Does Age Affect Startup Success?
The term ‘startup’ today is generally perceived as an innovative business venture founded by the likes of 20- something Silicon Valley entrepreneurs, with a young workforce operating in a quirky office/co-working space. Basically, a non-traditional working environment. One question that often arises in the startup world is – does age affect startup success?
With a whole lot of media attention directed towards young successful startup-owners changing the world and making millions, you could be forgiven for thinking you have to be a 19 year old Mark Zuckerberg or a 21 year old Steve Jobs to launch a successful startup.
What gets less media attention, however, are the equally strong examples of older/middle-aged startup owners who have achieved phenomenal success over the years, such as Bill Porter who started the online trading giant E*Trade at 54 and Robert Noyce who co-founded Intel at the age of 41.
Similarly, UK based entrepreneurs Ben Van Praagh and Brenda Deane have broken all stereotypes by starting their business venture at the age of 74 and 82 respectively. In an interview with The Guardian Van Praagh said “I am the same as when I was a young man, in business matters I am exactly the same. I work as many hours as I did, I take the same risks and I am as confident as ever.”
The question remains – are the success stories of 20-something entrepreneurs a norm, or do they just occur sporadically? Statistics show that overall, the average age for setting up a small business in the UK is 40. A recent study by MIT examined the age of entrepreneurs in various sectors, such as specialized tech employment, venture capital investing, patent firms and so on, found that the average age of founders is early-to-mid forties. The study also concluded that successful entrepreneurs are middle aged and not young, with founders in their early 20s having the lowest likelihood of successful exit or creating a 1 in 1,000 top growth firm.
Of course this does not mean that entrepreneurs in their 20s cannot make it, but it is wrong to assume that ONLY the entrepreneurs in their 20s will be successful or a that specific founding age can guarantee the success of a startup.
So while it is established that age does not determine startup success, what differentiates young and old startup owners?
What differentiates young and old startup owners?
All over the world there is an increase in the number of young people becoming business founders and owners. In UK alone, the number of people under 35 starting a business has risen by as much as 70% in the past five years. The driving force seems to be that younger generations are opting for business ownership to escape the life of an employee – 55% of founders set up a business so that they can be their own boss.
One of the biggest advantages of being a young entrepreneur is having the liberty and tendency to take more risks, compared to older entrepreneurs who may have more at stake due to financial and familial obligations. Young entrepreneurs, especially if straight out of school/university, can be extremely passionate, fearless and raring to go – making them confident enough to take risks.
Neil Petch, in his article for Entrepreneur, identified ‘Naivety’ as another advantage. He quoted Mick Hagen, who launched the networking and recruitment site Zinch after dropping out of Princeton and later exiting for almost $30 million in 2011. Zinch said, “being young and a little naive can be a beautiful thing. You don’t know what ‘normal’ or ‘best practice’ or ‘standard’ even means. There are no limits.”
Petch further wrote, “We too often over-analyze, over-think and over-engineer things to the point that we slow ourselves down or even psyche ourselves out. For many reasons, younger people are less inclined to do this, and while naivety comes with a whole host of cons, sometimes it is just what the doctor ordered when it comes to startup success.”
Since young people today are exposed to technology from an early age and innovation is par for the course, it gives them an edge over older entrepreneurs in certain sectors. This is why we see a lot of successful young startup owners emerging in the tech sector.
But there is one thing which younger entrepreneurs lack that can be found in abundance among the older ones – experience. Older entrepreneurs have experience of management, completing projects and operating in a business environment. If they launch a venture in an industry in which they have previously operated or dealt with in some way, they are more likely to be able to spot gaps in the market and have the connections and knowledge to get their start-up working. Without the advantages of real world industry experience, younger entrepreneurs are likely to face more challenges in getting their business off the ground.
Not only are the older entrepreneurs more financially stable to fund their business, they also have a clearer idea about the things to do and the things not to do, having learned from the mistakes made during their time as an employee.
They also have the added advantage of having contacts and a network built during the course of their employment. This makes it is easier for them to collaborate with others for launching their business and secure investment if needed.
Having looked at both sides of the coin, it can be safely said that there is no ‘right’ age to start a business. As long as you have a unique idea and a plan on how to execute it, you’re never too old or too young to launch your startup. There are some factors related to age which can potentially affect your business in some way, but those factors do not necessarily determine your success. As Steve jobs said, “What separates the successful entrepreneurs from non-successful ones is pure perseverance.”