Personality crucial for StartUp success
Evidence of the crucial role of founders' personality for HiTech Startup success
The Big Five
Given the founders and their collaboration is critical to the success of the StartUp, does personality matter in the selection and development of the Management Team? Or can anyone just be successful and work well with others in such a turbulent environment? To ask the question is to answer it immediately.
The Big Five is a group of reliable and validated personality questionnaires and models. That over time the group of five behavioural clusters has grown to six personality traits has done little to change its naming - Big Five.
We describe these Big Five personality traits very briefly. Behind a founder's observable behaviour lie matching thoughts and feelings. All these create success or failure.
Extraverted founders are focused on the outside world. They get energy from conversation and company. They are often very active and dynamic.
The often more technology-oriented, introverted, thoughtful CTO as a personality, is well known.
Founders with a very low score on the Emotionality scale, worry little even in stressful situations and are little affected by the negative feelings of others.
Founders with low emotionality and high extraversion tend to be purebred optimists.
Founders with a very high score on the accommodation scale are willing to compromise and cooperate with others. They can easily control their temper.
Conversely, founders with a very low score on this scale bear resentment towards those who have done them harm. They are critical of others' shortcomings and stubborn in defending their point of view. They are quick to feel anger in response to disrespect.
Founders with a very high score on the conscientiousness scale organise their time and their physical environment. They work towards their goals in a disciplined manner. They strive for accuracy and even perfection in their tasks and consider carefully when making decisions.
Founders with very high openness in their personality are curious about different areas of knowledge. They use their imagination freely and show interest in unusual ideas or people.
Founders with a very high score on this scale avoid manipulating others for personal gain out of their personality. They feel little temptation to violate norms. They are not interested in excessive wealth and feel no special entitlement to increased social status.
Underlying these five dimensions are up to 30 facets. For example, the Agreeableness dimension may include the following facets: forgiveness, kindness/indulgence, flexibility and patience with others.
HighTech Startup Success
Business success is defined as a startup being acquired by a (large) player within a reasonable timeframe or conducting a successful IPO or acquiring another company.
Therefore, the research question arises: Is there a relationship between founder personalities and HighTech Startup success?
Numerous factors (sector, geography, support network, economic conditions, startup phase, etc.) must be filtered out to document the specific contribution of personality, necessitating large-scale research.
Researchers often use extensive databases of startup founders (e.g., Crunchbase), linking this personal data to founders' natural communication behavior on social media. Recent research successfully identifies the Big Five personality dimensions in social media communication.
Due to the nature of research methods, they use data from more than 100 countries, various ecosystems, funding sources, organisational cultures... A sample of results can be found below.
Findings from Freiberg & Matz (2023)
What do we learn about the influence of personality?
McCarthy et al (2023; 21 187 HiTech StartUps) show that openness, a lower level of modesty and a high level of activity are major positive contributors to StartUp success. Openness allows you to keep exploring for opportunities to tackle problems. Too much modesty probably hinders you from having an impact on the StartUp's internal and external environment. That there is very hard work to be done in a StartUp is obvious and then a personally high level of activity is beneficial.
Freiberg et al (2023; 10 541 HiTech StartUps) also prove that openness and conviviality have a positive impact on the first rounds of funding. An influence that disappears in later funding rounds. The finality of the StartUp becomes clearer. And it becomes an increasingly businesslike environment.
Heightened emotionality is negative for all success criteria, especially in the later rounds. An increased level of anxiety, fear of the future is not what you want in the turbulent environment of a StartUp.
If Conscientiousness would possibly be positive for the initial funding, it certainly becomes negative for the later exit. There could be several reasons for this, e.g. having difficulty letting go of control.
In-depth awareness of these determining factors is often already a first step towards better functioning of individuals and teams. Changing personalities doesn't happen overnight. Even if you wanted to. But practising founders in recognising their behavioural talents and development points, supports their personal growth and final team success.
In another contribution, we describe a few different personality profiles of founders and prove that not only the personality of founders is an important factor. Complementarity, of strengths and weaknesses in the starting team, is also a co-determining factor.
Investors, founders, employees and other stakeholders have a keen interest in putting together the best possible StartUp team and developing it.
If you wish to have a obligation-free conversation with us about this, please contact us via the contact page. Thank you.
- Paul X. McCarthy, Xian Gong, Fabian Braesemann, Fabian Stephany, Marian‑Andrei Rizoiu & Margaret L. Kern (2023) The impact of founder personalities on startup success.
- Brandon Freiberg and Sandra C. Matza (2023) Founder personality and entrepreneurial outcomes: A large-scale field study of technology startups."