This article was co-authored by Laura Musgrave, Kevin Bijas, and Jeffrey Cohn.

“People over 45 basically die in terms of new ideas.” said venture capitalist Vinod Khosla in 2011.  “People under 35 are the people who make change happen,” he further asserted.  Taking the exact opposite tack, in a recent CNBC interview, Alan Patricof, founder of Greycroft Partners, an elite venture capital firm, said: “academic studies show that the success rate of entrepreneurs who start at the age of 60 are twice as successful as those that started in their thirties.” It is widely known that among the top determinants in a start-up’s success or failure is the executive team. This, of course, starts with the CEO, and young companies have a broad set of founders and CEOs with different backgrounds, competencies, and demographics at the helm. One vaguely controversial, age-old discussion is around the numerical age and corresponding maturity of CEOs and how age, which translates to experience, can impact the trajectory and level of success of a company. 

A Forbes article in 2017 titled “If You Want To Be ‘CEO Material,’ Develop These 15 Traits,” created a laundry-list of traits needed to be a great CEO. We chose to address the following traits in this article: 

  1. Passion 
  2. Vision 
  3. Grit and courage 
  4. Decisiveness/judgment 
  5. A track record of high performance and potential 
  6. Curiosity 
  7. Ability to anticipate and navigate challenges 
  8. The mindset to embrace obstacles.

In conducting our research before writing this article we noticed that there is a lot of dialogue out there about whether young CEOs are more successful than older, experienced CEOs and vice versa, but we did not see any investigation into the psychology that would make either assertion true. In an attempt to extract some of the opinions out of this topic, we want to look at the CEO traits from the article and whether younger or older CEOs are more likely to possess each trait based on the anatomy and development of the brain. Rather than argue for older or younger CEOs, we look at the tradeoff from a neurological point of view.  Is the older or the younger brain better equipped for the startup CEO?   

The prefrontal cortex is often referred to as the brain’s “CEO” because of its role in all of the cognitive executive functions, including an ability to focus one’s attention; an ability to predict potential consequences of one’s actions or events in the environment; an ability to regulate emotions; impulse control; planning for the future; and an ability to think about ordering of events, including understanding that delaying gratification is often the better choice for long-term success or satisfaction. What these cognitive processes translate to in a business setting include behaviors like judgment, integrity, empathy, emotional intelligence, and vision.

The human brain develops back to front, thus the prefrontal cortex is one of the last regions to fully develop. Neural networks connect different parts of the brain, allowing the regions to communicate with each other in a way that is so rapid, it is perceived as instantaneous to the individual. As we grow and learn, our neural networks become more developed. Most scientists agree that, while an individual’s brain can develop more or less quickly based on experiences, which contribute to neural development, the prefrontal cortex typically doesn’t develop until age 25. This means that an individual’s ability to think long-term in decision-making, to regulate emotions, to recognize “I need to accomplish A before I start B”, and to negotiate fairly and effectively, are all not fully developed before 25 since the neural networks between the prefrontal cortex and the limbic system, which controls the fight or flight responses, has not developed.

While an immature (developing) prefrontal cortex can be advantageous in leadership qualities like courage and passion, it can provide challenges for leadership skills, critical for a startup, like judgment, integrity, empathy, emotional intelligence, and vision, since these require these executive cognitive functions.

With all of this in mind, we constructed the following table to compare archetypal young founders and experienced CEOs across the aforementioned Forbes traits that define successful CEOs. While there are arguments to both sides of the early career versus experienced CEOs, when considering the less fully developed prefrontal cortexes of younger CEOs, we assert the following trait comparison.

Regardless of your point of view on age and brain development, we can agree that investors will continue to invest in both young and old founders. So, what’s the takeaway for investors?  They should recognize that both have unique risks and be clear-headed about those risks ahead of time, before pulling the trigger on a big, new investment.

Given the relative immaturity of the prefrontal cortex, there are three notable risk factors for young CEOs—judgment, resilience, and track-record. We define judgment as the ability to quickly and efficiently zero in on the most salient issues, clearly anticipate unintended consequences, and make logical trade-offs.  These are unambiguously important tasks for any founder/CEO.  Judgment allows a leader to see the entire chessboard, often several moves in advance.  It enables leaders to think strategically in a cohesive, integrated way.  We believe that a well-developed prefrontal cortex enables good judgment, and prevents leaders from making narrow, ad-hoc, reactive decisions with no underlying strategic rationale. Unfortunately, the prefrontal cortex doesn’t become fully developed until the age of 25!

Even if a young leader has relatively good judgment and makes all the right moves when developing a business plan, unexpected obstacles will inevitably emerge as they implement the plan.  That’s why it’s important to carefully examine the track-record of a young founder/CEO. Investors should ask annoyingly detailed questions about the founder’s ability to follow through and achieve results in the face of unexpected obstacles, even if that means probing about school activities, projects, and clubs.

As the legendary heavyweight boxer Mike Tyson once said, “even the best strategy flies out the window when you step into the ring and get hit in the face.”  Leaders take their fair share of punches too and sometimes fall to the mat.  Investors need to know how founders and CEOs will react when their face hits the mat, which it inevitably will.  Some founders will bounce right back up.  Others will adopt an entirely different world view.  Better to know these risks ahead of time.

Conversely, relatively older founders have serious risks too. 

Do they really believe, deep in their gut, they can change the world?  This often takes an unbridled sense of passion somewhat fueled by naivety. Over time this optimism can gradually get chipped away through life experiences, temperance, and moderation.  In the same vein, older CEOs often have less tolerance for risk, having been ‘burned’ one too many times before.  The pain still feels fresh and stings right before pulling the trigger on a bold bet. Although this moderation can be good in certain situations, it’s a distinct risk factor for entrepreneurs trying to change the world.  And finally, founders need a constant sense of intellectual curiosity.  They’re never satisfied with existing processes, mental models, or views of the world.  As the brain becomes more mature, it develops patterns and neural networks that are hard to erase or reprogram.  This rigidity can be a risk factor for investors backing an older CEO.  We’re not saying it’s a deal-breaker.  But buyer beware.

So what?

The first step is to be aware of the risks.  There is no such thing as a perfect leader.  Age is a factor, and it can work both ways.  Regardless of how polished and accomplished your finalist candidates appear to be, we recommend digging far beneath the surface.  How should you do this? 

Don’t rely on gut instinct and basic vetting alone.  We recommend thinking carefully about leadership assessment. At N2Growth we use multiple, complementary assessment tools.  This is the gold standard for assessment.  No one assessment tool or technique can provide a clear and complete picture of all the hidden risks of senior executives.  Of course, you should tailor the approach in a way that best meets your needs. 

We typically start with a competency-based assessment to better understand exactly how the executive has achieved results in the past. We ask detailed questions about past accomplishments and failures.  The only downside of this technique is that candidates who don’t enjoy deep reflection may not want to be put on the psychologist’s couch for a few hours.  We then deploy a proprietary case-based assessment to understand how the candidate thinks about difficult, seemingly intractable business challenges.  Case-based assessments give us a sneak-peak inside the brain to see how the gears are really operating.  To better understand their psychology, preferences, and leadership style, we then deploy a psychometric assessment.  After we’ve gathered a great deal of relevant data and formed our own hypotheses about the candidate, we conduct a thorough 360-degree referencing. This is an important double and triple-checking mechanism.  What do others think?  Do they agree or disagree with our initial thoughts?  Can they give us even more data to help us understand potential risks, and how to mitigate them, depending upon the context?

At the end of the day, we see value in both Patricoff and Khosla’s point of view—both young and old founders can be excellent CEOs.  But both have risks, too. Much of this risk is a direct result of how the brain develops over time. To mitigate these potential risks we urge investors to use a rigorous, well-conceived assessment process. In addition to helping you reach a go/no-go decision about a particular founder, you’ll have plenty of data to help you think about future coaching needs, potential blind spots, and how to build a complementary executive team.