{"id":674,"date":"2016-03-08T21:33:11","date_gmt":"2016-03-08T21:33:11","guid":{"rendered":"http:\/\/payne.org\/blog\/?p=674"},"modified":"2017-09-09T11:56:59","modified_gmt":"2017-09-09T11:56:59","slug":"startups-should-revolve-around-their-founders-if-they-want-to-succeed-big","status":"publish","type":"post","link":"https:\/\/payne.org\/blog\/startups-should-revolve-around-their-founders-if-they-want-to-succeed-big\/","title":{"rendered":"Startups Should Revolve Around Their Founders if They Want to Succeed Big"},"content":{"rendered":"

I read a recent\u00a0Harvard Business School blog post titled “Startups Can’t Revolve Around Their Founders If They want to Succeed<\/a><\/em>“. \u00a0The authors\u00a0make a general argument that founders are the biggest obstacles to long-term startup growth,\u00a0citing\u00a0a new\u00a0research paper<\/a> (paywall, sorry) that hypothesizes:<\/p>\n

For a given startup, the value of the startup varies inversely with the degree of control retained by founders.<\/em><\/p>\n

From a statistical analysis of over 6,000 startups, the paper (and article) argue (roughly) that founders with board control, the CEO position, or both, can “harm the firm’s prospects, reducing pre-money valuation by up to 22%.”<\/p>\n

Really?<\/p>\n

While “founder scale-up” problems\u00a0are real management issues that can put significant stress and strain on any startup team (I’ve lived it), the\u00a0argument has a significant\u00a0flaw: \u00a0it’s based on an unweighted<\/strong>\u00a0startup data set. \u00a0If Uber’s value creation (for all stakeholders) is considered equal to Fred’s Wrecking, Storage and App Development, I’m skeptical\u00a0we\u00a0can conclude anything really useful.<\/p>\n

For example, a full half<\/strong> of the top ten US companies had or have founder leadership to significant\u00a0significant scale: \u00a0Apple, Google, Microsoft, Facebook and Amazon. \u00a0These five alone companies represent $1.5 trillion of value — over 8% of the total value of all public US companies! \u00a0And all<\/strong> of the top US companies founded within\u00a0~30 years are\/were founder led.<\/p>\n

Furthermore, while\u00a0I’m quite skeptical of private “unicorn” valuations, all but one<\/strong> at the top of that list have founder CEOs: Uber, Airbnb, Palantir, Snapchat, SpaceX, Pinterest, Dropbox, WeWork, Theranos, Lyft, and Stripe.<\/p>\n

So, here’s a completely different hypothesis:<\/p>\n

Most startup value creation, by a wide margin, accrues to founder-led companies.\u00a0(esp. in technology)\u00a0<\/em><\/p>\n

Stated differently: would you rather have a portfolio with 7 out of 10 companies successful, or a portfolio with Facebook?<\/p>\n","protected":false},"excerpt":{"rendered":"

I read a recent\u00a0Harvard Business School blog post titled “Startups Can’t Revolve Around Their Founders If They want to Succeed“. \u00a0The authors\u00a0make a general argument that founders are the biggest obstacles to long-term startup growth,\u00a0citing\u00a0a new\u00a0research paper (paywall, sorry) that … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,7,8],"tags":[],"class_list":["post-674","post","type-post","status-publish","format-standard","hentry","category-entrepreneurship","category-ramblings","category-software"],"_links":{"self":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/comments?post=674"}],"version-history":[{"count":2,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/674\/revisions"}],"predecessor-version":[{"id":677,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/posts\/674\/revisions\/677"}],"wp:attachment":[{"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/media?parent=674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/categories?post=674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/payne.org\/blog\/wp-json\/wp\/v2\/tags?post=674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}