Entrepreneurship: the Right Kind of Midlife...Opportunity
Think quickly, envision three successful entrepreneurs: who comes to mind? If Mark Zuckerberg, Steve Jobs, or Sergey Brin pop into your head, you aren’t alone. American culture celebrates maverick, young upstarts who upend industries while leading their companies toward unprecedented success.
While Silicon Valley and the image of ping-pong playing, youthful CEO’s have become an iconic part of the national consciousness, they aren’t an accurate depiction of a typical entrepreneur - or at what point in their lives they’ll successfully start their companies. Information from the Kauffman Foundation shows Americans aged 55 to 64 consistently start businesses at higher rates compared to those aged 25 to 34.
Further, recent research by the University of Alaska Center for Economic Development in their Alaska: State of Entrepreneurship report shows half of Alaskan entrepreneurs are 55 or older while only 6% are younger than 35.
At age 39 Alaskan Andre Horton reflects the characteristics of many entrepreneurs. He’s close to the median age of 42, but like almost half of Alaskan entrepreneurs, he’s previously pursued other businesses.
Along with his commercial photography enterprise, dReFoto, a sampling of Andre’s businesses include those in marketing, advertising, public relations, software, and general contracting. Compared to someone younger, his experience and expertise will prove valuable as he launches his newest one, a light manufacturing co-working hub in the center of Anchorage.
Unlike Andre, Kim Champney and Dr. Birgit Hagedorn are first-time business owners but previously spent significant time in their industries before starting their businesses in 2016 and 2017.
Kim Champney discussing Alaskan Direct Support Service Professional development. (Photo/Ciara Servantian)
Kim Champney started Champney Consulting after working 18 years in nonprofit social services agencies. Kim started her business for a mix of personal and professional reasons but her main catalyst was not being excited about walking into her agency’s office any more. Currently quite successful, Kim doesn’t believe she would have been able to maintain her business if she’d started it earlier: “Most of my consulting work uses the experience I gained in the field and, equally important, many of the relationships. It was definitely the right time; I could not have done it earlier.”
Along with financial stability, Kim’s experience underlines another key factor older entrepreneurs bring to their endeavors: human capital. Human capital is comprised of a person’s education, experience, knowledge, and skills. There are few shortcuts for gaining these time-tested assets and they prove to be important for making strategic business decisions.
Dr. Birgit Hagedorn doing fieldwork in Alaska. (Photo/Eva Enkelmann)
Similarly to Kim, internationally known Dr. Birgit Hagedorn has found her years of research, field work, teaching, and serving on boards has helped her operate her business and gain clients. Social capital, like human capital, is an important differentiator because entrepreneurs rely on their contacts and social networks to make key alliances. Birgit finds that her many connections throughout Alaska, along with other Arctic regions, help her quickly establish trust and work on projects. After years in academia, Sustainable Earth Research has allowed Birgit to see the industry side of the geochemistry and geology and besides offering workshops in environmental data collection, Birgit also provides research analysis, consults with analytical chemistry research laboratories, and works in environmental remediation.
Although she’s still adjusting to being a business owner, Birgit is thrilled she finally took the leap: “After having a successful career, it felt exciting to change my lifestyle and to have the freedom to develop my own ideas.”
Besides the entrepreneurs themselves, those who support them — the institutions, investors, and economic development organizations — need to make sure they aren’t being swept away by youthful enthusiasm. Compared to younger entrepreneurs, older entrepreneurs have almost twice, 1.8 times, the average return on investment. Released in April 2018, data collected for the National Bureau of Economic Research working paper shows venture capitalists tend to bet on relatively young founders when:
Our primary finding is that successful entrepreneurs are middle-aged, not young...we find no evidence to suggest that founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged. (p. 5)
Alaska Startup Week is a good opportunity to correct course and re-examine who we envision and support as entrepreneurs. Entrepreneurial ecosystems often seek to predict the entrepreneurial traits which lead to the creation of successful new firms.
When this is done, it is important to understand that age does predict success but in quite the inverse way of current popular thought. According to NBER, “The highest success rates in entrepreneurship come from founders in middle age and beyond.” (p. 29)
Learning valuable lessons through failing fast, mentorship, and developing minimal viable products provides younger entrepreneurs opportunities to develop human and social capital and catch up with their older peers. Still, with all other factors being equal, the next time you predict the success of a new venture, your best bet is to go with the older entrepreneur.
Alaska Startup Week is an opportunity for entrepreneurs to connect across the state and is a collaborative effort by multiple organizations to diversify Alaska’s economy, largely led by entrepreneurs. This year, Alaska Startup Week has grown from three communities to ten, with over 70 events in Anchorage, Fairbanks, Juneau, Sitka, Kenai, Soldotna, Palmer, Bethel, Homer, and Seward. Alaska Startup Week is on Facebook.
Jacqueline Summers is an entrepreneur advocate who is an active member of the Alaskan Entrepreneurial Ecosystem through her contributions to Alaska Startup Week, Alaska Startup Weekend, the Global Entrepreneur Network and other entrepreneurial events. She works for the University of Alaska Anchorage Business Enterprise Institute, owns Paxaro Solutions, and serves on the King Tech High School Entrepreneurship and Enterprise board. Her absolute favorite job title is “mom’ and she is inordinately proud of the two amazing people in the world who call her that, Malin and Shay.