Founders' fortunes

Feb 16 2006 by Robert Heller Print This Article

There are some awe-inspiring tales of entrepreneurship where young men give up on higher education to start businesses that earn them billions.

A case in point is Bill Gates of Microsoft, the richest man in the world. Two men of similar pedigree are now challenging him with Google.

So should the founder-entrepreneur stick with their baby all the way, as the myth would have it?

Noel Wasserman, a Harvard Business School assistant professor, has studied the facts and found the truth differs from the myth. According to his data, the percentage of founder-CEOs who "go the distance" is extremely low, especially in high-potential ventures'.

The percentage of founder-CEOs who go the distance is extremely low

According to Wasserman, Gates and Larry Ellison of Oracle stand out from the crowd in being able 'to lead their companies for quite a while'.

However, when Trinity Ventures looked at its successful companies over different dimensions it observed: 'The one trait of all our successful companies was that the CEO we backed at funding was still the CEO at the sale of the company or IPO (Initial Public Offer)'.

Trinity has learnt 'the need to believe that the existing CEO could bring the company to a successful outcome'.

Apple's Steve Jobs came to the conclusion that his creation had outgrown his management and passed it over to John Sculley, Procter & Gamble marketing man. The inevitable conflict and departure ensued and Jobs returned to the helm.

Jobs is a special talent who can visualise the marketing potential of technological promise. He has overseen numerous innovations at Apple including the smash hit iPod.

According to Robert Simon, there are two approaches to backing entrepreneurs: investing in people first and foremost, or forgetting about people and concentrating on the big opportunities in the market.

I believe the best approach lies somewhere between, though probably nearer the market. As Simon points out, the philosophy of the second approach is that if management doesn't work out, it can be fixed.

Seeking entrepreneurial success is the number one career opportunity in the 21st century. Management Today recently listed ten under-40s who run businesses, from nurse recruitment (worth around £50 million) to telecommunications (with the founder worth £17.4 million).

Those people would have been nowhere near as wealthy in a large company and they wouldn't have been so creative or found their job so rewarding.

To get ahead in business, you must see and act on opportunities and improve your skills as you go along. Invest in yourself and be your own venture capitalist.

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About The Author

Robert Heller
Robert Heller

Robert Heller, who died aged 80 in August 2012, was Britain's most renowned and best-selling author on business management. Author of more than 50 books, he was the founding editor of Management Today and the Global Future Forum. About his latest title, The Fusion Manager, Sir John Harvey-Jones wrote: "The future lies with the thinking manager, and the thinking manager must read this book".

Older Comments

As a serial entrepreneur who enjoys starting new businesses I have always had a problem with the view that business is a 'marathon'. I see it as a 'relay race' and there comes a time when the entrepreneur, skilled at start-ups, should hand over to someone with operational experience. Such people would possibly scream at the thought of sitting at their kitchen table with a blank sheet of paper, a phone and a remortgage document. This is risky and I know I have not always got this handover right but, as a shareholder, why would I want to limit the potential of my business. It doesn't always follow that the founder needs to leave the business. They could move to a more ambassadorial role extolling the vision.

Graham Sadd Maidenhead