Researchers used AI to determine what makes a successful startup — and founders' personalities have a major effect.
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A startup founder's personality traits may have a major impact on their company's success, a study published in Nature suggests.
The likelihood that a startup will succeed is extremely low, and its chances are often thought to be mostly affected by factors such as industry, location, economic climate, connections – and luck.
However, researchers from the Oxford Internet Institute at the University of Oxford, University of Technology Sydney (UTS), and the University of Melbourne have now found that "founder personality traits are a significant feature of a firm's ultimate success."
"We find that personality traits don't simply matter for startups — they are critical to elevating the chances of success," said Professor Paul X. McCarthy, lead author of the study, said in a press release from the University of New South Wales in Sydney.
The study found six distinct personality types of founders that showed an increased likelihood that their startup would succeed.
The six types were: fighters, operators, accomplishers, leaders, experts/engineers, and developers.
Each personality type is given a detailed breakdown in the study.
It says successful entrepreneurs are distinguished by a fondness for starting new activities, novelty, and variety, adding that they often also like to be the center of attention.
The researchers found that these core personality traits were dramatically different to the wider population, the report says.
"It's not part of this study, but we estimate 8 per cent of people worldwide may have personality traits that could make them successful founders," McCarthy said. "Likely, many are not in the entrepreneurial field right now."
"We can see how this plays out in many notable examples," he 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 Jeff Bezos, the discipline and focus of Mark Zuckerberg, and the trustworthiness of Larry Page and Sergey Brin underpin their company's success."
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The global team of researchers fed an AI algorithm with the language and activity of 21,000 founder-led companies gathered from X, formerly known as Twitter, analyzing their characters using the "five-factor" personality model.
They compared these profiles with data on Crunchbase to determine the connection between personalities and success.
Success was determined by whether a company had been acquired, had acquired another company, or had been listed on a public stock exchange.
The researchers acknowledged that the principal sources of data used in the study — Crunchbase and X — were likely to contain sample biases.
The AI model also confirmed that a diverse team that incorporates multiple personality types is more likely to increase the success of startups. In particular, having multiple founders with diverse personalities matters the most.
"Greater awareness of this novel form of diversity may help create more resilient startups capable of more significant innovation and impact," the authors say in the study.
