Elders dominate among entrepreneurs
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Kai Ryssdal: Time for a misconception check. If you think all the hot entrepreneurs out there are twenty-to-thirty-somethings with the next big idea and unlimited energy to launch it, it’s time to readjust your thinking. The average tech-company founder is 39. Overall the over-50 crowd outnumbers the under-25’s two to one. From the Entrepreneurship Desk at Oregon Public Broadcasting, Marketplace’s Mitchell Hartman has more on the graying of the entrepreneurial workforce.
MITCHELL HARTMAN: What springs to mind when I say the word “entrepreneur”?
DANE STANGLER: I think we all tend to have this archetype of the entrepreneur stuck in our mind — the Mark Zuckerberg, the Bill Gates, the college dropout who then goes on to make a fortune on a billion-dollar company.
Dane Stangler is a researcher with the Kauffman Foundation in Kansas City. He says that’s more often the exception to the rule.
STANGLER: Under the radar is the invisible trend of entrepreneurial activity. We’ve got this aging population. We have lots of entrepreneurs who fall into those older age groups.
People like David House. He’s 60, and lives up a dirt road in Aurora, Ore., in a home he designed himself.
DAVID HOUSE: There’s 11 tillable, and then back here we have maybe six acres of woods.
House describes himself as a life-long entrepreneur. He’s started several computing companies. He ran a medical-device company until it hit financial troubles two years ago.
HOUSE: When you get to this age, I think it’s important to have had the habit of evaluating, “What have I got that’s an opportunity in the making?”
Maybe raising veggies on his 20 acres?
HOUSE: It’s an excellent way to lose money.
What about the energy research he did back in the 70s?
HOUSE: Some decades ago I wrote a book about biogas production. This book amazingly has turned out to be the most complete reference about that somewhat obscure form of alternative energy. One of my sons then looked on Amazon, he saw the book was selling for $140. So we thought, “Well gee, maybe here’s an opportunity.”
House now has a biofuels consulting business. He just evaluated a project in India. The book is back in print, and selling well online.
The Kauffman Foundation says entrepreneurs aged 55-to-64 have founded new companies at nearly twice the rate of 20-to-34-year-olds. Of course, not every 60-something is like David House, with a promising green business up their sleeve and the energy and drive to launch it.
Benjamin Jones studies aging and entrepreneurship at Northwestern University. He says the young tend to be more willing to take risks and challenge existing paradigms.
BENJAMIN JONES: With a number of entrepreneurial enterprises you see young people who have great ideas. They’ll be much more open to trying something brand new.
Jones says young innovators have led the way in Internet search and social networking — think Google and Twitter. That’s in part because information technology doesn’t take a huge amount of upfront knowledge and education to master.
But he says that’s not the case in advanced fields like biotech, nanotech, and aeronautics. Here, older people have a leg up.
JONES: To get to the frontier in those fields where you can have the next big idea requires much more study now than it used to. In a way, what’s happening is we’re favoring people in their middle age, who have experience enough to get to the knowledge frontier, but are still perhaps nimble enough and flexible enough and have the cognitive capacity that gives them an advantage.
A head full of gray hair, in other words, can offer an edge in entrepreneurship. Researcher Dane Stangler says, boomers have other advantages as well: cash and contacts.
STANGLER: People in their 50s and 60s, even today with the decline in aggregate wealth, they do have a larger capital cushion. But more than that, you have a much deeper network of people to draw on.
And Stangler says those factors are even more important in this recession. Any venture that’s going to make it, will need some cash reserves. Plus, an experienced management team that’s “been there, done that,” at least once or twice before.
I’m Mitchell Hartman for Marketplace.
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