- A new study published in ‘Scientific Reports’ reveals that the success of startups is closely linked to the personalities of their founders.
- Researchers from prestigious universities analyzed data from over 21,000 startup founders to identify the traits that predict success.
- The study suggests that six particular personality types, referred to as Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers (FOALED), significantly increase the chances of startup success.
- The combined personalities of the entire founding team also play a crucial role in determining the success of a startup.
- Startups with diverse combinations of founder types have a significantly higher chance of success compared to those with a sole founder.
The World of Startups
The world of startups is a challenging and dynamic space, where success is often elusive. Many factors contribute to the triumph or failure of a startup, but a new study published in ‘Scientific Reports’ suggests that the key to success lies in the personalities of the founders themselves. Researchers from the University of New South Wales, Oxford University, and two other Australian universities conducted an extensive analysis of over 21,000 startup founders to identify the traits that predict success.
The Six Founder Types
The study identified six distinct founder types that significantly increase the odds of startup success. These founder types are Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers, collectively known as FOALED. The researchers found that successful founders possess personality traits that are not commonly found in the general population. Traits such as a drive for variety and novelty, openness to adventure, lower levels of modesty, and higher energy levels were found to be common among successful founders.
The Importance of Team Composition
While individual founder traits are important, the study also highlights the crucial role of team composition in startup success. Startups with three or more founders have more than twice the likelihood of success compared to solo-founded start-ups. The researchers coined the term “Ensemble Theory of Success” to describe the concept that startups with diverse combinations of founder types have an 8- to 10-times greater chance of success than companies with a sole founder. This theory aligns with other commonly subscribed notions in the startup world, such as the Three Hs (hipster, hacker, and hustler) coined by AKQA chief creative officer Rei Inamoto in 2012.
Methodology and Findings
To determine the personality traits of the founders, the researchers employed a machine-learning algorithm that analyzed the Twitter posts of the 21,000-plus founders. Although this methodology may raise eyebrows, it is based on a widely cited method created by three of the coauthors in 2019. By analyzing the language used in tweets, the algorithm generated psychological profiles for each founder, which were then correlated with their respective professions.
The study found that the algorithm could accurately distinguish successful founders with 82.5% accuracy. Data from Crunchbase’s directory, including information on fundraising, mergers, acquisitions, and IPOs, was used to measure the success of the startups.
Implications for Organizations
The findings of this study have important implications for organizations of all kinds. Having a diversity of personality types within teams is crucial for success. The lead author of the study, Paul McCarthy, emphasizes the significance of these personality traits, stating that approximately 8% of people worldwide possess the traits that could make them successful founders, even if they are currently not in the entrepreneurial field.
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