startup business Archives

Contrary to popular startup myths and misunderstanding, tech founders aren’t mainly younger than 30. They are generally well educated, not dropouts. They tend to start up where they are, instead of moving to Silicon Valley or other tech hubs.

Here’s a summary of data published by the Kauffman Foundation:

We observed that, like immigrant tech founders, U.S.-born engineering and technology company founders tend to be well-educated. There are, however, significant differences in the types of degrees these entrepreneurs obtain and the time they take to start a company after they graduate. They also tend to be more mobile and are much older than is commonly believed.

Founders are in their late 30s, 40s, and older

The average and median age of U.S.-born tech founders was thirty-nine when they started their companies. Twice as many were older than fifty as were younger than twenty-five.

90+% have college degrees

The vast majority (92 percent) of U.S.-born tech founders held bachelor’s degrees. Additionally, 31 percent held master’s degrees, and 10 percent had completed PhDs. Nearly half of all these degrees were in science-, technology-, engineering-, and mathematics- (STEM) related disciplines. Onethird were in business, accounting, and finance.
U.S.-born tech founders holding MBA degrees established companies more quickly (in thirteen years) than others. Those with PhDs typically waited twenty-one years to become tech entrepreneurs, and other master’s degree holders took less time to start companies than did those with bachelor’s degrees (14.7 years and 16.7 years respectively).
U.S.-born tech founders holding computer science and information technology degrees founded companies sooner after graduating than engineering degree holders (14.3 years vs. 17.6 years). Applied science majors took the longest (twenty years) to create their startups.

Top-rank universities are over represented

These tech founders graduate from a wide assortment of schools. The 628 U.S.-born tech founders providing information on their terminal (highest) degree, received their education from 287 unique universities. But degrees from top-ranked universities are over-represented in the ranks of U.S.-born tech founders. Ivy-League universities awarded 8 percent of the terminal degrees to U.S.-born tech founders in our sample.
The top ten universities from which U.S.-born tech founders received their highest degrees in our sample are Harvard, MIT, Pennsylvania State University, Stanford, University of California- Berkeley, University of Missouri, University of Pennsylvania, University of Southern California, University of Texas, and University of Virginia. U.S.-born tech founders with Ivy-League degrees tend to establish startups that produce higher revenue and employ more workers than the average. Startups founded by those with only high school education significantly underperform all others.

They start closer to home

Nearly half (45 percent) of the startups were established in the same state where U.S.-born tech founders received their education. Of the U.S.-born tech founders in our sample receiving degrees from California, 69 percent later created a startup in the state; Michigan, 58 percent; Texas, 53 percent; and Ohio, 52 percent. In contrast, Maryland retained only 15 percent; Indiana, 18 percent; and New York, 21 percent.

I like beachhead strategies. The term comes from military strategy, meaning that as you invade enemy territory, you need to focus your strength and concentrate on winning a small border area (the beachhead) that becomes the stronghold from which you’ll advance into the rest of the territory.

That’s what the allies did, successfully, in the D-Day invasion of Normandy in 1944. That military success was planned and led by Dwight D. Eisenhower, author of my favorite business planning quote (“The plan is useless, but planning is essential.”) It’s what you see in the opening scenes of Saving Private Ryan. It’s also something I learned mostly by playing war strategy games (although not specifically the one shown here; that’s just a good illustration).

And it’s good business. In business, particularly startups, the beachhead strategy is about focusing your resources on one key area, usually a smaller market segment or product category, and winning that market first, even dominating that market, before moving into larger markets.

Beachhead strategies are often critical for bootstrapping new businesses. And franchisor businesses should think of the beachhead strategy as making sure the initial locations are strong and successful and good models for future locations.

Sadly, people don’t always communicate beachhead strategies well. As an angel investor, and judge of business plan contests, I often see what should be beachhead strategies looking instead like they are focusing too narrowly and missing the larger markets that the beachhead will lead to.

It’s ironic. In business pitches, for startups, the beachhead strategies tend to generate criticism from judges, experts, and other assorted experts for being too narrow, too focused. They want the big picture. But, on the other hand, the big picture, do-everything strategies will often be criticized for being unrealistically ambitious, and unrealistic.

The answer to this seeming paradox is: If you are doing a beachhead strategy, make sure that you include the follow-up idea of broadening your approach later on, after establishing yourself in that first core market.

(Image credit: hoping the game publishers don’t mind seeing their cover shot here; I got it from images.google.com)

— Late addition

My friend John Reddish added one of the comments, mentioning the pictures of Normandy he sent along to add to this post. Here they are belong. Image credit, John Reddish: