Startup Unicorns Are Founded by 40-Year-Olds, Not 20-Year-Olds
STORY INLINE POST
When you think of startups, you likely imagine a college dropout creating a business out of his/her dorm room. After all, that has been the story painted about many of the internet giants of our time: Mark Zuckerberg started Facebook while at Harvard; Bill Gates started Microsoft at 20; Steve Jobs launched Apple at 25.
However, contrary to popular belief, young founders are actually the exception, not the rule.
A new study by researchers at MIT, Northwestern, Wharton and the U.S. Census Bureau found that startup founders are actually much older than you think. The mean age of startup founders is 42 years old. The mean age of high-tech startup founders is 43 years old. And the average age of founders of the high-growth unicorns (1 in 1,000 fastest-growing ventures) is 45 years old.
The study shows that the likelihood of success of a founder actually increases with age, all the way up to age 60. The older you get, the more likely your chances of success are. A 50-year-old founder is twice as likely to build a thriving enterprise that has either an IPO or a successful acquisition, versus a 30-year-old founder.
There are numerous founders who fall into this age group, many of whom started companies that you use on a daily basis. Eric Yuan created Zoom at 41. Reed Hastings started Netflix when he was 37. Bill Porter founded E-Trade at 54. Robert Noyce founded Intel when he was 41. And, my personal favorite, David Duffield and Aneel Bhusri created Workday at 65 and 40, respectively.
If the average age of high-growth founders is 45, why do we all have the college dropout as the image for startups? Blame it on the media. The sensationalist story of a 19-year-old Harvard dropout clearly sells more magazine covers than the 65 year-old who sold his previous payroll company to Oracle and is now launching another one.
Outside of the media, the question still begs. Are 40 year-olds really better at starting companies than 20 year-olds? And, if so, what makes them better? There are a few explanations that the study mentions, as well as a couple of other sources I tapped to get more color. Here are the primary reasons:
Work experience - The study reports that a leading indicator is work experience in the same industry. A similar study by Harvard Business Review reported that entrepreneurs with at least three years of prior work experience in the same industry as their startup were 85% more likely to succeed.
Life experience - I am sure you have heard the phrase: “Older, but wiser.” Forty-year-olds have more life experience than 20-year-olds, which provides valuable insight that can help them become successful entrepreneurs. They’ve had more time to observe how businesses and products work in the real world and gain a better understanding of customer needs. This allows them to make informed decisions when it comes to developing their own startups.
Knowledge and skills - Forty-year-olds have had more time to adopt skills. They have also worked in more types of positions and companies, which allow them to develop those skills. Speaking from personal experience (as I round the corner to 40), I can design in Adobe Photoshop and Illustrator, I am a Powerpoint wizard, I am a motivational speaker, I am a ninja at recruiting, I can run a sales funnel better than anyone and I can build financial models up there with the rest of them. I had nearly none of those skills when I was 20.
Social networks - Forty-year-olds have likely spent more time cultivating professional relationships than 20-year-olds. They also have more time to create more social networks through work, extra-curricular activities, spouses, kids, boards and more. Once they have those relationships, they are better able to think and act strategically and leverage relationships to achieve their goals, due to their maturity. This means they can find the right people to help them launch their business — a crucial step for any new startup.
Financial resources - Forty-year-olds generally have better financial resources than 20-year-olds. Most 40-year-olds have established careers, accumulated savings, and have access to capital investments through investors or banks. This gives them the ability to fuel their startups with enough resources to succeed, rather than having to scrounge up funds from friends, family, and other sources.
George Elliot put it best: “It is never too late to be what you might have been.” If David Duffield can build Workday at 65, you can start your company at 40 or 50. I don’t know about you, but for this repeat entrepreneur, mother of three who is still grinding it out, the future seems a little brighter.