Founder’s EQ is key to startup success

Dr. Winnie Tang October 07, 2024 22:04

People today are much smarter than people of previous generations. According to a study of 300,000 people in 72 countries, the intelligence quotient (IQ) rose by an average of 2.2 percentage points per decade in the 72 years from 1948 to 2020. However, growth varies across regions and age groups, with significant increases among young people aged 13 to 19 and those in the BRIC countries (China, India, Brazil and Russia).

United States scholar James Flynn pointed out that in the past, it took millions of years for the brain to evolve, but in recent times, it has made rapid progress all because of nutrition, education, improved standards of living and extensive information which have stimulated and inspired the brain.

Evaluating IQ levels is based on logical reasoning, problem-solving capabilities, and language skills, and its value in academic and technical applications is unquestionable. However, with the rise of artificial intelligence, human’s unique qualities of social skills, empathy, and emotional quotient (EQ) that regulate emotions have become even more important.

If a good IQ is like the key to open the door, a good EQ can keep the door open, and the combination of the two creates a synergistic effect.

People with high EQ have three characteristics:
1. Are more likely to collaborate with others and build good interpersonal relationships and support networks;
2. Able to inspire and motivate others, understand others’ emotions, as well as create environments where individuals thrive;
3. Can show resilience in challenging times, and also have an open attitude when facing different points of view, so they have a higher ability to resolve conflicts.

High EQ not only helps us move forward in life, but also helps us build successful startups. Research published earlier by U.S. Colombia Business School found that the personality of startup founders is closely associated with the success or failure of a company. Founders who are amiable and emotionally stable are more likely to raise capital and perform well at all stages of venture capital investment.

This finding helps investors predict the prospects of startups during the earliest stages when little objective performance data is available and success is most unpredictable.

Based on the social media posts of 10,500 founders, the researchers speculated about their future based on five personality traits: openness, conscientiousness, extraversion, agreeableness and neuroticism. They then combined these five traits with data from Crunchbase, a company providing information about businesses.

The study found that the two traits that have the greatest impact on entrepreneurial success are conscientiousness and neuroticism.

In the early stages, conscientious and diligent entrepreneurs will attend to all the details thoroughly to make sure the company can perform as expected. However, this cautious personality lacks flexibility, which hinders the future expansion of the business and is not conducive to a successful exit.

Neuroticism or emotional instability hurts an entrepreneur at every stage, which can easily discourage investors and increase the chance of making wrong business decisions. In other words, emotional stability, self-confidence and resilience in overcoming obstacles among startup founders are the most important personalities.

Nobody is perfect, which is why many savvy startup founders prefer to work with people with completely different personalities and strengths to complement each other to ensure the company can grow steadily and go far.

Dr. Winnie Tang

Adjunct Professor, School of Computing and Data Science;Department of Geography, Faculty of Social Sciences, The University of Hong Kong