How old do you think someone should be for the best chance at entrepreneurial success?
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.
More Info: www.forbes.com
Categories: Money Matters