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What is the right age to found a company? February 29, 2012

Posted by jeremyliew in founders, startups.
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I read a story in this weeks economist that surprised me. It claimed that founding new businesses is not just a young persons game, but rather that the average age of a founder of a tech startup was 39.

Research suggests that age may in fact be an advantage for entrepreneurs. Vivek Wadhwa of Singularity University in California studied more than 500 American high-tech and engineering companies with more than $1m in sales. He discovered that the average age of the founders of successful American technology businesses (ie, ones with real revenues) is 39. There were twice as many successful founders over 50 as under 25, and twice as many over 60 as under 20. Dane Stangler of the Kauffman Foundation studied American firms founded in 1996-2007. He found the highest rate of entrepreneurial activity among people aged between 55 and 64—and the lowest rate among the Google generation of 20- to 34-year-olds. The Kauffman Foundation’s most recent study of start-ups discovered that people aged 55 to 64 accounted for nearly 23% of new entrepreneurs in 2010, compared with under 15% in 1996.

There is definitely an availability bias (dominated by people like Mark Zuckerberg and Bill Gates) that leads us to think that tech startup founders drop out of college to start their companies. But I did a quick and informal poll with my partners and found results consistent with Wadhwa’s findings. Roughly 50% of the founders of our current portfolio were in their 30s when they founded their companies, with roughly equal numbers in their 20s to their 40s:


I went one level deeper, and compared the ages of the founders of internet companies to those of infrastructure companies:



Here we start to see a difference – although half of founders in both categories are in their 30s, the remainder tend to skew to their 20s for internet companies and to their 40s for infrastructure companies.

This squares with my intuition more- what do you think?

How Big Data is changing the lending industry February 27, 2012

Posted by jeremyliew in big data, financial services.
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I have a post on PandoDaily today about how big data +machine learning is reshaping lending and underwriting. I talk about some of the leading players in the space, including Wonga, Zestcash*, Klarna, and others, and why there is so much opportunity to create hugely disruptive companies in this space. Check it out!

* Zestcash is a Lightspeed portfolio company.

Why so many hot apparel ecommerce startups are vertically integrated February 3, 2012

Posted by jeremyliew in apparel, Ecommerce.
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The WSJ has a story on what goes into the price of a shirt that shows why so many of the current batch of hot apparel ecommerce companies (e.g. Shoedazzle*, Bonobos*, J Hilburn, Warby Parker, IndoChino etc) are vertically integrated. The retail value chain has a significant markup built into both the wholesale and retail channel as can be seen here.

Vertically integrated companies can take a lot of the costs out of the system and provide a much more compelling value to the consumer while still making an attractive margin.

* Lightspeed portfolio companies

WSJ compares Petfood ecommerce, likes Petflow February 3, 2012

Posted by jeremyliew in Ecommerce.
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Last year we invested in Petflow, an online  petfood retailer. We believed that Alex and Joe, the two cofounders, would be able to repeat the success they had in founding Azoogle (now part of Epic Media Group) and that the repeat purchase behavior inherent in petfood would generate loyal repeat customers and high lifetime value, despite the high shipping costs inherent in petfood. Pets.com went down in flames when the first bubble burst, but we believe that today’s much lower cost of building and running an ecommerce site, today’s variable marketing costs that performance marketing affords, and today’s mainstream acceptance of ecommerce make this a much better opportunity.

Others see a similar opportunity, notably Quidsi (parent company of Diapers.com) who launched Wag.com.

Alex and Joe have been steadfast in their focus on high quality food and service, and it’s nice to see that recognized in yesterday’s WSJ Cranky Consumer article comparing online petfood retailers. The higher quality focus is noted, despite the fact that the tester is used to cheaper supermarket brand food:

Tester Pixel loved this food. We put out two bowls: one with Meow Mix and one with the Holistic Select. He went right for the Holistic Select, and now turns up his nose at Meow Mix. Pixel may force us to return to PetFlow.

Mr. Chewy also got a thumbs up, Wag and Petfooddirect unfortunately did not. Congrats to Joe and Alex!