A cliché about youthful founders working feverishly to launch an industry-disrupting company is the prediction that they will eventually have to bring in an “adult” to advise on business decisions and manage growth. But what if the founder is already the adult in the room?
A new study that examines age and high-growth entrepreneurship revealed that founders are more likely to succeed when they start their business well after that youthful glow has faded.
“The highest success ranges in entrepreneurship come from founders in middle age and beyond,” says the working paper by professors at MIT and Northwestern University and Javier Miranda of the U.S. Census Bureau. Their findings are consistent, they say, with theories that key entrepreneurial resources like human capital, financial capital, and social capital accumulate with age.
The study analyzed the age of United States-based founders in recent years and focused on technology companies, using markers like the number of people hired, venture capital backing, patents garnered, and acquisitions to measure success. They found that the mean age for the highest growth new ventures is 45, and that the most successful entrepreneurs in both the tech sector and the geographic areas of the U.S. considered the most entrepreneurial are close to the same age.
But, as the study also notes, those findings are at odds with the perception that only a founder in their twenties can have the think-out-of-the-box mindset to disrupt an industry, and the unencumbered life that allows full focus on building the business.
Though certainly aware of those stereotypes, founders in their mid-thirties and beyond see their work experience as key to knowing exactly what disruption is needed in industries they’ve long been part of, and how to achieve their goals in the most efficient manner.
Viewed as ‘more of a peer’
Steve Stewart, who works from WeWork Pacific Design Center in Los Angeles, is well versed in working around the clock and traveling around the world at a young age. Starting in his twenties, Stewart spent a decade managing Stone Temple Pilots, one of the most popular rock bands of the 1990s, and built a thriving business overseeing the careers of about 25 other artists and their major-label record deals.
“I felt like I missed the tech boom,” Stewart said recently, shortly after returning from South Korea to open a new office for his less than two-year-old company, Vezt, a platform that allows fans to buy stakes in artists’ songs. “I saw it, but I was so tied up in the business I was in I couldn’t participate in the way I wanted to.”
It was his extensive experience in the music business that allowed Stewart and his co-founder to later identify its pain points. “The part that was broken wasn’t the distribution, and it wasn’t the production. It was the financing of the music itself, the way that artists were able to monetize, so we started to focus on that problem.”
Age brought not just knowledge, but the confidence to convince customers and investors he’s right about how to do it. “If you don’t have the confidence to project the problem, the solution, what your company is doing, and to invigorate and convince others, [the idea] is just going to sit there,” Stewart says.
His experience allows him to relate both to the young artists looking to make their living in music and the music industry executives close to his age. “When I was 24 walking into Atlantic Records, someone who was 50 may doubt me,” he says. Now, venture capitalists and senior level executives are “looking at someone across the table who is more of their peer.”
His contact list also means he can often get things done more quickly. “I can do something with one call or one email that might take someone without experience or contacts five calls or five emails,” he says.
A ‘fast and furious’ network
Cindy Joseph, who turns 40 in August and operates her talent management and consulting company The Cee Suite from WeWork Montague St. in Brooklyn, says she was pleasantly surprised by “how fast and furious my network came through for me when I launched my business.” That network included colleagues and people she’d managed or recruited over the course of her more than 15 years as a human resources executive at places like Accenture and Goldman Sachs, and her college alumni group.
Joseph works with clients across all industries, including finance and tech, and believes that later-in-life founders must demonstrate why their past experience is invaluable while winnowing that information to what’s most relevant to right now.
“It’s knowing when to lean on having the experience, but not letting that be something that hampers you and keeps you from thinking outside the box,” she says. “At the end of the day, it’s more about what’s next, and less about what’s behind us.”
‘Know how the machine works’
John Smelzer, 53, has been working on startups since his early forties, including having an ad network he co-founded, 5to1, acquired by Yahoo.
Smelzer understands the perception that investors are more interested in young founders. “It’s based on a belief that when you’re young you have limitless energy, nothing to lose, no mortgage, no kids, no private school tuition. You’re not bound by norms,” he says.
Smelzer, who works from WeWork Santa Monica, was a lawyer before working for two decades in sports media for the NFL, NBC Sports, and Fox Sports. He is now president and COO of ScoreStream, a five-year-old company that crowd-sources real-time local sports scores.
“When you’re disrupting… you have to have some knowledge of what will fly and what will not fly. It doesn’t mean you’re going to retreat or not try; you’re using your experience to focus your energy on the highest probability of success within the machine,” he says.
Smelzer feels he often knows exactly what the other side must get to make a deal work. “We know what the other side thinks is important, so it makes it a lot easier in a negotiation to give them the things you know they need and still get what you want,” he says.
‘If you have an idea now, do it now’
Cheryl Cheng, general partner at Menlo Park-based BlueRun Ventures, acknowledges there’s a magic to the youthful need to shake things up, but says founders of any age can be successful if they have that particular fire. One advantage many older founders have, Cheng says, is the operating experience to immediately run the business side of things, and to hire and fire in a way that’s tailored to the specific needs of the company, rather than focusing on friends or a lot of people with the same traits and interests.
Overall, she says, investors are best served to just focus on the problem proposed to be solved and who is the best person to do it. “Our job is to be open-minded all the time, and to really take in the whole package of any opportunity. It’s dangerous to be categorically opposed to something that arbitrary,” Cheng said, referring to a founder’s age.
Many 35-and-over founders, including Stewart, Joseph, and Melzer, do feel that, advantages of life experiences aside, the idea and the ability to execute are what matter the most. And that comes at different times for different people. “My view is, ‘Hey, if you have the idea now, do it now,’” Smelzer says.
Photos by Frank Mullaney