Humorist P.J. O’Rourke titled his 1995 memoir Age and Guile Beat Youth, Innocence and a
Bad Haircut. He was writing about his journey from hippie to conservative,
but the phrase applies just as well to the differences between younger and
older entrepreneurs, according to a recent
article by Annie Lowery on Slate.
In the piece, Lowery quotes research by the Global Entrepreneurship Monitor,
showing that the cohort of entrepreneurs under 35 may have created more new
businesses in 2009, but accounted for only 19.1% of “total entrepreneurial
activity.” Additional studies by the entrepreneurship-focused Kaufmann
Foundation found that the average age of entrepreneurs was 39, with far more
successful businesses launched by Americans over 50.
It stands to reason that experience would be helpful in
something as complex as starting a new company. So are other factors that often
correlate with age, such as a longer credit history, a thicker rolodex of potential
investors, partners and customers, the aura of mature authority, and deeper
knowledge of a particular market or industry.
Part of the appeal of the notion of “young entrepreneurship” is
that it is counterintuitive. It flies in the face of the very sensible idea
that, in business, experience and seniority are key. Young people stereotypically
offset the advantages of maturity with greater energy, fewer encumbrances in
their personal lives, a streak of unjaded idealism, and, frankly, a willingness
to take risks that more seasoned people might consider foolish. When you’re
making a big bet on entrepreneurship, it’s sometimes helpful to have less to
One reason there is so much focus on young entrepreneurs
is because they tend to succeed most spectacularly in highly-visible industries
such as IT, media and entertainment. It may be comparatively more difficult for
a 25 year-old to open an auto dealership or a cold storage warehouse, but it’s
a much smaller leap to launch a videogame studio or social media marketing
agency. In addition to perhaps having more familiarity and up-to-date skills in
these areas, young people are also adept at using technology to close some of
the entrepreneurial age gaps. For example:
automate relationship-building: Online networks make it practically
effortless to find and connect with people who might prove to be useful
business contacts. In addition to general networks like Facebook, there are now
increasing online resources and communities purpose-built for young
entrepreneurs. This partially offsets the advantages of a thick rolodex built
up over years.
Data supplants wisdom: Insights that were previously limited to those with keen intuition or deep experience are now broadly available to anyone who knows what questions to ask. Not only is more business knowledge accessible online than ever before, but
savvy entrepreneurs can mine online sites and communities for market
intelligence and customer data.
The economics of
attention have changed: Innovative businesses need attention from customers,
investors and the market to break through. In the past, industry veterans with
long experience could count on insider connections to give them an edge. Now
great ideas can go viral and global in an instant, and formal structures such
as innovation contests are becoming popular ways of exposing and validating new
for knowledge-based businesses are lower. It still takes credit to start
most traditional businesses, but in certain kinds of knowledge and service
industries, the only capital a startup entrepreneur needs is between his or her
ears. That creates a more level playing field for those with short credit
histories, and who may lack tangible assets like property or retirement
accounts to leverage into the new business.
These tools exist for young and old alike. There’s no reason
a 70 year-old entrepreneur couldn’t make just as extensive use of LinkedIn and
online analytics as anyone else. However, they all serve to mitigate the
traditional advantages of experience, and dramatically reduce the barriers to
entry in the highest-impact segments of the economy.
Midcareer professionals who leave established companies to
found new ventures in their fields of expertise will still enjoy considerably
better odds of success than someone just starting out, and retirees with a
lifetime of accumulated savings will still be able to put more resources into a
company to give it time to find its feet. A diversified economy needs those
kinds of businesses and should celebrate their success.
At the same time, we’ve seen significant changes in the past
decade that make it a lot easier for young people to make a serious run as
entrepreneurs much earlier in their lives. The kinds of businesses founded by
young entrepreneurs make a much bigger impact when they succeed, and leave a
much lighter mark when they fail.
Rob Salkowitz is author of Young
World Rising: How Youth, Technology and Entrepreneurship are Changing the World
from the Bottom Up, and Generation
Blend: Managing Across the Technology Age Gap. Follow him @robsalk.