When It Comes To Founding Successful Startups, Old Guys Rule

http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/

by vaksel • 17 years ago

78 62 17 years ago

techcrunch.com

Gibbon• 17 years ago

From Canada's profit 100 list:

Avg founder age: 43

62 have started multiple firms

3 firms on avg.

Avg workweek 58 hours

Graduate degrees 27

Sole founders 37

Co-founders 48

Female 6

Avg 5-yr growth rate: 2506%

cedsav• 17 years ago

If most have started multiple firms, then they didn't start being entrepreneur at 43. So is it age, or simply repeated experiences that really matter?

mixmax• 17 years ago

One is a prerequisite for the other.

pclark3• 17 years ago

my first thought: no shit?

why do you think serial entrepreneurs find it so much easier to raise money?

PG wrote an essay on it, and the startup learning paradox. You're likely to fail when you're young because you're inexperienced, but the only way to get experience is to start up.

stingraycharles• 17 years ago

You have to keep in mind the audience Techcrunch is appealing to: a lot of these rockstars probably really think wisdom comes with intelligence instead of the years.

What I'm wondering about, though, is the rest of these younger entrepreneurs: I understand that the older entrepreneurs of course make better decisions, but I wonder how much of these younger entrepreneurs (wrongfully) think they are just as capable, and thus something like Dunning-Kruger was taking effect.

I try to reflect this on myself, 26 years old and founder of a startup, and I am fully aware of my inexperience. I personally attempt to compensate that problem by gathering more experienced people around me, but in the end, there is only so much you can do about it. I do think, however, that knowing you don't know everything at least allows you to be more aware when you're likely to make a mistake.

pclark3• 17 years ago

I'm 21 and CEO of a startup and I don't know shit - I'm not even that smart - hence why I talk and listen to as many smart people as I can. I like to think I'm pretty good at working out what advice is good advice...

I also feel the only way to learn properly is to do it. You'll only follow someone's advice so far till your gut sets in and you need to make your own path - even if that requires being proved wrong.

edw519• 17 years ago

Word to the wise. Discount the old guys at your own peril.

Discount anyone at your own peril. These days, things are often not as they appear.

erlanger• 17 years ago

Classism, ageism, racism...all prejudices are to be avoided, regardless of the era.

yters5• 17 years ago

According to intelligent design theory (IDT), everyone is very capable of providing good advice, and people are always better than anything else at giving you information. This is because IDT shows no computational device or mechanism can actually create information, only people can do so.

And, any person can do so, not only special people. This is because people have free will and intelligence (i.e. are intelligent agents) and machines do not. Thus, it is mathematically provable that prejudice is always wrong.

kds• 17 years ago

Just an interesting fact to share:

Ray Kroc of McDonald's fame was in his 50s when he started the business. The McDonald's fast-food chain happened to become successful company and top-brand within Ray's lifetime. He died in the 1980s. Before McDonald's he hadn't been known for anything truly glorious and exceptional as achievement.

Perhaps, besides amounting enourmous experience and insight about restaurants and sales. Something which took him decades in the hard way and is recognizable only afterwards.

http://en.wikipedia.org/wiki/Ray_Kroc

1gor• 17 years ago

I have a theory why successful 'old' guys come as such a surprise. It is because a 'young founder' is largely a product of propaganda. Young guys are mercilessly exploited by VC crowd. Venture Capitalists and startup-buying companies like Google (should I also add incubators like YC?) need to maintain 'young is good' thesis to attract the supply of fresh cannon fodder.

The truth is that a VC sits on a portfolio of undervalued options. A success among pool of startups is always a non-linear event. It is a meteoric rise, a market-share grab which often actually creates a completely new market. A very few successful startups will make a large pool of dog investments still a very profitable business. One option will fire, the rest will expire worthless.

That's why a VC has to drive all of his startups towards increasing risk and trying to grow big, fast. Go for a large team. Invest, borrow, rise capital. One of you will win, the rist... what do I care?

Now, from the point of view of entrepreneurs, they often get a very poor deal. An engineer has only one option in his portfolio -- that is his venture. Its success is largely dependent on random factors like stumbling on a network effect, or tapping a new undiscovered need of millions. What would be a true price of such an option?

Whatever the price, young guys have poor bargaining power at the negotiating table facing seasoned VCs. Older guys do better. For a young guy a startup is not only a way to riches -- it is also a way to self-actualise, to define one's identify. An old guy does not need this crap. He has accomplishment behind his belt. He can drive a hard bargain and to get better deal from a VC. He is driven to get a good business deal, and will not go dancing across the room just because his name features in some crappy termsheet.

An old hand is also more likely to take less risk and to shoot for a long term, VC appetite be damned. They will be practicing more 37signals-like approach. Profitable? Have positive cashflow? Great! And fuck your IPO plans, at least until I feel the time is right.

So, it is no wonder that older founders have better success rates. They exploit the VC industry when they want to, not the other way around.

pg3• 17 years ago

Your theory is about a third right. Young founders do get more attention from the press. But not because of propaganda campaigns by their investors. The press doesn't have to be talked into it: they already have a bias toward writing about young founders.

And it's definitely false that VCs prefer founders who are young because they can be pushed around. VCs are very unlikely to invest in someone they can push around. Nothing turns them off like weakness.

jacquesm3• 17 years ago

Are you willing to share the number of companies YC has invested in where founders were in their 20s, 30s, 40s, 50s or older ?

yters5• 17 years ago

I've been curious about the phenomena of successful young startups in the media. Has the media always concentrated on such stories, exploiting people's hope to become an instant millionaire? Or is it a recent phenomena generated by the internet millionaires?

andreyf4• 17 years ago

At least since the 1690's: http://en.wikipedia.org/wiki/Gold_rush

mwerty• 17 years ago

"..showed that the average founder of a high-growth company launched his venture at age 40."

Have not read the paper but this sounds like survivor-ship bias. The number you'd want is what percentage of old guy companies succeed.

sriramk• 17 years ago

Not to derail the conversation but when did 40 become 'old'? I'm just a decade and a half from that age and that isn't long. I'd probably consider 60 or 70 to be old. Not 40.

philwelch3• 17 years ago

"Old" is relative to context. 40 is old for a startup founder or professional athlete. 40 is young for a presidential candidate or a CEO at a big, pre-existing company. 40 is old for a stripper, but young for a retiree.

yters5• 17 years ago

I consider 26, my age, to be old.

zacker2• 17 years ago

I think this article is misleading.

See Figure 1 on page 8 -- only 30.4% of the entrepreneurs surveyed were in software or hardware start ups, the rest were in other 'high technology' industries such as energy and bio-tech. I would love to see the same questions asked of only web-software start up entrepreneurs, I bet the results (age, experience, etc.) would skew differently.

tjmc• 17 years ago

No - the Hacker News/PG convention of referring to 'startups' meaning only web software startups is misleading. The general use of the term is broader. Seeing the breakdown by category would be interesting though.

zacker2• 17 years ago

I didn't explain myself well enough. It's assumed that &th audiences of HN and Techcrunch skew very much towards software startups. Given that, it is wrong to assume this survey bears much weight towards the audience of these sites. Techrunch should have realized this and flagged it before publishing the article.

envitar• 17 years ago

Excellent point!Add to this the fact that these old guys may well have a better understanding of what the customer wants and perhaps is prepared to pay for any service. Everybody is focusing on Google but how many like them tried and failed? You won't read about them. Someone who starts a business with his family attached to him thinks twice about each move and turn as any mistake may seriously affect not just his personal livelihood but his family's as well.A young twenty something who doesn't make it can always find a career afterwards something which is not necessarily the case for a forty something.

skmurphy2• 17 years ago

Strangely, the fact that failure will penalize an older team more can mean that their commitments in a B2B setting are taken much more seriously: if they fail to perform they cannot "move to another lifetime" they have to live with the consequences. This can make them more careful to promise what they can deliver and deliver what they promise.

callmeed2• 17 years ago

Wasn't there a big to-do at Revenue Bootcamp with PG and Mike Moritz? Didn't Moritz dismiss/dodge questions about "older" (> 30) founders? (see: http://www.thefunded.com/funds/item/5749)

Aren't most YC founders < 30ish?

It's curious.

dannyr2• 17 years ago

http://news.ycombinator.com/item?id=638350

from pg:

"There are quite a lot of founders over 30. I don't know exactly how many because we don't keep track of ages. The sharp falloff is around 35, but we've had a handful of founders over 40. None over 50 though. I think our age distribution is probably close to the age distribution for startups generally. We've funded more founders who are 27 than 20 or 35 because more people start startups at 27 than at 20 or 35."

andreyf4• 17 years ago

I think our age distribution is probably close to the age distribution for startups generally.

That can't be right - surely there is a correlation between the value of that YC provides and the amount of time one has spent in industry. I'd imagine that once one has $50k in savings, and has worked with law firms, knows angels and VC's, the value of YC funding drops drastically. Hence, I'd imagine older (more experienced) founders wouldn't be as interested in YC as, say, students in their early 20's.

araneae• 17 years ago

They're also all male, in addition to being old, married, and having two kids. Therefore, women won't be successful start-up founders.

Interesting, but I don't think it's productive for people to focus on how they are demographically different from your typical "success" story in any field or endeavor.

csallen• 17 years ago

Silicon Valley has probably funded a huge number of companies that are really features and not companies. It’s very easy to build a feature and call yourself a CEO. It’s much harder to actually grow a company...

This irked me a bit. I wonder how the author would define "feature" and why he believes that real companies don't simply make features.

As far as I can tell, there are companies out there with small feature-like products that are making consistent profits... and there are plenty of companies with massive complex products that haven't got a clue how to make money. I don't think you can choose to call something a company or not based solely on the complexity of what its main product/service.

mburney• 17 years ago

The more interesting question to me is which age demographic does better with less funding. Web 2.0 companies may be just "features" but the great thing about them is that they require barely any investment. In fact, a young person without any commitments (family, mortgage, etc.) and enough determination could figure out a way to do a startup with no VC investment at all. Could an older entrepreneur with a lot of commitments do a startup with such little investment? Probably not.

ojbyrne2• 17 years ago

I understand the constant mention of "commitments" but sometimes older people actually have less - mortgage might be paid off, they might be "empty-nesters" with no kids, while younger people often have student loans to deal with. Plus older people might actually have _savings_.

skmurphy2• 17 years ago

A team of older entrepreneurs can bring much more social capital and domain knowledge to a startup. In a B2B startup both of these can make quite a difference.

andrewparker• 17 years ago

This is simply survivorship bias.

Tichy• 17 years ago

How so?

mingyeow• 17 years ago

what is the argument about?

older guys have a better chance of starting successful companies because of their experience

younger guys have a better chance of starting fundamentally disruptive companies PRECISELY because they have no experience.

ojbyrne2• 17 years ago

Assuming this is actually the case, I guess the argument is about which has a better ROI. If, for example, your first category is proportionally 1000% more likely than the second, and the return on investment is less than 1000% in the second category, then it makes sense to fund the first category disproportionally. Not saying that is the case.

ecq• 17 years ago

I'm going to quote Indiana Jones.

'It's not the age honey, it's the mileage'

jamiequint• 17 years ago

"Old guys know better than to sign a term-sheet loaded with a nasty double-trigger option acceleration that would consign the founders to indentured servitude for years after a liquidity event."

Are there any VCs that would agree to single trigger acceleration? I was under the impression that 25% acceleration on acquisition with a double trigger was pretty standard.

krschultz• 17 years ago

A large part of the difference is the problem they are solving.

A lot of people tell you to "Scratch an Itch". When you are 40 and have had 15+ years at companies, you have encountered many problems that were entirely unknown to you as at college graduation.

Add in more technical & business experiance, connections, and personal capital and it is not really that surprising when you think about it.

The only thing I see in favor of the young guys is the lower cost of living without a family, and being able to work more hours. If you save and don't tie yourself up in expensive cars and homes, it is just as easy to do at 40 as 20. Maybe easier if you now have a wife or husband with a solid income. The hours difference is not that big of a deal compared to experience. Working smarter is more valuable than working harder.

I don't see why a lot of people on HN are so quick to say that one programmer can be considerably quicker than another with the right tools and talent, yet give no equal respect to the greater abilities of a business experienced founder vs a fresh out of school founder.

pmorici• 17 years ago

How is it that he claims average work experience to be 6 to 10 years but average age to be 40? Someone who is 40 should have 15+ years of work experience shouldn't they? 6 to 10 implies an age of late 20's Early 30's

revorad• 17 years ago

They typically have six to ten years of work experience and real-world ideas.

That's a bit low for 40-year olds, isn't it? So, on average they start working at 30-34 years of age? Or they start early but take really long vacations?

movix• 17 years ago

As an old guy '45', and an old surfer (why does there seem to be this connection - see illustration to article) and also a serial entrepreneur, this article and the HN comments made some uplifting reading. As we're applying to YC this year, we've obviously been discussing if the age and varied experiences of our team has any positive/negative influence on our application.

In our previous lives in media production, it's all about youth and energy, and seems to becoming even more so, especially in advertising where ideas are often driven by an innate understanding of the power of technology, and how it can be harnessed to create and realise ideas in completely different ways. I know many over 40's colleagues who think computers are for Googling and email (you know who you are), and that's the limit of their technological skill. These people are almost speaking a different language to the 25 year old directors they're working with, who are breaking all the so called 'rules'.

At one point, many HNer's, after years of struggle and work on projects will become 'the old guys', and still drawing on their entrepreneurial skills and drive. Some will have made that Big Deal with all the $$$, but very many will still be pushing their next idea after a series of almost made it's. I think it's important for young start-ups to project that image of themselves in the future, that they might be looking at 20 years of pushing and fighting to get the success they're striving for.

When It Comes To Founding Successful Startups, Old Guys Rule

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