The Innovation Age Bias At Sequoia Capital

Today marks my return to blogging here after taking a couple months off. I’m going to jump in with some thoughts from an event I attended last night at the Computer History Museum in Mountain View.

The event was a reception for students and alumni from MIT’s Sloan School of Management. Each year, Sloan brings a large contingent of students to Silicon Valley for its “Tech Trek.” They meet with a lot of interesting local companies, soak up some Silicon Valley inspiration, and get to build their networks. I’ve been invited several times to this event, but this was the first year I was able to attend.

After some introductory remarks about the state of Sloan, Dean David Schmittlein interviewed Sloan alum Douglas Leone, a partner at Sequoia Capital. They talked about the state of Silicon Valley, what Leone has learned in his career, and advice he had for students.

What struck me was a comment Leone made later in the exchange. I don’t have the exact quote. But essentially, he said that Sequoia’s portfolio of companies is dominated by founders under the age of 30. That’s no surprise, and a trend that’s been discussed in the valley over the past decade.

But then, Leone came right out and said they focus on people under 30 because people over the age of 30 can’t innovate. If you’re over 30, you can still be in management, Leone said, as a kind of consolation. But  there it was.

On the face of it, the remark is absurd, of course. But what’s said is that it perpetuates the valley’s obsession with youth. It’s the kind of sentiment that leads to age discrimination among older programmers and developers. But it also is ridiculous to think that just because you pass a certain age, you stop being creative or radical. Jack Dorsey created Twitter right around the age of 30 (give or take a few months).

Leone made some other silly remarks. For instance, he said that he thinks the notion of start-ups needing “adult supervision” is wrongheaded. He said that it’s never the grey hairs that come in and figure out how to make money or make an idea work. Actually, that’s exactly what happened at Yahoo when the company hired Tim Koogle to be CEO in 1995. (As a random aside, how is it that Koogle doesn’t have a Wikipedia entry?)

Whether or not Leone really believes the age thing is hard to say. But if it’s really a guiding philosophy at Sequoia, then that’s not just an insult, it’s a lack of imagination that will probably come back to haunt the venerable firm down the road.

 

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  • http://www.info-design.com Art Ignacio

    Perspective possibly influenced by his investment area, which appears to be Internet. Don’t think the point of view would bear out in green and bio-tech. Agree with you about the oddness of the generalizations.

  • Far Away

    Sounds reasonable to me.

    Once people get set in their ways for decades, they are unlikely to try new ideas. Fresh guys with fewer established paradigms are more likely to think of new things.

    I’m also not sure I buy the idea of discrimination against older programmers. I’ve worked with several 50+ who were excellent engineers.

    The real problem is probably closer to this: older programmers who fail to update their skill set and are therefore no longer marketable. (“I have 15 years of COBOL and 20 years of FORTRAN, why should I learn Javascript?!?!”)

  • Richard Sessions

    I agree. Sequoia is a dinosaur. Leone’s remark is not only absurd it is inaccurate.

    A less than 1 second search on Google found this: “The Ewing Marion Kauffman Foundation surveyed 652 US-born CEOs and heads of product development who founded high tech firms in the boom (and bust) years of 1995 to 2005. Both the average and median ages were 39 — far older than the mythic dorm-room visionary. Turns out those youthquake pioneers don’t really represent the pack. They’re outliers.” http://www.wired.com/techbiz/people/magazine/16-10/st_thompson. Search further and you quickly discover that successful start-ups are run by much older people. And, guess what: Business rules, laws of nature, or human behavior don’t change just because you are young…. “Fire – Ready – Aim” only works when combined with stupid luck.

  • http://darrenstuart.com Darren Stuart

    typical nonsense, I would of countered that with who is pushing Apples vision forward right now?

    at 35 myself I still manage to innovate daily in my work and projects.

  • Lou

    This probably has a lot more to do with ROI and control, rather than older people can not innovate. Someone over 30 will scrutinize the term sheet a lot more than some under 30. In other words they are more likely to invest in the young who are naive and foolish, as opposed to the old who are mature and wise.

  • http://twitter.com/ericelia Eric Elia

    Vivek Wadhwa’s research in September of last year is the only approach I’ve seen to actually put some data behind these theories. They found the average age of the successful founder/CEO to be 39. Article is published here (http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/)

  • http://www.windyhilldesign.org/ heath

    Generalizations may get you onto a playing field, but they’re a handicap when you’re playing the game. Details and realities are what matters.

    From a percentage POV, there’s more risk-taking in younger souls, because they can’t see outcomes clearly, as yet. That’s a strong feed to innovative processes. But risk-taking isn’t the only feed to innovation.

    There are minds that see past boundaries — innovative minds. Innovation has two main dynamics: the new thought and the pragmatic implementation. Innovative minds express both dynamics. Such minds aren’t bound by age or experience. More age and experience strengthen the likelihood of effective implementations.

    What is happening when innovation seems to pool where younger people are working is that new life-path niches are being carved out because older ones seem fully occupied.

    If he’d said hunger is the key to innovation… I’d have agreed with him. Hunger and access to small amounts of capital is where I’d look for innovation. It’s true that youth and relative hunger often go hand-in-hand. But to conflate youth with innovation is a sign of missing important signals about what drives change.

  • scott

    VCs want youth for the same reasons the armed forces do.

    Youth will work for less, are easily molded, have the time to work long hours and are much less invested other things that prevent them from taking risks.

  • http://twitter.com/ilamont Ian Lamont

    I wonder if Leone carries an iPhone or a phone running the Android operating system in his pocket. One was driven to market by a person in his 50s, the the architect of the other was nearly 40.

    Or Salesforce.com. Did Sequoia turn up its nose because Marc Benioff was in his mid-thirties?

  • Thomas

    Sequoia focuses on entrepreneurs under 30 because they’re less sophisticated in the ways of valuation and Sequoia knows they can write deal terms that will take the newbies to the shed. Lord forbid they should invest with someone who actually understands the concepts of liquidation preferences, etc…

  • http://twitter.com/chrisco chrisco

    That’s a silly, misleading, and self-serving statement Leone made.

    The reason guys like him target 20-somethings is the same reason con artists target the elderly. They are vulnerable.

    In the case of 20-somethings, they’re vulnerable because they are still green/naive. All they see is some friendly dude with a slick pitch who knows how to throw around a few buzzwords and sound smart to their virgin ears.

    They don’t yet realize that 99% of VCs are reading form the same used-car salesmen’s script, jumping on the same latest-and-greatest bandwagon, and generally trying to position them for an *ss f-ing. You can do that to a 20-something. Not so to so 30 or 40 year old.

    I’m exaggerating and using loaded language for effect and spice, but that’s the crux of the biscuit.

    Cheers!

  • http://www.GlobalizationResearch.com Vivek Wadhwa

    Chris, to me this shows an ignorance of the way innovation works and what drives/motivates entrepreneurs. No wonder so many of their investments fail.

    Some of the best entrepreneurs I’ve met in Silicon Valley are middle aged. They complain about not having calls returned from VC’s like Sequoia. You have explained why.

    Here is an article I wrote about elite education (which is probably what the majority of Sequoia partners received, and why they are so much out of touch) — http://www.techcrunch.com/2009/10/24/got-degree-envy-no-worries-you-can-still-make-it-big/

    Here is a piece on age which Eric also posted above: http://www.techcrunch.com/2009/09/07/when-it-comes-to-founding-successful-startups-old-guys-rule/

    And here is a hard hitting piece about the realities of Venture Capital and challenges the “propaganda” put out by the NVCA — http://www.techcrunch.com/2009/09/20/what-have-vcs-really-done-for-innovation/

    Regards,

    Vivek

  • oldtimer

    But then, Leone came right out and said they focus on people under 30 because people over the age of 30 can’t innovate.

    Pure BS. They prey on people under 30 because those are the ones with the least experience in negotiating for equity.

  • Comeon Now

    obviously playing to the crowd trying to generate deal flow. pretty straightforward.

  • http://www.siliconbeat.com Chris OBrien

    @Comeon: Interesting to note that a pretty good chunk of the crowd was OVER 30. The remark didn’t go over all that well. They were, after all, out here to soak up the spirit of the valley. So even if they’re over 30, they were interested in entrepreneurship and innovation.

    @Vivek: Thanks for sharing all those links. Worth checking them all out.

    One other thing that came up at the event: People wanted to know the career path for becming a VC. Leone said correctly there isn’t one right way to get there. But one thing not addressed was a recent critique of VCs offered by Marc Andreessen. He said too many VCs are getting into the game who were never entrepreneurs themselves. Andreessen said he wanted to become a VC himself because he wanted to get the VC industry back to its roots, back to the early days of the valley.

    I haven’t seen his whole resume, but I didn’t see any indication in his bio that Leone had started a company, just sales and management.

  • http://printcasting.com Dan Pacheco

    I am 38. I am an innovator and founder of a technology and movement. Curiously, the companies that are interested in working with us consider me to be young. Nuff said!

  • Dave Kochbeck

    There’s another reason why VCs often target 20-somethings rather than anyone above which is actually pertinent (rather than patently offensive): on average, folks under 30 have far less to lose through failure. I think VCs are as conscious of this as anyone would be. By 30 you’re much more likely to have school-aged children, a spouse, a house payment, a car payment, and aging parents.

    Do the basic economic calculus. Would you rather have: A) a 20-something whose thought process is 100% on making the turkey fly and returning 10-20x in a business space where 90% of ventures fail, and the key behavioral characteristics that imply success are focus, tenacity, and a high threshold of embarrassment; OR B) someone 30+ who has a spouse, can’t move back in with the folks if rent doesn’t happen, has to feed the kids, and generally takes a safer course to make sure that all their bases are covered?

    Taking a business from zero to a $1bln+ cap exit requires taking huge risks, and many of them are personal for founders, inventors, and the early management. In my 20s, I worked at seven startups. Two were boat anchors, two were passable, two grew some legs, and one hit it out of the park. In my 30s, I’ve worked for two. One was established, and it was somewhat notable, and one was a spin-off of an existing public company, and it was wildly successful.

    I got married at 32, and I’ve noticed that I’m somewhat more conservative in my consideration of new ventures than I was when I was single. I used to be willing to try anything and see if it stuck, but my overall appetite for personal risk has gone way down. The last conversation I want to have at home is, “I didn’t see you for two years because of that stupid company, and all we got out of it were free office supplies?!”

    I’ve also become known in a couple of major industries, and I do try to balance being something of a fixture in those industries with taking very public risks. I know when I was in my 20s, I wouldn’t have given that a second thought, because I was just some dude with lots of brains and very little to lose. No one noticed when I blew it back then.

    Does that mean that I’m not innovative? No. I’m working on my next big thing now. But it’s in an industry that I have some credibility in, and many of the pieces are off-the-shelf. I’m fairly confident that I’ll land VC investment, and I’m pretty certain that even Sequoia wouldn’t turn me away at the door. But it’s mostly because I’m fully cognizant of how my age and place in society affects my judgement, and I’m clear with investors that we have to win and win big like-no-kidding and where I sit in that equation – being able to say that failure is not an option as a personal commitment rather than as a suicide pact.

    I would guess that what Leone really meant was, “If you’re over 30, and you’re sitting out there in the audience listening to me and trying to get up the nerve to make your first attempt at taking a personal risk on a business, you’re probably too late. If you’ve waited this long to try something you’re almost certainly going to fail at the first couple times, we can already pretty much guess how you’ll take it, and we don’t want you.” I doubt he was really saying that anyone over 30 can’t innovate, because he and all his partners are over 30, and I don’t know how they’d understand what they were looking at if they couldn’t think on the same level. If he said that, he might as well have said, “Look, I take other people’s money and I go to Silicon Vegas with it.” And I’m certain he doesn’t believe that.

    I prefer to assume he’s a better investor than he is an off-the-cuff speaker.

  • PSS

    Can you say……. “projection”?

  • http://twitter.com/chrisco chrisco

    @Chris O’Brien @Comeon: The ones who were disappointed by Leone’s remark were not cut out to be entrepreneurs, anyway. Entrepreneurs don’t need permission to be entrepreneurs, especially not permission from some never-been-an-entrepreneur-himself VC guy out talking his schtick, trolling for youngsters.

    The true entrepreneurs in that crowd rejected his “age” comment and/or asked themselves what could be his true motivations for making such a comment. Actually, the true entrepreneurs in that crowd probably weren’t even in that crowd, they in side meetings they had arranged on their own or were engaged in other initiative-taking activities.

    BTW, Chris (O’Brien,), when you get a chance, can you post a link to your bio? Thanks. I’m curious as to your age and/or other clues as to why you appear to not be able to (or choose not to) see through the smoke. Is it that? Or, perhaps, are you protecting or seeking to expand your access to VCs, whatever that’s worth, by raising your hand as a journalist who will provide a platform without questioning the motivations of his sources, exploring their possible conflicts of interests, investigating the story within the story, or just plain exploring with a curious mind? No offense meant, and note I did use the word “appear” instead of “are,” but as a former venture finance guy myself, I’m used to being direct. Thanks again and thanks for the article and venue for discussion.

    Cheers,
    @chrisco

  • Mark

    He’ll change his mind when he grows up and becomes an old codger like the rest of us.

  • Jay R

    @Chris O’Brien you mentioned “One other thing that came up at the event: People wanted to know the career path for becming a VC. Leone said correctly there isn’t one right way to get there.”

    If you could elaborate on what Leone said about the career path I’m sure many would appreciate, might even be good for a new post. Excellent for many ppl to know how to get into the industry, how to crack it, who has and what they did, especially at arguably the best VC on the planet!

  • http://archlever.blogspot.com/ Jeff Dickey

    One of the most typically ridiculous things I’ve heard in my thirty years IN the Craft.

    By 30, if you followed a conventional 4-year educational program, you’ll have six years’ “real-world” (or as real as Sili Valley gets) experience of a half-dozen years; less, if you’ve done any military service (which helps with self-discipline) or advanced education (which helps in other ways, or so Google thinks).

    Realistically, you’re just getting to the point in your career where the known unknowns are coming into balance with the known knowns, and you’re developing a proper respect for the unknown unknowns, having had one or two of them blow up in your face. That latter experience cannot be fully understood until you’ve done your first company; you WILL make “newbie mistakes”. You may be a Sergey Brin-level technical intellect, but the number of people with matching business acumen (or who are willing to listen to and apply experiences of others) is somewhere around the ten-sigma point….your chances are better for being hit by lightning on the same day you win the lottery.

    By taking this attitude, Sequoia is declaring that they //know// that a larger-than-necessary proportion of their investments will make fatal errors and they’re willing to take that hit. One one hand, I suppose they can argue that it builds relationships – they give money to a bunch of kids for their first startup, it craters, and then Sequoia can judge how well the founders learned their lessons from the plan for the SECOND start-up. If they’re moving in the “right direction”, they get some money (likely in exchange for higher equity than the first go-round), and try again.

    But it DOES help perpetuate the myth that experience and innovation are mutually exclusive, a myth that has pervaded the software industry world-wide as it seeks to ape Silicon Valley’s storied successes (and avoid its less-celebrated failures). And that myth, I’ve seen since I was a teenager breaking in, does real damage. When I look back at the ten or so most influential people in my career, only one of them was below 30 – and the mean is somewhere in the upper 40s. If we’re going to ever have any hope of turning this craft of software development into an honest-to-$DEITY engineering discipline, we have to stop deliberately throwing away people who still have several decades of useful work ahead of them.

  • http://www.siliconbeat.com Chris OBrien

    @chrisco : It’s hard to see, but there is a small “about” button that lists brief bios of everyone who contributes here, though Elise and Jack are no longer with the Mercury News.

    You can find my short bio there, but to save you time, here it is:

    Chris O’Brien is a business columnist at the Mercury News, writing about technology, business and innovation in Silicon Valley. Twitter: sjcobrien

    If you want more background, go here: http://chris-obrien.com/?page_id=2

    As for your point at the end, I’m not sure where you’re coming from on that. The post was fairly critical of the remarks. In choosing to post it, and taking the angle that I did, I think it’s hard to say that I was out to win fans among the VC community, or Sequoia for that matter.

  • TechNut

    …. Steve Jobs…. greater innovation after 30 than before.

  • Janet V

    Like you darned kids would say: WTF? That’s crap.

  • http://www.esquivalience.com John

    Obviously Sequoia and other VC companies are adept at exploiting people
    under the age of 30; no wonder they would claim that only they can
    innovate. It is in their best interests to keep away older people who
    are more sensitive to getting ripped off by investors.

  • Carol Campbell

    Sounds like Sequoia Capital are after a cheap deal too!!!!
    They know that the young and naive innovators and more easily minipulated, and it will be easy for them to take away their profits for themselves…. Shame on them…. They will be found out before too long if that is the position they take! People are far too savvy in Silicon Valley for this behaviour what ever their age…..

  • Scott Edwards

    Really enjoyed reading Dave K’s comment above – I think he is dead on.

  • les madras

    Little known fact: Sequoia tried hard to pull its capital out
    of Google in 2000, citing the youth and poor
    business acumen in its founders.

  • http://twitter.com/chrisco chrisco

    @Chris O’Brien: 1) Thanks for the info. 2) Good point regarding the last paragraph of my previous comment. You’re no snuggler :)

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  • http://Highway101images.com Carleton S.

    We have to look at this at its most basic level.
    This person is the dean of a “prestigious” business school.
    He is telling his students to discriminate.
    A very powerful indictment of the college “community” AND a clue as to what happened to Silicon Valley.

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  • Matt

    Here’s a video where Mike Moritz (Sequoia) says they are really looking for under-25 founders… and jokes around about CA’s age discrimination laws.

    http://ycombinator.posterous.com/guy-kawasakis-fireside-chat-with-paul-and-mik

  • http://www.cindygallop.com Cindy Gallop

    I’m a 49 year old entrepreneur. I launched one venture, MakeLoveNotPorn, at TED last year:

    http://blog.ted.com/2009/12/cindy_gallop_ma.php

    and I will be launching another, IfWeRanTheWorld, in beta with a demo at TEDU in 2 weeks’ time – interim placeholder site here:

    http://www.ifwerantheworld.com

    I, ahem, think it would be fair to say that the words ‘innovative’ and ‘risky’ could be applied to both…:)

  • jjjffff

    and of course there is the bogey man of execution…a skill set usually based on a blend of synthesized experience, maturity, interpersonal skills, market adeptness, salesmanship , healthy paranoia, access to a network of resources, tenacity and drive.

    I posit that most of those attributes take more than a few years to develop

    Most Sequoia innovators may be in their 20s, but there is a reason that most SUCCESSFUL innovators are older, and in many cases on their second, third, etc….adventure

  • Comment

    Generation Xers (people who were born between 1961-1981) are the most entrepreneurial and innovative generation in America so far. There are 93,000,000 Xers in the US. The oldest Xer is currently 49 years old and the youngest is 29 years old. For more generational research see http://www.lifecourse.com.

    Many, many “innovative” tech companies were started by Gen Xers. Google.

  • Yuri Ammosov

    Lou is dead right. This is exactly what one of the partners at another top 10 SV VC funds told me: “We will never fund you – you know too much about how we can screw you in a term sheet. Kids are much better – they sigh without reading”.

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