Why Founder Led Brands Outperform the Rest

Founder-led businesses harness three qualities that make them more innovative, more valuable, and more likely to make bold investments to renew and adapt their business to stay relevant

Who will love this

• Founders

• Founder-led brand stans (I give you: Airbnb, IBM, Intel, Starbucks, Apple)

• People who work with founder-led businesses

• People who don’t work in founder-led businesses and long for internal alignment

Today

Good morning 👋

I’ve spent my career working almost exclusively for founders. I’ve also worked for clients including government, big consulting firms, and interviewed at Fortune 100 companies. They are not the same!

One of the biggest challenges in brand building is alignment. There’s a danger in many companies that the swirl of consensus creates a whirlpool of mediocrity: no one has the ultimate say over the brand, everyone has ideas, and thus you get a brand by committee (never a good thing). 

A Bain and HBR study found that founder-led brands outperform the rest of the market.

Businesses where founders are still involved are more commercially successful. “Still involved” is defined by the following parameters:

• The founder is still the CEO (Oracle, for example)

• The founder is on the board of directors (Four Seasons)

• The focus and principles that the founder put in place still endured (IKEA)

Bain conducted over 200 interviews and emerged with what they called ‘the founder mentality’ (sounds like a good name for a whitepaper eh). 

• Insurgency - waging war on industry norms on behalf of underserved customers

• Front line obsession - a deep curiosity for what’s happening on the front lines of your business

• Owners mindset - speed to act, and taking personal responsibility for risk and cost

Venture capital firm Andreessen Horowitz have written about why they prefer founding CEOs: they have the moral authority to make choices, they know the business and - this is the most important part in my view - they have a long term perspective.

As a brand builder, your job is to take the long-term perspective and balance it with the day-to-day running of a business. Good brand builders have to make hard choices, ruffle feathers, and zoom in and out between the weeds and the 30,000 foot view. 

Part of why I started this newsletter is to shed light on what great brand builders do, so that others can learn how to build more authentic, interesting, and successful brands. 

It’s not an accident that founder led businesses are more successful. The implications for those of us who aren’t founders are simple but tough to execute: the better you are at embedding a founder mentality for decision making into the business (wage war on behalf of underserved customers, front-line obsession, owner’s mindset), the better the business is in the long run.

That’s part of why I started this newsletter: to give creatively frustrated brand builders the tools, the case studies and the stats to make the case for brand in the boardroom. In fact, when I started looking at the data, over 80% of the brands I’ve published deep dives on have been founder-led. Bandit. Tracksmith. Starface. DadGrass. Ellevest. Wise. Interesting.

Let’s look at the research 🏊

Founder-led companies outperform others

🧐 The rule:

Founder-led companies have consistently outperformed other S&P 500 companies. From 1990 to 2014, they performed 3.1 times better.

➡️ Implication

Cultivate a founder mentality as a key strategic asset across your business

❌ Avoid this common mistake

Expect to cultivate a founder mentality by writing principles like ‘owner’s mindset’ on paper (versus baking them into your operating system)

🏆 The case study

Bain developed a database of all public companies and tracked performance over the past 25 years and found that companies most successful at maintaining profitable growth in the long term were - you guessed it - companies where the founder was still running the business. They then conducted interviews with executives and analyzed another 200 founder-led companies with the help of an expert who knew each company well. They found 3 clear characteristics that they called the ‘founders mentality’ that are observable, learnable and useable by all leaders.

💰 Bottom line

Cultivate a founder mentality as a key strategic asset

👨‍🔬 The OG behind this research

Chris Zook

Summary

Successful companies share simple-to-say but tough to execute hallmarks: a healthy appetite to wage war on industry norms, obsession with what’s actually happening on the front lines (my rule: great founders can tell you about their customers by name) and an owners mindset. If you’re in charge of a brand, these principles will do you well whether or not you’re a founder.

👀 Brand Scoops Catching my Eye This Week

• 🎹 This case study from Dentsu & Dutch telecom company KPN who collaborated with a singer-songwriter to create a music-video-as-PSA about online shaming. The video (and song) was so successful it helped get a law passed, beating Beyonce on Spotify and winning a Cannes Gold Lion in the process.

• 🎨 This 50th anniversary ad for the Sydney Opera House which hit me in the feels (and took home a Cannes Grand Prix). Featuring Tim Minchin, sweet choreography, a nod to the Opera House’s history and a gorgeous ode to creativity (I’m not crying, you’re crying) and sticking your neck out. Gonna be humming this one for a while, thanks Jason for the share!

• ✈️ Visit Oslo’s very cute campaign, “Is it even a city?” Nice to see some fresh unapologetic work from a tourism campaign.

• ⚫️ Bandit’s Unsponsored Project, a sick brand move to give unsponsored athletes a chance to make a statement by wearing unbranded black (Bandit) gear, and a very savvy move for a challenger brand that gives them a voice in the Olympic conversation. Couldn’t love this more if I tried.

That’s it, this week. If you enjoyed this, pass it on to a brand nerd-y friend or share your personalized referral link (below ⬇️).

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