

The case for old entrepreneurs - mikeleeorg
http://wadhwa.com/2011/12/02/washington-post-the-case-for-old-entrepreneurs/

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jpdoctor
> _“People under 35 are the people who make change happen,” said venture
> capitalist Vinod Khosla, “People over 45 basically die in terms of new
> ideas.”_

The real problem for Vinod: People over 45 are _much_ savvier when it comes to
term sheets. They already have financing scars and have friends with big scars
too.

It is much easier to take advantage of someone young who still believes the VC
bullshit lines, and those folks tend to be younger.

~~~
zackzackzack
That was the first thing I thought when I saw this.

I tried starting a business my freshman year with a professor. The entire time
my dad, a guy who has failed starting up businesses as many times as he has
succeeded, just kept saying "Get the papers signed, get the papers signed,
where are the papers, what are the numbers, how do you know he won't screw you
over?" It went on for a couple of months until the professor finally cut me
out. My dad had seen it coming from the very beginning and tried to tell me,
but since I was young and smarter than him and gonna be really awesome early
on in my life and and and and I ignored him.

I imagine some VC's are pretty much like the professor multiplied by like 50
million dollars of institutional money. Get the smart naive kids to make them
money and then screw them out of the reward ASAP. (Other VC's are, of course,
probably really awesome people who hate the reputation they have.)

~~~
jpdoctor
> _but since I was young and smarter than him and gonna be really awesome
> early on in my life and and and and I ignored him._

I feel your pain... Among my favorite Mark Twain quotes:

 _"When I was a boy of 14, my father was so ignorant I could hardly stand to
have the old man around. But when I got to be 21, I was astonished at how much
the old man had learned in seven years."_

Edit: Damn you Czarnian. <http://www.snopes.com/quotes/twain.asp>

OK, I will henceforth attribute it to Abraham Lincoln.

~~~
Czarnian
Mark Twain didn't say this. His father died when he was 13.

Not necessarily a bad sentiment, just not a Mark Twain thing.

------
SeamusBrady
Hah! As someone who is nearing their forties I find this Silicon Value
obsession with youth quite interesting. I live in Ireland and I have never
even been in the States, so my opinions should be taken with a pinch of salt
:)

I know of plenty of successful "older" entrepreneurs here, even in IT. We
don't have this cult of the under 25s here as much I think.

Perhaps VCs like under 25s because they are just easier to manipulate? Or is
it just another sign of a culture that is worryingly obsession with youth and
staying young at any cost?

~~~
mikeleeorg
An angel investor once shared candidly with me that if he were evaluating two
teams competing in the same market, where one was young & inexperienced and
the other was old & experienced, he would invest in the younger team.

His explanation was that building a startup is incredibly hard & time-
consuming, and a vast majority of teams fail. A younger team would have a
lower burn rate, be able to work all hours of the day to get things done (for
better or worse), and be more likely to stay with the startup life after
several failures.

An older team generally needs more of a salary for financial obligations
(especially those with a family, mortgage, etc), wouldn't be able to work as
many hours (especially those with a family), and might be able to survive a
failure or two, then give up and go back to a FT job somewhere because of
their already-established connections.

Whether you have the same mindset or not, this may be the mindset of many
investors in Silicon Valley. And perhaps journalists & industry bloggers too,
which would explain why the media here tends to emphasize younger cofounders.

~~~
jacquesm
The media emphasizes younger co-founders because it makes for a much better
story. Rags to riches before you're 25 sounds so much better than the same
before you're 60.

~~~
_delirium
I think there's also a disproportionate media focus on the _really_ big
successes, which do seem to have had pretty young founders: Apple (21 & 25),
Microsoft (19), Google (24 & 25), Dell (19), Amazon (30), etc.

~~~
pelemele
Jobs biggest success came when he was over 45 and honestly, we are not talking
here about stuff like break-thru cancer cure, new kind of alternative energy
or similar. We still use the same network stack (TCP, 1974), the same web
markup language (HTML, 1990) and the same programming languages as our fathers
(C++, 1979, PHP, 1995, SQL 1987).

~~~
einhverfr
Well, we aren't using my grandmother's computer programming language much
(Fortran).... Thank goodness ;-) hahahahah

~~~
dgabriel
Actually, Fortran is pretty widely used in the sciences. If you're working
with R, you're probably doing some Fortran stuff, too.

------
tomlin
Young entrepreneurs like this narrative because it gives them a sense of
possible success over _actually experienced_ individuals.

"Old" entrepreneurs (apparently, older than 25 years old), will find this
stance unsettling, for a few reasons. One reason that stands out for me: What
if I was under 25 when I started, but now "old" and still successfully running
the same company?

The problem with this narrative is that it never bothers to ask what happens
if you _don't_ dump your company at valuation and leave rich, enjoying the
high life.

Young entrepreneurs may see this outcome as more probable, "older" ones have
passed this fantasy and are happy to go further than a "cut and run" approach.

Possibly two different conversations, but I don't really understand the
mentality of building something great, getting a valuation and _hoping_ to
bail out to supposed utopia. How can you call yourself a passionate
entrepreneur if your game plan is to run your startup like a lottery winning?

------
Czarnian
What they're looking for is people with under-developed bullsh*t detectors.

I suspect the reason IT applications are sometimes being pioneered by younger
people has more to do with immersion in the technology from an early age that
can provide novel insights into how people will use technology. But as the
years roll on and the low-hanging fruit (like facebook) is picked clean, the
young folks are going to find it increasingly harder to uncover problems to be
solved.

~~~
Vivtek
There will never be a shortage of problems to be solved.

~~~
Czarnian
Never said there would be. Just saying that the problems are going to be
increasingly obscure and harder to solve.

~~~
einhverfr
I am not sure about that. A lot of solutions are to surprisingly obvious
problems that nobody ever saw before because we were accustomed to them.

------
ChuckMcM
I find this an interesting article in light of the previous "Oh shit I'm 30
and haven't done _anything_!" article.

There are young engineers who are too gullible and naive. Many VC's eat these
folks for lunch like Hollywood eats wannabe movies stars. I met a guy who said
that after his first startup he felt like some young kid who came out to act
and settled for a role in an adult film, only to have all the proceeds go to
the producer and a reputation sullied by is previous 'history.' His startup
had a good exit, for the VCs but was considered 'poorly executed' so he took
the heat.

I've met older engineers who were amazing creative forces to be reckoned with
in their 'day' but are now stuck in a bitter, curmudgeonly loop rebelling
against new technologies because they 'add no value over the old way which
still works fine thank you very much.' They get reviews they don't understand,
things like 'stuck in your ways, not a team player, argumentative.'

Flashy loud mouth hipsters reflect badly on young entrepreneurs and bitter
engineers reflect badly on older engineers. Its not like you can change that
though.

All you can do is take an engineer, listen to their ideas and observe their
work, and if they are good it will show. If they are past their sell by date,
that will show too. And if they are more air than insight, well that comes out
pretty quickly too.

One thing I've come to appreciate is how dangerous a generalization can be.

~~~
einhverfr
Let's look at the reason for the "stuck in your ways" dynamic. There is a
saying in the software engineering world, which is "Those who do not learn
from UNIX are destined to reinvent it badly." Very often times new approaches
come to the fore as fads which then fade away just as quickly. Often times
these new approaches have tradeoffs people make because they don't understand
the value of the old approaches. Nothing shows this better than something like
Ruby on Rails, a technology personally I will never touch more than I have to.

Older engineers who have been around the block tend to assume new technologies
are fads until proven otherwise. Many have been burned a few times. Many have
learned the hard way that the best engineers are methodologically
conservative. And so they get labelled as stuck in their ways not because they
are not creative, but rather because they are cautious about new fads. The way
to sell to these engineers is to demonstrate understanding of the values of
the old methods as well as the benefits of the new approaches.

 _All you can do is take an engineer, listen to their ideas and observe their
work, and if they are good it will show. If they are past their sell by date,
that will show too. And if they are more air than insight, well that comes out
pretty quickly too._

I will entirely second this however.

------
6ren
In general, you get better with experience; but in computing, it is _possible_
for youth to succeed. We pay attention to this because it is striking, not
because it is generally true.

It does indicate something different about computing that offsets the benefits
of expertise - the obvious factor is that the periodic revolutions in
computing technology largely neutralize past expertise, putting old and young
on a more equal footing than is usually the case. Some expertise carries over
to the next revolution; some does not; and some is actively detrimental.

I like the example of postscript, the first product of Adobe, developed by two
guys in their 40's. Of course, Microsoft, Apple, Google and Facebook were
founded by young guys, so it does seem as if past expertise is not just
neutralized but actively detrimental, at least for the technology revolution
itself.

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bond
I'm 39 and I still have lots of ideas floating around. Even at this age I
still can do long hours and keep pressing if needed. The only problem is to
find a partner who can have the same vision, keep focus and put the necessary
work for things to get done. My experience with younger people is that some of
those guys loose focus or interest pretty quickly and it's hard to keep them
motivated if we hit a roadblock or something gets on the way. Seems they're
good for a short term work but bad for getting to see the whole picture, which
involves a bit more experience/patience...

I bet there's a lot of younger guys willing to take risks and have what it
takes to make it, but so are the guys on their 30s and 40s...

~~~
einhverfr
I would agree. In fact, I have a huge amount of ideas floating around too, and
have been running my own business for some time (and now looking at finally
dramatically expanding it).

I am 36, and figure I will never have a shortage of ideas. It's finding the
time and people to make sure I can implement them which is hard.

------
johnrob
One phrase I associate with startups is "dumb enough to try". Startups usually
have to break rules, and the most reliable way to pull that off is to not know
you're breaking rules (i.e. youth).

It's not a death sentence for older entrepreneurs, though. A simple
countermeasure is to live/act/feel young.

~~~
rdl
Presumably a great strategy is to work for your 20s in a certain field (say,
IT/web), and then in your 30s spend a year or two working in something
tangential (say, trucking/logistics), and then do a startup which combines the
two. Then you're sort of a newcomer to one, but with a lot of experience to
bring to bear, as well as general workplace skills.

------
femto
Can anyone comment on the rates of use of bootstrapping and VC, between old
and young entrepreneurs?

My gut feeling is that older people are more likely to have the savings and
connections to bootstrap a company, and so route around any bias from VCs. Is
this borne out in reality? Data anyone?

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ww520
Older people tend to have better financial cushion. They are more likely be be
able to say no to bullshit terms from VC. Younger people have less choices to
refuse unfair terms from VC. Yeah, VC like younger bright-eyes entrepreneurs.

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_delirium
Just in terms of practicalities, isn't the health-insurance thing a much
bigger issue for older would-be entrepreneurs? A healthy under-35-year-old can
buy (sort-of) reasonably priced non-group health insurance, but I wouldn't
want to be looking for it as a 50-year-old, especially with _any_ sort of non-
crystal-clear medical history.

~~~
jaylevitt
Here in MA we're running the 0.5 beta of health care reform, and the absolute
best PPO refer-yourself-anywhere no-claim-denied coverage was $350/mo in 2010.
There were high-deductible HMOs for a third that.

It's actually more of an issue for me now, working for someone _else's_
startup, since I'm eligible for group coverage at work and therefore no longer
eligible for the great individual coverage plans.

~~~
danbmil99
It would be interesting to hear more about how the MA plan is or isn't
working. It's been such a political hot potato.

~~~
jaylevitt
Unfortunately, all I have is n=1 anecdotes. As I'm fond of saying, we have no
newspapers here, so it's hard to get data!

But I liked the state-mandated individual plan enough that I've told our CFO
we'd be better served by having no health coverage. With only 10 employees, we
don't qualify for anything but a low-tier HMO, and apparently risk pooling
(i.e. business-association group plans) is no longer allowed in MA.

I think the individual plans might be a worse deal for families, though, which
is of course a big consideration - I have no dependents.

------
johnohara
Lots of cross-currents in this article.

The premise focuses on "internet founders" which invariably celebrates
software development over hardware development.

Okay. But the truth is, an enormous amount of innovation continues on the
hardware side, and those development teams and founders are not generally
under 25.

Heck, if MSL Curiosity suddenly sputters on Mars it will probably be due to a
gray hair making contact somewhere.

------
trotsky
Much easier to bully your way into a shot caller role as a VC if your
portfolio companies are being run by inexperienced managers. An important part
of that is convincing your stars to "spend big" and burn through the cash
quickly so you can take larger positions before revenue catches up.

------
jasonjackson
This article sets up a straw-man argument by claiming the reason why VCs
invest in young people and not older people is because creativity diminishes
in older age. I think their refutation of this idea is well done with good
evidence, but who's to say that's the reason VCs invest in young people?

I think one of the main skills that young people bring is relentless execution
and incredible thirst for learning. Especially when you pair these skills with
the investment team who bring tons of experience, it seems to be a winning
combination for the 100x ROIs.

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safeerm
I started a company with my dad ( a serial entrepreneur) and a couple other
older people. The issue is that even though my dad has bootstrapped us a
little till the end of the year, we are approaching the time that we need
funding and since all the other co-founders need to support their family it is
extremely difficult to manage the company because they don't have the
flexibility and luxury.

So they can't take that many risks..

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over40guy4
It's deplorable that people like PG insist on age as a criteria for the YC
application :-(

~~~
danbmil99
you missed the memo -- no age limit: [http://www.quora.com/Is-there-an-age-
limit-to-get-funding-fr...](http://www.quora.com/Is-there-an-age-limit-to-get-
funding-from-YCombinator)

------
dicroce
VC's are looking for home runs, not base hits. Younger people are more OK with
big risk... The exception, of course, is older guys who have already sold a
company (and thus, probably aren't looking for a base hit)...

~~~
Czarnian
That is a horrible way to play baseball.

~~~
nanijoe
But VCs are not playing baseball. In baseball, a home run can get you no more
than 4 runs, whereas the home runs the VCs are playing for can get you many
many multiples of what would be considered a single.

~~~
acgourley
That's what they say. They cite economic theory that higher risk bets return
higher on average. The idea is less people can take them and so there is less
competition.

This might be true - I don't have the data. But _either do they_ as this is an
impossible experiment to perform.

~~~
einhverfr
A smart investor though is going to diversify risks though. Some good solid,
low risk but moderate return investments along with a higher risk strategy
with a portion of the money.

Otherwise you have higher risks but no guarantee that you will be able to
succeed across a trouble economic climate.

A better approach IMO is to diversify risks. One thing YC does that's kinda
cool is a very small amount of investment combined with a sort of mentoring
approach. I am not sure it is the right thing for my business, but I won't say
it isn't occasionally under consideration.

------
pbreit
You've gotta question the data and analysis when it seems like _every_ big
startup was founded by young people. I'm thinking of Amazon, Ebay, PayPal,
Yahoo, Google, Groupon, Facebook, Twitter, etc.

------
Ex-PraliteMonk
An ex-ski racer told me the young racers are faster than the older racers not
because of athletic ability but because the young ones haven't taken a serious
fall yet.

