2 very common mistakes founders make that can kill your startup

It takes a special kind of person to decide to found a startup. The long hours require energy, devotion, and continuous motivation. In the beginning, you need to be a jack of all trades, able to understand and jump on parts of the business you may not be familiar with, until you have the capital to hire people who are better at those tasks.

But founders are human just like the rest of us. Although they may seem superhuman at times, weaving through discussions on product development, marketing, and taking sales calls late into the night, at the end of the day, they’re subject to the same human tendencies.

According to a joint study by researchers at Harvard, Stanford, and the University of Chicago, 55% of startups fail due to people problems. These range from poor decision-making and conflicts between co-founders to hiring and keeping the right people. (And, to be honest, I’m surprised the statistics aren’t higher.)

As we all know, out of the many startups that are founded every year, only a small portion will actually survive and thrive. Founders who can recognise and be in control of these common statistics will be much more likely to succeed.

As the former Head of Startup Developer Ecosystems at Google, Jason Scott was part of a research team that sought to answer the seemingly impossible: what traits make an effective founder?

The study assessed the leadership capabilities of more than 900 startup founders, CEOs, and CTOs across more than 40 countries. In the end, their findings were condensed into seven common traits shared amongst the most effective founders. But can we really whittle success down to just seven traits?

Since his time at Google, Jason Scott went on to start his own VC firm Five Two Five to “invest in the best founders — regardless of postal code.” His aim is to remove the proximity bias Silicon Valley VCs so often have and, instead, identify the best startups to invest in across the globe. Less than a year later, the firm already has a passport book full of startups from across North America, Africa, Asia, and Europe.

As we get ready to welcome Scott as a speaker at VDS2024, we caught up with him to find out how he’s brought his learnings from Google into the world of VC investing and if he believes these traits still stand through all the founders and businesses he’s encountered across the globe.

Breaking up the band

So many of the greatest bands in history, despite the fame and fortune they achieved together, ended in in-fighting between bandmates leading each to “go their own way.”

The same can be said for co-founders. Scott shared that inter-founder conflict was one of the most common reasons for startup failure that he’s seen since starting as a VC.

According to the findings of the Effective Founder study, co-founder conflict results most often from unmet expectations. The reason being that founders often evaluate their cofounders’ effectiveness as leaders against much higher expectations than they actually set for themselves. When these expectations aren’t met, conflict ensues.

Scott has seen many professional relationships, even amongst good friends, fail because co-founders don’t have conversations around “interpersonal equity” as often as they should.

“Throughout life, our motivations for doing work changes,” Scott says. “There might be a time in our lives when we’re focused on making an impact. Then, five years later, I may have a large family and need to focus on income. I think not taking that for granted and assuming that someone else’s motivations, particularly your co-founders’ motivations, are similar to yours is important.”

One way to combat this tendency is to continuously check-in with each other asking questions like:

Why are we doing this in the first place? Are we doing this for the impact, intellectual stimulation, or do we simply want to make money? How fair does this partnership feel overall?

The magpie founder

When asked what he thought was the most important trait out of the bunch he researched at Google, Scott hesitated. For him, they’re all a really critical piece of the puzzle. However, one common pitfall he did admit to seeing quite often amongst founders is the tendency to get distracted by shiny new possibilities.

“I think protecting [themselves and their teams] from distractions is one that I see founders struggling with, because they tend to be excitable, eager, and very forward-thinking humans,” Scott says. “We call them the founders that chase bright and shiny objects,” he adds, saying that they might get an email from an investor or see an article on what’s going to happen in the industry and then, all of a sudden, half the team is researching a topic or diving into a new market segment.

The Effective Founders study found that 42% of founders are seen by their team as easily distracted by new projects or ideas. On the other hand, amongst the most effective founders that participated in the study, 96% were seen to invest their time in what really drives success for the business and 93% kept their teams focused on priority deliverables/objectives.

So how do you become a founder that doesn’t drop everything to pursue those bright and shiny objects, but really introduces focus to your team? This relates to another topic Scott is really passionate about: how to create the right key results and objectives for your team. Although KPIs are a common tool, so many teams struggle to actually get them right.

That will be the focus of one of Scott’s workshops/talks at VDS2024 where he’ll share some of the insights and data he’s collected as a researcher and coach for international startups.

To find out more about how you can use the seven Effective Founder traits as a framework to identify great startups or improve your effectiveness as a founder, join us at VDS2024 taking place in Valencia from October 23-24.