Kind of tricky article, feeding off the observation that many of the most successful technology startups were founded by people in their twenties. This led to the joke that perhaps VCs shouldn’t fund anyone over thirty.

Then this post comes in from a Corante Blog titled: The (Bayesian) Advantage Of Youth which suggests that perhaps older folks have accumulated too much knowledge, keeping them from seeing the world in a different light. Example: a forty year old assumes music can only be sold by a music store on a CD, whereas a twenty something wouldn’t, having grown up with Napster downloads.

However, I must politely disagree that too much knowledge is a bad thing - it’s what people do with it that matters. To say knowledge is irrelevant comes groaningly close to the previous Web 1.0 bubble mentality where common sense was commonly discounted, as it was too common and didn’t get the common people pretend-rich fast enough.

The stupidest Web 1.0 business models considered profit unnecessary because garnering users was more important (WebVan, Kosmo), somehow implying it was healthy to lose money on every sale. At the time, this presently head-scratching statement was justified by labelling profit an antiquated baby boomer, old economy concept that had to be swept away to make room for the “new economy.” Companies were encouraged to give things away for free in order to gain users and market share. This strategy worked really well for companies with lots of money in the bank (Microsoft) but the startup burnrate was insane - as you can’t pay employees with free.

But I don’t disagree that twenty-somethings have advantages in addition to healthy inexperience.

Rob Hyndman makes a good observation that older folks are more cynical and take less risks. Instead of saying “let’s try it” they tend to name reasons why something can’t be done, as opposed to many twenty-somethings with an experimental, risk-tasking bent.

I’m also sure twenty-somethings are better able to make the sacrifices often needed to get a startup off the ground in the early days. An older startup exec will likely need more compensation - a retirement package, options, health insurance, a nice office, and an exit strategy. Meanwhile, someone just out of college is more likely to be just fine without all these perks, living in a tiny apartment, working in an office that is basically a garage, or forgoing health insurance simply because they don’t know any better. How many forty somethings with kids in college could do this? All this sacrifice is a direct benefit to the company’s bottom line.

Another advantage of youth is the opportunity to fail. With a good ten years before middle age responsibilities (kids, mortgage, retirement, a spouse), the consequences of abject failure are lower: you only hurt yourself, and have time to recover. Who cares if you go bankrupt when you still have decades to earn the money back?

Here’s a kid who has invented a cool chemistry card game “Elemento” and wants 100K in funding so he can make a million bucks before he’s in high-school. Personally, I think his success lies more in the fact that at his pace, he could crash and burn three times over before he’s even eligible for the draft. Therefore, I get the feeling he’ll be successful, if not this time around, the second, third, or fourth.

Lastly, I feel that youth’s advantages is more demographic than anything this generation (Y, is it?) “knows” that older folks don’t. After all, “Generation X” (of which I’m a part) was loosely associated with driving the ideas behind “Web 1.0.” When that began to collapse, many companies brought in more experienced (think “baby boomer”) management teams - and the companies still tanked. No amount of youthful energy or elder experience could halt the nose-diving stocks of profitless companies. The end result was a lot of “schadenfreude” and finger-wagging that you can’t change business fundamentals like profit and providing services people actually want to use. Are we supposed to forget all those business fundamentals simply because a new generation has come of age, eager to spend investor’s money?

To the twenty-somethings, your youthful advantage is temporary. Before you know it, you’ll realize risk applies to everyone. All that is such a novel idea because it’s in opposition to those older, will seem old to those younger than you. This is as inevitable as today’s pop music pissing off yesterday’s teenagers.

So start a company while you still can. Mr. Elemento is already kicking your ass.

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