What is the psychological make-up of a successful start-up founder?
Startups have become the cool thing to do as the world has seen the meteoric rise of Facebook and the fortunes created by of the Instagram, the Uber, the Atlassianiasn founders of the world. Over the last month my start-up RestAlert has received a lot of media attention because of the start-up boom occurring in Australia. During the media attention I have been asked a number of times what it takes to become a successful start-up founder. I have a background in Psychology so unsurprisingly I thought about it from an individual perspective and I thought I would share my answers with you
Risk tolerance and challenge motivation
I love my outdoor lead climbing, exploratory scuba diving and adventure racing. None of those hobbies are potentially as safe as crafting or cooking. However, to me they provide an opportunity for psychological challenge, adrenaline and physically challenge which I thrive on. Running a technology company provides me with similar conditions to my hobbies. Start-ups are a challenge and they are inherently risky; apparently 90% fail. If you’re not a up for a challenge and don’t like risk they are probably not for you.
Risk Mitigation
There is an old scuba diving saying that there are ‘old diver and bold divers, but very few old bold divers’ and the sentiment is also reflective of my experience of running a startup. Just as with engaging in extreme sports, risk are part of the course of startups. However how you manage the risks is what really matters. Many of the risks of a start-up can be mitigated or managed by doing some solid research to avoid potential pitfalls, in depth knowledge of the field, effective planning for a range of circumstances and ensuring you have put in place contingency plans. My journey building RestAlert has involved a lot of planning and iterative testing to figure out what works and what doesn’t prior to taking risks, ensuring I provide my customers with a product which suits their needs.
Curiosity and the Researcher Mindset
I have utilized my training as a researcher to be able to develop RestAlert as a profitable business. I have treated it like a research project, in that I try to collect evidence in the form of numbers to guide the decisions I make to reduce the likelihood of a poor decision. If those numbers aren’t available because my company is still growing and I seek counsel from those wiser and more experienced than I am. I have been very fortunate to work with some great people in the form of mentors, investors and customers who have provided that guidance. In so doing they have contributed to the success of my company and many of them I now call personal friends. This same mindset of natural curiosity and desire to find answers is something I have observed in a number of other successful start-up founders I have observed.
Perception and Temperament
Like extreme sports, my personal experience and observations are that running a start-up requires a certain type of temperament. By virtue of my hobbies, I would probably be classified as a risk taker and very challenge motivated. I have noticed a similar streak in many other successful founders I’ve met. Not everyone likes their risk in the range of ‘life and death’ and not everyone likes working in an area where the challenges have previously been described as impossible (for example Peter Diamates), but most founders tolerate risk situations well and legitimately view problems as challenges to be overcome instead of the potential for something scary and bad.
Stress and Coping Ability
The Inverted U hypothesis (also known as Yerkes-Dodson Law, 1908) suggests that people’s optimal functioning and performance does not occur in a situation without any stress, nor does it occur in a situation with too much stress. If you mapped stress on an x axis and performance on a y axis the relationship would look something like an upside down U (hence the name). However what constitutes too much and too little stress differs between people. Some people can cope with stress better than others. If it doesn’t take much for you to feel stress it may mean that your stress tolerance is lower than other peoples.
If you’re a naturally anxious person or easily stressed, start-ups are probably not the best career choice, as they are rife with uncertainty. In the early stages cash flow and funding is uncertain, customers aren’t always stable and start-ups need to be able adapt very quickly to changing circumstances. For me personally, the inherent uncertainty of a start-up creates a level of anxiety in me which motivates me to create, build, perform and achieve something instead of incapacitating me, as it can for others.
Stimulation required
Stimulation is a natural reinforcer, just like food, water and sex. If people are under-stimulated, they will inevitably seek more stimulation. Just ask any parent what happens when they leave their child alone in a room without giving them something to do. The child will either start whinging about being bored, get grumpy , sullen or alternatively there will be a concerning silence which indicates the child has found something else to amuse themselves (the parents better hope they didn’t leave the permanent markers out lest they find their kids have taken to them on the walls). The amount of stimulation one person requires to be happy and to perform well is not the same amount another person requires.
Start-ups provide you with a constant source of stimulation. There is always something more to do, and chances are there is a diverse range of things to do. It is a psychological challenge, for an early stage startup founder to be everything at once; subject matter expert, business development manager, strategist, marketing, technologist and PR person. Not to mention, the hours required to make it a successful and profitable business are also a physical challenge. If you are someone who needs a lot of intellectual stimulation start-ups may well be a great idea to engage your mind.
The dark side of stimulation and stress performance
Large, old and well established organisations are often very risk averse and avoid change for fear of the consequences of straying from the path. They often view the high risk and high reward to be gained is outweighed by the very low risk and average but stable reward afforded by staying on the tried and tested path. This corporate risk aversion may mean some people are not provided with an adequate level of stress to enable optimal performance (as per the inverted U hypothesis). However, if you prefer the certainty and stability that comes with an average financial return in the form of a salaried position, as opposed to the uncertainty, minimal stability and high risk with a potential for a high financial return then start-ups are not for you.
I know I personally perform less well in situations with high levels of routine and minimal variety which is often provided by those large, established organisations. The presence of the exact same characteristics which make me work well in a start-up including a high need for stimulation, a higher stress threshold than others, challenge motivation and risk tolerance / risk management strategies mean I am not suited as strongly to an academic, old school corporate or government career.
Good Timing
Your ability to run a start-up will be influenced by the timing in your life. Start-ups are stressful so if you are currently experiencing personal upheaval or stress for example going through a significant relationship breakdown, changing your housing arrangements, having a baby, taking care of elderly relatives or worse yet multiples of them at once, it is probably going to be more difficult for you to start a company. Your attention will be diverted and split and your performance may be reduced if there is too much stress. (That is not to say it can’t be done, it can. I know a few people who have started companies in the midst of those life changes. However, it is easier when those things aren’t happening concurrently).
The Life Change Index Scale (1967) shown below was developed by Holmes and Rahe to understand how likely a person is to become ill in the near future based on past and probable future events. In the context of starting a company it is worth considering exactly how much stress you can cope with in your life right now given your individual circumstances. If you endeavour to create a startup in the midst of a very chaotic personal life will you become optimally stressed or will it push you over the edge and see you become to become unwell and perform poorly?
Hard work and sheer single minded determination
Start-ups are not easy despite all that is glamorized in pop culture. As with any sport or to become an expert in any field of practice, you need the appropriate pre-requisites to succeed (which in this case I would argue are most associated with mindset, temperament and background knowledge). On top of that there is a lot to be said for simply putting in the time and effort required without giving in or giving up.
No professional athlete has ever just waltzed into the Olympics to reach the pinnacle of their career without any training. They put in hours and hours of practice each day. In a similar vein, successful founders put in huge amounts of time and effort into their company.The require you to just keep going and to keep working even when the results are minuscule and improvements are slight. However if you just keep going with it, over time these teeny tiny improvements and learnings add up. Many successful startup founders dedicate a small portion of their lives to them. If you aren’t willing to be dedicated, hardworking and understand you will have to sacrifice things in your life to get your start-up going, start-ups probably aren’t for you.
My final thoughts
Running a start-up has been like a rock-climbing. It has been scary, I often question my skills and abilities and wonder what on earth I am doing straying from the well trodden path, but it has also been a heap of fun and provided me a personal sense of achievement, meaning and opportunity to develop new skills and hone my current skills which I would have never experienced on the standard path. I would do it again in a heartbeat.
