I’ve often thought that running a company would be much easier if a founder did not need to hire people. But it turns out that hiring, motivating and retaining the best talent is really important to a company’s success.
With all the startups getting off the ground in Worcester — not to mention the students at local colleges and universities who want to start companies — a question should come to mind: “Do I have what it takes to make a startup successful?”
I recently read a research report that can help you answer that question: if you’re an open-minded extrovert, your odds of success are higher. That may be obvious — although I can think of many successful startups founded by brilliant introverts — but what is less apparent is why extroverts are more effective entrepreneurs and what you should do about it.
That’s my summary of Stanford Graduate School of Business research published in January 2016 that revealed a powerful insight: Startup success depends in part on a founder’s ability to create professional networks, and those who have open, extroverted personalities in their networks eventually produce better ideas for startups and teams.
The Stanford researchers studied more than 100 entrepreneurs who attended a June 2014 boot camp in New Delhi. They found that networks of peers help entrepreneurs generate ideas, find talented co-founders, and gain the skills they need to scale businesses.
Their research also found that networks could be especially useful in attempting to boost entrepreneurship in emerging markets, where entrepreneurs don’t yet know the norms of startup life. GSB research also found that matching people with specific traits — extroversion and openness — makes networking easier, and eventually produces better ideas.
The Stanford researchers asked teams of entrepreneurs to develop startup ideas for the Indian wedding industry. They found that the quality of the ideas got better from people, especially those open to new ideas, after they were paired with extroverted people.
In a nutshell, if you are open and extroverted, you have an edge when it comes to turning your idea into a successful business. If you are closed and introverted, you may have more difficulty unless you can find a co-founder who is the opposite — or you can train yourself to be more open and extroverted.
My interviews with hundreds of founders have taught me that when it comes to hiring co-founders, they look for people who pass two tests: They believe they will enjoy working with him or her, and the potential co-founder has excellent skills in a field that the startup needs to succeed and which the founder lacks.
The Stanford researchers found that entrepreneurs could gain different insights about potential co-founders from three kinds of interactions.
1. Direct Collaborations
Direct collaborations — working intensively on a team together — resulted in the most information about potential co-founders. More specifically, such collaborations revealed the strength of the interpersonal fit and the potential co-founder’s talent.
Indeed, such benefits of direct collaboration help explain why many of the CEOs I’ve interviewed started companies with people they worked with successfully in prior companies.
The benefits of direct collaboration suggest that a founder who is networking to find potential co-founders should collaborate on a project before asking them to join the startup’s executive team.
2. Indirect Relations
Indirect connections — having a shared friend or acquaintance — yield more information about a potential co-founder’s interpersonal ability, but not talent, according to the GSB researchers.
The insights that such indirect connections yield regarding a potential co-founder’s interpersonal ability help explain why so many of the CEOs I interviewed like to be introduced to people through a shared connection. After all, if a trusted third party makes the introduction, the risk of a poor cultural fit is reduced.
But before hiring such a person, the founder must supplement the information about interpersonal skills by investigating the potential co-founder’s talent in the specific function that the co-founder will lead.
Such talent can be tested through interviews in which the candidate participates in a simulation of their job coupled with deep interviews with people who have worked in similar professional settings with the candidate.
3. Short conversations
Finally, short conversations revealed insights to a potential co-founders’ abilities, but not their interpersonal skills, the GSB researcher found.
It is easy to see how such conversations could come from brief networking meetings with potential co-founders. But to discern a good personality fit, the entrepreneur might invite candidates to a dinner with the executive team or to participate in a company event, such as a softball game or white-water rafting trip.
If you have an idea, you will need to work with others to turn it into a viable business. Your odds of finding the talent you need will rise, as will the quality of your solutions to the growth challenges you’ll encounter, if you have an open and extroverted personality.
Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College. His email address is firstname.lastname@example.org.