The Elveo methodology

TL;DR

  • Investors tend to look for common traits when seeking the best founders: ambition, execution, resilience… yet most startups still fail. The real successes are not random nor extraordinary — they come from precise behaviours that we have been able to identified through psychology.
  • We assessed 700 founders comparing their performance with their psychological profile using Carl Jung’s and Dario Nardi’s researches. By iterations, we identified 100 behavioural data points that make founders successful.
  • Today, with Elveo, we are able to predict the entrepreneurial potential of each founder with 96% accuracy that can drive better investment decisions.

Predicting entrepreneurial potential by analyzing behaviour

Why people have failed at predicting entrepreneurial potential

For decades people have tried to predict entrepreneurial potential with a precise and repeatable approach. They looked at different ways: AI, big data, even astrology and more.

They all failed for one reason: all of these models do not take into account the uniqueness of each individual, added to the market they are addressing, the position they are in, nor whom they are working with.

Some founders have innate capacities for entrepreneurship:

  • Maurice McDonald’s, founder of McDonald’s built the first scalable kitchen by optimising every part of it. Since birth, he was known for his rare ability to optimise and simplify processes; which means that doing this for McDonald’s was natural to him. His personality was his competitive advantage.
  • James Dyson, built 5000 prototypes in 15 years to get his first vacuum cleaner to work. He was extremely patient and resilient and you can’t succeed in hardware startups without those traits.

These successes are not random, nor extraordinary. They come from precise behaviours and if you can detect those, you are able to predict the potential of every founder.

With this in mind, we spent 3 years working with 700+ incredible founders to build the framework that predicts entrepreneurial potential: after thousands of iterations Elveo was born.

Here follows the methodology we are using:

How did behavioural theories evolve

There are 2 types of psychological assessments:

  • Personality theories are the most popular ones for their ease of use and results being simple to understand. This simplicity is made possible because it consists in putting people into boxes without digging too much into their uniqueness. However, this type of analysis doesn’t take people’s evolution over time into account.
  • Behavioural theories do take people’s evolution and ongoing development into consideration by understanding the evolution of one’s brain according to one’s personality.

Researchers that theorised behaviour models

Initial psychological theory: Carl Jung

  • Carl Jung, a psychologist from the 50’s was the first to draw the lines of psychological types. His theory works around 8 cognitive functions that each person uses and develops in a different order.
  • In the late 60’s, Myers Briggs added the extraverted / introverted aspect into Jung’s theory, creating the MBTI, still known today. Since then, Carl Jung’s theory has been at the heart of many common HR models: DiSC, interaction styles, MBTI etc.

Latest evolutions of the theory: Neuroscience

  • Dario Nardi, researcher in neurology at UCLA, confirmed the link between Carl Jung’s 8 cognitive functions and 8 different areas in the brain (study available here): each of these 8 cognitive functions is linked to a particular area of the brain, that is more or less used based on each person’s age and life experiences.

    According to each person’s environment, age and life experience, some zones get developed faster than others. By using an ECG (electrocardiogram) to map the brain’s activity, researchers have been able to determine in which order and at which pace, does each person develop their 8 cognitive functions, given the psychological type they are.

    Dario Nardi’s theory applied to a team of two: https://youtu.be/zxP-4_FjNxg

What do behavioural theories say

These theories state that each of us has 8 behaviours. All behaviours are developed one after the other, at a certain age each, in a pre-defined order according to one’s personality type.

Firstly, you need to know which behavior somebody is currently using, in order to know which one they will be developing next in a couple of years. Since the order of the sequence of all 8 behaviors is known in advance according to each person’s personality type, it is possible to know which behaviours one already has developed and which ones will be next.

That is how an evolutive analysis works.

Elveo

What is our method to assess behaviours

We are using an online questionnaire with 48 questions.

Unlike for a personality test that consists in asking direct questions that one needs to answer honestly, we have prepared a set of indirect questions that speak to the unconscious mind and enables to avoid response bias.

Example: Instead of asking: Are you an ambitious startup founder? We ask: How much do you freely follow your gut instincts and exciting physical impulses as they come up?

This question can seem awkward for some individuals, but very precise and exciting for others. That is how it works: we suggest a precise description of a behaviour to a person’s unconscious mind. If they understand it, they will be pushed by their unconscious mind to answer it, without being influenced by their conscious brain, that is naturally biased.

To validate which word appeals to which kind of behaviour, we have evaluated the effect of each question on people brain “zones”. To do this, we used ECG and a heart rate monitor to understand how the brain reacts for each of these words. This concept was first introduced by Dario Nardi in 2007, and it enhances the questionnaire’s accuracy.

With thousands of iterations we created our questionnaire.

How we linked behaviour and entrepreneurship

We analyzed the psychological results of 700 startup founders and compared them to their individual performance, team dynamics and overall company development. Linking all this data, we were able to identify 100 key behaviours that have an impact on entrepreneurship

Example: We noticed that introverted founders are slower in their execution, but have a more strategic development approach. Therefore, some markets are more adequate to them than to other types of founders.

With these 100 behaviours we were able to identify each founder’s potential according to:

  • the rareness and quality of their psychological profile
  • their complementarity with their other team members
  • the type of product/service they are building
  • their founder-market fit
  • their founder-job fit

The sample we tested the questionnaire on

We analyzed 700 founders over a period of 3 years, including:

  • 84,7% male / 15,2% female
  • 69,3% CEOs / 13% COOs / 14,5% CTOs / 13% CFOs / 3,2% CMOs / 8% Sales
  • Pre-seed 69,3% / Seed 23,62% / Series A 5,5% / Post-Series A 1,6%

For each of these founders, we made predictions on how far each team / founder would go. Today, the accuracy on our predictions is at 96%.

To summarise, our Elveo model is based on:

  1. Carl Jung’s 8 cognitive functions (used in many HR tools)
  2. The analysis and anticipation of people’s behavioural evolution over the years
  3. An assessment that addresses the unconscious mind to get unbiased insights

References that helped us build Elveo

  • The Essentials of MBTI Assessment, 2Ed. Quenk, N. 2009.
  • Gifts Differing: Understanding Personality Type. Myers, I. 1995.
  • Building Blocks of Personality Type: A Guide to Using the Eight-Process Model of Personality Type. Haas, L. & Hunziker, M. 2006.
  • Gifts Differing: Understanding Personality Type. Myers, I. 1995.
  • Personality Type: An Owner’s Manual. Thomson, L. 1998.
  • Personality Types: Jung’s Model of Typology. Sharp, D. 1987.
  • Psychological Types. Jung, C. 1976.
  • Was that Really Me? How Everyday Stress Brings Out Our Hidden Personality. Quenk, N. 2002.
  • Personality Type: An Owner’s Manual. Thomson, L. 1998.
  • Personality Types: Jung’s Model of Typology. Sharp, D. 1987.
  • The Shadows of Type. Bennet, A. 2010.
  • Was that Really Me? How Everyday Stress Brings Out Our Hidden Personality. Quenk, N. 2002.
  • Energies and Patterns in Psychological Type. The reservoir of consciousness. Beebe, J. 2017.