research

Most startups fail within 2-5 years.¹

Multiple analyses depict that people problems (issues rooted in the founders or team) are a leading cause of startup failure. Noam Wasserman, a professor at Harvard Business School, found that 65% of high-potential startups fail due to conflict among co-founders.²

Harvard Business Review likewise reported that around two-thirds of new ventures falter because of “people issues,” especially problems with the founding team or senior executives.³ These issues encompass misaligned vision, ego clashes, poor hiring decisions, and dysfunctional team collaboration at the leadership level.

Studies of failed startups show just how prevalent founder-related failures are. An analysis of 101 startup post-mortems by CB Insights found that 23% of failed startups cited having the “wrong team” as a primary reason for their collapse.⁴ Similar to Wasserman’s research, co-founder conflict and misalignment also consistently appeared among the top reasons for startup implode.

These failures can be seen as largely “predictable, preventable mistakes” stemming from poor human decisions, rather than just bad luck or external factors.¹

This research implies that strengthening founder teamwork, self-awareness, and alignment is often the difference between startup success and premature and unnecessary failure. Alignment is repeatedly cited as a key pillar of long-term success, with mission, vision, and values forming the core.⁵ Developing these requires significant pre-work, rather than being left to chance.

FoundersGlobe. (2024) Why most startups fail: 10 brutal but preventable reasons. Available at: https://foundersglobe.com/why-most-startups-fail-10-brutal-but-preventable-reasons/
Conlan, B. (2021) Harvard Business School professor says 65% of startups fail. Entrepreneur. Available at: https://www.entrepreneur.com/leadership/harvard-business-school-professor-says-65-of-startups-fail/370367
Gonzalez, M., Yellin, J. (2024) 3 management myths that derail startups. Harvard Business Review. Available at: https://hbr.org/2024/05/3-management-myths-that-derail-startups
Schwimmer, J. (2024) The ego trap: how founders can fail their startup. Available at: https://rainesinternational.com/the-ego-trap-how-founders-can-fail-their-startup/
Khadem, L., Khaden, R. (2020) The alignment factor: the map that will help you sustain. Available at: https://www.entrepreneur.com/growing-a-business/the-alignment-factor-the-map-that-will-help-you-sustain/359508

Grupe, D.W. and Nitschke, J.B. (2013) Uncertainty and anticipation in anxiety: an integrated neurobiological and psychological perspective. Nature Reviews Neuroscience, 14(7), pp.488–501. doi:10.1038/nrn3524
Arnsten, A.F.T. (2009) Stress signalling pathways that impair prefrontal cortex structure and function. Nature Reviews Neuroscience, 10(6), pp.410–422. doi:10.1038/nrn2648
Bennett, D., Davidson, G., Walton, M. and Hsu, M. (2016) The impact of uncertainty on human stress responses. Nature Communications, 7, 10996. doi:10.1038/ncomms10996

Navigating the world of startups is extremely uncertain and stressful for founders, and the brain is not naturally comfortable with uncertainty.

Research into neuroscience and psychology suggest that the human brain is fundamentally wired to seek safety, predictability, and comfort, while perceiving the unknown as a threat¹. Our brains will often prefer a known negative outcome over an ambiguous one in a phenomenon called uncertainty aversion, because “the anticipation of an unpredictable threat” keeps the nervous system in a stressful state of high alert¹.

Why do our brains do this?

In evolutionary contexts it made sense as avoiding uncertain dangers increased survival. When faced with instability or the “unknown,” the amygdala (the brain’s fear centre) floods the brain with stress signals, while the prefrontal cortex (responsible for rational planning and decision-making) pulls back and gets suppressed². This means that the more uncertain things feel, the harder it becomes to remain calm and make thoughtful decisions, because the brain is biologically primed to escape discomfort rather than lean into it.

Modern neuroscience confirms this. A landmark experiment published in Nature Communications found that people’s stress responses peak under uncertainty; participants experienced higher stress waiting to find out if they might receive an electric shock than when facing a guaranteed bad outcome³.

This can explain why uncertainty so powerfully hijacks behaviour: it sparks fight-or-flight reactions that bias people toward fast, emotional choices instead of strategic ones¹. For entrepreneurs, this bias toward comfort and predictability can translate into classic self-sabotage, such as: prematurely scaling, making ego-driven hires, or abandoning their mission too soon.

Adler, J.M., Lodi-Smith, J., Philippe, F.L. and Houle, I. (2016) The incremental validity of narrative identity in predicting well-being: A review of the field and recommendations for the future. Personality and Social Psychology Review, 20(2), pp.142–175. doi:10.1177/1088868315585068
American Psychological Association. (2014) The road to resilience. Available at: https://www.apa.org/topics/resilience
Campbell, J.D. et al. (1996) Self-concept clarity: Measurement, personality correlates, and cultural boundaries. Journal of Personality and Social Psychology, 70(1), pp.141–156. doi:10.1037/0022-3514.70.1.141
Shamir, B. and Eilam, G. (2005) “What’s your story?” A life-stories approach to authentic leadership development. The Leadership Quarterly, 16(3), pp.395–417. doi:10.1016/j.leaqua.2005.03.005

Founders operate under extreme pressure, and research shows that internal alignment (i.e. a clear sense of purpose, identity, and narrative coherence) can make the difference between reactive leadership and resilient leadership.

Studies on narrative identity suggest that people who construct coherent life stories report higher well-being, healthier identity functioning, and greater resilience¹. In a business context, this means a founder with a strong inner ‘north star’ is less likely to be derailed by external pressures, because their decisions align with a stable sense of self and mission.

Resilience itself is strongly tied to leadership effectiveness.

The American Psychological Association notes that resilient individuals adapt better to stress, make stronger decisions, and sustain higher performance under pressure². Likewise, research on ‘self-concept clarity’ shows that leaders who are confident and clear about who they are experience lower stress and make more decisive choices³. Narrative identity plays a role here, too: leaders who embrace and draw meaning from their own life stories demonstrate more authenticity, adaptability, and emotional stability, even under crisis conditions⁴.

For founders, this translates into steadier decision-making, calmer responses to setbacks, and the ability to keep teams grounded when turbulence hits. And so possessing strong internal alignment provides an invaluable foundation that can be as critical to startup success as business strategy.