The Myth of the Young Start-Up Founder

It is a persistent myth that successful startup founders are young.  After all, Mark Elliot Zuckerberg was 19 years old when he launched Facebook; William Henry Gates III was also 19 years old when he created Microsoft; Steven Paul Jobs was 21 years old when he launched Apple; Elon Reeve Musk was 28 old years when he was CEO of PayPal; and Jeffrey Preston Bezos was 30 years old when he launched Amazon.  They are or were some of the wealthiest people in the world, and that supports this impression of the young, upstart genius who is a disruptor.  For example, when we consider TechCruch awards over the years, particularly the last decade, the average of founders at the time of founding was 31 years of age.  This is the same for many such accelerator awards and incubators.  The average age tends to vary from around 29 years old to 32 years old.

When we expand this to all entrepreneurs, using data available for several countries, the average age of founders for businesses is past 40 years of age.  This includes all sorts of businesses, from single person offices to factories, from retail outlets to restaurants.  Most of these businesses are not meant to scale up to unicorns or dragons.  If we narrow it down to the sort of startup that would give the Facebooks and Amazons a run for their money, the sort of businesses that would attract venture capital funding, and fit into Silicon Valley, the average age of founders is still in the forties.

Young founders are more common in software and related- technology startups, although they are still not the majority.  Because social media related industries have a lot of exposure, it gives the impression that startup founders are young.  But there are also startups in manufacturing, biotechnology, heavy industries, and other fields that do not necessarily catch the same media attention, even though they are just as, if not more, important.  In some fields, such as energy, the founder ages are a lot closer to 50 years.  These are not industries for young people.  If we consider successful startup, and look at capital growth, employment growth, and growth in market share, the average age of founders is still around 45 years of age.  Most of these companies had a successful exit, either through IPO, SPAC or were bought out.  Statistically, reports have shown that middle-aged founders tend to make better decisions, have the basis of experience, and are more likely to be successful.  The older the founder, the higher the chance of success, and this crests in the mid-fifties. 

There are logical reasons why this is so.  For one, it matters that founders have some experience in the industry.  A few years of experience brings down the risk by as much as 85%, compared to founders just out of school.  This actually correlates even with notable young founders.  When we chart the growth of Google, Apple, Microsoft, and Amazon, these companies’ growth picked up when their founders were in the forties.  The iPhone, for example, was introduced when Steven Jobs was 52 years of age.  Amazon moved away from merely selling books when Jeffrey Bezos was 45 years of age.  They may have founded their companies young, but they peaked at middle age.  Microsoft began its retreat from consumer products in the early 2000s, when William gates was in his forties. 

Despite abundant data showing the higher probability of success in investing in older founders, venture capitalists still tend to bet on younger founders.  We can speculate why, but we have no definite answers why.  Perhaps it is because venture capitalists are taken by the myth of the young disruptor.  Perhaps it is because younger people, without the benefit of corporate experience, are easier to fool.  The cynic in me thinks this is quite likely.  Perhaps they believe that they have the know how to fix a wayward project, and younger people are more amendable and have the time.  Younger founders are more likely to be weak financially, meaning that they would likely take any deal that gives them some immediate upside, regardless of how much control they are ceding in the long term.  Older founders are less likely to fall for these predatory shenanigans.  Because of this, the myth is self-perpetuating, because of how things apparently look.