tech-company, founder, growth, young-entrepreneursWe see a lot of examples where young & inexperienced programmer teams creating tech startups and than taking it to multi millions of net worth. We don’t see a lot of business/finance/MBA guys doing this and when think about it they were explicitly trained to run and grow companies (maybe not start companies but still).
Is there a secret advantage programmers have when running companies?
I think a lot of what you're seeing is survivor bias (you don't see the many, many, many companies of that type that fail) and reporting bias (20 year old geek making millions is a better story than 45 year old manager leveraging years of experience).
If you look at the numbers you'll see that the average age for successful startup founder is 40 — much more your experienced business person rather than an inexperienced programmer.
That said — there is an advantage that programmers have. They can build and deliver software based products themselves. Which means that when it comes to bootstrapping, early customer development, etc. they have a cost and speed advantage. They don't have to take the time and money to hire a third party to build. They don't have to deal with the inevitable mistakes in communication between the founder a separate dev team.
But they also tend to make a bunch of common errors. They tend to build before finding markets (coz building is what they do, understand and are good at). They tend to underestimate the amount of admin and non-coding time is needed to run a company. They don't have the skills to manage scaling up from one or two people to small teams, and especially larger organisations. And so on.
So yes, a small company of just developers has some advantages, but probably a bunch of disadvantages too. The idea that young devs are a lot better at startups than other folk is pretty much a myth.
TL;DR: They're not.
I am a computer scientist and someone that was an early employee of a newsworthy startup in my mid-20s. Like another answer said, there is definitely selection bias and reporter bias at work here, and that’s probably the biggest contributing factor.
However, the young types that are successful have two other advantages that haven’t yet been mentioned:
(1) When you’re young you don’t know what’s impossible. As you get older and come up with ideas, you more easily dismiss them because your life experience gives you a broad perspective on why an idea might not work. When you’re young you don’t have that perspective and you just do it. When you hit those roadblocks that an older person might have thought of, you either fail or creatively overcome them. Those that overcome roadblocks obviously can reach a point where their older counterparts would not because older folks would not have even started in the first place.
(2) A young person is fresh out of school or still in school. They are learning the latest and greatest technologies, methods, recent research, etc. When they’re thinking about ideas their perspective is naturally focused on what’s possible with these new emerging technologies because that’s all they know. Older folks have to take the time to learn new stuff themselves, if they even have the time. Most of the time we’re concerned with leveraging what we already know or leveraging the cumulative effect of what we know, not on new stuff. If you look at the companies who have had young “geeks” as founders, they have all leveraged something new, either technologically or conceptually new.
The combination of these to factors gives younger people an advantage. But don’t fall for the selection bias – most still fail, you just don’t hear about it.
Running a company and running a software development project are two different things. Often, if you try to apply business school training to software project management you'd end up with cost overrun, release delays and buggy products. Not always, but often (unless business schools these days have started teaching how to manage programmers).
A lot of people just getting into the industry these days have forgotten the 70s and 80s and what was known then as the Software Crisis. Back then, more than 80% of all software projects fail. By fail I don't mean not commercially successful. By fail I mean producing no usable end result - no product shippable (in other words, vaporware).
These days the stats look much better - less than 10% of software projects fail. Which to me indicates that we, as an industry, have learned how to manage software projects. But there is no "one true way" that you can teach people in business school. Different teams have different working methods and those that work tend to spread around (in part due to the high turnover in the industry - ideas go with people).
So we now have a situation where the knowledge/skill of managing software development teams is partly (if not mostly) informal experience of working with code. Which makes programmers/ex-programmers the most likely group of people who can manage software projects.
Also note that your question’s definition of a successful company is based on its monetary net worth (the amount that a buyer is willing to pay for it). You are not taking into account the non-financial metrics of a company’s success, such as the consistency of its revenue stream, the sustainability of its infrastructure, its preparedness for rapid customer-base growth, or the profitability of its business model. You’re using an evaluating method which is more appropriate for judging a static product than a living company.
The news-worthy moment, which we often read about, when a professional business person acquires control of a lucky start-up, is not the moment when that start-up company becomes a success. It is more often, the moment when a product and its business-illiterate creators get their first chance of becoming a real company.
I’m quite late in the parade, but I’d like to mention a simple probabilistic approach.
People in their 30-40s are simply too busy, committed in something else, have too much at risk, know other ways to make money, don’t pursue the dream of being famous and outrageously rich anymore (because they know life is made of something else), so they’re quite few to take the risk. When they build something, it brings them the kind of success they want: substantial money, accomplishment, a reasonable amount of adrenaline. And they succeed, most of the time.
People in their early 20s are hundreds of thousands to take that kind of risk each year. And for every Facebook or Dropbox, hundreds of thousands will do exactly the same thing but fail. And you’ll never hear from them. When they build something, they’re going for big, huge success and do it without much anticipation. And they fail. Except some of them for which the stars get aligned.
In a certain way, your question is pretty similar to asking why elderly and lonely people are so much better at winning at the national lottery?
Older people have families!
So they don’t have the time or inclination to spend 16 hours a day for a month locked away coding their brilliant idea on a diet of nothing but pizza and chocolate!
“Hackers” are not better than anyone else at starting startups in my opinion.
In fact, I would claim no one is better at starting startups, who succeeds is random; if you disagree, you should be in VC, PE, etc., since within a short-time, you’d be very wealthy.
Younger people are able to take more risks. Their sense of responsibilities are far less than those who are 30s, 40s, etc. Young people can then take risks to try to build things without a sense of any significant downside.
However, not everyone who is an independent developer can run a business. For example, Larry Page and Sergin Brin from Google hired Eric Schmidt to help run the company(a decade) before Larry Page eventually took over as CEO once he had enough experience.
Mark Zuckerberg from FaceBook has a very well organized management team that he surrounds himself with. Sheryl Sandburg (Harvard grad), Mike Schroepfer (CTO of Sun Microsystems and graduated from Stanford) Mark also learned a lot from shadowing other successful and well known CEOs for the experience that they have.
Therefore, it isn’t necessary that young people who happen to hack can run a company better. If you look at the most prominent companies that have young CEOs, they have gotten experience from those around them and have been able to adopt to their own company.
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