When Should You Launch Your Startup?

Source: Reuters

Should you launch your startup right after college, or might you benefit from gaining some work experience before becoming an entrepreneur? Recently, Amazon founder Jeff Bezos told Italian Tech Week that gaining work experience is the smarter strategy. He explained, "Go work at a best-practices company somewhere where you can learn a lot of basic fundamental things [like] how to hire really well, how to interview, etc. There’s a lot of stuff you would learn in a great company that will help you, and then there’s still lots of time to start a company after you have absorbed it.”  Bezos argues that college dropouts such as Bill Gates and Mark Zuckerberg are the great exceptions rather than the rule.  

Is Bezos correct?  What do the data show?  Johnny Wood, writing for World Economic Forum, profiled a key study on this topic.  Scholars Pierre Azoulay and Daniel Kim examined the link between age and entrepreneurship.  They published their findings in the American Economic Review.  The researchers examined nearly 3 million ventures over a 7 year period.  They found that experience leads to a higher probability of entrepreneurial success, confirming Bezos' intuition.  Wood writes:

The research looked at 2.7 million business start-ups between 2007 and 2014, and found the average age of people who founded a business and went on to hire at least one employee was 42.  The team also found that experience counts. Those entrepreneurs who had worked in the same sector as their business start-up were found to be 125% more successful than those without a background in their chosen sector.   Azoulay and Kim’s findings show that a small proportion of high-performing start-ups in the study period were founded by 20-year-olds, less than 1%. Those with the highest growth had an average entrepreneur age of 45.

Many reasons exist for this advantage that experience offers.  Building on what Bezos argued, I think that you not only learn best practices, but you learn worst practices too.  You discover what NOT to do by operating in different businesses.  You witness dysfunction, inefficiency, cultural barriers, and customer pain points.  By seeing how companies fail, you increase your odds of succeeding.