Ever see a pie chart like this, or can you at least envision one, wherein a partner of yours (or God-forbid, you), expect a majority control of a startup? I get asked all the time, about how to handle retaining control when it was my idea or how to deal with a cofounder who wants too much.
My Cofounder wants 51%. What should I do?
We can learn a lot about entrepreneurs through the words they use to explain their situation. From asking about funding for an MVP, we can tell they’ve been misled. When talking about patents and their unique idea, we can tell they’re likely misinformed or overconfident. When they distinguish wants from needs or convey (as is the case here) that they’re working with someone unreasonable, we can tell their team will likely fall apart and cause their failure.
Before exploring the point of my article today, better founder agreements, let me explain what led me to considering that we need better agreements.
“Wants to take”
Well, what you should do without bothering further is quit.
Such a person, expecting they are entitled, is not a partner, that’s a wantrepreneur who is selfish, and frankly, ignorant of how this works – you should just run, but I know most of you won’t.
No one gets 51% outright. Certainly not for an idea, nor the vision, the strategy, a plan, nor the roadmap. It’s highly unlikely that anyone deserves 51% under any circumstances other than being the sole founder (which no, does not mean they own 100%).
If you want to play it smart, take their so-claimed brilliance and go start the company that should exist thanks to the idea, with a team more capable, collaborative, and experienced.
Startup founders earn equity for the following reasons:
Bringing resources – team, money, or both – this is usually considered the CEO
Developing the market – this is the CMO
Developing the solution – this is typically a CTO, but that depends on what you’re doing
No one gets anything for talking about it. No one gets equity for bringing a team to do it for them.
EVERYONE must do something, and execute their responsibility, to get it, all by themselves.
We do this by setting a cliff (a point in the future when everyone earns some of the shares, and from then on earns more over time; with no one getting anything until then). You protect everyone else and the startup from the failure of a person by putting that in writing PLUS the fact that they are responsible for alone delivering the OUTCOME of their work expected.
Startup Founder Agreements are Failing Teams
I put outcome in big letters so it’s clearer – this does not mean putting in the work, it does not mean coding, promoting, or talking to investors, it doesn’t even mean doing what you said you’d do, it means the results of the work manifest, are productive, are effective, and are valuable.
We have the money or more people working on the team
We have growth, customers, partners, and investors – outcome, not work being done
We HAVE the fully developed solution, as expected – outcome
If people fail to do this, they are removed from the team. No hard feelings. No equity other than what is earned to that point.
Excuses are not allowed. If they don’t deliver but you’re willing to let them keep trying, you push OUT the cliff to a later date ? If they don’t deliver the outcome when expected, they do NOT get their equity, they can continue working to deliver it, for nothing, with a new cliff set when they’ll start earning something.
Let me be clear too, these are the only 3 valuable roles in the company!
NOTHING else matters. These roles are not interdependent though they must work together… what that means is #1 can’t claim they didn’t deliver because either or both of other two failed to do so. That doesn’t matter because you don’t then get to start earning equity without you having delivered! They won’t get theirs; you don’t get yours. Simple.
Yes, raising capital might be dependent on growth or a delivered solution, but that doesn’t mean you start getting to earn equity without delivering your piece, just because they didn’t deliver theirs.
Marketing can do marketing without the other two
Developerscan deliver a solution without the other two
Granted, not well, but it is possible, so no one gets to establish an excuse that they can’t do their job because the others aren’t – people that do that aren’t founders, they’re employees of a company with resources.
This is why, as should be the case, that while you’re not dependent on one another, you also are dependent on one another.
Marketing can’t do their job well if the vision for the company is off somewhere else. They certainly can’t get customers is the solution is junk.
Developers won’t create the ideal solution without marketing
The CEO fairly can’t really get funding or more on the team, if there isn’t growth or a solution
Do the work, deliver the results, and earn your equity; if you don’t, you don’t have anything anyway.
I’m curious if you’re looking at the fact that team’s falling apart are the leading cause of startup failure, and if you are interested in or working on agreements that might better protect the venture itself, or the team committed and delivering, from a bad apple. Let me know!
When asked if I have any mentors to whom I look up to, people tend to chuckle when I share that at the top of my list are my family and Superman.
Embodying both to an extent, my earliest experience with a Man of Steel was my father, who struck me as impervious to anything, and unwaveringly kind to everyone. Mild mannered Clark Kent by day, my father’s style of speaking made anyone feel comfortable, while you just sensed that there was this super power behind his demeanor – indeed there was, an incredibly impactful executive and ideal father.
Still, Superman himself tops my list of mentors, and rather than jumping right into Truth and Justice, let me point out that it was the strong woman involved in his life, and their unrivaled love for one another, that drove my values. In their family, Lois Lane is entertaining, creative and storytelling, and strong-willed, finding the best in people while being the best herself. She accomplished all that, protecting Superman’s identity, with him (her partner), capable of great things while dealing with great challenges. Together raising a Superboy.
Throughout their lives and as a family, including Ma and Pa Kent, I found the ideals and values I hold in myself; even the science, disguise, integrity, and fantasy of Superman, everything I longed to become, including taking off my own glasses and putting a little curl in my dark hair.
Knowing Superman
The history of the creation of Superman is a tale woven with innovation and collaboration. The iconic superhero was co-created by writer Jerry Siegel and artist Joe Shuster, and his inception can be traced back to the 1930s. In 1933, Siegel wrote a short story titled “The Reign of the Superman,” featuring a villainous character with psychic powers.
Over time, this concept evolved into the heroic figure we know today. In 1938, Superman made his first appearance in Action Comics #1, marking the dawn of the superhero genre and a transformative moment in popular culture. With his distinctive blue costume, red cape, and powerful abilities, Superman quickly captured the imagination of readers, offering them a symbol of hope and strength during a period of social and economic upheaval. The character’s immense popularity led to adaptations in various media, from radio shows and television series to movies and video games, solidifying Superman’s status as a cultural icon and a cornerstone of the superhero genre.
The success of Superman can be attributed to the synergy between Siegel and Shuster’s creative vision and the evolving tastes of their audience. Superman’s origin story as an infant sent from a dying planet to Earth, where he uses his extraordinary powers to protect humanity, resonated with readers during a time when the world was grappling with real-life challenges. The character’s various story arcs and reinterpretations over the years have allowed writers and artists to explore different aspects of his identity and the themes of justice, morality, and the struggle between good and evil. Superman’s enduring legacy not only paved the way for the superhero genre’s expansion but also set the standard for the creation of multi-dimensional comic book characters that audiences could connect with on a personal level.
The origin of the Superman comic offers a fascinating parallel to the founding of a startup, with several striking similarities in the journey of its creators, Jerry Siegel and Joe Shuster, and the process of launching a new business.
Siegel and Shuster had a groundbreaking idea for a new kind of hero—a “super” man. Much like startup founders, they saw a gap in the market and innovated to fill it. Startups often begin with a unique vision or a new way of solving a problem, just as Siegel and Shuster reimagined the hero archetype.
Struggles and Persistence
Before Superman became an icon, Siegel and Shuster faced numerous rejections. They pitched their idea to publishers and, turned down repeatedly, you can consider how this mirrors your struggle to gain initial traction while facing rejection from investors, customers, or partners. Persistence and belief in their vision were crucial for Siegel and Shuster, just as they are for startup founders.
Iteration and Adaptation
The character of Superman underwent several iterations before becoming the hero we recognize today. Siegel and Shuster refined their concept, adapting it based on feedback and their own evolving ideas. Startups, too, go through multiple iterations of their product or service, pivoting and refining based on market feedback and user needs.
Finding the Right Partners
Superman’s creators eventually found success by partnering with National Allied Publications (later DC Comics), which published the character in Action Comics #1. Finding the right partners, whether they be publishers, investors, or co-founders, is a crucial step for startups. The right partnership can provide the resources, distribution, and support needed to scale.
Intellectual Property and Ownership Challenges
One of the critical lessons from Siegel and Shuster’s story is the importance of understanding and securing intellectual property rights. They sold the rights to Superman to DC Comics for a relatively modest sum and spent years fighting for recognition and compensation. Similarly, startup founders must navigate the complexities of intellectual property, equity, and ownership to ensure they retain control and reap the rewards of their innovations.
Superman didn’t just succeed; he created an entire genre and had a lasting cultural impact – and this too parallels the notion that as a startup, you can’t just sell nor prove a solution to a problem but rather need to create a new category entirely. Successful startups can similarly disrupt industries, create new markets, and leave a lasting legacy. The impact of a startup, like that of Superman, can extend far beyond its initial product or service, influencing broader trends and inspiring future innovators.
A Planet Doomed / A New Way Forward
Superman’s own journey starts with his unique origin as an alien from Krypton. Despite being different from everyone around him, Clark Kent embraces his uniqueness and uses it to his advantage. Entrepreneurs often have unconventional backgrounds or ideas that set them apart from the norm. Instead of conforming, embracing what makes you unique can be a source of strength and innovation.
After being sent to Earth as a baby, Clark Kent has to adapt to an entirely new environment. He learns to balance his extraordinary abilities with the need to fit in as a human. Entrepreneurs, too, must adapt to ever-changing markets, technologies, and customer needs. Resilience in the face of adversity and the ability to pivot when necessary are crucial traits for success.
Clark’s upbringing by the Kents instills in him a strong moral compass and a sense of responsibility. He learns the importance of doing the right thing, even when it’s difficult. For entrepreneurs, maintaining ethical standards and a clear sense of purpose is essential. Success achieved without integrity is often short-lived, and having a strong ethical foundation can guide difficult decisions and build long-term trust with stakeholders.
Superman’s dual identity as Clark Kent and the Man of Steel highlights the challenge of balancing different roles. Entrepreneurs often juggle multiple roles and responsibilities, from visionary leader to day-to-day operator. Finding a balance between these roles, much like Superman does, is key to managing the diverse demands of a startup.
Superman possesses immense power, but he uses it responsibly to help others. Entrepreneurs, especially successful ones, often find themselves in positions of influence. How they wield this power can define their legacy. Using one’s skills, resources, and influence to create positive change and support others in the ecosystem can amplify success beyond personal gain.
Despite his powers, Clark Kent often struggles with self-doubt and the fear of not belonging. This is a common theme for entrepreneurs who face the imposter syndrome and doubt their ability to succeed. Superman’s journey teaches that it’s okay to have doubts, but what matters is pushing through them and staying committed to your mission. How he found his way through that? A partner of his own, Lois Lane, with whom (*ahem*) he needed help bringing Superboy to life, a decent analogy for what it takes to bring your startup to life.
Superman’s story reinforces the importance of having a strong support network. The Kents, Lois Lane, and other allies provide emotional support, guidance, and sometimes a reality check. Entrepreneurs need a similar network of mentors, advisors, and peers who can offer support, advice, and encouragement during tough times.
Just as Superman was driven by a vision for a better world, Entrepreneurs, too, are driven by a vision of how their product, service, or idea can make the world a better place. Keep this vision at the forefront.
In my work, helping cities and ecosystems develop explicitly for startups, Superman should inspire and teach, but also offer a lesson in the fact that no one is coming to the rescue.
The hard truth is, no single savior is coming to fund you or solve your problems. The onus is on you to rise to the occasion, execute your vision, and drive your startup forward. However, even the greatest heroes don’t work alone—they form alliances, much like the Justice League. While your entrepreneurial journey requires you to be your own hero initially, the greatest challenges are overcome with the help of others.
Superman can teach us lessons about perseverance, ethics, and hope, but he alone cannot defeat every villain. Similarly, in the startup ecosystem, relying solely on yourself is not enough. The most successful entrepreneurs understand the power of collaboration and partnership. Finding the right team is critical to the support, expertise, and resources necessary. Entrepreneurship demands a proactive mindset, but it also requires building a network of allies who can offer diverse perspectives and skills. Identifying problems, devising solutions, and implementing them effectively often necessitates a team effort. Success in startups isn’t just a product of individual effort; it’s a result of strategic partnerships, shared vision, and collective determination.
In economic development, the importance of a strong network cannot be overstated. Building a sustainable business model, fostering community support, and leveraging local resources are all critical components that benefit from collaboration. It’s about creating value not just for yourself but for the broader ecosystem. Engaging with mentors, advisors, and fellow entrepreneurs is necessary if your community hopes to be taken seriously as meaningful to startups and venture capitalists.
Ultimately, pragmatism in startups and economic development means understanding that while the path to success starts with your own actions, it is paved by the collective efforts of your network. Form your own Justice League and tackle the greatest challenges… find a Lois Lane to get your Superboy off the ground. Keep in mind, Superman can’t do everything himself, and he isn’t really coming to save the day anyway.
The past decade of research into entrepreneurship and startups has proven rather conclusively that success is all but determined by the team in place, and that there are certain personalities, skills, and experiences that contribute to success, or assure failure. This has my head spinning as it should of founders, that when the market validates that there is a problem and path to solutions, there is an opportunity to innovate, teach, or improve the world. Which is to say, we can (arguably) help would-be founders better understand what CO-founder would best complement their abilities and the work that needs to be done.
Gino Wickman and Mark C. Winters, the authors of Rocket Fuel, one of the must-read books I advise to all entrepreneurs, helped me first see that success is a result of complementary skillsets which help us overcome our own shortcomings. The transformative book highlights the near proven fact, that a person visionary will fail without an integrator while an integrator will fall short without a visionary.
“Without an Integrator, a Visionary is far less likely to succeed long-term, and realize the company’s ultimate goals; likewise, with no Visionary, an Integrator can’t rise to his or her full potential. When these two people come together to share their natural talents and innate skill sets, it’s like rocket fuel; they have the power to reach new heights for virtually any company or organization.”
The duo evident in Wickman and Winters’ work incessantly tugged at my mind until a solution to the question of finding the “right” cofounder clicked; a solution derived from the long-celebrated Peter Drucker observation of the economy:
So, the ideal cofounders? Marketing (which is a role) and Innovation (wait… which isn’t a distinct thing, is it?)
Frankly, neither is “marketing” clearly defined to most, and though I’m strict about the definition of marketing, I’ll concede that the impact of someone exceptional at Sales, Content, Promotion, Influence, or who knows a Market intimately, could all qualify as a capable founder in that capacity. So, what we’re seeking in trying to help a founder identify their distinct strength (and role) is what best complements that by filling the gaps and requirements necessary for that person to be successful, yes? That IF Sales… then who? IF an Engineer, what do they need? When a Visionary and an Integrator get together, we launch rockets, but what skills and experience do each of those people have? What do YOU need?
Looking at the distinct roles of a company, we can plot the strengths of a person by way of that role, and complement it, across, with the skill likely most pertinent to their respective success. Here is what we put together, let’s start clockwise from the top:
FINANCE (you have a background in accounting, banking, investing, or other financial services): The complement to that strength as a founder would be having a product with which to work — either you’re funding or managing the product established in the market.
PLATFORM (you developed or managed a suite of solutions that together result in a solution for a use case needing many experiences as one): To be successful, that means your complement has to develop the market and experiences for that — this could be Business Development OR Product/Software Development but in either case, what you’re bringing to your founding team is the person who can enhance the demand for your platform strength.
ENGINEERING (wherein you create solutions to problems, whether a software, hardware, or soft goods engineer): This might be closest to Drucker’s observations in that engineering something is futile (in fact wasteful) without the marketing work to determine what, how, and why to build.
SUPPLY CHAIN (as in fulfillment, delivery, process, and distribution optimization): Driving demand for a better supply chain stems from Sales and someone with an exceptional background in Sales benefits from someone who can optimize the process of fulfillment and distribution.
OPERATIONS (wherein you excel at handling the breadth and depth of an organization or process): What enables you to thrive is the Producer, be that a producer of content, products, or other solutions, your expertise struggles without that which needs what you do best.
We can continue around the circle but hopefully that’s enough to help you discern the rest; that is, for example, if you’re a marketer, what you need is the person who can develop the solutions, the engineer.
Product people need Finance
Development people need Platforms
Marketing people need Engineers
Sales needs Supply Chains
Production people need Operations
Hopefully you’ve noticed that we designed the circle in the fashion that we have because the skillsets NEXT to one another, are similar.
This is important to understand because too many founders seek (or attract) similar skillsets: Marketers attract Salespeople — and yet a marketer and a sales-oriented founding team will fail because they alone are marketing and selling what?? They support one another but those ancillary skills fail to fill gaps that hold back either skill from success. You know this to be true… two Engineer founders tend to struggle with adoption. Even an Engineer and a Product person, you *know* seem to struggle because they lack market demand, customers, or capital. The skills closer to one another need to be offset by the skills across.
Before I let you go, there is an elephant in the room to point out. This circle isn’t comprehensive.
What if your skill is that of a Doctor, Architect, or Chef? Maybe you’re an Athlete.
These are Professions, which is why these roles in society are referred to as “Professionals.”
Professionals aren’t key roles in a team. And more notably missing, I trust you’ve caught, is Legal and HR. These too are professions.
You can’t complement the skill set of lawyering with marketing or engineering, unless you’re just starting a law firm (rather than a startup doing something distinct and innovative). HR is a critical role in companies but managing people and the risks/rewards of employees is first dependent on having a valuable venture that can have employees. Someone with a career in HR can absolutely have a business related (such as recruiting, benefits, or an executive search firm) but to build a new, innovative venture, we need the skillsets that could be applied to the Human Resources as a sector of the economy.
A chef launches a business, an athlete is paid to perform, and a doctor heals… all of these are businesses but to create a *startup* in food, sports, or healthcare, we need the skills capable and complementary in launching a successful, new ventures.
If you are that Profession, as yourself what skill is your strength and focus. Find the opposite on our wheel.
I want to put your head on a specific focus as we explore this question. In the last few weeks, I’ve tackled the question of an ideal team for a startup, sharing new research about personalities, been critical of expectations, and proposed that understanding and avoiding how startups fail is more important than attention directed at what is working for you.
Throughout these weeks, the word “execution” kept coming up and you know as well as I do, advising execution is one of the most popular turns of a phrase.
“Ideas are easy. Implementation is hard.” – Guy Kawasaki
“The way to have a company that executes well is you have to execute well yourself.” – Sam Altman
“No excuses. No explanation. You don’t win on emotion. You win on execution.” – Tony Dungy
“Execution is the game.” – Gary Vaynerchuck
“Execution is everything.” John Doerr
Execute what?
Friends and peers know I’m not a fan of meetings and as I asked myself that question, my mind kept wandering to time spent in meetings as the best counter-point to what it means to be getting shit done. I’m prone to say, “The only reason that warrants a meeting is because something is wrong. What’s wrong? Let’s fix that so we don’t spend more time meeting.” And I find that the work that I do in MediaTech Ventures, teaching founders and developing ecosystems for cities, comes from this underlying tendency I have that if we address what’s wrong, we can focus on doing the work that matters.
In Startup Development Organizations, we can expect that the mentors, advisors, and program, are overcoming obstacles for founders and mitigating risks for investors. If (since) we know execution matters so much, we should all be ensuring that founders aren’t wasting time on the wrong things:
Building before knowing what the market will support
Selling more than listening
Talking with the wrong people
Designing with perfection in mind rather than releasing and testing
Putting together collateral more than developing relationships
Dictating what it should be because it’s what you want
Trying to protect or keep secret ideas, stifling progress
Bringing the wrong people on to the team or even what might be the right people but the wrong time
In that last regard, I recently sparked a wonderful discussion about the ideal team in a startup, noting, “Startups are exceptionally unlikely to work out, meaning the team sort of has a moral obligation to do whatever necessary to make it work (otherwise everyone loses); and that very often means you are not a fit. Startups aren’t companies wherein they can afford to train, manage, and work with you to make a job work – you all have a responsibility to make the venture sustainable and successful.”
What led me down this past was first, a study conducted by Oxford Internet Institute, University of Oxford, University of Technology Sydney, and the University of Melbourne which found that founding teams that have a need for variety and novelty, reduced modesty, an openness to adventure, and heightened energy levels are MUCH more likely to be successful. With that in mind, I blended the path to success with the known causes of failure to provide you with a matrix you can use to weigh whether or not the team you have is ideal.
That brought us back to the fundamental question here, to do what? Most founders waste a lot of time on the wrong things and as a startup, you have limited runway. Execution matters but no one ever clarifies HOW TO FOCUS
CLOSE, CODE, and CREATE – the Keys to Execution
Meetings. Sell, another too frequently heard bit of startup advice, sell!
Why do I criticize selling when it’s such popular advice and when it seems obvious that you need to talk to customers and bring in cash flow?
Founders and startup teams get lost in the weeds of doing things rather than delivering the results that matter – That’s execution.
CLOSE
One of the primary reasons I couldn’t continue working in companies (established companies) is because of increasing frustration with Agencies who love providing numbers about all the things they’ve done.
We got you 1000 visits! Your viral marketing campaign reached 100,000 people. That press release was on 24 different sites. We ran 12 new ads and set up 3 more campaigns. We got you leads.
And I felt like I was pulling my hair out as a, then, junior working professional, as the management and Board of the company seemed satiated with work being done. “Thanks agency! Here’s more money, keep up the good work.”
What the hell?
I only care about results and results aren’t found in work done, results are the conclusions sought: close business.
Get that LOI with a potential partner, get the contract signed, launch the form that signs up customers so that they pay. This is execution as a startup.
You should not care at all how the meetings are going and don’t distract the team with new possibilities. Of course, keep everyone aligned to the vision and mission of the venture but having meetings with leads is not execution! Close deals.
CODE
Startups get lost in the weeds of designs. CTOs fear putting something up because that work reflects their skill. Founders bury themselves in opinions and articles explaining what’s ideal. Product releases stall because, “we’re not ready.”
That isn’t execution.
Get it done, get it pushed, get it live.
Startups are experiments. As you endeavor to uncover new business models for innovative solutions, you cannot KNOW what is right or what works and the ONLY way to find out is to just put it up. Stop overthinking, stop seeking perfection, and stop making excuses.
The WORST investors or partners in a startup are the people who doubt working with you because there is a bug on the site or a feature isn’t working. The faster you can iterate, LEARN, and pivot, the more likely you are to find success; and anyone expecting a startup to be flawless is someone you don’t want to be working with. Get it up!
CREATE
People often ask how I can write so frequently and so much. The answer? Because my being concerned about typos, tone, length, or my confidence in my own opinions, prevents anything at all from being shared. I write knowing full well you might disagree with me; in fact, I want you to disagree with me – startups almost ALWAYS fail – Advisors who claim they’re right and tell you what to do, with certainty, are idiots (if anyone was “right,” we wouldn’t need you being a founder of something people haven’t figure out yet, would we?)
Never waste time doing an entire redesign of a website; just change it, go.
Holding off on that newsletter because you only have 10 subscribers?? How many is the right number?
Group thinking the perfect pitch deck? Make one, start pitching, and listen to feedback.
Afraid to even start? You need that patent or you’re still working a job? No one else is waiting…
Social media have you stifled because you don’t know what to tweet? Just tweet it! You can always tweet something else tomorrow!
Appreciate these keys to execution in reverse order because I need to you see that execution isn’t the work underlying the accomplishment, it’s the accomplishment, and anything you’re doing that takes you or your team away from accomplishment, makes your venture more likely to fail!
Create something… such as the code to get the solution going… so you can close business.
Execution means getting it done. If you or your team aren’t, you need to rethink your focus, right now, and anyone failing to get shit done should be an advisor (at best) rather than someone on the team.
Notably, the research indicates that the collective personalities of a startup’s entire founding team significantly influence the venture’s outcome.
Now, arguably, we know this. Most of the articles citing the causes of failure lie in the team (poor execution, lack of focus, misaligned expectations, different work ethic, or inconsistent values) but society seems to continue to argue incessantly about whether or not we can teach people to be entrepreneurs, even failing to agree on what it means to be an entrepreneur. We have books written about Grit, Tenacity, Purpose, Passion, and Mission, and yet many (most?) founders seem fixated on owning their own business, making money, or developing their solution; fixations that have little to do with what it actually takes to be successful as a founder.
Has this research uncovered clarity that we might use to help founders understand if they have a shot? Might we more clearly distinguish and agree on what it means to be “entrepreneurial”? Can this insight help founders find co-founders and develop a team of people that complements not just their skills and experience but also their personality traits – making success much more likely?
“There are valuable lessons here about the importance of fostering a variety of personality types within teams.” Paul X. McCarthy, one of the published researchers, clarified in Science Daily, “We estimate that around 8% of people worldwide may possess personality traits conducive to being successful founders, and many of them might not be engaged in entrepreneurial pursuits at present.”
Interesting isn’t that? 10% of startups succeed… entrepreneurial people are considered quite rare in fact… and around 8% (coincidence?) of people worldwide possess the personality traits they’ve identified that correlate with success.
When “experts” (yes, I mean to put that in quotes as I find the term is subjective) ponder the attributes that contribute to the success of startup founders, a plethora of opinions and metrics emerge. Some propose three specific personality traits and four distinct founder types, while others favor the Big Five traits or even suggest a list of six, seven, or as many as 16 diverse personality profiles. I, frankly, hold some credence in Myers-Briggs and my ENTJ association; and yet, I’m constantly in discussions with those who think Myers-Briggs is bunk.
Published in the journal Nature Scientific Reports, the recent study asserts that successful founders exhibit personality traits that deviate from the norm in the broader population (very consistent with how I distinguish “entrepreneur” from business owner or even founder – rare, unusual people who deviate from the norm). Six specific personality types they’ve collectively summarized as “FOALED” (Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers), demonstrate a stronger predictive power for success compared to other conventional factors commonly assessed by the business world. For instance, their personality-based metric is purportedly five times more predictive of success than industry affiliation and twice as predictive as the founder’s age (referring to the fact that there is a much higher correlation between age and success with a startup than most might hope; simply, be 44 years old).
Lead author and adjunct professor at the University of New South Wales, Paul X. McCarthy, emphasized the significance of personality traits in the success of startups.
In their study, the researchers and authors reported that their algorithm accurately distinguished successful founders with an 82.5% accuracy rate. They gathered data from Crunchbase to evaluate the success of startups, considering factors such as mergers, fundraising, acquisitions, and IPOs, drawing data assessing personalities from behaviors on social media.
These traits include a desire for variety and novelty, an openness to adventure, reduced modesty, and heightened energy levels. The paper concludes that the more a startup team exhibits these traits, the greater the likelihood of success.
Now, let me clarify something they also made clear. They didn’t say that the founder(s) must have these attributes but rather that their research finds that the founding team is much more likely of success if they do, meaning that if that isn’t you, find someone who is, “Firms with three or more founders are more than twice as likely to succeed than solo-founded start-ups,” added Oxford researcher, Fabian Stephany.
“Let’s “assume” that their research is even half correct – those are still high numbers worth consideration.” Wade Allen, who specializes in transforming businesses through talent, “Can start-ups think deeper about how they start and how they grow?”
the Ensemble Theory of Success
Startups that encompass a diverse mix of founder types have a significantly higher probability of success (and I found that notable because of the already recognized value of gender/race/age diversity in teams), with 8 to 10 times greater odds compared to companies led by a single founder. Diversity ABSOLUTELY matters; and with an 8-10x greater chance of success, one could argue that diversity of personality is critical. This observation led the researchers to introduce a concept they’ve termed the “Ensemble Theory of Success.” This theory aligns with other commonly embraced notions in the startup community, such as the Three Hs (“hipster, hacker, hustler”), initially coined by AKQA’s chief creative officer, Rei Inamoto, in 2012. According to these concepts, a successful startup typically consists of a founder who embodies a trendy persona, another who excels in programming, and a third who possesses unwavering dedication to hard work – as I once explored it, The Butcher, The Baker, and the Candlestick Maker.
The point in what I, at least, consider conclusive finding is not that you must have these traits to find success as a founder but that indeed, we can determine if your startup is very likely to fail if your core team lacks among them a desire for variety and novelty, an openness to adventure, reduced modesty, and heightened energy levels.
What this guides for would-be, early-stage founders, is that priority one is not likely talking to customers, studying the market, nor building that MVP, but rather ensuring you find the Fighters, Operators, Accomplishers, Leaders, Engineers, and Developers who do.
Focus. We hear that word and advice bantered about A LOT in the startup community but rarely is that mentorship capably followed up with WHAT to focus on and why.
This is what contributes to founders to wasting time and failing. You think the advice is helpful; it’s not, it’s distracting.
Focus? Yes. But on what??
Most of the advice I hear given is misleading.
“Focus on customers,” okay, but which ones??
“Focus on fundraising,” sure… but that take a lot of time and attention. What happens if it doesn’t manifest, and we spent our focus trying?
“Focus on the product,” well that’s just dumb, if I’m being blunt. What if no one wants it or it’s flawed?
Focus on the wrong thing in this regard (As a startup founder mind you, this doesn’t apply to business owners or working professionals), causes waste that will burn you out and cause failure.
Focus On What?
Focus on the PROBLEM. Be fixated on the problem. Nurture an addition to the problem so great you need to snort it.
Not, the solution, Paul?
The mistake most make, and where many, particularly many investors in being horrible at advising, is that “focus” does NOT mean focus on making your solution work! You get misled by the notion that you need to prove the solution can work because of requests for traction as evidence but you can’t ever prove anything will work as a company, because the solution alone isn’t a company. What you can do, all you can do, is incessantly focus on creating value by serving the challenges inherent in problem.
** Odds are ridiculously high that that solution won’t work, and the startup will fail **
So, what do you do? Focus on the problem so that all of your efforts, distractions, pivots, and executions contribute to creating value serving the challenges inherent in the problem.
Two things tend to happen when you focus on the solution (or something other than the problem):
Focusing on the solution causes founders to waste time on things that *aren’t working* and therefore are wasteful.
Losing focus on the problem causes the team to start chasing other opportunities unrelated to the problem; grasping at straws because you’ll take on anything that “seems” to help.
Operating Businesses (which aren’t startups!) focus on the solutions: delivering the solution to customers, serving customers with that, and profiting (and yes, I mean profiting, not making money, because an operating business can focus on reducing costs and earning revenue = profit).
Startups must focus on the problem because you can’t yet depend on the reliability or opportunity in whatever solution you’re providing at the moment.
Distracting yourself from solving the problem, to sell what you’re doing now to any customers or to chase a new opportunity that’s exciting but unrelated, is a COST – a distraction from adding experience, data, market share, or revenue, from within the same focus as the problem.
Stay focused such that everything you are doing is aligned to continuing to overcome the problem, whatever that takes, and as a result, all of your effort, even if/when not specifically what you want to be doing, supports your mission of solving the problem and building a sustainable, competitive, valuable company
Next time ANYONE advises you to simply “focus,” ask them: 1. On what? 2. Why? 3. How?
Because, if they can’t answer those 3 questions in a way that is actually helpful toward you creating value from working the problem, then their advice is distracting (and likely wrong).
Highly risk tolerant and constantly fixated on doing things better, entrepreneurs tend not to be found running companies.
That’s not remotely a knock against entrepreneurs. Operating a company is a management skillset, it’s operational, it’s project based, it’s plan and execute…. and these are skillsets that, while valuable to a founder, are not typically consistent with Lean, Agile, Pivot, and other notions prevalent in a startup.
As a founder, as the entrepreneur, the most difficult transition you’ll make in your professional career is from early venture to operating company. Keep in mind the clearest distinction and definition of a startup is, I think, that which Steve Blank posited, “A startup is an organization formed to search for a repeatable and scalable business model.”
Businesses and Companies are distinct from Startups
There is a VERY simple explanation for this but it’s one that most people don’t like to hear because we all think we’re ideal to run our ventures forever.
Startups are NOT “new businesses” Startups are temporary ventures in search of a business model.
As such, being in search of a model (because one doesn’t already exist), Startups can’t be run like “businesses” and rarely (if ever) become and remain businesses; in the sense of “small business” vs. “company”
With me? It’s a tough notion to wrap your head around but once you do, this struggle and the REASON for it becomes immediately clear.
A Company is a business entity owned by many people, shareholders. It isn’t owned by the founder, a business owner, nor partners; it’s owned by many.
A Business (or more accurately as I’m trying to get the idea across, a Small Business), is not that. A Small Business IS usually owned by few; maybe just the owner or partners.
Now obviously, these words get mixed up and misused. They mean different things. Try to focus not on the words I’m using but rather the intention and meaning I’m trying to get across.
At least we can agree, a Company is different from a Business, yes?
Starting a Business, odds are exceptionally HIGH that all you really need to do is what other like-businesses are doing.
Startups tend to become Companies because ….
Startups are a massive amount of risk, likely to fail. In order to help them NOT fail, they have to get lots of people involved and VALUED in ways beyond just making money. Because in the early days, they aren’t making money! That’s what Startup means.
A startup is no longer a startup when the model is figured out and working. At that point, it’s a company (usually; well rather, in fact, always as far as I can imagine).
Why are some entrepreneurs capable of evolving into companies?
I can almost always answer it with another question… Why aren’t Companies terribly innovative and disruptive?
Entrepreneurs are highly risk tolerant and constantly fixated on doing things better; fixing things and disrupting things that work reasonably well in order to make them work far better.
Those are risks. Companies can’t afford such risks and disruptions. Companies often just serve their customers with what they have, their subpar solutions, because they’re good enough and because they’re what customers expect.
Regardless of WHY, the fact is, Companies tend not to be as innovative and entrepreneurial as startups for the simple fact that Companies are no longer startups.
Companies are run by people who excel in management, operations, service/support, and process. These are not the characteristics of Startups. These are not where Entrepreneurs thrive.
MOSTentrepreneurs have difficulty managing companies beyond the startup stage because companies are run by executives, not entrepreneurs. Entrepreneurs tend to leave companies to start companies so that they can work in such environments where their skillsets and personalities as entrepreneurs, thrive.
What should most startups do as the transition to company? Appreciate the fact that most of that early team probably needs to transition to a team appropriate to the next stage of what that organization will be.