Personality traits of start-up founders can predict their venture’s success, according to a multi-university study, published in Nature. Traits such as openness to adventure, lower modesty, and heightened activity levels were linked to higher success rates. The research team, including members from UNSW Sydney, University of Oxford, UTS, and the University of Melbourne, used machine learning to analyze personality profiles from Twitter accounts. The findings also highlighted the significance of personality diversity within teams across various industries.
The study suggests that around 8% of the global population may have the personality traits conducive to successful entrepreneurship. Future studies will aim to identify individuals in roles not suited to their personalities.
Unraveling the start-up success code
It’s no secret that running a start-up is a risky venture. Statistics paint a grim portrait, with most start-ups failing within their first few years. Altogether, 9 out of 10 start-ups fail, another study says. However, a recent study sheds light on a fascinating factor that could tilt the odds of success in favor of certain entrepreneurs. The research has found that the personality traits of start-up founders could be a significant predictor of their ventures’ success.
The study examined traits such as openness to adventure, lower modesty, and higher activity levels. These traits, often associated with an entrepreneurial spirit, were found to be more prevalent among successful start-up founders. However, the findings go beyond individual traits. The research also emphasizes the importance of having a diverse range of personalities within the start-up team. It reveals that start-ups with diverse combinations of founder types and those with three or more founders have significantly higher odds of success.
The above-average success rate of Brainport start-ups
In 2022, Innovation Origins and Strategy Unit researched the characteristics of former winners of the Gerard & Anton Award, an annual prize for promising start-ups in the Brainport Eindhoven region. The study showed that the above-average success of start-ups from the Brainport Eindhoven region (75% of them are long-term successful) can be directly linked to the specific characteristics and conditions within the region. The high degree of cooperation and the broad presence of talent and knowledge stand out the most. The main distinguishing factors:
– availability of talent and knowledge
– cooperation across the ecosystem (vertical and horizontal)
– availability of suitable work locations (including labs)
– the focus on solving major societal problems (impact-driven)
– the accessibility of knowledge institutions and technical support
A new perspective on entrepreneurial success
Traditionally, the success of a start-up has been associated with tangible factors such as the novelty of its products or services, market interest, and the quality of the founding team. While these factors undoubtedly play a critical role, this new research suggests that the founders’ personality traits can be equally, if not more, influential.
The researchers used a machine learning algorithm to infer personality profiles from the founders’ publicly available Twitter accounts. The data analysis included multi-variate regression analysis and clustering techniques. The research highlights the importance of considering environmental factors and founder personality traits for startup success.
Decoding the entrepreneurial personality
The research used the Big Five personality model to examine the traits of start-up founders. This model includes traits like openness to experience and conscientiousness. The data revealed that start-up founders naturally cluster according to their personality traits. The study identified six types of start-up founders based on their personality features, labeled as Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers (FOALED). Each type of founder has distinct personality traits, with Fighters being spontaneous and tough, and Operators being conscientious and agreeable.
The power of personality diversity
The study also highlights the benefits of personality diversity among the founding teams of start-ups. It suggests that the combination of personality characteristics of a founding team could have a material and significant impact on its likelihood of success. According to the findings, start-ups with diverse and complementary personality traits among co-founders are more likely to succeed.
Moreover, the study also reveals that successful female and male founders have more similar personality traits compared to unsuccessful founders of the same gender. This finding supports the significance of personality traits in entrepreneurial success, regardless of gender.
The study shows that knowledge of the personality traits conducive to entrepreneurial success could guide individuals in deciding whether embarking on a start-up journey is the right move for them. It could also inform investors about the types of individuals and teams they should support.
However, the researchers acknowledge certain limitations, including sampling biases and the potential for bias in presenting a person’s digital identity on Twitter. Therefore, the team plans to conduct follow-up studies to identify misfits and individuals in roles unsuited to their personalities.