The most successful entrepreneurs are actually middle-aged, not young

May 3, 2018 7:00 AM

Pretty interesting new research looking at American entrepreneurs that was surprising for the researchers: Age and High-Growth Entrepreneurship: Pierre Azoulay, Benjamin Jones, J. Daniel Kim, Javier Miranda [pdf]

1. The average age of the founders of the fastest growing American companies (the top 0.1 percent of highest-growth startups) was 45 years old.

2. The average age of the founders of the fastest growing American companies is 45 is true across ALL American industry sectors. (So Technology/Internet included.)

3. Founders of the most successful businesses get better at starting successful companies the older they become.

4. Experience matters. The more experience the founder has in the industry of the startup, the more likely that startup would be a successful startup.

posted by gen (25 comments total)

Additional coverage:

New research shows successful founders are far older than the Valley stereotype

Here's How Old You Should Be When You Start a Company, According to Science. (It's Not What You Think)

Planet Money - Aging Up: Most people think the best time to start a business is when you're young. (audio)
posted by gen at 7:03 AM on May 3, 2018

I'm surprised that they're surprised. Why would young people, with less money, less experience in their field, and less knowledge of the markets they're serving be the majority of entrepreneurs?
posted by The Underpants Monster at 7:09 AM on May 3, 2018 [30 favorites]

To be precise- they're looking at the most successful (best in 1000) of all American businesses, not just the majority. But you're exactly correct- the media has helped to create this image of the college dropout who goes on to create the super-company (Jobs, Gates, etc.) but that's exceedingly rare.
posted by gen at 7:12 AM on May 3, 2018 [1 favorite]

Millionaires are just inheriting their nest eggs later, I guess.
posted by Artw at 7:19 AM on May 3, 2018 [5 favorites]

This seems like a little bit of a no-brainer? People who have experience in an industry are more likely to create successful businesses in that industry. I understand that we're obsessed with youth and with the idea of disruption, but there is something to be said for knowing what you're talking about.
posted by ArbitraryAndCapricious at 7:25 AM on May 3, 2018 [7 favorites]

The most parsimonious explanation is that this is about access to capital, as are many age-related correlations. (I'm not going to pay to read the study to find out if they address this, but the coverage suggests not.)
posted by enn at 7:27 AM on May 3, 2018 [1 favorite]

> I'm not going to pay to read the study

The paper is available for free: http://www.nber.org/papers/w24489.pdf
posted by gen at 7:33 AM on May 3, 2018

The paper is available for free

That link takes me to a page that says "Online access to NBER Working Papers denied, you have no subscription." Perhaps you have access through your institution, or due to your location? It also says: "You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy."
posted by enn at 7:40 AM on May 3, 2018 [2 favorites]

I'm surprised that they're surprised.

To be fair, when the idea of disruption gets disrupted, even the people who were unsurprised get surprised.
posted by GenjiandProust at 7:43 AM on May 3, 2018 [5 favorites]

Part of the myths of our time are that there is such a thing as 'generic' talent or competence and that good people can get up to speed quickly on anything. This is obviously appealing to many* as if you hate your job, boss and current opportunities it lets you imagine you're just a bit removed from massive success.
That it hasn't happened yet is mostly because other people don't recognize your talent and given you the appropriate opportunities.

This is also reinforced because by definition narratives of why an innovation is successful in the mainstream press focus on the parts that lay people can feel like they understand in a few hundred words, or at most the length of a New Yorker article.

Most important stuff is in fact hard and can take years or even decades to actually learn. Very few problems are things no one has bothered trying yet.

The most parsimonious explanation is that this is about access to capital, as are many age-related correlations.

So obviously I disagree. People experienced in a field can identify problems which are both important and solvable, not to mention draw on knowledge of all the solutions that haven't worked. Capital and a network of support contributes, but people in their 40s can do things that people in their 20s are unlikely to manage.


*I'd be remiss if I didn't admit that having what my sister calls "the confidence of a mediocre white male" makes this especially appealing.
posted by mark k at 7:45 AM on May 3, 2018 [8 favorites]

Well, when first I read this, I thought there is hope for me yet.

Apart from the access to capital part, alas.
posted by y2karl at 7:54 AM on May 3, 2018 [1 favorite]

My experience is that often (in the smaller tech businesses I've worked for), a younger person will want to start a business, but will often partner with an older person (with more resources, contacts, experience etc.) who then runs the 'business' side, while the younger partner leads the development of the product or service. So it doesn't surprise me that most entrepreneurs are older than you might think. Just because they run a tech business doesn't mean they are themselves at the cutting edge of tech innovation - they just know how to keep a business afloat better than most of the people under 30 (again, in my experience).
posted by pipeski at 8:21 AM on May 3, 2018

the media has helped to create this image of the college dropout who goes on to create the super-company (Jobs, Gates, etc.) but that's exceedingly rare.

It's the old Dog Bites Man phenomenon. What gets more attention: a person/people working for years to build up the knowledge, skill, and connections they need to eventually do something great, or that one 19 year old who became a millionaire over a weekend from some hobby project?
posted by Sangermaine at 8:27 AM on May 3, 2018 [2 favorites]

A slightly older copy of the paper is freely available on the MIT Sloan website.
posted by cichlid ceilidh at 8:32 AM on May 3, 2018 [2 favorites]

I'm a tech CEO and co-founder. I'm 37 and a mom.

I would not be able to run this business without the decade plus of experience that I bring to the table. I'm good at closing because I can assure larger clients that I've seen everything and have dealt with regulations in 40 different countries.

I look about a decade younger than my age normally, but I've learned to change my makeup, clothes and hair to age me up or down according to the situation that I'm dealing with. I've found investors a lot harder to deal with in this respect compared to customers because many have a pre-conceived notion of how startup leadership should be and I have to guess what they're looking for much of the time. Do they need 'young and dynamic' or 'mature and confident'?

My co-founder is about a decade younger than me. We split development tasks down the middle and he took over sales while my job combined being a CEO, CFO and Product Manager. We're up to 8 people and I'm glad I can now delegate much of the communications and management tasks I'd been holding on to. I finished an MBA about two years ago and am currently using *all* of it.

I can't imagine my younger self doing this job well. If anything, my capacity to read and understand people is far beyond where it was when I was in my 20s. This helps me to be a better manager, a better negotiator, and even when filling out paperwork because I have a better capacity to read through questions and into what is really being asked. Additionally, my network is much, much more robust.

In the NYC and Pittsburgh startup communities the best companies seem to be run by people who have seen some things. Veterans and seasoned industry experts are usually my favorite picks.
posted by Alison at 8:45 AM on May 3, 2018 [20 favorites]

Mod note: Weird, the original link in the post was in fact publicly available without subscription when the post went up; that seems to have changed in the interim. I've modified the post to link to the MIT-hosted copy that cichlid ceilidh pointed to.
posted by cortex (staff) at 9:27 AM on May 3, 2018 [3 favorites]

While it's easy to be snarky, I think this is a valuable discussion because the media darlings these days are all 20-somethings.

Go read Becoming Steve Jobs for an outstanding case study in how true, lasting success comes through learning and maturity. The Steve Jobs of 2011 was in many ways a completely different man than in 1985 when he was kicked out of Apple.

My job has evolved into one where mentoring and stewarding young talent is critical to our organization's success. One of the biggest challenges I have is in taking a young 20-something with lots of energy and ambition and getting them to realize that developing as a *whole* individual is critical to overall success. Many think that their energy and ambition are enough - and sometimes they are - in the short run.

"Been there, done that" is crucial to building solid organizations.
posted by tgrundke at 9:34 AM on May 3, 2018 [1 favorite]

> The Steve Jobs of 2011 was in many ways a completely different man than in 1985 when he was kicked out of Apple.

Indeed, the Planet Money podcast talks to one of the researchers who points out that Jobs was in his 40s when he was shepherding the iPhone to market- arguably Apple's most important product.
posted by gen at 9:47 AM on May 3, 2018

While it's easy to be snarky, I think this is a valuable discussion because the media darlings these days are all 20-somethings.

I don't know how you could really quantify a thing like that, but I don't think it's true. Tim Cook is 57. Travis Kalanick is 41 (and his replacement Dara Khosrowshahi is 48), Elon Musk is 46, Jeff Bezos is 54, Jack Dorsey is 41. I guess Evan Spiegel of Snapchat is in his twenties, but he's the only big-name startup CEO I can think of in that bracket; even Zuckerberg is well into his thirties now. The average age of CEOs is increasing. Older people control most of the centers of money and power as they always have; I think it's telling that the presence of a few outliers is enough to make people decry "media darlings" in their twenties and our "obsess[ion] with youth."
posted by enn at 10:03 AM on May 3, 2018 [1 favorite]

So, this is very much in my bailiwick as a business school academic who researches entrepreneurship (full disclosure, I worked with Pierre a bit, not on this paper), so happy to answer questions on the paper.

I will also tell you that the same biases that cause you to think that 20-something founders are the best are also why women and minorities are also often discriminated against in venture capital (38% of companies are founded by women, only 6-8% of VC goes to companies with even one female cofounder). Since VCs can't predict success any more than we can (and there are papers to prove it), they use biased heuristics to make decisions - looking for the next Jobs/Zuckerberg. That creates all sorts of problems in who gets funding.
posted by blahblahblah at 10:07 AM on May 3, 2018 [8 favorites]

The biases in venture funding are insidious and perpetuate the status quo. We are starting to see female-run VC funds that focus on female founders but they are still rare- and unproven so far.

In Asia, which I know well, there isnt the hetereogeneity in founders- Chinese companies are almost exclusivly founded by Chinese, there are other biases that the Chinese VCs bring to the table there- so its human nature to an extent, sadly.
posted by gen at 10:18 AM on May 3, 2018 [1 favorite]

> Tim Cook is 57. Travis Kalanick is 41 (and his replacement Dara Khosrowshahi is 48), Elon Musk is 46, Jeff Bezos is 54, Jack Dorsey is 41. I guess Evan Spiegel of Snapchat is in his twenties, but he's the only big-name startup CEO I can think of in that bracket; even Zuckerberg is well into his thirties now.

That seems a little circular in reasoning. Musk sold his first company for $300M when he was 28. Zuckerberg was a multibillionaire before he was 30. Bezos and Dorsey were in their very early thirties they started their major companies. Steve Jobs was worth over a hundred million in 1980 dollars (roughly equivalent to three hundred million in 2018 dollars) before he reached thirty.

Wunderkinds eventually grow up. While most of them fail, even the successful ones aren't necessarily recognized and feted as such until the businesses they started in their twenties have been around for over a decade.
posted by ardgedee at 10:27 AM on May 3, 2018 [1 favorite]

Wunderkinds eventually grow up.

I propose we call them “wundererwachsen.”

Sort of the way that Angry Young Men grow up to be angry men, and that’s kind of sad, alarming, and boring.
posted by GenjiandProust at 11:34 AM on May 3, 2018

In Asia, which I know well, there isnt the hetereogeneity in founders- Chinese companies are almost exclusivly founded by Chinese, there are other biases that the Chinese VCs bring to the table there- so its human nature to an extent, sadly.

China actually has the least gender bias of major VC countries according to some new work by a colleague.

The biases in venture funding are insidious and perpetuate the status quo. We are starting to see female-run VC funds that focus on female founders but they are still rare- and unproven so far.

The bad news is that more female VCs does not mean more investment in women, in fact, women partners are often less likely to invest in other women. The calculus of when women support other women in funding startups is complicated.

(Warning: there may be some self-citations in the stuff above)
posted by blahblahblah at 1:00 PM on May 3, 2018 [1 favorite]

> China actually has the least gender bias of major VC countries according to some new work by a colleague.

Good to hear that. I'd love to see more when the research is public.

China is a complex place. China has more female billionaires and more female CEOs than other countries, (perhaps even taking into account the population I believe) and yet there are very, very few women in the top ranks of the Communist Party. The traditional gender roles of East Asia are common in China and yet there has been space for some women to break out of those roles to lead major businesses.
posted by gen at 4:38 PM on May 3, 2018