Why Older Entrepreneurs Are A Better Bet
Backed by Silicon Valley and glamorized by Hollywood, peach-fuzzed innovators like Facebook founder Mark Zuckerberg have popularized the image of the successful entrepreneur as a swashbuckling whiz kid in his 20's.
But a group of studies is challenging the widely-held view that it's tech-savvy youngsters who are driving America's startup growth, which reached a 14-year high in 2009. On the contrary, some new data suggests that when it comes to launching successful startups, old guys rule.
Research by the Global Entrepreneurship Monitor (GEM) shows that entrepreneurs over the age of 35 accounted for 80 percent of "total entrepreneurial activity" in 2009, meaning the planning, setting up, and managing of new businesses. Entrepreneurs under 35, on the other hand, were responsible for only 19.1 percent of entrepreneurial activity, the research finds.
"And that isn't necessarily a bad thing: Older entrepreneurs tend to be more successful," writes Annie Lowrey in an article that appeared on Slate last month. Lowrey quotes research from Vivek Wadhwa, a Duke University researcher who worked with the Kauffman Foundation in 2009 to explore the anatomy of a successful startup founder.
Wadhwa's survey of over 500 startups operating in "high-growth industries" showed that the average founder of a successful company launched his or her venture at the surprisingly high age of 40. The study also found that people over 55 are almost twice as likely to launch high-growth startups than those aged 20 to 34.
And gray entrepreneurs outpacing green ones isn't an isolated trend that's only occurred in the past few years. "In every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34," says Dane Stangler, a research manager at Kauffman. She argues in a paper that the decline of lifetime employment, longer lifespan, and the effect of the current recession are all contributing to increases in entrepreneurial activity amongst older generations.
In a Fast Company article, author Rob Salkowitz agrees that enterprises are more likely to survive if they're run by an older entrepreneur. But he also suggests that "the kinds of businesses founded by young entrepreneurs make a much bigger impact when they succeed, and leave a much lighter mark when they fail."
Salkowitz is likely referring to the two types of startups most commonly associated with youngster founders: smaller firms launched with little capital. There's a good chance, statistics show, that these will fail but no jobs will be destroyed and little money lost. The second type is a Microsoft, Amazon, Google, Facebook, Twitter or Groupon. Each was founded by someone under the age of 35. And each went on to change the world.
Older entrepreneurs, too, have had some big hits, and they'll continue to have them. Research shows that breakthroughs today come at older ages than they did a century ago. In fact, 2010's top two fastest-growing tech startups, according to Forbes, are First Solar, founded by a 68-year old, followed by Riverbed Technology, co-founded by entrepreneurs who were 51 and 33 at the time.
So, given the recent boom in older entrepreneurship, why don't older founders get more love? Why aren't billion-dollar blockbuster movies made about Larry, the 52-year old tech startup founder with a wife, two kids, and ten years of startup experience? In short, because the startups they launch tend to be less sexy. Here's Newsweek's Stefan Theil's take:
"Part of the reason that companies started by older workers don't get much recognition is because they don't generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth."
Whichever entrepreneurs -- young or old -- end up founding the most successful companies, if the past few decades are any indication, it's clear that a small number of innovative startups will grow into billion-dollar businesses and drive economic growth.
Keep an eye on Huff Post's Small Business America blog in the coming weeks, as the Kauffman Foundation begins contributing regular posts. Also, is there a startup or small business you want featured on the Huffington Post? If so, email firstname.lastname@example.org with details.