Fast Company

Follow The Money: Does Wealth Lead To Innovation?

Our list finds that median household income doesn't determine startup success.

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Why? "There is a reasonable hypothesis that areas that are fertile for startups are fertile at a point in time, such as Detroit in the 1890s," says Ed Glaeser, Eleanor Glimp Professor of Economics at Harvard. "Startups come, they succeed, and then it becomes progressively less friendly as the area becomes wealthier. A few dominant firms emerge and they eventually end up pushing out startups. Areas then have to find a way to reinvent themselves."

[Twenty Dollars Image via Robert Pernell]

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2 Comments

  • jpsilvashy

    This article has no real value, what is an "Innovation Hub". I'd love to see some stats at how Florida is the top "Innovation Hub".

    What factors are you using to determine if a startup is successful, more so, how can you possibly know the founders personal or family wealth in a large enough sample?

    I've been apart of 2 successful startups but nobody has ever done an evaluation of my family or personal wealth before I had a company. This article is a gross generalization to get clicks... 

    Fast Co., you can do better than this.

  • Chris Jones

    This is so erroneous, it is useless. A couple of major points:

    1.  The definition of "innovation," established in a sibling article, is fallacious. All startups were included, not just those that involve innovation.

    2.  Critical measures are ignored, such as wealth distribution. Both wealth and impoverishment contribute to entrepreneurship. A state having significant polarization, with a high number of both rich and poor residents, might have middling average wealth. Average wealth alone doesn't tell the story.