Many contend that entrepreneurs need to have passion, a inner zest, drive, in order to succeed. According to Cardon, theoretical models support the notion that passion is a motivational driver for effort and performance in entrepreneurial pursuits. New research even indicates that passion can be a valid predictor of business creation as well as an outcome of entrepreneurial behavior.
But when passion borders on the line of emotional attachment or fixation to a predefined business idea or model, nascent entrepreneurs could be walking straight towards trouble. That said, a deeper understanding of motivations and behavioral factors at play of founding teams could be relevant to venture capital firms and angel investors, hedging bets on fledgling startups. It could also be highly applicable for early-stage teams lacking self-awareness of their attachment, leading to wasted time and effort.
Types of Entrepreneurs, Types of Failures & Successes
If we bucket entrepreneurs into 3 main categories according to underlying motivations for launching their business, we can gather more insight into reasons behind key decisions. Over time, such “inflection points” could likely affect future growth rates of the company:
First, entrepreneurs with the desire to solve a pressing market need or take advantage of an existing market opportunity.
Second, entrepreneurs with desire to create a company yielding high and quick returns.
Third, entrepreneurs seeking to create a sustainable job for themselves or to be perceived as an entrepreneur/founder.
In essence, we see the 3 types of entrepreneurs motivated by: (1) market opportunity or unmet need, (2) money, and (3) position and status.
Founders motivated by an observed market opportunity or unmet need may strive to create a value-add business, focusing on the social impact of their business. Founders motivated by money may be apt to iterate on their business model or product/service in order to reach paying customers, thereby aligning well to investors seeking quick and high returns.
The Danger of Founding Ego
However, founders motivated by status and job security may likely be foremost focused on themselves. This may cause an emotional attachment to an existing idea or model that hinges on their status. They may be so fixated on how they want to be perceived by the outside world, that they could very well be operating their company into the ground.
In these cases, founders may fall victim to myopic and harmful behavior patterns. Their decision-making process may be correlated to their fear of losing their perceived status. Such decisions can include building ventures not enough customers will buy, refusing to raise capital in fear of relinquishing control, or disregarding constructive feedback that could lead to the next iteration of the business idea or model.
Moreover, if motivations suggest reason for an emotional tie, founders may attribute highs and lows of their company as a personal reflection of themselves. This mirroring of company to self could lead to an unhealthy questioning self-worth, sentiments of discouragement, and lack of desire to continue to persevere in the face of adversity. As a result, this may be a large contributing factor to the observed high failure and drop-off rates in nascent startups. Particularly in cultures where “failure” is not an option or where paradigms of successful entrepreneurs are lacking, such patterns may arise more easily.
Founders may very well have the passion needed to build and grow new ventures, but the real question is what is their originating motivation for doing so? When an unyielding obsession to a business idea, model, growth plan supersedes said passion, failure could result as corollary and harmful effect.