It is time to put the myth of the sleepless founder to bed. Too many entrepreneurs think skipping on sleep is the heroic path to success, and a badge of honor. But in a recent series of studies, we found several specific deficits among exhausted entrepreneurs that demonstrate that even the most dedicated founders could best serve their fledgling venture by resting up.
In our paper we investigated fundamental functions required of a founder in the early stages of a new venture’s lifecycle: the generation of new venture ideas and the formation of beliefs about a new venture’s potential. In a series of three interrelated studies, we show that entrepreneurs who shortchange sleep analyze business opportunities differently than their well-rested counterparts, and even differently than their well-rested selves.
In the first study, we compared 784 practicing entrepreneurs to each other and asked them to report their sleep the previous night. Each person then read three new venture executive summaries. These summaries were independently rated for quality by a panel of expert entrepreneurs and investors, and our coauthor team categorized both superficial (obvious) and structural (non-obvious) alignment between the new technology and the intended market.
Two of the three ideas had both superficial and structural alignment, meaning that these ideas were more promising for commercial success. One of the new venture ideas showed superficial alignment between the technology and market, but had real structural problems, meaning this idea should be less promising compared to the other two. Compared to well-rested entrepreneurs, entrepreneurs who slept less the previous night frequently ranked the ill-conceived idea above one or both other two ideas. This suggests that entrepreneurs who are short on sleep rely more on superficial cues when forming initial beliefs about new venture ideas.
The second study examined 101 practicing entrepreneurs over a two-week period. We checked in with these entrepreneurs twice each day, once each morning to ask about the previous night’s sleep, and again in the afternoon to ask them to rate a new venture idea. When these entrepreneurs slept less, they made mistakes evaluating non-obvious business ideas.
As we observed in the previous study, exhaustion hampered an entrepreneur’s ability to evaluate less-obvious qualities associated with the idea. Importantly, these results compare an entrepreneur to themselves across the different days. This means that, even if you don’t sleep as much as everyone else normally, you’re still worse at evaluation when you get less sleep than normal.
Finally, to isolate sleep as the causal variable in these observations, we conducted a sleep deprivation experiment with entrepreneurship students. Participants were randomly assigned to one of two groups, one that slept at least seven hours and one that stayed up for at least 24 consecutive hours. The two groups then performed the same new-venture ranking task from the first study.
We also asked them to think of potential business ideas for a novel technology. Those open-ended responses were coded for both superficial and structural thinking. The sleep-deprived group was significantly more likely to rank the ill-fated idea higher than one or both of the other ideas, and the open-ended responses focused more on superficial features than structural alignments. In other words, structural thinking in the ideation task mediated the relationship between sleep and the ranking of new venture ideas.
These studies work together to suggest that sleepiness creates obstructions for important entrepreneurial tasks. Entrepreneurs who operate on less sleep struggle to evaluate complex alignments between a new technology and a commercial market, and these complex structural alignments are the key determinants of a business’ commercial success.
Business ideas are plentiful, and pursuing the wrong idea early-on can hamstring an entrepreneur’s efforts to launch a venture. An early misstep might even be the difference between becoming a successful entrepreneur and failure. Far from being a sign of weaknesses, sleep can serve as an early-stage aid to effectively evaluate the myriad business opportunities to pursue. Sleeping at the right times, such as the night before ideation and evaluation tasks, will improve outcomes.