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90% of Startups Fail because of Team Issues
Admittedly, we recycled the headline from a DDVC post earlier this year about how to use social media posts to predict founder personality trade. But it equally fits today’s episode as we dive into team dynamics in founding teams.
Those individuals roll up their sleeves and take the company from 0 to 1, tackling the challenges of building something entirely new. But as a startup evolves, so does the team.
Roles and responsibilities shift, and in many cases, even the people sitting around the table may change. According to research and recent studies, turnover in founding teams is more common than you might expect, and knowing how to navigate these changes is key to long-term success, and making sure you’re one of the 10% of survivors.
Founder departures aren’t always as voluntary as they seem. Research done at the Stanford Graduate Business School (2022) assigns “Push-Out Scores” to CEOs leaving a startup. 0 = Very unlikely they were pushed out, 10 = highly likely they were.
Alignment is critical. Founders must share a clear vision, mission, and set of priorities to stay on track. While disagreements about strategy or tasks can spark innovation, interpersonal conflicts are far more damaging—they create rifts that can erode trust and stall progress. When unresolved, these tensions can quietly undermine the partnership, eventually spilling over into the broader organization.
The culture of a company is often a reflection of its founders. Positive dynamics at the top foster collaboration, creativity, and open communication throughout the team. But poor dynamics can have the opposite effect, seeding dysfunction and even toxicity.
This matters not just internally but externally, too—investors carefully evaluate the cohesion and trust within founding teams. At the earliest stages, those dynamics are among the most reliable indicators of a startup’s potential.
A well-cited study by Bernstein et al. (2017) found that including information about the founding team in emails to investors increases click rates by 13% - one of the strongest factors in the study.
Solo founders—you don’t have to sit this one out. While we focus on teams of 2 or more founders in this episode, many of the learnings translate to the relationship with your first hires (e.g., a founding engineer) too.
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