To better understand the digital economy, we need to study unicorns - startups that have reached a valuation in excess of USD $1 billion soon after their foundation. Since many of them, from Steve Jobs to Bill Gates and Michael Dell the Mark Zuckerberg, have told their stories exhaustively in the business press, this is an easy task.
There's one interesting common denominator in all their stories: they all quit university at 19 years of age to start their own companies, which grew to become our foremost examples of successfully using digital technologies to build business and gain a competitive edge.
Research by 650 Labs in 2014 reviewed a large set of Unicorns (N=52) and concluded that the average age at which people start these companies is 31. While there were exceptions, the study noted that 20-something founders were quite common, and well-represented among those who have built successful billion-dollar businesses. If we take a look at history, disruptive ideas usually seem to originate with the under 35's: Charles Darwin, Albert Einstein, Louise Braille, and so on.
So young age is not a dominant trait for just digital entrepreneurs,- it's common for innovators and disruptors in general.
Why is youth such a dominant trait? How can young people disrupt industries and challenge existing incumbents? What´s wrong with older people? Or incumbent corporations that possess decades - or even hundreds of years - of combined work experience and still fail to innovate and respond to rapid market changes?
Six reasons why age is more than just a number
- Nothing to lose. Typically, young people don't have mortgages or kids yet, so if their venture fails, the collateral damage is minor. Having nothing to lose allows young entrepreneurs to take more risks and freely explore crazy, new ideas.
- Something to prove and the time to prove it. Young people are often single and haven't scaled the corporate hierarchy to a CXO or managerial position yet. They still feel a need to prove to others that they are capable of doing great things, willing to put in the effort and go the extra mile for personal and professional success. This manifests itself in the outcomes of new digital ventures.
- In peak cognitive age, with new skills. Young people are often still in school or have recently graduated, so, unlike older people, they have been exposed to the newest available academic knowledge. Studies also show that a person's ability to rapidly process information peaks around age 18 or 19, and starts to slowly decline after that. So young people, in addition to having a biological advantage, have been recently conditioned to create new ideas.
- Healthy naïveté, more optimistic and open-minded. Young people haven't spent years or decades in corporations and have thus yet to learn all the unproductive corporate procedures and practices that they would then need to 'unlearn' in order to create radical innovations or think outside the box. Young people may have an optimistic mindset, maybe even a bit naïve: they want to change the world. Experience hasn't made them cynical, skeptical or pessimistic. A positive clean slate to start from is a very healthy base for creating something new.
- More physical energy. On average, young people are in comparatively good physical shape. They have more free time to invest in sports and leisure activities that keep their body, muscles and brains fit. Thanks to their better physical shape, they can tolerate longer working hours. In entrepreneurial activity, physical energy and longer working hours are definitely an advantage.
- Closer to the future. They are the future generation. They'll take over the world one day. They live and breathe the creative destruction that will replace our outdated institutions and ways of working. "Everything was better back in the day" is not how they see it. Why would they? They only have your word for it. The young mindset is dominated by an unlimited future. The past is an abstraction.
Strength in diversity
Luckily digital business is not like kindergarten, so you don't have to leave once you reach a certain age. Age and experience bring with them certain strengths and advantages.
Unlike young entrepreneurs, seasoned business professionals typically have established strong networks that help them open new doors, create sales and form new partnerships. They have valuable experience that can potentially help create unique insights from existing data, and ask relevant questions that may lead to a breakthrough in thinking. Unlike young entrepreneurs, older people often have valuable experience in managing companies and can help a new venture avoid typical pitfalls related to business growth, offering commercialization people management and other factors.
All in all, while younger people might be more revolutionary, idea-rich and driven, older people may have better execution skills to make something cool happen and truly deliver on the vision. That´s not too shabby! There's definitely room for seasoned business professionals who can apply all they've learned earlier in their career.
Then there's also the question of homogeneity.
Is the fact that becoming an extremely successful digital entrepreneur - to exaggerate a bit - seems seems to now be reserved for young, white, inexperienced men, who all come from the same area and attended the same schools? How does this state of affairs help us promote gender or race equality, fight against age discrimination or improve prosperity of minorities, let alone the prosperity of poor countries in the world? It doesn't.
Let's hope for more unicorn founders who don't fit the current young architype in the future. These new founders could potentially become inspirational trailblazers for a new generation of successful digital entrepreneurs, and their success could empower people all over the world to engage in digital entrepreneurship.
Our wish for a more heterogeneous digital entrepreneurship community may come to pass in some ways, but youth will still dominate the digital economy for the foreseeable future. Going forward, we will witness more and more breakthroughs created by young, dynamic and skilled professionals. We will continue to see corporations that fail to harness the power of youth flounder.
How to survive the youthquake
Business leaders should consider hiring more young people, even if they don't yet have enough relevant work experience or a formal education. Young age as such is not a silver bullet to radical breakthrough innovations, but we believe that a lack of it in digital teams might be somewhat problematic for corporations that wish to create radically new innovations.
Corporate leaders need to ask themselves these six questions:
- What could we do to make our firm more attractive place to work for young people?
- How do we make sure that we hire the best young talent in the marketplace?
- Once these people have been hired, how can we ensure that they get enough freedom to innovate, explore, challenge and take risks, so that our company can produce radical new ideas?
- How can we harness the experience, contacts and insights of the seasoned business professionals, too?
- How can the young and the old play together to create a winning recipe?
- How can we ensure that there are equal opportunities for all people to pursue their entrepreneurial dreams if they so wish?
This blog was written as a collaborative effort by Mark Zawacki, founder of 650 Labs, a strategy consulting firm that advises large corporations globally on strategy, innovation and corporate development, and Mika Ruokonen, digital business advisor and one of the business heads at Futurice,.