The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25 • Hacker News Board

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#51

Post by pmarca » Sun, Apr 28, 2013, 10:37 AM UTC

jules wrote: post #46

johnrob wrote: post #44

Earlier quoted context omitted.

Lottery tickets are a good example in this case. By definition, strategy A and B cannot both be winners (there is only one winning ticket). So the only thing that will set either apart is if one of the two strategies has the winning ticket. The price per ticket is only relevant if neither has the winner, in which case you're comparing who had bigger losses. The reason I like the lottery example is that two venture ca…

Yes, in the end the VC with the winner is going to win, but that's beside the point even if there is a single winner in the world (which in reality is obviously not true, there are not dozens but hundreds of huge ROI winners). The point is that you don't know the winner beforehand. A VC who is getting 2*x% equity for $y is expected to perform twice as good as one that is getting x% for $y. The arguments that are bein…

It's not the same equity. Quality is not distributed equally among the sample set of companies. The great startups (as judged retroactively via returns -- e.g. Facebook and Google) often (but not always) can get multiple competitive offers from top-tier venture firms, so having some abstract theory about how you're going to only pay low prices significantly damages your opportunity to invest in the companies that are going to generate all the returns.

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#52

Post by pmarca » Sun, Apr 28, 2013, 10:39 AM UTC

SiVal wrote: post #14

I'm going to guess--I have no proof--that entrepreneurs over 50 tend to be looking for a technology to meet a specific market need that has been eating at them for a long time, while those under 25 are more likely to be looking for a market need they could address with the brand new tech skills they've been developing. If I'm right, they could make pretty good partners.

We tend to see the opposite. The high-quality young founders tend to be pursuing a single great idea. The high-quality older founders tend to decide to start (another) company first and then try to figure out an idea worth pursuing. The fact that the older founders tend to have more domain experience helps them with this strategy.

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#53

Post by pmarca » Sun, Apr 28, 2013, 10:41 AM UTC

nitroscott wrote: post #25

I'm amazed no one has commented on the fact that the pool of potential entrepreneurs under the age of 25 is incredibly small (most kids ages 0-18 aren't out there starting companies, and a big chunk are in college) versus if you're 50+ there is a much bigger pool (reasonably ages 50-75) and you probably have the means and connections to be more successful. I'm surprised it's only twice as many...

There aren't that many qualified people over the age of 50 with the energy and determination to mount another startup effort again. It happens, but often people who have done well in their careers simply won't subject themselves to that level of trauma again.

Plus, the marvelous yet infuriating problem that we have in this industry is that the people who succeed young often make a lot of money and check out.

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#54

Post by ballostix » Sun, Apr 28, 2013, 12:59 PM UTC

DavidAdams wrote: post #15

I can't speak to "over 50," but I can speak to "over 40." I founded my first software startup in 1995 while I was still an undergraduate. I had the good fortune of timing it so that after a year and a half of toil and obscurity we hit the wave of the dotcom boom, and I was able to establish myself as a proven serial entrepreneur and have been able to found a series of moderately successful tech companies over the yea…

Wow, same age, but would not consider myself digital native. I still pine for fax machines!

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#55

Post by tptacek » Mon, Apr 29, 2013, 6:34 PM UTC

notacoward wrote: post #37

pg wrote: post #29

Earlier quoted context omitted.

VC's can take much bigger advantage of a 25 year old than a 50 year old This is a persistent myth, but if you examine the math it doesn't work out. A VC firm could improve their returns by at most 2x or 3x by extracting really good terms from an inexperienced founder. But that's rounding error compared to the 100x difference between a big success and a small one. This is a subset of the more general rule that there i…

OK, so they have a bigger pool of investments to choose from if that pool includes founders who would reject lousy terms. I get that, but it doesn't change the math. VCs can still only invest in so many companies. Perhaps having a 50% larger pool allows them to raise the bar slightly on who they fund, but the difference that makes is still proportional to how well they can pick winners in the first place. That's prob…

It doesn't do that because most startups fail. Selecting for the ones from which you can extract the best terms just gives you more of the failures. Negotiating strength isn't just a proxy for company strength, it's also an intrinsically important business skill. This is one of the more basic illustrations of "adverse selection" you can find.

I'm sure there are VC firms who do scout out pushover startups and bleed them. But then, most VC firms fail to generate attractive returns.

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#56

Post by notacoward » Tue, Apr 30, 2013, 2:55 AM UTC

tptacek wrote: post #55

notacoward wrote: post #37

Earlier quoted context omitted.

OK, so they have a bigger pool of investments to choose from if that pool includes founders who would reject lousy terms. I get that, but it doesn't change the math. VCs can still only invest in so many companies. Perhaps having a 50% larger pool allows them to raise the bar slightly on who they fund, but the difference that makes is still proportional to how well they can pick winners in the first place. That's prob…

It doesn't do that because most startups fail. Selecting for the ones from which you can extract the best terms just gives you more of the failures. Negotiating strength isn't just a proxy for company strength, it's also an intrinsically important business skill. This is one of the more basic illustrations of "adverse selection" you can find. I'm sure there are VC firms who do scout out pushover startups and bleed th…

I challenge you to find statistics showing that any VC favors the tough negotiators over the easy ones, or that there's any correlation (let alone causation) between negotiating strength and future success. Yes, it's an important skill, but negotiating with VCs and negotiating with customers are two different things. That particular subset of negotiating skill pales in comparison to things like having a good vision, hiring good employees, or executing the rest of a business plan well. The world already has too many people whose only skill seems to be schmoozing VCs.

Re: The Truth About Entrepreneurs: Twice As Many Are Over 50 As Are Under 25

#57

Post by SiVal » Tue, Apr 30, 2013, 8:24 AM UTC

pmarca wrote: post #52

SiVal wrote: post #14

I'm going to guess--I have no proof--that entrepreneurs over 50 tend to be looking for a technology to meet a specific market need that has been eating at them for a long time, while those under 25 are more likely to be looking for a market need they could address with the brand new tech skills they've been developing. If I'm right, they could make pretty good partners.

We tend to see the opposite. The high-quality young founders tend to be pursuing a single great idea. The high-quality older founders tend to decide to start (another) company first and then try to figure out an idea worth pursuing. The fact that the older founders tend to have more domain experience helps them with this strategy.

Ah, interesting point. This isn't quite the opposite of what I was saying, but it's definitely different. You're saying the youngsters are passionate about solving a specific problem, which is opposite of my speculation that the oldsters have the problem in mind. But you aren't saying that the oldsters just want a vehicle for their technical skills, you're saying they want a vehicle for their business skills.

Interesting observation....