There are many unwritten rules in the startup world. It's almost a given that there's a hectic pace, sleepless nights, and that constant thought that your idea will most likely fail. Still, as a motivator, there's the dream of a massive valuation - your startup could be worth millions - but you must achieve all this when you're young. So, the pressure is on, and if you don't believe me, you can take Paul Graham's words.
"The cutoff age for investors is 32", Graham, confounder of YCombinator, once said in an interview. Those are harsh words coming from a big name in the VC world. So, when he gives out such a precise number, people take it as a sacred truth. The problem is that this makes us obsessed with age. It has created a world where only young founders are worth it.
When we think of successful founders, some names quickly come to mind. Bezos, Zuckerberg, Gates, and Jobs are prime examples of making it big from a young age. After all, they were in their twenties when they founded their companies, but we tend to forget what happened behind the allure of young age. The truth is that most of these companies had their biggest hits later in life. For example, Amazon became a logistics giant when Bezos was 45, and the iPhone didn't come until Jobs was 52.
Still, the world obsesses over youth. Mark Zuckerberg endorsed having a young founder when asked about the keys to a successful company. His answer was clear cut: "young people are just smarter." Of course, once he said this, the world ran with it, but is it true?
Multiple studies have gone out of their way to try and answer this question, and the results tell a concerning story. It's not all about young people being brilliant. The reason why investors love putting their money into these young founders might be a bit darker.
The first significant discovery that magazines such as the Harvard Business Review discovered is that young founders are easier to deal with than older ones. They're less experienced and financially savvy. They could be a better deal for investors, as they might be willing to take less cash or sell for cheaper. Sounds harsh and reasonable at the same time, but let's not focus only on the negative.
Dealing with a startup requires a lot of energy; let's face it, energy dwindles with age. Plus, young people don't quit when facing failure: they're stubborn. For me, any young entrepreneur who has dared to start a business during these pandemic times is admirable, and I've met many. So, investors much rather have someone who isn't willing to stop at the helm of a startup, rather than someone who has lived long enough to know better. Plus, sometimes, young founders make it big. That's why we love the 30-under-30 lists, and the articles showing how under-40 founders turned their idea into billions. There's some truth to these lists. A Danish study showed that 40% of startups are run by founders under 40, but research shows a lot that we choose not to see. Sure, 40% of new startups are led by young founders, but at the same time, these are the startups with the least success.
While investors love having a young, tireless founder, there's no replacement for experience. Older founders have lived enough to understand when not to be headstrong and when to divert their efforts to other causes. As a result, most high-growth startups have founders between the ages of 40 and 49. It shouldn't come as a surprise. After all, they've lived through enough and gained enough experience to face the many challenges of dealing with a startup. The problem is that a 50-under-50 list doesn't sound as sexy.
Speaking of these lists, we must always view them with caution. Let's take one of the most famous, the Forbes 30-under-30, and one that people strive to be a part of. There's no denying the talent there, but sometimes, there's also no maturity or ethics. We’ve all heard the stories of young founders lying and cheating their way into landing millions in funding, and the occasional lawsuit. This is only one example of how these lists are all about the hype before turning 30, and there's little follow-up once the founders pass the three-decade mark. It'd be a great article, don't you think?
Most research agrees that the best age for a founder is around 42 to 45. So, it makes perfect sense that MIT research shows that 50-year-old founders have twice as much chance of a successful exit, either through acquisition or by going public, than 30-year-old founders. So, let's shed the conclusion that only young founders make it big. Age is just a number, but as we obsess over it, we exert unrealistic pressure, and it's beginning to show.
The number of young adults aged 20-34 taking on entrepreneurship has dropped 30% since 1996. Millennials are far less entrepreneurial than previous generations, and I understand completely. While there are many economic reasons, including a prohibitively expensive cost of living and the increase of the gig economy, which lures people away from having a company, there's also the aversion to pressure. Young people prefer having a purpose to a big check, a good cause, instead of a good salary, which speaks volumes.
When we look at these lists and obsess with age, we forget the primary goal of a startup. These companies and entrepreneurs aim to revolutionize how we live. Some of them have accomplished this and much more, and not all of those founders are young. The startup life is a marathon, not a sprint. We might sacrifice something big if we keep obsessing about making it a race before thirty. Founders aren't rockstars. We don't need them to peak at 27, at the sacrifice of their future.
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