Is there a “right” personality for entrepreneurs?
Thibault Vandermosten from Personas360 explores that very question through the framework of the Big Five personality aspects.
Note: You may want to complete the free big five personality test before reading further.
So you want to be a successful entrepreneur?
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Knowing your personality through the Big 5 lens is critical for entrepreneurs as it is related to at least three of the top reasons why startups fail.
23% of startups fail because of the wrong team composition.
13% of startups fail because of disharmony inside the team or with investors.
8% of startups fail because of founder burnout.
Addressing the underlying issues behind those three reasons dramatically reduces the odds of your venture burning down.
Team composition
Understand who each team member is, from both self and 360 perspectives, to reduce biases.
Evaluate if they are a good fit.
Learn how to capitalize on their strengths and mitigate their weaknesses.
Disharmony: Learn how to better communicate with your team and investors.
Burnout: Learn to better sustain the team by being more aware of preferences; and what energizes or drains.
Going through all those points would make this already long article truly gargantuan. At this stage, we will only go through the strengths and weaknesses of the different trait scores in entrepreneurship. We will use the Big 5, as it is the only consensus in personality research and is used in the literature studying personality and entrepreneurship.
For convenience reasons, we separated each trait between "higher" and "lower" with respective pros and cons. We encourage the reader to remember it is not a binary switch but a continuous spectrum, and the more extreme a score, the higher the related impact.
2. Openness to experience and its impact
The higher your Openness, the higher your imagination, curiosity, and need for new concepts and ideas. Among the 5 traits, it correlates the most with entrepreneurship intention.
Higher Openness
Highly open entrepreneurs have an easier time thinking out of the box, envisioning how different the future could be, and exploring the solution space. It will be easier for them, and they will enjoy it more.
On the challenges side, they like novelty, so they might more easily get distracted by new shiny offerings, trapped in perpetual loops of potential improvements, or get bored when the work does not vary enough. The last reason is partly why some highly open founders genuinely enjoy the early stages of a startup. There are so many hats to wear, and they can always feed their innate curiosity for learning. At a later stage, monotony can creep in when startups become too big and the role too specialized.
Lower Openness
On the other hand, people with lower Openness can struggle with the inherent change startups want to bring or to imagine innovative solutions or products. Entrepreneurship is about learning, growing, and managing change in a fluctuating world, which is not their natural comfort zone.
Still, they can provide reliability because they enjoy the tried and tested approaches and feel comfortable applying them to success. They will usually choose more traditional entrepreneurship ventures: services, existing products, or bringing an existing innovation into a new market. This behavior is very different from the highly open founders, who like to be the "the first" (not for the glory, but because something already explored is "boring").
3. Conscientiousness and its impact
Higher Conscientiousness
People with higher Conscientiousness tend to be more industrious and orderly. At its root, Conscientiousness is a measure of your capacity to regulate your impulses. This capacity can obviously be helpful in life, as proven by Conscientiousness being the top predictor of occupational performance, or by the marshmallow test. However, keep in mind that more is not always better. As with every other Big 5 trait, extreme scores (high or low) correlate with disorders; over-Conscientiousness predicts OCD.
These self-regulation benefits also apply to entrepreneurship, where a tremendous amount of hard work is required just to start, founders have to sacrifice the present to invest in future growth and prospects, and building structure is vital to solidifying a scale-up. More conscientious people tend to score higher on achievement striving, which helps them be more ambitious, and on self-efficacy, which allows them to manage themselves with less need for an external authority structure (such as a manager for employees or investors for bootstrapped founders).
On the other hand, the higher your Conscientiousness, the higher your perfectionism and your love for robust structure, which can be (intentionally) absent in startups. Some popular entrepreneurial philosophies advocate strongly against perfectionism. In "The Lean Startup", Eric Ries warns your MVP should not be something you would be proud of and want to share with your relatives. For highly conscientious people, who wish each deliverable to be a work of art, producing something they see as low quality is painful.
Another issue is plan management. The higher the Conscientiousness, the higher the desire for solid, set-in-stone plans. However, businesses, especially at the beginning and small scale, are by nature unstable and very sensitive to external changes. In startups, it can be hard to know what is in store for next month, let alone next week. There is a reason why highly conscientious people are very present on the corporate executive ladder, where large plans can be set in motion over the years with relative stability compared to the wild entrepreneurial world where chaos can be omnipresent.
The last factor is risk avoidance; the more conscientious, the higher the cautiousness ("the disposition to think through possibilities before acting"). And let's be honest, being an entrepreneur is not a statistically sound gamble, both for small businesses and startups.
Lower Conscientiousness
The lower your Conscientiousness, the easier the lack of planning and chaos, the better the flexibility, and the more comfortable lean approaches are.
However, there are also more issues with self-accountability and self-efficacy, which makes low scorers more reliant on an external authority to keep them motivated and on track. Even then, a series of different motivators will be needed to push through the challenging entrepreneurship journey, as hard work will be less sought and less fulfilling in and of itself.
Low Conscientiousness scorers are attracted by entrepreneurship's ultimate promises of freedom and rest, of doing what they want. Think of the "escape the 9-5 rat race", which includes a very appealing message to people wanting to get more with less constraint. However, these people will need to work with their naturally low Conscientiousness, either by pushing long enough to reap the desired rewards or find a way to build a sustainable business that requires less effort and offers more freedom. E.g., a highly specialized freelancer with high $/hour or a small product rather than a silicon-valley venture type startup.
4. Extraversion and its impact
Extraversion is defined by the level of engagement an individual seeks with the world. The higher the extraversion, the more stimulation one will seek.
Higher Extraversion
Entrepreneurs with higher extraversion will
Benefit from a larger network. By naturally seeking more stimulation, they will be present at more events, engage with more people, and eventually build a social network that can support them in their venture. This network increases the odds of success when raising capital or building key partner and customer relationships.
Be more assertive. More extraversion means a higher tendency to take charge, speak out, and lead. This natural leadership and desire to take control can encourage the start of a venture ("Someone needs to do something about this, and that someone will be me"). It can also help in scaling up the business by taking charge of the growing team.
Be more positive. A higher extraversion means higher sensitivity to positive emotions. It is interestingly uncorrelated to the sensitivity to negative emotion, neuroticism. The joy, excitement, and hope of a highly extroverted person can fuel the entrepreneurship journey and raise the morale of the team.
Lower Extraversion
Entrepreneurs with lower extraversion will
Need less stimulation to be satisfied. As they are happier with less, they will be less distracted by chasing it for the sake of it. If someone with lower extraversion is going in front of VC's events to raise money, it is more because they need it, less because they enjoy the flashiness of the events.
As the main stage is too stimulating, entrepreneurs with lower extraversion are more naturally inclined to delegate and not hog the spotlight. Someone with higher extraversion will want more of the stimulation from being center stage and across everything, potentially becoming the bottleneck of their own business. It is a similar outcome for different reasons to when someone is very high in Conscientiousness and overly engaged in supervision.
5. Agreeableness and its impact
Agreeableness is divided into two core elements: compassion and social harmony. The simplest way of understanding the compassion scale is to imagine a negotiation with a third party. The more you negotiate for them, and the less for yourself, the more agreeable you are. Social harmony is correlated to politeness and a desire to avoid and reduce tension in social settings.
Higher Agreeableness
Entrepreneurs higher in agreeableness
will favor cooperation over competition, both internally (culture) and externally (with suppliers and customers).
will be more likely to be genuinely driven to have a positive impact on the world. This attribute helps to be very customer-centric and to be attentive to their clients' problems. They are more likely to see themselves at the service of the customers rather than the other way around.
will benefit from social goodwill and should leverage it. Being agreeable and compassionate is often seen as socially desirable, and a very agreeable entrepreneur should take advantage of the earned goodwill. This is even more important because by being very agreeable, the entrepreneur is likely to negotiate to the advantage of others, giving more than what they receive. Benefitting from goodwill is one way to get some value back, even though it might feel dirty to someone very agreeable. They might say: "This is not the reason why I am helping, and capitalizing on it will make it less meaningful".
One key concept for very agreeable people is that you cannot pour from an empty cup. If you have nothing, you cannot help others. Sometimes you have to take, keep, or say no in order to give later. It also applies to entrepreneurship: "You eat to live; you do not live to eat." Make sure to be profitable (or at least sustainable) to ensure a long journey of positive impact on the world.
Lower Agreeableness
Entrepreneurs with lower agreeableness:
Embrace the competitive landscape. They enjoy the ruthlessness in the startup ecosystem. Rather than being afraid of competition, they see it as motivational and a fun challenge as they like going in, fighting, winning, and taking all the rewards.
Protect their business interest. Their capacity to and comfort with negotiating to their advantage help build a sustainable business. The other side of the coin is that low agreeableness people might want to win every single negotiation and end up losing the war, as the accumulated "net losses" of favors can eventually make some parties walk away.
Disregard social harmony. While this might provoke conflict with other disagreeable people and damage relationships with highly agreeable people, less agreeable entrepreneurs can get stuff done faster as they are less bothered by having the hard conversations, taking the hard decisions, and implementing them. It can be a substantial competitive advantage over highly agreeable entrepreneurs. The latter can struggle to make critical calls because they want to please everyone (e.g., firing that one early employee who is not bringing enough value and is tanking the company with their salary).
6. Neuroticism and its impact
Neuroticism is a sensitivity to negative emotions. The higher the neuroticism, the higher the stress, anger, sadness, and so on for a similar situation. While this might sound like a solely detrimental construct, there are reasons it is one of the 5 dimensions of personality. Negative emotions are an integral part of evolution. People who did not have systems to recognize what was hurtful, either in advance (stress, fear) or as a learning experience (sadness, anger), died. We are the descendants of people who were afraid of snakes and stressed about lack of food. Pain is essential to learning.
Higher Neuroticism
That being said, entrepreneurs with higher neuroticism will need strong support systems to cope with the tremendous amount of negativity the journey will bring. Neuroticism sometimes works as a self-selection filter. Indeed, highly neurotic people learn to avoid anxiety-inducing environments. And, once again, entrepreneurship is intrinsically a bad gamble wrapped in uncertainty.
Furthermore, highly neurotic founders might struggle to make calm and rational calls in stressful situations, as they can be overwhelmed.
However, their sensitivity helps in detecting and managing problems. They will be more likely to pivot when something is not going right, rather than stubbornly moving on. They can be great at discussing contingency planning and envisaging what risks should be considered.
Lower Neuroticism
People with lower neuroticism will present a higher degree of resilience and will be capable of going for longer in demanding conditions. Their resilience can keep the light on and carry a team's morale even in the darker times. It is tremendously helpful in starting a business as the load can be heavy to carry.
Yet, in entrepreneurship, to keep going in the same direction is not always the winning move. Sometimes it is essential to reflect, listen and change course; to notice that the hardships are a sign of problems and not to be endured, ignored, or glorified. Overconfidence is a slow and insidious killer, and it negatively correlates to neuroticism.
7. What are the perfect scores to become an entrepreneur?
We purposefully did not address this question, and we are not the only ones thinking like this (see Gartner critique of 1988). We cannot answer for multiple reasons.
Entrepreneurship is a word that can mean many things. Are you a freelancer, a sole trader, an SME, or a scale-up? All of those would call themselves entrepreneurs but have very different fields and challenges.
The data seems heterogeneous; there is not a single way to the top. Even among the most famous entrepreneurs, there are massive personality difference, proving that success is not limited to a single personality setup.
Ok, but what about traits that are more likely to succeed? While there are studies on correlations between the Big 5 and entrepreneurship, there are a couple of issues:
They are context-dependent (what applies to the study's subject does not necessarily apply to you). E.g., a study on Vietnam's entrepreneurial habits in the farming industry does not necessarily translate to digital tech founders in Silicon Valley.
Even if local seemingly optimal personality scores would be found in an ecosystem, it does not mean that everyone should try to switch to it. Heterogeneity is a key pillar to a healthy ecosystem, and having differences will allow to better tackle the variety of problems entrepreneurship is meant to take on.
8. Now what?
Curious about your own traits? Do you wonder if you have the right team, or is there friction when communicating with a co-founder or an investor?
You can now check your Big 5 scores from self-assessed and 360 perspectives with Personas. We have three incremental tiers.
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