When do you seek to "disrupt," and when do you seek to "build"? As an entrepreneur, it's an important distinction to make in the language you use in writing and in presentations, particularly if you're seeking funding.
That's according to a new study by Columbia Business School researchers Dana Kanze and Sheena S. Iyengar. Kanze and Iyengar studied two thousand "entrepreneurial identities" according to whether or not they used the language of disruption to describe themselves and their startups. The researchers then studied how the use of disruptive language impacted the entrepreneurs' ability to attract and retain financial and human capital. Primary sources included LinkedIn profiles and Crunchbase data on their startups' funding, full-time employee (FTE) counts, and FTE start and end dates.
Not sure what "disruptive language" means? Think of it as the difference between saying you're a risk-taker, and saying you're a community-builder.
As Kanze and Iyengar found in their study, risk-takers (and those who present themselves that way) come across as thought leaders, ahead of the pack, and on the brink or edge of the next big innovation. Entrepreneurial identities who used the "disrupt" root in their profile language were likely to also use words like dare, innovate, shift, threaten, and first. They generate more buzz, attract more attention, and are more likely to convince investors to fund their projects.
"Builders," on the other hand, are perceived as more collaborative group-thinkers which, though they may in fact contribute more stability to the startup environment, fall behind when it comes to raising capital, at least initially. Entrepreneurial identities who used the "build" root also used words like collaborate, agree, compile, adapt, and amplify.
Researchers underscored the value of adjusting the language of your entrepreneurial identity over time as the needs of the company evolve. Here are three main takeaways from the study, and what they mean for crafting the language of how you present yourself and your startup.
Implications for Funding
A startup team that presented themselves as disruptive -- by using words like risk, threaten, and and dare in their entrepreneurial identities -- significantly predicted the amount of funding that the startup raised. Builder-led startups were ten times more common than disrupter-led ones, Kanze and Iyengar found, but "disrupter" startups received 1.7 times more funding on average.
Implications for New Hires
In a control experiment of 100 Amazon Mechanical Turk participants, Kanze and Iyengar found that prospective new hires for the disrupter startup felt significantly more energized, excited and inspired than the builder startup. Participants also allocated nearly twice as much hypothetical funding to the disrupter.
Implications for Employee Tenure
The average employee tenure at builder startups is eight months longer than at disrupter startups. Though disrupters may attract funding and employees more easily, retaining those employees and effectively using the funding are separate matters.
Kanze and Iyengar conclude their study with the advice that entrepreneurs may find it useful to associate different entrepreneurial identities with their startups at different points in its lifecycle: "disrupter" to sell the idea, for example, and "builder" to nurture subsequent product releases.
In other words, entrepreneurs looking to attract funding early in the life cycle of their company can choose to adopt disruptive, cutting-edge language that appeals to investors, while that language can shift to more stable, build-mentality language once the company is more established.