Friday, May 11, 2012

Entrepreneurs, The Clock is Ticking on Your Career


"You have less time than you think," I tell entrepreneurs.

From the time I was a kid, I've been obsessed with age and mortality. Unlike most of my peers, I was convinced that childhood was going to be the best, most carefree years of my life, and I remember thinking at age 11, "Well, at least I had a good run."

I've had some pretty good years since then, but my obsession with time remains, which means I've thought pretty carefully about the entrepreneurial career.

You see, most of us think something along these lines:

"Retirement is a joke, and Social Security is a punchline that will never come. Forget 65, I'll probably still be working at 75."

As a result, we view our careers as starting in our 20s, growing in our 30s and 40s, peaking in our 50s, and slowing winding down after that. This might be true of traditional careers, but it isn't true for entrepreneurs.

The scary thing is, if you're an entrepreneur, your days of starting companies from scratch are probably over by age 45.

I'm not happy about this; in fact, that particular deadline will loom in my career all too soon. But it's based on a realistic assessment of the Silicon Valley ecosystem.

Like it or not, the startup world is full of a pervasive and unacknowledged ageism. I'll spend more time on that topic in a later post, but I'll provide three telling data points:

1) At my recent Reverse Demo Day, one of the entrepreneurs in the audience asked the question, "How do you feel about older entrepreneurs?" The answer he got from an angel was, "We love older entrepreneurs. Some of our best entrepreneurs are in their 30s." And he wasn't kidding.

2) A recent article about Splunk's IPO focused on the extreme age of its venerable CEO, Godfrey Sullivan. "Splunk CEO Twice Zuckerberg’s Age," the headline screams. The entire focus of the article is on his anomalous age...58. One of his (younger) friends comments, "“You’d think he was 35, taking his company public. He is so energetic after all he’s done in his career.” In other words, we should be shocked that he's vibrant rather than doddering.

3) In this great post from Adioso founder Tom Howard, he writes: "It was now my 34th birthday. I was already on the old side for a startup founder. Wait till 37 or 38 then start something new? That was no age to be starting again."

One some level, I always knew this. I'd worked with a number of CEOs in their 50s during my career, and almost all of them saw the gig as their last before retirement. But what ratcheted up my fear to the next level was this realization:

If you wait until your mid-50s to make the transition to venture capitalist, you're probably too late.

Like many entrepreneurs, I always viewed venture capital as the appropriate retirement plan. It's prestigious, reasonably lucrative, and most importantly, fun. The problem is, if you want to join a VC fund as a General Partner, you need to convince your fellow partners (and even more importantly, LPs) that you'll be going strong for the entire 10+ year life of the fund. Not many folks are willing to take a chance on newly minting a GP at age 55.

Sure, we're surrounded by VC legends who are well past that age (think Don Valentine, Dick Kramlich, and Bill Draper, among others), but none of them started after the age of 55.

Unless you've hit a home run with one of your startups (which, incidentally, eliminates the need to worry about money again), you'd better start that VC transition before you turn 50.

And that means that you'd better not start a company (which is generally at least a 5-year commitment) after you turn 45.

Scary? Yes. Discouraging? Yes. But not as discouraging as discovering too late that you've missed your chance.

Samuel Johnson was reported to have said, "Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."

I've told you when your career will hang. It's probably sooner than you thought. Concentrate your mind, and make the most of the time you have left.

6 comments:

Rex Hammock said...

Your theory is interesting, but it is based on your experience of a small sub set of startups (venture-backed internet-enabled companies), in a certain region in a highly publicized segment of the nation's overall economy.

However, when it comes to the larger economy, according to the Kauffman Foundation (who has lots of research on the demographics of entrepreneurs), the average age of an entrepreneur is 39 and there are 2X the number of entrepreneurs over age 50 than under age of 25.

In some industries, age matters. A decade or two of developing the network of decision makers who can facilitate a roll out of a new product (or concept) is more critical than the cool idea in some industries.

That said, other than the ageist context of your advice, I agree with it.

Now is the time to start -- no matter what your age.

Likewise, now is the time to realize that life is short -- so perhaps you should also start living, and not just working, also.

Chris said...

Rex,

You're absolutely right that this advice is extremely specific to Silicon Valley. In the broader world, 45 is viewed as being in the prime of one's career.

Personally, I believe that one is better equipped at 45 to start a company than at 25, but I'm known for being an eccentric. For the past two years, I've been advising one Internet entrepreneur who's in his 70s. Ageism makes his job much more difficult, but he's determined to succeed.

It's also important to avoid the deferred life plan. I've pointed out in the past that entrepreneurship is unlikely to lead to wealth, so you should only do it if it makes you happy:

http://chrisyeh.blogspot.com/2010/07/entrepreneurship-is-about-happiness-not.html

goodcoffeegoodcode said...

Nice article. I think the scope of this is isolated to Silicon Valley though. Not all startups are created by hipsters that offer the latest photo app or coupon buying deal. There's plenty of stats that show more startups are created by under 30s BUT those started by over 30s are much more likely to survive past the 2 year mark. However, we should always keep an eye on the clock and never assume we have enough time!

Fred Ducrot said...

Hi Chris,

I think that your article is great. Like Rex I believe that being older is a true asset for starting a business:

- Your concept (it's my case) may come from your own career and experience. That requires from you to be slightly older.

- You can leverage on your experience to ensure that your business will work. As we all know without great execution your business may never take off. Efficient execution comes often from years spent dealing with customers, running projects, developing commercial and marketing strategies. This ensures that you rely on yourself rather than other people to run what is in the end YOUR business.

I did write an article on this which received great feedback both on my blog and on linkedin. Please have a look. I'd be interested by your views on this.

http://fredducrot.tumblr.com/post/18786293408/too-old-to-become-an-entrepreneur

Finally I will also argue that you advocate for a very U.S/Californian view of entrepreneurship. From a European standpoint, age, maturity, experience - whatever you call it -- is definitely being viewed by investors as a plus when you present a project and thus increase your chance to get funded and/or provided with financial means to get started.

Cheers

Fred

Gord said...

Noam Wasserman just came out with his book The Founder's Dilemmas and he's done a massive amount of quantitative research on this question (10,000 founders strong).

From his HBR article "Don't Wait Too Long to Become an Entrepreneur"

"Entrepreneurs are more effective at building ventures from scratch once they have attained a certain level of maturity and self-knowledge, but they can achieve this without spending most of their working lives in corporate jobs. In my research on thousands of founders of high-potential ventures that had succeeded in raising capital from professional investors, 76% of founder-CEOs had worked for 20 years or less before founding their first ventures -- they had made the leap by the time they were in their early 40s."

Wasserman talks about the issue of when to found (if you should found at all) in his book under the section "Career Issues".

His research:
http://founderresearch.blogspot.com/

The book:
http://www.amazon.com/gp/product/0691149135/

And the HBR article from above:
http://blogs.hbr.org/cs/2008/09/dont_wait_too_long_to_become_a.html

He covers a really impressive breadth and depth on entrepreneurship. Great reading.

Chris said...

goodcoffee,

This is definitely a Silicon Valley-centric article. I do think that there are many reasons why older entrepreneurs are more likely to succeed, but they do face ageism on the part of investors (who, ironically enough, are closer to them in age than to the 20something entrepreneurs the investors seem to prefer).

Fred,

It's pretty amazing that in Silicon Valley, experience often loses out to inexperience. I think the issue arises from the fact that many VCs are outside the target demographic of consumer internet products. They are forced to rely on external markers rather than their own product instincts.

Gord,

I've been a fan of Noam and his research for years. The fact that it backs up my point is a bonus.

I actually got a chance to meet Noam at my last HBS reunion in 2010. Cool guy.