Your 40s are the new 20s.
Picture this: a group of bright, 20-something guys in hoodies hunched over their laptops in a poorly-lit garage in Silicon Valley, determined that they’re on the verge of creating the next Apple, Google, Facebook, or Airbnb, it doesn’t matter — they want to create the next big thing, the next tech darling to capture the hearts and wallets of venture capitalists. They’re mostly self-assured programming geniuses and recent college dropouts, eager to take on the status quo and introduce to the world their better mousetrap.
But there’s a catch.
This stereotypical situation just isn’t the reality. The commonly-held notion that you have to be in your early twenties to build the next unicorn just doesn’t hold up when the facts are examined. Along with being highly limiting and quite honestly, discouraging, to a majority of aspiring founders, this notion that the world’s most successful companies are founded by very, very young people is simply not true.
In a recent National Bureau of Economic Research working paper entitled “Age and High-Growth Entrepreneurship,” researchers Pierre Azoulay, Benjamin Jones, J. Daniel Kim, and Javier Miranda arrived at some noteworthy conclusions. As opposed to the widely held belief that young people, often still in college or recent college dropouts, are most likely to start successful startups, they found that “successful entrepreneurs are middle-aged, not young,” and that “younger founders appear strongly disadvantaged in their tendency to produce the highest-growth companies.” By utilizing the U.S. Census Bureau’s high-quality administrative datasets, they found that the average age of a startup founder (who hires at least one other employee) is 41.9 years, a figure that increases to 45 when exclusively looking at the founders of the top 0.1% of high-growth startups.
But, you might argue, this figure doesn’t take into account factors like industry and geographical area, which should have an impact on these numbers. And they do — but not to the extent one might imagine. The average ages for successful founders across the different industries, including the tech sector, hover between 38 and 51, with the lower end of 38 still being vastly higher than the celebrated 20s. When looking at the top 50 zip codes with the highest entrepreneurial activity, which are primarily located in California, New York, and Massachusetts, the average age is 40.8.
When segmenting startup founders by these factors, such as geography and proximity to technological hubs, the lowest average age the researchers found was entrepreneurs of VC-backed startups in New York, where the average is 38.7. In general, the researchers concluded that “founders in their early 20s have the lowest likelihood of a successful exit,” while on the other hand, a 50-year-old founder is “1.8 times more likely to achieve upper-tail growth than a 30-year-old founder.” This could be attributed to the fact that middle-aged entrepreneurs have more industry experience that they can leverage in growing their startup, and this experience ultimately leads to “a vastly higher probability of an upper-tail growth outcome or successful exit, with success rates rising up to 125%.” This noteworthy conclusion is important for VC firms, since most look at the likelihood of a startup exiting as a major consideration when providing investment.
All this said though, you could still fight back. And given the success stories of individuals like Steve Jobs and Mark Zuckerberg who created their companies at the ages of 21 and 19, respectively, the Valley has come to hold young people in very high regard today. Demonstrated by Peter Thiel’s famous fellowship program that gives students $100,000 to drop out of college and bring their idea to life, it’s clear that there’s a significant bias towards VCs investing in young entrepreneurs. While college can be a very valuable time to launch a startup, it’s clear that you don’t need to be in your twenties to build the next big thing.
Here at Quake, age is just a number to us — we don’t care how old you are, we care that you’re passionate about the problem you’re trying to solve, that you’re making every effort to succeed. Beyond your age, we value the specific skills and ideas that you bring to the table, because it assures us that you’ll be able to handle the challenges of running a high-growth startup when the time’s right.
Written by Anjali Agarwal, Junior Associate at Quake Capital
