Tech Entrepreneurs: Older Is Better

People often have the wrong reasons for doing one task instead of another.

THE STEREOTYPE of the successful tech entrepreneur is of someone who’s brilliant, hip, and young. But a working paper suggests that the most successful entrepreneurs are older—generally in their 40s. The paper’s authors include Benjamin Jones, professor of strategy and entrepreneurship at Northwestern University’s Kellogg School of Management in Evanston, Illinois; Pierre Azoulay, professor of technological innovation, entrepreneurship, and strategic management at Massachusetts Institute of Technology’s Sloan School of Management in Cambridge; J. Daniel Kim, a PhD student at MIT; and Javier Miranda, principal economist of the U.S. Census Bureau in Washington, D.C.

The researchers correlated tax-filing data, U.S. Census information, and other federal datasets to create a list of 2.7 million company founders who had hired one or more employees between 2007 and 2014. They discovered that these founders had an average age of 41.9 years; founders of new technology ventures with fast growth had an average age of 45 years. Further, they discovered that the leaders of companies that had been successful by one of two measures—going public or being acquired by another firm— were likely to be about 46.7 years old on average.

A 50-year-old could be twice as likely to hit gold as a 30-year-old.

While younger entrepreneurs might have the energy and digital savvy to lead revolutionary tech startups, the researchers point out that older founders have better leadership skills and more experience solving problems. When founders have at least three years of experience in industries where they are launching new businesses, they are twice as likely to have what the authors call “a one-in-1,000 fastest-growing company.”

These findings suggest that venture capitalists who only bet on entrepreneurs in their 20s might be missing out on some potentially world-changing ideas—and when these startups never get launched at all, everyone loses.

To see an interactive graphic that calculates which age group is more likely to found a successful startup, visit insight.kellogg.northwestern.edu. Find “How Old Are Successful Entrepreneurs?” under the “Research” tab.