Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

The Ungraying of High-Tech Business 0

One of the interesting offshoots of the first Internet boom in the late 1990s was the breakdown of age-related hierarchies. Marc Andreessen was three months short of his 24th birthday when he and Jim Clark founded Netscape in 1994. He was on the cover of People magazine in 1995, and "became the poster-boy wunderkind of the Internet bubble generation" (wikipedia). I noticed it after hiring someone 23 to run our Web business in 1998. Then I watched with wonder as epinions.com raised $8 million in early 1999 and another $25 million that November without a founder even 30 years old.

It seemed to me then that this was a major change in the way we do business. As I was growing up — I’m 59 — we assumed we had to get to 40 or so to have power. As I looked out at the new world, with the business landscape changed forever, many of the key jobs really required younger people. Not that they had to be under 30 like athletes or models for physical reasons, but simply a matter of fact, the new world was built younger. Netscape is a good example, but well before that we had Bill Gates founding Microsoft when he was barely 20. Steve Jobs was 21 and Steve Wozniak 25 when they founded Apple Computer.

Meanwhile, it’s been a long time since I started Palo Alto Software in 1983, and I’m looking at 60 on my next birthday. So I was fascinated this morning when I read blog.pmarca.com: Age and the entrepreneur, part 1: Some data. He starts with:

"I have opinions on this topic, but rather than just mouthing off like I would normally do, I decided to go get some data. This post presents that data — the next post will have the mouthing off."

So of course I’m looking forward to his "mouthing off" in the next post, but in the meantime, data is good. Marc admits first that the data he has is 0nly anecdotal. Ironically, that’s fine with me, I trust apologetically anecdotal data more than supposedly rigorous data (hence my several posts on this blog in the last couple of months about doubting research). So this gets more interesting.

The main source of data turns out to be a 1988 — in other words, pre-Internet boom — study by a professor of psychology at University of California Davis named Dean Simonton. Marc cites the source documents but I opened that text and went back to his summary very quickly.

Simonton looks at several factors, including how creative output changes over the course of a career, the effect of starting early, and the relation between quantity and quality of output (i.e., between "productivity" and "creativity"). By the way, I was intrigued by this way of putting productivity and creativity as quantity and quality of output. That works for me.

Some of the results are pretty much what you’d expect. For example, productivity tends to rise to a peak during your career, and then fall to about half the peak rate. Also, a small percentage of workers in any given field account for a large percentage of output. It’s often 50% of the work done by the 10% most productive people. And the top people do 100 times more than the lowest. Also, the best producers tend to start early, produce a lot, and continue longer. 

So far I don’t see anything that goes straight at the basis for an age-related hierarchy in business. In a way you could take the idea of increasing to a peak to imply that maybe older people should be in charge. However, it’s not nearly so simple. Simonton’s research also suggests that in some some fields (he mentions lyric poetry, pure mathematics, and physics) creative achievement tends to peak earlier in a career (25, 30) and then fall further, so the end is only a quarter as creative as the peak. Others ("domains as novel writing, history, philosophy, medicine, and general scholarship") peak much later, 40 or 50 and then drop off less. Simonton says this general trend is clear.

I’m wondering now if Marc is going to suggest (that would be in the "mouthing off" that’s still to come) that the high-tech world that has spawned younger management is of the first variety, poetry, math, etc., in which the creative peak comes at an earlier age. That would make sense with the data. Which is high-tech business like, poetry, or novels? Math and physics? Or history, philosophy, medicine, etc? That’s an intriguing line of thought.

Here’s an unrelated but juicy tidbit: the difference in peaks also means that those whose creative peak comes earlier (poets, for example) tend to live less than those who peak later (novelists, for example). Be a novelist, not a poet, you’ll live longer.   

Another one I rather liked goes back to something I encountered in business school 30-some years ago about creativity: quantity of ideas is more important than quality. This one is regardless of age.

"quality of output does not vary by age… which means, of course, that attempting to improve your batting average of hits versus misses is a waste of time as you progress through a creative career. Instead you should just focus on more at-bats — more output.

"The odds of a hit versus a miss do not increase over time. The periods of one’s career with the most hits will also have the most misses. So maximizing quantity — taking more swings at the bat — is much higher payoff than trying to improve one’s batting average."

So we have another post with the "mouthing off" to look forward to. I don’t know though, with the data seeming to lean towards starting early, I’m bracing my older self.  I guess the consolation is that on either scale I’m still over the hill. And where was I in my 20s? In Mexico City, being a foreign correspondent. Oh well … no quick conclusions there, I guess I’m just waiting to see.

Marc ends the post with two challenges: first, fit your opinion into this model. Second, which is entrepreneurship, the late 20s early 30s type associated with math, physics, and poetry, or the 40s and 50s type associated with novel writing, medicine, general scholarship?

I’ll leave that challenge pending. For now.

– Tim