A Lost Generation of Entrepreneurs?

Posted by: Nick Leiber on January 27, 2010

This is a post by guest blogger Jeff Bussgang.

jeff_bussgang.jpg I’ve been worrying lately that we are suffering from a lost generation of entrepreneurs.

That was my first reaction when I read what Sequoia’s Doug Leone said a few weeks ago about innovation and age at a recent talk with MIT Sloan students visiting Silicon Valley, where Leone claimed that only people under the age of 30 are truly innovative. Over 30 folks can manage innovation, Leone observed, but you need to be under 30 to create it. Examples cited included Jack Dorsey, Twitter’s founder who was 30 at the time that he started the service.

Now you can argue whether this is right or whether it’s a hyperbolic statement for effect, but let’s put that aside for now. Here’s my worry: when I was under 30, I had the opportunity to be a part of a rocket ship start-up (Open Market), that promoted me into an executive team position of a public company in my 20s. The lessons and skills from that experience inspired me to delude myself into thinking I could be the founding president of another start-up, Upromise, when I was 30. At the time, when I looked around at my peers and friends, they were all doing the same thing at a similar age. Folks like Jeff Glass, who started m-Qube at around the same time and age, Scott Friend, who became president of ProfitLogic, Russ Wilcox at e-Ink and many more). These companies all eventually became substantial companies that each resulted in exits north of $100 million.

Now fast-forward to today. During the period of 2001-2009, there have been very few substantial start-ups built to allow that generation’s 20-somethings to learn and develop company-building skills. As a result, we have a lost generation of entrepreneurs. Not enough 20-somethings, or let’s even say under 35, have had the opportunity to see success at a young age and learn the important lessons of start-up leadership. I think once you’ve seen some success in your 20s, you are that much more likely to be a strong entrepreneurial advocate, mentor and serial starter in your 30s.

When my partners and I tried to develop a list of today’s under 35 entrepreneurs who had started companies and seen meaningful success with them, it was a depressingly short list. In addition to Twitter’s Jack Dorsey, Mark Zuckerburg is an obvious one, as are the YouTube founders, Chad Hurley and Steve Chen. Less well-known standouts include the Great Point Energy team (Andrew Pearlman and Avi Goldberg), who saw some success at Coatue (sold to AMD) which led them to starting what looks to be a fascinating and potentially game-changing clean energy company. And there’s Ric Fulop, who co-founded A123 in his late 20s, last year’s IPO darling.

So what do we do about it? I suppose one thing we can do is celebrate the heck out of the under 35 entrepreneurs we know who have seen success because we need their peers to know that it’s possible and encourage them to serve as role models to today’s students so that we don’t suffer from yet another lost generation in the years ahead. So who else should be on our list?

Serial entrepreneur Jeff Bussgang is a partner at venture capital firm Flybridge Capital in Boston. Follow him on Twitter @bussgang.

Reader Comments

Steve

January 27, 2010 11:19 AM

I'm a 29 year old entrepreneur living your very concern. Growing up watching the young entrepreneurs clouded my perception of entrepreneurship because I believe that generation is a blip in radar caused by the internet boom. The older generation of managers NEEDED those young people because the older generation knew very little about the technology. Now, there are plenty of older managers who understand the technology so investors, whether it's angels or VCs, won't settle for a 20-something running the company. I have two start ups right now, and whenever I talk to investors, that point gets echoed: Unless you've already sold a company for $100 million, you need to surround yourself with people who have. Not easy for for a 29 year old struggling entrepreneur, but I'll keep trying. Great article!

Jaycob

January 27, 2010 01:32 PM

I think it is interesting that a lot of the companies listed as started by friends in the article seem to be internet start ups. There's a big difference between lamenting the lack of entrepreneurship and comparing it to the days of the dot com boom where everybody was willing to throw cash at even the shakiest of business internet start-up business plans. Is there truly a shortage of entrepreneurs, or is the author just speaking from the lens of somebody who came from a time when there was an excessive number of them?

Yawp

January 27, 2010 02:49 PM

When VCs begin espousing arbitrary standards for identifying the next, great entrepreneur rather than leveraging their skills to identify the next, great idea, regardless of its origin, the VCs are evidencing their own disconnect and failure, not that of the entrepreneurs.

Josh

January 27, 2010 02:52 PM

I agree with a lot of the points in this article, but there seem to be two different issues being confused into one. The creativity of an under 30 entrepreneur, and the experience of maintaining and possibly selling a start-up company don't necessarily have to have anything to do with each other. I worked through my 20's at a start-up under someone who had 30+ years experience in the field of medical pumps. The owners were very innovative in that field, whereas most of the employees were young and comfortable in their positions, hoping to merely make it to the big "payout." Without the 30 years of a humdrum existence maintaining 2-week paychecks behind them yet, they were not quite as daring and bold as someone who had.

jjjkkk

January 27, 2010 03:03 PM

Putting it another way, how many (%) of the late 90s generation actually "started companies and seen (sic) meaningful success with them". That is also a depressingly small number. The vast majority of those startups destroyed capital

Happenstance - if you were the right age bracket during a game changing boom, you rode the wave. That has been true during every historical age of innovation - not just Web 1.0 or 2.0.

It is harder now, because it is harder now

jjjkkk

January 27, 2010 03:03 PM

Putting it another way, how many (%) of the late 90s generation actually "started companies and seen (sic) meaningful success with them". That is also a depressingly small number. The vast majority of those startups destroyed capital

Happenstance - if you were the right age bracket during a game changing boom, you rode the wave. That has been true during every historical age of innovation - not just Web 1.0 or 2.0.

It is harder now, because it is harder now

PremierInterns.com

January 27, 2010 03:20 PM

Great article. Both comments ahead of me bring up very valid and interesting points. I'm a 29 yr old first time entrepreneur also living with the same concern. I don't have too much experience dealing with angel investors or VC's but I would imagine that the cause of generation gap was due to the first dot com bust. Most start-ups were created by 20 somethings. When that went by the wayside angels and VC's were scaling back their investments because it left a bad taste in their mouth. Today I still think age plays a significant role in whether a business gets funding or not. And as most know, without start-up capital, most businesses fail. Unless the 20 something yr old entrepreneur has a very unique business that can attract a lot of everyday users, it's going to be hard. Young entrepreneurs need to get creative when they're trying to build their business off the ground. It's exactly what I'm doing with my business and I urge every young entrepreneur out there to keep fighting the good fight. You'd be surprise how many free sources are out there now due in part to previous entrepreneurs.

marcdavid4

January 27, 2010 03:36 PM

My husband, recently retired, was more innovative in the IT world than his younger counterpart at the same corporation. Age does not play into the ability to create or not to create.
My son did not have the "right degree" so he took his talents to Europe. He is a designer in the computer world but never took a college class in computers. (He is self taught) End result is, more creative talent is leaving the US for other countries that value the ability to think. That used to be the criteria for a job. Being able to think and not the right degree.

Rob

January 27, 2010 03:45 PM

My business partner and I have hundreds of ideas, many complete with technical specifications... but we can only work on the ones that don't cost hardly anything.

Money is the issue. There is too much investment in existing technology, and comparatively little in new technology.

We also have lapsed into a group of people who can only think about the internet. Any "innovation" someone has, tends to revolve around a website. While those are valuable, we are losing innovation in EVERY other area.

Ryan

January 27, 2010 04:03 PM

When I saw the headline, I thought this would be about Sarbanes-Oxley and the other overhead costs imposed on businesses by the federal and many state governments that are crippling entrepreneurs. This doesn't have anything to do with generational differences; it didn't just "happen". People always want to make money and be creative, if only you'll let them.

ad frazier

January 27, 2010 04:23 PM

The generation may be lost, but the decade is definitely not. Don't rule out the baby boomers. For each youngster, 20 boomers come to the market over the next serval years. Retired, with a wealth of knowledge and experience are ready to fill the gap.
A larger % of boomers have the next big idea and become entrepreurs.

brandon

January 27, 2010 04:32 PM

read the book Outliers, and then come to your own good conclusion (the book doesn't draw great ones for you). its the end of this industry's revolution. as has happened with the previous revolutions where we got the names like Rothchild (read the ascent of money), Carnegie, Rockefeller (sic), to the more modern revolutions such as the hardware revolution a la gates, jobs. if you look at it like that you wouldn't scratch you head wondering why the progression isn't continuing. you need to find the next new thing, then you'll be truely progressive. and give me a call, because i'll want in on it!

Jake

January 27, 2010 04:43 PM

Marcdavid4: Amen, I completely agree with your comment. And, it's not only the "right degree" that's being sought, but the "right look" and the "right personality & fit" they want as well.

Screw Corporate USA,and good thing your son had the courage to not get discouraged and instead take control of the situation and head to Europe.

Alex

January 27, 2010 04:53 PM

In 1997 I work for a company that went public.

Today I am 53 and in 2007 I started a new company without VC or other investors. The company has revenue, profit, it continue to grow and I am very optimistic. Now. since I do not have any outside investors even a small success can fill like an IPO. Starting a company today is maybe in the range of tens of thousands of dollars, in general much less, and it can bring revenues and profits in the range of hundred of thousands of dollars or millions per year. For a VC such an operation will be a total flop, for you is a dream come true.

My point is: Today the entry point is very low, and there are a lot of opportunities. Skip the VC, don't even bother, companies with revenues of hundred of thousands of dollars can be created on a shoestring. You can compete hands down with bloated startups on life support. If you are over 50 and you are technical is a wonderful time to start your operation.

Regarding entrepreneurship I think Sequoia should partner with preschools, I am sure they will not be disappointed.

mahalohana

January 27, 2010 04:58 PM

Good article. Maybe I'm confused by your headline, I wonder what is your definition of an "entrepreneur"? In my simple world, I see a lot of them be they 20 years old or 120 years old. From owning a $100 million company to owning a table at a craft fair. America is choke full of (young) entrepreneurs. Turn off your computer and cell phone, go outside and walk around your city.

Shannon

January 27, 2010 05:01 PM

Great article, but the comments above do make me wonder about what's going on in Millenial entrepreneurship outside of the tech industry and how that compares to previous generations.

In many industries VCs or angel investors simply don't exist, and credit and capital aren't easy to come by these last few years. That is surely affecting rates of start-ups.

On the optimistic side, check out the Summit Series people, celebrating young entrepreneurs. Getting a lot of press lately: http://www.thesummitseries.com/

Jeff Bussgang

January 27, 2010 06:58 PM

Thanks to all for the great comments. To be clear, I think great entrepreneurship can happen at ANY age. I was merely reflecting that young entrepreneurs missed out from a timeframe standpoint during some lean years from 2001-2009 (yes, Gladwell's Outliers is a good reference point). As a result, there are few role models for them amongst their peers. We need to celebrate those role models and beat the drum - young entrepreneurs and old entrepreneurs alike CAN and WILL be successful in the 21st century.

d_p_kelly

January 28, 2010 03:25 AM

Very interesting article, always a pleasure to get a true entrepreneur’s insight. From my limited experience and short sighted point of view:-( Innovation should be measured against the problem it solves so in that sense I don’t see the dot era as a very innovative time, not at least from a problem solving perspective. However, it was well clued-in in to how to leverage economic and financial opportunities there is no doubt and maybe in that sense it was innovative. I think today benchmarking innovation is becoming more and more irrelevant, although understandably human to try and do it, but it might actually be cause of our fear that innovation is not on the way. I feel the actual process of innovation needs to evolve and I believe we have enough problems to work as motors for this change to happen. Keep these articles coming!

Andrew Wong

January 28, 2010 04:39 AM

A very inspiring article. Middlemanagement ambitions have become too large and the youth have become far too old at such a young age.

New User

January 28, 2010 11:10 AM

We are just closer of ending an era: the emerging of the Internet. A lot of ideas in the last 10-15 yrs were in technology/IT/Internet. The Real technical innovation was blocked by "China price": no small co, any genial owner, could not compete against this price(apprx all big cos created shops in China in last 10 yrs: thus their China price is "protected", and no small co could compete against it). The result is that when speaking about "creativity", the only remaining choice is IT. Here just to remember you that children play with computers from the age of 7 yrs old, etc. So, when they reach 22, they may have 15 yrs of "working experience".

The problem is that IT could provide apprx only a "nice interface" to things: as long as they do not have a solid engineering school, technical/true creativity is not. Look to the last Toyota recall: thousand of people layed off(and affecting the lives of thousand of people), bcse some(?a lot of?) young workers lack practical skills, other then computers. It is really sad, and quite destructive.

Jennifer Hammaker

January 28, 2010 01:39 PM

I work with an organization (ITN) that connections entrepreneurial faculty and students with businesses to boost tech transfer. Our mini seed grant program (up to $10k) has been very successful at engaging these communities in what we call the "sniff test." It allows the students to interact with CEO's and company founders to get a feel for the business. They may or may not want to start a company in the end, but at least they have practical, real-world experience. Most of the business contacts are CEO's at young/high growth companies or more established co's with the founder still at the helm.

Lafayette Howell

January 29, 2010 12:17 AM

I am not quite sure what to think about this blog post. The perspective intrigues one part of me; the other highlights the insular nature of this kind of thinking (these young men all expecting to receive a huge amount of money for “exiting” the company that was started).

What I have observed is more or less opportunists at the right time and not necessarily building anything to last or that is sustainable. Unfortunately, many people began to believe this was the norm (remember the rookie contracts in basketball BEFORE the rookie salary cap). We are at the same point in business now, where investors have gotten a lot wiser with experience, as well as NBA owners.

The real deficit and the opportunity is to have the entrepreneurial courage to think and say something fundamentally different that solves relevant problems in our society. From education, healthcare, teen pregnancy, dropouts, drugs, driving while texting. When we (entrepreneurs) begin to solve these problems in earnest, we will see the collective spirit of entrepreneurism return. YouTube could be akin to the golf skills of Tiger Woods; there will likely not ever be another financial return as great for such a short time from launch to exit, just as there will likely never be another Tiger Woods on the course.

The challenge now is that entrepreneurs have gotten a bit lazy. We know everyone is working hard, but the thinking, the types of problems we are solving are not necessarily unique. A good example of this is the proliferation of apps on Apples App store. The real opportunity is to now tackle juicier business and societal problems that affect the world. Here’s a question for those under 35 entrepreneurs: what has more sustainable and relevant value to our economy: having 1 billion people on Facebook or reducing the high school drop out rate to less than 10% nationally? The few people that have stock and the VCs will proudly like to see the former, which will lead to another Business Week article to discuss how less than a half-dozen people became billionaires. This in turn will lead to another lame blog post from one of those people who enjoyed an uber-payday to comment about another lost decade of because they don’t have enough friends with similar amounts of coin.

jjjkkklll

January 29, 2010 06:32 PM

This has been posted in at least 3 places (here, blog, Reuters). Interesting to contrast the comment threads

The Sequioa 20 something bias has to be joke. Anyone with any experience in this stuff knows that real success in a sustainable enterprise (not aanother silly social networking me too idea with no business model ) requires some basis in economic reality and business experience

Virtually every meaningful study has ID'd the most typical funded entreprenuerial profile as good tech or business training, some organizational experience in a well managed company, market familiarity with the problem being addressed, and about 12-18 years of business experience. Putting it another way, try to get funded for a venture that is technically complex or requires sophisticated market reach w/o that on your team. Good luck with that

abass

January 30, 2010 09:46 AM

I work with an organization (ITN) that connections entrepreneurial faculty and students with businesses to boost tech transfer. Our mini seed grant program (up to $10k) has been very successful at engaging these communities in what we call the "sniff test." It allows the students to interact with CEO's and company founders to get a feel for the business. They may or may not want to start a company in the end, but at least they have practical, real-world experience. Most of the business contacts are CEO's at young/high growth companies or more established co's with the founder still at the helm

corina kroon

January 30, 2010 05:59 PM

If money is your problem, consider moving to The Netherlands where companies like aperture or myself can help you with applying for great innovation programs that support knowledgable innovative entrepreneurs.

snerdinepine

January 31, 2010 09:24 AM

That is a stupid blog. The fact is that the older you get the more insight you have. The start of the internet offered both money and opportunity - its a different game now. Bring experience and make it useful - thats the new paradigm.

50yearold

January 31, 2010 11:33 AM

My entrepreneurial career began in early 80's during boom years and I can tell you that things have definitely changed. One issue I see is the younger generation is almost totally focused on convoluted high tech brainchilds, rather than basic need services and products. If this generation would pull away from their Macs and put their feet on the ground there would be much higher success ratio. The easy tech stuff has mostly been figured out. Harder to come up ideas that leap frog over the old stuff. Incremental tweaks won't attract money. Tech is now a mature industry run by mature adults.

Value Vs Bullshit

February 1, 2010 11:47 AM

I am a firm believer that entrepreneurship is essential to the competitiveness of a nation. I love Google, yet I hate Facebook. The difference here is that Google to date has over $10 billion of cash. This cash was generated because the company is profitable and it provided an invaluable service by linking the buyer with the right seller and vice versa. This cash is tangible and real and a testament that there is intrinsic value to Google. Facebook has made minimal revenue and people are drooling over how much the company is worth. Don't get me wrong, it is a vastly important vehicle to link people together and for that popular high school girl to show to her classmates that she's still having fun 10 years after graduation. People have speculated that Facebook is worth over $10 billion. My response would be, show me that you can make $10 million in earnings first and then we'll see if we're willing to pay 1,000 times P/E for the company. Innovation is a great thing, but it does not necessarily result in financial value. Craigslist.org is a powerful website with huge economy of scale. However, it only pumps out $10 million of revenue a year. Innovation for innovation's sake is okay. But, if you call yourself an entrepreneur, you better make sure that your innovation leads to profits.

olla kalu ogba

February 1, 2010 06:16 PM

Isnt it harder to think anything is posible when life has dealt u some hard knocks. by ur 30s reality checks def. set in...i.e if u started dreaming early enough. lol!!!

Kristin Ivie

February 1, 2010 07:05 PM

Thanks for this thought-provoking post. I've written a response post here: http://www.socialcitizens.org/blog/lost-generation-entrepreneurs-i-think-i-found-them.
I think perhaps you were looking in the wrong place for this generation of entrepreneurs. I have some examples of nonprofit starters and social entrepreneurs who should be added to your list of under 35 success stories, and I'm interested to know whether you think they fit the bill.

Tony Fleming

February 2, 2010 01:12 AM

Some businesses cannot be effectively started by people with only 20-something experience. Much biotech leaps to mind. I tend to agree with the posters who tweak the author as having ridden the wave. No offense. Lots tried and failed. But, it was a different time, obviously.

Sam

February 4, 2010 01:21 AM

If I recall, OpenMarket was started by Glenn Meacham... who was over 30. Nice that you road that gravy train, along with Sam K and other McK / HBS types. That exit - which didn't create lasting value - gave you capital to take risk in the midst of a frothy time. You learned a lesson on how to build to flip... but not how to build and run a company for the long-term. I think we're missing a gen of entrepreneurs since too many credit their success to themselves (youth, brilliance, other) vs. the incredibly frothy times and didn’t learn core lessons that blend innovation with execution. Bill Gates - he counts. Steve Jobs - credit him too... and Bezos, among others. They built businesses w/o all the hype… with a much longer incubation period and were held to real metrics of profits pre-IPO, etc. I was there in the boom days and enjoyed two IPO’s and experienced numerous financings and acquisitions, so believe I can say first hand that there was a lot less to the business / entrepreneurial story – real pioneers who built companies with tight resources, providing for huge and lasting innovation and making real lasting success come from it. Time and time again I was dismayed by how the anointed ones credited their financial success to their own entrepreneurial capacity vs. a healthy interest in gambling and a high level of brash and irresponsible behavior. Surely, many winners did create lasting value, but what about real hero's such as Chambers, Whitman, Duffield? No sub-30’s in that group and real companies built under their leadership.

jimmy

February 6, 2010 03:26 AM

It communicates important entrepreneurial management practices, such as how your venture will mitigate risk, and how your venture will manage uncertainty. Most importantly, new business venturing is now about focusing on creating sustainable value.

jimmy

February 6, 2010 03:26 AM

It communicates important entrepreneurial management practices, such as how your venture will mitigate risk, and how your venture will manage uncertainty. Most importantly, new business venturing is now about focusing on creating sustainable value.

Donna Kastner

March 26, 2010 02:09 PM

Came to this article a little late - but then again, I'm part of that Boomer Generation you all but dismissed.

Don't count us out - amazing things are going on with Boomers launching viable businesses they will take right into retirement.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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