Startup Founders Are at a Disadvantage When Applying for Jobs

Companies say they’re looking for employees who are entrepreneurial and innovative, which would make you think that job applicants who have launched startups—especially successful ones—would have an advantage over those with more conventional résumés.

But startup founders are actually less likely than non-founders to be called in for job interviews, according to a new study by Tristan Botelho, assistant professor of organizational behavior at Yale SOM. And, surprisingly, successful founders look even less desirable to recruiters than unsuccessful ones.

Botelho was inspired to create the study by his students, who often ask about job prospects for entrepreneurs. Students would ask him questions like, “What happens to me if things don’t work out? Am I stunting my career, or am I helping it? Do employers value this kind of experience?” he remembers. “And I would tell them that I wasn’t sure.”

To find out, Botehlo and Yale SOM PhD student Melody Chang applied to 2,400 entry-level software engineering jobs in six metro areas around the U.S. using fictitious résumés. Some of the profiles were for a successful startup founder, some for a failed startup founder, and some for a candidate who had no founder experience. Some of the fictitious candidates appeared to be men and some women, but education, interests, and skills were identical in each of the three categories.

Of the fictitious candidates with no founder experience, 24% received a request for an interview, while 13.6% of the candidates with founder experience were asked to interview. And successful startup founders had the worst results, with an interview rate of just 10.9%, compared to 16.2% for failed startup founders.

Wondering if recruiters thought startup founders were simply too qualified for entry-level jobs, Botelho sent out another 400 applications to mid-level jobs, using profiles for a male successful founder and a male non-founder profile. But again the founder application got fewer responses, with a callback rate of 6.3%, compared to 13.8% for the non-founder.

What explains these results? Entrepreneurs are adaptable, innovative and persistent. They know how to work independently and communicate and collaborate with people outside of their areas of expertise. Those should all be great selling points for hiring managers, right?

“What may be surprising about the results was that the successful entrepreneur was preferred the least,” Botelho says. “To gain further insights we interviewed technical recruiters. They were really scared that a successful entrepreneur will leave after a few months, and they had real-world stories about successful entrepreneurs leaving and taking people with them.”

Interviews with 20 recruiting professionals shed a lot of light on the study’s results. As Botelho theorized, many of them valued the entrepreneurial mindset and breadth of experience founders bring to the table. But many were concerned that such candidates were too independent, not committed to the company, and unlikely to fit in a traditional workplace structure. “Founders look like aliens to people,” one recruiter said.

Recruiters are judged by the quality and retention of the candidates they hire, and founders look like flight risks. It’s expensive to hire and train for technical roles, so companies want reassurance that a new hire will stick around. Recruiters worry that founders, especially successful ones, will get bored and look for the next exciting project, potentially taking coworkers with them. In addition, recruiters were less concerned about capabilities and skills of a failed founder. They acknowledged that most startups fail and value what a candidate learns from such failure. Taken together, these conversations confirmed that recruiters’ concerns related to fit and commitment outweigh the benefits of acquiring entrepreneurial traits and broader skillsets.

What does this mean for entrepreneurs entering the traditional workforce? Research has shown that most founders will join the labor market after founding their venture. When applying for jobs, “they need to express their desire to fit in and remain committed to the firm,” Botelho says. “They need to show how that experience has set them up for success at that company.” Networking with people who work at the organization to have an advocate for your candidacy is also a good move. Many aspiring founders fear that they would be stigmatized if their venture fails, but, from a labor market strategy perspective, having a failed venture experience could be leveraged as a positive signal.

And what does it mean for the companies who say they want more entrepreneurial employees? The study points to a disconnect between firms’ claims of wanting to be innovative and their hiring actions. The human capital strategy from the upper management has to be clearly communicated to recruiters and hiring managers, acknowledging that hiring former founders doesn’t come without risks. “But if they find the right person through this process, it will create a lot of value for the firm,” Botelho says. “Honest conversations have to happen across all levels of the organization.”