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| By Chris Graebe |
There’s this strange notion among investors about startup founders.
Many believe that young, hungry twentysomethings make the best entrepreneurs.
People with nothing to lose, going all in on their visionary ideas, and even leaving school to pursue them.
After all, it’s been ingrained into us by the stories of Mark Zuckerberg, Bill Gates and Steve Jobs. Their successes have been studied, analyzed and even turned into Oscar-worthy movies.
Is There a Startup Age Sweet Spot?
It’s not just Hollywood that’s accepted this notion. Huge venture capital firms often prioritize younger founders for investment.
Some even write off middle-aged investors before they walk in the door.
Paul Graham, co-founder of Y Combinator, once said, “The cutoff in investors' heads is 32… After 32, they start to be a little skeptical."
Zuckerberg apparently agreed. “Young people are just smarter,” he said at a Y Combinator Startup School event.
He was 22 at the time.
Like Apple’s Old Slogan, Time to ‘Think Different’
Now, many of you know I’m in the business of sizing up startups from their earliest stages.
I introduce the ones with the best potential to succeed into my Deal Hunters Alliance.
I’ve worked with founders across just about every industry. And there are many factors for their ultimate success or lack thereof.
But if there’s a sweet spot for a successful startup founder’s age bracket …
Let’s just say I was intrigued by some data on this topic that just came out of MIT.
Statistically, the most successful founders aren't in their 20s or even their 30s.
Rather, on average, you start to find a lot more success stories when the founder is around 45 years old.
4 Ways Age Correlates to a Better Shot at Success
Pierre Azoulay, an MIT professor and researcher, conducted a groundbreaking study. One that’s shaking up the venture capital world.
At least, those who read his paper, "Age and High-Growth Entrepreneurship."
Azoulay and his team used U.S. Census data to analyze the age of all founders in the country and then compare that with success metrics of their businesses.
What they found is that for companies in the top 0.1% in terms of growth, the average founder’s age is 45. The team found …
- Real-world experience is far more alluring than youthful exuberance.
Older entrepreneurs tend to have more experience in their industry and/or more time in the startup space. That includes founding startups or working for them.
- Trial and error — and even failure — are great teachers.
Older founders have been around the block, made mistakes, learned from them, and tend to be more prepared to start and grow a company.
- If you do something again and again, you get better at it. Entrepreneurship is no different.
Steve Jobs co-founded Apple at 21. But his company’s most profitable and game-changing product, the iPhone, didn’t come out until he was 52.
- Some industries have higher barriers to entry.
In certain industries, founders in their 20s are almost nonexistent.
In a field like biotech, founders need a bachelor's degree, a Ph.D., and years working as a researcher just to get a foot in the door.
The MIT study shows that the average age of software startup founders is 40.
Meanwhile, biotech and energy startup founders are on the higher end at around 47.
Plus, Different Lifestyles Provide Different Advantages
The 22-year-old Zuckerberg didn’t have it entirely wrong about youth. It does bring some key advantages.
- They may adapt more quickly to new technologies or market changes.
- They can often be more flexible with their time, as most don't yet have families or well-established careers.
- They generally have less to lose in terms of capital and reputation.
But older founders have some big advantages of their own.
While "risking it all" to find success is often romanticized, the 45+ founder is more likely to be settled financially before founding.
Meaning, they can make decisions from a place of security and confidence rather than one of pressure.
A founder in their 40s also tends to have …
- More capital on hand to start a company.
- Deeper networks that can make hiring, consulting and securing funding easier.
- Experience at successful companies that can benefit their new venture.
Plus, many already finished their education, got established in an industry, founded a company or two, and started their family.
They’re often more ready to take calculated risks.
And this can hold a lot of appeal for potential investors who want to keep their own risk in check.
Middle-Aged Founders Who Made Billion-Dollar Businesses
Along with the statistical evidence shown by Azoulay and his team, we can look at real-world examples of successful companies — arguably, empires — that were started by middle-aged founders.
GEICO
- Founded by 50-year-old Leo Goodwin with $25,000 in personal savings.
- Went public about 13 years later.
- After going public, its market cap exploded 50x over the following decade.
- Today valued at around $56.2 billion.
Goodwin founded GEICO with his wife after working in insurance for over a decade.
He spotted an opportunity in the market for a company that directly served government employees' insurance policies. And he built what would become one of the largest insurance companies in the country.
Warren Buffett bought his first Geico shares in 1951. Buffett’s Berkshire Hathaway company acquired full ownership of Geico in 1996.
Walmart
- Founded by 44-year-old Sam Walton.
- Went public after just eight years.
- Today has over 11,000 locations and 2.2 million employees.
- Today valued at around $792.2 billion.
Long before founding Walmart in 1962, Walton worked at JCPenney. He left and took his retail expertise to the next level by purchasing and running a Ben Franklin craft store branch.
There, he honed a low-margin retail strategy by selling high volumes of products at low prices. This laid the foundation for the Walmart business model.
Seeing great success with his first store, he opened a new one called Wal-Mart Discount City.
Shares went public in 1970, and the rest is history.
E*Trade
- Founded by 54-year-old William A. Porter with just $15,000.
- The world’s first digital trading company.
- Twelve years later was named the fastest-growing company in Silicon Valley.
- Went public after 16 years of business.
- Today valued at around $10.9 billion.
Porter's background wasn't in trading or software. He grew up a cowboy on his family's homestead in Colorado. He went to college and got a master's degree in physics as well as management.
From there, he founded an electronics company, invented a device for inspecting train engines, and served as the chairman and president of several companies.
After Porter had already built a very successful career, he set out to make the world’s first trading software.
He didn’t know whether this could even be done. But via his network, he teamed up with fellow founder Bernie Newcomb, who did the programming.
Together, Porter and Newcomb built a company that disrupted the entire financial industry.
E*Trade went public in 1996 and was acquired by Morgan Stanley in 2020.
The Next Startup to Go Public?
I recently discovered a startup with an innovative solution. One that could disrupt the $10 trillion global energy sector forever.
I’m talking about driving an energy breakthrough that could cut Americans’ energy bills nearly in half … and allow technologies like AI, advanced robotics and more to reach their full potential.
This company controls the key ingredient to make that happen. And it has more of it than anyone else in America.
That makes it ideally positioned to become the dominant supplier.
Even better …
Remember how Azoulay’s team found that energy sector startups tend to be led by more seasoned entrepreneurs?
I can confirm that these founders have some robust resumes.
One of its executives previously grew a tiny, $3.4 million company in this sector to a valuation of $3.4 BILLION.
That’s 1,000x growth!
He told me personally that this new deal is the first since that big win that he’s been willing to put his name on.
The best part? You can have FIRST-DAY ACCESS to invest in this private funding round.
When this deal opens later this month, I expect it to fill up VERY fast. Possibly in one day or less.
That’s all I can say for now. But this coming Tuesday at 2 p.m. Eastern, I’m planning to reveal the details.
Click here to make sure you’re online to receive them.
Happy hunting,
Chris Graebe
