03/06/2012 03:30 pm ET Updated Mar 06, 2012

Young CEOs Of Startups Find Benefits, Challenges By Hiring Employees 40 And Older

Eric Grosse's rite of passage at TaskRabbit, a San Francisco-based web startup, came late last year at the company's annual holiday party. It was just one month after TaskRabbit hired Grosse, who was previously a senior executive at Expedia, the online travel giant. Someone at the party turned on the office's Xbox and popped in the game Dance Central. Suddenly, Grosse, who is 42, found himself in a virtual dance-off with his co-workers, most of whom are in their 20s.

Despite some dexterous dance moves, Grosse is still considered the old guy at the office. Had he remained in corporate America, his age would be unremarkable, but young companies like TaskRabbit tend to hire younger workers, according to a new study based on Census Bureau data -- making a 40-something like Grosse stand out. At firms 20 years or older, less than a third of employees are under the age of 35, and nearly half of employees are older than 45, the study found. In contrast, in startup firms founded within the past five years, 45 percent of workers are under 35, while 30 percent are over 45.

Newly minted billionaire Mark Zuckerberg is, of course, the most prominent (boyish) face of this trend, but the proliferation of new startups in recent years has meant more young companies are employing more older workers. As such, they're challenging the stereotype that those with corporate experience, children and mortgages are too rigid and too risk-averse to hack it at new entrepreneurial firms.

In fact, Grosse jumped right in at TaskRabbit, according to Leah Busque, the company's 32-year-old founder. Busque hired Grosse to replace her as CEO so she could focus on the company's product, an online marketplace that helps people outsource their errands. "He refused to take an office," Busque recalls. "He wanted to sit out in the open with everyone else, so he just joined a pod of desks."

To be sure, Grosse has some notable startup experience. Before he sat atop the corporate chain at Expedia, he was one of the founders of Hotwire, a discount travel site that Expedia acquired in 2003.

For other senior executives who join startups, the transition is not always as smooth -- especially for those who are on equal standing or ranked lower than someone younger.

"I remember hiring folks who were 10- or 20-year veterans of the industry," said Eric Ries, a Silicon Valley entrepreneur and author who, at the age of 26, was named one of BusinessWeek's 2007 Best Young Entrepreneurs of Tech. "Not only would the new hires have to deal with me, a much younger person, as their boss, but I had to explain to them that we operate on a different system than they're accustomed to."

That system, of which Ries is a leading proponent, is called the "lean startup," an approach to creating companies that has attracted much attention in recent years from entrepreneurs, technologists and investors.

Lean startups test insights and course-correct in days or weeks, not months or years, to preserve cash and eliminate time wasted on building products that customers don't want. The demands of such a system require people comfortable with changing a product more rapidly than is customary in the corporate world, which can be disorienting for workers with large-company backgrounds.

But startup CEOs report observing little correlation between employees' age and their propensity to grasp lean ideals. "I've always been blind to age," said Ben Milne, 29, who is the founder and CEO of online payments startup Dwolla. Milne has worked with people of all ages since he started his first company, a Web-based manufacturing startup, at the age of 18. "You just need to have the 'hell with, let's build it' attitude."

As for the commitments that come with age, such as children, entrepreneurs often find work-arounds. "Some of the best people I've ever worked with in startups, who I would hire in a heartbeat over a 20-something with no life, are older and have children," Ries said. "They leave the office at a certain time each day to go home, put the kids to bed, and then they're back online hacking until the wee hours."

John Halloran knows that routine well. For the past six months, the 43-year old father of two has built Snapp School, a startup that creates technologies that connect teachers with parents. He works at DogPatch Labs in Manhattan, a technology incubator for young companies. Most of the resident entrepreneurs at DogPatch are at least a decade younger than Halloran, including his co-founder, Alex Weinberg, who is 26.

"Alex is closer in age to the teachers we're targeting," Halloran said. "He has a much better perspective on consumer tech. So while I focus on how to build the technology, he focuses on what we should be building."

The duo met at a startup event in New York last spring where Ries was presenting. At the time, Weinberg was a teacher with Teach For America and Halloran was a senior engineer at the institutional brokerage firm Liquidnet, which he helped start in 2000.

"I went through the dot-com boom," Halloran said. "And it's phenomenal how much more startups can get done with less capital and in less time compared to 10 years ago. Meanwhile, the core understanding of launching a site, like configuring servers and setting up routers, has become almost obsolete, since it's all pretty much automated now."

Young entrepreneurs like Sahil Lavingia were in diapers when launching a website still required a room crammed with servers. Lavingia, who is 19, recently left Pinterest, one of the fastest growing social networks of all time, to start Gumroad, which helps people sell online content. He'll soon begin hiring as the site expands, and he said he's looking forward to bringing in some experienced talent. "Kids in their teens and early 20s can pull all-nighters, but I've seen friends get totally burnt out after leaving the office every night at 5 a.m. for a month," Lavingia said. "Older guys have a better idea of what's sustainable."

Ries agrees that there's a problem with the mythology of startups being an up-all-night workaholic bash reserved for 20-somethings. "If you look at the quality of work that is done in those environments, it's not always that high," Ries said. "The code you write at 2 a.m. is often really bad, and you have to remove it when you stagger in the next day."