When It Comes To Founding Successful Startups, Old Guys Rule
techcrunch.com
techcrunch.com
The truth is that a VC sits on a portfolio of undervalued options. A success among pool of startups is always a non-linear event. It is a meteoric rise, a market-share grab which often actually creates a completely new market. A very few successful startups will make a large pool of dog investments still a very profitable business. One option will fire, the rest will expire worthless.
That's why a VC has to drive all of his startups towards increasing risk and trying to grow big, fast. Go for a large team. Invest, borrow, rise capital. One of you will win, the rist... what do I care?
Now, from the point of view of entrepreneurs, they often get a very poor deal. An engineer has only one option in his portfolio -- that is his venture. Its success is largely dependent on random factors like stumbling on a network effect, or tapping a new undiscovered need of millions. What would be a true price of such an option?
Whatever the price, young guys have poor bargaining power at the negotiating table facing seasoned VCs. Older guys do better. For a young guy a startup is not only a way to riches -- it is also a way to self-actualise, to define one's identify. An old guy does not need this crap. He has accomplishment behind his belt. He can drive a hard bargain and to get better deal from a VC. He is driven to get a good business deal, and will not go dancing across the room just because his name features in some crappy termsheet.
An old hand is also more likely to take less risk and to shoot for a long term, VC appetite be damned. They will be practicing more 37signals-like approach. Profitable? Have positive cashflow? Great! And fuck your IPO plans, at least until I feel the time is right.
So, it is no wonder that older founders have better success rates. They exploit the VC industry when they want to, not the other way around.
And it's definitely false that VCs prefer founders who are young because they can be pushed around. VCs are very unlikely to invest in someone they can push around. Nothing turns them off like weakness.
E.g. Adobe was founded by a couple of guys in their 40's.
Avg founder age: 43
62 have started multiple firms
3 firms on avg.
Avg workweek 58 hours
Graduate degrees 27
Sole founders 37
Co-founders 48
Female 6
Avg 5-yr growth rate: 2506%
why do you think serial entrepreneurs find it so much easier to raise money?
PG wrote an essay on it, and the startup learning paradox. You're likely to fail when you're young because you're inexperienced, but the only way to get experience is to start up.
What I'm wondering about, though, is the rest of these younger entrepreneurs: I understand that the older entrepreneurs of course make better decisions, but I wonder how much of these younger entrepreneurs (wrongfully) think they are just as capable, and thus something like Dunning-Kruger was taking effect.
I try to reflect this on myself, 26 years old and founder of a startup, and I am fully aware of my inexperience. I personally attempt to compensate that problem by gathering more experienced people around me, but in the end, there is only so much you can do about it. I do think, however, that knowing you don't know everything at least allows you to be more aware when you're likely to make a mistake.
I also feel the only way to learn properly is to do it. You'll only follow someone's advice so far till your gut sets in and you need to make your own path - even if that requires being proved wrong.
What makes you think that? In my experience, it's pretty easy to be talked both out of a good idea and into a bad one.
Aren't most YC founders < 30ish?
It's curious.
from pg:
"There are quite a lot of founders over 30. I don't know exactly how many because we don't keep track of ages. The sharp falloff is around 35, but we've had a handful of founders over 40. None over 50 though. I think our age distribution is probably close to the age distribution for startups generally. We've funded more founders who are 27 than 20 or 35 because more people start startups at 27 than at 20 or 35."
That can't be right - surely there is a correlation between the value of that YC provides and the amount of time one has spent in industry. I'd imagine that once one has $50k in savings, and has worked with law firms, knows angels and VC's, the value of YC funding drops drastically. Hence, I'd imagine older (more experienced) founders wouldn't be as interested in YC as, say, students in their early 20's.
"Half (maybe more) of the startups we fund don't need the money. And in fact the money is a only a small part of what YC does. The money we invest works more like financial aid in college: it ensures that the people who do need money can cover their living expenses while YC is happening. "
When I was right out of school, or off my first job I might've considered it... but these days? never.
In our previous lives in media production, it's all about youth and energy, and seems to becoming even more so, especially in advertising where ideas are often driven by an innate understanding of the power of technology, and how it can be harnessed to create and realise ideas in completely different ways. I know many over 40's colleagues who think computers are for Googling and email (you know who you are), and that's the limit of their technological skill. These people are almost speaking a different language to the 25 year old directors they're working with, who are breaking all the so called 'rules'.
At one point, many HNer's, after years of struggle and work on projects will become 'the old guys', and still drawing on their entrepreneurial skills and drive. Some will have made that Big Deal with all the $$$, but very many will still be pushing their next idea after a series of almost made it's. I think it's important for young start-ups to project that image of themselves in the future, that they might be looking at 20 years of pushing and fighting to get the success they're striving for.
A lot of people tell you to "Scratch an Itch". When you are 40 and have had 15+ years at companies, you have encountered many problems that were entirely unknown to you as at college graduation.
Add in more technical & business experiance, connections, and personal capital and it is not really that surprising when you think about it.
The only thing I see in favor of the young guys is the lower cost of living without a family, and being able to work more hours. If you save and don't tie yourself up in expensive cars and homes, it is just as easy to do at 40 as 20. Maybe easier if you now have a wife or husband with a solid income. The hours difference is not that big of a deal compared to experience. Working smarter is more valuable than working harder.
I don't see why a lot of people on HN are so quick to say that one programmer can be considerably quicker than another with the right tools and talent, yet give no equal respect to the greater abilities of a business experienced founder vs a fresh out of school founder.
Discount anyone at your own peril. These days, things are often not as they appear.
And, any person can do so, not only special people. This is because people have free will and intelligence (i.e. are intelligent agents) and machines do not. Thus, it is mathematically provable that prejudice is always wrong.
How does it show this? And for what definition of "information"?
it is mathematically provable...
The first step of mathematics is to define your axioms and then your terms. IDT doesn't seem to do either.
http://marksmannet.com/RobertMarks/REPRINTS/2009_Conservatio...
A critique (FWIW):
http://scienceblogs.com/goodmath/2009/08/quick_critique_demb...
Dembski's paper shows that any search performing better than random sampling requires the addition of information. This is information in the Shannon sense, -log2(p), where p is the probability of sampling the target region in a search space normalized according to random sampling.
This cannot be done algorithmically for an arbitrary search landscape. According to IDT, however, the defining quality of intelligent agents is their ability to produce information. This can be measured and thus falsified or confirmed. I.e. do agents we normally identify as intelligent, such as humans, actually produce information?
Per question 2:
If the above does not define terms enough for you, let me know. Dembski does a very good job in defining ID mathematically. The following is a collection of his work, much of it freely available online.
Ray Kroc of McDonald's fame was in his 50s when he started the business. The McDonald's fast-food chain happened to become successful company and top-brand within Ray's lifetime. He died in the 1980s. Before McDonald's he hadn't been known for anything truly glorious and exceptional as achievement.
Perhaps, besides amounting enourmous experience and insight about restaurants and sales. Something which took him decades in the hard way and is recognizable only afterwards.
This irked me a bit. I wonder how the author would define "feature" and why he believes that real companies don't simply make features.
As far as I can tell, there are companies out there with small feature-like products that are making consistent profits... and there are plenty of companies with massive complex products that haven't got a clue how to make money. I don't think you can choose to call something a company or not based solely on the complexity of what its main product/service.
See Figure 1 on page 8 -- only 30.4% of the entrepreneurs surveyed were in software or hardware start ups, the rest were in other 'high technology' industries such as energy and bio-tech. I would love to see the same questions asked of only web-software start up entrepreneurs, I bet the results (age, experience, etc.) would skew differently.
Interesting, but I don't think it's productive for people to focus on how they are demographically different from your typical "success" story in any field or endeavor.
Have not read the paper but this sounds like survivor-ship bias. The number you'd want is what percentage of old guy companies succeed.
Where did you get that from ?
The media bias seems to be to put the focus on the younger ones because they usually make 'hip' stuff. But when it comes to building solid businesses the older crowd is definitely not to be underestimated.
All founders of start-ups eventually become 40+, they have more experience than the younger generation and they're bound to do it again.
Unless their original start-up became a regular business and they have to keep running it. Decades fly by like that...
Though I wouldn't really classify rock or mountain climbing as a profession, the really good ones tend to peak around their 40s.
The books I've read on the subject indicate that though the peak physical capacity lies in the mid to late twenties, there are many other factor at play that make climbers better as they age (up to a reasonable age limit).
Experience, more long-term planning, increased ability to endure pain, etc give older climbers (30-45) a much higher chance to complete or survive a climb than their younger counterparts. The same appears to hold to true for other expeditions (long-term sailing, arctic/desert fun, etc). Football and basketball are not the be-all-and-end-all of sports.
Get over it.
With this, I started feeling old when I was 18. It led me not try out out new things thinking I'm too old for it.
I'm 33 now but I had a realization that nobody is too old for anything. I'm trying out new things again and I don't care if I'm older than most people.
Are there any VCs that would agree to single trigger acceleration? I was under the impression that 25% acceleration on acquisition with a double trigger was pretty standard.
That's a bit low for 40-year olds, isn't it? So, on average they start working at 30-34 years of age? Or they start early but take really long vacations?
older guys have a better chance of starting successful companies because of their experience
younger guys have a better chance of starting fundamentally disruptive companies PRECISELY because they have no experience.
'It's not the age honey, it's the mileage'