Success Factors
In M&A Factoid #10 we described research that showed some industries are more welcoming to newcomers than others.
For instance, founders of software companies succeed on average about half the time, yet only about 1% of newbie farmers do. (Success in this case is defined as whether the startup had been acquired, acquired another company, or IPO’d.)
But by itself, the industry in which entrepreneurs compete explains only about 3% of whether their venture succeeds or fails.
Indeed, researchers have identified another 13 key factors that together seem to account for the great preponderance of reasons why certain startups make it and others don’t.
This chart lists all 14 factors in declining order of predictive importance, starting with the heavyweight, the founder’s “Execution/Operational Efficiency.”
Here’s the same data with a visual emphasis.
In the real world, each of these factors is affected by interactions with others. Any factor can combine with others to create outsized synergistic or multiplicative contributions to startup success.
For example, both variations in the personality types of a startup’s founders and the number of founders greatly multiply the chances of success. Founder combinations like Leader (high openness and assertiveness), Accomplisher (high conscientiousness and extraversion), and Developer (a balance of traits) lead to favorable outcomes. At least when it comes to personality, diversity can prove valuable.
Yet, startups with three or more founders, regardless of personality type, are 2.6 times more likely to succeed compared to single-founder startups.
Winning Personalities
The green rows in the first chart above describe certain founders’ personality characteristics, which together account for about 35% of startup success. See below for more details on how those personality factors contribute.
BTW, personality types aren’t necessarily immutable - only about 50% of them are inherited. So if a would-be founder were aware of which critical characteristics were lacking, there may be a way to enhance them and to reinforce positive traits already present.
Next Step: Apply This Information
See my The 12 Characteristics of Successful Entrepreneurs for a user-friendly questionnaire that touches on many of the factors above and can help you determine how well the stars may align for a successful entrepreneurial life.