Why Founder-Led Companies Outperform
What sets apart companies that consistently outperform the rest? One key factor is the involvement of the founder. Whether they’re still the CEO, on the board, or serve as a trusted adviser, founders bring something special to the companies they helped build. This study shows that companies in the S&P 500 where the founder is still engaged tend to be much more innovative. These businesses generate 31% more patents, and the patents they create are more valuable. Additionally, they’re more willing to take bold risks to adapt and reinvent themselves, which is critical in today’s fast-changing world.
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So, what makes founder-led companies different? It comes down to something called the Founder’s Mentality. This is a set of practices and mindsets that go back to the way the company was originally built. These traits stick with the company as it grows, helping it remain innovative and forward-thinking.
Below are three important elements of the founder’s mentality that keep companies ahead.
Staying True to the Mission
When a founder starts a business, there’s usually a very clear mission behind it. Whether it's Netflix revolutionizing video rentals or Google organizing the world’s information, founders often create their companies with the goal of serving customers in ways that no one else has thought of. This sharp sense of purpose is what we call "business insurgency"—the company challenges industry norms to create something new or better.
Staying Connected to the Customer
Obsession with the front line. Founders often stay close to the details of the business, whether it’s interacting with customers, refining the product, or solving problems firsthand. This kind of attention keeps the company in touch with what’s really happening, instead of relying on reports from the corporate office.
Acting Fast and Taking Responsibility
The owner’s mindset. Founders tend to think like owners because, well, they are. This means they take personal responsibility for risks and costs and have a sense of urgency when it comes to making decisions. They don’t wait around—they act quickly to take advantage of opportunities or solve problems.
Now let’s switch to real facts and real evidence. Below is a portfolio of stocks with the largest market cap, led by their founders or have them on the board. I took it from this Investing.com page .
The performance of the portfolio:
Let’s take a closer look at some companies presented in the portfolio.
NVIDIA Corporation (NVDA)
Jensen Huang co-founded NVIDIA in 1993 and remains the CEO today. Under his leadership, NVIDIA has become a dominant force in graphics processing units (GPUs) and has expanded into areas like artificial intelligence and data centers.
Amazon.com, Inc. (AMZN)
Jeff Bezos founded Amazon in 1994 and served as CEO until 2021. He transformed the company from an online bookstore to the world's largest e-commerce platform and a leader in cloud computing through Amazon Web Services (AWS). Andy Jassy, a long-time Amazon executive, is the current CEO.
Meta Platforms, Inc. (META)
Mark Zuckerberg co-founded Facebook (now Meta) in 2004 and continues as CEO. He's led the company through its evolution from a college social network to a global social media giant, expanding into areas like virtual reality and the metaverse.
Berkshire Hathaway Inc. (BRK.B)
Warren Buffett took control of Berkshire Hathaway in 1965, transforming it from a failing textile company into one of the world's largest conglomerates. Known as the "Oracle of Omaha," Buffett's value investing strategy has made Berkshire a powerhouse in insurance, energy, and various other sectors.
Tesla, Inc. (TSLA)
Elon Musk co-founded Tesla in 2003 (though he joined shortly after its initial founding) and remains CEO. He's driven Tesla to become a leader in electric vehicles and renewable energy solutions, revolutionizing the automotive industry and pushing for sustainable transportation.
Netflix, Inc. (NFLX)
Reed Hastings co-founded Netflix in 1997 and served as CEO until 2023. He led the company's transformation from a DVD-by-mail service to the world's leading streaming platform, revolutionizing how people consume entertainment. Ted Sarandos is the current CEO.
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Salesforce, Inc. (CRM)
Marc Benioff co-founded Salesforce in 1999 and continues as CEO. He pioneered the concept of software-as-a-service (SaaS) and cloud computing for business applications, making Salesforce a leader in customer relationship management software.
PDD Holdings Inc. (PDD)
Colin Huang founded Pinduoduo (now part of PDD Holdings) in 2015. The company has become one of China's largest e-commerce platforms, known for its group buying model and focus on agriculture. Huang stepped down as chairman in 2021.
Blackstone Inc. (BX)
Stephen Schwarzman co-founded Blackstone in 1985 and remains Chairman and CEO. Under his leadership, Blackstone has become one of the world's largest alternative asset management firms, specializing in private equity, real estate, and credit investments.
BlackRock, Inc. (BLK)
Larry Fink was one of the co-founders of BlackRock and he remains as the CEO today. He has been running the company for 35 years and has established BlackRock as the largest ETF manager in the world, helping investors adopt a passive and low-cost approach to investing.
KKR & Co. Inc. (KKR)
Henry Kravis and George Roberts co-founded KKR (Kohlberg Kravis Roberts) in 1976. The firm became famous for its leveraged buyouts and has since expanded into various alternative asset classes. While they've stepped back from daily operations, their influence on the private equity industry remains significant.
Regeneron Pharmaceuticals, Inc. (REGN)
Leonard Schleifer founded Regeneron in 1988 and continues to serve as CEO. Under his leadership, Regeneron has become a leading biotechnology company, known for developing innovative treatments for various diseases.
MercadoLibre, Inc. (MELI)
Marcos Galperin founded MercadoLibre in 1999 and serves as CEO. He has built the company into Latin America's leading e-commerce and fintech platform, often referred to as the "Amazon of Latin America."
Palantir Technologies Inc. (PLTR)
Peter Thiel co-founded Palantir in 2003. The company specializes in big data analytics and has become known for its work with government agencies and large corporations. Alex Karp, another co-founder, serves as CEO.
The Results: Founder-Led Companies Perform Better
The research shows that companies that keep the founder’s mentality alive as they grow tend to outperform their peers by a wide margin. Companies where the founder is still involved are four to five times more likely to be top performers. An index of S&P 500 companies with active founders has outperformed the rest of the index by 3.1 times over the past 15 years.
Even in the world of venture capital, there’s a strong preference for founder-led companies. Why? Because founders have the moral authority to make tough decisions, they know the business inside and out, and they have a long-term view of what it takes to build a lasting company.
This is not a financial or investing recommendation. It is solely for educational purposes.