From Elon Musk’s supreme confidence to Jeff Bezos’ ability to make smart decisions under pressure, some of the most successful entrepreneurs are known for their distinctive personalities. But these traits aren’t just interesting side notes to these founders’ stories: confidence and calmness, along with other qualities such as a love of adventure, can have a big impact on startup success.
A startup is typically counted as a “success” if it’s acquired by another company or goes public (that is, its shares become available to trade on a stock exchange). And common investor wisdom attributes this to either supply side (novel products) or demand side (market interest or “hot sectors”) factors.
Of course, many other elements are associated with startup success. There’s a “Goldilocks age” for startups, for example, with those younger than seven years old less likely to be successful because they haven’t had enough time to develop. Startups based in hot spots like San Francisco, Berlin or London are also more likely to succeed due to better access to finance and talent.
While our new research shows all these elements are important, it reveals that the personalities of founders are actually the most influential factor in startup success.
AI uncovers the x-factor: founder personality
Our multidisciplinary team from the University of New South Wales, the University of Oxford, University of Technology Sydney and the University of Melbourne embarked on a two-year mission to unravel the mysteries behind startup success. We tapped into detailed data on more than 21,000 global startups to discern patterns that might predict a venture’s triumph or downfall.
Using AI algorithms, we applied the “five-factor” model – a psychology theory that divides personality into five main groups – to analyse startup founders worldwide. After comparing data on thousands of successful founders to information about employees, we discovered that entrepreneurs exhibit very different combinations of personality traits to everyone else.
Entrepreneurs tend to have a penchant for variety and novelty. They often have a desire to be the centre of attention and an inherent exuberance. While these traits might sound generic, in the business world they translate into risk-taking, networking and relentless energy – critical ingredients for startup success.
Based on our findings, we have identified six distinct founder personality types: leader, accomplisher, operator, developer, fighter and engineer. Each type has its own combination of subtle personality traits, for example, operators value orderliness and fighters are emotionally sensitive.
Founder personality traits
Many of these personality types are thriving in the real-life startup world. Take, for instance, Bill Gates, co-founder of Microsoft. He left Harvard to chase what was then a risky dream. This epitomises “openness to adventure”, which we found was a characteristic of the “leader” personality type.
This theme of defying the odds coupled with seemingly limitless energy resonates with many founder stories.
Melanie Perkins, a co-founder of $26 billion graphic design software company Canva, faced over 100 rejections from investors before securing the venture capital funding needed to build the platform. She has described herself as “determined, stubborn and adventurous” – also traits of the “leader” founder type.
Jeff Bezos is a well-known “acccomplisher”. He left his secure position at a New York hedge fund to found Amazon from Seattle. This wasn’t an impulsive move, it was a strategic choice. Bezos saw Seattle as the best place for a national distribution hub because it would benefit from Washington state’s specific tax laws. Such meticulous planning and long-term vision has characterised some of Amazon’s other achievements, including the development of Amazon Web Services, a global cloud computing leader.
And, of course, no discussion of start-up personalities would be complete without Tesla and Space-X founder Elon Musk. This “engineer’s” many business interests are driven by boundless imagination, as well as intellect. You can see this in SpaceX’s audacious goal to colonise Mars and Tesla’s futuristic Cybertruck design, as well as Musk’s underground transportation system Hyperloop.
Founders are wired differently
The power of diversity
Our model also indicated that startups with a diverse blend of these founder personality types are 8 to 10 times more likely to be successful.
Canva’s three co-founders are a great example of this. Ex-Googler Cameron Adams’s technical intellect and imagination has combined with Cliff Obrecht’s assertive dealmaking and Perkins’ energy, trustworthiness and adventurousness to create a tech juggernaut.
Even if you’re not gearing up to launch or invest in the next big startup, personality offers a fascinating lens through which to view the start-up world and its most talked-about figures. And these findings are likely to hold in other settings too: team performance is shaped by the right combination of different personalities.
Behind every successful startup, there’s more than just a groundbreaking product or a burgeoning market, there’s a dynamic founder – or founders – with a personality that’s the secret to startup success.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
This article was originally published on The Conversation. Read the original article.
