Silicon Valley: The rise of the adolescent CEOs

Josh Buckley chief executive of an online gaming startup is looking forward to next month’s Game Developers Conference in San Francisco particularly for the parties and the accompanying schmoozing with industry Alisters.

There’s one problem Buckley who will turn 20 this week on February 22 may be turned away from many of the parties because he is not old enough to drink. His fake ID was recently confiscated and the two new ones he ordered from a company in China have not yet arrived.

Such are the dilemmas facing the everyounger entrepreneurs that Silicon Valley investors are backing these days. While little data on the phenomenon exists venture capitalists say they are funding more chief executives under age 21 than ever before.

At a certain point they can’t get much younger or we’re going to be invested in preschool quipped Marc Andreessen whose venturecapital firm Andreessen Horowitz is one of several that backs Buckley’s company MinoMonsters.

Andreessen and other venture capitalists say the entrepreneurs they fund at 18 or 19 typically have been prepping for years learning computer code taking on ambitious freelance projects and educating themselves on the Internet.

Some are selfconsciously molding themselves in the image of Facebook founder Mark Zuckerberg 27 who created computer games as a child and was taking a graduatelevel computer course by his early teens.

Internet businesses that target consumers make a sweet spot for the babyfaced because online companies often require relatively little capital. A semiconductor startup might require 10 million to 20 million in the early stages noted Joe Kraus of Google Ventures and that would be tough even for the most talented youngster.

If I’m going to write that big a check I’m going to invest in people who’ve done it before he said. But if you look at it as ‘Hey I’m going to raise 500000′ there’s a lot of ways to raise that.

Kraus helped back Airy Labs an educational socialgaming company run by 20yearold Andrew Hsu that raised 1.5 million. Hsu is now learning the same hard lessons as many of his elders the company recently laid off staff and is looking to rent out some of its office space in Palo Alto California. Hsu said the company is taking a different direction and focusing on a line of new products in math language arts and science.

Kraus said his biggest hiccups with young entrepreneurs are the business references they don’t understand because they are too young to be aware of them.

Andreessen says more than one young entrepreneur has asked him What did Netscape do again? Andreessen cofounded Netscape which developed the first commercial Web browser and helped launch the Internet era shortly after graduating from college in 1993.

I was 9 years old during the first Internet boom says Brian Wong 20 who runs rewardnetwork Kiip. He has had his fill of stories about companies that tanked amid the dotcom bust of 2000. The first time he heard the name Webvan a legendary dotcom failure I had to look it up he recalled.

Wong has raised more than 4 million from Hummer Winblad Venture Partners and others.

He believes his age helps him and other youthful entrepreneurs. You’re expected to be limitless he said. Kind of destructive.

While the freewheeling ways of youth may be a positive for venture capitalists they are less appreciated by landlords. Tim Chae the 20yearold chief executive and cofounder of socialmedia marketing company PostRocket said his age and lack of credit created problems when he moved to San Francisco last year and needed an apartment. Finally his father had to drive the 88 miles from Sacramento to cosign a lease.

Chae a Babson College dropout now lives in nearby Mountain View and attends 500 Startups a crash course for young companies run by a venture firm of the same name. He has raised a small amount of capital and hopes the upcoming Facebook IPO will help investors look more kindly on young entrepreneurs. Thank God for Zuckerberg he says.

Zuckerberg who left Harvard after two years is helping recast the notion of dropping out of college. Peter Thiel an early investor in Facebook and a cofounder of PayPal is encouraging others to try that path through twoyear fellowships for students who take a break from school move to San Francisco and pursue their entrepreneurial aspirations.

That’s what 17yearold Laura Deming did when she won a fellowship based on her goal of finding and funding antiaging technologies and left the Massachusetts Institute of Technology. Because she is not yet 18 she finds herself faxing documents such as nondisclosure agreements to her dad back in Boston to cosign.

Other young entrepreneurs have trouble negotiating the highways and byways of Silicon Valley quite literally. Sahil Lavingia 19 recalls a day last summer when he had several meetings scheduled on Sand Hill Road home to many of the nation’s leading venturecapital firms and no car to get there. The journey of just a few miles took hours by the time Lavingia rode a local train a couple of stops caught a bus to Stanford University and then hopped a shuttle bus to the Stanford Linear Accelerator Center which is on Sand Hill Road.

Another time dreading the combination of a hot day and a sweaty walk around Palo Alto he pulled on a pair of shorts even though he was heading to a meeting with bluechip VC Accel Partners. The outfit casual even by laidback Silicon Valley standards didn’t stop Accel from investing. Lavingia an alumnus of hot online bulletinboard company Pinterest raised 1.1 million for his payments startup Gumroad.

Buckley also ran into problems getting himself to Sand Hill Road. One night he stayed up until 3 a.m. and slept too late to get to a scheduled meeting with a venturecapital firm. It didn’t go down too well he said adding that his profuse apologies and requests to reschedule were met with a curt no thank you.

Not to worry. Buckley who had already sold a company while in high school for a sum he says was in the low six figures raised more than 1 million from Andreessen Horowitz and others.

At the time of the missed meeting he was attending Y Combinator a threemonth program for startups. In a nod to the boy wizard of book and movie fame Y Combinator cofounder Paul Graham has called Buckley the Harry Potter of startups but said he was not the youngest to win admission to the program.

That honor goes to John Collison now cofounder of payment company Stripe who was admitted at age 16 but did not go through the program Graham says. Instead he and his then19yearold brother merged their company with another Auctomatic and sold it to a Canadian company for 5 million in cash and stock.

Most of the young entrepreneurs say their interest lies in building rather than selling their companies. Buckley had to say as much in response to inquiries he said received recently from Facebook about a possible sale. His determination not to sell stems from advice he received from a successful executive he met last year at Y Combinator Mark Zuckerberg.

Reporting By Sarah McBride. Editing by Jonathan Weber and Maureen Bavdek

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