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Predicting Startup Founder Success

A pivotal indicator of a startups founder’s potential for success is the level of risk they’re willing to undertake. Over the past half year, I embarked on an investigation into the key predictors of entrepreneurial aptitude. This involved research encompassing numerous articles, books, and journals, in an attempt to unearth early signals for investing.

In my exploration I discovered that most early-stage investors are very subjective and often rely on intuition. This unsurprisingly leads to a lot of bias and a lot of missed opportunities. In my preliminary study I surveyed a group of successful startup founders, defined as those with exits in the seven to ten-figure range. The goal was to distill key traits and operational strategies through a series of over sixty questions. The responses were compared with those from founders without exits, which provided an intriguing glimpse into commonalities and contrasts.

The survey spanned various areas, encompassing aspects of personality and approach to work. To ensure consistency, the questions were designed to be immutable - unchanging over time. They ranged from self-expectation queries such as “Do you set unreasonably high standards for yourself?” to background questions like “Did you have siblings growing up?”

One question stood out: “What have you given up to start this company?” We noticed a clear link between the extent of personal sacrifice and the success of an entrepreneur. This might seem logical, considering that the founder is often the one who invests first and most into their venture. A larger personal risk and investment may represent a bigger bet, stronger conviction, and ultimately more grit to make it work.

It’s crucial to clarify that the findings don’t suggest causation or an automatic path to success simply by quitting a well-paid job. Rather, it seems to highlight a trend where a greater risk has statistical ties to success.

One related finding is that immigrant founders tend to be more successful. Immigrants typically relinquish their home country, language, and family ties to launch a startup, which aligns with the notion of taking high risks. Moreover, research shows founders will often relocate to startup hubs like San Francisco, New York, and Boston to further supporting the concept of betting big on oneself.

Founder’s success is multi-faceted and depends on many factors. Luck, market timing, and let’s not forget the idea but the willingness to take risks is certainly a significant predictor.

What do you think? Are there good counter-examples? What other questions do you think are predictive of founder success?

This post is licensed under CC BY 4.0 by the author.