Encore Entrepreneurs: They’re Older and They Have More Insurance
OK, I want you to take a quick test and answer the question with the first thing that comes to mind: What does a “start-up entrepreneur” look like? OK, do you have a picture in your mind?
If you are like most people, I bet your first thought was someone who looks suspiciously like a white male 20-something in a blue hoodie, torn jeans and ironically unhip tennis shoes. And if you stroll through the “typical” tech or health IT startup in Silicon Valley, that is exactly what you see, although there may be a few females sprinkled in. The young entrepreneur’s natural habitat is often portrayed as a landscape of garages and loft-like spaces with exposed pipe architecture. Decorations run to also-ironic old band posters (Rolling Stones or Elvis Costello especially popular), abandoned pizza cartons and discarded Red Bull cans aimed poorly at garbage can baskets. People tend to equate entrepreneurship with youth who have a wanton willingness to show the world how they are all doing it wrong while yelling “Cowabunga” and launching into the high risk abyss unencumbered. A couple of years ago PayPal founder and now venture investor Peter Thiel even started an organization to encourage kids under 20 to drop out of school and build start-ups.
OK, now let’s move past conventional wisdom and to reality. Here’s a fact for you that are obsessed with the idea that innovation is the purview of youth: over the last decade, the highest rate of entrepreneurship in the U.S. has shifted to those who are currently eligible for senior discounts at the local movie theater and dine on the early bird special.
“Contrary to popularly held assumptions, it turns out that over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group. The 20-34 age bracket, meanwhile, which we usually identify with swashbuckling and risk-taking youth (think Facebook and Google), has the lowest rate. Perhaps most surprising, this disparity occurred during the eleven years surrounding the dot-com boom—when the young entrepreneurial upstart became a cultural icon.” This comes from a report called The Coming Entrepreneurship Boom published by the Marion Ewing Kauffman Foundation, a leader in thinking about entrepreneurship in the U.S.
And if that’s not good enough for you who think that grandparents should be seen at the holidays, not followed at the office, the same Kauffman research has revealed that the average age of the founders of technology companies in the United States is a surprisingly high 39—with twice as many over age 50 as under age 25.
This whole issue came to my attention earlier this week when I was sitting next to a friend and colleague, Jody Holtzman, who is senior vice president of thought leadership at AARP (hey Jody: are there people with the title of Thought Follower at AARP? Just checking…). We were at a conference together and he showed me his cell phone where there was an announcement about a February 12, 2014 hearing being held by the U.S. Senate Special Committee on Aging with a title of “In Search of a Second Act: The Challenges & Advantages of Senior Entrepreneurship.”
The purpose of the hearing was to highlight the incredible entrepreneurial contributions of people over 50, but especially to make a call for senior-focused training and mentoring programs, funding incentives and tax incentives for senior entrepreneurs, and especially, to call for an end to age and lending discrimination, which is rife among our start-up culture.
The young may think they have a special right to represent entrepreneurship, but it turns out that, according to 2013 Global Entrepreneurship Monitor data, 50 percent of new businesses launched by individuals aged 50+ are still in business after five years. I would be shocked if that statistic held up for 20-something-founded start-ups. What seniors have that young people don’t is a wealth of experience to bring to bear when things go inevitably side-ways, as they always do in start-ups. They also have highly evolved (many decades long) business networks to draw upon for resources that include more people than the members of their college fraternity. No wonder actual grown-ups do so well. Plus, they have actually seen the Rolling Stones and Elvis Costello live and don’t need a poster to be cool.
This whole debate reminded me of that awesome scene in the 1991 movie Fried Green Tomatoes where Kathy Bates is sitting in her car ready to take a long-awaited parking spot and two young girls steal it from her, saying “Face it lady, we’re younger and faster.” She responds by smashing their car and saying, “Face it girls, I’m older and I have more insurance.”
And another thing: in healthcare we most often think of seniors as those who will be using the healthcare system, but if you listen to the testimony from this hearing, one would come away thinking those are the people who will build the businesses to fix it. An interesting thought raised that hadn’t occurred to me was this: The Affordable Care Act will increase the potential for seniors to start companies since they will no longer feel attached to other jobs for the sake of maintaining their health insurance coverage, a point made by Senator Bill Nelson, Chair of the U.S. Senate Special Committee on Aging. I found this to be such an interesting idea; we may have a whole bunch of pent-up senior entrepreneurship to unleash by allowing those who actually need their healthcare coverage to be free not to worry about where to get it anymore.
As Elizabeth Isele, Co-founder and CEO, of SeniorEntrepreneurshipWorks.org, pointed out at the Senate hearing, “Boomer entrepreneurs live healthier (physically, mentally, emotionally), vital, relevant, productive, and more meaningful lives longer than their retired counterparts and thus create less demand on social service/entitlement programs; in fact they continue to contribute to Social Security and Medicare through their taxes.” So there. I love this quote of hers:
“We need to stop the gloom and doom we are generating by referring to this huge and rapidly expanding demographic as an impending crisis or ‘Silver Tsunami.’ We, as a society, need to recognize seniors are one of our greatest natural resources. They are not a ‘silver tsunami,’ they are a silver lining, yielding golden dividends.”
The MetLife Foundation has done research showing that there are 34 million seniors who wish to start their own businesses in the US. During the Senate hearing it was pointed out that it is a particularly good thing when seniors start businesses because:
- They are huge job creators. While the majority of senior entrepreneurs create small and micro-businesses, their 5-10 employee hires have a huge cumulative affect on job creation. As Gina Harman, President and CEO, Accion USA, says, “Of the 27.8 million businesses in the U.S., 91 percent have fewer than five employees. These businesses have been the largest net contributor of new jobs to the U.S. economy in the past 15 years and collectively employ 50 percent of all private sector employees.” In a country that needs jobs, that is a good thing.
- They help young people find jobs because they need assistance from younger workers in such areas as marketing and technological support.
- They contribute $120+ billion in federal taxes, not including state taxes, annually to support federal programs and reduce dependency on entitlement programs, so add to the economy in a very positive way.
To help address some of the challenges faced by senior entrepreneurs, the Small Business Administration (SBA) and AARP entered into a strategic alliance to provide Americans over the age of 50 with the tools and information they need to launch new companies in March 2012. As a result of this effort, SBA, AARP, and its partners have helped nearly 120,000 new and existing small business owners over the age of 50 between April 2012 and May 2013. That is, as they say, a good start.
I have spent a lot of time with the people at AARP working with them on encouraging healthcare start-ups targeted at the 50+ marketplace, but it occurs to me that we have not had a lot of participants who are actually over 50 present at the event. Maybe none. I hope that this year is different, as I have to believe that the best people to solve problems are the ones with intimate familiarity with them. Plus they have more insurance.
And with that I will make a pitch for you to attend the wonderful AARP Health Innovation@50+ Live Pitch event May 9, 2014 in Boston. I will very happily be emceeing for my third year and I am confident it will be a great event featuring entrepreneurs of all ages. The best part is always the live audience of AARP members grilling start-up CEOs on their products and services targeted to seniors. It is a super event infused with an entrepreneurial spirit that transcends age and brings a broad array of people together for a collective good. I hope to see you there.
This essay was originally posted at Lisa Suennen’s Venture Valkyrie blog and is republished by permission.