It is often said that founders need to bring in professional managers to successfully grow their business. For example, Alphabet, the highly successful parent company of Google, brought in a professional CEO to lead the company through tremendous growth.
But, what does this mean more generally in terms of successful business growth?
A recent Wall Street Journal article sheds some light on this topic. The article, which is titled “These CEOs Might Boost Your Portfolio” appeared in the paper’s January 15, 2026 issue. Regarding investing, the article discusses what can make “your chances of owning a big winner rise.” The article says, “In the past five years, founder led companies in the S&P 500 beat that index by 167 percentage points. Companies helmed by outside ‘professional’ CEOs lagged behind the index by 11 percentage points.”
The article points out that, while CEOs are generally encouraged to act like owners, this hasn’t led hired professional CEOs to achieve the more successful performance attained by founder CEOs. The article explains that “professional CEOs own less than a fifth the typical stake of founders.” The article cites John Ablin, chief investment strategist at money manager Cresset, who examined how well companies performed. According to the article, “he convincingly compares several during their founder and non-founder eras…the founders edge is stark.”
The article mentions that, unlike the hired professional CEOs, founder are not likely to leave to run another company. As I see it, this is essentially saying that the founder is far more strongly committed to the company’s success. I’ll add that a founder CEO is more likely to have a deeper understanding of the company’s strengths, while CEOs from outside might bring too much of what was ideal for their former employer, but may not be quite right for their new leadership role.
In my many years of studying business success and failure patterns, I find that doing what fits the company’s strengths is so important for achieving business success. And, a CEO hired from outside may not understand what fits the company as well as a founder CEO does. After all, what works well in one company does not necessarily work well in another. A classic example of this that I wrote about some time ago is the Penney’s isn’t Apple situation, where a former Apple executive tried to bring what worked well at Apple to Penney’s. The approach failed miserably at Penney’s.
So, in conclusion, we must remember that there are advantages to having a founder CEO, rather than a CEO hired from outside.
It is often said that founders need to bring in professional managers to successfully grow their business. For example, Alphabet, the highly successful parent company of Google, brought in a professional CEO to lead the company through tremendous growth.
But, what does this mean more generally in terms of successful business growth?
A recent Wall Street Journal article sheds some light on this topic. The article, which is titled “These CEOs Might Boost Your Portfolio” appeared in the paper’s January 15, 2026 issue. Regarding investing, the article discusses what can make “your chances of owning a big winner rise.” The article says, “In the past five years, founder led companies in the S&P 500 beat that index by 167 percentage points. Companies helmed by outside ‘professional’ CEOs lagged behind the index by 11 percentage points.”
The article points out that, while CEOs are generally encouraged to act like owners, this hasn’t led hired professional CEOs to achieve the more successful performance attained by founder CEOs. The article explains that “professional CEOs own less than a fifth the typical stake of founders.” The article cites John Ablin, chief investment strategist at money manager Cresset, who examined how well companies performed. According to the article, “he convincingly compares several during their founder and non-founder eras…the founders edge is stark.”
The article mentions that, unlike the hired professional CEOs, founder are not likely to leave to run another company. As I see it, this is essentially saying that the founder is far more strongly committed to the company’s success. I’ll add that a founder CEO is more likely to have a deeper understanding of the company’s strengths, while CEOs from outside might bring too much of what was ideal for their former employer, but may not be quite right for their new leadership role.
In my many years of studying business success and failure patterns, I find that doing what fits the company’s strengths is so important for achieving business success. And, a CEO hired from outside may not understand what fits the company as well as a founder CEO does. After all, what works well in one company does not necessarily work well in another. A classic example of this that I wrote about some time ago is the Penney’s isn’t Apple situation, where a former Apple executive tried to bring what worked well at Apple to Penney’s. The approach failed miserably at Penney’s.
So, in conclusion, we must remember that there are advantages to having a founder CEO, rather than a CEO hired from outside.
