Becoming a successful startup founder requires a unique set of qualities and characteristics. It’s not just about having a great idea or a strong work ethic; it takes much more than that. According to a joint study conducted by researchers at Harvard, Stanford, and the University of Chicago, 55% of startups fail due to people problems. This statistic is not surprising when you consider the challenges and complexities of running a startup.
One of the most common reasons for startup failure is co-founder conflict. Just like in famous bands that end up breaking up, co-founders often experience in-fighting and disagreements that can lead to the downfall of their company. The study found that this conflict is often a result of unmet expectations. Co-founders tend to have high expectations for each other as leaders, but when these expectations are not met, conflict arises.
To avoid co-founder conflict, it is important for founders to have open and honest conversations about their motivations and expectations. Understanding each other’s motivations and being transparent about goals and aspirations can help align the team and minimize potential conflicts. Continuously checking in with each other and asking important questions like “Why are we doing this in the first place?” and “Does this partnership feel fair overall?” can help maintain a healthy working relationship.
Another common pitfall among founders is the tendency to get distracted by new possibilities and shiny objects. Founders are often enthusiastic and forward-thinking individuals, which can lead to a lack of focus on the core objectives of the business. The study found that 42% of founders are seen as easily distracted by new projects or ideas. In contrast, the most effective founders in the study were seen to invest their time in activities that drove success for the business and kept their teams focused on priority deliverables.
To overcome the temptation of chasing after new opportunities, founders need to establish clear objectives and goals for their team. This includes setting the right key results and objectives that align with the overall vision of the business. Many teams struggle with defining and implementing effective key performance indicators (KPIs), so it is important for founders to invest time and effort into creating a framework that keeps everyone focused on what truly matters.
These insights into the traits of effective founders can be used as a framework for identifying great startups or improving one’s effectiveness as a founder. By understanding the common pitfalls and challenges that founders face, entrepreneurs can take proactive steps to navigate these obstacles and increase their chances of success.
Jason Scott, the founder and managing partner of VC firm Five Two Five, has applied these insights from the study into his investment strategies. His aim is to identify the best startups to invest in across the globe, regardless of their location. By removing the proximity bias often associated with Silicon Valley VCs, he is able to tap into a diverse range of startups from North America, Africa, Asia, and Europe.
Scott’s experiences as a researcher and coach for international startups have provided him with valuable insights and data, which he will share at the upcoming VDS2024 conference in Valencia. This conference will provide a platform for entrepreneurs and industry professionals to learn from experts like Scott and gain valuable knowledge on how to leverage the effective founder traits for success.
In conclusion, building a successful startup requires more than just a good idea and hard work. Founders need to possess certain traits and be aware of the common challenges they may face. Co-founder conflict and distractions are among the top reasons for startup failure, but by understanding and addressing these issues, founders can increase their chances of success. By using the effective founder traits as a framework, entrepreneurs can identify great startups or improve their own effectiveness as founders.
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