Founder-led businesses have been outperforming other companies in the S&P 500 index by 3-to-1 over the past 15 years, so let's look at three of the top companies still led by founders.
Beginning life as an online bookstore in the '90s, Amazon.com (NASDAQ:AMZN) has come a long way, and in no small part thanks to its founder and CEO Jeff Bezos -- otherwise known as the world's wealthiest man.
Amazon shareholders have been fortunate, too, with the stock price growing tenfold since 2012 alone, while the company is currently worth roughly 2,000 times more than it was when it became public in 1997. On top of this, in the past three years alone, the stock has gained 132%, versus the S&P 500's 41%, a very impressive return. Amazon's cloud service subsidiary, Amazon Web Service, is worth far more than the core business when it went public -- $500 billion.
And Bezos is an important factor in this. In the early days, he would personally bring books to the post office to mail to buyers, so there's no denying his passion for the company. He also has a lot of money invested in the company's performance, with over $100 billion worth of shares in Amazon as of August 2019. With so much at stake, there can be no doubts that Bezos' best interests are aligned with the company.
Perhaps most importantly, at only 55 years of age, he has at least several years left as the head the company.
2. Berkshire Hathaway
Next up is a company led by a man who is widely regarded as the greatest investor of all time -- one of his best calls being Amazon. It's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B), and founder Warren Buffett, of course.
OK, purists will realize that Warren Buffett technically wasn't the founder of Berkshire Hathaway, but he is the one that made it what it is today.
In short, Berkshire Hathaway was a failing textile manufacturer dating back to the early 19th century. Warren Buffett took control in 1964, ousting the original founders. Today, it's a completely different company, with holdings in every industry under the sun, from Coca-Cola to Duracell to Amazon; this is no longer a textile company.
In his 50(ish) years as CEO of Berkshire Hathaway, Buffett has turned his company into a cash cow of the highest order, more than doubling cash flow in the past decade alone. With a stock portfolio worth $200 billion and a further $100 billion in cash just waiting to be burned (not including its core insurance business), Berkshire is certainly in a good place.
This success can be attributed to the Oracle of Omaha himself, as Buffett's keen eye for investment that has led to such growth. With over 60 subsidiaries, all focused on long-term growth, Buffett's conglomerate can weather almost any storm.
Though it has been going through a turbulent period in its relatively young life, Netflix (NASDAQ:NFLX) is of the greatest success stories in the last 20, and a lot of the credit goes to visionary founder Reed Hastings. It certainly has been a long and bumpy ride for Netflix shareholders, and Hastings has been with them every step of the way.
A remarkable case study of the CEO's character took place in 2011, following a bungled attempt to split its DVD business from its streaming service. The move came on the heels of a massive price hike, causing hundreds of thousands of subscribers to flee and shares to tumble. Hastings took his lumps, apologized, reversed the decision, and doubled down on the consumer experience. As the old adage goes, the rest is history.
Boasting more than 150 million followers as of its July earnings report, the company is still a force to be reckoned with, despite growing concerns surrounding declining membership and increased competition. Netflix is still the pinnacle of media streaming, and has fought through adversity and threats to existence, coming out the other side stronger. It's entirely possible that 2019 will turn out to be nothing but a blip.
With Reed Hastings at the helm, the company has increased by almost 35,000% in value, in one of the most incredible tales from Silicon Valley, and still remains the leader in streaming.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Amazon, Berkshire Hathaway, and Netflix. Read the full disclosure policy here.