[Originally published on October 3, 2017 at 4:28 AM]
Sometime during the summer, a friend of mine questioned if young founders (let's say younger than 26) would be able to develop the biggest startups of the future. The argument was that startups of the future will trend towards hard tech. Technologies like biotech, robotics, AI, and material science each take years to build domain expertise, not to mention capital intensive. Both those form barriers for young founders to get started. Contrast this with the recent history of companies centered in information technology/internet startups. We all have the image of genius hacker developing applications as a teenager. This was (and still is) an open industry, where the tools for development are literally on everyone's desktop. With all that said, it sounds like we have to say goodbye to the garage startup. So are there any reasons for us to be optimistic about the young founder of the future?
In the past 20 years, there have been many examples of student founders. Michael Dell, Bill Gates, Woz, and Steve Jobs all come to mind. Yet, it's hard to think of examples that stretch outside of this range, but we should fall prey to availability bias.
A quick survey of Wikipedia shows that in each technological era, young founders have always been able to make a name for themselves. This list is highly biased towards US companies and not comprehensive by any means. However, it's no guarantee that this trend of young founders will continue just because of this past trend--just ask Nassim Taleb. Startups are a uniquely creative pursuit. They sit between, mathematics, a totally abstract pursuit, and history. In "Age and Outstanding Achievement", Simonton examines the age of peak creative/leadership output of different fields. Poetry, pure mathematics, and theoretical physics --which exhibit a peak age in one's late 20s or early 30s -- and novel writing, history, philosophy, medicine, and general scholarship -- exhibit a peak age in one's late 40s or early 50s. I think entrepreneurship skews towards the younger side, but why? Naval Ravikant and Marc Andreessen have already written two great blog posts about this, and I'll quote liberally from them here.
"The first set comprises problems that are solved by an emotional state (poetry, painting), by loading a very difficult single framework into your head (math, physics, coding), and / or competition (driven by sex drive and time-sensitive). The latter set are more rational, are systems problems rather than point problems, and don’t have time-sensitive competition. " - Naval
Compared to internet startups.
"Modern entrepreneurship, especially web entrepreneurship, is extremely competitive / time sensitive, requires enormous amounts of iteration even withina single product life-cycle, and often requires solving many challenging technicaland business problems one after the other in a public view (with the opposite sex watching). So, it favors the young and single." - Naval
While Naval says that the young founder phenomena may be limited to the modern age, I'm making the generalization using the list built above that entrepreneurship has historically and will for the foreseeable future maintain this youthful skew. Another biological factor that may cause the youthful skew is the difference in peaks of fluid and crystallized intelligence. The young founder's combination of enthusiasm
and peak in fluid intelligence help her with identifying new markets, iterating on products, and more. Yet founders are not alone sufficient to create huge startups. Networks of other talented people, financing, production infrastructure, and the right knowledge also need to be in the mix.
Although hard tech startups will always require fundamental knowledge to get started to iterate, knowledge is now easier to acquire than ever. Youtube videos, pirated textbooks, Reddit, and StackOverflow are just a few aggregated knowledge bases. Knowing things within a domain is now easy enough, but young entrepreneurs of today also have the advantage of seeing the non-obvious connections between different fields. arXiv and scihub.org have allowed for academic papers to be shared as soon as they are written. It's amazing to watch when implementations of DeepMind's paper is worked on by communities around the globe simultaneously. Usually in one week you can expect to see code from that paper, and in another week that code doing something as interesting as writing episodes of Friends or analyzing the genome.
Sadly not all fields enjoy the low startup costs of software and AI startups. The hard tech startup often needs lab space or large capital commitments to start building prototypes. Not to mention the speed of iteration for AI is probably some factor of 10x faster than biological experimentation or material science, because you don't have to wait for cells to reproduce (or die). Again, new innovations help are on the young founder's side. Infrastructure is now almost as easy to deploy in hard tech as it is for a developer to use AWS making the speed of iteration 10x and cost 10x less.
After a founder uses those basic tools of infrastructure to find an idea that looks like it could be impactful they leverage new funding mechanisms to can scale more quickly. The funding of innovative ideas has long been concentrated in the hands of a few. Governments once reigned supreme in funding things, as we became wealthier this trickled down to wealthy individuals, then to professional risk investors, and now to individuals in the form of crowd sales, Kickstarters, and most recently app-coin sales. If you accept the idea no one can judge innovation at the earliest of stages--that VCs and angels are using basic heuristics to cull bad startups as opposed to picking winners--then new funding mechanisms can. Free flow of capital through crowdfunding, more diversified risk at the seed stage benefits allows for more companies to get created.
The internet and associated products should help entrepreneurship in general. If history is any guide, these types of innovation should help those out at the edge the most--today's young founders and others that are resource poor. More young founders can start hard tech companies of the future as the speed of iteration, cost of starting, and intellectual capital get easier to access. The more abstract tools get, the more quickly we can go from insight in mind to project in hand. I for one, am excited about this future.
Young founders will win because: