The average age of successful entrepreneurs in the U.S. is roughly 42, according to a new study by the MIT Sloan School of Management, which challenges the popular notion of the Silicon Valley “wonderkid” — the 20-year-old university-dropout who went on to run a multi-billion dollar enterprise.
The study, a collaboration between MIT Sloan, Northwestern University’s Kellogg School of Management and the U.S. Census Bureau calls into question the narrative — most prevalent amongst venture capitalists and the startup community — that youth is a key trait of successful entrepreneurship.
“If you knew nothing else, and you had two identical ideas, one proposed by a very young person, one proposed by a middle-aged person, and that’s the only thing you have to go on, you would be better off — if you wanted to predict success — betting on a middle-aged person,” Pierre Azoulay, Professor of Entrepreneurship and Strategic Management at MIT Sloan, and lead author of the study told VICE Money.
“Basically the most successful growth-oriented startups, that is, companies that have started small but gone on to contribute to job creation, tend to be founded by older people,” Azoulay said.
The notion that young people are in fact better positioned to succeed as entrepreneurs because they are more creative, resilient, and essentially do not “worry about the negatives” is an ethos that has existed for decades now, especially in Silicon Valley, where some of the most successful companies — Facebook, Amazon and Apple — were founded by men in their 20s. Steve Jobs was just 23 when he founded Apple, and Mark Zuckerberg was 20 when he invented Facebook.
In “The Toilet Paper Entrepreneur”, author Mike Michalowicz argues that young people tend to not have preconceived notions, and are in fact far more willing to try something new. “Be young, be crazy, and launch a company!” Michalowicz, an intellectual fixture in the startup community, frequently preaches. Yet another example of how youth is emphasized in entrepreneurship is a prominent fellowship program created by venture capitalist and co-founder of PayPal, Peter Thiel — the program provides $100,000 in grants to budding entrepreneurs as long as they are under the age of 23 and drop out of school.
But the reality of America’s business landscape is vastly different. Of 2.7 million people who founded businesses in the U.S. between 2007 and 2014, and went on to hire at least one employee (a measure of “startup growth”), the average age was 42. When broken down into what kind of firms these 2.7 million people founded — in order to get a better measure of entrepreneurship in the tech world — high-tech employment, VC-backed firms and patenting firms had average founder ages of 43, 42 and 45 respectively.
Azoulay and his co-author Daniel Kim also found that entrepreneurs were 125 percent more successful if they were previously employed in a particular sector in which they are starting a business.
“In theory, we know that with age a lot of benefits accumulate,” Kim said in a press release about the study. “For instance you get a lot of human capital from experience, you also get more financial resources as you age, as well as social connections, all of which will likely boost your odds of success as an entrepreneur.”
So what about the Zuckerbergs and Elon Musks of the world? Are they simply exceptions to the rule? Yes, according to Azoulay.
“They are outliers. If you think about Zuckerberg, Jeff Bezos, Steve Jobs, they are exceptional people. And exceptional people will do exceptional things, create successful companies. But what we proved here is that for the most part, the age of entrepreneurial success is older than we think it is.”