Do Old Masters or Young Bucks win the start-up game?

Congratulations to Novak Djokovic, whose epic win in the French Open final, brought him his 19th major singles title at the ripe age of 34. He is within one of the all-time record. He defeated Nadal, no spring chicken himself at 35. Roger Federer will soon be 40 and is unlikely to add to his title collection, although he did with the Australian Open in 2018. Who would bet against Serena Williams winning one more at 39?

We live in an age of old masters. Last year Tom Brady (43) won his seventh Superbowl. Phil Mickelson (50) recently won the US PGA Championship. Lewis Hamilton is 36 and still in imperious form, destined for more F1 titles. Even in football, which is a youngster’s game if there ever was one, Cristiano Ronaldo has just become the first person to play in and score in five European Championships. He is 36 and he will probably be there again in four years’ time. These are all sport examples because you would imagine the demands of sport to take their toll over time. We can find the triumph of age everywhere we look, from David Hockney (83) to Bob Dylan (79). Performers can stay at the top of their game for a very, very long time.

Is this age dividend also true in the field of entrepreneurship? Start-up ecosystems are surrounded by a cult of youth, with many success stories. Elon Musk was 24 when he began, one year younger than Larry Page and Sergey Brin when they founded Google. Pierre Omidyar and Jack Dorsey were 23. Evan Spiegel 22. Mark Zuckerberg 19. All these superstar founders seem positively ancient compared to Bill Gates, who started his career at 16. Youth is clearly no barrier to success. This is great news for the record numbers of Generation Z ‘future founders’. 82% of 16-21 year olds want to become entrepreneurs and start their own business.

Looking beyond the buzz of celebrity founder success, various studies tell a slightly different picture. A 2018 Kellogg Insight study showed that older entrepreneurs were both more common and more likely to succeed. They studied 2.7m start-ups and discovered the average founder age was 45. They built a model to show some surprising differences between age cohorts: a 40 year old is 2.5 times as likely to build a successful start-up as a 25 year old. At 50, this rises to 2.8 times. 55 is 3.4. 59 is a whopping 4.5. Age seems to be one of the most important determinants of success. Not prior start-up experience, not working for big tech like Google, not even working in business. Just age.

The reasons for this are obvious. Malcolm Gladwell suggests it takes 10,000 hours of practice to become truly excellent at something. Older people have had more chance to practice their skills. They have more business experience. More experience of people and the emotional roller coaster of life. They know more people and have worked with different kinds of employees. They have had more training and more chances to apply their skills. They have had time to learn from mistakes and improve their decision-making. Just look at some of those sports stars mentioned above in action. The economy of movement. The tradecraft they deploy to compensate for physical disadvantages. The patience in waiting for the right moment to strike. The calmness under pressure. Perhaps this is why founders aged over 50 raise the most pre-seed money from investors. They are safe pairs of hands.

What should you do if you are a younger founder?

Don’t despair. The funding disadvantage at pre-seed stage soon disappears. By the time of the seed round, if you have made it that far, investors give the most funding to founders in their 20s ($1.9m compared to $1.1m to those in their 50s). Clearly another dynamic is kicking in: that of capability. What matters more than age is how capable you are. Usually it takes time to acquire capabilities, which is why there is a correlation with age. But there is no impenetrable barrier to those with natural talent or fast learners.

As the roll-call of successful entrepreneurs above shows, it is possible to win big when you are still in your 20s. Richard Bland, the 48 year old golfer, was in the news recently for winning his first event at the 478th attempt. It was a glorious of personal achievement. But he would much rather have won in his twenties, like Jordan Spieth and Rory McIlroy, who first won aged 21 and 22.

But you can’t ignore that age dynamic entirely. It pays to have some experience and wisdom around. When Rory McIlroy won, he had the veteran caddy JP Fitzgerald on his bag, whispering words of wisdom. This was the same tactic George Bush used to compensate for his lack of experience: he relied on Dick Cheney and Donald Rumsfeld. So if you have a team of young bucks, make sure your next hire is someone with a different age profile. The same goes for older founders. You need a few young mustangs around to balance out your team and bring a new dimension.

And this is really the key to start-up success and indeed the success of any team. It isn’t age, it is diversity of talent and experience. What damages companies, led by young or old founders, is homogeneity. You recruit people you know from your peer group, who you relate to, and who seem to be just as good as you, and, before you know it, you have created a world of Mini-Mes. This risks the perils of group think, confirmation bias and excessive consensus.

The customers you are targeting are unlikely to be a homogeneous group, so your team shouldn’t be either. You want different perspectives. You want some dissent. You want different kinds of ideas. You will only get that if you successfully blend people of different ages, experiences and backgrounds. You need people unlike you around to learn from and keep you on your toes.

So start-ups is a game to play for both old masters and young bucks. But it is a game best played together, with each bringing something different to the party and playing to their strengths. If you get this right, it won’t take you 478 attempts to succeed.

UP AND TO THE RIGHT.

Further reading:

https://insight.kellogg.northwestern.edu/article/younger-older-tech-entrepreneurs

https://www.docsend.com/index/pre-seed-fundraising-report/

https://bmmagazine.co.uk/news/43488/