Technology, competencies, and the right attitude are the ingredients a startup needs to thrive. Eventually, all three boil down to one thing - team. Technology requires guidance; competencies belong to professionals, and attitudes are people's means to navigate reality; none is free-flowing without a human touch. Therefore, it’s not surprising that you can predict the destiny of a business by drilling down its co-founding team personalities.
Startups differ from small businesses since they bring innovation and plan to scale, in most cases, globally. This is the very reason why investors are interested in funding them instead of the local bakery. It takes a specific type of person to embrace the entrepreneurship challenge, and usually, that would be someone creative, comfortable with taking risks, and willing to walk the unbeaten path. However, such characteristics are not equally represented and available to each entrepreneur. Besides, there is more than one kind of startup founder personality.
Why Does Awareness of Founder Personalities Matter
''A genius in the wrong position could look like a fool.''
Idowu Koyenikan, Wealth for All: Living a Life of Success at the Edge of Your Ability
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Knowing how different types of founders think and operate is the key to maximizing their strengths and minimizing their weaknesses.
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Matching complementary personalities has proven to save time and resources. For example, a co-founder excelling at analytical thinking and project management might not be a tremendous asset during ideation brainstorming sessions. Hence, investing a lot of time in it is not optimal.
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Diversity enriches collaboration. A keen sensibility for individual differences is a charm for stimulating creativity, reducing personality clashes, and fostering a positive culture.
A popular and extremely basic way to label startup founders is by dividing them into tech and non-tech. This approach suggests that the non-tech founder will be the CEO (AKA business co-founder), and the other founder will earn the title of CTO. This role split might be too shallow because even the non-technical co-founder should have a level of technical expertise and vice versa.
To help us better understand and categorize different types of founders, startup theorists have created various classifications. Let's explore some of the commonly used ones:
The Archetypes Theory
Universal symbols and patterns are often used as a code to describe customer personas and brand identities. Similarly, this method is applied to entrepreneurs.
For instance, researcher and college professor Maher Hakim points out four main types of people who found their own business - The Serial Entrepreneur, The Brand Name, The Young and Naive, and The Gambler. Interestingly, he gives examples of famous founders who fall into these groups, including Jack Dorsey and Aaron Levie.
Jan Baeriswyl from Hackernoon goes further and explores founder madness. His archetypes analysis outlines several more breeds like The Mad Scientist and The Global Catalyst.
Yet, these portraits of entrepreneurs are anecdotal and don’t go in-depth into qualities. They also overlook certain types, such as experienced newcomers or accidental founders who pivoted from other projects. On top of that, entrepreneurs who are said to fit particular archetypes can have entirely divergent personalities and skills, significantly affecting their companies' achievements.
The 3H System
The story about the ideal 3H co-founding team consisting of a Hustler, a Hacker, and a Hipster is a favorite in startup circles. It introduces the concept of a Minimum Viable Team (MVT), a term that Rei Inamoto, AKQA’s Chief Technology Officer, uses first. The MVT focuses solely on three areas - sales, tech, and market, where each founder rules over their respective domain.
Hustlers are masters of networking and negotiation. As such, they know every little facet of their product but don’t go into the development and production spheres. These are the areas reserved for the Hackers. Their founder profile is a wizard at a revolutionary technology that few others know. In addition, they should be full stack and totally self-sufficient, no matter how complex the product is. Finally, they shall also participate in strategic decisions or even deliver a roadmap for the rest of the team to follow.
Lastly, we have the Hipster. This person is a powerhouse responsible for all things creative within the company, including design, branding, and customer experience.
While this system has proven remarkably accurate and effective for building a solid, balanced foundation for a startup, it remains a sweeping generalization. It doesn’t give any insights into the working styles of each co-founder and how they may play out in team relationships and during changes at later stages of the startup. The 3H formula is a decent start but falls short of predicting a business' success.
The Influence of Age and Experience
After all, let’s not underestimate how old and how experienced founders are. Numerous studies have investigated the interconnectedness between age, experience, and startup growth, although the data is inconsistent.
People generally start their companies in their 20s, 30s, 40s, and 50s. Some have industry knowledge and college degrees, others don’t. Although researchers try to calculate the algorithm of the perfect conditions for a high-performance startup, the numbers never quite confirm their assumptions.
Here’s how data analyst and startup founder Benn Stancil comments on statistics collected by CrunchBase.
‘’Within age groups, experience still matters, though the results are a bit mixed. For founders under 30, experience actually has a slight negative impact. For founders between 30 and 49, experience appears to have very little effect on fundraising but a significant effect on exit rates. Experience has the greatest impact on founders over 50: Those with prior experience are roughly twice as successful as those without.’’
Another study discovers that the most successful founders tend to be in their middle age. However, there are exceptions: ‘’individual fixed effects allow some people to succeed at very young ages, even when people (including these young successes) get better with age. Thus, there is no fundamental tension between the existence of great young entrepreneurs and a general tendency for founders to reach their peak entrepreneurial potential in middle age.’’
Entrepreneur DNA and Performance Analysis
Unlike startup researchers and other accelerators, Founder Institute uses a combination of science and live data to determine the success rate of a business. Rather than subjectively judging startup ideas, the admissions criteria for the FI accelerator is an online battery of tests that quantifies the greatest variable in startup success: the founder(s).
Through a flow of continuous data, regression analysis from PhDs, and frequent test updates, FI has built and maintains statistically validated evaluations for identifying the highest potential entrepreneurs.
After collecting and examining our stats, we have constructed nine entrepreneurial types that aspiring founders fit in. These profiles have survived the test of time but are constantly reviewed and updated for better precision.
These are brief descriptions of the nine types, along with their most prominent strengths:
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The Hustler - Armed with an outgoing personality and a presence that exudes confidence, they can sell any product and pitch any company to anyone, from customers to investors and everyone in between.
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The Innovator - Possessing an adventurous attitude and a forward-thinking nature, they are all about exploring new and emerging technology and conceiving new products before anyone else does.
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The Machine - Equipped with a strong sense of duty and an aptitude for problem-solving, they can transform a simple proof of concept into a marketable product in even the tightest schedules.
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The Prodigy - They let their natural intellect and social skills guide them through the hardship of the startup world, never letting the adversity of launching and running a successful business get the better of them.
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The Strategist - Creative and tactical thinker, constantly developing effective and efficient business models that benefit and grow the company. Strategists never lose their cool in difficult situations.
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The Visionary - They are constantly on the lookout for new and innovative product ideas and are always perceptive to the needs of their demographic.
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The Architect - With thoughtful planning, disciplined thinking, and superhuman attention to detail, they can execute even the grandest of product visions.
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The Inventor - Driven by a natural curiosity that questions the status quo, Inventors are constantly uncovering unique market insights and devising fresh ideas that keep them one step ahead of the competition.
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The Achiever - Self-motivated and naturally inclined to build a better product right now, they will regularly deliver solo results that exceed those of entire teams.
Conclusion
It’s hard to put humans into boxes, even when they are startup founders. Still, having a reliable framework that can predict how entrepreneurs' personalities impact a startup's progress is an invaluable advantage.
The Entrepreneur DNA test is based on the results of over 175,000 founders worldwide, and it assesses 26 traits correlated with entrepreneurship. After discovering their profile and strongest traits, founders receive personalized advice and an action plan for their optimal progress.
Learn how you can use the DNA test to improve your startup or accelerator here: https://dna.fi.co/
The Founder Institute is the world’s most proven network to turn ideas into fundable startups, and startups into global businesses. Since 2009, our highly-structured accelerator programs have helped entrepreneurs raised over $1.75BN in funding across over 200 cities worldwide.
Learn more about the Founder Institute at FI.co, or join an upcoming startup event at FI.co/events.