Startups face many existential risks, from their finances to their technologies. But there is one risk which some research indicates is the biggest of all: 55% of startups fail because of people problems, according to researchers at Harvard, Stanford and the University of Chicago. What do you do when the team argues over the direction of the company, how cash is spent or how much equity is fair? How do you fire a loyal friend who’s not up to par with industry expertise? How do you get your team to work as hard as you do?
We led an effort at Google for Startups to assess the leadership capabilities of more than 900 startup founders, CEOs and CTOs across more than 40 countries to build one of the deepest and broadest sets of data on founder capabilities ever assembled. Our goal: put the most effective entrepreneurs under a microscope to understand their best leadership strategies.
We’ve summarized our findings in The Effective Founders Project report, which contains detailed analysis, references from the most robust research done on these people issues and, most importantly, practical tips. Here are our seven key findings :
- Treat people like volunteers.
Whether they’re fresh graduates or experienced, world-class talent, the best people want to do great work for a challenging, meaningful mission. Inspiring your team with purpose gives you a chance to hire and retain the best talent; for example, many talented engineers want a unique challenge, rather than another old project that just wants to crowd out the market. - Protect the team from distractions.
While CEOs are often seen as distracted by new ideas, the best ones create focus and clarity on what really matters. But we understand this is difficult: when a startup is finding its way, everything can feel like an opportunity, making it hard to keep the team focused. Set clear goals and priorities to build momentum for your team. This in turn fuels better performance and morale. It’s also important to create some kind of closure ritual for when great ideas go to the graveyard. - Minimize unnecessary micromanagement.
While our data shows micromanaging can be helpful in certain situations, the most effective leaders aim to delegate work in order to grow both themselves and their businesses. Our data suggests micromanaging can be a major derailer, especially for CEOs. Recognize which teammates need to be closely supervised, and which you can empower to make good decisions and operate independently. - Invite disagreement.
Our data suggests founders consistently undervalue inviting opinions that are different from their own, while cofounders and teammates rate it highly. Yet some studies have shown that though it might not always feel that way, disagreement among diverse teams actually leads to more effective outcomes. In turn, that could mean more innovative and inclusive products. - Preserve interpersonal equity.
Violated expectations are the main source of conflict among cofounders. Our data suggests many founders keep track of their cofounder’s duties, but unknowingly define expectations for themselves more minimally. The most effective cofounders openly discuss and document what they expect from each other and constantly check for what we call “interpersonal equity.” Do both of you feel expectations are fair? Is what you give and receive in return fair compared to your cofounders? - Keep pace with expertise.
While you can’t be an expert in everything, leaders need to know enough about each role to hire the right people and help develop their team. Ninety-three percent of the most effective founders have the technical expertise to effectively manage the work, and make time to stay ahead of their industry. - Overcome discouragement.
While most people would expect self-confidence to grow with time, our data suggests the most effective founders are not nearly as confident as the least effective founders are. This observation aligns with what is known as the Dunning-Kruger effect, where overconfidence at the start of the journey helps founders get started, but discouragement and self-doubt set in soon after. That in turn can give you the inner challenge you need to reach further. For some, that self-doubt comes as a setback. If that’s you, remember it is likely a signal of growth, and not of inevitable failure. Seek out a support system, focus on the positive, and know how to ask for help when they need it.
Head to startup.google.com to download the full Effective Founders Project report—and avoid the pitfalls of the most common people problems.