A 40-Year-Old Is Twice As Likely To Start A Successful Business Than a 25-Year-Old
“The longer you’ve been around, the better your odds.”
Research published by a group of researchers using census and tax data purports to show the ideal age of starting a successful business, dismissing many of the preconceptions that youth is advantageous when starting up a business.
“There’s this idea that young people are just more likely to have more valuable ideas,” mentions Benjamin Jones, professor of strategy at the Kellogg School who spearheaded the study. “If you look at age and great achievements in the sciences in general, it doesn’t peak in the twenties. It’s more middle-aged,” he said, suggesting that top Nobel Prize winners didn’t earn their breakthroughs until later in life.
Jones, alongside J. Daniel Kim, Javier Miranda from the U.S. Census Bureau and MIT’s Pierre Azoulay published a paper which combined tax data with U.S. Census Information, as well as a number of datasets on offer to put together a list of 2.7 million company founders who had hired more than one employee between 2007 and 2014. The team then put that dataset under the microscope in order to find out the age of optimal entrepreneurship, using a “universe of data,” in the words of Jones.
The team found that on average, the average age of the founder when starting their organisation was 41.9 years. This age figure was, however, taking into consideration anything from restaurants to dog-walkers, and the team was particularly interested in determining the average age of what they classified as “high-growth” ventures; successful start-ups, essentially. To discover this, they tightened the scope of the search and refined it down to technology companies, which are notorious for rapid growth figures. They again refined the search to the top 0.1 percent of those companies to only be analysing the creme-de-la-creme.
The results again indicated that an age north of 40 was optimal. “It surprised me,” Jones said. “It’s even older than I thought, “there are more bites at the apple from 40-year-olds,” he added.
“The facts stand strongly against the idea that you want to come from outside of the industry,” he said in relation to the data showing that founders with three or more years of experience in the industry are twice as likely to have a fast-growing company.
What’s more, the data has shown that a 50-year-old is 1.8 times more likely to start a top-performing company than a 30-year-old; a 20-year-old the worst shot of them all. A person who is 40 is more than twice as likely to start a successful organisation than a person who is 25-years-old.
The authors of the paper are hoping that the data will be taken into consideration by powerbrokers across industries that are responsible for handing out valuable funds and job positions.
“If we’re not allocating dollars to the right people in entrepreneurship, we may be losing, in terms of the advances that best raise socioeconomic prosperity,” Jones added. “It’s actually a fairly high-stakes question.”
“One idea is that young people are especially likely to have transformative ideas- that they’re not beholden to the current paradigm. When you think of Mark Zuckerberg saying ‘move fast and break things,’ the early Facebook mantra, it’s very much this emphasis on transformation and disruption.”
“They can be all-in, hour-after-hour, in a way that older people might have trouble matching, given other responsibilities.”