Debating the Peak Age for Entrepreneurship
Is the peak age for entrepreneurship really 25? Or is it more like 40?
Those questions are the focus of a lively debate on TechCrunch, the widely read chronicler of tech industry news.
The hubbub started after TechCrunch founder Michael Arrington wrote an essay equating founders of consumer internet companies such as Facebook and Zynga, the online games site, with NBA players. Both peak around 25, the often-provocative Arrington argues. He cites a venture capitalist who found that young entrepreneurs are more creative, more imaginative and more willing to invest all their time in their startups.
Arrington, who is 41, backs up the observation with other anecdotes, noting that at Y Combiner -- an innovative venture investor that's backed Dropbox, Disqus, Bump, and other hit internet companies -- the average age of funded entrepreneurs is 26.
That doesn't sit well with many TechCrunch readers, who are debating the issue on the site's message board and beyond. Maybe, some argue, the age of venture-backed entrepreneurs has less to do with creativity and imagination and more with how much easier it is for an outside financier to control a 25-year-old company founder than tell a 45- or 55-year-old how to run his or her business.
"Obviously I don't agree -- since I founded a company that now has 250 million users, and I was well into my 30s when I did; it was my second startup, but I was older than 30 with the first one too," writes Gracenote founder Ann Greenberg. "So what if Y Combinator mostly invests in people who average under 25 -- they may just be reinforcing the stereotype, and therefore contributing to the skewing of any subsequent data. Besides, many investors just want to feel like they're the smartest folks in the room...they may believe that's easier to achieve by surrounding themselves with youngsters."
TechCrunch also published a rebuttal of Arrington's original argument from Adeo Ressi, head of The Founder Institute, a startup incubator that's helped spin off more than 350 companies. Ressi, who is 39, argues that ageism is the reason more venture financiers don't fund startups with older founders. He says when Founder Institute researchers studied data on company founders who'd cycled through the incubator, they found that "an older age is a better predictor of entrepreneurial success," along with intelligence, openness and agreeableness.
"It's clear that the stories of a few college-dropout turned millionaire (or billionaire) startup founders have clouded both the mass media and the tech industry from reality," Ressi concludes. "We have romanticized the idea of a young founder because, well, it's a great story, but these stories are not the norm. In the end, classic biases of gender, race and age need to be discarded for a real science of success."
Other research supports Ressi's conclusion. An August 2010 Newsweek article reports that the average age of high-tech startup founders is 40. Vivek Wadhwa, a senior research associate with the Labor and Worklife Program at Harvard Law School, came up with that number by studying 549 successful technology ventures. Older entrepreneurs have higher success rates due to their experience, familiarity with customers' needs and well-established supplier networks, Wadhwa concludes. In fact, in 2009, TechCrunch published a guest post from Wadhwa titled When It Comes to Founding Successful Startups, Old Guys Rule.
Younger entrepreneurs may hog the spotlight, but baby boomers are becoming business owners faster than anyone. From 2007 to 2008 -- the latest data available -- new businesses launched by 55- to 64-year-olds grew 16 percent, faster than any other group, according to the Ewing Marion Kauffman Foundation, a nonprofit group that studies U.S. business startups. All told, boomers in that age group started approximately 10,000 new businesses a month. The trend of people over 40 starting businesses is so strong, the Kauffman Foundation predicts an entrepreneurship boom not in spite of but because of the country's aging work force.
Other researchers and authors have noted a link between aging and creativity that could lead people to start their own ventures. Marc Freedman, CEO of Civic Ventures, discusses the subject in his new book, The Big Shift. Bestselling author Malcolm Gladwell included a piece about it in What the Dog Saw, his 2010 collection of essays from The New Yorker. Gladwell discusses researcher David Galenson, an empirical economist at the University of Chicago, who discovered there were two spikes in creativity, both very young and after 60.
I'd love to hear your thoughts. Is there a peak age for entrepreneurship? If you've started a business after 40, do you believe age, experience, deeper pockets and an established network triumph over youthful ambition?
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