How Old Are Successful Tech Entrepreneurs?
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Entrepreneurship Careers May 15, 2018

How Old Are Suc­cess­ful Tech Entrepreneurs?

A defin­i­tive new study dis­pels the myth of the Sil­i­con Val­ley wunderkind.

successful entrepreneurs are most often middle aged

Michael Meier

Based on the research of

Pierre Azoulay

Benjamin F. Jones

J. Daniel Kim

Javier Miranda

Sil­i­con Valley’s tech work­ers can go to great lengths to appear youth­ful — from hav­ing plas­tic surgery and hair trans­plants, to lurk­ing in the park­ing lots of hip tech com­pa­nies to see how the young and promis­ing dress, as chron­i­cled a few years ago by the New Repub­lic.

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While this may seem extreme, there is clear­ly a bias among many in the tech sec­tor toward the young. Take Mark Zuckerberg’s state­ment that young peo­ple are just smarter,” or the $100,000 fel­low­ships that Pay­Pal cofounder Peter Thiel hands out each year to bright entre­pre­neurs — pro­vid­ed that they are under 23.

There’s this idea that young peo­ple are just more like­ly to have more valu­able ideas,” says Ben­jamin Jones, a pro­fes­sor of strat­e­gy at the Kel­logg School. 

But is this notion accurate? 

If you look at age and great achieve­ment in the sci­ences in gen­er­al, it doesn’t peak in the twen­ties,” he says. It’s more mid­dle-aged.” Even Nobel Prize win­ners are hav­ing their break­through suc­cess­es lat­er and lat­er in life, Jones found in ear­li­er research. Are the star­tups of Sil­i­con Val­ley real­ly an exception? 

In a new study, Jones, along with Javier Miran­da of the U.S. Cen­sus Bureau and MIT’s Pierre Azoulay and J. Daniel Kim, use an expan­sive dataset to tack­le that ques­tion. The researchers find that, con­trary to pop­u­lar think­ing, the best entre­pre­neurs tend to be mid­dle-aged. Among the very fastest-grow­ing new tech com­pa­nies, the aver­age founder was 45 at the time of found­ing. Fur­ther­more, a giv­en 50-year-old entre­pre­neur is near­ly twice as like­ly to have a run­away suc­cess as a 30-year-old.

At What Age Are Entrepreneurs Likely to Find Success?A person who is
is 2.1x as likely to found a successful startup as a person who is
(Change the ages above to see more combinations.)40 year olds make up 3.0% of startup founders, while 25 year olds make up 1.7%.A 40 year old is 1.3x as likely as a 25 year old to found a startup that is in the top 0.1%.Interactive: Frank Elavsky, Research Computing

These find­ings have seri­ous impli­ca­tions — not only for aspir­ing entre­pre­neurs, who might be over- or under­es­ti­mat­ing their odds of suc­cess based on their age, but for soci­ety at large. After all, if ven­ture cap­i­tal­ists are reluc­tant to bet on old­er entre­pre­neurs, then many poten­tial­ly suc­cess­ful star­tups may nev­er get off the ground. 

If we’re not allo­cat­ing dol­lars to the right peo­ple in entre­pre­neur­ship, we may be los­ing, in terms of the advances that best raise socioe­co­nom­ic pros­per­i­ty,” Jones says. It’s actu­al­ly a fair­ly high-stakes question.” 

Old­er vs. Younger Entrepreneurs 

In the­o­ry, Jones says, there are plen­ty of good rea­sons to think that younger peo­ple make bet­ter entre­pre­neurs, espe­cial­ly in technology. 

One idea is that young peo­ple are espe­cial­ly like­ly to have trans­for­ma­tive ideas — that they’re not behold­en to the cur­rent par­a­digm,” he explains. When you think of Mark Zucker­berg say­ing, Move fast and break things,’ the ear­ly Face­book mantra, it’s very much this empha­sis on trans­for­ma­tion and disruption.” 

As dig­i­tal natives, younger entre­pre­neurs may also have a bet­ter sense of how tech­nol­o­gy can meet con­sumer demands. Fur­ther­more, peo­ple in their twen­ties are less like­ly to have mort­gages or fam­i­lies that dis­tract from their pro­fes­sion­al goals. 

They can be all-in, hour-after-hour, in a way that old­er peo­ple might have trou­ble match­ing, giv­en oth­er respon­si­bil­i­ties,” Jones says. 

But the oppo­site sto­ry is just as com­pelling: Old­er peo­ple have had decades to build the busi­ness, lead­er­ship, and prob­lem-solv­ing chops that help a start­up suc­ceed. And while they may be less tapped into cer­tain con­sumer trends, espe­cial­ly around the habits of the young, they may know quite a bit more about oth­er busi­ness opportunities. 

Expe­ri­ence can bring sub­stan­tial insight about spe­cif­ic mar­kets and spe­cif­ic tech­nolo­gies, in addi­tion to skills at run­ning things,” Jones argues. 

So which nar­ra­tive is cor­rect? I’ve want­ed to ask the ques­tion for a very long time but didn’t have the data,” says Jones. 

While researchers could mea­sure the suc­cess of new com­pa­nies on a large scale, they were not able to iden­ti­fy their founders. That changed last year, when infor­ma­tion on com­pa­ny own­ers was made avail­able to researchers work­ing on inter­nal Cen­sus projects. 

The longer you’ve been around, the bet­ter your odds.”

By com­bin­ing tax-fil­ing data, U.S. Cen­sus infor­ma­tion, and oth­er fed­er­al datasets, the researchers were able to com­pile a list of 2.7 mil­lion com­pa­ny founders who hired at least one employ­ee between 2007 and 2014

Pre­vi­ous stud­ies of entre­pre­neur­ship have had to rely on rel­a­tive­ly small sam­ples of founders. But the beau­ty of admin­is­tra­tive data is that it’s not a sam­ple,” Jones says. It’s the actu­al uni­verse of data.” 

The Longer You’ve Been Around, the Bet­ter Your Odds” 

Among the 2.7 mil­lion founders in their dataset, the aver­age age of a company’s founder at the time of found­ing was 41.9 years. 

How­ev­er, that analy­sis includ­ed all kinds of firms, from tech com­pa­nies to nail salons to restau­rants. The researchers were chiefly inter­est­ed in high-growth new ven­tures — the kinds that can trans­form the econ­o­my — and under­stand­ing whether the Sil­i­con Val­ley mythol­o­gy was true. So they lim­it­ed their dataset to include only tech­nol­o­gy com­pa­nies, and fur­ther win­nowed that down to the fastest-grow­ing 0.1 per­cent — in oth­er words, the one com­pa­ny out of every 1,000 that saw its sales or num­ber of employ­ees increase the most in its first five years. 

Among this exclu­sive sub­set, the aver­age founder age was 45.0. It sur­prised me,” Jones says. It’s even old­er than I thought.” 

For an alter­na­tive mea­sure of suc­cess, the researchers also looked at firms that had suc­cess­ful­ly exit­ed” the mar­ket, either by get­ting acquired by anoth­er com­pa­ny or going pub­lic in an IPO. The aver­age founder for that group was even old­er, at 46.7.

While these results clear­ly indi­cate that mid­dle-aged founders dom­i­nate among the high­est-growth firms, it is also true that forty-some­things are much more like­ly to try to start a new com­pa­ny than twenty-somethings. 

There are more bites at the apple from 40-year-olds,” Jones says. 

To fur­ther test their results, the researchers made anoth­er cal­cu­la­tion look­ing at the prob­a­bil­i­ty of suc­cess among those who had found­ed a firm. They deter­mined what they call bat­ting aver­ages”— the odds that founders of dif­fer­ent ages make it into the top 0.1 percentile. 

The data revealed that a founder who is 50 years old is 1.8 times more like­ly to start a top com­pa­ny than a 30-year-old founder, and that a 20-year-old founder has the worst chance of all. 

The longer you’ve been around, the bet­ter your odds,” Jones says. 

Why Do Entre­pre­neurs Get Bet­ter with Age? 

The results prompt anoth­er big ques­tion: What is it about mid­dle-aged founders that accounts for their high­er rate of suc­cess? Is it stronger lead­er­ship skills? Greater finan­cial resources? A more robust net­work of cus­tomers and sup­pli­ers? Or some­thing else entirely? 

While the paper does not attempt to pick apart all the mech­a­nisms behind suc­cess, it does offer an enlight­en­ing insight: founders with three or more years of expe­ri­ence in the same indus­try as their start­up are twice as like­ly to have a one-in-1,000 fastest-grow­ing company. 

The facts stand strong­ly against the idea that you want to come from out­side of the indus­try,” Jones says. 

He hopes to explore this ques­tion more deeply in future research. 

Jones also wants to inves­ti­gate a puz­zle that the paper intro­duces: while old­er peo­ple build stronger com­pa­nies, ven­ture cap­i­tal­ists nonethe­less invest dis­pro­por­tion­ate­ly in firms with younger founders. 

Per­haps this is because young peo­ple tend to have few­er finan­cial resources, so ven­ture cap­i­tal­ists inten­tion­al­ly tar­get them, know­ing that they are like­ly to get a bet­ter stake in the com­pa­ny. Or it may be evi­dence that ven­ture cap­i­tal­ists are buy­ing into the flawed belief that young peo­ple make bet­ter entrepreneurs. 

It could be ratio­nal for the ven­ture cap­i­tal­ists, or it could be that they’re just mak­ing a big mis­take,” Jones says. 

He sus­pects that the young founder” myth has pushed young peo­ple to take unwise risks in the past and kept old­er peo­ple from act­ing on their ideas. He hopes that the study takes a step towards dis­pelling that myth. 

At the indi­vid­ual lev­el, you have to ask your­self Do I want to be a founder now, at this point in my life?’” he says of peo­ple decid­ing whether or not to choose the entre­pre­neur­ship path. I think this can be very use­ful infor­ma­tion to peo­ple weigh­ing that decision.” 

Featured Faculty

Benjamin F. Jones

Professor of Strategy; Faculty Director, Kellogg Innovation and Entrepreneurship Initiative (KIEI)

About the Writer

Jake J. Smith is a writer and radio producer in Chicago.

About the Research

Azoulay, Pierre. Benjamin F. Jones, J. Daniel Kim, and Javier Miranda. 2018. "Age and High-Growth Entrepreneurship." Working paper.

Read the original

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