Paul Graham famously said:
The cutoff in investors’ heads is 32 … after 32 they tend to be a little skeptical.
That apparently is the consensus view on what age you want the founders to be in order to generate successful returns.
What does the data say? According to a new paper by Pierre Azoulay, Ben Jones, Daniel Kim and Javier Miranda, the answer is nothing like that. (The paper isn’t available but the slides from the talk at the NBER Summer Institute have been posted).
Hold on a sec, my impression from Tech Crunch is that the award winners are pretty young.
Yep, around 31 or if you look at Inc and stuff like that it is 29 years
OK so what is it like for the US?
For new firms in the US between 2007 and 2014 (aka the Y-C years), it is 41.9.
OK but that is all firms. What about technology?
It is actually higher, 43.9 with VC backed firms 41.9 and patenting firms 44.6.
Yeah but not in Silicon Valley surely?
Nope pretty much the same.
Alright but what about successful firms? That’s what the VCs care about.
In Silicon Valley, the ones with a successful exit have an average founding age of 47!
What are we missing then?
Probably lots of stuff. This is just the basic data results. It doesn’t seem to pass the standards of modern econometrics (yet). So it may be that we can work out what is at the bottom of this. But it sure is provocative at the moment and should give Silicon Valley investors types some food for thought. It should also cause us to have another look at whether encouraging 20 somethings with endless entrepreneurship programs is a good idea.
36 Replies to “The young entrepreneur myth?”
Fully agree. Some more data points: according to the Kauffman Foundation, typical successful founders are 40yo and 2x are over 50yo than under 25; according to Cowboy Ventures, unicorn founders are between 34-36. This whole idea of university students ‘doing stuff’ rather than ‘learning how to think about doing stuff better’ is misplaced and does not do them good. Successful under 25 are outliers.
Please, please, please will someone show this data to all the international aid agencies like IFC which are promoting entrepreneurship as the answer to youth unemployment in places like Tunisia and the way forward for the Arab spring.
Only in a youth-obsessed culture would we miss the obvious correlation between age and experience, or forget that experience and a higher quality rolodex are often the most crucial determinants of enrepreneurial success.
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