I read two very interesting articles this week on entrepreneurs. Thanks to MM and JC for sharing them.
Paul Graham (of Y-Combinator fame) writes on his blog that “Determination” of the founders is a good proxy for high likelihood of success. He then goes on to provide “The Anatomy of Determination”. See the full article here.
We learned quickly that the most important predictor of success is determination. At first we thought it might be intelligence. Everyone likes to believe that’s what makes startups succeed.
If determination is so important, can we isolate its components? Are some more important than others? Are there some you can cultivate?
The simplest form of determination is sheer willfulness. When you want something, you must have it, no matter what.
Being strong-willed is not enough, however. You also have to be hard on yourself. Someone who was strong-willed but self-indulgent would not be called determined. Determination implies your willfulness is balanced by discipline.
If this is true it has interesting implications, because discipline can be cultivated, and in fact does tend to vary quite a lot in the course of an individual’s life. If determination is effectively the product of will and discipline, then you can become more determined by being more disciplined.
There’s one other major component of determination: ambition. If willfulness and discipline are what get you to your destination, ambition is how you choose it.
I don’t know if it’s exactly right to say that ambition is a component of determination, but they’re not entirely orthogonal. It would seem a misnomer if someone said they were very determined to do something trivially easy.
So here in sum is how determination seems to work: it consists of willfulness balanced with discipline, aimed by ambition. And fortunately at least two of these three qualities can be cultivated. You may be able to increase your strength of will somewhat; you can definitely learn self-discipline; and almost everyone is practically malnourished when it comes to ambition.
And then I read a post on TechCrunch by Vivek Wadhwa, a former entrepreneur and now a scholar at UC Berkeley, whose research suggests that when it comes to successful startup founder, old men still rule. Well, I am not sure if 40 is old, but still…He makes a point against the prevailing trend, esp on the west coast, to be attracted to 20 something first-time entrepreneurs. I am particularly interested in this debate since I believe East coast VCs have generally done a terrible job of attracting young entrepreneurs to create companies here. We need more passionate and “determined” young entrepreneurs joining startups as co-founders. Read his full post here.
I’ve got a message for all the Silicon Valley venture capitalists who think a CEO is over the hill after age 40. Old guys rule. And they are far more likely to be the founder of a successful technology company than most of you understand. How do I know this? Research that my team conducted, based on a survey of 549 entrepreneurs in high-growth industries, showed that the average founder of a high-growth company launched his venture at age 40. We also learned that these founders are likely to be married and have two or more kids. They typically have six to ten years of work experience and real-world ideas. They simply got tired of working for others and wanted to rise above their middle-class heritage.
These clearly aren’t the talented 20-somethings who have “great passion” minus the “distractions like families and children…that get in the way of business” which Sequoia Venture’s Michael Moritz raves about (also in this Building 43 video). Or the ”very low paid” young entrepreneurs who, according to Google’s Eric Schmidt, make “all the right things happen” by “working themselves to death”. But these are the companies which Silicon Valley VC’s seem to flock to. And maybe that’s one reason why the failure rates of VC investments are so high.
I have a few theories about why VC’s favor the young. First, VC’s tend to travel in herds. For the last decade, the herd has been all about the Internet. And Internet startups require a lot less sophistication and coordination than, say, a telecom gear startup, an enterprise software startup, or a biotech startup. Everything from the product development processes to sales processes are far more complex for these types of products. I also think that in its Web 2.0 infatuation, Silicon Valley has probably funded a huge number of companies that are really features and not companies. It’s very easy to build a feature and call yourself a CEO. It’s much harder to actually grow a company, something that, according to my research, old guys appear to be better at.
Secondly, and this is speculation but I have some personal experience in this area. Younger CEOs are probably easier to push around. Wet-behind the ears and inexperienced, young CEOs are probably far more likely to sign onerous term sheets out of sheer gratitude for getting funded. Old guys know better than to sign a term-sheet loaded with a nasty double-trigger option acceleration that would consign the founders to indentured servitude for years after a liquidity event.
What are your thoughts?