20 years old entrepreneurs are a lie, MIT
According to a working paper titled, Age and High-Growth Entrepreneurship by Massachusetts Institute of Technology’s (MIT) Professor Pierre Azoulay and PhD student Daniel Kim, the most successful entrepreneurs are in their forties and they are busy starting companies and are arguably doing a better job of at it as well.
The paper crunched data from the Census Bureau’s Longitudinal Business Database as well as from the Internal Revenue Service. The paper discussed that the average age of a founder that went on to hire at least one other person was 45.
This was especially true for companies in the high-tech “knowledge economy.”
The team at MIT looked at data of around 2.7 million people who founded businesses between 2007-14 and then went to hire at least one employee. Along with average entrepreneur age, they also learned those new ventures with the highest growth had an average founder age of 45. Look at the image below.
Professor at MIT, Pierre Azoulay said,
“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.”
Ph.D. student Daniel Kim added,
“In theory, we know that with age a lot of benefits accumulate, 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.”
The research paper revealed that age really matters in entrepreneurship, as it could be the result of human, social, or financial capital, a combination of those, or something else. The one thing this survey doesn’t have is good data on education. How qualified you need to be to start your own venture, We can’t tell you the founders have PhDs or a college education. We surely don’t know that.
Although a little bit of experience matters a lot as its the part of what age is about, you know what’s happening in the industry, you understand the problems as well as you were a part of the industry. This is a lesson for both founders and funders because right now some ideas that deserve a funding might not be getting it since their 37-year-old founders are labeled as washed out!
Lastly, the research disclosed if you’re 25 years old or maybe just coming out from University with a Bachelors degree or an MBA program, there is this social perspective that you should be an entrepreneur right now, rethink that, because you might have a great idea but you might not have the right skills or experience to really propel that idea. Think about career paths as options, not just as absolute paths.