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Businesses The Almighty Buck Technology

Tech Start-ups Aren't Just for Wunderkinds 96

jonniee writes "The results of a new report from the Kauffman Foundation are contrary to what we usually hear about U.S. tech start-ups. Who are these entrepreneurs? Is the report in sync with what you're seeing?" According to the linked article, "Challenging the perception of American technology entrepreneurs as 20-something wunderkinds launching businesses from college dorm rooms," the new study "reveals most U.S.-born technology and engineering company founders are middle-aged, well-educated, and hold degrees from a wide assortment of universities."
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Tech Start-ups Aren't Just for Wunderkinds

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  • It's good to see that the "older" crowd is also involved in start-ups. Most of the 40-somethings around me are stick-in-the-muds who have no interest in change or taking any risks.

    It makes it easier for me to succeed. Though I did just turn 30, not as much a youngster anymore. I think the biggest reason 20-er's succeed is they do not understand the world wants them to fail (so they don't). Older folks are so much more cynical that they don't step out of the comfort zone.

    • by Narpak ( 961733 )
      And perhaps because those that might want them to fail just don't have the technical in sight, at least not until later, on how to stop them.

      Or perhaps it's because many technologies are still at an early stage of their potential, and that those with insight and drive manage to find new areas from which they can make a profit. Not to mention the opening of new world markets where innovative companies might find opportunities overlooked by older, more established corporations.
      • Re: (Score:3, Insightful)

        by colmore ( 56499 )
        New technologies give little advantage to the experienced, and so the playing field is flat for creativity, fresh perspective, and all that lovely stuff to succeed.

        That said, there's a lot more maxed out credit cards than there are Facebooks.

        Still, I think the reason that there's a perception of startups being littered with 21 year olds, is that when a 21 year old's startup does something noteworth, a LOT more gets written about it.

        A general phenomenon I like to call the "Action News" effect. If something
    • by Kadin2048 ( 468275 ) <slashdot...kadin@@@xoxy...net> on Thursday May 01, 2008 @01:26PM (#23266264) Homepage Journal
      > I think the biggest reason 20-er's succeed is they do not understand the world wants them to fail (so they don't). Older folks are so much more cynical that they don't step out of the comfort zone.

      I'm not sure this holds water. There's a perception that young entrepreneurs are successful, but it's basically a myth, perpetuated because of all the attention that a few (rare) successes bring.

      The entire focus of the article is that most startups, and I'd be willing to wager most successful companies, aren't started by young people fresh out of college. They're somewhat unsurprisingly started by people with experience in the industry. But "several well-educated 40-somethings go to a bank, get a business loan, rent an office space, and start a new company by filling a niche they know there's a demand for" just doesn't make for as exciting reading as "two college kids in their dorm room risk it all and run up credit card debt pursuing their dreams".

      Really it's just the real world turning out to be less romantic, you might say, than the media sometimes makes it out to be. No real surprise there.
      • I'm not sure this holds water. There's a perception that young entrepreneurs are successful, but it's basically a myth, perpetuated because of all the attention that a few (rare) successes bring.

        I agree, and it's not just limited to young entrepreneurs. The media focuses on the rare successes (and failures) to the point where they seem commonplace. If you were to believe what they feed us, you'd think that all today's schools are filled with prodigy, gang member, anorexic, obese, and and suicidal students taught by sex fiend teachers. It's news because it's -not- ordinary, so thinking of the news as representative of the average world is obviously going to be wrong.

      • I'd be willing to place a small wager that the success to failure ratio is far more favorable to startups created by people with some life experience rather than those created by 20 year olds.
        • Given that the older crowd is more likely not to have a technology background going by the article, I wouldn't be as sure. Product isn't everything, but how well can you do if you don't have a good product when you don't already have connections for the company?
          • As a startup guy, one thing you hear over and over from the money guys is that they'd rather fund a good team with a lousy product than a great product with a mediocre team.

            People are everything in this business.
      • by bkr1_2k ( 237627 )
        Exactly. Anyone who's spent time actually trying to get a company off the ground by interacting with other companies (not creating a software product in the basement) sees this constantly.

        Most companies, especially tech companies, are started and managed by people in their late 30s and early 40s who've garnered enough success and experience to venture out on their own in a field they are familiar with and where others are familiar with their work.
      • Re: (Score:2, Insightful)

        by Coldmoon ( 1010039 )
        Quote "The entire focus of the article is that most startups, and I'd be willing to wager most successful companies, aren't started by young people fresh out of college. They're somewhat unsurprisingly started by people with experience in the industry...".

        I am one of those who did not even get involved seriously in the industry until I was in my mid 30s and never had much use for standard 9 to 5 jobs so have worked as a hired gun most of my career.

        This experience has provided a rich return as far as exp
      • by flynn23 ( 593401 )
        That's partially true, but the real reason is that 20-somethings have less to risk (both financially and personally) and don't have the burden of responsibility that most older workers would have (family, mortgage, etc). They also command less money when the business gets going because of inexperience and market rate. This is why financiers prefer to work with younger workforces. More time on the job, smaller costs, less aversion to risk.
      • Re: (Score:3, Insightful)

        I've only briefly examined the report, but it's already clear that there is a strong selection bias in the results. They're pulling from a database of companies worth $1m+ founded between 1995-2005. There are probably at least four issues with this:

        First, it doesn't properly account for businesses that take a long time to mature. it's very possible that a business started in 2003-2005 hasn't broken the $1m+ barrier yet, and these companies aren't examined at all by the survey.

        Second, they aren't usin
      • Good article to set people straight on how mundane most startups are. I am almost 40 and http://www.shellshadow.com/ [shellshadow.com] is my 3rd startup (not counting the half-baked college days projects).
        I have purposely narrowed my focus on this one. Some has to do with age and risk profile changing. But the other reasons are that I do have more experience and understand that my goal is to fill a niche and that initial niche better be good enough to get to sustained profits quick. If I can take on adjacent markets and
      • I'm not sure you can go to university and read slashdot without coming up with several "it's so obvious, someone else must be working on it" ideas.

        The question of whether fourty something's that think in industry terms or 20 somethings with a compiler and a dream will be more successful is dependant on the economics in your area.

        Spam is making people much less receptive to "genius" ideas developed and distributed over the interwebs... people want microsoft certification on software, pretty shiney interf
    • by asc99c ( 938635 ) on Thursday May 01, 2008 @01:43PM (#23266450)

      Partly I think it's just that if you're the sort of person who is going to have success as an entrepreneur, it's all about drive, vision and creativity. Those don't tend to increase that much with experience.

      Kind of like what they say about Mathematicians - if you've not made a big contribution by your 30s, you probably never will.

      On the other hand engineering work is very much improved by experience, and many of the best engineers I know are in their 40s or older.

      So the newsworthy startups are often started by college kids. But the majority of startups have a decent if not earth shattering premise, backed up by business and engineering skills built up with experience and run by older people.

      • Re: (Score:1, Insightful)

        by Anonymous Coward

        Partly I think it's just that if you're the sort of person who is going to have success as an entrepreneur, it's all about drive, vision and creativity. Those don't tend to increase that much with experience.

        Kind of like what they say about Mathematicians - if you've not made a big contribution by your 30s, you probably never will.

        On the other hand engineering work is very much improved by experience, and many of the best engineers I know are in their 40s or older.

        So the newsworthy startups are often started by college kids. But the majority of startups have a decent if not earth shattering premise, backed up by business and engineering skills built up with experience and run by older people.

        The biggest problem I've seen with the younger people in charge of startups is that even the rare ones truly gifted with drive, vision, and creativity just don't understand business. So, they may know their engineering, and they may have a good handle on their market, which is what's key, I think, but they sort of expect everything else just to fall into place, and it doesn't. The smart ones are fully aware of these gaps in their experience and value the people who can fill them in. More often than not

        • The biggest problem I've seen with the younger people in charge of startups is that even the rare ones truly gifted with drive, vision, and creativity just don't understand business.

          I think you could say the same thing about any type of managerial (or leadership) position. For example, I'll soon be a college graduate. I tend to be pretty good with the technical stuff however I know I don't have the real-world experience to be in a leadership role. I could see myself being there in a couple years but not at this point.

          So I can see what you mean. If I was to start a business I'd want to hire someone to do the managing of it so I could focus on the technical side.

    • Re: (Score:3, Insightful)

      by mpapet ( 761907 )
      Most of the 40-somethings around me are stick-in-the-muds who have no interest in change or taking any risks.

      As one of those 40-somethings, it depends on the environment in which they work and the risks they've taken.
      In the bigger places I've worked, blame-shifting and doing nothing was the standard operating procedure. It's a very corrosive environment that has little to do with age.
      For some do-nothings, they've got a significant other they'd like to stay married to, a family to feed and educate and a mor
      • It's a very corrosive environment that has little to do with age.
        I'll grant this in a heartbeat. 'Corrosive' is a perfect way to put it. I agree, it is difficult to keep a positive attitude and think you are someone who can "make a difference" or be successful when the industry continues to beat you down. I lumped older workers, probably unfairly, in this paradigm. In fairness to my original post though, I did qualify it with those people "around me".
    • Re: (Score:3, Insightful)

      by bkr1_2k ( 237627 )
      No, the biggest reason 20 somethings succeed is that they have less to lose if they fail. Thus, they are more likely to take the risks of losing it all.
    • It makes it easier for me to succeed.
      Which is why I was trying to avoid posting. The Kauffman Foundation needs to stop giving out secrets. If 40 somethings found out they could take their experience and make a go at it on their own... hey wait! You little shit! What do you mean older?!? 40 isn't old!
    • by Goblez ( 928516 )

      I think the biggest reason 20-er's succeed is they do not understand the world wants them to fail (so they don't).

      Actually this is my biggest motivation. And it seems when times are rough one of my only motivations.
    • I think the reason that most of these 20-something wunderkids have seen such big successes boils down mainly to luck and probabilities. There's lots of people out there at all sorts of ages who are working hard, and it's just the nature of how the world works that some end up being in the right place at the right time, and things just sort of fall into place.

      Hard work and great ideas are very important, no doubt, but there's always an element of chance involved. Chance doesn't discriminate in regards to age
    • by geekoid ( 135745 )
      It's about risk.
      Older people don't want to risk there children's health and future.
      I suspect that if the US had a decent nationalism health plan, a lot of people would go out to start their own business.

    • I think the biggest reason 20-er's succeed is they do not understand the world wants them to fail (so they don't). Older folks are so much more cynical that they don't step out of the comfort zone.

      Naw, I think it's just the law of large numbers. you see successful 20-something startups, because so many educated 20-somethings start them. Then the herd gets thinned, the droves of eager-beavers get older and bitter, and the 40-somethings left know their shit. There may be fewer of them, but they're more likely to succeed, per capita.

  • by haluness ( 219661 ) on Thursday May 01, 2008 @01:16PM (#23266146)
    Sure, some of the high-profile startups might be the result of a wunderkind in a dorm or garage. But it's also true that by definition, these types of startups are going to get a lot of publicity.

    It would make sense that someone with more experience under their belt might be a good candidate for a startup.

    Also, I'm of the view that startups don't necessarily have to solve all the worlds problems (ala Google) or even solve sexy problems. There are enough niche areas, where experience and knowledge counts as much (if not more) than youth.
    • I'd agree with this, definitely. In my consulting business the majority of my clients are startups, but they're also older people. People in their 30s or 40s and sometimes even 60s who are looking to create a business, have a sound idea, very well designed business plan, and considerable investment ready. In my experience, the younger startups typically don't have as much planning done and usually pull through with funding by the skin of their teeth.

      This doesn't mean that the budding entrepreuner should
    • Mod parent up
      Startups run by 40 somethings are not news.
      Startups run by 20 somethings are news
      Therefore, most people believe that successful startups are run by 20 somethings.
  • I'm not sure that this is surprising to anyone... So you've got a great idea? Perhaps the next big thing? Now you have to worry about raising capital, starting a business, locating space to work, equipment, licensing, regulations, etc...

    It's just not as simple as -

    1. Idea
    2. Profit

    Running a business is tough even when you have a great idea! It's not surprising that older more experienced people are involved in tech startups. Heck, look at google, two young guys but they had "handlers" to help them get
  • by Angst Badger ( 8636 ) on Thursday May 01, 2008 @01:23PM (#23266226)
    I've spent most of my professional career working for startups. Every one of them has been run by middle-aged entrepreneurs, most of them on their third or fourth attempt to run a successful business. I suspect this is because most investors wouldn't actually touch a startup with a ten foot pole, and most young people lack the personal resources to accumulate any startup cash. We hear about startups run college dropout wunderkinds precisely because they are unusual and therefore newsworthy, which is much the same reason we hear about absurd personal liability lawsuits instead of the millions of humdrum cases no one would bat an eyelash at.
    • by ivan256 ( 17499 )
      You've basically nailed it.

      For every one startup founded by a 20-something year old within 40 miles of MIT, there are 25 started by somebody aged 40+.

      I don't have any official statistics on the success of these companies, but it seems to me that both types are just as likely to be successful. The older engineers have just had more time to come up with good ideas, and more experience to judge them by.

      The younger founders get more press though. "25 year old makes millions!" is a better headline than: "Person
  • Sure ... but our CEO just threw a tantrum and threatened to take his toys and go home if he wasn't properly respected.

    Don't worry though, we lured him out with some milk and cookies and shiny DVD to look at.
  • As someone who has had a startup in the past, I can tell you that of course that is the case.

    In fact, when you look for angel investor or VC funding, one of the key elements that they consider is the background and pedigree of the founders.

    Your past experience, expertise, education (especially education) and pedigree (a well known school is easier to sell than a relatively unknown one) all play a big role in who you can talk to, and how seriously they will take you.

    Even when you talk to a potential client,
    • The entrepreneur mindset is definitely a different way of thinking. You can't teach it, but it doesn't go away with age.

      I've been in a room full of Ernst + Young Entrepreneur of the year award candidates and the age range is all over the place but most are middle age+. Parent's right about talking with investors, and just having experience comes easier with age.

      The other reason you won't hear the 'rags to riches from a dorm room' story is that the older crowd often times can be an entrepreneur without h

  • This is completely sensible. The era when a youngster with no advanced education could pop up and dominate a swath of the tech sector is mostly gone. There are certainly niches where that will still work, but the vast majority of the easy stuff has been done, and the success (or failure) of a start-up is increasingly dependent on who the starter upper has around them. If they are established and have solid connections to a local university (as it would appear from the article is the case in most of these
    • by metlin ( 258108 )
      Here are a few points:
      • Look for angel investors in your region.
      • Talk to the local chamber of commerce, and see if they have any ideas or suggestions.
      • Talk to your bank. Also try talking to some of the community banks nearby - a lot of them tend to give out small loans for individual entrepreneurs.
      • Look online for VC bloggers around your area (trust me, they are dime a dozen) and try to talk to them.

      It also helps if you have a solid business case, of course (and if you're presentable).

    • Anyone know how I might get a small amount of financing to get a project going?

      SBA loan.

      That said, here's a piece of advice: don't sit around waiting for someone to dump money on you. There are very few businesses that *really* require a lot of money to start. The best way to build a business is nearly always to start small, work your ass off (possibly while keeping another job), and gradually build it up *by yourself*. Don't get partners unless you absolutely have to.

      Do something *tangible* EVERY D

      • Do something *tangible* EVERY DAY toward your goal. And tangible means not writing down some plan you won't follow anyway. Tangible means, say, writing a hundred lines of code (if you're a programmer), even if you're dog-ass tired. Make 20 cold calls to drum up business. Live as sparsely and cheaply as possible and sock away every penny toward your dream. This can't be emphasized enough: STOP TALKING AND START DOING. Be bold. Be brave.

        Amen. Even if you don't know it's what you want to do today, start re
  • by mpapet ( 761907 ) on Thursday May 01, 2008 @01:30PM (#23266312) Homepage
    'Wunderkinds' type founder stories make better story telling than "I started my hosted application business in my garage after putting in my time at the DWP and seeing a need."

    Some of the most ridiculous startup fiction that come to mind,

    -Michael Dell. Both Mom and Dad Dell had the deeep pockets, knowledge, connections to grow their son's so-called dorm-room start up. Reselling PC's is very capital intensive for those who aren't aware of the business problems.

    -Cisco. After the guy who founded cisco stole/borrowed/whatever the IP from the university he worked for, the sexier fiction to cover up the legal gray area and ethical skulduggery was he used was to claim the networking technology was used to talk to his future wife. (or something like that) Meanwhile the guy who -actually- did all the work and seemed to have an ethical bone in his body, retired from the university in relative anonymity.

    Along with all of the VC money comes the story tellers to paper over most of ethically challenging details.
    • To be honest this is common practice, people, ie. customers and investors, find fictitious startup reasons sexier and makes for good marketing. People like a good story and they like a company that seems to have a good story behind, fictitious or not.
  • It makes sense because that's about the time the kids are gone, and they can devote time to their passion again.

    After all the whole fuel of the 20-something startup is that you do not yet have spouse/kids/life to keep you from working 80+ hour weeks. This is called a "youth culture" but really just means you don't know you're supposed to be enjoying life.
    • I do and don't agree. It seems like everybody is just waiting until they are really old to start having kids. A lot of people wait until they are 35 now. Myself, I'm 27 and have 2 kids. I really enjoy having kids, and it's nice to have enough energy to keep up with them. I also look forward to the future when they leave the nest, and I am still young enough to enjoy life. Not that I'm not enjoying life with kids. But they do limit how much free time you have for doing stuff on your own.
      • Yeah, the way people wait so long nowadays just seems very weird to me.

        Then again, maybe that's because my parents waited until they were 34 and 45, and my brother and I both have various horrible allergies.

        And now my mother is going through menopause while I'm in college. Oy gevalt.
    • by iamacat ( 583406 )

      It makes sense because that's about the time the kids are gone, and they can devote time to their passion again.
      So I have to wait until 55 to start a company. Shit! And I here thought I am a couple of months away from initial product release. Provided of course that my daughter doesn't burp on my MacBook Pro at an inopportune time.
      • by Duncan3 ( 10537 )
        I never said it wasn't possible, but kids do take a lot of time. Time that's a lot more fun then sitting at a desk, that's for sure :)
  • As if this wasn't totally obvious. You hear about a handful of successful entrepreneurs who are very young, without hearing about the thousands of others who are very young who fail. The success ratio for extremely young entrepreneurs is abyssmal - no better than chance. Dot-coms are an exception, but that time has come and gone, and many of the dot-coms that have endured and actually achieved long-term success were NOT started by young kids in garages or basements; certainly, even more of those that are
    • Not so for computers - particular software - but that will not remain the case for long.

      I disagree. There are a couple of reasons for software startups still being the domain of even the "dorm room duo" for a long time to come.

      1) Low barrier to entry - All it really takes is hardware (whose price has been decreasing) and some software (much of which is free as in cost). You can literally start a software startup on a few grand (if even that) and keep it funded by doing consulting on the side.

      Biomed, on th
      • Yeah, but how many comp sci undergrads know enough actual computer science to successfully figure out a clever, sale-able solution to a problem that someone actually needs solved?

        The "undergrad entrepreneurs" that *I* know are just a bunch of kids in 100-level classes who are trying to start a gaming studio. Admittedly, they seem to be making progress on a game of some sort, and all the best luck to them, but I don't see how they're going to compete in the market with some product of one or two years' unde
        • Yeah, but how many comp sci undergrads know enough actual computer science to successfully figure out a clever, sale-able solution to a problem that someone actually needs solved?

          A number of my friends and I were writing code for organizations and getting paid for it (both as employees and on a consultant basis) when we were still undergrads. Granted, we weren't necessarily "average" students, but people who pull off starting a successful company generally aren't.
          • Oh, I'm not saying that some smart comp-sci undergrads can't write real code and get payed for it. The CS department here tells all its students to have their first internship or whatnot doing just that by the summer after sophomore year.

            I just think that, more than other industries, computing encourages almost everyone with an idea and far too much coffee to make a go at a startup company.
            • You're thinking of "startup" in far too narrow a scope. Most people do.

              You don't just have to have one product. Any new software company is a startup, really, including consulting companies.

              Personally, I think the experience you gain in a startup is extremely useful because you learn not only about the technology but about business as well. Unfortunately, some companies in the Midwest disagree, because they're too paranoid and think that anyone who has been on their own before will do it again at the dro
      • by kninja ( 121603 )
        Biomed is actually expensive because of the FDA certifications and multiple phases of clinical trials you have to do to actually get something to market.

        The training and equipment costs usually pale in comparison to the clinical and approval expenditures.
  • Individuals with more life experience and education more likely to put said knowledge to use...
    News at 11!
  • The only reason that there's a perception of the 20-something success is that it generates media attention when it works. There are way, way more young failures and older successes, but that's what we should expect to happen. The younger the kid, the less attention is paid to how successful their strategy is and the more credence is lended (for some reason) to their outrageous claims. Try to follow up on any of those 12-year old dot-com phenom types and see if any of them (or their parents) are still pus
  • by Reality Master 201 ( 578873 ) on Thursday May 01, 2008 @01:45PM (#23266474) Journal
    Das Wunderkind, die Wunderkinder. Lernen Sie Deutsch!
    • by Enleth ( 947766 )
      Ja, ja, Volkswagen!

      (Please excuse my obsucre reference to a probably-not-very-well-known Polish comedy "How I started the Second World War" - I just had to do that... To explain a bit: that's how one of the main characters responded to a Gestapo officer asking him a question, because he didn't know German at all.)
      • Is that the one where the main character's gives his name to the Gestapo as Grzegorz Bry[something I have difficulty pronouncing despite speaking two other Slavic languages]?

        That's a funny one.
    • A German grammar nazi...
      • You know, I understand the colloquial American English use of the word, but in Germany, they reserve the term Nazi for a group of people who took over the country and murdered several million people. Maybe the word is better left to that usage.
  • Of course nobody reports that. It's not news!
  • They were on the roads, driving 45 in the fast lane with their left blinker on, now they're leading our companies! Great, lets hope to retire them someday!

    *ducks*
    AHHHH! Anything but the cane! *cowers*
  • ...and it's not an experience I'd be without, but god how clueless we were in some areas. I think most young start-ups that survive do so because noone has told them how difficult what they're doing is so they do it anyway. That also means many run into all the pitfalls littered with other companies they should have learned from, so I think they got the most failures and the most spectacular successes.

    The only reason there is a dip that rebounds later is that parents with small children rarely want to do a
  • Just another prime example.

    "Smart looking man launches company based on his education" doesn't make it to the press but "young geek strikes it rich" will. Without real surveys of the entire industry what really goes on is never revealed. Only the extremes come to light.

    The truth is often boring. That is to say making it interesting will not make you any smarter. It makes you a liar.

  • "Because entrepreneurship is an indicator of economic vitality in regions and across the country, this study raises important policy questions about how to foster greater tech entrepreneurship to boost economic growth," said Robert Litan, vice president of Research and Policy at the Kauffman Foundation. "Probably the most compelling fact in the study is that advanced education is critical to the success of tech startups."
    That is all.
  • in a startup might be relatively young, just out of college and willing to take risks. However, as soon as that startup gets enough funding to hire some more employees and pay them a salary, they aren't going to go after other college grads with limited experience.

    Funded startups typically go after top tier developers with lots of experience to get their product off the ground. They need these guys because the challenges a startup faces are huge compared to the number of people and infrastructure available.
  • I started my first business out of total frustration with working at a Fortune 500 company who made politics instead of product. It wasn't a huge success but it earned me a lot more money and lasted a good 10 years. And it enabled me to start my second business. Never forget that the B students work for the A students at companies started by the C students.

Some people manage by the book, even though they don't know who wrote the book or even what book.

Working...