This spring, as college graduates march down the aisles in their caps and gowns, most won’t be dreaming of rising through the ranks of a Fortune 500 company; they’re more likely to be hatching plans to start their own world-changing startups. With The Social Network and Silicon Valley, the average 22-year-old grew up on stories about how young people can make their fortunes by striking out on their own.
So it’s no wonder that 67% of millennial respondents in a recent Bentley University study said their career goals involve launching a business, while only 13% said they aspired to climb the corporate ladder to become a CEO or president. But is it really so easy to start a successful company? (Answer: Not as easy as it looks in the movies–the vast majority of startups fail; only 35% of all companies in the U.S. make it to their 10th birthday.) Most people don’t fully understand what it takes to be an entrepreneur until they take a stab at starting a business of their own. Doing so involves significant risk, including possible losses in startup capital and the opportunity cost of not building more stable careers elsewhere.
This is the dilemma that Clearer Thinking, a nonprofit that develops decision-making tools (like this calculator for figuring out how much your time is worth), has been trying to address. Today, the organization is launching a free test designed to help would-be startup founders understand if they have the skills and personality traits that might help them succeed at launching and running a company. (You can take the test here.)
“Entrepreneurs are responsible for so much innovation in the world, and they end up shaping our lives,” Spencer Greenberg, Clearer Thinking’s founder and an entrepreneur himself, tells Fast Company. “It’s incredibly important that the right people end up starting companies, but it’s also important that the wrong people don’t start companies, because it is disastrous for them. They could take three or five years of their lives not earning a living, burning through their savings, and spending their own money, for a project that ultimately doesn’t go anywhere. This seems like one of the highest-stakes decisions that people could make.”
To gather research for the test, the Clearer Thinking team examined the existing research about what makes a good startup CEO. They found that most academic studies tended to focus on data, such as the age or capacity for risk among startup founders, which was interesting but hard to assimilate in practical ways when starting a business. There were also many advice books from people who had started businesses, but the insights in them tended to be very specific to the author’s own experiences.
Clearer Thinking bolstered this data with their own analysis of serial entrepreneurs. Greenberg points out that it is important that they studied people who were able to replicate their success across multiple companies in multiple industries, since strategies that work in creating a financial tech platform, for instance, might not work when trying to develop a mass consumer product. “We needed to find people from whom we could extract a pattern,” Greenberg explains. “We needed to go beyond their particular experience to see behaviors that worked again and again across all types of companies.”
Among the many entrepreneurs they examined were people like Paul Graham, the cofounder of Viaweb and Y-Combinator, and Peter Thiel, the cofounder of Paypal, Palantir Technologies, and Founders Fund. “We pored through their work and everything we could find that they had said to try to extract underlying principles and patterns,” Greenberg says. “These are people who have figured out a process that they can repeat again and again.”
In the test, users answer a range of questions and are given a report that reveals exactly how suited they are to start a business. If you get a low score, the test will tell you point blank that you’re not entrepreneur material. According to its research, Clearer Thinking has found several characteristics that make it impossible to be a successful entrepreneur. One is how much stamina you have and how much you are able to work. People who launch successful companies have the ability to work at least 70-hour weeks and function on little sleep; people who aren’t able to be very productive beyond the traditional 40-hour workweek likely wouldn’t survive. Another important skill is having enough technical knowledge to be able to recruit talented engineers. “It’s so hard to make it as a startup founder that if you’re missing three of the essential skills, you’re almost certainly dead in the water,” Greenberg says.
In some cases, it is possible to compensate for an area of weakness by picking the right cofounder. If a potential startup founder is qualified in multiple ways but is simply lacking in coding skills, it might make sense to find a cofounder who has a strong technical background. Conversely, if a founder has a brilliant idea and excellent operational skills, but is unable to speak publicly to promote the company, it might be worth finding a charismatic cofounder to be the company’s spokesperson. However, if too many of these qualities are missing, no amount of teamwork will be able to salvage the company, Greenberg says.
One subtle insight that the Clearer Thinking team developed from their research is that successful startup founders have two intertwined characteristics: a relentless pursuit of success and a simultaneous ability to learn from feedback. Entrepreneurs need to believe in their idea and fight for it, even in the face of adversity; at the same time, however, they need to be able to tweak their goals and adapt when new information is made available. Going too far in either direction will inevitably lead to failure: they will either be so inflexible that they drive a business into the ground, or so wishy-washy that they pivot the company at every turn without giving it the opportunity to succeed. “When you pair these two traits, it’s a very powerful and essential combination,” Greenberg says. “Successful founders know they are going to succeed at their business no matter what happens, but they are highly flexible about how they get there and learn at every stage of the process.”
Before the test launched, it was beta-tested on hundreds of subjects to make sure it generated useful and accurate results. And while this test is designed to help people who are interested in starting businesses today, Clearer Thinking is also using the test as a larger data-gathering project. As people take this test and results come in, the organization will use this incoming information to learn more about people in the startup community in order to develop more useful tools.
Over the next few months, Clearer Thinking is hoping to release reports to reveal some of the insights it has discovered. For instance, one question they are hoping to answer is whether people who think they would make good startup founders actually match the mold of a successful entrepreneur, or whether people are unable to accurately assess their own potential. “We’re hoping to gather a really unique data set that goes beyond existing empirical information about startup founders,” Greenberg says.