Research Shows Older Founders Launch More Successful, High-Growth Companies

Many of the world’s most famous founders were young when they launched their company. Mark Zuckerberg founded Facebook in college; Steve Jobs and Bill Gates were almost as youthful when they founded Apple and Microsoft. These stories are appealing; successful young founders receive major press coverage; their stories are turned into films and their lives chronicled by biographers. But the cultural and media emphasis on younger entrepreneurs obscures an important startup reality: Most successful entrepreneurs are above 4o.

Pierre Azoulay of MIT, Benjamin F. Jones of Northwestern University, J. Daniel Kim of The Wharton School, and Javier Miranda of the U.S. Census Bureau analyzed IRS filings, American patent filing, and Census data to investigate potential correlations between founder age and entrepreneurial success. Although their datasets included thousands of firms of every size, they paid special attention to what they call “growth-oriented” businesses that aim to create substantial economic activity. In other words, the authors were especially interested in firms that might eventually employ hundreds or thousands of people and achieve substantial market capitalization.

The research results suggest that the stereotypical views of the successful founder — inexperienced and young — are entirely wrong. The average founder of a company in the top 0.1% for growth is 45 years old. If a 50-year-old begins a company, that firm has a substantially higher chance of becoming a top “0.1%”growth company than one founded by a 30-year-old. The 50-year-old’s company is “1.8 times more likely” to achieve this level of growth. Super-young founders under 25, by contrast, are least likely to succeed in growing their ventures or making a good exit. Zuckerberg, Jobs, and Gates, in short, are exceptions who prove the rule.

Other  findings from this study:

• Venture capitalists are more likely to fund younger than the average founders, thus betting against the data.  The reasons for this remain unclear.  Perhaps VCs have a high risk tolerance, perhaps older founders are less likely to need funding, or perhaps the venture capitalists have just made mistakes.
• Successful high-tech firms usually have founders in their forties.
• “Outsider advantage,” the idea that inexperienced founders bring new ideas and new paths to success, seems to be a myth, as more founder experience correlates with increased firm success.