3 reasons why we need Gen Z startup builders
Gen Zs bring much more value than you think
“Among the top 0.1% of startups […], we find that the founders started their companies, on average, when they were 45 years old”.
Harvard Business Review, 2018, which is code for: this statement commands a lot of respect. With first-class research, one of the most revered institutions in the business world managed to, and I quote, debunk “the myth of the young entrepreneur”.
And as influential ideas often do, that thesis found its way into the mind of Investors. Professional credentials are a key (if not the top) criteria VCs consider before jumping on a first call with founders. Over the years, a founder’s LinkedIn profile turned into the industry standard for picking the “desirables” out of the bunch.
And, let’s be honest here, why should VCs think any differently? Experience means more business knowledge, more social and financial capital, entrepreneurs that are less prone to making mistakes, especially rookie mistakes. It means less failure, a word which carries a lot of weight, especially now, as the tech world seems to be in a tailspin.
Why should we view things any differently?
As you might have figured out from the headline, this article suggests an alternative perspective.
I am not here to question the validity of the above statistical conclusions, but rather to challenge how such conclusions may have undermined the budding potential of a generation of innovators that are hungry for change, that have manifested more collective entrepreneurial spirit that any generation prior, in a world which is in desperate need of a fresh new perspective. (There, I’ve said it.)
The recent tech burst forces Investors to think back to first principles. Venture returns follow a power law, that is, a small handful of companies radically outperforming all others. It reminds us that the venture game is about chasing singularity. By the end of this article, I hope to have convinced you not only that there is merit in empowering young founders, but that the very “singularity” we all seek may be lying under the growing voice of the young.
So here it goes: 3 reasons why we need Gen Z startup builders.
1️⃣ Cost of entrepreneurship
I am going to play the Devil’s advocate and assume that founders with more professional experience are better, on all fronts, than younger ones. The next step is to show you that even if this were true, society would still benefit from having an active class of young entrepreneurs.
Let’s start with a core premise we can all agree on: more startup activity increases the likelihood of innovative breakthroughs. In that respect, the US has always been ahead of Europe (let’s face it). When researching why, beyond the economic and political arguments, a new fault line unravelled before me: the cultural willingness to undergo “entrepreneurial experimentation”, that is, an untested and iterative process of trial and error towards value creation. It implies that making mistakes is an inevitable, and even integral, part of startup building. It also implies that founders can learn from their mistakes, since they create feedback loops and iterate. Startups fail, often times to the extent which they disappear. But the founders who started them survive, and bring packs of learning with them.
The second premise: the cost of startup failure increases over a person’s lifetime. Think about it: in college you have more time on your hands, are likely to be responsible for fewer people, and society judges your mistakes less harshly. As you grow older, the opportunity cost of starting your own business increases, and when you start a family, well, that’s an entirely different ball game.
If we can agree that (1) a process of trial and error is inherent to the entrepreneur’s journey no matter when it starts, and (2) the cost of error increases when entrepreneurs get older, then the sooner we anticipate the entrepreneurial journey over a person’s life, the lower the aggregate cost of entrepreneurship for society.
Involving young people in startup building helps us build a generation of creative-thinking leaders early on, that have built a familiarity with failure, internalised a bias for action, which in time becomes a habit of building newer, bigger and better things. So here it is: micro-level experiments, no matter their success rate, compound into a system-wide culture of innovation. The earlier we start the process, the stronger the compound effect.
And who knows, in the ocean of inevitable failures, some gems may come out of young minds the first time around. Google, Facebook, Apple…
Which takes me to the next point: in what circumstances could young people be better innovators?
2️⃣ Founder-market-fit
Founder market fit. A VCs all time favourite. However, brutally misused. Simply put, founder-market fit is the concept that startup founders should have a deep understanding and alignment with the market they are targeting. What is often overlooked is the “deep” element of that definition.
I overheard a VC explaining that Gen Zs were better at spotting consumer trends, and thus would be fitting for consumer tech solutions specifically targeting young people (of course, he added that a Gen Z founder would have to partner with a more seasoned professional because we could not POSSIBLY let the manage their own accounts).
My response, as you might have guessed it, is that the above interpretation implies an incredibly reductive definition of what founder-market-fit actually means. It isn’t hard for anyone to figure out what the consumer trends are, at any point in time. Give it a few weeks or months, depending on the depth of research, and you have yourself a report. Founder market fit comes to define all the elements of a founder that cannot be simply shared into transferrable data nuggets on a report, but rather something intuitive and instinctive…
It lies not in the what but in the why. It isn’t sheer knowledge on current consumer trends, but the ability to empathise with the invisible forces driving those trends: understanding the perspective, the underlying incentives, and more importantly, having an emotional attachment to the values shared by the growing consumer base. In other words, everyone can observe the ground shake, but few have sight over the tectonic plates informing how the world is shaping over time. That oversight is what enables young founders to identify the problems with the current system, or what we like to call the contrarian truths. This is precisely why there is a difference between witnessing and experiencing trends.
It is also important to emphasise the universality of those behavioural and value-based insights, for startup building as a whole, and not just for consumer products. The distinction between B2B and B2C often undermines how consumer trends permeate the business world, as if putting a suit on turns a person into a different species. We do not need to go far back to realise that the product design and go-to-market motions of B2B breakthroughs such as Slack, Notion, Figma (to name a few) are more akin to viral consumer products than traditional enterprise products.
I could take this even further (in fact, I could do this all day) - beyond founder market fit, there is founder-purpose fit. Over the last decade or so, it has become common acceptance that fundamental societal values like environmental consciousness and diversity & inclusion should become core mandates in the private sector, and now with a certain degree of emergency. Gen Z saw these topics get into the mainstream in their childhood and adolescence, and partook in the global discourse around those issues in their most formative years. By and large, caring about the planet, understanding the value in diversity, are not topics young people had to force upon themselves like an external agenda, but are instead integral to their decision frameworks, which is why Gen Z share more concerns for the planet’s wellbeing in their buying decisions and career choices. I will stop there because this argument alone deserves far more attention than a paragraph can offer.
So far, in my attempt to deliberate over why young people can bring value to the innovation economy, I have relied on notions that have already received broad consensus, such as cost of entrepreneurship and founder-market fit. With this next point, I want to make sure I did not just add a flavour to our current arsenal of knowledge, but also challenged our current beliefs in what makes a great founder:
3️⃣ The power of naiveté
This last one demands a leap of faith.
After hundreds of discussions with young founders, I started exploring the relationship between youth and entrepreneurship, independently of any historical context. I wondered whether a literal lack of experience could be a core trait in enabling singular ideas to flourish.
There is something about young minds that fits so beautifully with the process of creation. I recall how an ordinary evening during my Bachelor’s became one of the best moments in my life. My friends and I grouped in the living area in our PJs, ordered in pizza and beers and started chatting about what we believed the future would look like. The conversation quickly became a rapid-fire exchange of audacious world views, myriad of ideas on how to break deep-seated conventions, impossible technologies solving insurmountable challenges, raising voices, laughs and excitement storming the room until 3am. With zero work experience, and not a clue on how to build a business, in that moment, we truly believed we could re-shape the world. Why does it feel like these conversations happen less and less as we enter the workplace? Some psychological studies found evidence of a decline in creativity with age. I personally refute that idea entirely. I believe that nurturing our creativity over time is a choice rather than a predicament. I do, however, believe that with age, we gain a growing awareness over limitations. This ability to identify obstacles, and more broadly acquire a better understanding of the current state of the world, has a core function in startup building. But in time, it may substitute the far more important faculty of imagination. As we become more entrenched in professionalism, how far do we let our minds wander? How big can we let our ideas become, if we are conditioned to see all limitations?
Planck's principle is the view that scientific change does not occur because individual scientists change their mind, but rather because successive generations of scientists have different views. In the context of entrepreneurship, younger people may be less beholden to existing paradigms of thought and practice. The boldest endeavours have always challenged the status quo, and if young people choose to abide rather than create, there will be a point where all we see, are obstacles.
This boldness is not an antonym to experience. In fact, a common trait of virtually every young entrepreneur I spoke to, was in recognising their lack of experience, and hungrily seeking more. However, the gathering of experience is conditional to the value that is being created. They are feeding knowledge into a vision, rather than letting the vision be shaped by that knowledge.
There is power in naïveté, not defined as excess creativity, but literally defined as a lack of experience, enabling the mind and our collective thinking to roam freely a little further before being restrained by the hard shores of reality.
Sources
HBR’s report The Average Age of a Successful Startup Founder is 45
Åsa Lindholm-Dahlstrand, Martin Andersson and Bo Carlsson article Entrepreneurial experimentation: a key function in systems of innovation
Rex Woodbury’s article Blurring Lines Between Consumer and Enterprise
WEF’s report Gen Z cares about sustainability more than anyone else – and is starting to make others feel the same