Middle-aged and older founders of start-up companies are more likely than their younger counterparts to create highly successful businesses, according to a new working paper published by the National Bureau of Economic Research.
The study challenges the popular notion that brash young entrepreneurs barely out of college are best at launching multibillion-dollar enterprises. It found instead that years of experience can be crucial to success.
The researchers — Pierre Azoulay and J. Daniel Kim of the Massachusetts Institute of Technology, Benjamin Jones of Northwestern University and Javier Miranda of the Census Bureau — examined census data to find the fastest growing start-ups over the past decade, or what they called the “1 in 1,000” ventures. They found that the mean age for the founders of such companies was 45.
They looked at two metrics of a start-up’s success — workforce growth and the ability of founders to depart after taking their company public or having it acquired by a larger firm — and found that a 50-year-old founder was nearly twice as likely as a 30-year-old to achieve “upper-tail” growth.
“When asking where most high-growth or technology-intensive firms in the U.S. come from, the answer is ‘middle-aged people,’ ” the researchers wrote.
The researchers found a jump in the likelihood of success starting at age 35, followed by another surge for founders between the ages of 46 and 60.
But outstanding success could come even later. The researchers cited the example of David Duffield, who was 64 in 2005 when he cofounded the cloud-based business management applications company Workday, which today has a market cap of around $28 billion.