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YOUTH CAN SOMETIMES
BE A DISADVANTAGE |
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In the interest of having my readers all become financial
wizards, I am going to offer some investment advice. Never, ever put your
money in a company founded and run by someone under the age of 30.
Sure, you would have missed out on Mark Zuckerberg, who
started Facebook when he was 19, or Steve Jobs, who was in his 20's when
he founded Apple, buy they're anomalies. Most 20-somethings with grand
ideas crash and burn, and you don't want to be part of it.
I thought about this when I had dinner last weekend at a
fancy restaurant that opened a few months ago. It was founded and is being
run by a 20-year-old. I wanted to make sure I tried it before it closed.
The owner just graduated from high school when she began
working on her dream project. The only investors, as far as I know, were
her apparently very wealthy family. They spent millions building the
restaurant and my guess is they'll lose millions before it's done.
The views were outstanding, the food was frightfully
expensive but excellent, and the service was impeccable. So why am I so
sure the restaurant will fail? BECAUSE SHE'S 20 YEARS OLD, THAT'S WHY!
She hasn't lived long enough to recognize the mistakes she
made. The most serious is that it's the wrong concept for the location,
and that sinks her right there. Add the minor mistakes and the ship
will sink even sooner. The optimism of youth can't overcome reality.
Consider tech companies, where youth is considered a big
plus, mainly because those youngsters actually understand all that tech
stuff. Researchers found the average age of those who founded the most
successful tech companies was 45 years old.
In a study of over a million tech companies, they found that
a 50-year -old entrepreneur was almost twice as likely to start an
extremely successful company as a 30-year-old. And it gets better. A
60-year-old founder was THREE times as likely to launch a successful
startup than a 30-year-old.
As has been said, there is no substitute for experience. I
always think of the clueless mistakes I made in my 20's. My favorite was
when I had the opportunity to build an inexpensive house in West Marin
when I was only 24 years old.
It was the dumbest house ever built. To save money, I hired a
buddy in his 20's to design it. Passive solar was the rage at the time, so
I cluelessly went that route. Once I moved in, I quickly called it
"The House of a Thousand Temperatures."
I made every mistake in the book. Kitchen too small, bedrooms
in the wrong place, bathrooms that didn't function well. I hadn't lived in
enough places to know what worked best. Unfortunately, I never built
another house. If I did, I would have corrected all those mistakes of
youth.
The same holds true for business. I'm fortunate to have
survived some of the stupid moves I made in my 20's. I had huge plans for
ideas that, in retrospect, ultimately had no chance of succeeding.
Unfounded and misguided optimism.
I thought about this again when the San Francisco Business
Times came out with their annual "Innovators under 25" issue.
They profiled ten entrepreneurs aged 17 to 25 who started their own
companies. Very impressive young whippersnappers, but I wouldn't suggest
investing in their fledgling companies.
They need to fail a few times before they hit it big. With no
experience, it's extremely difficult to develop sound strategy, execute
ideas, make tactical decisions and be a good leader. They might have the
tech wizardry, but that's not enough. Good enough to hire, but not good
enough to be on their own. Yet.
So I just shook my head as I glanced around at the beautiful
but near empty restaurant last weekend. They'll pour more money into it,
and I'm assuming they can afford it. But the 20-year-old chose the wrong
location, and no amount of money is likely to overcome that monumental
mistake.
She'll learn, though. The good news is she has time to
recover. Once she turns 35, the world will be her oyster. The failure of
youth quite often leads to the success of middle-age. |
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