
When It Comes To Founding Successful Startups, Old Guys Rule - vaksel
http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/
======
1gor
I have a theory why successful 'old' guys come as such a surprise. It is
because a 'young founder' is largely a product of propaganda. Young guys are
mercilessly exploited by VC crowd. Venture Capitalists and startup-buying
companies like Google (should I also add incubators like YC?) need to maintain
'young is good' thesis to attract the supply of fresh cannon fodder.

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.

~~~
pg
Your theory is about a third right. Young founders do get more attention from
the press. But not because of propaganda campaigns by their investors. The
press doesn't have to be talked into it: they already have a bias toward
writing about young founders.

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.

~~~
jacquesm
Are you willing to share the number of companies YC has invested in where
founders were in their 20s, 30s, 40s, 50s or older ?

~~~
pg
I don't actually know the numbers. We don't keep track. But I know there
haven't been any with founders in their 50s, and only 2 or 3 with founders in
their 40s or their teens. Most founders are in their 20s or 30s. Completely
guessing, I'd say 15-20% have founders in their 30s.

~~~
YuriNiyazov
Have you noticed any correlation between age and failure?

~~~
pg
Off the top of my head, I'd say that older founders are more likely to
succeed. They don't give up so easily. On the other hand, they also tend to
have much higher burn rates, which make their startups easier for
circumstances to kill.

------
Gibbon
From Canada's profit 100 list:

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%

~~~
cedsav
If most have started multiple firms, then they didn't start being entrepreneur
at 43. So is it age, or simply repeated experiences that really matter?

~~~
mixmax
One is a prerequisite for the other.

------
pclark
my first thought: _no shit?_

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.

~~~
stingraycharles
You have to keep in mind the audience Techcrunch is appealing to: a lot of
these rockstars probably really think wisdom comes with intelligence instead
of the years.

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.

~~~
pclark
I'm 21 and CEO of a startup and I don't know _shit_ \- I'm not even that smart
- hence why I talk and listen to as many smart people as I can. I like to
think I'm pretty good at working out what advice is _good_ advice...

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.

~~~
andreyf
_I like to think I'm pretty good at working out what advice is good advice..._

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.

~~~
pclark
I can usually take some advice and work out if its useful. Sometimes just
stopping and thinking about it makes it far clearer. Some people give great
advice, and _terrible_ advice at the same time.

------
callmeed
Wasn't there a big to-do at Revenue Bootcamp with PG and Mike Moritz? Didn't
Moritz dismiss/dodge questions about "older" (> 30) founders? (see:
<http://www.thefunded.com/funds/item/5749>)

Aren't most YC founders < 30ish?

It's curious.

~~~
dannyr
<http://news.ycombinator.com/item?id=638350>

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."

~~~
andreyf
_I think our age distribution is probably close to the age distribution for
startups generally._

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.

~~~
callmeed
True, but ...

 _"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. "_

<http://www.ycombinator.com/faq.html>

------
movix
As an old guy '45', and an old surfer (why does there seem to be this
connection - see illustration to article) and also a serial entrepreneur, this
article and the HN comments made some uplifting reading. As we're applying to
YC this year, we've obviously been discussing if the age and varied
experiences of our team has any positive/negative influence on our
application.

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.

------
krschultz
A large part of the difference is the problem they are solving.

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.

------
edw519
_Word to the wise. Discount the old guys at your own peril._

Discount _anyone_ at your own peril. These days, things are often not as they
appear.

~~~
erlanger
Classism, ageism, racism...all prejudices are to be avoided, regardless of the
era.

~~~
yters
According to intelligent design theory (IDT), everyone is very capable of
providing good advice, and people are always better than anything else at
giving you information. This is because IDT shows no computational device or
mechanism can actually create information, only people can do so.

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.

~~~
andreyf
_This is because IDT shows no computational device or mechanism can actually
create information, only people can do so._

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.

~~~
yters
Per question 1:

[http://marksmannet.com/RobertMarks/REPRINTS/2009_Conservatio...](http://marksmannet.com/RobertMarks/REPRINTS/2009_ConservationOfInformationInSearch.pdf)

A critique (FWIW):

[http://scienceblogs.com/goodmath/2009/08/quick_critique_demb...](http://scienceblogs.com/goodmath/2009/08/quick_critique_dembski_and_mar.php)

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.

<http://www.designinference.com/>

------
csallen
_Silicon Valley has probably funded a huge number of companies that are really
features and not companies. It’s very easy to build a feature and call
yourself a CEO. It’s much harder to actually grow a company..._

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.

------
zacker
I think this article is misleading.

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.

~~~
tjmc
No - the Hacker News/PG convention of referring to 'startups' meaning only web
software startups is misleading. The general use of the term is broader.
Seeing the breakdown by category would be interesting though.

~~~
zacker
I didn't explain myself well enough. It's assumed that &th audiences of HN and
Techcrunch skew very much towards software startups. Given that, it is wrong
to assume this survey bears much weight towards the audience of these sites.
Techrunch should have realized this and flagged it before publishing the
article.

------
araneae
They're also all male, in addition to being old, married, and having two kids.
Therefore, women won't be successful start-up founders.

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.

------
mwerty
"..showed that the average founder of a high-growth company launched his
venture at age 40."

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.

~~~
sriramk
Not to derail the conversation but when did 40 become 'old'? I'm just a decade
and a half from that age and that isn't long. I'd probably consider 60 or 70
to be old. Not 40.

~~~
yters
I consider 26, my age, to be old.

~~~
dannyr
Growing up, I was always younger than my peers. I was the youngest in my
class, team, etc.

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.

------
mburney
The more interesting question to me is which age demographic does better with
less funding. Web 2.0 companies may be just "features" but the great thing
about them is that they require barely any investment. In fact, a young person
without any commitments (family, mortgage, etc.) and enough determination
could figure out a way to do a startup with no VC investment at all. Could an
older entrepreneur with a lot of commitments do a startup with such little
investment? Probably not.

~~~
skmurphy
A team of older entrepreneurs can bring much more social capital and domain
knowledge to a startup. In a B2B startup both of these can make quite a
difference.

------
andrewparker
This is simply survivorship bias.

~~~
Tichy
How so?

------
jamiequint
"Old guys know better than to sign a term-sheet loaded with a nasty double-
trigger option acceleration that would consign the founders to indentured
servitude for years after a liquidity event."

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.

------
revorad
_They typically have six to ten years of work experience and real-world
ideas._

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?

------
pmorici
How is it that he claims average work experience to be 6 to 10 years but
average age to be 40? Someone who is 40 should have 15+ years of work
experience shouldn't they? 6 to 10 implies an age of late 20's Early 30's

------
mingyeow
what is the argument about?

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.

~~~
ojbyrne
Assuming this is actually the case, I guess the argument is about which has a
better ROI. If, for example, your first category is proportionally 1000% more
likely than the second, and the return on investment is less than 1000% in the
second category, then it makes sense to fund the first category
disproportionally. Not saying that is the case.

------
ecq
I'm going to quote Indiana Jones.

'It's not the age honey, it's the mileage'

------
envitar
Excellent point!Add to this the fact that these old guys may well have a
better understanding of what the customer wants and perhaps is prepared to pay
for any service. Everybody is focusing on Google but how many like them tried
and failed? You won't read about them. Someone who starts a business with his
family attached to him thinks twice about each move and turn as any mistake
may seriously affect not just his personal livelihood but his family's as
well.A young twenty something who doesn't make it can always find a career
afterwards something which is not necessarily the case for a forty something.

~~~
skmurphy
Strangely, the fact that failure will penalize an older team more can mean
that their commitments in a B2B setting are taken much more seriously: if they
fail to perform they cannot "move to another lifetime" they have to live with
the consequences. This can make them more careful to promise what they can
deliver and deliver what they promise.

