Many people are seduced by the allure of a young, hoodie-dressed tech entrepreneur who just quit college to start a successful internet startup. Steve Jobs started Apple at 21 and Mark Zuckerberg was 20 when he co-founded Facebook. But, as enticing as this conjured image may sound, the 20-year-old entrepreneur is a myth. According to a new study from MIT, the average age of an entrepreneur who’s started a new business and went on to hire at least one employee is 42.
“If you knew nothing else, and you had two identical ideas, one proposed by a very young person, one proposed by a middle-aged person, and that’s the only thing you have to go on, you would be better off—if you wanted to predict success—betting on a middle-aged person,” Azoulay said.
To learn when, on average, an American entrepreneur starts a new business, Azoulay tapped into the Census Bureau’s Longitudinal Business Database, and Schedule K-1 business owners data from the Internal Revenue Service. There are many ways to measure and entrepreneur’s average age, along with other metrics, but the new study shines in the fact that the Census data is matched to IRS records. This allowed the researchers to get a lot closer to the ground truth than anything else.
Overall, the study included 2.7 million people across all walks of life who founded businesses between 2007-14. The team was careful to clarify self-employment versus entrepreneurship but also narrowed the scope from any and all companies to the ones that have the ambition to grow. Some businesses, like neighborhood car washes or pizza shops, start with the intention of becoming successful — but stay small.
“There’s nothing wrong with that,” Azoulay said. “But when you’re talking about entrepreneurship, what you conjure is the image of someone who’s trying something with the ambition to grow at the time in which he or she starts.”
On average, the MIT researchers found that the average age of the American startup founder is 42 — and this shouldn’t be surprising to anyone. You can argue that a 23-year-old entrepreneur has more energy and less responsibility, enabling him or her to take more risks — but that’s about where the advantages of young age in business end. With age, various other benefits accrue, such as experience, financial resources, and social connections.
Some might think that it’s in more up and coming fields like online retail or internet services that you’ll find the kiddo-entrepreneur. However, the closest any founder age got to “young” was in VC-backed firms, where the average age was 39 in New York. What’s more, the average founder age in some of the newest technology sectors—in this case, wireless telecommunication carriers—was 39 years old. Even very famous entrepreneurs who started out young, such as Bill Gates and Jeff Bezos, had more success as 50-year-olds than as a 20-year-olds. Another interesting finding was that entrepreneurs were 125 percent more successful if they were previously employed in the particular sector in which they are starting a business.
Of course, this doesn’t mean that the findings should discourage young people from pursuing their entrepreneurial ambitions. Perhaps, the biggest takeaway is for the middle-aged readers out there: your time is now!
“If you’re 22 or maybe just coming out of an MBA program, and there is this social perspective that you should be an entrepreneur right now, rethink that, because you might have a great idea but you might not have the right skills or experience to really propel that idea,” said Daniel Kim, a PhD student at MIT. “Think about career paths as options, not just as absolute paths.”