Startups Are Not Just for Kids
Not all tech titans are college dropouts either
By Margo McCall
Many of today's biggest technology companies were founded by kids barely out of high school. Bill Gates learned programming at 13 and left Harvard University as a junior to start Microsoft, a company that now has 78,000 employees worldwide and $50 billion in annual revenue.
Apple founder Steve Jobs, whose company produces $24 billion in annual sales—and a slew of culture-changing consumer electronics devices—dropped out of Portland's Reed College after only one semester.
Larry Page and Sergey Brin left Stanford University's computer science program after coming up with the idea for Google, and have been too busy running their $16.6 billion search firm to get around to finishing their PhDs.
The story's the same for Jerry Yang and David Filo, who conceived of Yahoo! while working on their electrical engineering doctorates at Stanford in the mid-'90s.
Starting companies takes experience
But the experiences of these bright stars in the high-tech universe are hardly representative, according to a survey of American-born entrepreneurs by the Ewing Marion Kauffman Foundation. In fact, contrary to the stereotype, most technology and engineering company founders are well out of their 20s.
"The message is that age is not a barrier—age is an advantage. Twice as many US-born tech entrepreneurs start companies in their 50s as do those in their early 20s," said lead researcher Vivek Wadhwa, a fellow with the Labor and Worklife Program at Harvard Law School and executive in residence/adjunct professor at the Pratt School of Engineering at Duke University.
The Kauffman Foundation found that the average and median age of US-born founders was 39 and only about 1 percent were teenagers. And the tech executives surveyed didn't found their companies overnight. American-born tech executives with MBAs took 13 years to start their companies, compared with 14.3 years for those holding computer science and information technology degrees, 17.6 years for engineering degree holders, and 21 years for those pursuing PhDs.
Besides the looming shadow created by larger-than-life figures like Gates and Jobs, the stereotype of the youthful tech-company founder was fueled by the swarms of high-flying wunderkinds who landed millions for their inventions during the dot-com era.
Wadhwa, who started out as a software developer, was involved in the founding of two startups during that time. The first, Seer Technologies, was based on technology developed at Credit Suisse First Boston and grew into a publicly traded company with $118 million in revenue. The second, the privately held Relativity Technologies, produces enterprise software modernization systems.
"In the dot-com days, you had a bunch of young kids starting companies. They weren't the only ones starting companies, but they were the ones who got attention. I knew that there was something wrong with the perception. Maybe only a handful were in the young category. The vast majority were experienced executives," he said.
Learning from your mistakes
Wadhwa said it takes years to amass the business and technological experience that's needed to found a successful company. "You need experience to start a company. If you're going to execute a business plan, you need to know how to manage a company, and you gain that by doing it," he said.
Learning what not to do is just as important. "Failure is underrated. You have to mess up a few times to know how not to mess up. Suffering defeat makes you a lot more pragmatic and cautious. You know what to watch out for."
Wadhwa said many start their own companies after advancing to the point when they are "smarter than their bosses." Midlife can also be accompanied by the desire "to see if you can make it on your own."
The study was based on a survey of 652 CEOs and executives at 502 engineering and technology companies founded between 1995 and 2005. Almost all of the founders held bachelor's degrees. About one-third also possessed master's degrees and an additional one-tenth had doctorates.
Nearly half of the degrees were in science-, technology-, engineering-, and mathematics-related disciplines, and about one-third were in business, accounting, and finance.
Is Ivy League necessary?
Although the survey respondents earned degrees from nearly 300 different schools, Ivy League schools were overrepresented. The top 10 schools where the entrepreneurs earned their highest degrees include Harvard University; Massachusetts Institute of Technology; Pennsylvania State University; Stanford University; University of California, Berkeley; University of Missouri, University of Pennsylvania, University of Southern California, University of Texas, and University of Virginia.
Furthermore, US-born tech founders that had earned Ivy League degrees tended to establish companies that generated higher revenue and employed more people. Wadhwa said that while elite schools have a slight edge, the results show that where you went to school doesn't matter all that much.
But he said getting a bachelor's degree is an important first step, since companies founded by entrepreneurs with only high-school education underperform the others. CW
(Top photo: Bill Gates gives a presentation at New York's Columbia University. Bottom photo: Google's Larry Page and Sergey Brin.)