- The founders of Cleo and uBiome both lied about their age to the media to appear younger.
- While telling white lies isn’t an uncommon practice for startups, the founders may have felt added pressure to appear young due to perceived investor age bias.
- Experts say the media’s obsession with “under 40” and “under 30” could be driving that age bias.
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Turns out, they were lying.
Earlier this month, Business Insider discovered the founder of the poop-testing startup uBiome presented herself as younger than she was to reporters. When she was 40, founder Jessica Richman misled Business Insider on her age to get included in the website’s “30 most important women under 30 in tech” ranking.
Reports recently surfaced that Shannon Spanhake, the founder of $US115 million parenting app Cleo, resigned due to possible mismanagement. Forbes found Spanhake had lied to the publication to present herself as a 36-year-old CEO, when voting records show that she was 42 at the time.
Many people bluff about their age, but two high-profile CEOs outright lying to journalists suggests an increased pressure to appear young in Silicon Valley. Yet research shows founders over 40 run the most successful companies.
It may be that the media focus on entrepreneurs “under 30” is fuelling ageism in venture capital.
“I don’t blame those women for lying about their age at all, because I get it,” says Alice Fisher, founder of The Radical Age Movement, a nonprofit advocating against age discrimination. “They’re not gonna write about you if you started your business at 48, but they will write about you if you started your business at 28.”
Telling investors little white lies
Embellishing facts in Silicon Valley is nothing new. In quests to show investors how fast their company can grow, founders may lie about how many customers they have signed versus gotten handshake agreements with, or lightly embellish revenue numbers, according to Founder Collective, a seed-stage VC fund.
Founder Collective has backed over 250 startups, and just one committed pre-meditated fraud, says the fund’s managing partner David Frankel. He has seen how a white lie can snowball into an accounting scandal that threatens a company.
“In our experience, ethical lapses among entrepreneurs are rarely part of a Machiavellian plan; more often they’re the result of a slow erosion of standards in the face of startup stress,” Frankel said in an email to Business Insider.
But the fact that Richman and Spanhake lied about their age rather than company growth, could have been to make sure investors didn’t see them as too old. A survey of 539 startup founders by VC firm First Round Capital reported 37% of them believe startup investors have an age bias, compared to the 28% who say they discriminate on gender and the 26% who say they discriminate on race.
Entrepreneurs say venture capitalists begin to pass on founders once they turn 36, the survey found.
The media’s obsession with young entrepreneurs
Young entrepreneurs’ over-representation in news and entertainment could skew investors into thinking all successful founders are young. Mark Zuckerberg’s “Harvard dorm room experiment turned billion-dollar company” became folklore, capped off with an Aaron Sorkin blockbuster.
In reality, the rockstar 20-something entrepreneur is an anomaly. The average age of business founders hovers around 40, according to research conducted by MIT professor Pierre Azoulay, who analysed 2.7 million people who founded companies between 2007 and 2014.
Older people aren’t just starting companies more often – they’re often better at it. A founder at age 50 is approximately twice as likely to experience a “successful exit,” meaning they get acquired or go public, compared to a founder at age 30, the research finds.
Under-30 and under-40 lists lead us to associate entrepreneurship with youth in ways that are probably not correct. “If two entrepreneurs come to you with the same idea, everything is the same except the age of the founder, based on our data, you would expect the older founder to do better,” Azoulay says.
Given the data that suggests older founders run successful companies, investors themselves may not have an age bias, says Betty Wong, who runs Stage2Startups, which helps companies started by people over 45 get funding.
Often time, VC firm partners hire young associates to go out and find companies to invest in, Wong says. Young people tend to go to events and run in circles with other young people. That’s why associates bring VC partners companies started by young people, leading VC firms to invest more heavily in younger founders, in line with how hiring managers hire candidates who remind them of themselves.
Still, Wong says, if the media were to showcase older entrepreneurs more often, VCs may actively seek out their companies.
“If you’re a VC and you see 10 stories about a successful young entrepreneur but no stories about the older entrepreneur, you have to make a choice,” Wong said. “If the media could run stories about entrepreneurs over 50 or over 40 or over 30, it would help to rebalance the opportunity.”
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