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.
Thesis: Founders have a deep, emotional connection to the business and have longer tenures.
For many, 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 reputation and in many cases (perhaps in an unhealthy way), your sense of self worth is tied to the success of the business. I'm not suggesting that "hired" CEOs don't also care about their reputations, but there is something different about the view you have of a business when you started it.
It takes years to learn an industry, years to build relationships with people, and years to influence a culture. Companies that trade out CEOs every few years are by definition going to have less solid and consistent strategies and cultures than those who have more stability at the top, and that must influence long-term value as much as anything else.
Something to chew on.
I agree. Companies with founding CEOs have a drive for the company to succeed that is hard to compare.
Posted by: Red Jello | October 04, 2007 at 08:46 PM