Startups and youth walk hand in hand. Or so we’ve been told. There’s a reason why there are no movies about under 43 founders creating technology companies. But, even if we trust Hollywood a lot, we don’t lose anything by investigating, right? It turns out that being over 40 when founding a startup is a very good predictor of its success. Read this article and you will understand why.
Build a startup while in college, find a problem, search tirelessly for a solution, get things rolling, find traction, and then raise capital, expand, reach new markets, become an industry leader, and retire—if you want to—at the age of 40.
It sounds like a story straight out of the imagination of Hayao Miyazaki, the genius behind Studio Ghibli, who puts very young, determined, and courageous people capable of withstanding life’s challenges at the helm of his adventures. Miyazaki’s stories are epic, although being picky, they don’t necessarily reflect his life, as he founded his disruptive animation studio at the age of 44.
«At 40, you recruit better; you have more validators, and it is more likely that talented people will want to work with you because you have more credibility»Diego Villegas, CEO and cofounder of Slang.
It may surprise you, but the average age of the founders of the most successful startups, those with growth in the top 1% of their industry, is 45. The data was published in 2020 by Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda, researchers at MIT, Northwestern, and Wharton, using US Census Bureau data.
In the abstract, they explain:
“Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45”.
Maybe you’re thinking, “Sure, but take the data only to technology-focused ventures.”
The research would respond: “The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs”.
Diego Villegas, Colombian, CEO and co-founder of Slang, an English startup for professionals, is perfect for discussing this topic. At 17, he and his brother had already taken over the family oil services company MASA. With Diego at the helm, the business went from being a family venture to being acquired by the multi-national company Stork. “It took me 18 years to get to $200 million,” he recalls.
That experience – and a subsequent MBA at MIT – led him to connect with other people and stories. He faced new problems that led him to start Slang when he was already in his 40s. “At 17 I was immature, and perhaps the most dangerous thing is that I didn’t know I was. The Diego of that time was perhaps very naive, so he made many mistakes. That costs money and speed,” he explains from Boston, where he lives. “The Diego of now is a person who has more knowledge in different areas and understands how important it is to create a great team.”
Perhaps this is the point where a middle-aged entrepreneur makes the most difference. This is how Diego explains it:
“At 40, you are much more obsessive about the team. You understand the importance of talent for productivity to be more efficient. You learn that with experience, you suffer it. Many young people say that the team is very important, but putting it together is a different story. At 40, you recruit better; you have more validators, and it is more likely that talented people will want to work with you because you have more credibility,” he adds.
Perhaps the epic tales we’ve grown up with have blinded us to the importance of experience. After all, it is surprising that Steve Jobs, Bill Gates, Mark Zuckerberg, and others founded their companies when they were 21 or younger and in unusual conditions, such as a garage or a dorm.
Initiatives such as Peter Thiel’s $100,000 scholarships for those who have a good startup idea and have dropped out of college boost this idea. Added to this are statements like the one made by Paul Graham, co-founder of Y Combinator, to the New York Times, transcribed in the study that inspired this article: “The cutoff in investors’ heads is 32. After 32, they start to be a little skeptical.”
“It just sounds so cool. Technology adoption is more natural among younger people, and there is a lot of marketing based on the Hollywood concept of setting up a startup in Stanford or a garage,” explains David Fernández, manager of Endeavor Biobío and professor at the University of Concepción in Chile. But that marketing has been ceding to reality. Fernández saw this during his 10-year stint at the Startup Chile accelerator. “In my experience there, we saw how the age of the founders of the selected companies went up. At the beginning, most of them were 25 years old, today they are around 34”.
René Lomelí, from 500 Global LatAm, elaborates on this point: “I don’t have the exact data, but the average age of the founders of the startups we work with must be around 30 years old. It is an age where you can take the risk of starting from scratch and also have experience. The profile of founders over 40 is very intriguing, especially when they launch startups in industries where they possess expertise. But there are fewer who dare to leap into entrepreneurship because they have more to lose. This is more prevalent in Latin America than in Silicon Valley, for example.”
«The profile of founders over 40 is very intriguing, especially when they launch startups in industries where they possess expertise»René Lomelí, 500 Global LatAm
This idea is supported by Diego Villegas’ experience of being a Colombian living in Boston: “I think that in the US, the personal debt system works well. People have more financial buffers to take risks. The educational system here is very good and secure. Plus, you can have your house insured. In Latin America, it costs much more, a good school there is private and expensive, and the interest rates to buy a house are very high”.
Age and creativity
The MIT study also recalls a statement made by Vinod Khosla, co-founder of Sun Microsystem, at a conference in 2011: “People under 35 are the people who make change happen. People over 45 basically die in terms of new ideas.”
Not a very fortunate statement, but perhaps he has a point. If we think about music, for example, creativity seems to shut down after 40, and a good portion of the artists we admire are engaged in recycling their own material once they cross that threshold.
Is there a relationship between creativity and age? To begin with, here is an example that destroys the previous paragraph: “Look at the case of Patti Smith. Great musician, punk muse, she turned to literature at the age of 77 with her book Just Kids. Now she is a great writer and is a super interesting example of creative reconversion in an older person.”
This is Trinidad Zaldívar, head of the IDB’s Creativity and Culture Unit. There she works, studies, and promotes the creative industry that ranges from those who write poetry like Patti to those who create software like Diego. “In general, at the bank, we have seen more youth entrepreneurship. But the ventures of older people are much more durable and successful over time. So from this, we can say that creativity does not run out but is expressed differently depending on age. An older or very older person can still be very creative. The scientist who invented cell phone batteries patented another battery [in 2017] that lasts much, much longer. He was 94 years old at that time.”
A thought that reinforces Diego Villegas’ experience: “First, I believe that creativity is a mindset of life. Second, knowledge is a prerequisite for creativity and innovation. You don’t wake up and invent Coca-Cola. You don’t just wake up one day bored and invent the microwave. If creativity were something like a spark, there would be a systems engineer inventing a cure for cancer or someone doing cancer research creating a machine learning algorithm.”
-Isn’t that the case?
-It’s not like that. It never happens. Whoever discovers something about cancer is because they have been researching it for many years. You are not creative in an area you don’t know; creativity is an emergent property of human knowledge. You know certain fields, and the human brain completes that vision and starts to come up with other things. For example, you know the Netflix-type subscription model, you know about product development, you learned about e-commerce, and you worked for a while in logistics. All that gets mixed up in your head, and you start a company like Amazon.
Trinidad also adds: “What is considered as creativity is often that which is generated in youth and is not called the same as creativity expressed at other times in life. So we would have to talk about creativities. There is not just one.”
It makes sense. As does the idea that experience helps you create new solutions and find new perspectives. Like Franz Freudenthal did in Bolivia, Patti Smith with art, or Diego with Slang.
Will Hollywood be interested in telling their stories?
Main image: Diego Villegas, Slang’s CEO and co-founder (Photo: Slang)
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