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The study by Greenberg and Mollick (2026) empirically investigates the “stranger puzzle,” a central theoretical tension in entrepreneurial team formation.
This puzzle concerns the trade-off between the proposed benefits of including strangers—specifically, access to non-redundant networks and diverse informational resources—and the significant operational risks arising from relational uncertainty, coordination costs, and behavioral unpredictability.
To test this puzzle, the authors employed a unique dataset derived from a survey of founders whose ventures successfully secured funding via the Kickstarter platform.
The final analytical sample comprised 3,562 ventures that had formalized as organizations.
For a detailed examination of the study’s theoretical framework, methodological approach, and empirical results, please refer to the structured analysis available in the interactive tabular summary provided below.
The “Devil” You Don’t Know: The Trade-offs of Co-founding with Strangers
A comprehensive analysis of whether founding teams that include strangers benefit from diverse networks or suffer from operational dysfunction.
Greenberg & Mollick’s (2026) study systematically examines the “stranger puzzle” in entrepreneurship: the tension between the theoretical benefits of founding with strangers (access to non-redundant networks and resources) versus the operational risks (relational uncertainty, coordination difficulties, and distrust).
How to read this analysis: The sections below move from the theoretical framework to empirical methodology, key findings, practical implications, and future research directions. This structure provides both strategic insights for practitioners and theoretical contributions for scholars.
Summary
This landmark study addresses a fundamental tension in entrepreneurship: while professional investors prefer founding teams for their diverse skills and networks, the inclusion of strangers on these teams introduces significant relational uncertainty. Drawing from unique survey data of over 3,000 crowdfunded ventures, the research reveals a compelling paradox.
The Benefits: Founding teams with strangers successfully attract approximately 22% more backers, with these backers coming from non-redundant networks outside the founders’ immediate circles. This validates the structural advantage theory that strangers serve as bridges to novel resources.
The Costs: Despite these initial advantages, ventures with strangers perform substantially worse operationally. They are:
- Significantly less likely to deliver the promised product/service (40.9% reduction in odds)
- 1.64 times more likely to cease operations
- 2.8 times more likely to permanently stop operations
The study concludes that the relational uncertainties introduced by strangers substantially outweigh their network advantages, challenging prevailing assumptions about team diversity in entrepreneurship.
Theoretical Framework: The “Stranger Puzzle”
The research is grounded in two foundational theoretical perspectives that create the central tension:
1. Network Theory Advantages
- Structural Holes Theory (Burt, 2004): Strangers provide access to non-redundant networks, serving as bridges between disconnected social groups
- Resource Diversity: Strangers bring diverse experiences, skills, and perspectives not available within close-knit circles
- Reduced Homophily: Less similarity in attitudes and beliefs should prevent “echo chamber” thinking
2. Liability of Newness (Stinchcombe, 1965)
- Relational Uncertainty: Collaborating with strangers entails significant information asymmetries regarding reliability, trustworthiness, and compatibility
- Coordination Costs: Learning how to communicate and collaborate effectively with strangers requires additional time and resources
- Behavioral Uncertainty: Difficulty predicting whether strangers’ behaviors will complement team dynamics versus creating conflict
Hypotheses Tested
H1: Teams with strangers should (a) attract more non-redundant backers, and (b) possess greater skill/experience diversity
H2: Teams with strangers should (a) be more likely to deliver products/services, and (b) be less likely to dissolve
Methodology & Data
Data Source
The study utilizes a unique merged dataset from:
- A proprietary stratified sample of 65,326 Kickstarter project creators
- Kickstarter platform data on campaign performance
- Detailed founder surveys measuring team composition, skills, and outcomes
Sample Characteristics
- Final Sample: 3,562 ventures that launched formal organizations
- Economic Impact: Projects collectively raised $151M in crowdfunding, generating approximately $358M in total revenue
- Team Composition: 3.86% of teams included at least one stranger co-founder
Key Measures
Independent Variable: Presence of stranger(s) on founding team (binary)
Dependent Variables:
- Network Reach: Number of backers (natural log transformed)
- Skill Diversity: Prior experience across 7 domains (organizing, manufacturing, marketing, etc.)
- Operational Success: Delivery of promised product/service
- Organizational Survival: Current operational status
Analytical Approach
Multiple statistical methods including OLS regression, ordered logit models, fractional logit models, and binary logistic regression, with robustness checks using Coarsened Exact Matching (CEM).
Key Findings
1. Network Benefits Confirmed
- Teams with strangers attract 22% more backers (net of controls)
- Backer composition shifts: 38.1% strangers vs. 32.3% for teams without strangers
- Family/friend backers decrease: 39% vs. 45.8% for teams without strangers
2. No Skill Diversity Advantage
- Contrary to expectations, teams with strangers showed no significant difference in skill/experience diversity
- No advantage in any of the 7 skill domains measured, including innovation capabilities
- This challenges the assumption that strangers automatically bring complementary skills
3. Significant Operational Disadvantages
- Product Delivery: Teams with strangers are 40.9% less likely to deliver their promised product/service
- Organizational Survival: 1.64 times more likely to be non-operational
- Permanent Failure: 2.8 times more likely to permanently cease operations
4. Mechanism: “People Problems”
When delivery delays occurred, teams with strangers were significantly more likely to attribute problems to “issues with co-founders” (p = 0.001), suggesting relational dynamics drive poor outcomes.
5. Dose-Response Relationship
Each additional stranger on the team further increases the risk of operational failure, confirming a clear trade-off between network diversity and team cohesion.
Implications & Future Research
Theoretical Contributions
- Boundary Conditions: Establishes that network diversity advantages break down under relational uncertainty
- Behavioral Uncertainty: Highlights the importance of unobservable behavioral compatibility beyond measurable skills
- Liability of Newness: Extends Stinchcombe’s theory by specifying relational mechanisms of failure
Practical Implications
For Entrepreneurs:
- Carefully weigh network benefits against relational risks when considering stranger co-founders
- Invest in team-building and trust-establishment mechanisms when working with strangers
- Consider staged commitments before formal co-founder agreements
For Investors:
- Evaluate relational compatibility alongside skill diversity
- Ask explicit questions about how founders met and their prior working relationship
- Consider supporting team-building interventions for teams with strangers
Limitations & Future Research
- Single Informant: Relies on lead founder perspectives; multi-informant designs needed
- Retrospective Design: Future longitudinal studies could track team dynamics over time
- Behavioral Mechanisms: Need direct measurement of trust, conflict, and communication patterns
- Contextual Factors: How do industry, geography, or venture stage moderate these effects?
- Mitigation Strategies: What interventions can help stranger teams overcome relational challenges?
The study opens important new avenues for research on entrepreneurial team formation, relational dynamics, and the conditions under which diversity benefits translate into performance outcomes.
References
Greenberg, J., & Mollick, E. (2026). The “devil” you don’t know: A test of the detriments and benefits of co-founding with strangers. Journal of Business Venturing, 41, 106537. https://doi.org/10.1016/j.jbusvent.2025.106537
Key Theoretical Foundations: Structural Holes Theory (Burt, 2004), Liability of Newness (Stinchcombe, 1965), Network Theory in Entrepreneurship.