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Editor’s Note: Vivek Wadhwa is a longtime friend of Making Sen$e and appears here today extolling the economic virtues of coding and entrepreneurship — for the older, even much older set. He’s written before about his personal experience as a CEO, where he’s seen how older entrepreneurs are crucial to Silicon Valley. Wadhwa last appeared on this page writing about how to fix Google’s gender gap. A similar version of this column appeared in the Washington Post last week.
— Simone Pathe, Making Sen$e Editor
Economists are raising the alarm bells about declining entrepreneurship in the U.S. They also worry that businesses — like people — are getting “old and fat.”
Ian Hathaway and Robert Litan of The Brookings Institution published a report that documented that the share of firms aged 16 years or older has increased from 23 percent in 1992 to 34 percent in 2011, while start-ups have become a smaller proportion of the economy, going from 15 percent to 8 percent. They say this is a trend that is happening “in every state and metropolitan area, in every firm size category, and in each broad industrial sector” and that this could lead to a future of slow economic growth.
Old companies can be a problem for the economy because they become set in their ways and stop innovating. These companies don’t add as many workers or grow at the pace that smaller companies do. Old people, however, are an asset — even if they are fat. They have the knowledge, experience and motivation to build innovative new businesses and boost economic growth — if we empower and enable them.
A common belief, at least in Silicon Valley, is that it is only the young who can innovate, and that therefore, we need to encourage more students to start companies. Yes, we do want the young to start companies, but do we really need more social media apps for sexting or finding dates, as kids in Silicon Valley are developing?
A better strategy may be to motivate and empower the old — the parents of these students, and maybe even grandma and grandpa.
In yesterday’s era of social media and mobile apps, it was kids in dorm rooms who built the disruptive technologies. They understood these technologies better than anyone else and were not encumbered by the ways of the past. With today’s exponential technologies, it is possible to solve bigger problems than sharing a photo. We can address the challenges of health, hunger, energy and clean water by taking advantage of advances in sensors, artificial intelligence, robotics, synthetic biology and computing.
To solve the big and complex problems of humanity, entrepreneurs need to have a world view and to be able to see the big picture. They need industry experience, knowledge of diverse social and scientific disciplines, and people-management skills. They need the abilities to go beyond wishful thinking, to step into others’ shoes, and to weigh likely outcomes of the options before them. Older, experienced workers usually have many of these skills. Yes, they may lack an understanding of mobile technologies and app development, but these can be learnt in the same way that the kids learned them.
We must first get over the myth that older workers can’t innovate. This leads to bias in press coverage and to investors favoring college dropouts in funding decisions.
Research that my teams at Duke and Harvard did in 2008 revealed that the average and median age of the founders of successful technology companies was 39. Twice as many founders were older than 50 as were younger than 25. And there were twice as many over 60 as under 20. In a follow-up project in 2009, we looked at the backgrounds of successful entrepreneurs in 12 high-growth industries. We found the average age of male founders to be 40, and of female founders to be 41.
We learned that these entrepreneurs typically started companies for one of three reasons: they had ideas for solving real-world problems; they wanted to build wealth before they retired; or they had tired of working for others. There is an abundance of American workers who share these sentiments. To boost our economy, we need to unleash and enable them. Here are some ways to do that.
An analysis of U.S. Census data by the Kauffman Foundation’s Dane Stangler revealed that the average age of U.S. entrepreneurs is now rising, with the highest rate of entrepreneurial activity shifting to the 55–64 age group. So assisting this older group in founding businesses is likely to produce far greater dividends than assisting the young in the same way.
Regardless, it’s not necessary, and not especially useful, to choose between helping older and helping younger entrepreneurs. What is best for the economy is to have the old and the young working together to solve big problems. The young can come up with the audacious ideas; the old can find sensible ways of implementing them. And it won’t hurt if the old lose some fat.
Vivek Wadhwa appears in Paul Solman’s Making Sen$e segment, “Man vs. Machine,” below:
Vivek Wadhwa is a distinguished fellow at Carnegie Mellon University’s College of Engineering. He is the author of "The Driver in the Driverless Car: How Our Technology Choices Will Create the Future" and "Innovating Women: The Changing Face of Technology." Wadhwa is an entrepreneur and academic at Stanford, Duke, Emory and Singularity Universities where he oversees research. Wadhwa has studied the impact of globalization on U.S. competitiveness and also diversity in Silicon Valley -- or the lack of it. He is an advisor to several governments; mentors entrepreneurs; and is a frequent contributor to the PBS NewsHour.
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