Similarity Versus Complementarity: Know Thyself

It is a basic fact of life that people feel most comfortable with, and tend to like, others who are similar to themselves in various ways.¹ In fact, a very large body of evidence points to two intriguing conclusions regarding the appeal of similarity: (a) almost any kind of similarity will do—similarity with respect to attitudes and values, demographic factors (e.g., age, gender, occupation, or ethnic background), shared interests—almost anything; and (b) such effects are both general and strong. For example, similarity has been found to influence the outcome of employment interviews and performance ratings: In general, the more similar job applicants are to the people who interview them, the more likely they are to be hired. Correspondingly, the more similar employees are to their managers, the higher the ratings they receive from them.² You can probably guess why similarity is so appealing: When people are alike on various dimensions, they are more comfortable in each other’s presence, feel that they know each other better, and are more confident that they will be able to predict each other’s future reactions and behavior. In short, everything else being equal, we tend to associate with, choose as friends or cofounders, and even marry people who are similar to ourselves in many respects.

Entrepreneurs are definitely no exception to this similarity-leads-to-liking rule. In fact, most tend to select people whose background, training, and experience is highly similar to their own. This is far from surprising: People from similar backgrounds “speak the same language”—they can converse more readily and smoothly than people from very different backgrounds; and often, they already know one another because they have attended the same schools or worked for the same companies. The overall result is that many new ventures are started by teams of entrepreneurs from the same fields or occupations: Engineers tend to work with engineers, entrepreneurs with a marketing or sales background tend to work with others from these fields, scientists tend to work with other scientists, and so on.

In one sense, this is an important “plus”: As we will note in a later section, effective communication is a key ingredient in good working relations, so the fact that birds of a feather tend to flock together in starting new ventures offers obvious advantages. On the debit side of the ledger, however, the tendency for entrepreneurs to choose cofounders whose background and training is highly similar to their own has several serious drawbacks. The most important of these centers around redundancy: The more similar people are, the greater the degree to which their knowledge, training, skills, and aptitudes overlap. For example, consider a group of engineers who start a company to develop a new product. All have technical expertise, and this is extremely useful in terms of designing a product that actually works. But because they are all engineers, they have little knowledge about marketing, legal matters, or regulations concerning employees’ health and safety. Further, they might know very little about writing an effective business plan, which is often crucial for obtaining required financial resources and determining how to operate a company effectively. Moreover, although all of them have excellent quantitative skills, they are not proficient at preparing written documents or “selling” their ideas; as is often the case with people from a technical or scientific background, they are better with numbers than words. Further, since all were trained in the same field (and might even have studied at the same school), they have overlapping social networks: They tend to know the same people and hence have a limited range of contacts from whom they can obtain needed resources—information, financial support, and so on.

By now the main point should be clear: What this particular team of entrepreneurs—or any other team—needs for success is a very wide range of information, skills, aptitudes, and abilities. And this is less likely to be present when all members of the founding team are highly similar to one another in important ways. Ideally, what one team member lacks, one or more others can provide because the team can pool its knowledge and expertise. For entrepreneurs who are assembling their founding teams, rule number one is this: Do not yield to the temptation to work solely with people whose background, training, and experience is highly similar to your own. Doing so will be easy and pleasant in many ways, but it will not provide the rich foundation of human resources that the new venture needs.

Self-Assessment: Knowing What You Have Helps to Determine What You Need

Now that we have clarified the dangers associated with the potential downside of choosing to work exclusively with cofounders similar to oneself, we will take a step back and briefly examine a related issue: the importance of an accurate self-assessment in this process. As we noted earlier, it is difficult, if not impossible, to know what you need from prospective cofounders without first understanding what you, yourself, bring to the table. For this reason, a crucial initial step for all entrepreneurs—one that they should perform before beginning the task of assembling required human resources (cofounders or additional employees)—is a careful self-assessment, an inventory of the knowledge, experience, training, and motives that they themselves possess and can contribute to the new venture.

This is far from a simple task: The dictum “know thyself” sounds straightforward, but in reality, it is exceedingly difficult to put into actual practice. There are two major reasons why this is so. First, we are often unaware of at least some of the factors that affect our behavior. The powerful effect of similarity, described above, is a prime example of this fact. Often, people like others, including prospective cofounders, because of subtle similarities—they are alike in various ways but are not fully aware of these similarities. In short, they know that they like each other and find it pleasant to work together but they do not really know why! To the extent that we are unaware of the factors that influence our behavior and reactions, the task of knowing ourselves becomes complex.

Second, and perhaps more important, we do not gain knowledge of our abilities, or even attitudes, directly through self-reflection. Rather, we gradually gain insight into these important aspects of ourselves through our relations with others. Only other people—and their reactions to us—can tell us how intelligent, energetic, charming, or well-informed about various topics we are. There are no direct physical measures of these and many other attributes, so we have to gather them, gradually, from what other people tell us, directly or indirectly.

Although the task of acquiring clear self-knowledge is a complex one, we can perform it quite well—if we take the trouble to do so. There are concrete steps you, as a prospective entrepreneur, can take to develop an accurate view of your own human capital—the resources you bring to any new venture you choose to launch. You can complete several key portions of this personal inventory yourself, but for others, you will need the help of people who know you well—and hence, can provide insights you cannot readily acquire alone. Remember that the reason for engaging in this activity is to understand what you already have—your own human capital—so that you can determine what you need from other individuals, including potential cofounders.

Knowledge Base. This is a good place to begin because it is something you can do alone. Ask yourself the following questions: “What do I know?” “What information and knowledge do I bring to the new venture?” Here, your education and experience are directly relevant and can suggest what you know and what you do not know and therefore need to acquire from others, including potential cofounders.

Specific Skills. Quite apart from your knowledge base are specific skills—proficiencies that enable you to perform certain tasks well. Are you very good with numbers? Adept at making oral presentations? Good with people? Everyone has a unique set of skills, and you should try to understand—and inventory—yours as a preliminary step in developing your new venture.

Motives. This is not only more difficult but also quite important. Why do you want to start a new venture? Because you like a challenge? Because you fervently believe in your new product? To earn a huge fortune? To escape from corporate life and become self-employed? You can hold all of these motives at the same time, but it is useful to ponder their relative importance to you because if your personal motives do not match those of potential cofounders, you might be laying the foundation for serious future problems.

Commitment. This is related to motivation but not identical to it. Commitment refers to the desire to see things through (i.e., to continue even in the face of adversity) and to reach your personal goals relating to the new venture (e.g., those listed under motives). Recent findings indicate that this is an important factor in new venture success.³

Similarity or Complementarity: A Final Word

So which should you seek in prospective team members, similarity or complementarity? The answer depends largely on the dimensions you are considering. Complementarity is very important with respect to knowledge, skills, and experience. In order to succeed, new ventures must acquire a rich and useful inventory of human resources. Choosing cofounders whose knowledge and experience complement your own can be very useful in attaining this important goal. On the other hand, similarity, too, offers benefits: It enhances ease of communication and facilitates good personal relationships. And similarity with respect to motives is very important: If the cofounders of a new venture have sharply contrasting motives or goals, conflict between them is almost certain to develop.

Overall, then, we suggest a balanced approach: Focus primarily on complementarity with respect to knowledge, skills, and experience, but bring similarity into the picture with respect to motives.⁴ Doing so will provide good symmetry between acquiring the broad range of human resources that new ventures require and establishing a good working environment in which all members of the founding team can work hard to convert their vision into reality.

Good luck with your personal inventory—and with the task of choosing excellent cofounders. And as you proceed, keep the words of Lao Tzu, a philosopher of ancient China, firmly in mind: “He who knows others is clever; He who knows himself has discernment.”