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arXiv · 2302.07968

The Science of Startups: The Impact of Founder Personalities on Company Success

Paul X. McCarthy·Xian Gong·Fabian Stephany·Fabian Braesemann·Marian-Andrei Rizoiu·Margaret L. Kern
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Abstract

Startup companies solve many of today's most complex and challenging scientific, technical and social problems, such as the decarbonisation of the economy, air pollution, and the development of novel life-saving vaccines. Startups are a vital source of social, scientific and economic innovation, yet the most innovative are also the least likely to survive. The probability of success of startups has been shown to relate to several firm-level factors such as industry, location and the economy of the day. Still, attention has increasingly considered internal factors relating to the firm's founding team, including their previous experiences and failures, their centrality in a global network of other founders and investors as well as the team's size. The effects of founders' personalities on the success of new ventures are mainly unknown. Here we show that founder personality traits are a significant feature of a firm's ultimate success. We draw upon detailed data about the success of a large-scale global sample of startups. We found that the Big 5 personality traits of startup founders across 30 dimensions significantly differed from that of the population at large. Key personality facets that distinguish successful entrepreneurs include a preference for variety, novelty and starting new things (openness to adventure), like being the centre of attention (lower levels of modesty) and being exuberant (higher activity levels). However, we do not find one "Founder-type" personality; instead, six different personality types appear, with startups founded by a "Hipster, Hacker and Hustler" being twice as likely to succeed. Our results also demonstrate the benefits of larger, personality-diverse teams in startups, which has the potential to be extended through further research into other team settings within business, government and research.

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Paul X. McCarthy, Xian Gong, Fabian Stephany, Fabian Braesemann, Marian-Andrei Rizoiu, Margaret L. Kern. 2023-02-15. The Science of Startups: The Impact of Founder Personalities on Company Success. https://doi.org/10.1038/s41598-023-41980-y

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