There is a widely held belief that the world’s most successful entrepreneurs are young people. Indeed there’s fair evidence to this when we look at it as a headline: Bill Gates, Mark Zuckerberg and Steve Jobs all started their now-infamous companies when they were in their early 20s… and they changed the world with them. But when we delve further into entrepreneurship past the most famous cases, is there a pattern to be uncovered in the founders’ ages or not?
The Headlines Around Young Entrepreneurs
The two most prevalent sources of information that we can look to for further details on entrepreneurs certainly seem to perpetuate the ‘the younger the better’ rhetoric around business founders. Media outlets tend to highlight young entrepreneurs more than older ones, as they spin an easier success story, and VCs have a tendency to jump on to startups at the very beginning of their journey; and these tend to be started and run by younger people.
The Data Paints a Different Picture
However, when we look at other sources that go beyond headlines and into data, the picture is reverse. Looking through TechCrunch award winners from the last decade, the average age of the founder at the time of business inception is 31. For entrepreneurs ranked to have founded one of the ‘fastest growing startups’ by Inc. magazine, the average age is 29.
When analysing data from the US covering every business founded in recent years through the country’s Census Bureau, the average age of entrepreneurs at company foundation is 42. Indeed while the majority of these are intended to be (and remain as) SMEs, this is a very telling picture – and there are, of course, millions of businesses worldwide that function just fine without ever making the headlines the likes of Google and Amazon have.
When the focus into analysis moves more into businesses closer to the high-tech startup that draws so much attention, the facts remain the same – and the age even higher! Industries that employ high percentages of STEM workers, businesses that have had a patent granted, companies that have received VC investment or firms that are located in entrepreneurial ‘hubs’ still don’t modify the main conclusion: the average age for high-tech business founders sits in the early 40s.
That said, there remains a large amount of variation between industries and sectors. In startups producing software, the average founder age is 40 but younger entrepreneurs aren’t uncommon. In more ‘traditional’ industries such as oil and gas, the average age sits at 47; with those in their 20s scant seen at all. The true picture simply seems to be that the consumer-facing IT industries tend to be led by young thought leaders and innovators, and so this is the most common perception of entrepreneurship in the minds of most.
Towing the Line between Entrepreneurs… and the Most Successful Entrepreneurs
Of course, not all businesses are born equal and neither will all businesses succeed in the same way or to the same levels. In analysing the top 0.1% of startups ranked on employment growth across their first five years of operations, we find the average founders’ age is 45. This varies little across those with the fastest sales growth and those who successfully and swiftly exit through an IPO or high-value acquisition. Put simply, when you look at most successful firms, the average founder age goes up, not down. Overall, the empirical evidence shows that successful entrepreneurs tend to be middle-aged.
Why do Older Demographics make Better Entrepreneurs?
There are many factors that contribute toward those in their 30s and 40s being more successful at starting and running businesses, not least that they’re more likely to be in a position in their lives to ‘take the leap’ and give entrepreneurship a shot. Generally speaking, entrepreneurial performance rises sharply with age before cresting and decreasing in the late 50s as people choose instead to retire.
Those a little older are also more likely to have access to the necessary funds to start a business, to leverage a professional network around a business and to find themselves in a position best able to pitch and explain business plans for a venture.
Although we have looked at extraordinarily successful firms — the top 0.1% by growth as well as the rare outcome of successful acquisition or IPO — one might still wonder if even more extreme outlier firms are started by the very young. Interestingly, however, when you study notable outliers such as Bill Gates (Microsoft), Steve Jobs (Apple), Jeff Bezos (Amazon), or Sergey Brin and Larry Page (Google), the growth rates of their businesses in terms of market capitalization peaked when these founders were middle-aged. Jobs introduced Apple’s most profitable innovation, the iPhone, when he was 52. Bezos has moved far beyond selling books online, and Amazon’s future market cap growth rate was highest when he was 45.
Franchising for the Mature Entrepreneur
Whilst breaking ground on a tech startup might be a young persons game, we see that Franchise businesses appeal to the more mature entrepreneur. Franchise business have a proven track record with an existing support network, which appeals to the cooler headed and more cautious entrepreneurs. Franchise businesses also have higher overall success rates, with solid (but not pie in the sky) financial returns. Starting a franchise business tends to have transparent up front costs, and ongoing outlay - which appeals to the more experienced entrepreneur, who may have already gone through the trials and tribulations of starting, and running, their own businesses and are now looking for a more “out of the box” solution to financial freedom. Many Franchise owners are people who have reached an Executive or Stakeholder level in a corporate environment and have decided to do something for themselves, whilst having a good handle on the difficulties of starting a business from scratch which makes franchise business appeal over a brand new business concept.
Learn more about starting a Refresh Renovations franchise by joining one of our Discovery Days!