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

53 Pages Posted: 17 Feb 2023

See all articles by Paul X. McCarthy

Paul X. McCarthy

University of New South Wales (UNSW)

Xian Gong

University of Technology Sydney (UTS) - Faculty of Engineering and IT

Fabian Stephany

University of Oxford - Oxford Internet Institute; Bruegel; Alexander von Humboldt Institute for Internet and Society

Fabian Braesemann

University of Oxford - Oxford Internet Institute

Marian-Andrei Rizoiu

University of Technology Sydney (UTS)

Peggy Kern

University of Melbourne - Melbourne Graduate School of Education

Date Written: February 15, 2023

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 (n=26,781). We found that the Big 5 personality traits of startup founders across 30 dimensions significantly differed from that of the population at large. We can train a classifier to distinguish founders from employees with 82.5% accuracy. 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.

Keywords: science of success, startups, personality traits, crunchbase, twitter

Suggested Citation

McCarthy, Paul X. and Gong, Xian and Stephany, Fabian and Braesemann, Fabian and Rizoiu, Marian-Andrei and Kern, Margaret L., The Science of Startups: The Impact of Founder Personalities on Company Success (February 15, 2023). Available at SSRN: https://ssrn.com/abstract=4359859 or http://dx.doi.org/10.2139/ssrn.4359859

Paul X. McCarthy

University of New South Wales (UNSW) ( email )

Xian Gong

University of Technology Sydney (UTS) - Faculty of Engineering and IT ( email )

Fabian Stephany

University of Oxford - Oxford Internet Institute ( email )

1 St. Giles
University of Oxford
Oxford OX1 3PG Oxfordshire, Oxfordshire OX1 3JS
United Kingdom

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Alexander von Humboldt Institute for Internet and Society ( email )

Bebelplatz 1 | 10099
Berlin
Germany

Fabian Braesemann (Contact Author)

University of Oxford - Oxford Internet Institute ( email )

1 St Giles
University of Oxford
Oxford, Oxfordshire OX1 3JS
United Kingdom

Marian-Andrei Rizoiu

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Margaret L. Kern

University of Melbourne - Melbourne Graduate School of Education ( email )

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