Web3 Could Unleash Innovation by Overturning Age Bias in Startups
Web3 has the potential to even the playing field between experienced techies and the next generation, writes James Whitley.
By: James Whitley • Loading...DeFi News
Last week, it hit me: I was actually working at my first job putting together bankruptcy exit plans for a failing airline the year our protocol’s intern was born. After a bit of a panic and checking to see if my address was updated so I’d receive my AARP card (yes – I’m exaggerating), I spent a little more time reflecting on how I, a finance and management professional with nearly 18 years of experience, found myself as a contributor to a cutting-edge DeFi protocol.
So why exactly would I choose a web3 opportunity rather than any of the numerous other startups I’ve decided not to pursue? Web3 is uniquely positioned to upend the age bias that exists in the traditional startup world because it’s cheaper and quicker to scale, positions older founders in a positive light for their careers, and facilitates the step-change innovations in industries that require a deeper level of expertise.
Bias is Very Real
Ask someone to describe a startup founder, and they probably have the image of a twenty-something college dropout with a dream. (Think: either Elizabeth Warren’s “shadowy, faceless…super coders” or a young Steve Jobs tinkering away in a garage.) Investors, media, and people in the tech community themselves are all too happy to perpetuate the stereotype that innovation is exclusively the realm of youth. In fact, among employees, the bias is very real.
A recent study from the University of Gothenburg shows very clearly that employees over 35 are “expected to be less interested in technology…[and to] have more difficulty processing information and picking up new things.” But for VCs, who put out $621B of capital in 2021, the age posturing might be more of a “look at my midas touch” marketing opportunity to fill the funnel than anything else.
The Time is Now: Web3 Must Make Good on its Promise of Inclusivity
A recent report by ArtTactic revealed something startling about web3: for an industry that casts itself as an egalitarian panacea we still have a long way to go. More than three quarters of NFT sales went to male artists, between January 2020 and September 2021, while only 5% went to female artists (the report also…The Defiant
Despite the general perception and employees’ views of their own co-workers, research, including that from Wharton, concludes that the most successful founders are actually mid-career, somewhere in their early 40s. So while there may be a ton of early-20s founders out there living the ping-pong and cereal-in-the-office dream, experience often rises to the top. This goes along with the age for innovation in science and medicine, where contributions to technical fields often happen well into people’s careers.
What we do know is that self-deselection coupled with a perceived or real ageism means many mid-career, would-be entrepreneurs never end up stepping out of the corporate world to start a company. As if the feeling of already having missed their chance isn’t enough, many who do feel like they have what it takes to succeed on their own simply can’t take the risk.
While there may be a ton of early-20s founders out there living the ping-pong and cereal-in-the-office dream, experience often rises to the top.
Take Salt Lake City, where I spend a good deal of my time. Even in a relatively inexpensive place, the baseline costs of a three-bedroom home, supporting a small family, and the occasional night out or vacation can easily exceed what VCs would consider a reasonable salary for an early-stage founder. And for people who have spent their careers in corporate, a couple years worth of salary from savings either isn’t there or needs to be held for other reasons. In short, the expectation that founders take a low or no salary, bet everything they have on a low-probability outcome, and forfeit the resources that come with big company backing almost always prohibits older founders from taking the leap.
In many cases, the challenge of building a team to create proprietary technology and an IP moat can be mitigated in the web3 environment. Open-source code and composability of functions, coupled with largely remote-friendly work environments, means you can spin up proof of concepts at a fraction of the time of traditional models. In other words, there are a number of industries in which web3 and crypto entrepreneurs can focus on the final steps of solving a problem rather than building up the infrastructure necessary for most web2 plays.
Web3 Removes Hurdles
Furthermore, lower costs and availability of crypto venture capital means earlier funding. With token offerings instead of equity, entrepreneurs can reserve a fixed amount for their team and avoid the traditional cycle of growing for growth’s sake so that valuation outpaces dilution. Vesting schedules are often accelerated compared to traditional models, too. A crypto founder may begin to receive unlocked liquidity for a utility token two years after starting (a year for development and a year post utility token launch). Compare this to 5-15 years to go public and only after significant dilution in standard startup lifecycles.
And finally, many mid-career professionals are reluctant to leave the established companies they’re with for a small company because the reputation risk of losing brand recognition can limit their prospects for return should things not work out.
However, when taking a risk on a new business model for an existing need, the web3/crypto founder is actually becoming more marketable to the large company he or she left so, in the worst case, this founder will have a slightly lower salary for a couple years which may even be more than made up for when returning after a failed venture.
Perhaps most importantly, startups in web3 often represent a step change in innovation vs. incremental gains in user experience from traditional startups. Industries like finance, insurance, and real estate are especially ripe for disruption through disintermediation, decentralization, and digital property rights.
Experience and Youth
These industries receive the bulk of VC investment, but often have either very long and expensive development pathways (healthcare 16%), or are simply a repackaging of existing info (most “tech” 29% and consumer services 11%) – not an attractive draw to top talent with life commitments. Yet, these are precisely the industries that match the deep, specialized expertise of industry vets with the long approval times and high barriers to entry that prevent evolution in a traditional sense.
So what are we left with? An environment where the most successful group of potential entrepreneurs are no longer held back from unleashing their potential. By mitigating barriers with web3 formats, more teams may find themselves with a mix of experience and youth. They’ll be able to draw on the energy of the up-and-coming and the expertise of industry vets to drive a level of change not seen since the invention of the internet.
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