Morgan Stanley
  • Ideas
  • Aug 22, 2018

Follow the Leader

In the unpredictable world of startups, a steady hand at the wheel can make a significant difference.

“Leadership is not about a title or a designation. It's about impact, influence and inspiration. Impact involves getting results, influence is about spreading the passion you have for your work, and you have to inspire team-mates and customers.” 
– Robin S. Sharma

What are the elements that make a startup successful?

Does it come down to the perseverance of founders? Is it all about a truly great idea? Is it reliant on teamwork? How big a part is played by clever marketing and connections? Can funding, or lack of it, make or break a startup dream?

The answer, of course, is that success doesn’t come from one aspect in isolation. However, it’s hard to underestimate the influence of a competent leader.

If entrepreneurial success hinges on a founder’s mastery of psychology, it stands to reason that a founder’s flawed ego is often the root cause of startup failure.

- Tom Eisenmann. ‘Ego and startup failure.’ Forbes. 2013

According to an article on startup psychology published by Forbesi, steady-handed stewardship of a primary founder is an important determinant of whether a new business will falter or fail.

A startup’s original founder will usually face the important task of selecting a team, sans the benefit of professional HR guidance and experience. Once that team is in place, they need to follow up by keeping the group inspired and focussed.

If you’re starting a business and choosing co-founders and making your first hires, you’re looking at one of the most intense relationships you’re going to have in your life. It’s similar to marriage.ii

- Professor Lindred Greer, Stanford Graduate School of Business.

The dynamics of a nascent business will tend to intensify personal interactions, particularly within the small team environments that characterise most startups. In a team of 10 or less, interpersonal conflicts can be disastrous, as can the influence of team members who are out of alignment with the company’s mission or values.

Team members ensconced in the buffered walls of large corporations can make small errors and fly smoothly under the radar. They may even incur small losses for a business without attracting the glare of any managerial spotlight. This is not the case for startup team members who coexist in a small group with high visibility – a situation where relatively small setbacks or errors can be magnified.

Adding further stress can be the degree of personal investment a founder has tied up in their business venture. A boss whose life savings are invested in a startup could find it more difficult to mitigate their emotions in the face of unforeseen obstacles or delays. There will often be a timeline for the venture’s feasibility that ticks away constantly in the back of their mind. In simple terms, there is more at risk, the stakes are higher, and each team member is under more pressure as a result. In such an environment, a leader with a cool head and the ability to navigate stress is essential.


  • Have a clear idea of the type of culture you want to create. Draft a list of core values and a concise, but strong, mission statement. This will ensure the founding team members have a shared vision – including aligned values and aims.

  • Separate the personal from the professional. You may have a personal interest in the startup succeeding, but you need to approach each situation from a business mindset and use critical thinking. Make decisions using your head, not your heart.

  • Mitigate stress. Have an outlet for stress – whether exercise or meditation. Find what works for you, and make time for self-care. Burn-out or physical ailments connected to fatigue or stress will impact your ability to operate at your peak, and business outcomes will suffer.

  • Be deliberate about the type of team you want and need, and plan ahead. Create a ‘dream team’ list that describes your ideal team members. This will bring clarity to the likely composition of the team you’re looking for and the mix of traits and skillsets they’ll need to embody.

  • Hire wisely. An early-stage team can be strongly impacted by an unsuitable new addition. Without HR support the decision to let someone go can also be complex and time consuming. Then comes the cost of finding and training a new recruit.

  • Find people who are excited by the company’s vision/mission statement. Passion goes a long way in the initial stages of a startup venture.

  • When adding to the team, don’t limit yourself to certain personality types. Different personalities add value by introducing new perspectives and alternate ways of thinking. Dissimilar personality types can often complement each other and bring balance to a team’s overall dynamic.

i‘Ego and startup failure.’ Tom Eisenmann. Forbes. 2013.

ii‘How to build a better startup team.’ Steve Hawk. Stanford Graduate School of Business. December 2016.