I'd say "promise of future status and material rewards" rather than "threat of poverty". The threat of poverty strongly induces very risk adverse behavior. One of the necessary conditions for a country to produce a silicon valley is that they have sufficient material wealth that poverty isn't a risk.

But yes, once you have the money and the fame, you probably won't be as driven.

You can mitigate risk aversion with a starting in a niche market with a lot of money and demand or in a healthy market of seed capital and incubators.

Even in that context the threat of poverty still hangs as you're functioning with finite resources which are self-propagating.

It's usually a positive thing if the team can finance their own early growth - with a) a product that generates revenue or b) enough growth to appease investors without cannibalizing the teams creative freedom. Something which provides a runway and capacity to reinvest in a larger bolder vision which might take 2-4yrs.

The ROI of being self-sustainable is the founders can keep the team small, independent, and driven by their larger vision while still keeping them grounded in reality.

Early stage acquisitions have a similar downside as starting within Google, as they have to pursue their larger vision after the massive distraction of being acquired and integrated into a larger firm, which equally kills the necessary culture as pure poverty would.

Same with VC, purely gambling investors money on a long term vision usually leads to an early acquisition or late-game hail-mary focus on revenue - but unlike a small startup they will have much higher revenue requirements, which sideline any big visions

I can't comment on how it works for companies as a whole, but it has been shown that individuals are more strongly motivated by the desire to avoid a loss than the desire to gain something.

https://en.wikipedia.org/wiki/Loss_aversion

I'm familiar with loss aversion, and it's really not relevant here. (Maybe it would be if you could fall in status by not innovating, etc.)

I think Elon Musk is an example of the opposite -- he actually put himself in threat of poverty because he wanted to innovate.

Let's not kid ourselves. He was not actually under threat of poverty, just under the threat of losing all his assets. Worst case, he loses his cash and gasp goes to work for someone else, probably for a really high salary (maybe one of the VCs he made rich when he sold PayPal).

Do you have a specific source for "threat of poverty in order to innovate", or are you just referring to his large investments in his companies?

“About four months ago, I ran out of cash,” Elon Musk, 2010

http://dealbook.nytimes.com/2010/06/22/sorkin-elon-musk-of-p...

There are many other sources, and later interviews where he discusses this time of his life.

Interesting, but this is a period where he merely had a liquidity problem, not a lack of assets.

At the time, those were very questionable assets. We don't remember how close both Tesla and SpaceX came to failing. Had those not worked out, Elon really would have lost all his money.

How do you explain the Apple phenomenon in that case? They keep cranking out new product categories in spite of having ample money in the bank.

You can build teams that buck the trend, but it requires strict discipline and high-up leadership that's willing to cannibalize existing profit.

Apple doesn't hand new product categories 100$ million, they make them prototype repeatedly until they have something worthy of investing full resources in.

Apple is not a useful datapoint for anything. It's a company storied and large enough that you can't really learn anything from it.

Nobody else is like Apple, except Apple.

I dont agree that there is nothing others can learn from Apple. At one point in time, Sony stood apart much in the same way that Apple does now.