Chapter 3 - Advice for the Middle Age Entrepreneur
To read:
The ‘old’ myth: Contrary to popular myth, the National Bureau of Economic Research finds that successful entrepreneurs are middle-aged, not young.
Experience and competence: 570 years of collective experience didn’t count for much in MIT test of “seasoned” executives charged with cyber security.
To listen:
Viktor Frankl on COVID-19: How the great philosopher found meaning in hardship and uncertainty, from his grandson Alexander Vesely.
Chapter 3
Advice for the Middle Age Entrepreneur
“Don’t aim at success. The more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side effect of one’s personal dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself...
“Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long-run — in the long-run, I say! — success will follow you precisely because you had forgotten to think about it.”
— Viktor Frankl, philosopher, author, Holocaust survivor
While throughout this book I argue that we’re living in technology’s “Golden Age,” it is equally true that the entrepreneur’s journey gets tougher the closer you are to the “Golden Years.” Or if not tougher, it is certainly a different journey. It demands a different set of skills— and the leverage of those skills — on the part of the midlife entrepreneur who wants to be successful.
To be clear, I certainly want to encourage would-be entrepreneurs in their forties, fifties, and even sixties. Sure, Bill Gates and Mark Zuckerberg both founded their famous companies at the age of 19. The late-blooming Steves, Jobs and Wozniak, were 21 and 26 respectively when they founded Apple. But the Silicon Valley myth that a would-be founder older than 35 is “over the hill” is just that, a myth. It’s a myth that gets reinforced in popular culture in many ways, which sadly include such initiatives as that of PayPal Co-founder Peter Thiel’s fellowship program that provides $100,000 grants to would-be entrepreneurs so long as they are below age 23 and drop out of school. In fact, there is even some evidence made in a study, linked on the Digital Companion, by the National Bureau of Economic Research that companies founded by late-bloomers co-relate to faster growth. And after all, if you’re successful as a manager/executive of a big company, the easiest way to earn that CEO title to which you aspire probably is to start your own company and “promote yourself,” doing pretty much what you were for them but on your own.
The examples are both inside and outside of technology abound. David Duffield founded PeopleSoft in 1987 when he was 46, then as CEO led it to become the world’s second-largest application software company before selling it to Oracle in 2005 for almost $11 billion in cash. Then, at age 63, he founded Workday, which became even bigger (and ultimately competed against Oracle and his prior company). Workday is worth over $57 billion as of this writing. Henry Ford founded his eponymous carmaker when he was 40 and didn’t introduce the Model T until he was 45. Robert Noyce founded Intel with Gordon Moore at 41 and two decades later became the first CEO of Austin’s SEMATECH. Julia Child wrote her first cookbook at 50 before rocketing to worldwide fame. Steve Jobs may have been 21 when he founded Apple, but he was 52 when he and his team invented the world-changing iPhone. Or there’s the remarkable example of Jack Weil, the son of a Jewish refugee exiled from Prussia, who founded Denver-based clothing manufacturer Rockmount Ranch Wear when he was 45; he remained active as CEO until he died at the age of 107. (He is also credited with inventing that Texas icon, the bolo tie.)
That said, young people are generally cognitively sharper, or so it’s argued. They often have a huge advantage in the lack of distractions of family, mortgages, and other obligations. But in my view, the exorbitant advantage that the younger entrepreneur enjoys — which is yet one that the midlife founder can overcome —boils down to what is known as the “Planck Principle,” named for the famous German physicist and Nobel laureate Max Planck. He argued a half-century ago that innovation comes not from converts won over to a new idea, but from the fact that a new generation comes along to look at the world from a fresh perspective.
“It rarely happens that Saul becomes Paul,” Planck wrote in his autobiography, making a Biblical reference to the conversion of the ancient apostle. “What does happen is that (innovation’s) opponents gradually die out and that the growing generation is familiarized with the ideas from the beginning.”
I would put this idea somewhat differently: the younger entrepreneur enjoys the advantage of not knowing what is impossible and also not knowing how hard the journey will be. Those meanwhile pondering a startup after years as an employee — even as an executive star — can be burdened by the blinders of established ways that often limit their ultimate success. So in my view, if you’re older than 40 there’s still plenty of time to get “into the arena.” It’s just that for a variety of reasons, often the less experience you have in an industry, the better. This is counterintuitive, I know. And don’t discard your copy of Malcolm Gladwell’s book Outliers, which famously argued that you need 10,000-plus hours to master anything from computer code to the cello. Experience does count. I’m sure Elon Musk has put in his 10,000 hours and then some on everything from engineering cars to rockets to public transit tunnels.
But in an age when business paradigms shift around faster than whiteboards in an open office plan, the successful midlife entrepreneur will be the one who embraces this imperative.
A slightly wonky example helps to frame my thinking on this. It comes from a study I encountered while writing this book, and it’s adjacent to my views shaped as a data entrepreneur. In perhaps the most comprehensive experiment ever to study cyber-security decision-making, the MIT Sloan School of Management in 2018 paired a group of seasoned data security executives with a control group of inexperienced graduate students to test who might fare best in a simulated threat environment.
The exercise, linked on the Digital Companion, was complex, akin to the flight simulators to train and test pilots. It modeled various investment decisions, fixed cyber attacks on data with fixed impacts, as well as random attacks and random impacts. And it collapsed five years of decision-making into an interactive online game in which participants conducted 1,479 simulation runs. Ultimately, 38 professional cybersecurity executives with an average of 15 years of experience each “competed” with 29 graduate students who were in a general course on information technology and had no cybersecurity expertise. While the two groups performed differently on different aspects of the simulation, overall there was no significant difference in the success rates of the two groups. In other words, 570 years of collective experience among the “seasoned” executives were of virtually no utility when it came to anticipating and managing threats to data in a rapidly changing and evolving sector. Of the two groups, which do you think is the most likely to produce the entrepreneur who will found the company that ultimately slays the dragon of cyber threats? I’m sure you know what my guess would be.
The study concluded with the insight I would make more generally. This is that decades of experience indeed have great value, but the hubris of the experienced can hide important paradigm shifts in plain sight. My point here is that you just need to be aware of your blind spots and compensate accordingly.
One who has really excelled at seeing around vulnerabilities is my good friend Cotter Cunningham, who bucks the flavor-of-the-day entrepreneurial stereotype in many ways and who is somewhat of a legend in Austin technology circles.
After college, Cotter followed a standard career path, working his way through several jobs and ultimately rising to the post of COO of publicly traded BankRate, a personal finance company based in Florida. After eight years as COO, Cotter’s entrepreneurial journey began at age 46 with the euphoria of being his own CEO followed by a gut-wrenching pivot. Cotter’s first company was called Divorce360.com. After more than a year, it was a miserable failure. And the funny (and fortunate) thing is that Cotter has never been divorced! But instead of crying in their beers about it, Cotter and Tom Ball (who was at Austin Ventures at that time) decided what to do next: they founded the interactive, online retail coupon company ultimately named RetailMeNot in 2006. In 2017 it sold for $630 million after a successful IPO.
Some years ago, I interviewed Cotter when I was the Entrepreneur-in-Residence at the McCombs School of Business at the University of Texas at Austin. You can watch that discussion on the Digital Companion.
“If I had started a business at 20, I wouldn’t have known what not to do, I wouldn’t have known what to do. I would have just kind of had to find my way,” Cotter said back in that conversation. “When you start a business at 45, you know what doesn’t work. You know how your boss has treated you, you know how you don’t want to be treated… a lot of our culture is based on my wanting to do things differently than the way things were done at the companies where I had been previously.”
It was ultimately a conversation with his wife that pushed him to make the leap, he recalled. “I was bitching about the way things were going, and she said, ‘Well if you’re so smart, why don’t you do better?’,” he recalled. “That was it, I said, ‘What the heck’.”
And what was his secret for a midlife jump into the entrepreneurial stream? “It’s all about persistence. Persistence, at least in my case, is not something I was born with. It is something I’ve developed as a skill,” he said. “I’ve always persisted. Don’t give up.”
Another friend who I mentored as a midlife entrepreneur is Suneet Paul, Co-founder and former CEO of the fintech firm NewComLink (now Vyze, which was acquired by Mastercard). In addition to thoughts similar to Cotter’s, he underscores his use of a Board of Advisors with diverse competencies as key to seeing around those paradigmatic corners I’ve described.
“I’ve lived the real business world, had the chance to do different things and take risks while working for more established companies, learn from mistakes, and try something new the next time,” Suneet wrote me not long ago. “It is not like starting a company and learning business acumen at the same time.”
So if you’re ready for the journey despite a streak or two of gray in your hair, forget about age and get to work. Everything I wrote in Chapters 1 and 2 about both the euphoria and pain of the entrepreneur’s ride is just as valid for you as for any other would-be founder. But I do have a few additional words of advice.
First, you need to shrug off the big-company attitude and get centered. And fast. When you are a big company executive/manager, people pay attention to you most of the time but it isn’t very genuine and you start to believe their bullshit. For example, you get on the phone with a business partner and they kiss up to you. That is because you have the resources of a big company — possibly even billions of budget and thousands of people under your purview. You are in for a rude awakening if you expect that type of treatment toward anyone at a startup. You’ll get on the phone and you’ll have to really hustle. They will think, “Why am I wasting my time speaking with this small-company person?” Ironically, they’ll especially think this if they are working in a big company because they are more cautious about taking risks on a “no-name.” You don’t have the legitimacy that comes with decades of building a stable brand. You are an ant again. Actually, you always were an ant, you just lost perspective, and now is the time to realize that. It’s just like you were when you were a child and everything was a blank slate. Get rid of the executive swagger, get ready to fetch your own coffee, and when done put your cup in the dishwasher yourself. It’s a new day. Don’t skip ahead, but Chapter 17, Action-Oriented Communication, will also help you on this front. Meanwhile, at the outset of this chapter, I quoted the author Viktor Frankl. His book Man’s Search for Meaning is a good book for everyone, but for the midlife entrepreneur, it’s the critical guide with which to begin. Frankl will help you find your inner passion.
The interviews on finding meaning in times of hardship on the Digital Companion, recorded with his grandson Alexander Vesely, will move and inspire you.
Second, you need to learn how you’ve been conditioned, even manipulated, your whole life. This is a big topic, but you need to master the automatic reflexes that we develop as humans, which people in turn exploit to steer our decision-making. An expansive look at ways to gain mastery over your interaction with the world is in one of my favorite books Influence: Science and Practice by Robert Cialdini. This is important because it will put you very much in tune with human behavior. In short, Cialdini explores the counter-intuitive ways that influence works. Much of his focus is on the human need to reciprocate gestures and our unconscious desire to be part of a consensus before making a decision. This is why he insists on the critical responsibility to focus on personal commonalities to win the trust of your counterparts in any negotiation. Most importantly, Cialdini offers not just a primer on how to influence customers, partners, and employees but also the means to do so ethically. As a good person, you can leverage his insights for the greater good in your business instead of evil. And you can always ward off the evil by being informed on how it can manifest due to our collective, hardwired vulnerabilities. The book is also full of very practical early-stage marketing advice so you can break through the noise. You’ll really need that starting out, and the big companies you worked for figured this out at their beginning. In addition to linking to his books, I also include a video in which Cialdini explains the six “short cuts,” which are behavioral concepts, to break through noise: reciprocity, scarcity, authority, consistency, liking, and consensus.
Third, you need to think big or you will quickly fall into the pattern of being a “first-stage entrepreneur.” By this I mean your bootstrapped firm will stay small, limited to consulting or services, and will never have more than 20 or so employees. This compares with what I call “second-stage entrepreneurs,” whose companies are product-based, can bring in investment, and are ready to “swing for the fences.” And of course, it also compares even more dramatically with “third-stage entrepreneurs,” those who are all grown, have returned investor capital, and are well on their way to long-term growth — like hometown Austin heroes Whole Foods or Dell. Indeed, you do have more to lose than the younger folks but reflexively playing for safety will serve as a weight and you will be unlikely to achieve financial freedom. The best book on how to get the courage to think big and take on the slumbering giants is The Innovator’s Dilemma by Clayton Christensen. Much more on him when we get to Chapter 6, The Fallacy of Risk in Entrepreneurship.
Fourth, you must constantly work on self-improvement, take time to reflect, and embrace vulnerability. I’ll have much more to say on this in Chapter 14, Seven Lessons Learned on the Journey from Founder to CEO. But these insights come from my own lessons in midlife and they are critical to the success of the mature founder and CEO. Reflection also includes the reality that you must own the long-term vision of the company to keep the fires lit and carry the torch. By embracing vulnerability, I’m suggesting here that you need to build on the concepts I outlined in the previous chapter on overcoming fear. Remember that everyone is watching you and will, to a large extent, mimic your behavior. If you close your mind to learning because of your prior success or try to fake what you don’t know, others will do so too, with dire consequences.
Fifth and finally, you must have the humility and self-awareness to surround yourself with great mentors, from your angel investors, to your VC investors, to your Advisory Board, to your Board of Directors, and to your CEO or executive coach, which in my case is Kirk Dando, who has also become a very good friend. You are going to need them. You have a much harder pivot than younger people because of your material and family encumbrances and your big-company attitude.
The big idea here is that the fundamental difference between the twenty-something entrepreneur and the forty-, fifty-, or even sixty-something, is that those of you in the latter group must be willing to discard old ideas and ways of doing things and learn new ones. As humans, our brains are not programmed for this, our temperaments are not suited for this, and our social standings are often a sheer dead weight on our ability to look anew and afresh. In a phrase, you’ve got to embrace change internally if you are going to effect change externally.
In conclusion, let me leave you with a thought from journalist Barbara Bradley Hagerty, a reporter at National Public Radio and a writer for The Atlantic:
“Our brains resist change, they rail against it, our amygdala will always want the safe bet. But are the obstacles truly insurmountable? Is it a brick wall? Or is it a sliding door, which, once you decide to approach it, begins to swish open? Because even though our brains prefer safety in the short run, in the long run, they crave meaning, challenge, and novelty.”
― Barbara Bradley Hagerty, Life Reimagined: The Science, Art, and Opportunity of Midlife