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June 17, 2007

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Greg Linden

Hi, Don. Looking at this, I wonder if some of the discussion is conflating risk tolerance with vision.

People in their 30s and 40s tend to have more difficulty taking their vision and running with it. Small children and other responsibilities tend to get in the way of risk taking.

People in their 20s have fewer constraints and tend to be risking only themselves by launching themselves off on some idealistic crusade.

So, it may be the case that some in the older crowd do not lack vision, but just the opportunity and will to pursue it.

Bob Warfield

Don, I'll put my money on Dave Winer a long time before I bet on your NYC VC.

Greg is right on target that there are many opportunities to confuse what's really happening cause and effect-wise. To his risk tolerance/vision issue, I'd add at least one others: What's more memorable, interesting and newsworthy? The kid or the established player? The young entrepreneur is the "man bites dog" story.

We love to read about the youngster schooling the established players, but I will submit that I see little evidence it happens more often than the other way around, and plenty of reason to believe its written about more often.

Closely related is the idea that is visionary simply because its so radically different, and we want to hear about it, but in the end, it just doesn't go very far. There are a zillion Web 2.0 startups, but their eventual fate will be decided as much by Darwinian Selection as vision. That's a polite way of saying even a blind (and very young) squirrel will find an acorn if he tries enough different places.

Or if you prefer, let's not confuse vision with fashion. Today's hot Web 2.0 startup may be tomorrow's ho-hum because it really was just the fashion of the moment and not visionary. We need to wait for our 20/20 hindsight to say which ones will be visonary.

There are plenty of counter-examples in the vision space as well:

- To your Marc Andreesen, I would point to Jim Clark as the real visionary who plucked him up and made it happen.

- Mark Benioff launched the SaaS revolution with Salesforce.com.

- Jeff Hawkins did Palm late.

- Tom Siebel invented the CRM category.

- Larry Ellison himself while we're in the Enterprise world.

- Philippe Kahn invented the Camera Phone after he'd been left for dead post-Borland.

So, in these matters, I think Mark Twain is much closer to truth. The rumors that older folks have no vision are greatly exaggerated.

Alfred Thompson

How much of what Jobs gets credit for is not so much his own vision but his ability to know a good thing when he sees it?

I think that you are right about people who get older losing their vision. We get to constrained by what we know is not possible or will not work. THe young don't know it will not work so they just go off and do it.

Shelley

What you neglect to mention is that virtually all of the founders of the companies you referenced are white, male, predominately American, and members of the affluent class (Stanford, Princeton, Harvard, MIT, Yale,...)

So do we, then, accept that this is the natural order of things? Opportunity only exists for affluent, white, typically American males?

No wonder the rest of us are leaving technology.

Michael R. Bernstein

Greg is right on the money. And part of that risk-taking that youngsters are prone to is dealing with VCs earlier than necessary rather than pushing an idea as far as possible toward a self-sustaining business on organic growth.

IOW, even though young entrepreneurs can now push an idea farther on a shoestring than ever before, so can older entrepreneurs, and the older entrepreneur will get seduced by VC money later in the company's maturity cycle, to the VC's detriment.

Young entrepreneurs will be less savvy about negotiating (letting the VCs take advantage). They also will take more risks in running the business and waste more of the VC money, which actually gives the VCs the upper hand when negotiating further funding for those ideas that do happen to take off (and remember, for a VC, the one hit-it-out-of-the-ballpark success eventually pays for all the other failures).

Somewhat balancing that is that young entrepreneurs can be less realistic about their demands during negotiations (killing deals).

But, on the whole, a young entrepreneurs risk-taking profile is closer to the VC's, and they are less likely to be a savvy negotiator for funding. From a VC's perspective, what's not to love?

kayvaan

Don - I think you're stretching here. You're engaging in pure and (I think) overly general speculation about the cause of a phenomenon that you do not really do a good job of demonstrating even exists.

(Sorry for the awkward sentence there. I'm 32, so my "sentence vision" is fading.. >:)

Greg's "risk tolerance" comment is, to me, a much more likely causal factor (I say "factor" because it's probably more than one thing that causes this alleged phenomenon).

Your speculation would probably much more palatable if you control for things like marriage, kids, health, etc. THEN maybe I'd buy it.

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Announcer: Middle-aged? Not getting those great, visionary ideas anymore? Buy our patented "Entrepreneurial Vision Restorer" for only three payments of $199.95 and we guarantee that your head will be full of totally rad ideas for RoR web applications again. You may not remember to make your mortgage payments or pick your kids up from school, but damned if you won't want to risk your kids' educations on the one thousand and first social network."

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DonDodge

Thanks for the insightful comments. Lots to think about.

Greg, the idea that older people with families to support have a lower risk tolerance than younger single people is probably true. However, younger people have the fear that they really don't know how to build a company. don't know how to raise money, don't know how to hire people, etc. So, on balance I would say that there are LOTS of reasons people of all ages don't start companies, but younger people tend to go ahead and do it more often.

Bob, Jeff Hawkins and Tom Seibel are good counter examples. As I said, there are exceptions, but the number of innovative companies started by 20-somethings is impressive.

Alfred, I think you picked up on the real reason...older people are constrained by what they know will not work. Younger people don't know that something won't work, so they just go do it. That is what I meant by "not blinded by "knowledge" of what is not possible."

Shelley, suggesting that opportunity only exists for affluent, white, American, males, is simply wrong. There is no one stopping you or anyone else from creating an idea and starting a company. It has never been easier or cheaper to start a company. Plenty of investment capital is available for anyone, regardless of background, to start a company. Tell me again...who is stopping you from starting a company?

Bottom line? There is risk and fear for everyone, at any age. Younger people probably have more fear of the unknown, while older people feel more financial risk.

dave rogers

Nice way to just dismiss Shelley.

It seems to me that she's simply "watching the trends...and they are pretty clear."

The future looks a lot like the past.

That is, if you can see clearly.

CPCcurmudgeon

It disturbs me that there is a growing dismissive attitude in the tech community towards people who are 30+. It's not enough that we find ourselves being laid off and replaced by (presumably) cheap labor, without even an opportunity to negotiate wages. Now, because of the success of a few 20-somethings, we don't even get consideration as potential successful startup founders. As someone who was laid off, has had trouble finding a full-time position in technology, and may need to form his own business just to pay the bills, this is very distressing.

Re: Shelly's comment about affluent white males, I don't want to overgeneralize, but most of the famous success stories we hear about had access to money, or people who had money, or were positioned such that if the startup didn't pan out, there was something to fall back on. Most people (especially the non-affluent) don't have access to those types of resources. If you want to argue the Paul Graham "It only takes $20000 to start a company" line, sure, but keep in mind that most startups fail. To the affluent, $20000 is a small drop in the bucket. To everyone else, it's a substantial investment, something that may not be available for quite some time (if ever) if things don't pan out. Most people can't afford to drop $20000 on a startup every few months. If they've even been able to save that much, it's something they need down the road as a down payment on property, money put towards children's education, contribution to retirement, etc.

jay e

I'm a 40+ male who has put it all on the line to start a business more than once. We knew going into our latest business that it would only have a 4 year lifespan and that has turned out to be accurate. Since my early 20's I've accurately forecasted new markets and technologies as far as 12 years ahead. I own a development company with a portfolio of future markets both big and small but after getting screwed twice on the "we don't sign NDA's" tactic we can no longer pursue our remaining projects with just our internal resources.

Perhaps it's just that I don't know what I'm doing in trying to raise capital, and that's a very real possibility since I've always found it easier to fund things myself.

But now that we need to find money it seems difficult to be heard. Any advice on where to turn? At this point I'd even be happy being bought out by a company willing to develop some of the projects and just retain a small percentage of them while staying on to lead. It's bittersweet to see one of our un-developed projects get out to market by someone else, and worse when the idea was simply stolen. But there is at least one multi-Billion dollar potential project and two half Billion dollar projects just sitting for lack of the few Million it would take to get them running. And those are not over-inflated estimates based on pie in the sky dreams.

So back on point. Perhaps it's due to my age. Perhaps I'm not talking to the right people and perhaps I just am not adept enough at the financing game or a combination of all three. But any thoughts on where to turn before I have to go back into Defense contracting work would be appreciated.

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