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<p>Actually, now that I think about it, I now see where the point of contention is, and it has to do with the fundamental determination of risk. That’s what we need to define.</p>
<p>What is risk? Risk inherently means to run the chance of losing something valuable. But that’s the key: it has to be more valuable. And the more valuable that something is, the more risk involved.</p>
<p>Hence, you say that somebody with a degree will be able to start a company with less risk. On the contrary: that’s actually more risk. Why? Because that person could have instead just gotten a regular job, earning (if an engineer) a standard entry-level $50-60k salary. Instead, he forgoes that salary in favor of starting a company that may fail. That is high risk. And the higher that forgone salary is, the MORE risky it is, because you are staking more and more. </p>
<p>On the other hand, some guy with no degree at all is risking little. Why? Because he doesn’t have much. Therefore he doesn’t have much to lose. So if he gives up a year of his life in a failed company, well, it’s not like he could have made a lot of money by taking a regular job, because he doesn’t even have a degree? So how much is he really staking? Hence, how much risk is he really assuming? His startup fails, so what? It’s not like he was risking very much. </p>
<p>Let me present a thought experiment. Consider a casino game in which, if you win, you get a million dollars. But if you lose, you lose all the money in your wallet (whatever that is). Clearly those people who aren’t carrying much cash would be far more likely to play this game compared to those who are carrying a lot. In fact, I would expect that those people who are not carrying any money at all would play the game over and over again, because they literally have nothing to lose. </p>
<p>But the takehome point is that risk inherently means to give up something of value, and that value includes the opportunity cost of pursuing an alternative. When your alternatives are not that good, your risk goes down because you will be giving up less. It is precisely those people who have great alternatives who would then be taking the most risk by not pursuing those alternatives.</p>