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    Exploding the Myth of the 20 y/o Founder

    Far from the story we are told on repeat, a study found that the most successful new businesses have an average founder age of 45.

    There is a wonderful fairy tale that goes like this: Brilliant college student in posh Ivy League dorm room creates an irresistible startup in his spare time, quits college to run his new shiny enterprise, raises billions in funding and promptly changes the world. Wonderful. Except that, apart from 3 or 4 companies, this is a complete mythology. And that changing the world part? Not always the best outcomes there either.

    It Takes More Than an Idea

    A study by MIT Sloan professor Pierre Azoulay and PhD student Daniel Kim went deep,  looking at data from around the 2.7 million people who founded businesses between 2007-2014 and went on to hire at least one employee. They learned those new ventures with the highest growth had an average founder age of 45.

    “Young people are just smarter.” It’s so easy to pick on Zuckerberg; he is such a wonderfully rich target that keeps on giving reasons for ridicule. (I understand that at least one FTC commissioner is so pissed that he wants jail time for the Zuck. Oops, broke too many things?) The reality is that it takes more than an idea to run a successful company. Tim Cook of Apple is 58. There is experience and direct knowledge of the sector that figures in heavily. “…entrepreneurs were 125 percent more successful if they were previously employed in a particular sector in which they are starting a business,” Kim and Azoulay found. If one is looking to start a business, it makes sense that having some understanding of how these things work would be a competitive advantage.

    Age As Advantage

    There is also the advantage of having a larger network and other resources. “For instance, you get a lot of human capital from experience. You also get more financial resources as you age, as well as social connections, all of which will likely boost your odds of success as an entrepreneur,” Kim said. Young entrepreneurs do have the advantage of being able to take much higher risks, as their recovery ramp following disaster is longer. They also have yet to be kicked in the head by the reality of how hard it is to run a business. Both of these could be known as the young-founder-delusion advantage. If it can be dreamed, it can be made into a unicorn. Maybe. But on balance, the older entrepreneur has the advantage.

    It takes a certain amount of time to understand the human relational skills needed to build and manage a team. It also takes some time to understand how a sector works, where the white space is, and where the land mines are buried. That more successful businesses are started by older people is not a surprise. “If you’re 22 or maybe just coming out of an MBA program, and there is this social perspective that you should be an entrepreneur right now, rethink that, because you might have a great idea but you might not have the right skills or experience to really propel that idea,” Kim said. “Think about career paths as options, not just as absolute paths.”

    There are certain careers where youth has an advantage. But in general, these involve being part of a larger organization rather than creating an organization and running it. Starting and running a business is an incredibly complex endeavor, massively more so if it involves investors and raising money.

    Ride or Die

    We older people are often starting businesses because there is no alternative. We have been pushed out of the work force based on our age and, with no alternative, we become reluctant entrepreneurs. There is something else here that is sometimes overlooked. If there is no Plan B, then it’s ride or die with Plan A. That makes a powerfully motivating force to succeed. The younger person can totally bomb and, with the knowledge that they can just get a job if they fail, they are less committed.

    The older person, on the other hand, may have no alternative. They may have all their chips on the table, fully in, without an escape route. Not all that pleasant for the older business owner — terrifying, actually — but chances are they will find a way to make it work when the younger person can just pull the rip cord and bail out.

    Of course, a situation that seems to work well for everyone is an intergenerational team. This is something that Charlotte Japp of CIRKEL and Chip Conley, ex-Airbnb, will be speaking about at YBL on June 11 in Los Angeles. Please join us for a lively discussion on this topic by purchasing a ticket here.

    Read here for our profile on Chip Conley

    Read here for our review of the CIRKEL fashion event in NYC

    Read here about YBL speaker Geeta Wilson

    David Stewart
    David Stewart
    David is the founder and face of AGEIST. He is an expert on, and a passionate champion of the emerging global over-50 lifestyle. A dynamic speaker, he is available for panels, keynotes and informational talks at david@agei.st.
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