) and I can tell you, they didn't touch on many of the most important issues in the industry today.

I'm not going to criticize Obamacare, but there are a bunch of things they could've done that would've been easier to implement and easier to understand that would've fixed the system! For example, get rid of the PPOs and give the "discount" they provide to everyone. PPOs provide no real value and have basically stuck themselves in the middle of the transaction and inflated costs, which inflates insurance premiums. Getting rid of them would immediately reduce costs quite a bit and make healthcare (and, indirectly, health insurance) much more affordable.

I guess the politicians wouldn't outright get rid of a whole sector of an industry, though, which makes it harder...

When I sold health insurance, one of the things we would often suggest is, if possible, to get a cheap policy with a high deductible and simply put the difference into an emergency fund until you can cover the deductible. This gives you access to the PPO, so you can pay the reduced rates (which are actually quite affordable if you make a decent income!) if something happens, while making the whole thing much more affordable.

[ridgeguy]

The politicians can't get rid of the PPOs, even if they wanted to. Politicians have to get (re)elected, which takes increasing amounts of cash. No cash, no office. If you're out of office, you're out of power.

The PPOs have very large revenues and therefore wield great power in determining the outcome of any move to reduce their influence.

This is regulatory capture by economic interests that don't provide value in the health care service chain. It's making health care more expensive for everyone.

[atomi]

PPOs are the only way right now to get all health care providers to compete for patients.

disclosure: I'm for a single payer system that allows everyone to choose their preferred provider.

[steveplace]

Yup. If you're young and fit, you don't need coverage for diabetes. A high deductible with a cancer/accident supplemental will be 30% the cost of a more normal plan.

[logicalmind]

Same here. I've been a developer for years and as I've transitioned jobs I've met a number of really good developers. Any time an idea arises that would make a tempting startup I reach out to people I've worked with to solicit the opportunity to work on it together. Every time I've done so, the inevitable decline always has something to do with healthcare.

Once you're beyond your post-college years and have a wife, and possibly children, the risk of a startup suddenly includes the cost of healthcare and risk of not having any. All of us can make comfortable salaries and have money to take risks on our dreams and be protected from failure by incorporation. But that does not translate to the potential medical issues of yourself or your family which would lead to personal bankruptcy and future employment issues.

[pyrrhotech]

I dunno, state schools are still pretty cheap. My sister's tuition with room and board is $10k per year. If you are someone smart enough to be an entrepreneur in your late 30s, you should have a corporate job paying 150k+ and can save all 4 years worth in a matter of months with a bit of determination.

And health care, while expensive, isn't as big of a deal as most people make it out to be. Get a high deductible plan and a family of 4 can be insured for <$700/month. If you are starting a business in your late 30s you should have a lot of savings already. While annoying, this shouldn't stop you.

[sedachv]

> If you are someone smart enough to be an entrepreneur in your late 30s, you should have a corporate job paying 150k+ and can save all 4 years worth in a matter of months with a bit of determination.

It takes 10 months to save $40,000 if you're putting away $4,000 a month (which is half of take-home pay at $150k). If you are someone smart enough to be an entrepreneur in your late 30s with a corporate job paying 150k+, your children are probably smart enough to want to go to an expensive college.

[tzs]

> Get a high deductible plan and a family of 4 can be insured for <$700/month

Looks like it can be done for quite a bit less than that, when ACA subsidies are taken into account (or when expanded Medicaid is taken into account if the other adult family member also has no income...I think all the states where tech startups are common went along with expanded Medicaid).

[logicalmind]

But presumably you are going to have co-founder(s) or employees. The decision is not just for yourself or your family. Your co-founder(s) will have to accept the same situation and anyone you employ would also be expecting health coverage.

[superuser2]

Where?!? University of Wisconsin, for example, is $24k in-state with room and board.

To get through college for $10k/year in many places, you'd need to go to one of the state's lower-tier schools in a small town and live at home. Not many state flagships are in the business of charging less than $20k.

[jeffasinger]

Most of the SUNY (New York State) schools charge about $8k per year in tuition and fees. On top of that, they would need living expenses of about $10k per year to live near campus.

Unfortunately, without working more than 20 hours/ week, a college student isn't going to be able to come up with that $18k per year on their own, but they could get more than half way there, which doesn't leave a ton of support the parents would actually have to provide.

[pyrrhotech]

She goes here: http://www.collegedata.com/cs/data/college/college_pg03_tmpl...

She does live at home. If she lived at school it would be about $17k

[superuser2]

You said "with room and board," which implies living in university housing. That would do it.

[sadface]

Sure, it's not impossible or nobody would be doing it, but it's still more expensive (a high deductible is still a "cost") and comes with a lower chance of success. Obviously that's going to shift trends in a more conservative direction.

[autokad]

considering that 250k for a couple puts a person in the top 2% in the nation, its not as easy as you make it sound to pull off 'just getting a 150k salary job'.

[pyrrhotech]

it's a hell of a lot easier than becoming a successful entrepreneur

[sedachv]

Your comments make one want to ask: if it's so easy, why didn't your parents save up the money to send your sister to a better school?

[pnathan]

+1

I have a variety of company ideas, but I have several key issues:

- College loans. I pay close to my apartment costs in these.

- Health care for myself and family. Expensive!

- Living costs - moving to someplace really cheap to bootstrap would likely be horribly for my career and would drag hiring down significantly.

So I incur a fair amount of immediate costs, as well as future risk by quitting and starting my own company. I could probably handle the risk, but the immediate costs are.... high.

(If I thought I could have done something involving early loan repayment that I could have performed, I would have! But I didn't see any when I last checked).