[HN Gopher] Age and high-growth entrepreneurship
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Age and high-growth entrepreneurship
Author : jacobr
Score : 101 points
Date : 2022-01-23 15:36 UTC (7 hours ago)
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| [deleted]
| beckingz wrote:
| The mean age at founding a 1 in 1000 fastest growing organization
| is 45.
|
| Which makes sense, because industry connections for talent and
| sales are incredibly valuable.
| Toine wrote:
| And this : "Prior experience in the specific industry predicts
| much greater rates of entrepreneurial success"
| jeffreyrogers wrote:
| Makes sense that the high profile founders that started
| companies when young were largely inventing new industries
| from scratch. I'm actually struggling to think of a case
| where that's not true. Stripe kind of fits, but that's
| arguable.
| beckingz wrote:
| All the examples I can think of didn't actually start a new
| industry.
|
| They did get in early on a new industry, but they didn't
| start it even if they ended up defining it.
| jasode wrote:
| Some previous threads on the Azoulay/Jones/Kim paper:
| https://news.ycombinator.com/item?id=16902662
| rkk3 wrote:
| The public only knows consumer tech startups, which imo is like
| catching lightning in a bottle & selling it. The key idea/insight
| probably matters more in consumer, which can benefit from being
| young or around young people. You also don't get as much of a
| benefit from experience & professional network as you do in other
| verticals; B2B SAAS, Deep Tech etc. Without making the
| distinction between types of companies, pieces like this are
| silly pop-sci.
| lumost wrote:
| Young consumers are also more open to new consumer tech than
| older customers. Being young and starting a consumer tech
| company is a lot like having unique industrial knowledge of
| your target customer.
|
| If you look at how many early stage consumer tech companies
| were implemented - many of them also throw economics out the
| window when they are first starting e.g free video hosting and
| serving without a plan to charge money. I suspect that younger
| founders are more believable to VCs and investors when they
| pitch these kinds of ideas then more experienced founders. It's
| easier to think that inexperienced founders will wise up while
| thinking that experienced founders never did.
| is0tope wrote:
| I couldn't find it in the paper, but I wonder how having a family
| affects this?
| 0xfaded wrote:
| I think family can be an indication of stability. Existing
| obligations can be factored in ahead of time. The alternative
| (and this was my case), you can start something in your mid to
| late 20s, and if wanting a family becomes a factor while the
| company is neither taking off nor dying, that introduces a new
| variable. I decided to leave (there were many more reasons),
| but if I was in a stable situation at 45 maybe I would have
| decided differently.
| moron4hire wrote:
| What do you mean? Like having a wife and kids? Or having rich
| parents and uncles who can pay your expenses while you take
| risks? Cuz the latter seems like the one most successful
| founders share.
| vmception wrote:
| Regarding the latter, its not the subsidize chance to take
| _a_ risk, its the subsidized chances, plural. There is a
| selective evolution towards already wealthy people because
| everyone else gets one chance and is shut out for the next
| decade or so working for wages, and god forbid they pursue or
| get involved in any relationship rite of passage over that
| next decade, greatly reducing the probability of being able
| to take a risk without consequences to the relationship.
| moron4hire wrote:
| Excellent point
| bennysomething wrote:
| Except that 80 percent of millionaires in the USA are
| first generation affluent. Google it, primary source is
| research conducted for the book the millionaire next
| door.
| moron4hire wrote:
| Except we're not talking about millionaires.
| Toine wrote:
| I guess it heavily depends on the person. I got a huge boost of
| motivation and energy to launch something when I got my first
| kid. I guess it's the opposite for others.
| jay_kyburz wrote:
| More pressure to ship, but I went 3 days a week when my kids
| arrived and I don't regret it at all. Now my kids well
| established in school and have their own interests, I'm ready
| to focus on work again.
| georgewsinger wrote:
| Studying "1-in-1,000 fastest growing new ventures" is completely
| misunderstanding tech. Startup returns are about power-laws and
| _extraordinary outliers_. If we instead study the age of founders
| of tech companies which actually generated almost all of the
| ecosystem gains over the past few decades:
|
| 1. Apple: $2.65T - Jobs: 21 - Woz: 26
|
| 2. Alphabet: $1.73T - Larry/Sergey: 25ish
|
| 3. Microsoft: $2.22T - Gates: 19 -
| Allen: 22
|
| 4. Amazon: $1.45T - Bezos: 29
|
| 5. Facebook: $0.84T - Zuckerberg: 19
|
| Looking at just the age of founders instead of other substance is
| stupid. But if we're _just_ looking at age and nothing else, then
| younger founders make for better outliers, and generating
| outliers is the whole point of this endeavor.
|
| -----
|
| EDIT: With its high market cap, Tesla belongs on this list, and
| actually had some older founders. Problem: the older founders
| left the company/were forcibly removed, didn't retain much
| equity, and aren't credited with much early success when they
| were actually in charge. Still, some interesting data points.
|
| Tesla: $0.94T - Elon Musk: 32 - J.B.
| Straubel: 28 - Martin Eberhard: 43 (forcibly removed
| due to late/over budget Roadsters) - Marc Tappening:
| 39 (left Tesla in 2008)
| tomcat27 wrote:
| "most successful firms" have to mean only FAANG?
| debdut wrote:
| well they are, FAAMG tbh
| zhoujianfu wrote:
| I thought they were MAMA(A?) now (sorry Netflix).
|
| Microsoft Apple Meta Amazon (Alphabet?)
| BlueTemplar wrote:
| Usually spelled GAFAM.
| tomcat27 wrote:
| whatever! but that's not the point. What's the right
| benchmark?
| fuzzfactor wrote:
| >Looking at just the age of founders instead of other substance
| is stupid.
|
| Yeah, you get mostly founders who were young enough to live
| with their parents until they get enough connections to raise
| some capital.
|
| Elizabeth Holmes is another example, emphasizing that the
| younger you begin, the more of a head start you have.
|
| _Some_ young people are just smarter. Zuckerberg is just not
| one of them.
|
| Some young people have greater integrity too. Holmes is not one
| of those.
| gumby wrote:
| Reed Hastings founded Netflix when he was 37
| [deleted]
| quickthrower2 wrote:
| The market cap of these companies IMO is possibly misleading.
|
| Much of that gain came after going public, so we are looking at
| large corporate returns rather than startup returns.
|
| If "startup investing" as opposed to "holding stock of a public
| company" you might want to measure gains to IPO at most.
| gumby wrote:
| This is an astute observation.
| [deleted]
| lbarrow wrote:
| Why did you leave off Netflix?
| jefftk wrote:
| Netflix is a lot smaller: $0.18T.
|
| (Founded 1997. Reed was ~36, Marc was ~38.)
| erosenbe0 wrote:
| Too much analysis of software giants. It's all industry
| specific.
|
| 2/3 Intel founders were about 40. Sam Walton did not own a
| store until at least age 35. Bell founded AT&T, maybe in
| historically relative terms the most successful tech company
| ever, at 37. Jensen founded Nvidia about 30. Warren Buffet
| bought up Berkshire in his late twenties.
| georgewsinger wrote:
| This is a great response, especially RE Intel & Bell Labs.
|
| Jensen and Buffett both count as "young" though, I think? In
| any event all of these founders are below the age of 45?
| erosenbe0 wrote:
| True. I'm just countering the tendency to think that pure
| youth is best. That seemed to peak with the Elizabeth
| Holmes mess. Had she gained five years of experience and a
| more grounded plan of attack with the same level of
| charisma and ambition it may have turned out more
| favorably.
| mndgs wrote:
| It would be as stupid to base an investment strategy purely on
| a young age (as your text is implying). Good luck or good bye
| to your retirement funds this way..
|
| I'd say identifying an underlying trend early (all examples you
| gave) and then picking the most promising candidate from
| companies building on that trend, is the key.
|
| But still, there's also management quality, founders that grow
| as management personalities together with the business, and
| sheer luck.. point being, uber-successful investing is more an
| art than science. And surely, not just a young age..
| georgewsinger wrote:
| I agree, and definitely don't endorse investing purely off of
| founder age (I even stated that in my original post).
| lmeyerov wrote:
| The math on Apple, AWS, Microsoft, and Facebook are not that
| easy. They are now multi-LOB of companies, with significant
| revenue coming in from BU's created and run by people who
| aren't the original founders.
|
| Ex: AWS appears to be Andy Jassy, who was probably 30 or 40.
| Similar and probably even "older" stories for GCP (Google) &
| Azure (MS). Their supporting "co-founders" may be even older,
| like Werner Vogels (63).
| kitd wrote:
| _and generating outliers is the whole point of this endeavor_
|
| Tbh, I think that's just one definition of "the endeavor" in
| question. Not every start up needs to be a unicorn.
|
| Also the ones you have picked have been around long enough that
|
| 1. Their growth has had surges and slows
|
| 2. The tech environment was quite different when they were
| founded.
| godelski wrote:
| But there's plenty of other companies that are great
| investments that aren't FAANG. Your change of investing in one
| of these is almost zero and there's so few samples we can't
| tell the difference between noise and signal.
| georgewsinger wrote:
| You misunderstand how tech works.
|
| - Normally distributed endeavors: look at averages, ignore
| outliers.
|
| - Power law distributed endeavors: ignore averages, focus
| only on outliers.
|
| In tech, a few companies generate _all of the returns_. And
| it 's fractal all the way down. E.g. there have recently been
| 900 U.S. unicorns minted in the past few years (IIRC),
| accounting for roughly $1T in total market cap. Yet 4 out of
| the 5 companies on this list are worth _more than all of
| these new unicorns combined_.
|
| If you take the attitude "I don't have any chance of
| investing in one of these outliers", you'll only invest in
| "safe" things and go broke over time.
| Hokusai wrote:
| Is your advice to buy stock in all companies founded by
| young people from 1976 (Apple) to 2004 (Facebook)? I guess
| not, you need many other factors that may make impossible
| to recognize these companies.
|
| Is not possible that it gives you better return of
| investment if you choose less risky companies? It may be
| better to make good profit in 90% of your investment that
| incredible gains on 0.00000001 of it.
| hiptobecubic wrote:
| I think the point is that you _still_ basically don 't have
| a chance of investing in one of these outliers, so instead
| of going broke over time because you're playing the wrong
| game, you go broke over time because you just lose.
| godelski wrote:
| > If you take the attitude "I don't have any chance of
| investing in one of these outliers", you'll only invest in
| "safe" things and go broke over time.
|
| This is an absurd conclusion from my comment. We still have
| unicorns and companies that grow 100x and 1000x without
| being FAANG. Those are great investments. I'd argue that
| they aren't safe either. I think you're finding a
| conclusion by looking at the answer. There's also only 4
| companies there out of hundreds of thousands. You can't
| find the signal in the noise. As many others have pointed
| out here, companies you list also have another common
| factor: the internet was new. This offsets the industry
| experience factor that the paper discussed because there
| was no industry to speak of. This gives younger people an
| advantage. But there's not really something like that right
| now.
| antishatter wrote:
| lol I love the "safe" things cause you to "go broke"
| a-dub wrote:
| > Looking at just the age of founders instead of other
| substance is stupid. But if we're just looking at age and
| nothing else, then younger founders make for better outliers,
| and generating outliers is the whole point of this endeavor.
|
| they're not really outliers at all anymore if you're forming
| distributions and considering the mean.
| [deleted]
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