Why are today’s young, brilliant billionaires so boring?
Rising inequality of opportunity making it even more difficult for people to get ahead
Early in Warren Buffett’s life, his father failed to get hired at the family grocery store during the Great Depression.
Without a job, and without any money after a run on the banks, the family of four ran up a tab of grocery bills at the store to put food on the table, and even then, his mother sometimes skipped meals. Leila Buffett, beset by stress and with a mind likely impacted by linotype fumes she inhaled as a child, would often berate her two small children.
From this nadir, the family gradually achieved more secure financial footing. His father started a stock brokerage and eventually went on to become a fourterm congressman.
Young Warren started showing an aptitude for numbers. He became obsessed with timing everything, calculating odds, even tallying the frequency of the letters that appeared in the Bible most frequently, according to The Snowball: Warren Buffett and the Business of Life. By age15, he managed to earn thousands working his local paper route. The rest, as they say, is history.
Earlier this month, the legendary investor, 87, was surpassed in wealth by 34-year-old Mark Zuckerberg. The gap was closed in part by Facebook’s surging stock — up 15 per cent this year so far — and in part by Buffett’s large charitable cash outflows. Today, the three richest people in the world, Jeff Bezos, Bill Gates and Zuckerberg, have all made their fortunes in tech.
Compared to Buffett and many of his contemporaries, Zuckerberg’s childhood was more banal. He grew up in Dobbs Ferry, a small middle-class suburb of New York, the son of a dentist and a psychiatrist. He started using his father’s computer at a young age, and showed an early facility for programming, before graduating from an elite prep school.
Zuckerberg’s story is typical of newly minted technology billionaires in the Bloomberg Billionaires Index.
With 64 technology businessmen and women on Bloomberg’s list, which tracks the world’s 500 richest people, the industry has produced more billionaires than any other (unless you count inheritances). This year alone, tech has created 11 new billionaires.
But there’s something missing from the foundational stories of this new group of self-made men (yes, they’re mostly men). Where earlier generations’ formative experiences revolved around paper routes and pathos, today’s prototypical founding story involves an uppermiddle-class childhood, early access to a computer and an elite education — even if that education was abandoned.
Before he famously walked out of Harvard University, Zuckerberg created an instant messaging system for his dad’s dental practice at age 12. At 15, Twitter’s Jack Dorsey was daz- zling his bosses during a programming internship. And Uber’s Travis Kalanick was writing code by middle school.
Today’s founders are long on brilliance, but short on hardship.
It’s difficult, after all, to become a computer prodigy without a computer.
That dollop of privilege speaks to a larger trend in the American economy: For millions of low-income people, it’s getting harder to build something from nothing.
In order to drop out of Harvard, first you have to get in.
In by-now-familiar statistics, the rate of income growth at the top levels of earning in the U.S. have far outpaced growth at the bottom segments (in the 1980s, it was the other way around, according to research by Thomas Piketty, Emmanuel Saez and Gabriel Zucman).
Last year, Oxfam International found that more than 80 per cent of earnings went to the top 1 per cent of the world population.
That so many of today’s new billionaires mostly come from comfortable backgrounds is emblematic of a broader concentrating of wealth in the U.S. According to recent Federal Reserve data, the median family’s net worth had not recovered its pre-recession value by 2016, while the top 10 per cent gained double digits since 2007.
It is, of course, not the fault of tech’s young luminaries that the economy has shifted toward technological skills. Even as it has boosted Americans’ standard of living, the rapid pace of innovation has made education an increasingly important factor in determining income, a trend that in turn has exacerbated rising inequality.
Overall educational attainment in the U.S. is rising, but nearly 70 per cent of the adult population has still never graduated from college. That’s even though higher education has increasingly become a prerequisite for white-collar work. The college wage premium, or what bachelor-degree holders make compared to high school graduates, has skyrocketed since the 1970s and now hovers at about 50 per cent, nearrecord levels.
The so-called “digital divide” between rich and poor households, has reinforced the gap between haves and have-nots. Despite the pervasiveness of personal computing, poor kids today are less likely to have access to the programs that could help them develop early coding genius.
According to Pew Research Center data, 87 per cent of households with an income of $75,000 or higher use broadband at home. But for households making less than $30,000, it’s only 45 per cent.
This is not a lamentation of the comfortable childhoods of corporate leaders. In some ways, the American myth of the up-from-nothing elite was always mostly imagined.
The likelihood that a child today will rise from the lowest to the highest quintile of earnings is less than 10 per cent. That’s low compared to other rich countries, according to Chetty’s data, but it’s not much changed since the 1970s.
The American Dream has always been a story we told ourselves, bolstered by the hardscrabble tales of men who rose from nothing to become magnates. Today, Zuckerberg is a moral leader — a family man, and a donor to noble causes.
But those looking to follow in his footsteps will cast an eye back to his early days: to the comfortable Westchester upbringing, the fencing club captainship at an elite prep school, the insouciant Harvard days and to Facemash.
American youth may aspire to climb the same ladder. They’re likely to find it’s missing some rungs.