Tag Archives: Age

Is there an ideal age to create?

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Here is my new contribution to magazine Entreprise Romande, which they entitled “Let the Expression of Energies Emerge from the Youngest Age.”

ER-Sept13-72dpi

In recent years, there’s been a recurrent debate: is there an ideal age to create? I ‘m not talking about artistic and scientific creativity, even if the question deserves a study in itself alone. What artist has indeed produced a major work after 40 years? The Nobel Prize is often awarded for the culmination of a career, but the work had been produced decades earlier. Finally, the Fields Medal, the highest prize in mathematics, is given to individuals who are under 40 years. Is it the same for the creation of business? In a few months, Scott Shane [1], and Vivek Wadhwa [2] have recently denounced the myth of the young under-30 entrepreneur that Silicon Valley would have unduly celebrated. Shane finds entrepreneurial activity twice as much with individuals in their fifties, including in high technology, as with young entrepreneurs. Wadhwa concludes with an average of 40 years for those who succeed.

I will not hide my surprise with these new analyzes because my intuition and my experience made me move towards a cult of youth. In an analysis, – perhaps a little fast-, I had found an average of 27 years for famous entrepreneurs in Silicon Valley (those who founded Intel, Apple, Oracle and other stars of the Internet such as eBay, Google or Facebook ) and even 33 for their famous European counterparts (SAP , Logitech, etc.) The explanation seemed simple: if the experience is an important criterion of success for the management of a company, enthusiasm and energy will compensate for its absence when it comes to breakthrough innovation in markets where uncertainty is greater. In addition, the experience can be provided by surrounding oneself with experienced professionals. Finally one has nothing to lose and family responsibilities are seldom hard to bear when being 20-year old. Enjoy risk-taking as long as you are young!

Age of founders

I decided to do again my own analysis by studying the 500 founders of 200 companies, mainly in the field of high technology in the U.S. but also in Europe. I got an average of 38 years, similar to that suggested by Shane and Wadhwa. But do not conclude too quickly that the debate is over! The devil is in the details… By considering only the first entrepreneurial experience, counting only entrepreneurs who commit their body and soul in the adventure (and not those who are advisers or early investors) it drops to 34 years. There is however a point of agreement between these analyzes: the average has been steadily increasing in recent years.

Age-through-years

I still personally believe that youth is an asset, simply because entrepreneurship is about enthusiasm and energy, and sometimes unconsciousness. Entrepreneurship is not about being young so much as what motivates to be an entrepreneur, is to have certain qualities which, overall , are more often found in young people. Would there be an explanation that bring closer these rather discordant findings? An idea that is dear to me is to see that experience is useful for incremental innovation, where one improves what already exists. Creativity and adventure are related to disruptive innovation, which has created new industries for 50 years (computers, software and biotechnology for example.) Another remark: I think innovation has been less revolutionary in the last 10 years, since the maturation of internet technologies. As a consequence, large companies seem to have taken the hand, as some experts noticed [3].

Last observation: the average age of those who have created exceptional companies (I measure it with higher than $100 billion capitalization) is 27 years. Even the founder of Genentech, the company which was at the origin of biotechnology, was 29 years old. All these companies still had one of their founders as CEO at the time of IPO. The slowdown in major innovations correlated with the increasing age of entrepreneurs could unfortunately be a sign that our world is less creative because older. There is probably no ideal age to create, but we must encourage the expression of enthusiasm and energy from an early age by encouraging creativity, loose from the constraints of experience and knowledge.

References:
[1] Entrepreneurship Is a Midlife Game http://www.entrepreneur.com/article/225843
[2] The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25 http://www.pbs.org/newshour/rundown/2013/04/the-truth-about-entrepreneurs-twice-as-many-are-over-50-than-under-25.html
[3] The Empire Strikes Back. http://www.technologyreview.com/news/426238/the-empire-strikes-back/

On a similar topic, I was a little puzzled by a short article I mention here, from Swiss magazine Bilan. The future, a question of youth (link to French article: L’avenir, affaire de jeunes, by Stéphane Benoit-Godet)

The future, a question of youth
Google wants to extend the lives of people and defeat death. An event that has not been so noticed. Yet it is not only an announcement effect. The possibility of downloading our own memory in thirty years so that a part of us can survive represents a formidable challenge to humanity and creativity.
Is this crap? There are many “deniers of progress”, those who fight in vain their time because they do not understand its implications. There is however an exciting movement in the science that envisions o convergence of engineering, information science and neuroscience.
Patrick Aebischer is a pioneer in Europe with the vision he imposed at EPFL. Others work hard at the convergence of these different techniques to get to the mother of all scientific epics, the understanding of the brain.
If Google decides to work at this breakthrough, we must be interested because the resources the Silicon Valley firm dedicates to its special projects division are enormous. And when it comes to processing data on a gigantic scale, its founders are experts.
Henry Markram who has raised 100 million from the EU for his Human Brain Project at EPFL also fits perfectly in this revolution. What has been made possible here thanks to the will of one man – Patrick Aebischer had a good part of the establishment against him when he arrives at the EPFL – has spread further.
If Larry Page and Sergey Brin, at Google, dare to embark on this adventure, it is because they are immersed in the bath of innovation that is Silicon Valley. The place where are created start-ups that disrupt social interaction (Facebook), technology (Apple), how to learn (Twitter), move (Tesla and SpaceX) or consume (PayPal).
Ironically, the head of that company, David Marcus, a Geneva serial entrepreneur who moved to California, is shaping the future of money when Swiss bankers have never been in such bad shape.
This culture is still missing here. The trigger is perhaps encourage people in their 20s and under to start their own business. As the crazy visionaries in Silicon Valley who have a mission to improve the lives of people, the desire to create and the entrepreneurial enthusiasm could lead to huge success.

When age does not hinder creativity: a rare example in mathematics

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I seldom (but sometimes) talk about Science or Mathematics. Mostly when it helps me illustrate what innovation or creativity is about, and sometimes when I see analog crises in all these fields (see for example the posts on Dyson, Thiel or Smolin). And there is another related point: it is often claimed that major scientific discoveries or entrepreneurial ventures are done at a young age.

YitangZhang
Yitang Zhang

You probably never heard of Yitang Zhang who has stunned the world of mathematics last month by proving a centuries-old problem. He is a totally unknown mathematician and more surprising, he is (over) 50-year old. For those interested in the problem, you can read Nature’s First proof that infinitely many prime numbers come in pairs. Basically, Zhang proved that there are infinitely many pairs of primes that are less than N apart. Mathematicians still dream to prove that N is equal to 2 – the twin prime conjecture -, but Zhang was first to prove that N exists … even if N is 70 million!

French start-ups (again)

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I am attached to France for obvious reasons. And recently, I have read a lot about French innovation. It’s not as bad as the general public may think but it is not as good as I would like. Still there are reasons for hope. Let me comment two recent works:
– an article from Le Monde newspaper, entitled Heureux comme un patron de start-up en France
– a report from OSEO (the French Innovation Agency) which I had mentioned before in You have to go global, and right from the start, but which I had read too quickly!

The article from Le Monde is about French Accelerator Le Camping. The article is optimistic (maybe a little too much), but you should read it if you understand French. What I noticed was:

– “The Hexagon can also count on experienced funds such as Partech (but also Idinvest, Apax) who continued to irrigate the area after the bursting of the Internet bubble in 2000. About fifteen venture capital funds finance about a thousand start-ups and inject 200-300 million euros per year in the digital field, said Philippe Collombel. The French industry is one of the best in the world, judges Christopher Bavaria, president of Idinvest. And there are many areas where a little “Frenchy” managed to make a name alongside the leading Anglo-Saxon player: Dailymotion vs. YouTube, Viadeo behind LinkedIn , Deezer on the heels of Spotify …” I think this is dangerously optimistic but nice! We should not be just a copy-paste version of the USA though.

– “Another asset of the Hexagon: its serial entrepreneurs. The first generation began with the Minitel, has launched the digital era in the late 1990s, and overcame the bubble. They include Marc Simoncini (iFrance, Meetic), Jacques-Antoine Granjon (ventre-privée), Patrick Robin (Imaginet, 24h00), Xavier Niel … Twenty years later, they play the “business angels” for the younger: PriceMinister, Dailymotion, Criteo, or Deezer.” Quite true.

– However, “the Business Angels do not support enough entrepreneurs” […] “There are not enough funds enbling jumping from start-up to that of medium-sized companies.”

[You may also be interested about an analysis of the Acceletor trend from the Financial Times, which is also quite good: Start-ups put their foot on the accelerator. “In the past they could have been labelled an incubator, which is apparently different from an accelerator.” […] “Probably the first accelerator was Paul Graham’s Y Combinator in Silicon Valley. Since 2005 it has fostered almost 500 start-ups, including big successes such as AirBnB and Dropbox.” […] “This method of building new companies at warp speed is fascinating. The philosophy is to try lots of different ideas, fail fast, and pivot if something does not work. I like the sense of urgency, the work ethic, the high-pressure environment that helps drive rapid progress, and the incredible opportunities to network and cross-fertilise.” […] “However, in general, I think start-ups take a long time to become viable – years not months – so trying to achieve so much in such a concentrated period of time feels unrealistic.” […] “There are now an estimated 123 accelerator programmes around the world.” […] “Some veterans think many will close, just as many of the projects they incubate will fail. But all this frantic activity will surely boost entrepreneurship, stimulate jobs, and – in the long run – create wealth, so it deserves applause”]

You can find (in French) the OSEO report by clicking on the picture. I was wrong in my previous post, I learnt a few things! And it has more depth than the good Le Monde article. The first one is about the fears and difficulties of entrepreneurs.


Click on picture to enlarge.


Click on picture to enlarge.

Fear of failing with its attached stigma remains high. Finding customers is the biggest challenge, higher then finding investors. Interesting. Then there is an interesting lesson about the age of founders, which you can compare to an analysis I have made on 165 public companies.


Click on picture to enlarge. Source: personal data

This is a popular topic, and you might read again Wadhwa’s study, his Washington Post article or Is There A Peak Age for Entrepreneurship? I am not sure how to read all this, but I have the feeling there is a tendency to higher age recently… The average age of French founders is 41 whereas the public companies I have have founders with an average of 36.5 (and 34 for the companies founded before 1995).

Finally there is an analysis of “models of development of start-ups”.

The authors compare 2 main classes of start-ups (out of 5), the ones being the most common (classes 3 and 5 in the figure). [Class 4 is more an intermediate status en route to either 3 or 5; class 1 is M&A and class 5 have not developed at all.]

“In class 3, 41% of the total population, companies have a lower level of development because the company is “self-centered”. 50% have no partner, no subsidiary. The project leader is still a dominant position in the capital: 68% have a stake greater than 75% in this class; 1 out of 2 still 50% to 75% of capital.”

“In contrast, firms in class 5, have a proven open behavior. They have opened their capital to have the resources to advance an innovation project. 60% of project owners have less than 25% of the start-up in this class, as well as half of them with between 25% and 50% of the capital. Moreover, almost all listed companies are in this class. 80% of these companies are internationalized (export or implantation).”

“These are companies that have had time to grow: almost half who them are more than 8 years old and almost 40% are between 5 and 8 years old today. The maturity only does not explain, however, their momentum. Indeed, they were faced, too, with problems of redefining their business plans as well as those of class 3, even a little more frequently. However, they saw this less as a constraint.”

“In addition, Class 3 focuses more on public funding which is considered a main lever for growth. The youth of this population and the lower opening of their capital can hypothesize that the public support at the pre-seed and seed stages is an essential substitute to private capital.”

“The statistical comparison classes 3-5 on these variables reveals that:
• The median Class 5 has a higher workforce than class 4, which employs, more people than class 3 (respectively 10, 6 and 4 employees);
• Classes 4 and 5 achieve an identical median turnover (about 580k€) higher than the median Iclass 3 (390k€);
• On the median level of equity, it is still significantly higher for class 5 (409k€) than for class 4 (284k€) and Class 3 (149k€), and more than €1million for the upper quartile of the class 5 only 389k€ for the class 3)”

Of course the conclusion of the report is to encourage the filtering and then development towards class 5. but myless optimistic conclusion is that even class 5 companies are not big success stories…

Biotech IPOs, not so different

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I just read Biotech IPOs Start to Show Some Modest Signs of Life from Xconomy. It’s an interesting article because it focuses on Biotech, a field that many people consider as very different from other high-tech start-ups such as Internet, Software or IT in general. The general idea is that it takes much longer to succeed in biotech. You should read the article if biotech is of interest for you and I will not comment it more than mentioning that the good news is that there have been recent biotech filings and IPOs, the less good news being that the market capitalizations are not huge.

What I am more interested in is updating my regular analysis of start-up data (I have now 131 start-ups; see my latest analysis in March 2012 for example with 116 companies) and see how biotech behaves. Here is the synthesis (if you are interested the detailed list is provided at the end).

So what do I see as specific to biotech start-ups? First it does not take them longer to go public. 8 years vs. an average of 7 years. The difference is not in the exit time. They raise $98M on average, but this does not look so special either. But, and here is the but, their sales are only $11M when they go public. So, it takes them much longer to reach revenues. But it does not prevent them from going public (or even be acquired when they begin to have good results in clinical trials).

Another specific element is about founders. The founders’ average age is 41 (similar to medtech and semiconductor) whereas it is 35 on average. Why is that? because many founders are established, recognized university professors. Often times, they do not work full-time in the start-up but have a role of chief scientist. Indeed, the ownership of founders in the start-up is smaller than average (8% vs. 15%).

I should also add that the founders/employee shares ownership is much smaller too (25% vs. 40%) and the reasons are manyfold:
– founders have fewer shares as I just mentioned
– investors have more equity (50% vs. 45%)
– IPO shares are higher (25% vs. 16%). This comes from the fact (I think) that in order to raise the same amount of money, it is more dilutive for a company with less revenue…
– I did not mention another statistical element, which is they have fewer employees. The detailed table below imples about 100 employees (and you may see many of them have even less than 50 or 20 employees). This induces a smaller amount of stock options… (On average my 130 companies have 500 employees when they go public).

I thought this data was of some interest. Please react or comment!

Appendix: detailed data (notice that I am missing the Amgen data)


click on table to enlarge

Now it’s Yelp! IPOs in 2012… and again founders’ age

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IPOs do not seem to stop in 2012. Now it’s Yelp before Facebook! You’ll find below my usual cap. table format. As with many stories, there is no data on one founder. He left Yelp before the IPO, I am always surprised where there is nothing on him in the prospectus…


The Founders and Their Army Russel Simmons (left) and Jeremy Stoppelman, plus a few of the hundreds of thousands of Yelpers who post regularly on their site. Ref: Inc.

More interestingly is statistical data, that I have updated with now 116 companies. You can check founders’ age, years to IPO or VC amounts relatively to fields, geography and times of foundations. I also add % ownership of founders, employees and investors after IPO.

As a reminder, you can have a look at the full data in the attached pdf (or by clicking on the picture),


Click on picture to access full pdf data

Some final graphical illustrations about
– the age of founders relative to year of foundation

– some correlations (or not) between sales, VC amounts, nb of employees.

More data on IPO and founders.

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Following a recent post on the age of founders, I just did a more systematic analysis on the topic and at the same time analyzed more elements on the cap. table of many companies. I had 47 companies in my previous post. Here I just have 100!

The two tables give the founders’ age, the number of years from foundation to IPO and the founders’ remaining equity at IPO by field and geography.

Now if you want to have a look at the full record, just click on the next picture, you will get a 107-page pdf with all data. But please be aware of some of the following difficulties. All this is best effort! The cap. tables are subject to mistakes and comparisons are tough to make. For example:
– Founders do not always share equally the initial stake.
– There is no real definition of founders but the group of people who recognize themselves as such.
– ESOP reserved for future grants is a quite artificial part of the overall picture.
– When age was not available, a indirect measure was to consider a BS is obtained at age 22.
– Directors include independant directors only, not the investors.
– Finally not all companies went public, some were acquired and some filed but did not go public (yet)

Is there anything worth noticing? Well Biotech/Medtech founders are the oldest whereas SW and Internet entrepreneurs are the youngest. Surprising? Not really, but remember, these are not statistically valid data, this is just a compilation…

Age of founders

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As I just mentioned in my previous post on Carbonite, I promised to have a look at the age of founders again. This follows some challenging comments from Pascale on a recent post, Is There A Peak Age for Entrepreneurship?

I have data, the ones I may bore you with when I publish cap. tables of IPOed companies. Well, the companies publish the age of their officers so when the founders are still active, you can get their age at IPO and getting the number of years from foundation to IPO, you have the founders’ age. Usually, the biographies also give the previous companies founded by these people. So I did yesterday the exercise in two broad groups: companies which went public recently (mostly in the last 5-10 years) and companies which had gone public in the 90s or even before. Just remember that in my book, I had compiled the age of the “famous” entrepreneurs and it was 27.

First the group of recent companies (52 founders from 25 companies):

Then the older companies (53 founders from 22 companies) with the average of the group but also of the two groups at the end.

These are not stats, just anecdotes and you should also see that when I did not have the age, I looked at academic background with the idea that you have a BS when you are 21… So the average is 34, increasing from 33 to 35. Definitely not the 27 I had, not the 40 either claimed by recent analysis. Is the glass half empty or half full, I will let you decide! I still wonder why the big successes seem to induce a lower average (if true!).

A final (and not related comment): “years from foundation to IPO” has increased from 3.7 to 6.8, being 5 overall. Still very far from what I had in Europe, which was closer to 9 or even 10 years.

IPO again: Carbonite is the new star

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I just discovered about Carbonite, one of the companies in The 17 Most Important IPOs To Watch For In 2011. Storage and backup are clearly hot fields in 2011 (just have a look at Fusion-io for example). In the 1st link I just mentioned above, Carbonite is described this way:

Carbonite, the online storage backup for consumers and businesses, has raised roughly $67 million in various venture rounds, while its sales have doubled each year since its launch in 2006. The company claims to have backed up some 80 billion files, with more than 150 million new files backed up daily. It also claims to have restored more than 7.2 billion files that would have been otherwise lost forever. Inc. Magazine placed it as #9 on its Inc. 500 list for 2010 of the 500 fastest growing private companies. With “the cloud” remaining a hot topic and with its annual basic plan starting at less than $55.00 a year, Carbonite should have a solid reception when it comes to market.

So I digged the IPO S-1 document and looked at the company with my usual interest. Cap. table. founders, investors, ESOP. The 2 foudners has 7-8% each pre-IPO, investors 60% and employess the remaining 25%. What might be a little scary though is the lack of profitability. Here it is.

The S-1 also gives the list of selling shareholders.

But following a few exchanges of comments on a recent post, Is There A Peak Age for Entrepreneurship?, I looked at something else, the founders and their age. Here is what the prospectus gives:

David Friend (63) has served as our chief executive officer and as a member of our board of directors since he co-founded our company with Mr. Flowers in February 2005. Mr. Friend also served as our president from February 2005 to September 2007 and again since August 2010. Prior to starting our company, Mr. Friend co-founded with Mr. Flowers and served as chief executive officer and president of Sonexis, Inc., a software company providing audio-conferencing services, from March 1999 through March 2002 and served as a director of Sonexis from March 1999 through August 2004. From June 1995 through December 1999, Mr. Friend co-founded with Mr. Flowers and served as chief executive officer and as a director of FaxNet Corporation, a supplier of messaging services to the telecommunications industry. Prior to that time, Mr. Friend co-founded Pilot Software, Inc., a software company, with Mr. Flowers. Previously, Mr. Friend founded Computer Pictures Corporation, a software company whose products applied computer graphics to business data, and served as president of ARP Instruments, Inc., an audio hardware manufacturer. Mr. Friend served as a director of GEAC Computer Corporation Ltd., a publicly-traded enterprise software company, from October 2001 to October 2006, and currently serves as a director of CyraCom International, Inc., Marketplace Technologies, Inc. and DealDash Oy. Mr. Friend holds a B.S. in Engineering from Yale University. We believe that Mr. Friend is qualified to serve on our board of directors based on his historic knowledge of our company as one of its founders, the continuity he provides on our board of directors, his strategic vision for our company and his background in internet and software companies.

Jeffry Flowers (57) has served as our chief architect since April 2011, as a member of our board of directors since he co-founded our company with Mr. Friend in February 2005, and as our chief technology officer from February 2005 to March 2011. Mr. Flowers co-founded with Mr. Friend and served as chief technical officer of Sonexis, Inc., a software company providing audio-conferencing services, from March 1999 through March 2002 and served as a director of Sonexis from March 1999 through August 2004. Prior to that time, Mr. Flowers co-founded with Mr. Friend and served as chief technology officer and as a director of FaxNet Corporation, a supplier of messaging services to the telecommunications industry, and co-founded Pilot Software, Inc., a software company, with Mr. Friend. Mr. Flowers served as VP of Development at ON Technology Corporation, a publicly-traded software vendor, from June 1994 through February 1996. Mr. Flowers holds an M.S. and a B.S. in Information and Computer Science from Georgia Institute of Technology. We believe that Mr. Flowers is qualified to serve on our board of directors based on his historic knowledge of our company as one of its founders, the continuity he provides on our board of directors, his strategic vision for our technology, and his background in internet and software companies.

Doing simple math (so maybe not very accurate, this would give the following table)

Founder Friend Flowers
Born in 1948 1954
Company Founded at age Founded at age
Sonexis in 1998 50 44
Faxnet in 1994 46 40
Computer Pict. in 1982 34

So it shows that the founders are not young, not even middle-age. They are serial entrepreneurs and probably close friends given the facts they have co-founded 3 companies together and were definitely not in their twenties when they did it. In my next post today, I will come back on the topic.

Is There A Peak Age for Entrepreneurship?

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My friend Jordi mentioned to me the TechCrunch article Is There A Peak Age for Entrepreneurship? where the author writes in conclusion: “Age is only one factor among many to predict the success of entrepreneurs, and anybody at any age can break any molds put forward by “experts.” However, it’s clear that the stories of a few “college-dropout turned millionaire” (or billionaire) startup founders have clouded both the mass media and the tech industry from reality. We have romanticized the idea of a young founder because, well, it’s a great story, but these stories are not the norm. In the end, classic biases of gender, race, and age need to be discarded for a real science of success.”

Well I am not sure I agree so that I reacted and put there the following comment: “It is clearly a recurrent question and I have humbly a tendency to believe that young is better than old. On slide 27 of the pdf you can find on my blog (https://www.startup-book.com/2009/12/16/start-up-the-book-a-visual-summary), there is anecdotal-only illustration that some famous Silicon Valley entrepreneurs (not all of course) were younger than successful European ones. Then, in a more systematic analysis of Stanford alumni, I looked at how many years after graduation people started companies (slide 23 in https://www.startup-book.com/2010/06/18/high-growth-and-profits). The average is about 9 years but of course it includes the multiple companies of serial entrepreneurs. Finally in slide 26, I show that serial entrepreneurs seem to do worse with time. I have more data that show that those who were successful initially tend to do well again and those who did less well do less well again. So?
A couple of additional comments:
– I believe that high-tech is special as uncertainty is higher because of the risky nature of the products and new/emerging markets.
– I agree with some previous comments that experience is to be balanced with energy, ability to take risks and not being too conscious of them.
– Of course age is only one parameter, and there is also wealth, education, energy, entrepreneurial personality.
– Final comments: entrepreneurs and managers are different. Eric Schmidt did not start Google, he was hired in 2001…”