For Founders, Preparation Trumps Passion

Marie Assénat Many would-be entrepreneurs see their passion as the ticket to success. For example, on crowdfunding sites they vie to outdo one another in emphasizing their enthusiasm for their projects. And when it comes to fundraising, that approach can work: Passion tends to appeal to nonprofessional investors eager to fund the next great idea. But it’s a different story when it comes to long-term success. New research on hundreds of founders reveals that passion has nothing to do with results a few years out. What matters is preparedness—whether founders have fully fleshed out their ideas, gained a deep understanding of their markets, and created plans for overcoming obstacles and exploiting contingencies. A team led by Utpal M. Dholakia, of Rice University, conducted a series of studies (as yet unpublished) of projects entered in the largest university-level student entrepreneurship competition in the United States (held at Rice), in fields ranging from biotech and life sciences to consumer products and retail. At the outset the entrants cited passion as a key factor when predicting their success, and looking back after three years, the small fraction whose ventures were doing well cited that factor again. But the researchers’ analysis showed that in fact the entrepreneurs’ passion played no role in their projects’ fates. It was preparedness that enabled certain ventures to fly. The research team also studied 522 projects posted on Indiegogo, the largest global fundraising site. Founders’ videos and written statements were analyzed and coded for expressions of passion, such as “very enthusiastic,” “devoted,” and “dedicated” (along with, of course, “passion” itself), and for evidence of preparedness, such as reports of having found the resources needed to make the concept work. The findings showed that more-passionate entrepreneurs were about three times as likely as others to reach their funding goals, while evident preparedness had no effect. A further study by the team showed that professional investors have a very different perspective: They typically discount founders’ passion and pay the most attention to preparedness. But given that entrepreneurs are increasingly bypassing professional investors and appealing directly to the crowd, and that the crowd loves a passionate founder, what’s an entrepreneur to do? The researchers aren’t suggesting that founders downplay their passion—after all, a project probably won’t attract much funding unless it’s put forward with enthusiasm. But passion often becomes a negative if it’s given too much emphasis, either in the entrepreneurs’ minds or in their communications with potential funders. Instead, founders should balance their expressions of enthusiasm with clear indications of preparedness—signs that they know how to find and hire the right people and take care of the other details that will be critical to success. Both entrepreneurs and their audiences should be aware that without preparedness, passion is worth little. About the Research: Based on a series of studies by Utpal M. Dholakia, Michal Herzenstein, and Scott Sonenshein

For Founders, Preparation Trumps Passion

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