Alistair Shepherd: the algorithm predicting startup success
Harvard Business School senior lecturer Shikhar Gosh once said that venture capitalists, “bury their dead very quietly.”
The comments came after Gosh’s research pointed toward a failure rate amongst venture-backed startups of around 75%. That figure dwarfs prior estimates of national bodies globally, whose research suggested a failure rate of between 20%-30%.
It paints a picture of the relentless nature of modern startup culture. And Ghosh estimates that 30%-40% of high potential startups are forced to liquidate their assets.
But what’s the reason for such an astronomically high rate of failure?
“Team dynamics,” explains Alistair Shepherd, the founder and CEO of social analytics enterprise software, Saberr.
“Looking at all the research it’s crystal clear [startups’ failures] are down to the people.”
Research has shown that 65% of failed venture-backed businesses can be attributed to the dynamics “between the founders, or dynamics between the founders and early employees.”
Inspired, Shepherd wanted to find out whether or not it was possible to predict a good relationship,“because that’s all we are trying to do here,” he explains.
“I was already familiar with classic psychology and personality profiling. Tests like Myers Briggs, Hogan and Belbin. But the problem is, you can’t predict the success of a company based on a personality test.”
It was this realization that would set Shepherd to work on his team dynamics algorithm. One that would benchmark traits typical psychometric tests couldn’t.
Attributes like execution, strategy, leadership and idea generation are all brought into consideration.
This episode of the Hot Topics podcast will focus on how businesses can harness the power of team dynamics to improve efficiency and reduce their chances of failure.
To learn about the team dynamics algorithm helping make businesses successful, see above for this week’s episode of the Hot Topics podcast.