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Comment by amursft | Hacker News Reader

Don't really disagree that older founders are generally going to be more competent/experienced, but is an alternate interpretation of the data that as people get older their appetite for doing risky things decreases?

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.

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A dollar earned when you're 20 will be more valuable than a dollar earned later in your career if invested til retirement. Maybe it's good to build up a financial cushion and also your skills in your early career? Your financial risk may be lower later (from a retirement/wealth-building perspective) and your chance of success higher because of better skills and experience. Of course, people later in their careers usually have more responsibilities and higher incomes, so the cost may be higher then, too.

I imagine if you fail in your 20s, you might have to work longer before you can retire.

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.

But that's exactly the problem.

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.

> Having an appetite for risky things is dumb.

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.

But that’s exactly my point: if it’s low-cost and large upside, then it’s not exactly a risk is it? It’s just a smart choice.

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.

"Having an appetite for risky things is dumb."

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).

Not taking risks is the exact formula that leads to Kodak ditching the DSLR. 3M is built on engineer ingenuity and risk taking. The reason we have 'disruptive' companies like Uber and Netflix is because the old industries did nothing to capitalize upon the internet.

40s something's with capital can. Not everybody can get the capital to take the risks.

Depends on whom it's good for.

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.

Very well said. Though It’s disheartening to read and a tough pill to swallow.

Risk aversion is a taste, not a moral rule. I ended up living in the family home with no employment and very limited money several times in my 20s and everything has turned out fine. If you have a secure fallback petition in case of failure why not take risks?

Because I have a taste for risk aversion just like one has a taste for hookers and blow. To each their own.

HN obviously has a bias, but such risks when they involve not paying invoices or staff does have a moral composition.

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.

Business is always risky. But if you have a limited downside, and an huge upside, you are onto something.

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.

Starting a business is a huge risk in itself. And you have to start early to get used to failing, otherwise you wouldn't be comfortable taking this risk. Yes, your chances of succeeding might increase as you get older but the odds are still overwhelmingly against you. That puts your family at risk so technically you are in a better position to fail and retry again when you have less people depending on you.

Some would say they have more riding on it so they might try harder than a 20-something.

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>

Years of seeing other people screw things up makes me think it's harder, not easier. If one person can't do it, maybe another can, maybe I can. If most people can't do it, why am I any different?

I’m not familiar with the data but is the type of company taken into account? E.g. VC-fueled unicorn, consultancy, ...?

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.

> Don't really disagree that older founders are generally going to be more competent/experienced, but is an alternate interpretation of the data that as people get older their appetite for doing risky things decreases?

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".

less costly can still be enormously costly, and young people don't generally have much leeway either

Most young folks who even think of starting up a business certainly have a good family that can support them in case of (almost certain) failure.

Yes, and it's important to realise that.

This is false, and dangerously so. Older people have a range of skills and experience as well as professional networks to make use of. When a young person fails they have less to fall back on. Forming a productive business is a high level social function that requires a firm foundation for reasonable chances of success.

There is one thing that you would never know about - the fear of being unemployed after 40 with the family and mortgage. And the truth is that in this industry the time plays against us. It might be the biggest motivator ever to start your own business.

Older people also tend to have more friends in the industry and more capital along with competence/experience.

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