There’s little evidence to support that anyone is too old to start a business. In fact, older founders are usually wiser. They are more focused on achieving sales metrics than on building “the best product ever”. They work silently, attend fewer startup conferences and, without any surprise, the over 40s tend to achieve more.
But What Should They Be Careful Of? Indeed at Altar.io and 10kStartup, we’ve had a longstanding belief that teams of older founders are wiser. They are better connected, know how to sell, have more access to capital and are better poised to succeed. Now there is data to prove it and a method to guide seasoned founders to defeat their quirks and achieve more.
Two 18 year old’s started their (now) billion-dollar worth startup in a garage…
…Or so the story goes. The word “Startup” is connected today to the mental image of Steve Jobs and Steve Wozniak as kids launching Apple. Or of Mark Zuckerberg launching Facebook from his dorm room in Harvard.
Young, white, male and techie/geeky is the stereotype of the high performing startup founder. This is even reinforced by notions that people over 35 need not apply. Even Y Combinator’s founder Paul Graham famously lamented his bias:
“I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: How could he be bad? He looks like Zuckerberg!”
In the US The National Bureau of Economic Research raises some interesting points to support the “older” founder. They tell us that the most successful entrepreneurs are middle-aged, not young. This research goes a long way to reject the idea that youth is a key trait in a successful entrepreneur.
Moreover, people who had been previously employed in their startup’s industry sector were a whopping 125% more likely to succeed. Seeing either high growth or a successful sale of their own startup.
We also see, in the US, that a full 40% of founders were, at some point, leaders in the corporate world. Nearly 29% were previously ranked anywhere from Director to CEO – according to Harvard Business School.
The American Economic Review sheds some more light on this in its latest research. It shows “no evidence to suggest that founders in their 20’s are especially likely to succeed.” and goes on to state that their “primary finding is that successful entrepreneurs are middle-aged, not young. […] All evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged.”
Prejudice against older founders now has now a plethora of data against it. It stands to reason that having 15+ years of experience in a sector will benefit you as a founder. This knowledge allows you to create a tech-enabled solution that improves your sector. As a result, you will fix perennial issues and deliver better solutions to clients.
You’re Not Too Old To Start a Business
Being 40+ is indeed great when it comes to starting your own business. Founders may try to achieve Invention — as in (higher achievement/materialization) products of imagination (Merriam Webster). But what actually is happening is a disruption. An industry with new technology – a humbler version of invention. Or simply put an incremental development – by placing the use of technological development at the service of an existing industry.
For the younger founder, there are advantages of youth in technology and innovation. It is argued that they are cognitively sharper, less distracted by family or other responsibilities. The idea is the more youthful you are the more capable you are of transformative ideas. This resonates with Max Planck’s Principle, whereby younger people may be less beholden to existing paradigms of thought and practice (Planck 1949; Dietrich and Srinivasan 2007, Weinberg 2007).
However, more senior founders have significant advantages when it comes to access to social capital (network) and financial capital. Moreover, they also have great pragmatism. Younger people certainly lack a notion of empathy and knowing what customers actually want (you get this with time). Undoubtedly, they lack experience in running companies efficiently. This includes the effective management of operations, marketing/sales, finance, human resources, and culture. Above all, they lack the sectorial experience. Put it this way, would you rather have a junior or a senior running your business?
Younger founders -> More exposed to tech in general. Hence the name “Digital natives”.
Older Founders -> More accrued exposure to their sector, managerial techniques and.. increasing exposure to new tech.
However, older founders are getting cosy in terms of tech – whether it’s the cloud, salesforce or even Instagram. The “edge” that those “new kids on the block” had vs professionals with 10+ years of experience is starting to diminish rapidly.
Structured, experienced.. And now building the way to be great in Tech
Seasoned founders are by nature more ponderate, relaxed and hard-working. They are not hustlers, rather they have seamless time efficiency and effort management built into them. They have their own families and know well what risk means, hence mitigating it at every step of the process.
Young startup founders benefit hugely from being digital natives. They can see how things are and immediately see how things would be “if there was an app for that”. Their impatience and fresh sight/lack of experience is both their biggest strength and weakness.
There is another disadvantage for the 20 somethings. In general, despite working together in university, they have zero experience of actually working together. These founders are about to learn about the workplace and technology teamwork dynamics from scratch – and very much from the trenches.
A group of entrepreneurs moving from being senior managers into becoming founders is a premeditated move. They make this move, usually, with either their own deep pockets of savings or investors backing. This gives them a runway buffer in the region of years as opposed to months.
Usually, these founders bring along time tested processes, decades of people management skills and choose a team that has previously succeeded together. Which means that their organizational chances of success are higher. They outshine vs younger founders with little experience, mistakes to make and lots to learn.
Compared to digital natives, these older founders do not “suffer” as much when stuck in a queue or similar tasks where an app would suffice to fix it. Having passed their revolutionary teens and 20’s, their entrepreneurial drive is the “digital transformation” of a specific sector. Just imagine the world of possibilities in Real Estate.
Crucially, as I said before, founders with a lot of previous sector experience tend to widely outperform those with little or none (+125%). Specifically so for B2B ventures, which older founders tend to invest more in with a more controlled Supplier/Buyer environment.
How seasoned managers can endure and thrive with a Tech Startup
Now for the rougher part. Seasoned managers are usually quite green when it comes to technology projects. They need to quickly decide whether to insource or outsource their Product Development and Software Development efforts. This is usually where we see the most execution risk.
“A seasoned team is arguably great at Operations, Organizational and Financial Management and Sales. They often struggle, however, with technology Product Market Fit, Continuous Product Evolution and Software Development Team Management. Fortunately, there is one global answer to fix these weaknesses: The Lean approach/methodology founded by Eric Ries.”
What is the Lean Methodology?
In a nutshell, the Lean Methodology recognizes the high cost of failure in Product and Software development. It proposes an approach to mitigate the risk by dosing investments into the minimum effort to achieve maximum validation.
“The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration.”
This means that when you are building a tech product you should never start with 100% certainty that everything will turn out as initially expected from your super well-defined business plan.
Rather you should have Build-Measure-Learn feedback cycles. You test your initial assumptions with a small investment quickly by building a sample of your product – the MVP (Minimum Viable Product). After that, you keep investing more in small doses until you’ve validated your product’s Product-Market Fit.
1. Product Market Fit Study
The very first cycle should start with a Product Market Fit Study at the beginning of the journey. It should address the problem you are solving and the solution you are creating. It should define how to deploy and test. To do this you can use the target audience or a persona to create a compelling Unique Value Proposition (UVP).
At Altar.io, we’ve identified a methodology to achieve the prioritisation for the features that will help you test your first product: read about the 123 MVP Method.
Doing this means that you will have a hypothesis of how to achieve a meaningful product quickly. It will subsequently solve the real problem of a well-researched client persona. Then you test the solution with small but meaningful project development steps and you analyse the results.
Crucially though, a well researched and well-thought product must ensure a higher level of defensibility. Your vision must be innovative and have enough staying power for more than just a few years.
At Altar.io we believe it’s so crucial that we offer our clients the Co-Founders Retreat, an intense week in Lisbon at our premises. During the retreat, we help them in defining the Product Scope and Features Prioritisation for their Minimum Viable Product (MVP).
2. Continuous Product Evolution
This is a mix of planned product development rollouts and Agile Build-Measure-Learn cycles. These usually rely on product iterations every 2 weeks to help the company improve its offering. It relies on actual user adoption metrics (bottom-up) to perfect the product. As opposed to risky guesses alone (top-up).
Your business will be a KPI gathering machine allowing you to steer the ship in the right direction. You will be making informed decisions and providing information to all your stakeholders, from clients to investors, backing your business.
At this step, it is important to ensure that the project stays ahead of the curve. You achieve this by analysing metrics at all times to stay ahead of the competitors. You will also outpace the alternative solutions to the problem your product proposes to solve. Your competitors will do all of this, so you must too.
Tech is a living organism, always replenishing its cells. To put it bluntly, no one wants to be a pager manufacturer in the age of the smartphone.
3. Software Development Team Management
Managing a software development team is a whole different ball game to that of a clerical team. It comes with its own rituals, best practices and quirks – such as SCRUM jargon and routines. There several types of software developers you will likely meet and it’s important to get to know them.
For most seasoned, highly focussed and pragmatic startup founders the most important thing is achieving their initial goal. This means quickly achieving exponential user adoption and other KPIs to show that you are on a path to sustainability and growth.
Pragmatic and Lean Higher success rate
On a final note, seasoned founders tend to see Tech as a means to an end and not as an endpoint in and of itself. Consequently, seasoned founders see great Product as the crucial part of their business and mission, and rightly so.
It’s for this reason I usually recommend seasoned tech founders to also go Lean on Software Development. That means focus on proving your KPIs first and on building your tech team later. Hire when your business is proven, cash is less scarce and you are in essence in a better position to discuss terms.