Columbia Business School has unveiled groundbreaking insights into the world of technology startups in their recent study titled “Founder Personality and Entrepreneurial Outcomes: A Large-Scale Field Study of Technology Startups.” This research, which employs advanced machine learning techniques, delves into the critical role that founder personality traits play in determining the fate of tech startups throughout their journey.
In the realm of technology, notable figures like Steve Jobs, Jeff Bezos, and Mark Zuckerberg have exemplified massive success in founding startups. While the startup landscape contributes significantly to the economy, not all ventures achieve triumph. Identifying the factors behind startup success, especially during the early phases, has remained elusive. However, this new study reveals that the personality traits of founders could hold the key.
The study examines how founder personality impacts different stages of a startup’s development, from initial fundraising to eventual exit. Professor Sandra Matz and PhD Candidate Brandon Freiberg ’24 of Columbia Business School reveal that four of the Big Five personality traits – openness to experience, conscientiousness, agreeableness, and neuroticism – can help predict the likelihood of a tech startup’s success at various points. Intriguingly, extraversion stands as the sole trait with negligible influence on startup outcomes. The Big Five Model, established in the 1980s to understand the interplay of personality and behavior, postulates five core traits that encapsulate personality.
Of the traits, conscientiousness and neuroticism emerge as the most reliable predictors of startup outcomes. Higher neuroticism levels among founders correlate with a funding gap, fewer initial investors, and a diminished exit probability. Conversely, conscientious founders often secure more substantial funding from a smaller investor pool but face reduced odds of successful exit.
A compelling observation is the evolving role of conscientiousness as startups mature. Initially valued for meticulous planning and resource management, highly conscientious founders encounter challenges as the tech landscape’s pace accelerates, possibly hindering adaptability.
Openness and agreeableness manifest a positive effect on raising the first funding round. However, these traits exert minimal influence on subsequent outcomes such as funding amount, investor count, and exit via IPO or acquisition.
This research integrates a sophisticated data model that harnesses social media data from the MyPersonality project, combined with CrunchBase startup data. Analyzing information from over 65,000 users and 10,000 tech founders, the study deciphers certain personality traits from social media posts and correlates them with startup outcomes.
By unraveling the intricate connection between founder personalities and tech startup triumph, this study equips investors with insights to assess the potential success of nascent ventures. For in-depth details on this cutting-edge research, visit the Columbia Business School’s website.
Read more here.
