I almost wish now that I hadn't cut this footnote from Startup = Growth:
Failure to distinguish between startups and ordinary
companies is the source of the news stories we see
every six months or so announcing the discovery that,
contrary to popular belief, most entrepreneurs are in
their forties.
While I can appreciate the difference in definition between a made-to-scale startup and a more traditional business, I disagree that the former is "an entrepreneur" and the latter isn't. In fact, I'd argue that, if anything, it's the opposite. An entrepreneur builds a sustainable business. A "startup founder" is trying to strike oil.
These are very different things with different skills required, but, as the startup founder is the new thing here, it should get a new word instead of trying to force an existing, understood term to have a new meaning and just causing a lot of confusion as a result.
If ordinary company founders are not excluded, then distinguishing between startups and ordinary companies would not change the fact that most entrepreneurs are in their forties. If it's a distinction without a difference, why distinguish?
I'm not sure I understand you correctly, but he's saying that startup founders tend to be young, probably due to the risk profile of startups vs small businesses. Entrepreneurs as a whole (a much larger group) may well be in their forties on average, though.
Edit: Does anyone happen to know the success rate (for some definition of success) for restaurants?
I thought the Kaufmann survey covered tech entrepreneurs specifically? How would those companies not qualify as startups?
Isn't it possible that due to the way YC is structured ($18k of funding for 3 months where you have to relocate to the Bay Area), your sample is strongly biased towards younger founders, and that the median age for a successful startup founder is actually 40 or older?
That doesn't really answer my question. Your original comment makes it sound like you don't know if the Kaufmann survey includes fast-growing companies, so you've assumed that it doesn't because then startups are often founded by people who are aged 40 and that contradicts your personal experience.
Sure it does. Your question was how could companies founded by "tech entrepreneurs specifically" "not qualify as startups?" I explained that you were making the common mistake of assuming that all newly founded technology companies were ipso facto startups. In fact the test of a startup is growth rate, and while technology is a common means to that end, there are plenty of companies working on technology (for example, consulting firms) that don't have rapid growth.
Obviously my knowledge of startups isn't limited to those we've funded.
If you're really interested in the question of successful founders' ages and not just using this as an excuse to argue with me, you can learn a lot from publicly available information. Make a list of the most successful startups of recent times, and find the average ages of their founders. E.g. what was the average age of the founders of Microsoft, Apple, Yahoo, Google, and Facebook?
Paul - You are certainly describing something important but your narrower definition of startup conflicts with the prior definition as being a company that is searching for a repeatable and scalable business model (http://steveblank.com/2010/01/25/whats-a-startup-first-princ...). I am doing exactly this but I won't gamble on seeing growth sufficient to interest a VC.
What you seem to have identified in 'Startup = Growth' is a subset of the startup ecosystem more akin to 'wildcatting.' Both wildcatters and the ventures you seek risk capital from domain experts. These wildcatting risks and rewards are huge as you know better than most.
Maybe a more dignified word than 'wildcatting' can be found but 'startup' is taken.
I guess I'm unconvinced that using the top 5 or 10 consumer Internet startups is a good sample. But I take your point about arguing, and I'll poke around for some reliable data.
EDIT: So I looked at the actual Kauffman survey that everyone keeps referring to [1] to see how they selected the participants. The study was done in 2008, and here's how they selected the tech companies they surveyed:
To answer these questions, we surveyed 652 U.S.-born chief executive officers and heads of product development in 502 engineering and technology companies established from 1995 through 2005. These companies, identified from an existing dataset of corporate records in Dun & Bradstreet’s Million Dollar Database, have more than $1 million in sales, twenty or more employees, and company branches with fifty or more employees.
It seems then that the worst-case scenario here would be a company that's 13 years old and has $1m in sales. If you assume a starting revenue of $1000 / month that you mentioned in your recent essay, that's a weekly growth rate of 0.66%, which is pretty anemic by the standards you set out. On the other hand, if you assume that the average company in the survey is eight years old instead of 13, and that they have $5m in annual sales, the weekly growth rate climbs to 1.46%. Still a far cry from 5% weekly growth, but then 5% weekly growth for eight years isn't even remotely possible.
I could be wrong but isn't this whole mass scale "founding" by late teen to twenty somethings a new phenomenon? Yes, Gates, Jobs etc. had founded companies in that age group but it didn't happen at this scale.
Also, I think that this is primarily restricted to Internet where it has become increasingly easy to start new companies, and people create a mobile app and call it a "startup". Telecom and Semiconductor companies are still founded by more experienced people, though I don't have age data.
I'm not sure if you meant it that way, but personally I found your comment a little condescending towards people in their forties, and I'm one of them having just crossed over the threshold.
As people in their youth have done amazing things, so have people in their mid to late years, and its more about attitude than age in my very humble opinion.
There's a huge myth about Japan in that many people believe that salary men work insane hours out of dedication to their jobs. In reality, there is very little productivity in Japanese corporate offices. While the salaryman might stay for 12 to 13 hours a day, only 4 or 5 is spent actually working -- the other half is spent dicking around. They stay out of a social contract, a culture of not being the first to leave.
I think the kind of startups that we talk about here have a lot in common with the traditional Japanese corporate office culture.
"I think the kind of startups that we talk about here have a lot in common with the traditional Japanese corporate office culture."
You think the startup founders working 18 hour days are dicking around for most of that time? I'd say you're almost certainly wrong.
I'm not saying the post is wrong either, a good work/life balance might be the path to success. But the people who don't have that are not playing WoW all day at work.
The data doesn't support this. RescueTime did a study on the time that their YCombinator class spent "actually working" (their software tracks which window on your computer screen has focus, and how much time you spend interacting with it):
Barely anybody hit 10 hour days of solid productivity; typically, people can manage about 7ish hours of actual work, only 3-4 of which is coding or other heavily intellectually demanding tasks. This squares with several worker-productivity studies done around WW2 (when major corporations were deciding whether to move to the 8-hour workday; the standard at the turn of the century was 14 hours), which found that productivity decreases after 8 hours, and the time spent dealing with mistakes eats up any marginal increase in output. Having worked in one startup where much of the eng team seemed to work 12-14 hour days, I can anecdotally confirm that.
It's not that they're dicking around, it's more that they are probably staring at their computer screen cursing or berating themselves. Or feeling despondent and miserable about their chance of ever shipping product. Or writing code, but writing the wrong code which will just have to be ripped out once they think about the product again.
I have wondered if the 5 hours of heavy coding maximum is psychological or physiological. Does productivity drop because your mind rebels against itself? Prolonged mental focus is an unnatural thing to do in the scheme of evolution. There might be some mental mechanism that automatically triggers feelings of despondency in order to make you do something else. Alternatively, hitting the wall might be an actual physical problem - the brain might be overheating, or have some build of chemicals, or something, that requires a recovery time.
I suspect that when you're dealing with the brain there's little difference between physical and psychological: if the brain's hitting a wall physically it will unconsciously invent some explanation. I suspect that's what's happening with these startup founders who think they are working 18 hour days; anecdotally, when I've pushed myself to work 12-14 hour days, I haven't felt unproductive, I suspect my brain just shut down so that it couldn't register all the time I was wasting. If I look at my actual changelist history, I'd find that the first 3 changes of the day would take a total of about 3-4 hours and then the last one would take 7+.
There's been a lot of research done into "ego depletion" - basically, 100+ studies have found evidence that the ability to focus and make yourself get things done is an exhaustible resource, and then recent studies by Carol Dweck have indicated that your abilities to do so, in some sense, depend upon your mindset going in and whether you embrace the task to begin with. The logical place to answer this would be with an fMRI study, and the first such study was just published a week and a half ago. The abstract indicates they found something, but the article itself is paywalled:
NYTimes run an article last year on "ego depletion", focusing on "decision making fatigue". Turns out sugar (M&Ms!) does play an important role in restoring the willpower and ability to make decisions.
If the phenomena was purely psychological, then it might be possible to overcome it. Possibly, rotating the specific task you are working on, or changing locations, or taking shorter but very intensive breaks (like playing street hocky for 30 minutes), might be enough to prevent the brain from switching into despondency mode and allow a few more hours of high productivity. But if the limit is physical, then switching locations or activities won't help much, the brain simply needs to rest (although perhaps a cooling helmet would work - http://www.news-gazette.com/news/health/health-care/2011-03-... - I can't wait for magazine articles with trendy startup engineers at their standing desks all wearing brain cooling headgear).
I think recent science is discovering that even physical problems with the brain can be overcome. Depression is a chemical imbalance in the brain, but talk therapy has been shown to be effective for it. The act of thinking certain thoughts changes the brain's chemistry in ways that can be either positive or negative.
Say that we find that ego depletion comes from a shortage of blood glucose in the brain. If that's the case, the cure could be as simple as stocking the microkitchens with M&Ms (man, maybe Craig Silverstein had the right idea 14 years ago). It's also known that certain stimulants like caffeine and amphetamines help you overcome your normal mental fatigue limits - the problem is that they often tend to create dependency and lose their effect if you chronically overuse them. The reason for looking into the physical mechanism is that we might then be able to find simple solutions that work and don't have long-term side-effects.
"venture capitalists and the tech media began to debate whether there is an optimal age for an entrepreneur to start a company .... The pundits proposed the mid-20s as the optimal age to start a company"
May I point out that this is the best age -FOR- venture capitalists to fund and -FOR- the tech media to write about but not for entrepreneurship in general. VC and the tech media focus on the same thing... businesses that are in essence experimental rocketships. Most will implode fantastically but there will always be a few that go to the moon. Thats only one form of venture - even in tech.
It is really difficult to look into the tea leaves and find an answer to why things happen.
After spending the entirety of my twenties working on failed startup after failed startup I finally reached something that actually is turning a profit.
Now that I'm well past my twenties I no longer have interest in working those extreme hours but I'm not sure if I would have had enough experience to make some of the decisions I do today had I not invested all that time in failed businesses. It's a catch-22. I feel that my time spent against the grindstone was beneficial in my experience but I'm loathe to suggest anyone else go through the same process.
I think the only advice that is worthwhile is "you need a rock outside your company" you need something that isn't subject to the whims of the market that you can rely on. If the company is your rock then failure is going to hit you very hard; you'll be cleaning up your office with nothing - no life, no family, no friends.
If you weight companies by their market value, rather than a binary successful vs. unsuccessful[1] outcome, you'll come to a different conclusion. This is just a rationalization to avoid working hard.
[1] What's a "successful" company, by the standards of this and similar article? I don't want to inform my decisions with a study that considers Dropbox, on the one hand, and any sustainable small business, on the other, to be equally successful. There'll always be more of the latter.
Seems to me that you don't fully understand the point of this article. The author is suggesting that taking some time for yourself personally will make you more productive, not less. Pushing yourself to the breaking point just so you can say that you worked as hard as you could is a losing strategy. Let's not look to give ourselves a convenient excuse for when things don't work out. Instead, let's try to make it work out :)
One other way to look at this. When you think you'll do a 12-14 hour day you often waste a lot of time during the that day. Why? Because you don't treat time like a valued resource. Tell yourself you're leaving at 4pm no matter what and you'll find you get almost as much done.
"The Kauffman Foundation surveyed 550 successful entrepreneurs across multiple sectors, determined by profitability and being named a “high-valued” business by their peers. Their data suggests that most successful founders are in their mid-30s and married with children."
Why are these entrepreneurs named "high-valued" by their peers? Because they worked their butts off in their 20s and early 30s. Being named "high-valued" is a reverse-looking statement based on the entrepreneur's past achievements.
I spent my teens and 20s building business after business (and failed for the most part). I had no life. Now that I am older and do have a life (family), I succesfully run one business, and am working on building another. Less time to work on things means I have to produce higher quality. So the waste in process factor is reduced significantly. Before I would just amass a bunch of stuff to test. Now, I do quick/short tests and move on. No sense to waste anytime. After all, I only have so many heart beats left.
Good article, thanks. I just want to make a caveat.
In my job, if I worked as efficiently and quickly as possible, I would not be able to go out to lunch with coworkers, chat with people around the office about if we're getting iphone 5, etc,, or take time to go to the tap room on Thursday afternoons for a quick beer break and chat with coworkers. So I would essentially be more boring than the computer I sit at. When I first started working, I would eat at my desk, bringing all my food from home, not go out for coffee breaks, so that I could have time to go the gym after work, talk to my family, etc. When my friend called me a monk I started to reconsider the value of being social and "wasting time."
I guess all I'm saying is that if working insanely long hours is partly due to comraderie-building or "messing around," boosting morale for all, laughing, than I think that sort of activity is worth it.
I would consider that effective downtime. It doesn't HAVE to be going home to kids or whatever, but I think the point is that there is no value sitting at your monitor for 12 hours half-zoning out staring at code when your tank is empty.
“Founders tended to be middle-aged—40 years old on average—when they started their first companies. Nearly 70 percent were married when they became entrepreneurs, and nearly 60 percent had at least one child, challenging the stereotype of the entrepreneurial workaholic with no time for a family.”
>On average, these [violin] masters practiced in 90-minute spurts, three times a week
There must be a lot of context missing from this statistic, or it is simply untrue. The suggestion that one can master a classical instrument with only 4.5 hours of focused practice a week is absurd.
I've spent most of my life playing the Violin, alongside many different levels of professional musicians. Low- Mid-level professionals start at 3 hours a day of solo practice, not including group rehearsals. Most prodigies, those that go on to be soloists, are practicing 6-10 hours a day by their teen years. Without fail, the people that put in more effort, both in focus and in hours, are better players.
Maybe Pinkus Zuckerman or Itzahk Perlman only practice 4.5 hours a week these days, but they certainly didn't in their prime.
"The best typically worked in stretches of no longer than 90 minutes, three times daily."
So 4.5 hours a day, not 4.5 hours a week. That makes a lot more sense.
(Interestingly, this is about the same as the amount of focused coding time I can get in a day, and I structure it similarly: 3 intense periods of about 90 minutes.)
By all means do your heavy startup/entrepreneur stuff when you're as young as possible. In your 20's you can work hard and play hard. Most people have little or nothing to lose at that age. It's easy to end up in an ordinary job with a boss that's just as demanding anyway. In a startup, with hard work and a healthy dose of luck, later (which will arrive sooner than you think) by the time you have children you'll be set up well enough financially to do less intensive work and be able to be present and be a successful spouse/parent. You really can't ace both a career and family at the same time. Starting in your 40's sounds like the worst possible time to me.
Most people have little or nothing to lose at that age.
I disagree. As someone who spent all of his 20s building businesses, I can definitively say that I lost the most valuable thing anyone has: time. Sure, the experience is good, but its not as good as having focused myself on other more productive things.
Contrary to what you may hear on TV or here, businesses are not made of candy. It requires sacrifice, hustle, and a huge amount of time. Time better spent living life. Young adults don't get that. They think its like Hollywood portrayed it in the Social Network. Nope. It is pretty shitty actually. Even if you join something as good as YC, you still have to hustle a great deal without any guarantee whatsoever. Problem is that what you are gambling here is your life, investors just gamble money. Money comes and goes. Life, not so much.
Then why am I building a startup at age 33, when I already have a successful business? I'm a flip floppin' paradox. Sometimes we do what we do because thats what we know how do to. I'm too dumb and old to do anything else (best guess).
>>Most people have little or nothing to lose at that age.
This is no longer true. A couple of years ago, college seniors graduated with an average of $25,000 in debt. And that number is growing. What this means is that the percentage of people who have "nothing to lose" in their 20s is shrinking rapidly. Instead people are seeking "safe" corporate jobs in order to be able to pay off their debts. Working in a risky startup is not a realistic option for them.
I tend to agree - $25K is only about the cost of a very average new vehicle. Don't ruin your 20's obsessing on that amount of money. (I'm aware that "new" cars provide less utility for your money than 3-5 y/o cars.) Bottom line is that keeping your overhead low gives you more freedom. Generally speaking your overhead will probably never again be as low as it is in your 20's and you may have a lot more people who need your time later too.
