Too Old or Young to Start a Healthcare Startup?
Over the weekend, I was reminded by a dear friend that I am now 31 years old and thereby unable to qualify for the Forbes 30 under 30 list. Who needs enemies when you have friends like that? Too bad Healthcare Pizza hadn’t started in 2017, I surely would’ve made the list. Now all I can hope is for is Fortune’s 40 under 40 list, sharing the award with billionaire Kylie Jenner and Presidential candidate Pete Buttigieg. Seems likely…
On the topic of age and healthcare startups, today I have a doozy. I have long wondered if healthcare founders were traditionally older or younger than other industries, since the majority of today’s leaders across the payer, provider, drug, and device industry are all above the age of 50. I mean you don’t hear of too many 19 year old Stanford dropouts looking to disrupt the healthcare industry… Thanks to Hervé Lebret, I now have the data. Here’s the results. Compared to internet and software companies, healthcare founders at time of IPO are 11 years older. Below I have colored the healthcare related categories in orange, while the internet and software companies are listed as blue.
Another way to look at the data is the distribution of founder’s by age brackets. This simple histogram shows the average founder age breakdown for Healthcare versus Software and Internet. To me, this was even more interesting! Software and Internet has a standard bell curve peaking around the 30-34 age bracket, while Healthcare is significantly older. Specifically, 33% of healthcare founders were 50+ years old at the time of IPO compared with exactly 1% of founders in Software and Internet in that category.
As an amateur data scientist, I immediately wondered what primary confounding variables could be causing this discrepancy. One argument that I’ve heard from multiple sources is that the complexity of healthcare and difficulty in achieving scale will cause longer time periods before going public. Therefore, this delay would cause older founders at IPO. Since it seemed plausible, I decided to look into it. Much to my surprise, it takes the same amount of time for both Medtech and Software companies to go public, at 10.8 and 10.2 years respectively. There’s no difference that ages the healthcare founder. Squash that argument.
Now before all the PhDs, statisticians, and internet trolls jump all over me, I will admit there are likely other variables at play. For example, the World Wide Web was invented in 1990 by computer scientist Tim Berners-Lee, thereby skewing the Internet and Software talent pool much younger. It is also possible that healthcare startups with younger founders more often fail or become acquired, as opposed to going public. Or maybe younger generations are just disinterested with helping anyone but themselves and would rather play video games all day. “OK, Boomer.”
My guess is that healthcare is a hierarchical and status quo industry that benefits experience and connections. The two major power players in the industry are physicians and hospital executives. Of the 906,000 physicians in the U.S. today, the average age is 46.8 years old, while leaders are much older. For hospitals, the American Hospital Association reports 6,210 hospitals exist in the United States with CEOs on average 57 years old. To provide context why they are important, there are only 5,362 total Walmart stores (including Sam’s Club) in the same area.
Let me be clear, I don’t really care about age. I want the best and the brightest to receive funding, pilots, and partnership contracts, regardless of how many years they’ve walked the earth. I recognize the value having years of experience in health plan economics, hospital supply chain, or guiding multiple drugs through the FDA approval process. I also believe smart, young, and hungry professionals can accelerate change, challenge status quo, and leverage technology to improve the system overall. The startup ecosystem should encourage 20 or 30 year olds to start their first healthcare startup with reasonable expectations, because the experience gained may eventually lead to exits in their 30’s, 40’s, 50’s or 60’s. That company, or their second or third. And for those already in the middle or later stages of their career, you’re right in the sweet spot for that multi-million or -billion dollar exit! Good luck.
November 12, 2019
Andy Mychkovsky is the creator, writer, and head chef at Healthcare Pizza. In addition to working for a healthcare technology company and advising startups / investors on a variety of digital health topics, he lives in Arlington, VA with his wife and future French Bulldog. Follow him on Twitter or LinkedIn for future thoughts.