fitness, fulfilment and foresight · fitness, fulfilment and foresight research into the wellbeing...

Fitness, fulfilment and foresightResearch into the wellbeing of startup founders and entrepreneurs

KPMG.com/au/highgrowthventures

http://KPMG.com/au/highgrowthventures

There are few pursuits in which individual leadership plays as critical a role as building a high-growth venture. A founder’s vision, product development skills and ability to sell will literally make or break their startup.

Put simply: a high-performance growth company can’t exist without high-performance founders and leaders.

Startup

Research

FounderOver the past 5 years there have been significant efforts from many sides: governments, universities, investors and corporations, to fast-track Australia’s startup eco-system. The results have been positive, but it is not an overstep to say that, despite these efforts we are still not doing enough to help our startups to scale successfully.

A large part of this is down to the fact that, while our ecosystem has become excellent at teaching founders the hard skills required to build a tech startup, we have not placed enough emphasis on soft skills. Garry Vistonay of Right Click Capital notes that many founders struggle with the soft skills required to effectively run and build their business.

He also points to a worrying statistic from Harvard Business School Professor Noam Wasserman, the author of The Founders Dilemmas: 65 percent of startups that fail do so due to ineffective management from the founders, not product or marketing problems.

This research is born out of two key hypotheses. Firstly, a founder’s ability to lead their business is a critical success factor that determines the fate of their startup. And secondly, that a founder’s personal wellbeing, their physical and mental health, informs how they lead: everything from how they communicate, how they hire, to how they foster and build the culture necessary for a startup to succeed.

IntroductionC

onclusionC

ontact us

Amanda Price

Head of High Growth Ventures, KPMG Australia’s dedicated startup team

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Stress vs successSatisfaction in successBarriers to success

Wage woesWorking all hoursLack of physical activity

Stressed to the maxImproving productivityFriends and family

This quote from Elias Bizannes in the recently published Entrepreneur’s Guide from the ASX captures the founder’s struggle: “One of the biggest lessons I learnt with my other businesses is the importance of looking after yourself...Burnout is like depression; you don’t have energy or motivation; you don’t place any value on the work you do. You can be bumbling along thinking you are fine because you are happy otherwise, but the truth is, when you burn out, your capacity to work is so greatly reduced that you are best not working at all.”

The mental and physical investment from founders in building a startup is something I believe is not completely understood by those of us who help Australian high-growth ventures to succeed. When we first started looking at high-performance as it relates to founders, it was almost impossible to find data. That is why we have undertaken this research. For those working day-to-day with founders, the findings may not be surprising. But without measurement, there can be no baseline of understanding.

It is our hope that this research will start conversations within the startup community, and help founders to talk about the personal challenges they face. By encouraging open dialogue, we can better support founders and make high performance sustainable and realistic. Founders are not superheros, nor machines. They are complex human beings with feelings and families. Let’s remember that – and create an environment with access to the full range of skills they need to grow the Australian high-performance, high-growth ventures of the future.

IntroductionC

onclusionC

ontact us

Stress vs successSatisfaction in successBarriers to success




Innovation and entrepreneurship are seen as the saviours of Australia’s digital future. While the financial and resources aspects of a business enjoy strong support both from Government and the wider business community, the human side of entrepreneurship is frequently neglected.

Many founders see themselves as being harder working and more productive than their peers. But running a startup takes a clear toll – with much lower levels of satisfaction with the levels of stress/mental wellness, work-life balance, remuneration and amount of physical activity associated with the role.

There’s a significantly higher incidence of mental health issues among entrepreneurs versus non-entrepreneurs. US entrepreneurs were twice as likely to report a lifetime history of depression, three times as likely to report substance abuse, and six times as likely to report ADHD than comparison participants.

In addition, 70 percent of UK entrepreneurs said that founding a startup was much more work than being an employee. Half said they never “switch off”, and three-quarters reported being stressed several times a week (41 percent felt stressed “pretty much every day”).

Introduction

Founding a business is a demanding pursuit. Many entrepreneurs work long hours, well above the normal working week. The long hours required to grow a startup take a toll on work-life balance, and physical and mental health and wellbeing. This, in turn, affects business performance.

Yet, to date there has been little empirical research in Australia into the impacts that founding a startup can have on the founder.


1Stress vs successSatisfaction in successBarriers to success



IntroductionConclusionContact Us

Four characteristics of startup founders:

Average work week is 64 hours

Startup founders are putting in more than 50 percent more hours than the standard Australian 40 hour working week.

Work-life balance struggles

Founders are doing less physical activity than they would like, and are not spending as much time with family and friends as they would like.

Working around the clock

Most founders take work to bed with them and have not taken time off work recently.

Stress impacts the bottom line

The stress felt by founders has a large impact on their success, as well as their team members and colleagues.

Startup stress is understandable. The high risk of failure is ever-present. Three out of four venture-backed startups fail in terms of not returning investors’ capital, and 95 percent fall short of their initial projections. Up to 40 percent fail completely, liquidating their assets with investors losing all their money. Only around a third of startups survive ten years.

To get a picture of the situation in Australia, we surveyed 70 founders between 2-29 April 2018. They report working an average of 64 hours

per-week – well above the standard Australian 40 hour working week. They often take work to bed with them and many have not had time off work recently. Most would like to be able to spend more time with family and friends than they currently do.

These long hours impact the level of physical activity they are doing. Most founders are doing less than they would like, and are less fit than they would like. And this is recognised as having a sizeable impact on their startup.

Every founder acknowledges that stress plays a large part in their current position, and the majority of those surveyed also recognise their stress has a large impact on both the success of their business as well as their team members and colleagues. Yet despite how hard they are working, most are being remunerated less now than in previous roles. This is leading to significant dissatisfaction with their current level of pay.

How, as an industry, can we better support startup founders?

Sian Priest General Manager, Innovation Bay

“ Worklife balance is a constant battle for anybody in a position of leadership, but as a founder this is often amplified. Founders are under pressure to be “on” 24/7 and having to constantly fight fires to grow their business. The risk is that the long hours, and not taking time off, not only affects their ability to lead, but can sets a bad example for other people within their startup and lead to burn out.”






James Cameron Partner, Airtree VC

“ Founder mental health is a massive issue, and we don’t talk about it enough. This means we’re failing a lot of people who might be struggling. Because of the cultural stigma that still gets attached, many founders feel that talking openly about their own struggles will somehow mean they’re seen as less competent. This, of course is complete bullshit. Suffering from bouts of depression or other mental health conditions doesn’t mean you’re any less than capable in your role as a founder. As investors – we need to work even harder to dispel these myths. I’m sure many (most?) founders see their investors as another source of pressure and stress. But a good investor should be the opposite – they should be a pressure relief valve.”






Stress vs success

Amanda Price Head of High Growth Ventures, KPMG Australia

“ Startups are critical to the future of Australia’s economy. They may begin as a small part of the economy, but some will be major contributors to its future path. But stress and poor mental health can derail success. It’s critical that founders get better support, so they don’t burn out before their business has a chance to succeed.”






Satisfaction in success

Confidence remains high among founders

Satisfaction among founders with the progress of their startup is mixed – but nonetheless, confidence remains high that they will be successful.

While founders’ satisfaction with the progress of their startup is a relatively higher rated attribute measured, there is still a mixed experience, with roughly half rating their satisfaction below a strong 8 out of 10.

There’s a sense among some less satisfied founders that their business is not progressing as fast as expected. Key areas of concern noted by founders include to the challenges of growth and sales.

This should be no surprise, as other research suggests that 95 percent of startups miss projections around revenue growth, cash flow, etc.

Also present is the pressure to secure the funding their startups need to continue to operate, an issue affecting many founders regardless of their stage of growth.

Nonetheless, there is a strong level of confidence among founders that their startup will be successful in the future.

Benjamin Chong Partner, Right Click Capital

“ A lot of founders are perfectionists, they want their startup to work perfectly. As such, a lot of stress can be self-imposed, as we are working in what is essentially a high-failure industry. We need to break through the stigma of putting your hand up to say “I am stressed, I need help.”

0

In next two years

Mean score 7.3% 10

Satisfaction with progress of startup

Confidence in success of startup

7% 44% 49%

20% 76%

0

0

Ultimately

10

10

4%

24% 73%Mean score 8.3%

Mean score 8.1%

8%






https://immagic.com/eLibrary/ARCHIVES/GENERAL/GENPRESS/W120919G.pdf

Barriers to success

Hiring remains the top issue

Hiring was by far the top issue for founders. Without the right people, the chance of failure is high. Conversely the right talent can propel a business to success. The ability to close sales and access to funding were the other top issues, and both of these are also related to hiring: identifying the right people and having the resources to secure them.

Startups struggle to hire the skills they need for a range of reasons. Lower salary budgets and a lack of perks, as well as job insecurity, are all significant problems. In Australia, the talent pool is smaller, and attracting staff from overseas remains challenging. 86 percent of Australian startups are looking to hire international talent within 6 months. Compounding the problem, major US tech firms are visiting Australia regularly to hire skilled developers, and large Australian corporates are hiring technical talent for their teams. This can make it very difficult for startups to compete.

Barriers and assists for early success

Ability to hire/engage right people

Access to funding

Lack of systems/processes

Ability to close sales

Top 3 barrier Top 3 assist

Marketing capability

Access to experts

The greatest barriers to startup success are also the key things that help a company succeed. The ability to hire the right people, ability to close sales and access to funding are key.

70%

57%53%

57%63%

39%

31%

14%7% 10%

19%

66%

Belinda Wright Director of Immigration Advisory, KPMG Australia

“ Recruitment has been a long standing issue for the startup ecosystem, however the introduction of the Global Talent Scheme (GTS) may help to resolve this pain point.

The GTS is a pilot program which will run for 12 months from 1 July 2018 and is touted as a solution to the restrictive nature of the TSS visa. The GTS is made up of two distinct streams: the Established Business stream and the Startup stream. If I was a founder, I’d act now and make the most of this opportunity.”






Given this fall in income, it’s unsurprising that remuneration is a lower rated attribute of running a startup. Most founders rated their level of satisfaction with their remuneration below a strong 8 out of 10. Those who held corporate jobs previously are earning significantly less – but understand it is necessary for the long-term benefit of their startup.

The question of how much to pay themselves is one that the founders surveyed struggle with. Many are occupied with the challenge of balancing investing in the business, hiring other team members, and paying themselves fairly. For founders with families or other financial commitments, this can add to the pressure of their day-to-day lives.

Wage woes

The majority of founders are currently earning less than they did in their previous employment. 7 in 10 founders said they are now paying themselves less than they were earning before. Only a small minority (11 percent) are now receiving more money.

Founders take a big pay cut

Current remuneration compared to previous job

Satisfaction with renumeration

0 10Mean score 5.8

More Same Less Unsure/prefer not to say

11% 10%

70%

9%

26% 50% 24%

Amanda Price Head of High Growth Ventures, KPMG Australia

“ Founders know that building a startup is a high-risk, high-reward activity, and involves significant personal investment in terms of money, time and opportunity cost. As venture-backed startups progress, the question of founder salary becomes more questioned. Investors understand that founders need to be paid accordingly, given their hard work and long hours, however it also needs to balance the capital needs of the startup.”






The long hours that founders work mean they have limited opportunities to switch off.

On average startup founders report working 64 hours per week – well above the standard 40 hour work week, though not as high as the 80 hours typically seen in Silicon Valley. A large proportion (40 percent) reporting having no days off each week over the last three months.

They consistently bring devices to bed to work at night (49 percent do this every night including weekends) and use them first thing in the morning.

Some founders noted the time lost with family, and the cost of not being able to spend time with their young children or loved ones. Many noted that the long working hours necessary to build a company at the early stages were not sustainable. However, often this is seen as an acceptable trade-off for heading up their own business. Overall founders (71 percent) rate their satisfaction with their Work-Life Balance a strong 8 out of 10.

Working all hours

Founders work well beyond the standard 40-hour week

Average hours worked in last 3 months

Days off per week in last 3 months

< 40 hours

40 – 60 hours

Work every day

60+ hours

Day off

Average number of hours

Report working 7 days a week

64

40%

72% take devices to bed

23% haven’t taken 3 consecutive days off for over a year

53% worked during time off

Imogen Baxter Community Manager, Square Peg Capital

“ Founders tend to be purpose driven – determined to get complex things done in tight time constraints. Longer days are often required and not everyone sees them negatively. However, every person needs rest and recovery. “Length of day” or “hours worked” is a weird badge of honour that doesn’t need to exist in our ecosystem. Sustained high performance is far more important to optimise for.”

6%

40%60%

41%53%






Lack of physical activity

Founders impacted by lack of physical activity

Although there’s a link between physical fitness and financial and business success, with exercise boosting mood, memory and cognition, most founders are not doing as much physical activity as they would like. Those that come from the corporate world would typically be used

to much higher fitness levels, with the most competitive industries having the highest levels of fitness.

As such, founders view a decline in physical activity as adversely impacting their business. Satisfaction with the amount of physical activity is low (5.2).

Physical activity per week current vs desired

<1 hour 1 – 2 hours 5 – 6 hours3 – 4 hours 7 hours or more

Current Desired

1%

29%

4%

31%

17% 17%

29%

9%

49%

14%






43% are unhappy with their fitness level

39% are dissatisfied with amount of physical activity

88% think physical wellbeing impacts their startup

“ We often look after our businesses at the detriment of ourselves, particularly while growing and scaling. As a founder the buck stops with you. You are often the one ultimately responsible for delivering on expectations and promises made by your business whether it be to your investors, your customers or your staff. As a GP, I see these pressures resulting in poorer outcomes in terms of emotional health with higher rates of depression and anxiety in founders. This includes high risks of physical issues related to poor nutrition and exercises such as obesity, diabetes and cardiovascular disease.”

Vu Tran Co-founder and Head of Growth, GO1.com






http://GO1.com

Stressed to the max

Stress levels are high amongst founders

Stress badly affects many founders, having a wide-ranging impact. Stressed founders may suffer from a lack of sleep, depression and wider ill health, and this impacts their professional and personal performance. Nearly all founders (96 percent) feel their role is stressful, with two thirds (66 percent) finding it extremely or very stressful. None of the founders surveyed felt their role was not stressful.

Many founders note that stress was contributing to lack of sleep and noted that they felt it was affecting their health. Some face overwhelming pressure and anxiety. Founders also acknowledge the negative effects of this upon their business, particularly how their stress effects the mood, energy and motivation for their entire team.

Ultimately, over-stressed leaders can make poor decisions, causing problems throughout the organisation. They can also affect the performance of their team and colleagues, harming their venture’s chances of success.

Not very stressful

0%

Not at all stressful

0%

Extremely stressful

23%

Very stressful

43%

Quite stressful

30%

Neutral

4%

Stressfulness of role

57% see stress having a large impact on their success

43% see stress having a large impact on team members






“ Stress in lower doses can be beneficial, giving an energy and focus. However, beyond a certain threshold it definitely has a negative impact on performance and the effectiveness of people’s decision-making. Personally, I preserve time for outside interests, that exercise both body and mind, such as music, art and sports. I regard this as an investment in myself with a positive return on performance and mental attitude in the work setting.”

Alex Grant Co-founder and CEO, Myriota

58% relax for less than 1 hour/day

33% practice mindfulness meditation

Activities done to unwind & relax

Play sport/exercise71%

Go out to dinner50%

Read47%

Listen to music43%

Watch television39%

Cultural/entertainment events33%

Browse the internet33%

Go to the movies24%

Play video games7%

Spend time with family and friends74%

“ Holistically founders will achieve more if they’re healthy and happy. We see a lot of founders who really value their wellbeing and practice mindfulness. Some of the most successful founders have an awareness of how stress impacts them and their team, and the importance of balancing the work-life balance.”

Joel Connolly Head of Community, Blackbird Ventures






Improving productivity

Founders want to be more productive

While many founders rate their productivity as higher than their peers (57 percent) and believe they work harder (44 percent), they’re only moderately satisfied with their productivity levels. Many still believe their business is behind where it should be if they were to finish all their tasks this week. If they were able to complete their to-do list, most feel their startup would be on track or even ahead of where it needs to be.

Work habits compared to peers Productivity compared to peers

Working harder

More productive

About as hard

About as productive

Not as hard

Not as productive

Unsure/ Don’t Know

Unsure/ Don’t Know

44% 57%37%

34%

11%1%7% 7%

44% are often behind with emails

19% would be ahead of schedule if to-do list was done

“ Productivity is about more than just achieving work goals, it’s also a key factor in health and well-being. For me personally, I have meditation, exercise and important events for my daughter booked and visible in my calendar, and my team know they are fixed and that they have the same capability. This means work commitments may need to be completed later at night or on weekends when there is spare time, but for me that’s balance.”

Ruth Hatterley Founder & CEO, Moneycatcha






“ Fifteen hour days, working across different global time zones is not unusual when starting a tech business. Founders will always have less time for family and friends for a period, and that period could be measured in years. It’s not a coincidence that the timing of starting Trade Ledger was when I had no partner or family. It’s absolutely possible to start a company and have a great family life, but being single means I don’t have to think twice about international travel, weekend working or moving to another country. I just do it.”

Friends and family

Running a startup has a clear impact on family/social lives. The overwhelming majority of startup founders feel they are not spending enough quality time with the people they care about. Their friends and children are the people in their lives they would most like to be able to spend more time with.

On the upside, most have a family member, friend or mentor they can confide in.

Social and family life can suffer

Martin McCann Founder, Trade Ledger

Time spent with family/friends

Friends Partner/SpouseChildren Extended family

79%

22%33%

78%67%

42%

58%

21%

Spend enough quality time

Would like to spend more time

76% have friends & family to confide in

73% have a mentor or confidant to confide in






Australia has an unprecedented opportunity to evolve from a resource-based economy to an innovation economy, based on digital and technology-intensive business that can compete globally. Innovation is key, but it needs to be supported all the way along the chain.

Founders play a key role in driving innovation. They take massive risks, both personal and financial, to solve problems and build businesses.

It’s important for the community as a whole dig beneath the surface. There is no glamour in being a startup founder. We need to see founders more as human beings, they’re not coin operated, they’re not superheroes - they are human beings.

If we want to foster a high-performance startup eco-system, industry and government needs to acknowledge and act to work on the top pain points for entrepreneurs. We need to find better ways to support them. It is clear from

our research that stress is a key issue for the founder of high-growth ventures. It has the potential to hold startups back, when time is of the essence in taking their product to global markets. Australian startups don’t have unlimited resources that allow them to take years to get a product or service to market, nor can they afford to delay in a highly competitive global landscape.

For those who work as part of the startup community, such as investors, eco-system enablers, corporate innovators, there is also a responsibility to build more genuinely supportive relationships with founders. Be it in the boardroom, or over a coffee, we need to be willing to listen to founders personal and professional problems, and have open conversations about how to help.

It is our hope that this research helps to start and support those conversations, both at the industry and individual level. We plan to conduct many more pieces of research in this field in the future.

To address the issues raised within this report and to help make high performance sustainable for Australian founders, High Growth Ventures is launching an intensive wellbeing program for founders with many leading VC firms already reserving places in the first intake for their portfolio.

The Founder Program is designed to enhance the performance, wellbeing and purpose of venture backed founders. Lead by a team of specialists, ranging from athletes to serial entrepreneurs, the program focuses not only on the health of the startup, but on the founder as a whole.

Launching in August 2018, the facilitators include Rachael Neumann, Craig Davis, Scott Draper, Michelle Duval, Phaedon Stough and Brad Couper.

For more information, visit KPMG.com/au/highgrowthventures or to be considered for the next intake, contact Amanda Price directly.

Conclusion Supporting an opportunity







Amanda PriceHead of High Growth VenturesKPMG AustraliaT: +61 2 9455 9042 E: [email protected]

The information contained in this document is of a general nature and is not intended to address the objectives, financial situation or needs of any particular individual or entity. It is provided for information purposes only and does not constitute, nor should it be regarded in any manner whatsoever, as advice and is not intended to influence a person in making a decision, including, if applicable, in relation to any financial product or an interest in a financial product. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

To the extent permissible by law, KPMG and its associated entities shall not be liable for any errors, omissions, defects or misrepresentations in the information or for any loss or damage suffered by persons who use or rely on such information (including for reasons of negligence, negligent misstatement or otherwise).

© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Liability limited by a scheme approved under Professional Standards Legislation.

August 2018. 254433453ENT.

KPMG.com/au/highgrowthventures

mailto:[email protected]


https://www.linkedin.com/company/kpmg-australia

https://www.facebook.com/KPMGAustralia/

https://twitter.com/kpmgaustralia

https://www.youtube.com/user/kpmgaustralia

http://www.instagram.com/kpmgaustralia

fitness, fulfilment and foresight · fitness, fulfilment and foresight research into the wellbeing...

Documents