Don't really disagree that older founders are generally going to be more competent/experienced, but is an alternate interpretation of the data that as people get older their appetite for doing risky things decreases?
Failure is less costly for 20-something entrepreneurs than 40-something with family and mortgage to pay. And so you get more "starts" by young entrepreneurs where failure basically doesn't cost a lot. And less "starts" by 40-somethings unless they really think they have something worth taking the risk on.
Some would say they have more riding on it so they might try harder than a 20-something.
Or you could say they've put more thought and experience into the decision to start so they've already got a better chance at succeeding.
I think it's cause after years of seeing middle management screw things up, we're jaded and stubborn and convinced we can do better. Now get off my lawn! <grin>
Years of seeing other people screw things up makes me think it's harder, not easier. If one person can't do it, maybe another can, maybe I can. If most people can't do it, why am I any different?
20-something's shouldn't be wasting their time on things that, with a mature person's wisdom, aren't worth risking their time on. Rather they're better off gaining experience so they have good judgment when they're 40-something.
And 40-something's can handle it with a family and mortgage, because they're not naive enough to think you need to live on ramen to make it big. No: they have connections, put together a team, raise capital like the professionals they are, and continue to pay themselves a salary that can support a family.
Having an appetite for risky things is dumb. Isn't there a quote somewhere about how successful businessmen don't take risks? They try to only do things that seem to be a sure bet, and try to only use other people's money.
Not necessarily. People have different risk profiles and different ways they value experience. For example, consider this combination: (1) low cost to risk-taking; (2) large financial upside; (3) long-term benefits from the experience; (4) intrinsic enjoyment of the process. My point: there are times when starting a risky business is rational.
But that’s exactly my point: if it’s low-cost and large upside, then it’s not exactly a risk is it? It’s just a smart choice.
Risky things are where there’s a large chance of failure while putting all your eggs in one basket, and/or failure comes at a big cost.
The only time starting a "risky" business is rational is when you’re an investor with tons of money so the downside is minimal, or you’re the founder and will enjoy the experience regardless and will lose someone else’s money, not your own. But then, while the “business” is risky, it’s not actually a big risk for either party.
Well, I guess that depends on how big an appetite we're talking about. I think perhaps older more experienced people might tend to take less stupid risks. But if you don't take any risks at all you rarely get a big payout.
Perhaps the trend with the more experienced is that they have a better idea how big of a risk they can afford to take (without losing their shirt over the deal if it falls through).
Not taking risks is the exact formula that leads to Kodak ditching the DSLR. 3M is built on engineer ingenuity and risk taking. The reason we have 'disruptive' companies like Uber and Netflix is because the old industries did nothing to capitalize upon the internet.
40s something's with capital can. Not everybody can get the capital to take the risks.
For the 80%(?) of the young entrepreneurs who fail, not so much.
For the city/country that produces a massive company founded by young risk taking individuals - a lot. (Apple, Google, Microsoft, Facebook, Twitter, Airbnb etc)
Thinking of it as the explore-exploit method. Most of the explorers fail. Some of them turn in huge successes.
From a collectivist perspective, the net gain from these successes may dwarf whatever the over-exploitation that non-young non-risk taking individuals would generate.
Risk aversion is a taste, not a moral rule. I ended up living in the family home with no employment and very limited money several times in my 20s and everything has turned out fine. If you have a secure fallback petition in case of failure why not take risks?
HN obviously has a bias, but such risks when they involve not paying invoices or staff does have a moral composition.
I worked a couple of months for a startup that just didn't pay me. Now I don't believe people should be forced into indentured servitude, but the guys undertaken the same trick several times and many don't neccessairly agree that the slate is morally wiped clean when your 7th startup is finally a success after leaving a trail of misery behind you.
Business is always risky. But if you have a limited downside, and an huge upside, you are onto something.
Most of the time what regular people think is risky, is actually not because it has a tiny downside. Failing doesn't have to mean that you lost everything.
Starting a business is a huge risk in itself. And you have to start early to get used to failing, otherwise you wouldn't be comfortable taking this risk. Yes, your chances of succeeding might increase as you get older but the odds are still overwhelmingly against you. That puts your family at risk so technically you are in a better position to fail and retry again when you have less people depending on you.
> Don't really disagree that older founders are generally going to be more competent/experienced, but is an alternate interpretation of the data that as people get older their appetite for doing risky things decreases?
Risky is dumb. But VC's want you to be risky--swing for the fence or go home.
Older entrepreneurs know that you have to do something different than everybody else or you will fail, but their experience tells them what that is so that instead of being risky, it's simply being smarter.
Older entrepreneurs also tend to shoot more for a solid business with cashflow. It won't go exponential, but it will likely make the owners and employees more money than a "unicorn".
A dollar earned when you're 20 will be more valuable than a dollar earned later in your career if invested til retirement. Maybe it's good to build up a financial cushion and also your skills in your early career? Your financial risk may be lower later (from a retirement/wealth-building perspective) and your chance of success higher because of better skills and experience. Of course, people later in their careers usually have more responsibilities and higher incomes, so the cost may be higher then, too.
I imagine if you fail in your 20s, you might have to work longer before you can retire.
Though, if you fail at an older age and you are in the situation where there isn't much margin between your salary and mortgage (and supporting family), failure isn't as easy.
There is one thing that you would never know about - the fear of being unemployed after 40 with the family and mortgage. And the truth is that in this industry the time plays against us. It might be the biggest motivator ever to start your own business.
I’m not familiar with the data but is the type of company taken into account? E.g. VC-fueled unicorn, consultancy, ...?
Because there is a whole class of B2B companies that opens up as you get older: it requires experience in an industry to find a niche market, of entreprise sale processes, customer support, basic accounting, good connections and a network of previous trusted clients, and of course a large breadth of technical expertise to deliver. But then with correct execution and not much risks so you can have a “boring” but viable company from the start. Whereas in your twenties only the high risk type are doable.
So maybe there is a simple explanation in these numbers without doing hypotheses on the cognition and risk aversion of younger vs older people.
This is false, and dangerously so. Older people have a range of skills and experience as well as professional networks to make use of. When a young person fails they have less to fall back on. Forming a productive business is a high level social function that requires a firm foundation for reasonable chances of success.
Idiotic. Written by someone who has never come within ten feet of taking a risk in their life.
Of course the majority of entrepreneurs don't get rich. The problem is that it's impossible to know in advance which ones will, and the ones that fail essentially sacrifice themselves for the benefit of the collective.
What a patronising piece by a complete know-nothing journalist.
Can’t believe you’re making me step in to defend Jeffrey Tucker—who is not I repeat not a journalist by any means, he’s an Austrian School economist, what made you pull out that weird axe to grind?—but here we are just the same.
Even that weird bit of sneering aside, this is a pretty monstrous take. It is a net good to ensure that people are aware of the challenges and the likelihood of success—and how to maximize their success, which generally is to have a measure of real-world experience and skills to rely upon.
There is no collective in entrepreneurship, there is no noble sacrifice, there is game theory and economics and it is damned immoral and foolish besides to encourage a Children’s Crusade of starry-eyed kids to transform themselves into debtors and stress wrecks for a theoretical success they are overwhelmingly not—yet—going to have a fair shot at.
"A monstrous take"- seems a bit hyperbolic. We are on a pro-entrepreneurship site afterall. I'm not the above poster, so I don't know what the poster really means, but I would guess that sacrificing yourself to the collective when you fail means you become a Harvard Business School case study or something similar. Something new was attempted, lessons were learned.
Uncritically pushing into risky (and often self-destructive) behaviors people who are largely incapable of adequately assessing that risk--that is cruelty. Defending criticism of that cruelty with sneers about never-done-it and journalists, amirite is monstrous.
Using terms like 'sacrifice' and 'collective' seems hyperbolic as well. Sacrifice implies willingly offering oneself for the good of others. A collective implies others chipping in to mitigate a member's failure.
I would guess that sacrificing yourself to the collective when you fail means you become a Harvard Business School case study or something similar
The collective is code for the partners of the VC fund. Their business is to persuade sufficient people to take risks with their careers and even health, so that the numbers work out. Those that fail are the “sacrifices”.
I wrote the parent comment last thing at night before going to bed.
On reflection, and having read the article again, I still stand by it, although I couched it in strong terms in response to the smugness and sneering tone of the article.
Young people today are more qualified than ever. They have more degrees and spend longer in education than any generation before. On top of that, there are huge numbers of grad schemes, growing startups and government jobs. Graduate employment is extremely high.
His observation that startups have a high failure rate is completely self evident. Obviously deciding to become an entrepreneur doesn't put you on a path to riches. The fact that younger founders have higher failure rates is tautologically obvious too, since most people don't get lucky on their first startup. Most successful founders I know struck gold on their second third or even fourth attempt. That's partly experience (experience in starting startups, not whatever experience he things it is you get from politicking in a corporate in your thirties) and partly how probability works.
Now if you want to critique the role of corporates and government in all this - throwing money at useless incubators and other schemes and running competitions that amount to exercises graphic design and a slick presenting style - then I'm all ears. But for a non-risk taker to lecture risk takers on risk just really wound me up.
> ones that fail essentially sacrifice themselves for the benefit of the collective
Your wording is ironic. If they truly see it as a sacrifice, then urging people into sacrificing themselves would be a disservice. When framed that way, it does seem immoral.
I mean, many of us don't see it as a choice. If not 'starting a company', at least striking out on your own and taking a different path to society around you.
If you're born in a dead end town (or country) with little economic activity to speak of, then you either start concocting hustles (whether that be trading, starting a company, taking side jobs, moving town, clipping coupons.. whatever), or you're poor for a lifetime.
Looking at statistics like this is frankly uninteresting for the most driven individuals. Only 1 in N million people make it to the Olympics, but if you have the right genetics and drive, your probability of success is orders of magnitude higher.
> Only 1 in N million people make it to the Olympics, but if you have the right genetics and drive, your probability of success is orders of magnitude higher.
It’s actually significantly higher (yet still grossly out of reach for most). There were approximately 11,000 athletes at the most recent summer olympics so that’s closer to 1 in 1/2 million out of the total population. Even higher when you exclude by age and other factors.
Still much better off learning programming though.
Depending on the event you want to do, it can be super easy to get into the olympics. Here's an article about a woman that participated in the winter olympics by gaming the qualification rules.
I think it's a disservice to urge Young People as a whole to do any one thing. Let them figure out what's best for them, based on skillset and temperament.
The flip side to all this impressive data would be to ask how many people end up with a 1 in 1000 company by "getting a job, buckling down, learning a trade, and then... trying something new"
It's also a disservice to encourage teenagers to play sports because the data clearly show that people in their 20s and 30s are better professional sports players.
I think another point that’s important to make is that startups are an industry.
I’ve had great experiences at small early stage companies but the draw of getting kids to drop out of college or glorifying “hustle” is all in the end to benefit investors and those who stand to potentially benefit with limited risk.
That said, I completely understand friends of mine who look at the lifestyle of a founder or entrepreneur with a big “no thanks to that”.
This report miss that startups work with outliers, not averages. Sure the average age of founders of 1 in 1000 high growth firms may be 45, but VCs want 1 in 100 000—google, facebook etc.
In recent years, most of the extremely successful companies have been started by young founders. Elon Musk, Bill Gates, Mark Zuckerberg, Larry Page, Brian Chesky, Drew Huston, Evan Spiegle, etc.
When the environment you grow up in has little to no existing opportunities, the only way to succeed to is to create your own. You don't really have any other choice.
Business creation is already unusually low among the youngest generation compared to other generations when they were the same age. I don’t think we should be discouraging them further.
Agree or disagree on his take, the data deserves some consideration. Having started my own business young with success, I’ve been of the mindset that staring a risky venture is wiser in your youth.
I’ve always told my friends to try something out while they’re young before they have all the monthly expenses of a family etc.
But start small and validate the demand, and don’t quit your job because it’s funding your business. Otherwise debt can kill your runway and discourage taking further chances.
It’s far better to join a startup in your desired industry, or work for multiple startups, large companies etc. Then take that experience earned on someone else’s dime and start your own company.
I 100% agree there are too many young founders trying to compete in industries they know nothing about, with little skill, and with abhorrent management skill. Especially the last one is something you only get good at with the right experience and is crucial for starting a company (being able to manage others). I’ve made the mistake of working for young founders and asked myself the question: how & why would someone ever think this person could be successful?
Why do we have so many young incompetent founders? I blame the VC’s, who encourage a toxic culture that basically ensures people’s failure. They give people who are ill-equipped in almost every way money and then pray. There are exceptions to the norm, but they are just that —- exceptions. I think that’s why there’s all this mysticism built into the culture where it should be a lot more reasoned.
I don't think there's anything wrong or unethical with encouraging people to become entrepreneurs. Younger people are going to be more in tune with what new needs the next generation are going to have.
It is, however, unethical and wrong to encourage people to sacrifice everything when your society has zero safety nets for those that fail. And realistically, most entrepreneurs are going to fail. That's just factual reality. We all learn from our failures and become better engineers or better people from them, but when you tie it all to a hustle or a startup you run the risk of falling into a quite literally unrecoverable trap.
That's assuming you even have the capital to run your own company in the first place. I've been in the software business for a while now and I have nowhere near the amount needed to bootstrap a company plus support myself and my family.
There's a big difference between being a successful entrepreneur and "founding for the 1-in-1,000 fastest growing new ventures," which is what this article is really about.
There are plenty of folks here on HN running profitable small businesses - aren't they successful entrepreneurs?
The article posits many well reasoned points. I agree- it’s not my first inclination to nudge my children into such a volatile lifestyle and career path with high variance in payouts. Steady and stable is good, but it’s not for me to impose on them either. But I’ll most certainly nudge them in that direction over the former.
My first job out of University was meant to be a prestigious grad program building "leaders of tomorrow". What I was actually doing was sitting in a back office doing glorified admin work.
My first crack at entrepreneurship was at 25. I'm absolutely not a millionaire but I have learnt more than I ever would have in any job I would have had in a much shorter amount of time. For some this path suits their personality and if I knew I could do it much younger I would have.
Entrepreneuring is a 'hit' business. For every 1 success there will be 1.000's failures. It's the 20xx equivalent of late last century's starting a band.
It's fine trying out some long-shots, and doing this while you have no constraints beyond a couch to crash on and your next cup of ramen is far easier than doing so when you have kids and a mortgage, so go for it.
That said, should we 'urge' anyone into this lifestyle? No, not anymore than we should condemn some for trying it.
55 comments
[ 7.9 ms ] story [ 74.8 ms ] threadFailure is less costly for 20-something entrepreneurs than 40-something with family and mortgage to pay. And so you get more "starts" by young entrepreneurs where failure basically doesn't cost a lot. And less "starts" by 40-somethings unless they really think they have something worth taking the risk on.
Or you could say they've put more thought and experience into the decision to start so they've already got a better chance at succeeding.
I think it's cause after years of seeing middle management screw things up, we're jaded and stubborn and convinced we can do better. Now get off my lawn! <grin>
20-something's shouldn't be wasting their time on things that, with a mature person's wisdom, aren't worth risking their time on. Rather they're better off gaining experience so they have good judgment when they're 40-something.
And 40-something's can handle it with a family and mortgage, because they're not naive enough to think you need to live on ramen to make it big. No: they have connections, put together a team, raise capital like the professionals they are, and continue to pay themselves a salary that can support a family.
Having an appetite for risky things is dumb. Isn't there a quote somewhere about how successful businessmen don't take risks? They try to only do things that seem to be a sure bet, and try to only use other people's money.
Not necessarily. People have different risk profiles and different ways they value experience. For example, consider this combination: (1) low cost to risk-taking; (2) large financial upside; (3) long-term benefits from the experience; (4) intrinsic enjoyment of the process. My point: there are times when starting a risky business is rational.
Risky things are where there’s a large chance of failure while putting all your eggs in one basket, and/or failure comes at a big cost.
The only time starting a "risky" business is rational is when you’re an investor with tons of money so the downside is minimal, or you’re the founder and will enjoy the experience regardless and will lose someone else’s money, not your own. But then, while the “business” is risky, it’s not actually a big risk for either party.
Well, I guess that depends on how big an appetite we're talking about. I think perhaps older more experienced people might tend to take less stupid risks. But if you don't take any risks at all you rarely get a big payout.
Perhaps the trend with the more experienced is that they have a better idea how big of a risk they can afford to take (without losing their shirt over the deal if it falls through).
40s something's with capital can. Not everybody can get the capital to take the risks.
For the 80%(?) of the young entrepreneurs who fail, not so much.
For the city/country that produces a massive company founded by young risk taking individuals - a lot. (Apple, Google, Microsoft, Facebook, Twitter, Airbnb etc)
Thinking of it as the explore-exploit method. Most of the explorers fail. Some of them turn in huge successes.
From a collectivist perspective, the net gain from these successes may dwarf whatever the over-exploitation that non-young non-risk taking individuals would generate.
I worked a couple of months for a startup that just didn't pay me. Now I don't believe people should be forced into indentured servitude, but the guys undertaken the same trick several times and many don't neccessairly agree that the slate is morally wiped clean when your 7th startup is finally a success after leaving a trail of misery behind you.
Most of the time what regular people think is risky, is actually not because it has a tiny downside. Failing doesn't have to mean that you lost everything.
Risky is dumb. But VC's want you to be risky--swing for the fence or go home.
Older entrepreneurs know that you have to do something different than everybody else or you will fail, but their experience tells them what that is so that instead of being risky, it's simply being smarter.
Older entrepreneurs also tend to shoot more for a solid business with cashflow. It won't go exponential, but it will likely make the owners and employees more money than a "unicorn".
Though, if you fail at an older age and you are in the situation where there isn't much margin between your salary and mortgage (and supporting family), failure isn't as easy.
Because there is a whole class of B2B companies that opens up as you get older: it requires experience in an industry to find a niche market, of entreprise sale processes, customer support, basic accounting, good connections and a network of previous trusted clients, and of course a large breadth of technical expertise to deliver. But then with correct execution and not much risks so you can have a “boring” but viable company from the start. Whereas in your twenties only the high risk type are doable.
So maybe there is a simple explanation in these numbers without doing hypotheses on the cognition and risk aversion of younger vs older people.
Of course the majority of entrepreneurs don't get rich. The problem is that it's impossible to know in advance which ones will, and the ones that fail essentially sacrifice themselves for the benefit of the collective.
What a patronising piece by a complete know-nothing journalist.
Even that weird bit of sneering aside, this is a pretty monstrous take. It is a net good to ensure that people are aware of the challenges and the likelihood of success—and how to maximize their success, which generally is to have a measure of real-world experience and skills to rely upon.
There is no collective in entrepreneurship, there is no noble sacrifice, there is game theory and economics and it is damned immoral and foolish besides to encourage a Children’s Crusade of starry-eyed kids to transform themselves into debtors and stress wrecks for a theoretical success they are overwhelmingly not—yet—going to have a fair shot at.
No, it's not. You might find this hard to believe, but people can be very impressionable to advice.
Here's an actual conversation I had with a young engineer:
Me: "So how was your trip to Asia working as a software nomad?"
Young Engineer: "I spent all my money and derailed my career. That was stupid and I'll never do it again. I shouldn't have listened to HN."
Happy?
The collective is code for the partners of the VC fund. Their business is to persuade sufficient people to take risks with their careers and even health, so that the numbers work out. Those that fail are the “sacrifices”.
On reflection, and having read the article again, I still stand by it, although I couched it in strong terms in response to the smugness and sneering tone of the article.
Young people today are more qualified than ever. They have more degrees and spend longer in education than any generation before. On top of that, there are huge numbers of grad schemes, growing startups and government jobs. Graduate employment is extremely high.
His observation that startups have a high failure rate is completely self evident. Obviously deciding to become an entrepreneur doesn't put you on a path to riches. The fact that younger founders have higher failure rates is tautologically obvious too, since most people don't get lucky on their first startup. Most successful founders I know struck gold on their second third or even fourth attempt. That's partly experience (experience in starting startups, not whatever experience he things it is you get from politicking in a corporate in your thirties) and partly how probability works.
Now if you want to critique the role of corporates and government in all this - throwing money at useless incubators and other schemes and running competitions that amount to exercises graphic design and a slick presenting style - then I'm all ears. But for a non-risk taker to lecture risk takers on risk just really wound me up.
Your wording is ironic. If they truly see it as a sacrifice, then urging people into sacrificing themselves would be a disservice. When framed that way, it does seem immoral.
If you're born in a dead end town (or country) with little economic activity to speak of, then you either start concocting hustles (whether that be trading, starting a company, taking side jobs, moving town, clipping coupons.. whatever), or you're poor for a lifetime.
Looking at statistics like this is frankly uninteresting for the most driven individuals. Only 1 in N million people make it to the Olympics, but if you have the right genetics and drive, your probability of success is orders of magnitude higher.
It’s actually significantly higher (yet still grossly out of reach for most). There were approximately 11,000 athletes at the most recent summer olympics so that’s closer to 1 in 1/2 million out of the total population. Even higher when you exclude by age and other factors.
Still much better off learning programming though.
https://www.independent.co.uk/sport/olympics/winter-olympics...
The flip side to all this impressive data would be to ask how many people end up with a 1 in 1000 company by "getting a job, buckling down, learning a trade, and then... trying something new"
I’ve had great experiences at small early stage companies but the draw of getting kids to drop out of college or glorifying “hustle” is all in the end to benefit investors and those who stand to potentially benefit with limited risk.
That said, I completely understand friends of mine who look at the lifestyle of a founder or entrepreneur with a big “no thanks to that”.
In recent years, most of the extremely successful companies have been started by young founders. Elon Musk, Bill Gates, Mark Zuckerberg, Larry Page, Brian Chesky, Drew Huston, Evan Spiegle, etc.
https://eig.org/dynamism
I 100% agree there are too many young founders trying to compete in industries they know nothing about, with little skill, and with abhorrent management skill. Especially the last one is something you only get good at with the right experience and is crucial for starting a company (being able to manage others). I’ve made the mistake of working for young founders and asked myself the question: how & why would someone ever think this person could be successful?
Why do we have so many young incompetent founders? I blame the VC’s, who encourage a toxic culture that basically ensures people’s failure. They give people who are ill-equipped in almost every way money and then pray. There are exceptions to the norm, but they are just that —- exceptions. I think that’s why there’s all this mysticism built into the culture where it should be a lot more reasoned.
It is, however, unethical and wrong to encourage people to sacrifice everything when your society has zero safety nets for those that fail. And realistically, most entrepreneurs are going to fail. That's just factual reality. We all learn from our failures and become better engineers or better people from them, but when you tie it all to a hustle or a startup you run the risk of falling into a quite literally unrecoverable trap.
That's assuming you even have the capital to run your own company in the first place. I've been in the software business for a while now and I have nowhere near the amount needed to bootstrap a company plus support myself and my family.
There's a big difference between being a successful entrepreneur and "founding for the 1-in-1,000 fastest growing new ventures," which is what this article is really about.
There are plenty of folks here on HN running profitable small businesses - aren't they successful entrepreneurs?
It's fine trying out some long-shots, and doing this while you have no constraints beyond a couch to crash on and your next cup of ramen is far easier than doing so when you have kids and a mortgage, so go for it.
That said, should we 'urge' anyone into this lifestyle? No, not anymore than we should condemn some for trying it.
Gonna keep being an employee/contractor for a while.