Are Billionaires Self-Made? The Viral Thread on Bezos and Gates

Originally published 2021-12-09.

Photo via: Upworthy

Are America's best-known billionaires really "self-made"? A viral Twitter thread from July 2020 argued that they were not, pointing out that Jeff Bezos's parents invested $245,573 in early Amazon, that Bill Gates's mother sat on a national charity board with IBM's chairman just before IBM hired Microsoft, and that Mark Zuckerberg grew up with professional parents who supported his programming. The broad facts hold up. They do not erase the founders' talent or risk-taking, but they show how much a head start can matter.

Here is what the thread said, how its claims compare with the record, and what research tells us about wealth and opportunity.

The thread that started the debate

On 6 July 2020, the business commentator Jon Erlichman shared a familiar image: Jeff Bezos building Amazon in a garage. Twitter user Aidan Smith replied with a short thread arguing that this kind of story hides the role of family money and connections. He opened with two words, "Cute propaganda," and went on to list examples.

Cute propaganda. In reality Bezos's mommy and daddy gave him $245,573 to stop Amazon from failing in 1995, but you'd never know it from listening to our right-wing mainstream media that blames poverty on personal failure and attributes wealth to personal virtue. https://t.co/vM15SKIcWs

— Aidan Smith (@aidan_smx) July 6, 2020

The thread was shared tens of thousands of times and later written up by Upworthy, which helped it reach a much wider audience.

Jeff Bezos and the family investment

Bezos and his then-wife, MacKenzie Scott, did start Amazon in a rented garage in Bellevue, Washington, in July 1994. That part of the legend is true. What it leaves out is the family support.

In 1995 his mother, Jackie, and stepfather, Mike Bezos, invested $245,573 in the young company, receiving roughly 1.4 million shares. Fortune, citing Bloomberg, estimated in 2018 that the stake could have been worth almost $30 billion had they kept every share. Bezos has said he warned his parents there was a high chance they would lose the money.

The full picture is more mixed than either side of the debate tends to admit. Mike Bezos was a Cuban immigrant who arrived in the United States as a teenager and worked his way through university before becoming an engineer at Exxon. By the time Amazon was founded, the family was comfortably middle class rather than super-rich. Jeff himself had a Princeton engineering degree and had risen to senior vice president at the hedge fund D. E. Shaw by the age of 30. He left a well-paid job to take the risk, but he also had an education, savings and family who could invest if things went wrong.

Bill Gates and the IBM deal

The thread's second example was Bill Gates, whose story is often told as that of a college dropout following a dream.

You can find this in the backstory of almost every billionaire. The story of Bill Gates is told as if he was a normal guy who dropped out of college to pursue his dream when in reality his mom Mary Gates, the president of United Way, convinced IBM to hire Microsoft to build an OS pic.twitter.com/OOX1ELjMLb

— Aidan Smith (@aidan_smx) July 6, 2020

Gates grew up in a prosperous Seattle family. His father, William H. Gates Sr., was a prominent lawyer who co-founded the firm that became Preston Gates & Ellis. His mother, Mary Maxwell Gates, was the daughter of a banker and was active on many civic and corporate boards.

In 1980 she joined the national board of United Way and sat on its executive committee alongside John Opel, then IBM's chairman. According to several accounts, she spoke to Opel about her son's small company, and Opel mentioned it to other IBM executives. A few weeks later IBM hired Microsoft to provide the operating system for its first personal computer, the deal that made the company.

One correction: the thread called Mary Gates the president of United Way. She became the first woman to chair the national United Way's executive committee in 1983, a few years after the IBM deal. Her influence on the contract is also widely believed rather than proven; IBM was under time pressure and Microsoft already had a reputation for its programming languages. It is fair to say her connection likely helped at a crucial moment, but it was not the only reason Microsoft got the job.

Mark Zuckerberg's early start

Zuckerberg was born in 1984 in White Plains, New York. His father was a dentist and his mother a psychiatrist. He showed an early talent for programming, building a messaging program called ZuckNet that linked the computers in the family home and his father's dental practice. As a teenager he took a graduate-level computer course at a local college, and his parents reportedly hired a software developer to tutor him. He later went to the elite boarding school Phillips Exeter Academy.

By the time he arrived at Harvard in 2002, he already had what The New Yorker called a reputation as a "programming prodigy". The thread's point was that such a reputation grows more easily when a family can pay for tutors, private schooling and spare time to experiment. In Smith's words, "There is no fair playing field."

...wouldn’t have had the same opportunities as he did. Remember: People took such an interest in Zuckerberg to begin with because he already entered college with the reputation as...

— Aidan Smith (@aidan_smx) July 6, 2020

What research says about "self-made" wealth

The billionaire examples are vivid, but the bigger question is how much family background shapes everyone's chances. Large studies of income mobility in the United States, such as those by the economist Raj Chetty and colleagues at Opportunity Insights, have found that children's adult incomes are strongly linked to their parents' incomes, and that the odds of reaching the top differ greatly depending on where and to whom a child is born.

That does not mean wealth is simply inherited. Many children of rich families never build anything notable, and some founders came from genuinely modest backgrounds. What the evidence suggests is that money, education and contacts act like a safety net. They let people take bigger risks, survive early failures and get a hearing from investors or partners. Talent and hard work still matter; they simply matter more when someone can afford to fail.

Two common myths, and a fairer way to tell the story

• Myth: billionaires started with nothing. Few of the best-known tech founders did. Most had a good education, a professional family or useful connections.
• Myth: their success was handed to them. Plenty of people had similar advantages and did not build Amazon, Microsoft or Facebook. Timing, skill, ruthlessness and luck all played a part.

A fairer telling includes both. Bezos, Gates and Zuckerberg made bold bets and worked relentlessly, and they also started from positions most people never reach. The thread went viral because it challenged the simpler version, the one in which a garage, a dream and grit are all you need. Knowing the full story helps us judge success more honestly, and think more clearly about how to widen opportunity for those who do not start with a head start.

Sources: thread by Aidan Smith (@aidan_smx), 6 July 2020, as reported by Upworthy; Fortune, July 2018: Jeff Bezos's parents and their Amazon investment; Wikipedia: Jeff Bezos; Wikipedia: Mary Maxwell Gates; Wikipedia: Mark Zuckerberg.