In his interview on EconTalk, Paul Graham made a distinction between poverty and squalor. He says that most poor people live like rich people, but with cheap imitations. A rich person might have something made of gold and a poor person might have the same thing except made of plastic. But the creative poor, such as the proverbial starving artist, live differently. They live in poverty but not in squalor. They achieve a pleasant lifestyle by not trying to imitate the rich.
For example, the wealthy have large beautiful houses. The poor have small and usually not-so-beautiful houses. The rich have new expensive cars and the poor have old cheap cars. But the starving artist might not have a house or a car. He or she might live in a converted warehouse with a few nice furnishings and ride a bicycle.
The point of his discussion of poverty was to make an analogy for small software companies. It makes no sense for a tiny start-up to try to be a scaled-down version of Microsoft. They need to have an entirely different strategy. They can be poor without living in squalor.
I don’t know what I think of Graham’s assertion that the poor live cheap imitations of the lifestyles of the rich. There’s probably some truth to it, though I’m not sure how much. And I’m not sure how much truth there is in the romantic image of the bohemian starving artist. But I agree that it makes no sense for a small company to be a miniature version of a huge corporation.

