Updated: The Age/Entrepreneurship Myth

I pretty much entirely disagree with Fred Wilson’s implication earlier this week that age is an obstacle to entrepreneurship. It may be an obstacle to a particular kind of entrepreneurship — venture-backed companies where you give up equity to parental figures with money — but implying anything broader than that is silly and counter to the facts.

Find a related take at my friend Neil’s blog here. And I see that Fred has backed away from the clear sense of his original post in a subsequent one.

[Update]  I’m taking some deserved heat for having a strong stand here with no data. Sorry, it’s a TV habit.

To bring some data into the mix, the truth is that entrepreneurs do skew somewhat younger than the general working population. But that’s misleading, as it causes you to over-emphasize an unrepresentative statistic. The age skewness in entrepreneurship is much less important than the raw number of entrepreneurs in every age group.

You begin to see some of the preceding in a useful, if a little screwy, figure from the 2006 Global Entrepreneurship Monitor report:

While there are undeniably demographic differences between entrepreneurs and the general working population — ignore the GEM’s loopy high- and low-potential differentiation — there are huge entrepreneur numbers in every age group. There is no mid-life crisis for entrepreneurs.

Some more factoids:

  • The average age of Inc Hot 100 members is 41, but there is huge spread
  • U.K. data shows that while the average of entrepreneurs there is 36, there is little age difference between that group the rest of the working population. Matter of fact, 23% of entrepreneurs there are between 45 and 54

Related posts:

  1. Yes We Have No Entrepreneurship Professors
  2. The Myth of the Entrepreneur and the Garage
  3. De-Risking Entrepreneurship & Hiding Niklas Zennstrom in a Steamer Trunk
  4. Entrepreneurship & the Lottery Effect
  5. Entrepreneurship and the Money Myth

Comments

  1. While normally I see lots of facts @ IG there are none here. So why is it silly?
    I am very interested in the demographic data for entrepreneurs of venture capital technology startups if such a thing exists.

  2. me says:

    Totally agree with Lance.

  3. Blogs say that in the web sector, average founder/CEO is something between 23-27. but i actually seriously doubt that this trend spreads beyond web 2.0 companies.
    The age/enterpreneurship ratio must have a strong correlation with the ability to achieve qualified results in selected industry. In the internet the barrier of skill is currently pretty low, and ideas, rather then technology rule the place.
    In biotech, energy etc. things should be pretty different i think…
    (i’m 22 and founder/ceo of a calif. web 2.0 company, so i partially know what i’m speaking of :) )

  4. Wil Schroter says:

    As a 32-year-old founder of 9 companies (since age 19) I can tell you that Fred isn’t all that off.
    The fact is that in your “prime years” of 25-40 you have less risk and more energy.
    Showing the age of “established” entrepreneurs is a lame statistic because you would have had to be X number of years old in order to have likely BECOME an established entrepreneur.

  5. Well done!

  6. Rob Hyndman says:

    My sense is that the discussion has veered sideways. Presumably the real issue is when people try it on for size the first time. If you have a success or two in hand, the issues about doing it a third time are pretty different, I would have thought. And I suspect that for those who have it in their blood and start young, there is no going back.
    Haven’t a clue about how effective your data is for addressing that Q, but it’s the one that matters, it seems to me.

  7. Rob –
    Fair point, but serial entrepreneurs (the people of whom you speak) are a small-ish percentage of the overall population of entrepreneurs. F’rinstance, according to Gompers, et al. (NBER 2006), the percentage of venture-funded companies founded by serial entrepreneurs over the last 25 years has bounced between 5% and 10%. I have no good data on the broader entrepreneur population, so let’s assume that mass-market serial entrepreneurs are around the same percentage.
    The upshot: While serial entrepreneurs are out there, they are a small enough percentage of the overall population of entrepreneurs that, to a first approximation, the average age of entrepreneurs is the average age of first-time entrepreneurs.

  8. SFGary says:

    A substantial number of VCs who have blogs and make regular posts are probably (not sure here)in the technology sector and make a lot of investment in new software startups. As an older entrepreneur in Bay Area in this sector I can tell you that a lot of the entrepreneurs are skewed toward the younger set.
    But if you add in entrepreneurs from around the country doing startups/small businesses in all sorts of industries, the web 2.0 crowd is probably a small fraction of the total. However they do get a disproportionate amount of press.
    I would also disagree with commenter#3: I am not sure ideas rule the web 2.0 business. The availability of a lot of open source software has lowered the barrier to entry in creating web apps. Whether a useful, viable company is created is, in most cases, doubtful.

  9. Mark Mawhinney says:

    I’m not the brightest guy in the world which is perhaps why I had so much trouble understanding the chart you put up. As someone who started (co-founded) my first business – a 300 seat restaurant – at the age of 23, sold my half and started a computer services firm and sold it to a competitor before my 27th birthay (I did okay, but didn’t get rich off of either) I find I am getting more risk averse (smarter, more diligent?) as I get older (now 34). I think entrepreneurship has less to do with age than with drive/determination. I would agree with Rob’s comments that if you start young there’s likely no going back – hard to work for someone when you’ve been the master of your own domain. I have seen some older (older than 50) first time entrepreneurs who have an unrealist ‘romantic’ notion of what it’s like to start and successfully run a business.
    I’m curious – how does this group define ‘entrepreneur’?

  10. eas says:

    Moore & Noyce were ~40 when they founded intel & Grove was ~30 when he was employee #4.
    That was probably a pretty common pattern for a while. People cut their teeth at some established technology company that probably spun out of the WWII defense industry. They gained technical, management and business skills + some savings until their confidence and frustration grew enough to leave their safe employer and start their own company.
    A lot of things have put pressure on that pattern. The rise of the boomers had a demographic effect in terms of sheer number of young people. The lifestyle changes that accompanied that generation also had an impact, women in the workforce meant couples had another income stream, and kids came later too, which meant people could forgo stability for as much as another decade.
    These days, there are other things at play. Young people have no expectation of a job for life. The capital needs of web companies are shrinking. It may also be that younger entrepreneurs are more lucrative for investors because they have less of their own capital, and so investors promote the dream more aggressively in that market.

  11. David Merkel says:

    I think tech is unrepresentative of entrepreneurship in total. I see another area of private equity with financial companies; the entrepreneurs are predominantly older.
    My explanation for this is that younger entrepreneurs gravitate toward creating new technologies. Older entrepreneurs use new-ish technologies to refine, and occasionally revolutionize more mature business models.
    There are different strengths at different ages for entrepreneurship. As one that is middle-aged, I don’t think age in itself confers any special advantage. You simply have to use your accumulated gifts where they find maximum advantage in the market.

  12. Bootstrap says:

    Age never really is an obstacle to an entrepreneur. There is no difference to young first-time entrepreneurs and older aspirants. It all comes down to mindset, passion, determination, and a little luck.