Age and high-growth entrepreneurship
aeaweb.org
aeaweb.org
1. Apple: $2.65T
- Jobs: 21
- Woz: 26
- Larry/Sergey: 25ish
- Gates: 19
- Allen: 22
- Bezos: 29
- Zuckerberg: 19
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EDIT: With its high market cap, Tesla belongs on this list, and actually had some older founders. Problem: the older founders left the company/were forcibly removed, didn't retain much equity, and aren't credited with much early success when they were actually in charge. Still, some interesting data points.
Tesla: $0.94T
- Elon Musk: 32
- J.B. Straubel: 28
- Martin Eberhard: 43 (forcibly removed due to late/over budget Roadsters)
- Marc Tappening: 39 (left Tesla in 2008)Microsoft Apple Meta Amazon (Alphabet?)
Yeah, you get mostly founders who were young enough to live with their parents until they get enough connections to raise some capital.
Elizabeth Holmes is another example, emphasizing that the younger you begin, the more of a head start you have.
Some young people are just smarter. Zuckerberg is just not one of them.
Some young people have greater integrity too. Holmes is not one of those.
(Founded 1997. Reed was ~36, Marc was ~38.)
I'd say identifying an underlying trend early (all examples you gave) and then picking the most promising candidate from companies building on that trend, is the key.
But still, there's also management quality, founders that grow as management personalities together with the business, and sheer luck.. point being, uber-successful investing is more an art than science. And surely, not just a young age..
Tbh, I think that's just one definition of "the endeavor" in question. Not every start up needs to be a unicorn.
Also the ones you have picked have been around long enough that
1. Their growth has had surges and slows
2. The tech environment was quite different when they were founded.
- Normally distributed endeavors: look at averages, ignore outliers.
- Power law distributed endeavors: ignore averages, focus only on outliers.
In tech, a few companies generate all of the returns. And it's fractal all the way down. E.g. there have recently been 900 U.S. unicorns minted in the past few years (IIRC), accounting for roughly $1T in total market cap. Yet 4 out of the 5 companies on this list are worth more than all of these new unicorns combined.
If you take the attitude "I don't have any chance of investing in one of these outliers", you'll only invest in "safe" things and go broke over time.
This is an absurd conclusion from my comment. We still have unicorns and companies that grow 100x and 1000x without being FAANG. Those are great investments. I'd argue that they aren't safe either. I think you're finding a conclusion by looking at the answer. There's also only 4 companies there out of hundreds of thousands. You can't find the signal in the noise. As many others have pointed out here, companies you list also have another common factor: the internet was new. This offsets the industry experience factor that the paper discussed because there was no industry to speak of. This gives younger people an advantage. But there's not really something like that right now.
Though seriously, looking at Buffet - he invested in incredibly safe companies (ones generally valued at below their book value, at least for the first few decades) and used a bunch of leverage on them to make top-10 global wealth.
It bugs me (seems like it does for you, too) to hear the “you need risk for reward”.
Safe !== broke, and risky!== rich. But too many people equate ”safe” and bonds or index funds (which also won’t make you broke, they just won’t generate generational wealth for the most part).
Is not possible that it gives you better return of investment if you choose less risky companies? It may be better to make good profit in 90% of your investment that incredible gains on 0.00000001 of it.
Much of that gain came after going public, so we are looking at large corporate returns rather than startup returns.
If “startup investing” as opposed to “holding stock of a public company” you might want to measure gains to IPO at most.
Ex: AWS appears to be Andy Jassy, who was probably 30 or 40. Similar and probably even "older" stories for GCP (Google) & Azure (MS). Their supporting "co-founders" may be even older, like Werner Vogels (63).
they're not really outliers at all anymore if you're forming distributions and considering the mean.
2/3 Intel founders were about 40. Sam Walton did not own a store until at least age 35. Bell founded AT&T, maybe in historically relative terms the most successful tech company ever, at 37. Jensen founded Nvidia about 30. Warren Buffet bought up Berkshire in his late twenties.
Jensen and Buffett both count as "young" though, I think? In any event all of these founders are below the age of 45?
Look at the top 20, 50, and 100 to get a better idea of whether the top 5 observation is robust.
Per your example, if something has 0 explanation for whatever has 99% of influence, it is just not a useful explanatory mechanism. That doesn't mean there isn't a good explanation.
If you could recognize the causal networks behind a complex system the way a toddler can recognize a cat, after being shown very few examples, there would be no need for statistics.
Unfortunately, you can't. (But it doesn't stop lucky guessers thinking they can.)
A scientific hypothesis is correct or not independently of statistical analysis. It's true before it is verified. Statistics is just a social mechanism for demonstrating its correctness to other people (or yourself.)
It's entirely possible for someone to know they're right, actually be right, and it be uncheckable with statistics. The only difference between an outlier and a lucky guesser is knowledge. Blah blah blah anything that's measured ceases to be a good measure blah blah blah.
I agree with the comment you are replying to. You're commenting on a website of the most successful tech incubator of all time where, at least from a quick glance, all of the top companies were founded by people in their 20s. Given the researches intro sentence of "Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms" I think their conclusion is really just using an invalid viewpoint of what "the most successful new firms" means.
[1] https://www.investopedia.com/articles/personal-finance/05111...
How old was Jobs when he came back to Apple in 98? That's right, 42 years old.
Facebook also had several cofounders who left early, but I think they were all Zuckerberg's generation (Sean Parker was not a founder).
For what it’s worth, Elon Musk is not Tesla’s co-founder. He came in as a late investor and I believe one of the terms was that he’ll get the co-founder tag.
Founded in July 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors, the company's name is a tribute to inventor and electrical engineer Nikola Tesla. In February 2004, via a US$6.5 million investment, X.com co-founder Elon Musk became the largest shareholder of the company and its chairman. He has served as CEO since 2008. [0]
A) As far as I see all these companies were created in a different market, the most recent one from your list created 17 years ago:
1. Apple founded in 1976
2. Google founded in 1998
3. Microsoft founded in 1975
4. Amazon founded in 1994
5. Facebook founded in 2004
6. Tesla founded in 2003
I think it matters to take into consideration when we focus our analysis. The times were then and now. So analysis companies from 70' or early 2000's is different than analysing founded companies in 2020's.
I did not verified yet the dataset attached to the study, but I see that they say
> "Across the 2.7 million founders in the United States between 2007–2014"
so it appears they are studying 2007-2014.
So I have the same skepticism against the article. 2020 is a lot different than 2014. There are some similarities but also a lot of differences in the market, capital, know-how, competition, users expectations and more. What worked back then will not work now.
B) On one side Outliers can be fascinating to study. But for 99% of the population also unuseful in a way. Cannot replicate their pattern individually.
They are in a way a probabilistic "side-effect": they appear when there are enough interactions or data points, but nobody can pin point exactly from which initial data point they will appear. If this would be possible then with time everybody will invest early only companies that will become trillion dollars companies.
Nowadays if you were looking to fund someones idea for a social media company you might prefer someone who had worked in a senior position in another - perhaps 29 or older rather than 19.
I think looking at how much money (or) connections they got from their family (or) simply the privilege of having a safety-net as more accurate factor than the age for a successful($) startup.
Which makes sense, because industry connections for talent and sales are incredibly valuable.
They did get in early on a new industry, but they didn't start it even if they ended up defining it.
In the early years, Google was a breath of fresh air; their product (search engine) was miles better than the competition, it looked better, and it wasn't encumbered with ads. That was no gimmick. It's sad, what things have come to.
If you look at how many early stage consumer tech companies were implemented - many of them also throw economics out the window when they are first starting e.g free video hosting and serving without a plan to charge money. I suspect that younger founders are more believable to VCs and investors when they pitch these kinds of ideas then more experienced founders. It's easier to think that inexperienced founders will wise up while thinking that experienced founders never did.
How many of us out there are whispering to themselves "There's still hope..."
Maybe they do it more frequently on average when they're older than when they're younger.
It would be much more interesting to look at the age when people first achieve high growth success.