Insights From The World Of Startups
Think 50 is too old to launch a successful startup? Think again.
Startup Success Rates Increase Up To 3x As You Get Older. Here’s Why.
If you look at Inc.’s 2018 list of the fastest-growing companies in America, what’s most apparent is that the growth rate numbers are bonkers. Among the top 5, the median growth rate is 60,166%. What’s not obvious is the age of the top 5 founders when they started their company: the median is 37. And one of them, Depcom Power CEO Jim Lamon, was 56 when he founded his company.
This isn’t a coincidence. Older startup founders are up to 3x more likely to succeed compared to 25 year-old founders. Why? Because they have more experience, deeper networks, and greater financial resources.
Research on startup success factors offers some valuable lessons for entrepreneurs — both young and old.
“Young people are just smarter.” — Mark Zuckerberg, Harvard Dropout
“The founders of the fastest growing .1% of startups were 45 years old on average when they founded their companies.”— Harvard Business Review
Age Advantage #1 — Experience
Why is a 50-year-old founder 2x more likely than a 30-year-old founder to achieve nose-bleed type growth, and 3x more likely than a 25-year-old founder?
Work experience obviously plays a critical role here. All it takes is just 3 years of prior work experience in the same industry as your startup. This makes you almost twice as likely to launch a highly successful startup compared to founders with no relevant experience.
Experience comes in many forms, of course. Hard skills include technical and other industry-specific knowledge. Then there are the soft skills like how to be a leader, collaborate, and appreciate the value of people with think differently from you. That takes time.
Age Advantage #2 — Networks
Network connections are critical to an entrepreneur’s success. They’re your ticket to expertise, employees, suppliers, partners, advisors, and investors (if you want those). Think about the competitive advantage that comes from a deep and wide network of business connections made over decades of work.
While you benefit from a large network, you really benefit from a highly diverse network. Why? Because in the management consulting world, founding a company is classified as a “complex challenge.” This means there’s no formula for easy success. You can’t replicate what Mark Zuckerberg or Steve Jobs did and expect the same result. That moment in time is gone.
The best way to solve a complex challenge is to assemble a diverse network of people and point them at the problem. You need a diverse set of knowledge, problem-solving heuristics, and spheres of influence. If all you have is your college buddies, that’s not as helpful as a lifetime of contacts from the business world.
“The cutoff in investors’ heads is 32. After 32, they start to be a little skeptical.” — Paul Graham, VC and Founder of Y Combinator
“If you were faced with two entrepreneurs and knew nothing about them besides their age, you would do better, on average, betting on the older one.” — MIT Sloan School of Management Research
Age Advantage #3 — Financial
Older entrepreneurs are more likely to have savings and investments they can use to bootstrap their startup. By contrast, younger founders usually have to pitch their companies on the VC circuit. And, if they’re “lucky” enough to get funding, they now take orders from those investors.
Brad Hollister is the CEO of SwanLeap, which many call “the eBay of freight.” It’s also what Inc. magazine calls the #1 fastest growing company in America for 2018. Because Hollister was in his late 30s in 2013 when he founded SwanLeap, he had the option to use his retirement savings. This meant he could turn down $2M in venture capital that he didn’t want to be handcuffed to.
By self-funding, Hollister was able to build his company his way. The results speak for themselves: $100M in revenue in and a 3-year growth rate of 75,661%.
The Bottom Line
If you’re an older entrepreneur, don’t buy into the stereotypes of successful startup founders. You have the experience, networks, and probably financial resources for success.
If you’re a young entrepreneur, public and VC perceptions are definitely on your side, but just know that they aren’t enough for success. Try to diversify your board and your informal brain trust. Get out of the office and expand your network. Find women and men with the knowledge, experience and network diversity that you haven’t yet acquired.