Are older entrepreneurs more successful?
At 19, Ritesh Agarwal left India Inc stunned when he launched . When he was 17, he backpacked across the country. His experiences and difficulties in finding accommodation ignited the idea for his business.
Indian IT entrepreneur Suhas Gopinath, CEO at the age of 17, will probably hold his record of being the youngest CEO in the world for a very long time.
Founder fever is now a global wave. India is the latest addition. In a culture which has traditionally prized the job security over high-risk career adventures, it is now commonplace to hear versions of the startup dream across generations of professionals. This is particularly true, as it is in other countries, with the youth. We are amazed by these young entrepreneurs and harbor a celebratory fascination for them.
But the issue of contention is — can these super young entrepreneurial success stories be replicated by other young people?
This question becomes immensely relevant to India’s demographic discussions because 65 percent of our population is under 35 years of age. We are at a critical state where young aspirations have to be met, be it job aspirations or entrepreneurial goals so that we make the most of the demographic dividend that we have. Twenty-five percent of individuals belonging to the age group 18–24 years carry entrepreneurial intent, says the Global Entrepreneurship Monitor 2013, India Report.
Can their intentions be converted to active entrepreneurship and successful businesses eventually? Can they take inspiration from the success stories like those of Agarwal and Gopinath?
To answer this question, we are attempting to evaluate the young entrepreneurs, below the age of 25 years, as against the matured, entrepreneurs above the age of 35. The core difference lies in the experience that this two carry, says Prof. Mathew J Manimala, former faculty IIM Bangalore, an expert in entrepreneurial studies.
He says, “It is an individual’s experiences that kindle ideas. The ‘encounter with a phenomenon’ is what results in entrepreneurial ideas. But the chances that you will encounter a market relevant idea are high when you gather experience through which you gain insights into what the market needs.”
Notably, Agarwal of OYO Rooms did ‘encounter a phenomenon’, but that came through his experience in traveling, around which he built his business.
A study supported by the Kauffman Foundation, that surveyed 500 founders of high growth businesses found that “the typical successful founder was 40 years old, with at least six-10 years of industry experience” and that “twice as many successful entrepreneurs are more than 50 as under 25”.
An article in Forbes by Krisztina Holly cites that “have shown that for entrepreneurship, unlike typical markets, information networks are inefficient; this means founders identify different opportunities based on their unique prior knowledge”.
Prof. Manimala says from his research and observations over the years that entrepreneurs who are above the age of 35 are more likely to establish successful long-term businesses.
He says, “There are three factors that are the cornerstones of an entrepreneur’s success — quality of ideas, financial resources and network. The matured entrepreneur has more leverage in these than the young. The young entrepreneur would just be out of college, often a technological genius but not business minded, without much financial support nor connections in the industry. The lack of these factors makes it difficult for him to convert his entrepreneurial intent into a business.”
For an entrepreneur who is above 35, he would have committed mistakes, failed and learned his lessons through his experience. He would have established his networks that can be leveraged, be it as mentors or as investors. While the young entrepreneur would find it difficult to pitch his ideas to investors, the older entrepreneur has a proven professional background that adds to his credibility.
Coming to the aspect of risk — Do you think the young entrepreneur will be able to take more risks than the matured entrepreneurs? The popular fairy tale perception is that the young entrepreneur is free of financial commitments and can take all the risks to go the entrepreneurial way. Grand myth.
The young entrepreneur perceives entrepreneurial risk as more perilous than the matured entrepreneur. The matured entrepreneur tends to have a more favorable perception of risk. He would have a fairly stable financial condition from which he can draw funds for his venture or even feel comfortable about courting the risks of entrepreneurship.
This contributes to the fact that more individuals above the age are more likely to become entrepreneurs than the youngsters under the age of 25. We have also seen that high-growth startups are usually founded by older entrepreneurs. Be it the new-age successful entrepreneurs like Suchi Mukherjee of Limeroad or Deep Kalra of MakeMyTrip, or veterans like Narayana Murty of Infosys or Subroto Bagchi of Mindtree, they all invested a considerable number of years into their careers before plunging into entrepreneurship.
The advantage that a young entrepreneur would carry is that of higher energy and ability to burn the midnight oil compared to that of a matured entrepreneur. But the matured entrepreneur would know how to efficiently and smartly use his time. When the young entrepreneur works hard, the older one works smart. And this comes with experience. Creativity is known to spike at this age and when you couple that with resilience, productivity and being organized — you have a potent combination.
Adeo Ressi of The Founder Institute confirms this saying that the older entrepreneur would have completed various complex life projects, including that of building a house and raising a family, which makes him more resilient. He is also capable of identifying and addressing more realistic business opportunities.
Whitney Johnson, a leading management thinker, writes in HBR that entrepreneurs get better with age. He says middle age in entrepreneurship is not about stagnation but of creativity and great commitment as they want to make their lives count.
How can young entrepreneurs make up for their lack of experience that comes with age? Obviously, if you have encountered the big opportunity and phenomenon at the age of 20, you cannot be waiting until you turn 35, gain experience, and then start your business. The smart solution for this will be to get mentored by experienced entrepreneurs and investors. Also importantly, young entrepreneurs should choose employees who can match their passion with experience. Once the experience gap is filled, opportunities are promising for the fiery young entrepreneur.