Entrepreneurship - a matter of age?

Dr. Edward Rogoff

Professor, Long Island University Brooklyn School of Business

You are researching global entrepreneurship. Is there a correlation between the age of the founder and the success of a new business?

Yes, there is. The older the entrepreneur is when they start their business, the more likely they are to be successful. Some people may consider this a “shocking” finding but actually, when you think about it, it makes sense.

What entrepreneurs need is a network, resources, experience and knowledge. All this accumulates with age, so it only makes sense that older entrepreneurs are more likely to be wiser and more fit to take on a venture and to be successful with it.

Does this apply the same for both the developed and the developing world?

I don’t see a difference. It’s a good question. I don’t think anyone has really dug into these differences. One of the central conclusions of the global entrepreneurship monitor research is the distinction between the “have to’s” and the “must haves”. The entrepreneurs who are starting a business are doing this out of choice. They could get a job but they decide to start a business and those who can’t get a job also start a business. So, I think in the less developed world you are going to have more necessity driven entrepreneurs, as a general rule necessity driven entrepreneurs start smaller businesses.

Is there a specific industry or domain where older founders are more likely to start their business?

I think social ventures automatically increase with age dramatically. Over the course of their career, which was first motivated by earning money or building a business, they always maintained in the back of their minds an interest in a social cause. It’s like “If I were rich, I would start a business that helps children with learning disorders, if I had the time, I would like to help people who have mental illness.” They kept this in mind, maybe in some form they’d even been active in that field but they’d not been able to dedicate the necessary time and resources to it. But when they’re more secure financially, more secure personally, they realize more and more that they are running out of time to ever actually do this. If they engage in a social venture, I think it’s a beautiful thing. It’s like you know this is a deep felt, hard felt cause: I may have liked working in business, I may have liked making money, I may have liked something that was really simply just commerce, but something that has a purpose, that really is close to my heart, is a highly motivating satisfying undertaking.

Are there countries where senior entrepreneurship is more common?

I haven’t observed anything pointing to specific countries. I think there is a greater appreciation in Europe. I think here in the US, when people see somebody starting a venture at an older age, they discuss it like it’s somebody who refuses to obey the laws of biology and is starting a business at the “advanced age of 66”. It’s silly, as at the same time the supermarket next door has employees aged over 65 and no one makes any observations about that.

So, you appear a bit shady to others when you start a business in retirement age?

I think that’s right. It is like “didn’t this woman develop any hobbies during her life, starting an ice cream-store at 70?” But: She may have hobbies, but she also wanted to do this.

Looking at the labor market, data shows that well managed age-diverse teams are very productive / successful. Is there any data on the success of age-diverse founder teams?

I haven’t observed that in the data available in the US. It’s interesting, we progressed into a world where diversity, equity and inclusion is the holy trinity of human resource management. And non the less, older workers somehow don’t fit in. I have not seen a single case where older team members have been lauded for adding a valuable element of diversity to their team. I think this diversity, equity, inclusion topic is focused on ethnic and gender issues, not on age. It would be better if it were.

What is your advice for starting a business in later life?

As a person gets older, their financial risk tolerance goes down, as it should. You shouldn’t “bet the ranch” on a business when you’re 75 years old. It’s not financially wise and it’s also not necessary. My advice is to diversify the financial risk as you get older, you know, the same way you would manage a financial portfolio. When you’re 25 years old you can bet the ranch, if you lose the ranch, you know you have got a lifetime to get a new ranch. But when you’re 75 years old, look for financial risk mitigation strategies that are available and look for partners. If you build the business and you have a good network, and you have a good resumé which supports what you are going to do - as you get older it’s going to become easier raising money. So, what I would say is, as you get older, be more financially cautious.