In the labyrinthine realm of startups, the elusive key to success has been a subject of perpetual inquiry, with experts proposing various theories and metrics. From distilling it down to three personality traits or expanding it to a staggering 50 defining characteristics, the quest for understanding what makes a founder successful can be as complex as the entrepreneurial landscape itself. However, a recent study conducted by scholars from the University of New South Wales, Oxford University, and two other Australian institutions provides a nuanced perspective, distilling the myriad traits into a more manageable set.
Published in Scientific Reports, the study delves into data extracted from over 21,000 startup founders, asserting that success is intimately connected to specific founder personality types—six, to be exact. Going beyond individual attributes, the study places a spotlight on the collective personalities of the entire founding team as a pivotal factor in a startup’s trajectory.
The identified personality types—Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers, collectively labeled “FOALED”—are positioned as potent indicators of success. According to the study, these traits outshine traditional success metrics such as industry affiliation (with the personality-based metric allegedly being five times more predictive) and founder age (with the metric allegedly being two times more predictive).
Lead author and University of New South Wales adjunct professor Paul McCarthy underscores the critical role of personality traits in startup success, stating, “Personality traits don’t simply matter for startups—they are critical to elevating the chances of success.” McCarthy contends that while some perceptive venture capitalists may have intuited this, the study now provides empirical evidence grounded in data.
The study’s methodology, involving a machine-learning algorithm scrutinizing founders’ Twitter posts, might raise eyebrows, yet it builds upon a method previously employed by three coauthors to match workers with their ideal occupations. The algorithm purportedly achieved an 82.5% accuracy rate in distinguishing successful founders. Correlating this data with information from Crunchbase on fundraising, mergers, acquisitions, and IPOs enabled the study to gauge the success of startups.
Key facets of successful founders’ personalities, as identified by the study, include a proclivity for variety and novelty, an openness to adventure, reduced modesty, and elevated energy levels. The study posits that the more these traits manifest within a company, the higher its likelihood of success.
Moreover, the study challenges the conventional emphasis on singular founders, introducing the Ensemble Theory of Success. According to coauthor Fabian Stephany from Oxford, “Firms with three or more founders are more than twice as likely to succeed than solo-founded start-ups.”
In conclusion, the study underscores the significance of diversity in founder personality types within a startup team, signaling broader implications. McCarthy sees this as offering lessons for organizations of all kinds, highlighting the importance of fostering a diversity of personality types within teams. He estimates that 8% of people worldwide possess traits conducive to successful entrepreneurship, suggesting that many may not currently be in the entrepreneurial arena.