would love to hear pg weigh in on this...
These days,"young people" are part of the technology. It's not something they learn as abstract concepts. They are it and it is them. You wouldn't expect a 50 year old Elbonian mud farmer to go to school and learn to be a world class electric car designer. But, you would expect a 50 year old world class electric car designer to still be hot shit.
Or, in song lyrics: maybe I should learn to shut my mouth -- I am over 25 and I can't make a name for myself; some nights I break down and cry.
The brilliance of our current situation is what "they" think of you is more and more irrelevant. Just make something people want. People have unlimited wants after all.
The flip side of this analysis would be: YC and Sequoia prefer to fund kids because kids are easier to manipulate. Kids don't know how to read a contract or a term sheet. Kids don't know how to protect their own interests in their business when accepting funding. Kids don't know how to play hardball in negotiations.
Kids, in other words, are very easy to use as disposable resources.
(Indeed, with appropriate conditioning you can even convince them to believe that becoming a disposable resource is a sign of their Epic Founderhood.)
Someone who's seen peers get screwed over in previous gigs, or who's been screwed over themselves, is going to have learned a few things about how not to get screwed over the next time. So it's more profitable to deal with people who haven't learned those lessons yet. And once they have learned those lessons, you throw them overboard and replace them with the next batch of dewey-eyed innocents.
Ultimately, making a big successful company is really hard and VC's would want to bet on people who have the best chance of doing that - not the ones they can easily screw with.
Note: I don't buy the idea that only young people make good entrepreneurs. There's tons of evidence that older entrepreneurs can be very successful. It's probably true though that young people in general are more likely to massively revolutionize something entrenched, even if their overall success rate is the same or lower than older people.
Einstein, for example, was 26 when he published 4 papers that would change the field of physics forever: http://en.wikipedia.org/wiki/Annus_Mirabilis_papers
This is premised on the assumption that everyone was trying to "make it" at 22. Outside the little SV social network bubble, founders are generally older with a deep well of experience in a problem domain. I worked at two companies run by their original founders. The founders at both companies were in their late 30's or 40's when they started the companies. They had PhD's, years of experience in the field, numerous papers to their name, and extensive professional networks. They weren't trying to "make it" at 22--they were working in the industry building up a solid foundation for starting a business.
But given the "startup = growth" essay, where he says that only 1 company per cycle makes any difference to YC's returns, I can see the logic behind ageism.
Young people (I'm not one of them anymore) just have more unpredictable outcomes. They are the Black Swans.
The Black Swan theory is that the outliers shape our world. And that has been true in tech for sure -- Apple, Google, Microsoft, etc. are all anomalies. These companies grew enormously quickly and were all started by very young and inexperienced men. The two YC success stories that get pointed to -- AirBNB and DropBox -- were also started by the very young and inexperienced.
Older people are perhaps more likely to be successful. But there is less variance in their outcomes. There's the logic in investing -- once you're making money, you're less valuable. Because people know what you're worth. Before you make any money, people can ascribe crazy valuations to you. It will be wrong a lot of the time, but it doesn't matter because the one Black Swan event is what you're looking for. You only have to be right once.
Also, startups are a big risk financially. If you try something that blows up and leaves you broke at 26, big deal; a lot of 26 year olds are broke. By 38 you can't take so many risks-- especially if you have kids."
We learn how to control our variance as we get older. (I'm 29, so I have no idea if I'm "young" or "old" by SV standards.) High-variance life isn't fun unless you hit an early home run. Otherwise, it's stressful and shitty. Experiences like getting fired because you were better than your CTO's-friend manager and made him insecure are pretty damaging, and they lead to self-filtering and variance-reduction as a survival strategy.
Give us an R&D environment that doesn't beat the shit out of high-variance people for 20 years, and you'll see a world where experience doesn't reduce variance so sharply, but delivers increases on the whole distribution.
So many current work environments have self defeating dynamics. You're not allowed to be better than your boss. When that gets thrown away (e.g. startups -- you have no boss) everybody can thrive. Well, they can thrive if they haven't been trained over a lifetime to be risk averse due to shitty management.
Story of my life! +1 to that!
Do try not to believe in myths. Especially in 2012: people are young way longer than before and 'smarter and more capable' is quite relative.
I think this debate boils down to "acknowledging certain market realities" versus "creating market realities." If you advocate youth based startups, you have to define youth, which is entire subjective. "Youth" in this context probably just means "hasn't reached full creative potential."
Of course, people won't think that much. They'll see youth, think 25, then start evaluating the world from that viewpoint.