Tag Archives: Age

The age of founders and non-founding CEOs

The age of founders has been a recurrent topic here as you might see from tag #age. In my analysis about hundreds of startups (822 at this time, and 600 lately), I just thought it would be interesting to check the correlation, if any, there might be between the age of founders and a CEO among these founders or not. Intuitively, one might think that the less experimented founders may induce a non-founding CEO. So here are the results:

The numbers speak and may seem counterintuitive. A majority (and often an overwhelming majority in the digital world) of startups have a founding CEO and the average age of founders is lower in this case. Question of dynamism, of envy of the team, I do not know …. Do not hesitate to react and comment.

The Age of Founders – Again!!

Leave a reply

As an interesting coincidence, I was mentioned twice in a few days a recent research about the age of founders:
– Colleagues from IMF – the International Monetary Fund – mentioned to me this morning an article from The Harvard Business Review published in 2018: Research: The Average Age of a Successful Startup Founder Is 45 by Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda.
– Just before Christmas, I had a debate with French economists about the age of founders, and they mentioned to me Age and High-Growth Entrepreneurship by Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda.

The same authors, the same messages… In a nutshell: “It’s widely believed that the most successful entrepreneurs are young. Bill Gates, Steve Jobs, and Mark Zuckerberg were in their early twenties when they launched what would become world-changing companies. Do these famous cases reflect a generalizable pattern? […] Our team analyzed the age of all business founders in the U.S. in recent years by leveraging confidential administrative data sets from the U.S. Census Bureau. We found that the average age of entrepreneurs at the time they founded their companies is 42. […] But what about the most successful startups? Is it possible that companies started by younger entrepreneurs are particularly successful? Among the top 0.1% of startups based on growth in their first five years, we find that the founders started their companies, on average, when they were 45 years old. […] These averages, however, hide a large amount of variation across industries. In software startups, the average age is 40, and younger founders aren’t uncommon. However, young people are less common in other industries such as oil and gas or biotechnology, where the average age is closer to 47. […] In light of this evidence, why do some VCs persist in betting on young founders? We cannot definitively answer this question with the data at our disposal, but we believe that two mechanisms could be at play. First, many VCs may operate under a mistaken belief that youth is the elixir of successful entrepreneurship — in other words, VCs are simply wrong. Though it is tempting to see age bias as the leading explanation for the divergence between our findings and investor behavior, there is a more benign possibility: VCs are not simply looking to identify the firms with the highest growth potential. Rather, they may seek investments that will yield the highest returns, and it is possible that young founders are more financially constrained than more experienced ones, leading them to cede upside to investors at a lower price. In other words, younger entrepreneurs may be a better “deal” for investors than more experienced founders.”

The age of founders has been an interesting topic here as you may check with tag #age. In particular I wrote
– Data about equity of 600 startups in April 2020
– The Age of Founders of Start-ups – Again! in April 2019
– Age and Experience of High-tech Entrepreneurs in June 2014

What you will find in common between this recent research and my posts is that there is variation with the field. I am not sure this new research looks at the first entrepreneurial activity and it would make sense as their emphasis is towards experience. I also had different answers about the impact in value creation in my research with this striking illustration:

All this drives me to a second line of thinking:
– the importance of creativity: check #creativity.
– the importance of experience: I had a piece of research with strange results many years ago about serial entrepreneurs. The end result my be counterintuitive. Check #serial entrepreneur

I will not really conclude but say in the end it depends… except by mentioning Galenson‘s work about conceptual and experimental innovators: “Experimental innovators work by trial and error, and arrive at their major contributions gradually, late in life. In contrast, conceptual innovators make sudden breakthroughs by formulating new ideas, usually at an early age. […] Experimental innovators seek, and conceptual innovators find.” from Old Masters and Young Geniuses. This could be an answer to the authors’ question on the choice of VCs: they would be looking for conceptual innovators.

Airbnb files to go public – the last giant?

Leave a reply

Airbnb just filed to go public. Finally! It maybe the last IPO of the recent giants (and not the latest only), these giants which emerged in the 21st century, such as

and of course is the cap.table, not that far from what I had tried to guess in 2017 in www.startup-book.com/2017/03/13/what-is-the-equity-structure-of-uber-and-airbnb/

Data about equity of 600 startups – comments (2)

2 Replies

Second post of comments on (updated) data on 600 (former) startups, about (what I think) are interesting or intriguing results.

After venture capital in the first post, here are elements about founders.

The 600 startups gave me data about 1016 founders, al though there is an average of 2.3 founders per startup. I did not have the age of all of them, neither their role or ownership. The average age is 37.9, the median is 36. (This is age at foundation, I added this after a comment I received on April 9, 2020).

The following figures show some striking results about the age related to fields: founders are much older in the health-related fields, much younger in digital technnologies. It is more than 45 in biotech and 43 in medtech in comparison to 33 in software and Internet.

Updated data in equity of 600 (former) startups

Leave a reply

The Covid19 virus has an indirect effect, we have more time at home and in front of computers. So I updated my data in startup equity from 600 companies for which information was available, mostly because they had filed to go public. Here is the full list of individual data.

If you cannot visualize the document on scribd, here is a direct link to the pdf entitled Equity_in_600_Startups-Lebret-April2020.

At the end of this 600+-page document, you’ll find some statistics, here they are again. I will probably come back to some results I find interesting not to say intriguing. Enjoy an react!

Some addtional comments in later posts:
1- About venture capital: on April 7 comments 1.
2- About the age of founders: on April 8 comments 2.
3- About the equity of founders: on April 9 comments 3.
4- How is equity shared: on April 10, comments 4.
5- About the equity of non-founding CEOS: on April 11, comments 5.
6- About valuation of startups: on April 12, comments 6.
7- What have they become: on April 16, comments 7.

Basic data about startups (funding, sales, profits, employees at IPO and years to IPO) by fields, geographies and periods of time.

Data about founders (age, ownership and nb. by startups) and other stakeholders by fields, geographies and periods of time.

Data about ownership of non-founding CEOs, VPs, CXOs, board members by fields, geographies and periods of time.

New data about ownership of series A investors by fields, geographies and periods of time.

The Age of Founders of Start-ups – Again!

Leave a reply

The age of founders of start-ups is a recurrent topic on this blog. You can just check it through hashtag #age. I have just updated my cap. table database with now 500 “famous-enough” companies for which I have compiled a lot of data. You can check here the most recent update with 450+ companies in mid 2018 – Some thoughts about European Tech. IPOs or a synthesis dated 2017 with 400 companies Equity in Startups.

I just looked at the age of 850 founders from these 500 companies. I think it is interesting. I hope you will agree… I am not even sure I need to comment much. Average age is 37 overall, 45 in biotech, 37 in hardware (electronics, telecom and computers, energy) and 32 in software/internet.

Advice to young (and old) people by Jack Ma, the founder of Alibaba

Leave a reply

Thanks to my dear colleagues for mentioning to me this moving, inspiring interview from Jack Ma, the founder of Alibaba. He is giving advice to people from any age related to work and entrepreneurship.

If you’re 25 years old, do not worry, any mistake is an income.

Before 20 years old, be a good student.
Before 30 years old, follow somebody. Go to a small company, you learn the passion, you learn to dream. It’s not which company you go, it’s which boss you follow.
Between 30 and 40 years old, work for yourself. Time to be an entrepreneur.
Between 40 and 50 years old, do the thing you are good at. It’s too late to do something new.
When you are 50 to 60 years old, work for the young people.
When you are over 60, spend time for yourself. Go to the beach!

But when you are 25, make enough mistakes. You fall, you stand up, you fall, you stand up.

A few lessons from disruptive innovators

Leave a reply

My friend Jean-Jacques (thanks :-)) sent me a link about the CNBC Disruptor 50, a list of 50 “private companies in 27 industries — from aerospace to enterprise software to retail — whose innovations are revolutionizing the business landscape”. One could criticize the method, the fields, what is disruptive and what is not, but the list is by itself interesting. And I have done a few quick and dirty analyses. (I mean by Q&D a very fast analysis on the age of founders based on available data – their age or the year of their bachelor – my full analysis is available at the end of the post)

I found the following:
– Disruptive innovators are young (33 years-old)
– They raise a lot of money: more than $200M!!!
– and yes, they are mostly based in Silicon Valley.

Disruptive innovators are young

The average age of founder is 33 (whereas the age of founders of start-ups is closer to 39 – see my recent post Age and Experience of High-tech Entrepreneurs). As it was the case with that general analysis, founders in biotech and energy are much older than in software or internet. This was something I had already addressed in that paper: disruption might be the field of young creators.

They raise a lot of money

A really striking point is the amount of money raised by these disruptive companies. With an average age of 6 years, these companies have raised on average $200M… In energy, it is more than $400M and even more than $250M for the internet.

Silicon Valley leads

Not surprisingly though, Silicon Valley seems to be the place where to be. 27 companies are based there (a little more than 50%). It is also where they have access to the most capital ($280M on average). Then comes the East Coast (25%). Surprisingly they are based in NYC, not in Boston anymore when East Coast is concerned. Only 3 are Europeans… (Spotify, Transferwise and Fon) even if a few Europeans have also moved to SV…

Here is my full analysis which as I said before might contain mistakes (particularly on the founders’ age…). You might also disagree with my field classification…

click on picture to enlarge

Age and Experience of High-tech Entrepreneurs

Leave a reply

Every other year I go to BCERC, an academic conference about entrepreneurship. Not only to listen to researchers but also to add my own contribution. (You can find my previous contributions with tag BCERC). It’s also a way to confront and share ideas and results with others. This year, I wrote a short paper about Age and Experience of High-tech Entrepreneurs. The slides are available on slideshare and here they are:

Age and Experience of High tech Entrepreneurs from Herve Lebret

The paper is available on SSRN. Why did I do this, well, you can have a look at the slides or even read the 15-page paper. But my point was to react to recent claims that high-tech entrepreneurs are on average about 40-year old. I was surprised and did my own analysis based on about 570 founders… and yes, the average age is about 38. But… the devil is in the details. It is sector-, time-, region- dependant. And even more surprisingly, the higher the value creation, the younger the founders. here are just a few tables as a quick conclusion…

Lessons from Billion-Dollar Start-Ups: Unicorns, Super-Unicorns and Black Swans.

Leave a reply

A couple of colleagues informed me about Welcome To The Unicorn Club: Learning From Billion-Dollar Startups by Aileen Lee. I understand why. The article is closely connected to some of my main interests: high-growth start-ups and dynamics of entrepreneurs. Aileen Lee has analyzed start-ups in the Software and Internet fields which have reached a billion-dollar value while being less than 10 years old. She calls them Unicorns, whereas Super-Unicorns are companies which reached a $100B value!

All this reminds me of my analysis of 2700 Stanford-related start-ups (you can check Serial entrepreneurs: are they better? as well as High growth and profits) and to a lesser extent about the link between age and value creation: Is there an ideal age to create?

Aileen Lee has interesting results:
– out of 10,000+ founded companies per year, there are 4 unicorns per year (39 in the last decade – that is .07% of total) and about 1-3 super-unicorns per decade,
– they have raised more than $100M from investors (more than $300M for consumer-related). They may have been lean in their early days, but they grow fat!
– it takes 7+ years for an exit,
– founders have an average age of 34,
– they have 3 co-founders on average with a long experience together, often back from school,
– 75% of the founding CEO lead the company to an exit,
– many come from elite universities (1/3 from Stanford),
– pivot is an outlier.

I found this article interesting, important, and I even felt empathy and let me tell you why. We have a tendency to underestimate the importance of hyper-growth and hyper-fast. Growth is extremely important for start-ups; reaching $100M in value is a success. Looking at the small group which reaches $1B and then $100B is interesting. You need money for this (VC), you do not need that much experience but you need trust from co-founders. The founders of super-licorns seem to be the explorer of unknown territories. You need passion and resources.

On Unicorns, I have done a similar analysis in “Is there an ideal age to create?” I also have an average age of 34 for 1st start-up experience of all founders, and regarding Super-Unicorns which I call Black Swans (highly unpredictable outcome according to Taleb), I have identified 10 Super-Unicorns (see below) and there are 1-4 such companies per decade since the 60s. The average age of their founders is 28 and even 27 if I count the 1st experience.

[My Black Swans – Ancestor: HP (1939); 60s: Intel (1968); 70s: Microsoft (1975), Oracle (1976), Genentech (1976), Apple (1977); 80s: Cisco (1984); 90s: Amazon (1994), Google (1998); 00s: Facebook (2004).
Age of founders: HP: Hewlett and Packard (27) – Intel: Noyce (41) and Moore (39) (but they had founded fairchild 11 years earlier). Andy Grove was 32 – Microsoft: Gates (20) and Allen (22) – Oracle: Ellison (33) – Genentech: Swanson (29) and Boyer (40) – Apple: Jobs (21) and Wozniak (26) – Cisco: Lerner and Bosack (29) – Amazon: Bezos (30) – Google: Brin and Page (25) – Facebook: Zuckerberg (20) – Cofounder was 22.]

Now more data and statistics based on the Stanford-related companies. You can have a look first at my past slides and then I look at the Unicorn statistics.

Stanford high tech entrepreneurs-lebret from Herve Lebret

Basic analysis of Stanford-related unicorns

There are 3 super-unicorns in that group (HP, Cisco & Google). Out of 2700, there are 97 unicorns, which is a huge 3%! It probably means my sample is not exhaustive! Indeed Prof. Eesley estimates that 39’900 active companies can trace their roots to Stanford. This means now .2%. Now these are real exits whereas Lee includes private companies with no exit but a value provided by their investors. Whatever the ratio, unicorns are rare. Mine are less fat than Lee’s: they raise $30M with VCs.

I have less than 2 Stanford-related founders per company (but I do not count the ones with no Stanford link. It confirms Lee’s comment that many founders have roots back to school. It takes 8 years for an exit (fewer in recent years though) and 7 years for a graduate to decide about founding a company.

Unicorns and high-value creation is an interesting not to say important topic. Billion-dollar companies are not just a rare event, they tell us something about the impact of high-tech innovation & entrepreneurship. They are possible and desirable!