August 22, 2007

Father/Mother Knows Best?

Father/Mother Knows Best? USA Today had an interesting article today about how founder-led companies perform better than their non-founder-led counterparts, with a 15-year stock price appreciation of 970% vs. the S&P 500 average of 222%.  That’s pretty powerful data. The general reasons cited in the article include founders having deep industry knowledge…having a powerful presence in the company…having a huge financial stake in the success of the business…not looking for the next job so can take a long-term perspective…being street fighters early on I think all those are true to some extent.  And it’s certainly true, as one of the CEOs interviewed for the article said, that it’s not because founders are smarter or harder working.  But to add to the dialog, I think there are two other big reasons founders may be more successful at generating long-term returns for their companies.  One is much more tactical than the other. 1. Founders have a deep, emotional connection to the business.  For many of us, and certainly for the 15-year-plus variety mentioned in the article, a founder’s company represents his or her life’s work.  Whether or not your name is on the door like Michael Dell, as a founder, your personal […]