8/31/2007

The founder-knows-best phenomenon

USA Today had an interesting article 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%. Although most people will not be surprised by it, that's still a pretty powerful number, and have been studied by the investment community. From my point of view, company founders have a deep, emotional connection to the business, which make them great leaders. Other reasons explaining above numbers 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.

3 comments:

Jen said...

I think it's more so because of the huge financial stake. When our stakes are high we tend to perform better.

John said...

A powerful number, indeed! Sounds like it is something to consider when looking for an investment.

Amanda said...

Its like their 'baby' I guess. Interesting figures!