[Flickr credit: Quinn Dombrowski]
We all relish the optimistic curiosity and energy of young people testing ideas and exploring better ways of doing things. However, successful new ventures are invariably formed by teams that bring together not just disruptive thinkers, but experienced people with unique knowledge of their industry. In honor of my mother having turned 80 this year, I look today at the wise “third age” or “encore” entrepreneurs and how they are shifting the paradigm of “retirement” in our society.
Yes, my mother will find this blog and I will be discovered for revealing her age. She has an iPhone, a MacBook Air laptop, reads dozens of blogs regularly and is as networked globally as all three of her children. She also has a great deal of experience, and like so many grandparents, is deeply passionate about helping “the young”. She is always questioning the status quo. Like many young people, she has time to think, use social media and experiment with things. She is a natural entrepreneur.
In the United States, it is impossible to talk about entrepreneur demographics without discussing senior entrepreneurs. That is why the Kauffman Foundation’s Vice President of Research and Policy, Dane Stangler, provided testimony earlier this year to the United States Senate Special Committee on Aging and to the United States Senate Committee on Small Business and Entrepreneurship about the importance of senior entrepreneurship to the health of the United States economy.
75-year old Mexican entrepreneur Carlos Slim promotes the idea of an extended working life: working until 75 years of age while enjoying more leisure time over our productive years. He bases his “3-day work week 11-hour per work day until age 75” formula on the fact that the nature of work in our era allows us to enter our fifth and sixth decades energetic and healthy, unlike the previous era of taxing physical labor or lifelong repetitive work. In addition, he stresses that lifespans have increased by a full three decades.
Senior entrepreneurship is not a new phenomenon, but it is becoming increasingly prominent. Data analyzed by the Kauffman Foundation shows that Americans in the 55 - 64 age group have started new businesses at a higher rate than those in their twenties and thirties in every single year from 1996 to 2013 (see the Kauffman Index of Entrepreneurial Activity). Businesses started by those ages 55 - 64 accounted for nearly one-quarter of all new businesses started in 2013, a share that has risen from 14 percent in 1996.
In an earlier study looking at the backgrounds of successful entrepreneurs in twelve high-growth industries, Vivek Wadwha and his team found the average age of male founders to be 40 and that of female founders to be 41. He has recently written in favor of teaching older people how to code and dispelling the myth that older people can’t innovate.
While more data is needed to measure the impact of older entrepreneurs (e.g. on the types of businesses they found, determining their hiring), there is enough evidence showing that smart policymaking should not overlook this age group, nor assume their businesses are mostly low-impact self-employment ventures. On the contrary, more tech founders are over the age of 50 than under the age of 30. Data has also suggested that startups with older co-founders are more successful, at least measured by their survival rates.
Senior entrepreneurs are much more comfortable with social media than many imagine and like the young startup crowd, they are open to using free available resources to bootstrap their new businesses even when they have solid credit scores. Elizabeth Isele co-founded SeniorEntrepreneurWorks.org and SavvySeniorsWork.org on that observation. Her goal is to help more seniors tap into their strengths and creativity as well as resources available to them to start businesses.
The experience encore entrepreneurs bring is extremely valuable. A survey of 1,400 business owners who incorporated their business through LegalZoom in 2012 found that two-thirds of respondents over age 60 had previously started a company. Ten percent of these entrepreneurs had even started five prior companies.
The characteristics of baby boomers inspired Kauffman’s FastTrac to create entrepreneurial courses for those aged 50+. The curricula assist baby boomer entrepreneurs in honing their unique strengths, translating life-long passions or hobbies into a business, leveraging their years of experience and drawing on their financial portfolio to intelligently launch a business. “We believe there is pent-up demand for entrepreneurship education among more mature audiences,” expressed Kauffman FastTrac Vice President Michele Markey at the launch of this initiative in 2012.
Stressed and unsustainable government social services programs and retirement plans impacted by the latest recession all add to the reasons why policymakers and practitioners alike should tap into the experience, focus, flexibility and networks that retired professionals can bring to startup founding teams.
So what are the policy levers to pull to tap on the potential of encore entrepreneurs? As the American population ages, we can expect a greater share of entrepreneurs to be seniors. The main objective should be to enable these entrepreneurs to start more high-impact, job-creating companies. In his testimony before Congress, Stangler proposed:
Education programs are also important. Efforts like the U.S. Small Business Administration’s SCORE program have helped many but there is still a need for a platform for intergenerational idea and talent collision.
I am not suggesting senior entrepreneurs need to be exclusively treated as a special group. We would be wise however to call upon them and make sure they understand their value. Like the startup kids, they like their individual freedom from 9-5 employment; they care about improving the world and creating opportunity for new workers, they do not always follow the rules (albeit an earned privilege) and whether as mentors, investors or simply people who have time to think, they can create economic opportunities.