THE ECONOMIST: Do startup founders have different personalities? What we can learn from entrepreneurs

When you think about your next career move, you may well have your sights set on a higher salary, a new skill or just a shorter commute. When Salar al Khafaji, a Dutch entrepreneur, was thinking about his next venture, he had slightly different criteria.

Mr al Khafaji had already founded a data-visualisation startup and spent time working at Palantir, after the Silicon Valley tech firm had bought that business.

For his next act he wanted to work on chunkier problems, something big enough to show up in GDP statistics. His choice was construction, a huge industry with a long-standing productivity problem.

The upshot was Monumental, a bricklaying-robotics firm co-founded by Mr al Khafaji that is profiled in our latest Boss Class podcast.

The case that founders (or at least the successful ones) are different rests in part on stories like this. Other people want to pay the mortgage; founders want to change the world.

Before he started ushering in the singularity as the boss of OpenAI, Sam Altman was one of the people in charge of Y Combinator, a hothouse for startups. In a blog post in 2020, reflecting on the qualities that unite the best entrepreneurs and the best researchers, Mr Altman wrote that they “spend a lot of time reflecting on some version of the Hamming question”.

If you think this is something to do with sandwiches, there’s probably no hope for you. It is named after Richard Hamming, a mathematician who famously asked chemistry fellows at Bell Labs what the most important problems in their field were, then what they were working on at the time, and then why they were working on things that were unimportant.

This may not have been the best technique for making friends, but asking what the most important problem he could be working on is pretty much exactly what Mr al Khafaji did before founding Monumental.

There have been more systematic attempts to work out the ways in which founders are different. In a recent study, Paul McCarthy of UNSW Sydney and his co-authors inferred some common personality traits by analysing the tweets of a large cohort of entrepreneurs.

They found that these characteristics then did a good job of predicting whether someone was an employee or a founder. As you might expect, founders tend to be more adventurous and open to novelty than the population at large, as well as less modest.

In a review of the literature on entrepreneurial traits, published in 2017, Sari Pekkala Kerr of Wellesley College and her co-authors cite research suggesting that business founders tend to have an internal “locus of control”.

Psychologists use the idea of a locus of control to distinguish between people who think they are authors of their own destiny and people who think that external forces, such as luck or other people, are more responsible for the events in their lives.

Risk appetite also tends to be higher among founders, at least among those who start a business out of choice rather than because they lack alternatives.

But personality is not destiny. Startup success depends on many factors. Researchers in entrepreneurship talk about “rates” as well as “traits”; variations in the rate of new-business formation, and differences between male- and female-founded firms, can be traced to the availability of capital, for example.

And even if many founders share common characteristics, they still come in all shapes and sizes. Despite the mythology of the genius founder, Mr McCarthy and his co-authors find that a venture’s chance of success doubles if it has three or more founders, as opposed to just one, and that greater diversity in personality types is one reason.

Another paper, by Brandon Freiberg and Sandra Matz of Columbia Business School, suggests that certain traits, like conscientiousness, matter more at different stages of a tech startup’s life.

Nor should founders be fetishised: people derive meaning and create value from all sorts of work. But some entrepreneurial behaviours are worth copying.

You don’t have to have a certain personality type to ask yourself the Hamming question. Founders may be different but they are not another species.