The media has done an excellent job of promulgating the myth of the whiz kid entrepreneur, likely galvanized by Mark Zuckerberg and the monumental success of Facebook. The typical Silicon Valley success story leads with the Stanford student, or better yet, a Stanford drop out, who raises millions of dollars to build a world changing company.
And from where I sit, mentoring students and recent alumni of MIT, the myth certainly seems true. Even the alumni skew to being less than 30 years of age. I’ve yet to see a faculty member and I think perhaps only one or two staff have appeared in my ventures to be mentored queue.
Of course, I’ve seen studies showing that startup founders tend to be far older than the Mark Zuckerbergs of Silicon Valley fame, but I largely dismissed those studies as they included founders of small, no-growth businesses like pizza shops and dry cleaners, not the fast growth startups I’m used to working with. These studies showed that owners of small businesses tended to be in their late 30 and 40s.
However, new research by the economists Pierre Azoulay of M.I.T., Ben Jones of Northwestern, J. Daniel Kim of the University of Pennsylvania and Javier Miranda of the United States Census Bureau, provides the first systematic calculation of the ages of the founders of high-growth start-ups in the United States.
This research is highlighted in The New York Times article Founders of Successful Tech Companies Are Mostly Middle-Aged by Seema Jayachandran.
After stripping identifying information, the government provided the researchers with a data set including 2.7 million business founders. The researchers calculated that the founders’ average age was 42. And for the founders of the 0.1 percent fastest-growing firms, the average age was 45. Firms that were successful enough to have an initial public offering or be acquired by a larger company showed the same pattern: Their founders were generally middle-aged.
The bulk of the article focuses on Tony Fadell, founder of Nest Labs, father of the iPod and key player in the development of Apple’s iPhone. His story is well worth reading about. But unfortunately the author misses a key point about entrepreneurs and why their age averages out to 42 years: I wager that a large number of successful entrepreneurs are serial entrepreneurs. Serial entrepreneurs often try, but fail at their first or even second startups. But they perform the number one job of the founder: to learn. And they apply that learning to their following startups and thus avoid many of the mistakes first time founders make. It is unfortunate that the census data the study relied upon did not provide data on how many businesses these founders started or co-founded.
Back in the last century the received wisdom amongst VCs was to be leery of funding founders who had already tasted success. They reasoned that successful entrepreneurs would lose that lean and hungry drive so necessary to building something from nothing. Now, three decades later, venture capitalists learned what Hollywood knew years ago: better to back a director who made one film that flopped that someone with no directing experience whatsoever. I’d venture to say that there is now a positive bias in favor of serial entrepreneurs, successful or not. In fact many VC firms have “entrepreneur in residence” programs to bring their successful founders in house in the hopes that they will help the venture firm spot winners or even start a new company, to be backed, of course, by the hosting VC firm.
So what’s the lesson in this new study for founders? If you are young you can leverage the bias in favor of youth: risk-taking mindset, raw problem solving capability and pure energy. And if you are headed towards middle-age, or even there already, you should position yourself as older but wiser, with great examples of how you have learned from experience. Either way, founders are the product – the best investors put their money on great founders, not great ideas. Great ideas are cheap, not so great founders. Finally diversity wins when it comes to teams. So if you are a recent graduate make sure your co-founders have experience working in startups and in tech companies. And if you graduated some time ago, then play up your experience and look for younger teammates. As I say to my mentees, marketing is 90% positioning. As a founder you are marketing and selling yourself constantly: to investors, employees, partners, the media, vendors and others. Play to your strengths and build a team that can cover for your weaknesses.