Though, if you fail at an older age and you are in the situation where there isn't much margin between your salary and mortgage (and supporting family), failure isn't as easy.
20-something's shouldn't be wasting their time on things that, with a mature person's wisdom, aren't worth risking their time on. Rather they're better off gaining experience so they have good judgment when they're 40-something.
And 40-something's can handle it with a family and mortgage, because they're not naive enough to think you need to live on ramen to make it big. No: they have connections, put together a team, raise capital like the professionals they are, and continue to pay themselves a salary that can support a family.
Having an appetite for risky things is dumb. Isn't there a quote somewhere about how successful businessmen don't take risks? They try to only do things that seem to be a sure bet, and try to only use other people's money.
For the 80%(?) of the young entrepreneurs who fail, not so much.
For the city/country that produces a massive company founded by young risk taking individuals - a lot. (Apple, Google, Microsoft, Facebook, Twitter, Airbnb etc)
Thinking of it as the explore-exploit method. Most of the explorers fail. Some of them turn in huge successes.
From a collectivist perspective, the net gain from these successes may dwarf whatever the over-exploitation that non-young non-risk taking individuals would generate.
Not necessarily. People have different risk profiles and different ways they value experience. For example, consider this combination: (1) low cost to risk-taking; (2) large financial upside; (3) long-term benefits from the experience; (4) intrinsic enjoyment of the process. My point: there are times when starting a risky business is rational.
Risky things are where there’s a large chance of failure while putting all your eggs in one basket, and/or failure comes at a big cost.
The only time starting a "risky" business is rational is when you’re an investor with tons of money so the downside is minimal, or you’re the founder and will enjoy the experience regardless and will lose someone else’s money, not your own. But then, while the “business” is risky, it’s not actually a big risk for either party.
I worked a couple of months for a startup that just didn't pay me. Now I don't believe people should be forced into indentured servitude, but the guys undertaken the same trick several times and many don't neccessairly agree that the slate is morally wiped clean when your 7th startup is finally a success after leaving a trail of misery behind you.
40s something's with capital can. Not everybody can get the capital to take the risks.
Well, I guess that depends on how big an appetite we're talking about. I think perhaps older more experienced people might tend to take less stupid risks. But if you don't take any risks at all you rarely get a big payout.
Perhaps the trend with the more experienced is that they have a better idea how big of a risk they can afford to take (without losing their shirt over the deal if it falls through).
Most of the time what regular people think is risky, is actually not because it has a tiny downside. Failing doesn't have to mean that you lost everything.
Or you could say they've put more thought and experience into the decision to start so they've already got a better chance at succeeding.
I think it's cause after years of seeing middle management screw things up, we're jaded and stubborn and convinced we can do better. Now get off my lawn! <grin>
Because there is a whole class of B2B companies that opens up as you get older: it requires experience in an industry to find a niche market, of entreprise sale processes, customer support, basic accounting, good connections and a network of previous trusted clients, and of course a large breadth of technical expertise to deliver. But then with correct execution and not much risks so you can have a “boring” but viable company from the start. Whereas in your twenties only the high risk type are doable.
So maybe there is a simple explanation in these numbers without doing hypotheses on the cognition and risk aversion of younger vs older people.
Risky is dumb. But VC's want you to be risky--swing for the fence or go home.
Older entrepreneurs know that you have to do something different than everybody else or you will fail, but their experience tells them what that is so that instead of being risky, it's simply being smarter.
Older entrepreneurs also tend to shoot more for a solid business with cashflow. It won't go exponential, but it will likely make the owners and employees more money than a "unicorn".
Failure is less costly for 20-something entrepreneurs than 40-something with family and mortgage to pay. And so you get more "starts" by young entrepreneurs where failure basically doesn't cost a lot. And less "starts" by 40-somethings unless they really think they have something worth taking the risk on.