Are there psychological traits that distinguish startup founders and also help them win? In this article, we research them and investigate how permanent they are.
Why Entrepreneurs Want to Be Better than the Rest
Startup founders possess a unique design. Our previous articles explored the specific entrepreneur mindset, which includes alertness, increased risk tolerance, and desire to win. Usually, the desire to win is associated with gaining rewards, earning status, innovating, becoming an authority in a respected field, etc.
However, a recent study delving into the motivations of startup founders, revealed something fascinating. Through an experiment with competitive and non-competitive payment schemes, it was discovered that entrepreneurs participate in contests not just for achievement but for the enjoyment of it, too. It seems to be ingrained in their very nature. Here’s how the authors summarize their finding: ‘’Our results suggest that enjoyment of competition might be an additional factor driving entrepreneurs’ market entry decisions beyond well-known factors like overconfidence and risk-taking.’’
On the other hand, outperforming can be simply a result of extended personal development. A person who is well-rounded, progress-oriented, and ambitious in all aspects of life will undoubtedly shine brightly in their professional sphere.
Even if they haven’t ticked all the ‘’typical entrepreneur personality’’ checkboxes, they will eventually excel because of the hard work invested. Moreover, disciplined founders who continuously strive for self-improvement exude an infectious attitude.
According to Molly Graham, who managed Culture and Employment Branding at Facebook for two years and currently advises executives of fintech, climate, education, healthcare and Web3 companies, 80% of a startup’s culture is the founder. She believes that the things that set a founder apart become their company's competitive advantages: “Companies tend to reflect everything about their founders — their personality, strengths, weaknesses. So when you start defining culture in an intentional way, first look at yourselves.”
What Particular Qualities Make Entrepreneurs Stand Out
While not all founders are the same, they do share certain qualities. Entrepreneurship can be a test of will and a profound lesson in overcoming hesitation and the fear of failure. But the same can be said about any other career challenge.
In 2017, a scientist and a VC investor dug deeper to determine, list, and elaborate on the essential traits of successful entrepreneurs. The authors identified the following key traits: comfort with uncertainty, laser-like focus and execution, flexibility in response to market needs, big-picture perspective coupled with a detail orientation, and people management with the right balance of delegation.
Most of the people who work with and train startup founders will agree that all these characteristics are valuable. However, they are also subjective - there is no measurement of the level of uncertainty, and the laser-like focus and flexibility can mean one thing for one person and totally different for another, and so on. Therefore, it’s hard to conclude who has the key traits and who doesn’t.
Apart from carrying various meanings, psychological features can also be too vague or isolated. For example, this HubSpot article speaks about 12 traits, but they’re all gathered from different sources. Although the traits are observed and explained individually, they are not examined as a whole and the dynamics between them are unclear. Furthermore, some of them, like being process-oriented or confident, are constructs of other traits.
Because founder psychology can have varying interpretations, it is essential to have a tool that uses numbers or data to better evaluate personal qualities.
Leveraging Social Science
At Founder Institute, we have closely interacted with startup founders for over 14 years. We firmly believe that the most significant variable for a startup is the founder. Therefore, and also because it’s impossible to judge a business idea with no data available, we started using a testing tool to evaluate high-potential founders. To date, we’ve collected data from over 175, 000 startup founders, which has enabled us to define:
Through collaboration with psychologists and an exhaustive review of existing literature on predicting success, we have identified 26 qualities that correlate with entrepreneurship. Based on their proportions within a personality, we’ve seen 9 types of an entrepreneur occurring, which we call DNA Profiles.
Certain groups of traits influence entrepreneurs’ drive, work style, communication, and problem-solving skills.
For example, the levels of Autonomy, Planning, Proactivity, Management, and Dependability illustrate in detail how a person works - whether they are independent or they require supervision, do they plan ahead, do they delegate tasks mindfully, and whether they are strict with deadlines.
However, Fluid Intelligence and Emotional Control are among the traits that the higher we score, the better.
Some factors like Competitiveness, Agreeableness, and Risk Tolerance are more conducive to business development when they are moderately represented in a founder's personality. For example, someone who is overly agreeable might struggle with asserting their ideas and opinions, while a person lacking this quality might come across as too argumentative. The ideal balance is in the middle.
An Interesting Fact: Our testing has identified 3 traits with ceiling effects within our population of entrepreneurs - Curiosity, Perseverance, and Self Reliance. A ceiling effect occurs when too large a percentage of participants achieve the highest score on a test. Our testing has identified 3 traits with ceiling effects within our population of entrepreneurs.
Aside from evaluating Founder Institute applicants with the help of our DNA Test, founders undergo regular self-assessments and reviews from their mentors and peers. The data generated from these evaluations and scores are integrated back into the test, ensuring that the tool is constantly updated and improved.
Do Traits Change?
The traits themselves don't change, but their levels fluctuate, and this is where the real value of using a testing tool lies. It aids in identifying strengths and weaknesses, allowing individuals to work on them. Founders with optimal levels of key traits have a higher chance of success, but only if they use their advantages wisely. Alternatively, shortcomings in character can be rectified with discipline and consistency.
Similarly to genetic makeup, Entrepreneur DNA points out predispositions to certain conditions and evolution, but what matters more is people’s choices. The formula of dedication plus highly developed entrepreneurial qualities is what propels founders to greatness and enables them to outperform others.
The Founder Institute’s Entrepreneur DNA Assessment has emerged as a highly effective method for enhancing self-awareness and growth. It delivers reliable, personalized reports tailored to meet the needs of individuals and organizations.
Find out more about the test here: https://dna.fi.co/
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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.