Start-up founders’ personality traits may predict the success of their companies, finds research from the Oxford Internet Institute, University of Oxford, University of Technology Sydney (UTS) and the University of Melbourne.
The study, published in Nature Scientific Reports, shows founders of successful start-ups have personality traits that differ significantly from the rest of the population and that these traits are more important for success than many other factors.
The researchers found the core ‘big five’ traits – which measure someone’s openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism – significantly differ in successful start-up founders compared to the population at large and are typically heightened in entrepreneurs compared to others. The study also shows there isn’t a single ‘founder-type’ personality.
Dr Fabian Braesemann, departmental research lecturer, Oxford Internet Institute, University of Oxford and corresponding author of the study, said: “Instead, we find that six different personality types appear in the founders of successful start-ups displaying common personality traits, which we identify as fighters, operators, accomplishers, leaders, engineers and developers.”
The other facets distinguishing successful entrepreneurs include a preference for variety, novelty and starting new things (openness to adventure), enjoying being the centre of attention (lower levels of modesty) and being exuberant (high activity levels).
The researchers inferred the personality profiles of the founders of more than 21,000 founder-led companies from language and activity in their publicly available Twitter accounts using a machine learning algorithm. The algorithm was able to distinguish successful start-up entrepreneurs from employees with 82.5% accuracy. They then correlated the personality profiles to data from the largest directory on start-ups in the world, Crunchbase, to determine whether certain founder personalities and their combinations in cofounded teams relate to start-up success.
The researchers undertook multifactor modelling to measure the relative significance of personality on the likelihood of success versus other firm-level variables. They discovered a founder’s personality was more predictive of success than the industry (five times) and the age of the start-up (two times).
The researchers also found start-ups with diverse and specific combinations of founder types – an adventurous’ leader’, an imaginative ‘engineer’, and an extroverted ‘developer’, for example – had significantly higher odds of success.
Paul X. McCarthy, first author of the study and adjunct professor at UNSW Sydney said, “While all start-ups are high risk, the risk becomes lower with more founders, particularly if they have distinct personality traits…founding a start-up is a team sport and now we can see clearly that having complementary personalities in the foundation team has an outsized impact on the venture’s likelihood of success, which we’ve termed the Ensemble Theory of Success.”