4 questions every founder should ask themselves

A few years ago we asked 100 startup founders 4 questions about how they manage their companies:

How often do you…

“…develop shared goals in your team?”
“…measure employee performance using 360 reviews, interviews, or one-on-ones?”
“…provide your employees with direct feedback about their performance?”
“…set clear expectation around project outcomes and project scope?”

Founders could respond “never,” “yearly,” “monthly,” “weekly,” or “daily.”

The average founder answered monthly, but plenty of founders said they “never” developed shared goals or gave employees feedback.

Some founders, however, were active managers: they “checked in” with their employees least a few times a month.

Our data showed that active managers were more likely to run larger and more successful startups themselves, irrespective of their education or experience.

But this was just a correlation. So we asked ourselves, could getting advice about people management from active managers lead startups to perform better?

We conducted a randomized control trial where founders gave advice to one of their peers about how to grow their companies. For two years, we tracked their performance.

We found some surprising results.

Founders who received advice from active managers (e.g., those who instituted regular meetings, set goals consistently, and provided frequent feedback) had vastly better outcomes over the next two years: they were 28% larger and 10% less likely to fail than those who got advice from passive founders.

Screen Shot 2018-07-01 at 7.24.26 AM

Advice from active managers was especially useful for founders who lacked formal management training (e.g., an MBA) or were not part of an accelerator already.

Bottom line: If you are looking to grow your startup, get advice from people who actively lead their teams.

If you are interested in the nitty gritty, check out our full article here:

[https://papers.ssrn.com/sol3/papers.cfm?abstract\_id=2964249]

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