{"id":3500,"date":"2017-02-20T14:58:42","date_gmt":"2017-02-20T22:58:42","guid":{"rendered":"https:\/\/masonmyers.com\/?p=3500"},"modified":"2017-02-22T09:23:47","modified_gmt":"2017-02-22T17:23:47","slug":"founder-led-companies","status":"publish","type":"post","link":"https:\/\/masonmyers.com\/founder-led-companies\/","title":{"rendered":"Founder-Led Companies Return Three Times S&P 500 Average"},"content":{"rendered":"

A study in 2016 from Bain & Company shows that over the past 15 years “founder-led companies deliver shareholder returns that are three times higher than those of other S&P 500 companies.”<\/p>\n

Therefore, we at Greybull Stewardship focus on those founder-led, or founder-involved, companies. We study how they are conceived and managed. And we study how best to support founder-led companies with capital and with support for their growth and long-term prosperity. We have written here<\/a> about how founders need better financing options.<\/p>\n

\"founder\"<\/a><\/p>\n

Movie poster for The Founder featuring Michael Keaton<\/p>\n<\/div>\n

Founder-Led Companies Crucial for the Economy<\/h3>\n

Bain’s Chris Zook and James Allen write: ‘\u2018The Founder,\u201d a new film starring\u00a0Michael Keaton,\u00a0tells the story of\u00a0McDonald\u2019s<\/a>\u00a0Corporation founder Ray Kroc as he turns a few small restaurants into a ubiquitous international chain. It\u2019s a tale of founder-driven corporate growth. Something that has become too rare today. This breed of entrepreneurial spirit makes for a good story. But it\u2019s also crucial for the economy.”<\/p>\n

Continuing, Zook and Allen write: “We analyzed examples of sustained success at 7,500 companies in 43 countries, visiting many in person, to determine what made them stand out. Great founders imbue their companies with three measurable traits that make up what we dubbed ‘the founder\u2019s mentality.’”<\/p>\n

“First, insurgency: The founding team declares war on its industry on behalf of under-served customers. Mr. Keaton\u2019s Kroc announces in the film that the McDonald brothers\u2019 fast-service approach is akin to revolution.”<\/p>\n

“Second, an obsession with how customers are treated\u2014an attention to detail that borders on compulsive. In his autobiography, Kroc discusses not only burger patties, but even how high they could be stacked and the amount of wax on the paper slips between them.”<\/p>\n

“Third, these companies are steeped in an owner\u2019s mind-set. Too often in business, the founder\u2019s vision becomes distorted. Managers seek short-term profits by cutting corners, alienating customers and employees. Companies that maintain the founder\u2019s mentality constantly reassess internal spending. But their goal is to root out bureaucratic barriers to free up underused cash. Kroc was able to create an army of mini-founders by perfecting the franchise model.”<\/p>\n

Founder Mentality Creates 50% of the Stock Market’s Value<\/h3>\n

Moreover, Zook and Allen emphasize: Those companies that continue the founder’s mentality “create more than 50% of the net value in the stock market in any given year.”<\/p>\n

In summary: “Too few companies have a driven founder at the helm. An owner\u2019s mind-set governed by a sense of insurgency and a front-line obsession are what\u2019s needed to turn America\u2019s anemic recovery into a turbocharged one.”<\/p>\n

Similarly Zook and Allen published research in July 2016 saying “that of all newly registered businesses in the U.S., only about one in 500 will reach a size of at least $100 million in revenue. A mere one in 17,000 will attain $500 million in revenue and sustain a decade of profitable growth. Despite their rarity, these successful firms are a bedrock of the U.S. economy.”<\/p>\n

Zook and Allen, partners at Bain & Company, wrote \u201cThe Founder\u2019s Mentality,\u201d and published these comments in 2016 at Harvard Business Review Press<\/a>.<\/p>\n

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