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May 19, 2007

The (Bayesian) Advantage of Youth

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Posted by Clay Shirky

A couple of weeks ago, Fred Wilson wrote, in The Mid Life Entrepreneur Crisis “…prime time entrepreneurship is 30s. And its possibly getting younger as web technology meets youth culture.” After some followup from Valleywag, he addressed the question at greater length in The Age Question (continued), saying “I don’t totally buy that age matters. I think, as I said in my original post, that age is a mind set.”

This is a relief for people like me — you’re as young as you feel, and all that — or rather it would be a relief but for one little problem: Fred was right before, and he’s wrong now. Young entrepreneurs have an advantage over older ones (and by older I mean over 30), and contra Fred’s second post, age isn’t in fact a mindset. Young people have an advantage that older people don’t have and can’t fake, and it isn’t about vigor or hunger — it’s a mental advantage. The principal asset a young tech entrepreneur has is that they don’t know a lot of things.

In almost every other circumstance, this would be a disadvantage, but not here, and not now. The reason this is so (and the reason smart old people can’t fake their way into this asset) has everything to do with our innate ability to cement past experience into knowledge.

Probability and the Crisis of Novelty

The classic illustration for learning outcomes based on probability uses a bag of colored balls. Imagine that you can take out one ball, record its color, put it back, and draw again. How long does it take you to form an opinion about the contents of the bag, and how correct is that opinion?

Imagine a bag of black and white balls, with a slight majority of white. Drawing out a single ball would provide little information beyond “There is at least one white (or black) ball in this bag.” If you drew out ten balls in a row, you might guess that there are a similar number of black and white balls. A hundred would make you relatively certain of that, and might give you an inkling that white slightly outnumbers black. By a thousand draws, you could put a rough percentage on that imbalance, and by ten thousand draws, you could say something like “53% white to 47% black” with some confidence.

This is the world most of us live in, most of the time; the people with the most experience know the most.

But what would happen if the contents of the bag changed overnight? What if the bag suddenly started yielding balls of all colors and patterns — black and white but also green and blue, striped and spotted? The next day, when the expert draws a striped ball, he might well regard it as a mere anomaly. After all, his considerable experience has revealed a predictable and stable distribution over tens of thousands of draws, so no need to throw out the old theory because of just one anomaly. (To put it in Bayesian terms, the prior beliefs of the expert are valuable precisely because they have been strengthened through repetition, which repetition makes the expert confident in them even in the face of a small number of challenging cases.)

But the expert keeps drawing odd colors, and so after a while, he is forced to throw out the ‘this is an anomaly, and the bag is otherwise as it was’ theory, and start on a new one, which is that some novel variability has indeed entered the system. Now, the expert thinks, we have a world of mostly black and white, but with some new colors as well.

But the expert is still wrong. The bag changed overnight, and the new degree of variation is huge compared to the older black-and-white world. Critically, any attempt to rescue the older theory will cause the expert to misunderstand the world, and the more carefully the expert relies on the very knowledge that constitutes his expertise, the worse his misunderstanding will be.

Meanwhile, on the morning after the contents of the bag turn technicolor, someone who just showed up five minutes ago would say “Hey, this bag has lots of colors and patterns in it.” While the expert is still trying to explain away or minimize the change as a fluke, or as a slight adjustment to an otherwise stable situation, the novice, who has no prior theory to throw out, understands exactly what’s going on.

What our expert should have done, the minute he saw the first odd ball, is to say “I must abandon everything I have ever thought about how this bag works, and start from scratch.” He should, in other words, start behaving like a novice.

Which is exactly the thing he — we — cannot do. We are wired to learn from experience. This is, in almost all cases, absolutely the right strategy, because most things in life benefit from mental continuity. Again, today, gravity pulls things downwards. Again, today, I get hungry and need to eat something in the middle of the day. Again, today, my wife will be happier if I put my socks in the hamper than on the floor. We don’t need to re-learn things like this; once we get the pattern, we can internalize it and move on.

A Lot of Knowledge Is A Dangerous Thing

This is where Fred’s earlier argument comes in. In 999,999 cases, learning from experience is a good idea, but what entrepreneurs do is look for the one in a million shot. When the world really has changed overnight, when wild new things are possible if you don’t have any sense of how things used to be, then it is the people who got here five minutes ago who understand that new possibility, and they understand it precisely because, to them, it isn’t new.

These cases, let it be said, are rare. The mistakes novices make come from a lack of experience. They overestimate mere fads, seeing revolution everywhere, and they make this kind of mistake a thousand times before they learn better. But the experts make the opposite mistake, so that when a real once-in-a-lifetime change comes along, they are at risk of regarding it as a fad. As a result of this asymmetry, the novice makes their one good call during an actual revolution, at exactly the same time the expert makes their one big mistake, but at that moment, that’s all that is needed to give the newcomer a considerable edge.

Here’s a tech history question: Which went mainstream first, the PC or the VCR?

People over 35 have a hard time even understanding why you’d even ask — VCRs obviously pre-date PCs for general adoption.

Here’s another: Which went mainstream first, the radio or the telephone?

The same people often have to think about this question, even though the practical demonstration of radio came almost two decades after the practical demonstration of the telephone. We have to think about that second question because, to us, radio and the telephone arrived at the same time, which is to say the day we were born. And for college students today, that is true of the VCR and the PC.

People who think of the VCR as old and stable, and the PC as a newer invention, are not the kind of people who think up Tivo. It’s people who are presented with two storage choices, tape or disk, without historical bias making tape seem more normal and disk more provisional, who do that kind of work, and those people are, overwhelmingly, young.

This is sad for a lot of us, but its also true, and Fred’s kind lies about age being a mind set won’t reverse that.

The Uses of Experience

I’m old enough to know a lot of things, just from life experience. I know that music comes from stores. I know that you have to try on pants before you buy them. I know that newspapers are where you get your political news and how you look for a job. I know that if you want to have a conversation with someone, you call them on the phone. I know that the library is the most important building on a college campus. I know that if you need to take a trip, you visit a travel agent.

In the last 15 years or so, I’ve had to unlearn every one of those things and a million others. This makes me a not-bad analyst, because I have to explain new technology to myself first — I’m too old to understand it natively. But it makes me a lousy entrepreneur.

Ten years ago, I was the CTO of a web company we built and sold in what seemed like an eon but what was in retrospect an eyeblink. Looking back, I’m embarrassed at how little I knew, but I was a better entrepreneur because of it.

I can take some comfort in the fact that people much more successful than I succumb to the same fate. IBM learned, from decades of experience, that competitive advantage lay in the hardware; Bill Gates had never had those experiences, and didn’t have to unlearn them. Jerry and David at Yahoo learned, after a few short years, that search was a commodity. Sergey and Larry never knew that. Mark Cuban learned that the infrastructure required for online video made the economics of web video look a lot like TV. That memo was never circulated at YouTube.

So what can you do when you get kicked out of the club? My answer has been to do the things older and wiser people do. I teach, I write, I consult, and when I work with startups, it’s as an advisor, not as a founder.

And the hardest discipline, whether talking to my students or the companies I work with, is to hold back from offering too much advice, too definitively. When I see students or startups thinking up something crazy, and I want to explain why that won’t work, couldn’t possibly work, why this recapitulates the very argument that led to RFC 939 back in the day, I have to remind myself to shut up for a minute and just watch, because it may be me who will be surprised when I see what color comes out of the bag next.

Comments (42) + TrackBacks (0) | Category: social software


COMMENTS

1. Joe on May 20, 2007 12:44 AM writes...

Your own VCR/PC/Tivo example is actually an excellent counterexample. Tivo's two cofounders are easily on the wrong side of your theory. I can't find their actual ages, but their prior experience as per official company bios (CTO: http://www.tivo.com/5.2.3.asp) dates them considerably.

Doesn't disprove your theory as a generality, perhaps Tivo is the rare exception. But the fact that there are exceptions is exactly why there's still hope for us old fogies (since I'm on the wrong side of your theory too)

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2. Aron on May 20, 2007 12:49 AM writes...

Well thank the lord I never learn from my mistakes.

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3. groucho on May 20, 2007 2:56 AM writes...

You wouldn't by any chance have been reading NNT's 'THE Black Swan'?

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4. Zao Yang on May 20, 2007 4:21 AM writes...

I totally agree. Though there's a fine line. The young entrepreneur has to acquire a lot of knowledge really quickly, so he/she has to very mature for his age but less "experienced" than older people.

I've read a ton of business/technology books over the last 7 years even though I'm in my early 20's and I realized that I had to start a startup now, or I will never start it. We'll see. I've definitely made my share of mistakes, but I'm not so experienced to "know" what's impossible.

Zao

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5. Scott Kennedy on May 20, 2007 6:37 AM writes...

As another old fart on the wrong side of your theory, I would love to hear of any 'tricks' people might have used to prevent (or at least stall) knowledge from choking creative entrepreneurial spirit - here's some that work for me....


1. Change jobs a lot. This stops you from getting to smart in any one area, and keeps your brain in 'learning by doing' mode.
2. Celebrate failure. As we grow older, we feel compelled to gauge our growth by pointing to success, and flaunting how our lives are 'under control'. Fess up: your life isn't in control, and you still don't know what you're doing, or even what you want. Tell others about your mistakes, ask lots of questions, and re-learn the joy of blindly doing, not endlessly analyzing.
3. Distrust authority. Hindsight is 20/20. The tech pundits don't have anything on you. Throw out that book by Bill Gates- he's still clinging to the OS & apps he ripped off over a decade ago, and has done little innovating since (hence string of desperate catch-up acquisitions)
4. Anything goes Think about how stupid all of the recent winners sound: a web site where anyone uploads any old random videos, for free, onto massive hard drives you buy and maintain. A portable CD player and headphones, only worse quality than a CD, and about 10 times as expensive. Ringtones. A chain of stores that only sells coffee.

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6. Kirk on May 20, 2007 6:41 AM writes...

One thing that you may be over looking here is that you are defining youth in absolute terms, which means that although over a finite period of time (say the last 15-30 years) we may be able to identify a "sweet spot" for the ideal age for entrepreneurship, it is short-sighted to expect this pattern to hold indefinitely.

Why? Well, first of all, as the rate of change continues to increase, the relative difference in knowledge and experience (or lack thereof) between different age groups will shrink, which means that the the difference between being 20 and 40 will be less significant going forward than it is historically.

Furthermore, as long as change continues to accelerate (and the amount of useful knowledge continues to grow exponentially), the apparent "handicap" of experience you identify, will not be as great for older people. Instead of older folks looking back on data and models that have been relatively stable in their lifetime, and subsequently mis-evaluating how things are changing, they will live through multiple (and subsequently shorter) cycles of change, and therefore will begin to observe the patterns of change, rather than the contents of one cycle versus another.

So to use your example, they will not go from a world of certainty and black/white balls to one in which colored balls are unexpected, but rather will learn to observe the delta. They will begin to "expect the unexpected," and will formulate open-ended hypotheses such as "I wouldn't be surprised if there are cubes in the bag, not balls." Whereas this may not help them predict the next set of changes with any significant degree of accuracy, it could be a case where rather than being blinded by their (more often than not useful) experience, they may be in a better position than people with less exposure - they will have more data points regarding the delta.

Now this doesn't mean that the relative advantages of youth may not still exist, in that if they have no a priori theory or set of expectations, they are still more free to create or observe something totally different or unexpected, such as a paradigm shift. But will this advantage outweigh that of experience in the way it does (at times) today?

Another thing to consider when looking at what constitutes youth and entrepreneurial sweets spots is life expectancy. If the average life span begins to increase at non-linear rates, than how we define young and old will also change. I believe that in the years to come, there will be more and more "old" entrepreneurs, and do not think that the "rule of thumb" regarding youth (at least how we currently define it) will be as relevant.

Perhaps a more significant factor that is being largely overlooked here is not so much to do with knowledge or experience gradients, but rather the relative difference in risk tolerance between younger and older people. I think that perhaps the biggest thing that gets in the way of older people being entrepreneurial may have less to do with knowledge/experience, but more to do with lifestyle changes and an increase in risk-aversion.

Let's face it, when one gets older, they begin to realize that time is finite, and that they can't pursue all the things they dreamed of when they were young. This may result in an increased focus and maturity, but it is accompanied by a relative conservatism in decision making.

Whether it be settling down and getting married, having kids, or choosing to do things that are more important and meaningful, the net result is an approach to life and opportunities that is less care-free and less spontaneous. As people cross the "30's threshold," they begin to realize that if their entrepreneurial ad/ventures have not yet yielded significant results, it may be time to explore more "realistic" and less "risky" opportunities - they seek out stability. They also tend to expose themselves to less new people, and focus on cultivating deeper relationships than acquiring acquaintances. While this may contribute significantly to the meaning and quality of their life, it equally decreases the randomness factor, and makes the cross-fertilization of ideas (from radically different sources and world-views) less likely.

This may lead some of you reading this to say that the conclusion to draw, regardless of the underlying cause/s is still, "bet on the younger guys." In general, I would tend to agree, at least at this point in time. However, I believe the changing world (including changing values) will have a significant impact on lifestyle decisions and priorities, and will alter the very definition of youth. As people are becoming less committed to getting married and having children (at least at younger ages), they are less committed to settling down, and therefore, as Fred Wilson implied, "younger in spirit." Whereas this may not change your thesis about the factors underlying youth that are responsible for higher probabilities of entrepreneurial success, I am arguing here that:
a) the world is changing and therefore the factors underlying your causal factors are changing; and
b) the factors you have identified as primary/causal are confounded by multiple variables, and perhaps not sufficient in terms of their explanatory power.

Well, I wish I had more time to craft this into an elegant blog post and provide a more robust argument, but at the very least, I would be interested to hear your (and anyone else's) thoughts on this matter.

And oh yeah, I'm 30, so I don't know whether I have a vested in interested in arguing for either side, although I guess I am past your sweet spot and have yet to have a break-through entrepreneurial success, which would tend to indicate that I want to believe that I have yet to see my best days, ha!

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7. Jason Faber on May 20, 2007 6:51 AM writes...

5) Trim the pork! Once I became financially comfortable I lost the "Eye of the Tiger" I had in my youth. My projects are now more simple and I keep my budget really low. The constraints have made me more creative, and the core idea now must prove itself without hiding behind a big budget and big talk.

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8. John Binns on May 20, 2007 8:34 AM writes...

Kirk and Scott Kennedy--great comments. One fact that I still don't think has been emphasized enough here is that most startups fail miserably. It's not just tech startups, either. Nearly all new businesses fail. So, yes, the ones that succeed will often be started by young, stupid kids. But so will the ones that fail. The voice of experience is right in this sense. Kirk touches on this when he mentions the conservatism of old(er) age. Almost invariably, the most rational economic decision is not to start a new business. It's sort of a paradox, but it's irrationality that drives innovation. All those sad failures out there had to be made, so that society (and one lucky entrepreneur) could score the one success.

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9. Bill Olen on May 20, 2007 8:37 AM writes...

Nice analysis, thanks!

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10. Inter on May 20, 2007 9:37 AM writes...

Interesting post.

I liked the need to unlearn things or at least not be hold down by old ideas.

But I also think a couple of things:

To make a more "scientific" study:
how many startups fail?
The post is talking just about the one in a million that succeeded tremendously, but you may find also many many successful companies started by not so young people, for example: Mc Donalld's

Also, I know many 40ers that loose their job and find hard to get a new job. So, they are founding new business and some are doing well.

Maybe not as your examples, but fine.

Also, why underestimate yourself?
It is true that a younger mind usually is more creative than and old one. I read this in the scientific world, but not so sure in the artistic one. But, I'm sure that a 50 or 60 yrs old guy is perfectly capable of doing great also.
Remember michael Angelo and its Sistine Chapel.

What can you say to some not so young that don't have a comfortable savings, not consulting experience but a will to start a little business, not to make it to Wall Street but just to make a living, not to start anything because they are not young?

Thank you.

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11. Folletto Malefico on May 20, 2007 11:20 AM writes...

It's an interesting post due to the questions it raises, but it just scratches the surface and tries to find a 'rule' on this surface.

...probably that's exactly the point, since you're already saying that "I’m too old to understand it natively.".

The amount of variables that differentiates a 'young' one from an 'old' one are TOO MANY.

We have to consider lifestyle, income, marriage, passions, hobbies, etc, etc, etc.

If we take in balance ALL the variables, we notice just one thing: it's IMPOSSIBLE (or... well... quite impossible) to find someone 'old' in the same contest of a 'youg' one.

And that isn't just a matter of knowledge.
Because, knowledge is something you learn. What if you make 'take any rule just as long as it lasts' the foundation of your learning process?
All your thesis falls apart, since you put the problem in a simple notion-based realm.

Take all the variables into account. :)
The final answer is just that you cannot say anything about it without falling in huge simplifications. ;)

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12. tndal on May 20, 2007 11:22 AM writes...

Before you begin generating theories about young vs old, please provide some statistics that show the success rate versus age, _after_ factoring in such components as pre-existing wealth, education level, market addressed, geographical location, etc.

Regardless of age, starting a business is a crap shoot. And your theory is pretty much crap.

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13. Gabe on May 20, 2007 11:36 AM writes...

Tivo's founders are 57 and 48, and the company is 10 years old:
http://finance.yahoo.com/q/pr?s=tivo

Your thesis really seems unsupportable. Not necessary wrong, but just unsupportable.

My intuition is this naive fearlessness is a factor, but a smaller one than your piece suggests. But I can't support my intuition either, so, uh, whatever.

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14. hugh macleod on May 20, 2007 11:51 AM writes...

The great Zen teachers [e.g. Suzuki] were always keen on the idea of retaining what they called "Beginner's Mind", for the same reasons you talk about here.

I'm in my early forties now, and definitely peaking... perhaps 10 years too late.

I'm not complaining, though- nobody wants to see their best years relegated to the past tense.

Great article, as always, Clay :)

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15. Jim MacLennan on May 20, 2007 1:05 PM writes...

The younger generation's higher energy around entrepreneurship and startups may also be fueled by a less cynical, more altruistic sense. See my post in the attached URL (http://www.cazh1.com/blogger/thoughts/2007/05/consarned-whippersnappers-generational.shtml).

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16. sam on May 20, 2007 1:19 PM writes...

You said:

"People who think of the VCR as old and stable, and the PC as a newer invention, are not the kind of people who think up Tivo. It’s people who are presented with two storage choices, tape or disk, without historical bias making tape seem more normal and disk more provisional, who do that kind of work, and those people are, overwhelmingly, young."

TiVo was not founded by 20 somethings but experienced people. Good argument, bad example.

"TiVo, Inc. (NASDAQ: TiVo) was incorporated on August 4, 1997 as "Teleworld, Inc." by Jim Barton and Mike Ramsay, veterans of Silicon Graphics and Time Warner's Full Service Network digital video system. Originally intending to create a home network device, they later developed the idea to record digitized video on a hard disk."

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17. Ola on May 20, 2007 1:43 PM writes...

Very insightful and useful. Will keep this in mind.

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18. Bill Tozier on May 20, 2007 2:22 PM writes...

I think I may have met a number of people who might not fit the generalization here. I'm thinking of the folks about whom others say, over and over, "Boy, I wish we'd listened to her (or him) 10 years ago." Or "20 years ago", or "back when we had him working for us".

I know a surprising number of those people.

If only somebody'd listened to those folks, once upon a time, amazing things would have happened, or disappointing tragedies avoided. But nobody listened.

I bring it up because in my experience those oft-misheard insightful folks are sometimes old, sometimes young. I can't come up with a pattern when it comes down to their age.

Some of them have gone off and done their own thing, and succeeded. Some have stuck around where they were, and depending on their personalities they eventually point out that they "told 'em so"... or not.

I wonder if "failures of insight"---whether they come from overgeneralization or from bad schema---are less important than failure of execution and adoption.

Being right and doing something about it are two different things.

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19. Some 20 year old! on May 20, 2007 6:25 PM writes...

Lol at post 1:
Your theory about the bag may still be right; these two old entrepreneurs I pulled out of it are just an exception!
Before they were willing to say the earth went round the sun, they kept adjusting the models with new epicycles or mini orbits within orbits. If they went on long enough, they could have produced something mathematically identical to Newton’s parabolic orbits, but someone who could look at the same problem many ways beat them to it.
To say that the world is changing completely and anything goes is the fastest route to pretty, vapid bubbleland! People like coffee places because they are pubs for stimulants, people like sharing pictures because they take them partly for other people. Ringtones are powered by low-effort self-expression/disguise, and mp3's mean you can grab the moon in under 5 minutes, providing you don't mind a smaller one. People are still people and did Einstein really work out relativity because he was an outsider, or because he spent years in a patent office, meeting the most creative people in Germany?
I totally agree though that wide based flexible knowledge is important, based on my experience!
Looking back, what do the young have? Arrogance.

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20. Mike B. on May 20, 2007 7:19 PM writes...

Strong conclusions based on fuzzy definitions and weak evidence. Not recommended for submission to a peer review process.
Fuzzy definition: what is exactly and entrepreneur according to this article? Someone who sees opportunity where other don't? How about Murdoch's acquisition of myspace when everyone thought it was just a non-monetizable fad? I believe he was over 40 when he made this decision?
Or do you mean a technology innovator? Hardly anyone from you examples was first to create the technology? YouTube was not the first offering video social net, and microsoft was hardly ever first or best in technology. Also, it was Jim Clark's experienced eye that identified the opportunity in Mosaic.

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21. Matthew Burton on May 21, 2007 12:50 AM writes...

right or wrong, it's a hell of a birthday present. thanks, teach! :-)

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22. stephen on May 21, 2007 6:19 AM writes...

This is a thought provoking article. I'm particularly intersted in the section that contrasts young novices with older experts. "The mistakes novices make come from a lack of experience. They overestimate mere fads, seeing revolution everywhere, and they make this kind of mistake a thousand times before they learn better."

I've just set up a mobile phone service. Details are at www.callpedia.com. I've enjoyed getting it running and I think it could be useful but I'm unsure as to whether it could be a fad or something more significant. Can anybody comment? I'm 33 by the way.

P.S. The numbers should work from anywhere in the world and I will be adding US DID numbers over the coming weeks.

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23. Doug K. on May 21, 2007 9:07 AM writes...

BS. It has to do with time only. Younger people have more time because they have less responsibilities, period. More time means more opportunity to try different things and come up with new answers.

What you are saying is if I have no experience in a field I can find that one in a million chance of success. Well there are a ton of fields I know nothing about and it is not a factor of my age. I know nothing about biology so with your logic I should be able to hit it big building a bio-tech company but because I am older I am doomed to failure. It is a depressing scenario you portray and the fact that you will do anything but found a company shows that you believe it.

If I dedicate the time and I am excited about what I am doing then I have that shot. Unfortunately, most people when they are older get comfortable and don't try to push the envelope or don't need to.

My point is that it isn't because older adults can't innovate, think outside of the box, etc. It is because the current system is designed to reward the youth for doing it and punish older adults, so fewer older adults try. Ask Fred Wilson how many older adults present opportunities to him and I be the ratios are pretty close to his funding ratios.

Doug K.

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24. Doug K. on May 21, 2007 9:09 AM writes...

BS. It has to do with time only. Younger people have more time because they have less responsibilities, period. More time means more opportunity to try different things and come up with new answers.

What you are saying is if I have no experience in a field I can find that one in a million chance of success. Well there are a ton of fields I know nothing about and it is not a factor of my age. I know nothing about biology so with your logic I should be able to hit it big building a bio-tech company but because I am older I am doomed to failure. It is a depressing scenario you portray and the fact that you will do anything but found a company shows that you believe it.

If I dedicate the time and I am excited about what I am doing then I have that shot. Unfortunately, most people when they are older get comfortable and don't try to push the envelope or don't need to.

My point is that it isn't because older adults can't innovate, think outside of the box, etc. It is because the current system is designed to reward the youth for doing it and punish older adults, so fewer older adults try. Ask Fred Wilson how many older adults present opportunities to him and I be the ratios are pretty close to his funding ratios.

Doug K.

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25. Kaa on May 21, 2007 12:42 PM writes...

Interesting. Let me offer a similar but not the same observation.

The ecosystem of young entrepreneurs is one with a very high mutation rate. The upside is that the natural selection will, on occasion, produce winners with unlikely but brilliant solutions for the current set of problems. The downside is that for every successful "mutation" there are hundreds and thousands unsuccessful, if not plain retarded, ones.

The young ones are willing to play this game since they don't understand it well and don't have much to lose anyway. As you get older you start to realize that your chances of breaking thorough are not all that big and that the much more likely outcome of losing is a bigger deal than it used to be.

Basically, as you get older you give up the chance of being the next Larry or Sergey for a (much) better shot at avoiding the fate of a burned out loser subsisting on memories and occasional consulting.

In this context the young make better entrepreneurs not because they have less to unlearn, but only because they are the only ones willing to tolerate a horrendous failure rate.

Kaa

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26. Kaa on May 21, 2007 12:43 PM writes...

Interesting. Let me offer a similar but not the same observation.

The ecosystem of young entrepreneurs is one with a very high mutation rate. The upside is that the natural selection will, on occasion, produce winners with unlikely but brilliant solutions for the current set of problems. The downside is that for every successful "mutation" there are hundreds and thousands unsuccessful, if not plain retarded, ones.

The young ones are willing to play this game since they don't understand it well and don't have much to lose anyway. As you get older you start to realize that your chances of breaking thorough are not all that big and that the much more likely outcome of losing is a bigger deal than it used to be.

Basically, as you get older you give up the chance of being the next Larry or Sergey for a (much) better shot at avoiding the fate of a burned out loser subsisting on memories and occasional consulting.

In this context the young make better entrepreneurs not because they have less to unlearn, but only because they are the only ones willing to tolerate a horrendous failure rate.

Kaa

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27. Hoyt on May 21, 2007 1:44 PM writes...

Certainly it's true that younger entrepreneurs are less constrained by notions of what is "realistic" and achievable. They are far more likely to attempt businesses and innovations in areas where those of us who are "over the hill" (ooh! that stings!) can draw on our experience to clearly see where it would likely fail.

There are huge advantages to being unrealistic. Most successful entrepreneurs have a healthy dose of overconfidence, as they should. While the young can draw on naiveté as a resource here, older entrepreneurs must substitute ego.

There are equal advantages to the lower perceived cost of failure for the young. With experience comes the tendency to constrain the outcomes, both positive and negative.

I have no research to back me up on this, but I would be surprised if it were not true that:

1. A higher percentage of younger entrepreneurs fail than older ones.
2. Successful businesses started by young entrepreneurs attempting the unrealistic tend to succeed more spectacularly and with game changing innovations.
3. Older entrepreneurs succeed in greater frequency, but with incremental innovations and less spectacular outcomes.

Hoyt

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28. Otter on May 21, 2007 2:26 PM writes...

This dude doesn't know anything about Bayesian analysis. I don't know if it's true or not that it's best to be young to be a successful entrepreneur, but I do know that your analogy with the coloured balls is just plain wrong!

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29. Lloyd Fassett on May 21, 2007 2:29 PM writes...

You're keeping things on a surface level where you're comparing one language to the next. The language doesn't matter, the content does. The thing to look at is as old as the hills, does this serve someone's need? There are only new ways to get the same things done, and I believe Fred is right, it's a mindset that more correlates with success than age. If you want to quant something out, get data on mindset and a strong definition of success and failure.

The other issue is that a lot of new stuff has been new. The internet will enable industries to evolve and some of the new players will be born from the current players - which Murdoch/Fox is trying to do. A lot of change before the internet was not industry wide, where these changed are/will be. The thing to watch is who is serving the customer better? Same as always.

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30. Dave on May 21, 2007 2:53 PM writes...

This is not a young vs. old thing. This is an issue with someone's basic adaptability. It is true that most people are nowhere near as adaptable as they think they are, and that is why they do not throw out their past conclusions based on new evidence.
An older person with a low adaptability personality will definitely prove your point. But old farts like me (34) who happen to be psychologically adaptable can do just fine.

Nevertheless, as I start my new company, I'm headging my bets in this respect. I'm using my experience to know how to run the tech side, but it isn't a tech startup. It is in an industry I know nothing about, but that needs tech help. So hopefully all will work out for the best.

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31. Mike on May 21, 2007 4:15 PM writes...

My own 2-cents: It's not in a person's age, nor is it in a person's maturity. It's all about how he/she can think "outside the box" and have the diligence and ambition to make it happen. Anyone can have a great idea, but it's a bigger challenge to make that idea into a reality.

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32. SFGary on May 21, 2007 5:46 PM writes...

I too read Fred Wilson's post and now yours but to me its as if I ate a nice little piece of dark chocolate but am still dissatisfied. It seemed to me that he jumped to a conclusion based on a small sample of entrepreneurs coming through his "door" or information he gets from random tech blogs and your post sounds more persuasive but still left me unsatisfied.

If one goes away from the microscopic world of high technology startups and into other industries age is not a factor. Its how much risk an entrepreneur is willing to take to pursue his or her startup.

Speaking from my own experience of failing in a couple of tech startups and working in small, medium and large sized corporations I found that the experience I have gained in all those companies has made me a smarter entrepreneur. I do agree that I have to continuously remind myself that I need to reach out to absorb new ideas, be flexible and fearless enough to dump my own ideas in favor of better ones from others.

As to the white, black and colored balls theory, I am depending on my own to get me through the early days of my new self funded startup. Whether they are made of brass to tolerate the risk remains to be seen...

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33. Huy on May 22, 2007 12:09 AM writes...

You forget that the older and wiser you are, the more aware you are of the pitfalls you mentioned; you're more aware of the increasing rate of change and disruption.

We are older but we know this. The young kids may have a success, but they will fail, while us older entrepreneurs are poised to have success after success because we know how fast stuff is changing.

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34. Wesley on May 22, 2007 11:15 AM writes...

If worthy ideas and worthy investments are passed on because of ageism, then someone will come along to exploit the resulting inefficiency of capital allocation and reap superior returns. If, however, what I call "ageism" in Silicon Valley is deserved (whether because of reduced mental capabilities as noted above or mature investors having family distractions, etc.) then the bias really isn't such a bad thing since it leads to a more efficient allocation of investment capital.

Signed, the 47 year old entrepreneur of www.LifeTwo.com!

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35. Marc on May 24, 2007 2:00 AM writes...

Not buying it from personal experience. If you want to have the ignorance of youth all you have to do is switch industries. What's the difference?

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36. Ozzy on May 26, 2007 2:16 PM writes...

omg -- I just came across your site and this post (the word "post" does it no justice), and I must say it makes for some very fine reading indeed.

You sir are a fantastic writer and thoughtsmith!

Will definately be coming back and reading more.

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37. And on May 26, 2007 5:14 PM writes...

One thing that makes a difference in ages, is that youth has yet, in many circumstances, to experience results and consequences of their far reaching decisions.

How about issues of emotional adaptability and versatility? Issues of emotional flexibility and emotional security?

UNrelated to material circumstances and/or achievements?

Emotional dependency issues, in other words?

There's a lot about age that is 'been there/done that.' In terms of experiences, regardless of what material achievement the experience is tied to...,

there is nothing new under the sun.

A hamster in a plastic ball can run for hours and never reach anywhere.

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38. Sumitra Menon on May 31, 2007 1:44 AM writes...

I am a regular reader of Sramana Mitra, a Silicon Valley entrepreneur and strategy consultant. She has had a discussion with Warren Packard, a General Partner at Draper-Fisher-Jurvetson on entrepreneurial / investment opportunities to help young entrepreneurs. She has also conducted few other equally inspiring interviews with serial entrepreneurs.

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39. Ken on June 1, 2007 9:10 AM writes...

You got a great thoughtfull post here:
By 'youth' I think what you wanted to mean it is the time spent in the industry.
Somebody can be switching careers at an advanced (over 30) age and wont that then place his opinion of the bags content as 'open to suprises'.
Besides the fact that one has observed 999,999 outcomes means he may have the ability to swing the entrepreneurs decision. Should we therefore debunk experienced industry analysts' opinions ?

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40. Elliot Essman on June 3, 2007 6:20 PM writes...

Celebrating failure is key.

In ancient times, the Carthaginians would crucify their defeated commanders.

The Romans would pat theirs on the back and send them back into battle.

But in our real world, let us not forget that ignorance of impossibility dooms many talented people to perpetual failure.

Since the market ultimately shows its invisible hand, there is a luck factor in regard to those entrepreneurs who happen to grasp it.

That said, those who don't even grope into the unknown certainly grasp nothing.

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41. Elliot Essman on June 3, 2007 6:22 PM writes...

Celebrating failure is key.

In ancient times, the Carthaginians would crucify their defeated commanders.

The Romans would pat theirs on the back and send them back into battle.

But in our real world, let us not forget that ignorance of impossibility dooms many talented people to perpetual failure.

Since the market ultimately shows its invisible hand, there is a luck factor in regard to those entrepreneurs who happen to grasp it.

That said, those who don't even grope into the unknown certainly grasp nothing.

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42. Luke on June 12, 2007 8:33 PM writes...

There is no such thing as failure. When you have not achieved your desired goal, you learn next what must be done to achieve them. The "failure" instantly gives you the idea needed to turn that failure into a success. Each action you take is a stepping stone of experimentation and each step brings you closer to your desired outcome. I don't know if any one person can get everything spot on the first time. You start with an idea and then you constantly improve on the idea. And you can never finish improving it, it can always be improved more.

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