By John Salak –
Starting a business is always a crapshoot. More than 20 percent of U.S. start-ups fail in their first year, while almost half go under in five years and about two-thirds are dust in a decade, according to the U.S. Bureau of Labor Statistics.
Lots of reasons contribute to the challenge of making a successful business including but not limited to financing, product development, business plans and acumen, strong marketing and sales efforts and the health of the overall economy. But apparently, there is another overlooked element. Survival may depend on the personality of the founder or the combined personalities of the founding team.
Successful founders, in fact, have unique traits that differ significantly from the rest of the population, according to a study by Australia’s University of New South Wales (UNSW). These traits aren’t just unique, they are more important for success, think paramount, compared to many other factors.
“We find that personality traits don’t simply matter for start-ups—they are critical to elevating the chances of success,” reported the study’s lead author Paul X. McCarthy, an adjunct professor at UNSW Sydney. “A small number of astute venture capitalists have suspected this for some time, but now we have the data to demonstrate this is the case.”
The research team identified the distinguishing traits as a preference for variety, novelty and starting new things (openness to adventure); enjoying being the center of attention (lower levels of modesty) and being exuberant (high activity levels).
“The greater presence of these and other personality traits in founders are related to higher chances of success,” added Dr. Fabian Braesemann, co-author of the study from the Oxford Internet Institute, University of Oxford.
“We can see how this plays out in many notable examples,” McCarthy added. “The adventurousness and openness to experience of Melanie Perkins, the assertiveness and confidence of Steve Jobs, the exuberance and energy of Richard Branson, the calm under pressure of Jeff Bezos, the discipline and focus of Mark Zuckerberg, and the trustworthiness of Larry Page and Sergey Brin underpin their company’s success.”
The results were developed after examining personality profiles of more than 21,000 founder-led companies worldwide. Ultimately, the team discovered that there is no ideal “founder-type” personality. Rather, they identified six different types that can fit the model provided these individuals embrace the unique traits.
The six personalities identified included: fighters, operators, accomplishers, leaders, engineers and developers.
UNSW’s work in developing these insights on successful founders represents the good news. The bad news is that perhaps only eight percent of the worldwide population hold these traits and it is likely most of these individuals are not involved in entrepreneurial work.
The personality traits identified by the study are undoubtedly crucial, although the research team was quick to note that even model founders with essential traits and personalities can still get overwhelmed by circumstances beyond their control. These include inadequate financing, product gaps and macroeconomic factors.