Updated: May 6, 2020
Is entrepreneurship really only an option for the young?
The word entrepreneur comes from an old french word entrependre, meaning "an undertaking", however interestingly enough the English synonym for the word at the time was "Adventurer." In fact, the American Economist William Baumol once defined an entrepreneur as "the individual willing to embark on an adventure in pursuit of economic goals."
Given the roots of the word, it makes even more sense to see why entrepreneurship is considered a young person's destiny and not for the more experienced. In fact, the same general perception is imbued into modern society as well. When we think of entrepreneurs we imagine youngsters like Mark Zuckerberg or maybe Ritesh Agarwal which adds to the overall reinforcement of the stereotype. On one extreme end of the spectrum, we find Peter Thiel giving out $100,000 fellowships to bright entrepreneurs provided they are under 23.
So the question really is, are you too old to put on your own adventurer's boots?
In a study, Jones (Northwestern), Pierre Azoulay (MIT), Kim (Wharton) and Miranda (US Census Bureau), look at an expansive dataset to answer this question. They find that
the best entrepreneurs tend to be middle-aged. Among the very fastest-growing new tech companies, the average founder was 45 at the time of founding. Furthermore, a given 50-year-old entrepreneur is nearly twice as likely to have a runaway success as a 30-year-old.
"Despite potential advantages, young entrepreneurs may also face substantial disadvantages. Older entrepreneurs might access greater human capital, social capital, or financial capital.” - Excerpt from the study
Greater accessibility to human, social and financial capital definitely seems to be one of the greatest advantages conferred to the older adventurers. However, there is an even greater argument to be made for industry experience as a deciding factor. While the industry prefers younger leadership there is a definitive gap between the experience needed to actually be a successful leader and the amount of experience which young leaders are exposed to. In fact, the study notes that the view that young people produce the highest-growth companies is in part a rejection of the role of experience.
This rejection of the role of experience presents itself as a great disadvantage to many older entrepreneurs as is evidenced by the visible preference of venture capitalists in choosing to fund younger business owners as compared to their older contemporaries. However, the rejection of the role of experience also lends itself an opportunity for many to set up enterprises that focus on enabling the younger business leaders.
“Experience can bring substantial insight about specific markets and specific technologies, in addition to skills at running things” - Jones
By combining US tax filling datasets, the researchers were able to holistically look at 2.7 million companies and found that the average age for founders was 41.9 years. The research was also able to show that more 40 years were taking a chance at starting their own business and were more successful at it than their 20 something contemporaries.
While noteworthy trends, one must also take into consideration that a lot of company layovers start at the experienced end of the spectrum as they are the highest paid and often not as energetic anymore as any younger contemporary. Thus a lot of people may even be thrust into setting up a business when there are no options. It is important to be able to make the most out of these situations and expand into avenues that reward high degree of experience and industry exposure.
Perhaps the real question to be asked isn't "Am I too old to start my own venture?" and should become, "Do I want to be a founder today?"
Read more about the study here: https://insight.kellogg.northwestern.edu/article/younger-older-tech-entrepreneurs