Founder Age for High-Growth Entrepreneurship
Youth has long been considered a requirement for success in the world of entrepreneurship, yet simply accepting dogma has never been the practice at MIT Sloan. To that end, Pierre Azoulay, PhD ’01, (International Programs Professor of Management; Professor, Technological Innovation, Entrepreneurship, and Strategic Management) and J. Daniel Kim, SM ’16, PhD ’20, Assistant Professor of Management at the Wharton School, University of Pennsylvania, are seeking to understand the ideal age for high-growth entrepreneurship.
Along with fellow researchers Benjamin F. Jones, PhD ’03, Gordon and Llura Gund Family Professor of Entrepreneurship and Professor of Strategy at the Kellogg School of Management at Northwestern University, and Javier Miranda, principal economist with the U.S. Census Bureau, Azoulay and Kim performed a rigorous analysis of the best data available. This entailed linking together IRS K-1 data; U.S. Census Bureau datasets on businesses, employees, and individuals; and U.S. Patent and Trademark Office patent and venture-capital databases.
The results of their work indeed suggest that age is a predictor of entrepreneurial success, but in the exact opposite way expected.
“Our primary finding,” Azoulay and Kim’s team asserts, “is that successful entrepreneurs are middle-aged, not young. We find no evidence to suggest founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond.”
They also point out that “the preeminent place of young founders in the popular imagination may...reflect disproportionate exposure to a handful of consumer-facing IT industries, such as social media, rather than equally consequential pursuits in heavy industry or business-to-business sectors.” In other words, the media salience of youth-centric businesses may effectively conceal the decisive role of older entrepreneurs in other industries.
Between 2007 and 2014, the average age of the 2.7 million founders in the United States who started companies and then hired at least one employee was 41.9—more than twice that of Bill Gates when he started Microsoft. For the highest-growth new ventures, the mean founder age was 45. Continuing on this trajectory, the team discovered that a 50-year-old founder is 1.8 times more likely than a 30-yearold founder to achieve upper-tail growth. Among founders who benefited from exiting through an IPO or acquisition, the edge clearly belongs to more seasoned entrepreneurs.
Why Are Older Entrepreneurs Most Likely to Be Successful?
The researchers determined that age is a lot more than a number. Middle-aged entrepreneurs benefit in numerous ways from living longer: they have more social ties, which enables them to leverage long-term relationships with co-founders or suppliers; have greater financial wealth to draw upon; and have less difficulty borrowing capital to fuel expansion.
They have also had more time to start ventures and “take many more bites of the apple.” Conversely, younger entrepreneurs may lack the practical background and technical knowledge their older peers have accrued with age. This is particularly true of experience, which is by far the biggest differentiator between younger and older entrepreneurs. As Kim explains, “The number of years that one spends in the same industry as the startup is predictive of that company’s future performance.”
While figures like Bill Gates and Mark Zuckerberg are often highlighted as exemplars of youthful success, there are even more overlooked stories of older, more experienced founders who have disrupted industries. Herbert Boyer cofounded Genentech—which was later acquired for $47 billion—when he was 40 years old. David Duffield cofounded Workday—which is currently valued at $43 billion—at 64, an age when many executives are eyeing retirement. Their deep experience, coupled with battle-tested wisdom, underscored their achievements.
Implications for Entrepreneurs
Some ideas cannot wait. If Zuckerberg had delayed launching Facebook until middle age, someone else would have beat him to it. Despite this and other popular outliers, the research indicates that it would have been a mistake to dismiss the entrepreneurial advantages of middle age. Three or more years of relevant work experience in a founder’s industry was strongly associated with the odds of starting a fast-growing company in that field. Even so, the authors would neither advise students to wait too long, nor rush them into new ventures.
Here at MIT Sloan, experience—as well as the timely research of Azoulay, Kim, Jones, and Miranda—has shown us that opportunity often presents itself in ways that are at odds with conventional wisdom. Research like this also supports an important inference: entrepreneurship does not discriminate. MIT Sloan is committed to welcoming entrepreneurs of all ages and backgrounds, for the value of world-changing ideas has very little to do with the year someone was born—and everything to do with the future those ideas can create.