For the past two years I have been privileged to be invited to the venture capital company LocalGlobe’s annual showcase, where the day is spent listening to 15-minute overviews given by the CEOs of companies that LocalGlobe has invested in. What absolutely blows me away – and it’s not just because I am getting older – is that virtually all of the founders and CEOs are under the age of 35.
LocalGlobe was founded by father and son duo Robin and Saul Klein. I first met the Kleins in 2001 at the start of the first dotcom boom and have remained admirers of them ever since. In 2002, when Saul was 32, he co-founded and was CEO of Video Island, which became Lovefilm. In 2011 it was sold to Amazon for £200m.
The serial entrepreneur that he is, Saul came to The MBS Group to replace himself as CEO with Simon Calver so that he could go on to join numerous boards, invest in hundreds of startups, start one or two new businesses – such as music startup Platoon, work as an adviser to the government, teach and advise at the Saïd Business School as Entrepreneur in Residence and help with many philanthropic causes.
For me, Saul is a shining example of how young people are reshaping the business world, and the benefits other businesses can reap when they give youth a seat in the boardroom. This year at The MBS Group, we are doing more non-exec searches than we have ever done in our 30-year history, yet it strikes me there is scope for more companies to harness the innovation and entrepreneurialism of young people.
Company founders like Saul, Mark Zuckerberg at Facebook or Sergey Brin and Larry Page at Google all set up their businesses at a young age. In the food world I think of Jamie Oliver, too. Many of the next generation of innovators and disruptors coming through are similarly young, tech-savvy millennials, some of whom have raised millions and sold their companies to giants. Jon Reynolds and Ben Medlock sold their company SwiftKey to Microsoft for $250m last year when they were 30 and 26, respectively.
Despite this, few companies have any non-executive directors below the age of 35. According to a recent study by the IRRC Institute and Board Governance Research in the US, the median average age across all S&P 500 boards is 62.4 years, with little difference identified by company size or industry.
The research also found that more than half (55%) of the S&P 500 companies have only three decades represented on their boards, most commonly directors in their fifties, sixties and seventies. Only 5% of S&P 500 companies have directors from five or six different decades serving on their boards.
Experience is essential and invaluable, of course, so it is inevitable that boards are weighted towards older directors. Helping clients to make NED appointments is a fascinating process and finding those individuals that can use their breadth of experience – often attained over long and diverse careers – to provide companies with new, much needed perspectives is critical. But getting a mix of views and experiences could also mean finding a space for younger people.
Some companies have already taken steps in this direction. Starbucks, for example, appointed Hearsay Systems founder Clara Shih to its board in 2011, when she was aged just 29. Clara was already an influential leader in the tech space at that point thanks to the success of Hearsay, a software company that helps businesses to manage their social media presence. In 2011 she was named one of Fortune’s Most Powerful Women Entrepreneurs.
It is telling that in the six years since this appointment, Starbucks has massively expanded its online presence. The company recently announced that nearly a third of its sales in the second quarter were made online or through its app, contributing to total record revenues of $5.3bn. Starbucks has invested significant resources in its digital strategy in recent years, so it made sense for them to put such an impressive tech innovator as Clara in the boardroom.
Examples like Clara are few and far between, however, even as many large corporates strive to keep pace with technological change. Millennials are seen as increasingly important hires in departments such as marketing, data and digital, but it could prove invaluable to find a space for them in the boardroom too.
All of this provides plenty of food for thought as businesses look to ensure they are truly prepared for the future. The careers of people like Saul and Clara suggest that sometimes it pays to trust in youth.