Investors Bank On Young Entrepreneurs For The Next Big IdeaPlay
Get a job! That used to be the advice to college grads who got the bug to start their own companies. Get some business experience under your belt first, or at least put a tried and true person in charge.
That’s ancient history now. Local investors are throwing millions of dollars at entrepreneurs so young, Avis and Hertz won’t even rent them a car.
He looks like a kid in a candy store, except 22-year-old Seth Priebatsch is in his own corporate headquarters in Cambridge. He’s CEO of SCVNGR (“Scavenger”), which combines games and social media with the offline world. And he’s showing me his main conference room, where he’s pushing a button to make the walls slide in.
"It’s all brand-new anyways. If you say you have five years experience in iPhone development, you’re either Steve Jobs or you’re lying."Seth Priebatsch, 22-year-old CEO
He likes to do this to put pressure on groups so meetings get done faster.
"It doesn’t go in all the way. If it went in all the way we’d do it more often. Then it’d be much more 'Star Wars' and effective," Priebatsch said.
His own corner office looks more like a dorm room: one wall has a bookshelf studded with model cars.
"They are alphabetical, basically from Aston Martin down to — and I cheated and put like a Z4 at the very end, even though it’s technically a Beamer," Priebatsch said.
In his bright orange shirt and matching wraparound glasses, Priebatsch is almost hard to take seriously. But investors have — they have given him $20 million. That’s almost $1 million for each year he’s been alive.
This 22-year-old is no exception.
"We backed a company five years ago," said Todd Dagres, a partner at Spark Capital in Boston, "and the founder of that company at the time was 17 years old. He had to ask his mother for permission to start the company."
That company is Tumblr, now one of the most popular platforms for blogging. Dagres said he likes investing in entrepreneurs who haven’t yet matured.
"One thing I love about these people is they don’t know what they don’t know. They don’t fear failure. They don’t mind risk," he said.
But failure and risk are exactly why investors used to run away from young entrepreneurs.
"There’s always been this paradigm to go learn things in business, and then you can apply them to your own business that you start," said Bill Warner, who worked a day job for seven years before he started AVID, the Burlington company that makes software to produce videos. Warner later became an angel investor, looking to fund emerging companies. His same path is what he used to recommend to young wannabe entrepreneurs. But then something happened.
"Well, what about the people that have made some of the biggest companies we have on our planet today? They didn’t do that," he said.
Warner says Google and Facebook made investors realize that on-the-job experience may actually teach you bad things. You might learn bad habits and bad business practices by paying your dues in a corporate office park. Now Warner is sold on investing in fresh minds and business ideas whose potential is just dawning.
"If the company is a complete failure, it’s like, who cares? You know it was a small amount of money, and now you have this relationship with the entrepreneur," Warner said. "Then, what’s next?"
"If there’s anything that’s happening now, the age discrimination is on the other side," Dagres said.
Dagres said investors are funding young entrepreneurs so much, they’re actually shunning first-time entrepreneurs in their 30s and 40s.
"You should be investing in 3-year-olds if they know what they’re doing," Priebatsch said.
Priebatsch said investors should pay no attention to age at all, especially if the business idea is in mobile or Web technology.
"It’s all brand-new anyways. So no one has 20 years of experience in iPhone development. You know, if you say you have five years experience in iPhone development, you’re either Steve Jobs or you’re lying," he said.
In this day and age, forget about age. All you need to start is a fresh idea.
This program aired on July 5, 2011.