How old do you think someone should be for the best chance at entrepreneurial success?
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| David Duffield, founder of PeopleSoft and Workday (Wikipedia) |
If you said 20, or 22, or 25, you are not alone.
It wasn’t that long ago that age signified wisdom. But in the last
decade Silicon Valley routinely, even systematically, has overlooked the
old in search of the youthful. A couple of years ago, entrepreneur and
TechCrunch founder Michael Arrington wrote a blog post called, “Internet Entrepreneurs Are Like Professional Athletes, They Peak Around 25.” The average age of a Y-Combinator founder is only 26.
Today’s digital natives are
as adept at consuming new technologies as
they are unencumbered by old ways of thinking. My friend Tom Chi, a
former Yahoo! executive and prototyping guru for Google X Labs, likes to
say, “Knowing is the enemy of learning.” Certainly being young and
inexperienced is one way to approach new ideas with a beginner’s mind.
But research debunks the myth that youth is the key to
entrepreneurial success. And by investing our resources only in the
young, our society is missing a huge opportunity.
Youth superiority is a myth
My colleagues and I did a study,
funded by the Kauffman Foundation, that surveyed 500 successful high
growth founders. Against all stereotypes, we found that the typical
successful founder was 40 years old, with at least 6-10 years of
industry experience. Twice as many successful entrepreneurs are more
than 50 as under 25.
You may say, "Ok, but when it comes to disruptive, billion dollar
Internet ideas like Facebook, surely the young must have a leg up on
founders with gray hair!”
Let’s take a look at some recent analysis
by Aileen Lee of seed stage fund Cowboy Ventures. She studied U.S.
software start-ups that sold for billions of dollars over the last
decade, which she called “unicorns.”
“Inexperienced, twentysomething founders were an outlier,” explains
Lee. “Companies with well-educated, thirtysomething co-founders who have
history together have built the most successes.”
The founders of LinkedIn, the second most valuable unicorn in their
study, averaged 36; founders of the third most valuable, Workday,
averaged 52. The average founder on the unicorn list was 34. So even the
biggest hits, on average, have emerged from experience.
Why are older entrepreneurs more likely to succeed?
Studies
have shown that for entrepreneurship, unlike typical markets,
information networks are inefficient; this means founders identify
different opportunities based on their unique prior knowledge.
While a 20-year old may have little more experience than going to
classes, using their mobile apps, and pursuing their hobbies, a manager
from a manufacturing company might recognize the need for new logistical
software, or a technician in the energy industry might see the
opportunity for a better ceramic filter. These opportunities are not
sexy nor obvious to someone fresh out of college, but they can make a
unique and compelling value proposition and the basis of a successful
company.
And of course, ideas are only ideas until you execute. More
experienced leaders tend to have deeper networks, experience managing
teams, and better business savvy and skills for delivering on their
vision.
Some investors are catching on; for example, German entrepreneur Rolf Herken is tapping into experienced talent with his two new organizations,
Mine Innovation Engineering and Reality Ventures. But in the meantime,
the rest of us are worshipping at the altar of youth entrepreneurship.
The cheated generation
I constantly meet millennials whose only ambition is to start a
company. They say they don’t want to work for The Man; they want to
pursue their own dreams. They have been drinking the Kool-Aid of
entrepreneurship.
In response to the demand, universities are falling over themselves
to provide new courses and programs in entrepreneurship. And students
are spending a lot of energy coming up with startup ideas and entering
business plan competitions. Billionaire Peter Thiel took things a step
further when in 2011 he started enticing students to skip college for
his 2-year, $100,000 Thiel Fellowships.
But are we cheating this next generation out of viable careers? Not
everyone can be a successful founder. Given that most startups fail, in
five to ten years will we have a generation of self-employed
30-somethings that were chasing their dreams, but were left with not
much more than a few failures under their belts?
Don’t get me wrong; students do need to take charge of their careers,
and entrepreneurial skills will be critical for success. But whenever a
student without a startup idea asks me for advice with that panicked
look in their eyes, I tell them not to worry. If they want to explore
the startup world, they can join another startup founded by someone with
real industry experience. They should pursue their curiosity and build
up their own unique series of experiences to draw from in the future. I
assure them that they can always start a company when they have a
compelling idea worth focusing on.
The key to entrepreneurship and success
So what does this mean for policymakers and the business community?
If we want to solve youth unemployment or to stimulate economic growth,
we need to ask ourselves, “Where will these companies come from, and who
will have the skills to work for them?"
To really reach our entrepreneurial potential, we must create an environment that encourages experienced
talent to recognize new business opportunities and spin out new
ventures from their existing corporations when it makes sense. For
example, my colleagues and I just released a new study
that shows health insurance availability is an important factor for
fostering entrepreneurship, and this is especially true for those who
are older, married, and have children. Startup programs should cultivate
entrepreneurs in older industries ripe for disruption, from
transportation to manufacturing and beyond.
Older entrepreneurs can be role models for the next generation, who
should first learn real technical and creative skills that are in short
supply in the real world. Although it’s commendable for young innovators
to try their hand at a start-up if they have a compelling idea, they
shouldn’t be enticed away from developing a foundation that they can
build on later.
No matter where he or she ends up – as a founder, a policymaker, or
an employee at a big company – someone with a strong set of
entrepreneurial skills plus a set of unique knowledge and experiences
will be primed for a career of making impact and positively contributing
to society. And it’ll never be too late to start that company one day.
By
By
Listen to The Art of Manufacturing podcast for a behind the scenes look at entrepreneurs who make stuff. Follow me on Forbes here and on Twitter (@krisztinaholly) for more insights on the future of creativity, innovation, and entrepreneurship.
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