Commercially viable daydreams versus distracting fantasy

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com

When is the best age to become an entrepreneur and create a new company?

Experience often matters, though not always:

The collective summary of their learnings is: the average entrepreneur is 40 when they launch their startup. People over 55 are twice as likely as people under 35 to launch a high-growth startup. The average age of a successful startup with over $1 million in revenues was 39. Age was less of a driver to entrepreneurial success than previous startup and industry experience.

Examing the age of a few successful entrepreneurs when they launched their companies shows it runs the gamut. The ages, from youngest to oldest: Facebook (20), Microsoft (20), Apple (21), Google (25), Twitter (30), Amazon (30), Tesla (34), Oracle (35), Netflix (37), Zynga (41), Walmart (44) and McDonald’s (53). Experience is a key driver for many of these entrepreneurs but is not required, as seen in the success of Facebook, Microsoft and Apple.

Over the last few decades, as things have gotten worse and worse for young people, there has been an almost concerted effort to create a counter-narrative. Movies like Social Network suggest that it is normal to create a a business when one is in one’s twenties, but in fact that is very unusual:

How old do you think someone should be for the best chance at entrepreneurial success?

If you said 20, or 22, or 25, you are not alone.

It wasn’t that long ago that age signified wisdom. But in the last decade Silicon Valley routinely, even systematically, has overlooked the old in search of the youthful.

…My colleagues and I did a study, funded by the Kauffman Foundation, that surveyed 500 successful high growth founders. Against all stereotypes, we found that the typical successful founder was 40 years old, with at least 6-10 years of industry experience. Twice as many successful entrepreneurs are more than 50 as under 25.

You may say, “Ok, but when it comes to disruptive, billion dollar Internet ideas like Facebook, surely the young must have a leg up on founders with gray hair!”

Let’s take a look at some recent analysis by Aileen Lee of seed stage fund Cowboy Ventures. She studied U.S. software start-ups that sold for billions of dollars over the last decade, which she called “unicorns.”

“Inexperienced, twentysomething founders were an outlier,” explains Lee. “Companies with well-educated, thirtysomething co-founders who have history together have built the most successes.”

For my part, starting in my late teens I became aware that I had two types of daydreams:

1. Commercially viable daydreams

2. Distracting fantasy daydreams

(For #2 I originally wrote “escapist fantasy” but obviously escapist fantasy can be commercially viable — see every Micheal Bay film ever.)

The commercially viable daydreams were anything I could turn into a product: an idea for software, or an essay, or a book, or a design.

The distracting fantasies were the ones which catered to my ego in some way. And they were distracting, they did not focus me on work, instead they took me away from work.

As I’ve gotten older, the percentage of my daydreams that are commercially viable has gone up (with an exception for the era after my father died, when I was grieving and all of my daydreams were escapist in a distracting way).

It’s possible that I am now less fundamentally creative than I was when I was younger, but in terms of ideas that are commercially viable I know that I am much sharper than I ever was before.

Torrance is the researcher who over the last few decades has transformed the way people think about creativity. In one study he gave a tube to people of different ages and asked them what the tube could be. Children were factories of ideas: it’s a canon, it’s a bird house, it’s a telescope, it’s a breather. Adults came up with less ideas. So in that fundamental sense creativity declines with age. But in terms of commercially viable ideas, experience is a great help.

I’ll point out to that Drucker insisted that most entrepreneurs sabotage themselves. I suspect that this kind of self-sabotage declines with age. We learn our own vices, and we learn counter-strategies. We gain wisdom in the fundamental sense. As I wrote back in 2008:

Peter Drucker, perhaps the greatest business guru of the 20th Century, once remarked that innovators are often disappointed by the manner in which their innovations become popular. In his 1985 book, Innovation and Entrepreneurship, Drucker relates the story of Alfred Einhorn, who invented Novocain, which then became popular with dentists as a local anesthetic. Einhorn held a contempt for dentistry, since it represented such a small niche of medicine. He felt that Novocain should be used by surgeons for all forms of surgery, and so he waged a campaign against the use of Novocain by dentists. In the end, his innovation was successful despite him, rather than because of him. According to Drucker, this pattern, where a product or service is undercut by the entrepreneur who is trying to promote it, is extremely common.

When I first read Drucker’s book I found it hard to believe that an entrepreneur would actively sabotage their own innovation. However, having now spent several years working with startups, I’ve seen that it is, indeed, a common pattern. Many entrepreneurs starts websites at least in part because they consider themselves uniquely creative and insightful, and they want the whole world to see them as they see themselves. The website they launch proves them wrong: their insights are proven false, what works in the end is something unexpected. For instance, in 1992, when Bo Peabody launched Tripod, he was thinking that the site would offer content aimed at college students. His idea failed. The company was saved because some of the programmers at the company had started a side project that allowed anyone to create their own web pages. This then became the future of the company. In his book, Lucy or Smart, Peabody says it is important to be smart enough to know when you are getting lucky. And then, you have to be willing to accept that luck. This takes humility. What’s needed in an entrepreneur is emotional resilience, the kind of strength that allows for openness to the unexpected.

Twice now I’ve seen an entrepreneur sabotage their own website because it became successful for what they felt were the wrong reasons. This emotional resistance to success is nearly always inspired by one of two factors:

1.) The success is with a small niche. The startup was suppose to grow till it was larger than Google, and success with a small niche is, therefore, extremely disappointing. The niche might be big enough to potentially generate several million in revenue, but it won’t ever be enough to catch up with Google.

2.) The success is of a conventional type and, therefore, the entrepreneur regards it as boring. Perhaps the site was suppose to pioneer an altogether new style of interaction among humans, and instead the part of the site that becomes popular is of an old type – for instance, the blog on the site becomes highly successful. The entrepreneur is then disappointed, maybe even angry, to be the owner of a boring success.

Here then, are some fatal traps to avoid. Without open mindedness about the type of success you may encounter, your startup is doomed. And without humility about the limits of your knowledge, your startup is doomed.

What I see then are several forces in the human mind that need to be balanced for success. The creativity is youth is great, but the ability to avoid self-sabotage is also great. Creativity declines with age, but the ability to avoid self-sabotage increases with age (not in every case, and the exceptions are often infamous, but as a general rule, I think this is right). And so there is no perfect age to start a business, but perhaps a slow advantage over time to those who can avoid self-destruction.

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