The youth of today have access to technology and capital unlike any other generation, but it is their slightly older entrepreneurial brethren who make up the vast majority of start-up successes.
Mark Zuckerberg and Bill Gates founded their path breaking companies when they were still in their teens. Steve Jobs founded Apple at 21. Their stories, which get a lot of media attention, have many believing that younger entrepreneurs are the most successful. However, a study entitled, “Age and High-growth Entrepreneurship,” determined the most successful founders in the United States are in their 40’s.
If age is not the precursor for entrepreneurial success then why bother to study it? There has been a pervasive attitude amongst venture capitalists, angel investors and other lenders that once a person inters there mid-thirties they begin to become more skeptical of the actuality of successfulness. When you are in your teens or twenties you typically have much less “life” responsibility. You have little to no money, you are on your own, meaning not married or living with your family, and no children to support or career as of yet to worry about.
Interestingly enough the primary determinant in entrepreneurial success appears to be expertise or familiarity with the venture you have undertaken. According to Professor Daniel Kim who worked on the survey, “What we’ve found to be the most supportive in really explaining this link between age and entrepreneurial success was prior experience. The number of years that one spends in the same industry as the startup was predictive of that company’s future performance.” This is an adage that I have promoted for a long time. It seems fairly obvious that the more you know about the business you start the better it should be, all things being equal. I don’t think this study has found anything really that common knowledge hasn’t already taught us.
Work in an industry that interests you if possible, and learn as much about the business as you can before starting your own. As the chart below depicts, even though the likes of Gates and Jobs were very young when they began their businesses, their true wealth was not realized until decades later.
Another aspect that is also associated with young entrepreneurs is that if you fail while you’re young, you don’t have as much to lose, and can use it as a learning experience to begin again. Kim goes on to state that, “There’s the whole mantra of fail fast, so we also need to look at serial entrepreneurs, whether it really makes sense to try and then fail, and if that actually helps you become a better entrepreneur. I think the jury’s still out on that question. We hope to study that as well.”
At this point, it’s really unclear why and how investors are taking into account the age effect in entrepreneurship, but there seems to be this bias among the venture investors towards younger entrepreneurs. What this study suggests is that those who desire to leave the corporate world with or without an MBA in their late 30’s or 40’s may actually have a better chance of entrepreneurial success as a result of the time spent in the business.