How productive are owner-managers?

We find that the average premature death of a million-dollar-earning owner causes an 82% decline in firm profits.

And:

The data reveal a striking world of business owners who prevail at the top of the income distribution.  We find that most private business profits reflect the return to owner human capital.  Overall, the top earners are predominantly working rich, and the majority of top income accrues to the human capital of wage earners and entrepreneurs, not idle owners of financial and physical capital.

That is from Matthew Smith, Danny Yagan, Owen M. Zidar, and Eric Zwick, “Capitalists in the Twenty-First Century,” a new research paper.

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When Steve Jobs died some feared Apple might die with him. It didn't: Apple's share price has tripled since his death (even with the recent plunge). By the way, the referenced study is of closely-held (non-public) firms, which often suffer from inadequate planning for the founder's death and the relative lack of competence of her heirs.

"which often suffer from inadequate planning for the founder's death and the relative lack of competence of her heirs."

This is a gigantic problem in my industry, which does a lot of consultation for aerospace and defense firms, mostly in the Midwest. Tons of these guys built them from nothing into multi-million dollar firms, their kids are screw-ups or incompetent, they have armies of staff but poorly motivated to take over the working-leadership of the firms, and they're not innovative enough to get bought (at market value) by the bigs like Lockheed et. al.

These guys (literally ONE guy) are the company. They're increasingly turning to acquisition as their only option, sometimes through foreign acquisition. But yes, for the closely held private SMEs owner-managers are in many cases their companies productivity.

I often advise owners of successful closely-held firms. One huge challenge is to get the founder to focus on succession. Most won't. It's understandable: who wants to focus on her own mortality. What I try to do is focus them on their own successes, the successful firms they have created, and challenge them to take actions now to preserve their own creations. I call it dynastic planning, but the dynasty isn't necessarily familial. In my experience, I've even witnessed what I believed to be the founder's efforts to undermine his own heirs. As you likely know, recruiting and retaining competent successors outside the family is difficult. It's unfortunate that this blog post is focused on defending inequality, when inequality has nothing to do with preserving a successful firm after the founder's death. Of course, on this subject my perspective and yours is the real-world perspective, not the ideological perspective.

Actually it has a lot to do with inequality. A firm that is well-preserved after a founder's death will continue to make some folks pretty wealthy (unequal). You promote (defend?) inequality every time you help a successful closely-held firm continue to create wealth at a strong clip.

So stop being part of the inequality problem or stop complaining about it.

Wow there’s no way you take seriously what you just wrote. That has to be a joke!

Surely you're joking Mr. Feynman!

Not funny!

Very funny.

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Surely the classic answer was to recruit an able son-in-law?

That depends on having daughter with good taste in men. Good Taste by the fathers standard, of course.

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Good devils advocate act. Hard to understand the logical complaints against argument.

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"I've even witnessed what I believed to be the founder's efforts to undermine his own heirs."

I have seen this as well, some of it justifiable and some of it not. But yes, I have used similar strategies to the ones you allude to. It's sad really to see these guys which are still massively productive even into their 60s be unable to figure out how to A) guarantee the company doesn't go away and B) find a way to inject new innovative spirit with work-ethic and productivity to match. This is one of those things where - at least for manufacturing - those older generational mentorship style relationships were so critical. As a master machinist or avionics electrician teaching and supervising a younger journeyman in a way you were able to guide, shape, and mold their work with enough reliability that you could give them (instead of your kids) the reigns when you couldn't do it anymore. You saw this all through the aerospace industries expansion and major-acquisitions period throughout the cold war.

Most of the natural heirs end up focusing on an entirely different industry (when they go away to college) or hyper-focus in on some area of the business (like it's bookkeeping or business development) to the exclusion of all others, so there's no cross-training. They simply can't step into dad's shoes.

People are starting to give this a lot more attention though. So there's that.

Wie wohltätig kann ein Mann sein? (gemeinnützig)

+1

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Isn't there some sort of cosmic accounting at work in these scenarios? Like, the reason the founder has been so successful is that he has concentrated on growth of the concern with himself at the helm, at the expense of being a good father or building a robust dynamic team?

Not a politics reference in any way, but the Koch model is a paragon, just by org standards. Ditto Bridgewater. Prolly Aon back in the day, too.

They stand out because they are the exception? Attention is a limited resource, unequally distributed. Not everyone even knows how to lead others, thinking it's some kind of magic.

The high value of the company at the founder's death is just the charge blown all at once instead of something more controlled and artful? I'm standing next to Ray (below) on this one.

"with himself at the helm," or "to himself," ….if it's to himself, his point of view, is 1) there is no expense 2) there is nothing to compare it to, nothing that makes any substantive difference. If it's to himself, there isn't much unequal distribution because he's a caretaker just as much as an owner.

I could follow you until the last sentence? Owner is a caretaker of his own idiosyncratic and ephemeral value? If that's what you mean, agreed.

yup

Agreed. I don't see any reason for concern here.

First of all, inequality is how reality manifests. I keep hitting this point over and over, waiting for it to take. Inequality is good! Inequality is life itself. All this crusading for equality is just a temper tantrum for those who want the cup but not the race.

Secondly, if you look at this from the perspective of Coase's theory of the firm, noting that some non-trivial (in terms of economic value) firms really are just some guy when you scratch the surface means that a hell of a lot of markets must be pretty efficient. A lover of life might (ought?) find that a cause for joy.

Let us all take care of ourselves and our talents!

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"which often suffer from inadequate planning for the founder's death and the relative lack of competence of her heirs."

Doesn't this sort of prove the point? If you have one guy that is crucial to the firm's current success and his skill-set isn't trivially easy to transfer to an heir or new owner, that implies to me that his compensation is well justified in terms of value added.

Gesam

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"that implies to me that his compensation is well justified in terms of value added."

it does but this is a very limited set here. Owners who work their own businesses who make $1M+ a year. Steve Jobs was not that (he had a board of directors and was even once fired by Apple!) Here you have a business that grew but the owner never goes public or takes on serious partners only to let it blow up when he dies.

Also are they well compensated? If 80% of a businesses value is destroyed by the owner's death, to me that seems pretty bad compared to the business that has a well planned succession strategy that suffers little from the owners death....even better does a seamless transfer of power before the owner dies. On the other hand by definition it isn't my value that is destroyed but the boss's since these are not companies with shareholders.

The owners are where the value resides! I understand this is a tricky concept for someone whose mode of analysis depends on treating people as interchangeable.

100% true.

And for the love of God, people, stop treating rayward's anecdotes as Fact. This is universally good advice that transcends all posts and time.

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I think it is premature to say that there was no impact from Jobs death. If you look at Apple's product line, it is basically updates from what they had when Jobs was there. There is quite a big concern about new products and new ideas coming from them. It is just that the current products are so lucrative that the impact is being delayed quite a bit.

What Jobs' successors have done and what Gates' successors have done is shift more of revenues from product sales to monthly fees. Thus, the firms don't have to be as creative in product development, at least not on a short-term basis. I pay monthly fees to both Apple and Microsoft. But I do agree that Jobs and Gates were instrumental in product development, and their presence in those two companies has to be missed, especially Jobs at Apple. Selling product at prices well-above the competition for product not necessarily superior to that of the competition took the genius of Jobs. He could sell sand in the desert.

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playing the single-example game, I think the microsoft case has been more rent collection/oligopoly related. cloud came around in the past decade (after gates was no longer involved). microsoft was big and well positioned to make inroads as a second mover. so they were just using their good overall position to take a part of this big market. did they create this market or deserve to reap those high profits from it? doesn't seem so

Well, nothing is really simple in these real world scenarios. First, MS did *a lot* of work and invested a lot of money in cloud. These bets work sometimes (Office 365, Xbox) and sometimes they don't (Microsoft Phone, Cortana). So it is not just a matter of position and money, there is a lot of talent and business acumen that make a difference. As long as companies follow the rule of law, they always deserve what they get.

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Well, yeah, "owner-manager" didn't describe Jobs even in 1985, since Sculley was able to force him out as CEO.

He certainly didn't own Apple when he came back.

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"We find that the average premature death of a million-dollar-earning owner causes an 82% decline in firm profits."

I'd qualify as one of these individuals. If I died (I'm only 31 so the risk is low), my firm would shutter and see a 100% decline in revenue. I have a few people who work for me who are capable of being trained to manage the business. If they were transferred ownership they would be able to keep the firm afloat with little to no short term loss in revenue. Though, in the long run I would be less certain of that. For that matter, I am not certain that I can guarantee anything in the long run with myself running the business as a manager-owner.

I've been working on making myself replaceable, which is quite challenging. Systems, building business skills by delegation. It works as far as it goes, but the undefinable skills and hours as required are not simple to replace.

Making yourself indispensable is hard, and arguably is a bad idea due to the fact you cramp the future prospects of the company. In Greece the electrician often makes himself indispensable by making the electrical connections "kludge" and not diagramming his work, so nobody but him knows how they are connected. Bad for the project, good for his job security. Arguably these 'owner-operators' are also doing this, akin to the cardinal sin of not commenting your code when you program, so your successor knows what you're trying to do.

Bonus trivia: "The graveyards are full of indispensable men" - attributed to Gen. Charles de Gaulle.

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@derek - I see you are making yourself the opposite of indispensable, good on you.

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Maybe. One thing they would need to control for is how well documented and defined are the internal processes and procedures. One might argue some IP protection for the owner. However, the finding would also be consistent with poor management and operational skills. And, of course, there is also the whole internal agenda setting and rent-seeking activities that are potential sources for capturing the rewards.

That said, clearly the premiums the working owner earns over the absentee owners deserve attention in the discussion on income distributions.

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This paper complements a recent Greg Mankiw post on his blog.

A link to the post please. Thanks.

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Sad. In Brazil, business marching on as a generation passes the torch to another.

Mr. Guedes, a Brazilian millionaire who studied in America's famous Chicago and is now Brazil's Minister of Finance, has vowed to bring down cash taxes on business. I thank President Captain Bolsonaro for his leadership role in freeing Brazil from socialist slavery.

Mr Bolsonaro is enjoying life in Switzerland, leave him in peace.

He is not enjoying nothing. He is in a national mission to present Brazil to investors and statesmen. He has pointed out that Brazil is a paradise and yet is barely visited by foreigners.

Sensible foreigners shun Brazil. They don't want to be shot by civilians trying out their new toys or by Bolsonaro's death squads

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To me this confirms what I recently told my college aged son: To get the thinking right on inequality you need to stop thinking about what people earn, but think about what they produce. In business most people are paid for what they produce, and those who go on about inequality try to frame it as that people somehow are paid arbitrarily, so they don't deserve what they earn. So it's OK to take it from them.

You’re not understanding the argument. The argument is that conscientiousness, capacity for effort and IQ are almost entirely genetically based. As such, you have very little to do with how productive you are given X level of effort.

Effort is work. Anyone can put the hours in even they don't get paid the same for it. So many have the genetic makeup to be very well off, but do not put the effort in to do so. Those who do deserve the benefit of the wealth they create.

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To whatever extent that genetics play a role, it in no way establishes that the envious losers in life's genetic lottery deserve so much as a breadcrumb from the winners.

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"In business most people are paid for what they produce, and those who go on about inequality try to frame it as that people somehow are paid arbitrarily, so they don't deserve what they earn. So it's OK to take it from them."

Someone should try to make a case that the current CEOs, with their golden parachutes and gargantuan benefits are worthy much more than the ones who actually built America's industrial empire instead of allowing it to be hollowed out. Let us be blunt: it is not true. The system is staked out against producers. Selling America's children in bondage to Red China in exchange of a mess of pottage and trinkets has become much more profitable than producing. Thankfully, Carnegie is not alive to see what happened to America!

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This observation is at least as old as Adam Smith, who was not worried about income inequality because he was confident in the ability of inept heirs to waste their fortune.

Yet Pastor Niebuhr felt very much alone in rural Missouri. https://www.tabletmag.com/jewish-arts-and-culture/279081/reinhold-niebuhrs-zionism

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This is really great information. Over 140,000 pass-through owners with over $1.6M in income. That is the threshold for the top 0.1%. Is there any significant amount of workers in that bracket who are not pass-through owners? I guess a few tens of thousands of pro athletes, artists, public executives and bankers?

I kind of new this bracket of people was a substantial untold part of the top 0.1%, but had no idea it was such an overwhelming percentage.

The question to me is whether the social value attached to their firm's profits is actually greater or equal to those profits. For example, if an auto dealership does a better job of local advertising than their competitors, not sure there is any social value created. On the other hand, if they can figure out a way to generate the same amount of gross margins with fewer sales people, that's an example of productivity improvement. I think that the default assumption should be that profits earned in competitive markets reflect value delivered, but if you want to start persuading people on the left, you have to start working on this argument, too.

" For example, if an auto dealership does a better job of local advertising than their competitors, not sure there is any social value created. "

Sounds like a judgement call. The essence of your argument is that no one working in advertising doesn't produce any social value.

Sorry, should be: "no one working in advertising produces any social value."

Advertising for common, well-known, low-differentiation products is mostly a zero-sum game, right? It's possible that marketing and advertising for novel products creates social well-being -- although there clearly is a lot of well-being destroyed; see the marketing success of Purdue Pharma -- but marketing success for local auto dealerships seems mostly divorced from social welfare.

"but marketing success for local auto dealerships seems mostly divorced from social welfare."

Yep, like I said, that sounds like a judgement call. Personally I find great social value in a profitable company providing jobs and economic activity in a legal manner.

I don't believe local advertising of undifferentiated products is a judgement call with regards to social value provided and your follow up is a complete non-sequitur. Let me propose the following hypothetical. You have two Ford dealership's offering identical products. One of them is run by a guy with a much better sense of the local media market. And he happens to be a great actor. He spends the same money on advertising as his competitor but gets more people coming to his lot. Since some of them are not very smart or not very price-conscious he is able to make more per car sold than his competitor. In this scenario he has used his skill set to transfer money from his customers and/or his competitor to himself while providing no actual value for the service (maybe more entertaining commercials)? Both Ford dealerships are providing jobs and economic activity, it is just a question of who sales the most cars at the better margins.

I don't think this is the main characteristic of most of the companies on this list and, more importantly, I don't believe the government as a general proposition should think they can do a better job of figuring this out than the market, so it's best not to interfere much. At the same time, sales ability is going to be a major driver in some non-negligent portion of these reported results. And a substantial component of the sales-oriented skill set is how to direct more revenue to yourself without any additional value-add. It would be foolish to pretend this isn't true.

"I don't believe local advertising of undifferentiated products is a judgement call "

Ok, but it looks like you are making a subjective statement. IE a judgement call. Indeed, the only way to make an objective evaluation is to have a widely agreed objective standard on what "social value" actually is. There is no such standard.

Personally, I value good advertising as a social value. And since millions of viewers watch the Super Ball commercials without watching the game, clearly I'm not the only one who puts social value in it.

I also occasionally watch videos of local "bad" ads, just because they are often intentionally quite funny. They are often very regional, and often don't even discuss product details. They mostly concentrate on getting the listener/viewer to remember the name. You can say they have no "social value" but I don't think you can actually prove it.

There is no reason to italicize the believe in that statement. I have thoughts about the world I believe are true. If I state something as fact without attaching the caveat that it is just my belief, that's just being dishonest about the nature of achievable knowledge about the world. Some of these beliefs I understand reasonable people following reasonable thought processes will differ on. Some I don't believe any reasonable thought process will come to a different conclusion. This is one of the latter cases. Hence, not a judgement call in my opinion. I've seen plenty of local car dealership ads. They are almost uniformly annoying and not funny. But that doesn't mean they aren't effective at building name brand!

If you start with a very strong prior that any profitable company must be delivering a social value equal to or in excess of their profit margin (and remember, this has to be in comparison to any less profitable company that would alternatively exist in that market or, in many cases, be actively competing in the same market), then you will pretty much always be able to find a story that explains how this is possible. Your explanation here seems very much in that line of thinking to me. For me, I don't really start with such a strong prior and it seems much more obvious that there are business skill sets that will generate profits in excess of their social value.

I don't see that you moved the argument forward at all. Without some kind of widely agreed upon objective standard of what constitutes "social values", this is all just a subjective discussion.

Ergo, my original, short statement stands: "Sounds like a judgement call."

"There is no reason to italicize the believe in that statement. "

Fair point. italicizing the word believe didn't really add to the discussion.

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Owner-managers who earn extraordinary success, income, and wealth are not a problem; indeed, it's the source of the economic miracle that once was America. But I believe high levels of inequality is a problem, a problem confirmed by economic history. No, not the inequality produced by successful owner-managers, but the inequality reflected in the concentration of 40% of total wealth in 1% of the population. If one worships inequality at this level, then one must accept financial and economic instability. No, it's not the owner-managers, it's the concentration of wealth and the risk taken by them and their advisors in search of higher returns to support the wealthy 1% in the lifestyle to which they have grown accustomed.

You're caught in your own web. This blog post shows that a big part of the "inequality reflected in the concentration of 40% of total wealth in 1% of the population" is because successful owner-managers are successful and make up a large portion of that 1%.

So again, either stop helping these people with their destabilizing unequal earnings and wealth or stop complaining about it.

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At least for small businesses, relationships may be a bigger part of the story than ability. At my old company, when our office managing partner resigned about ten years ago, our client base took a pretty big hit. Part of that was the recession, of course, but I tend to think the fact that her replacement was a guy from another office maybe 40-50 miles away and nobody in the local business community had ever heard of him before played a big part in it, too. Not that reputation and trustworthiness and so forth count for nothing, but it's worth distinguishing those things from other kinds of human capital.

Why? People skills are skills. What is the meaningful difference in distinguishing?

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The problem with this is that it's easy to imagine that disruptive organisational changes correlate with deaths of owner managers, or that owner managers are valuable to firms by information hoarding and fiefdom building, rather than by unique skills, and added value within a transparent environment.

Like, Trump's enterprises might not survive well without Trump. But how much of this is because of his unique skills, and how much because the business is built around his cult of personality and its structure around his ideas of personal loyalty, and his efforts to make himself indispensable to the business (even if objectively, you could get a better business in the same sector without him, if that were not so)? Open question.

In a sense this doesn't change the conclusion - their "person" is adding to the firms' value, as the firm is presently structured. But it changes deeply the interpretation of whether we could conceivably be "better off without them".

This is another good point. But this is not the first time I've heard about a study like this one and in the first case the authors tried to look at less profitable owners as well. I believe it is the case that the most profitable firms take the biggest hit, which doesn't disprove your point but at least suggests that's not the most accurate explanation on average.

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On the other hand, the Geneva airport is full of private banking ads offering wealth management services to ensure your descendants don't have to work for money. Deceitful advertising?

@Axa - yes. I recall once a WSJ article on a rich guy who wanted to preserve his estate for the 'next 1000 years' and set up an elaborate program to do so. The article was a 'fun human interest' story but the writer made it sound that not even his kids were on-board for the next generation, much less the next 1000 years. It's consistent with the 'shirtsleeves to shirtsleeves in three generations' maxim but inconsistent with the main theme of the book "The Son Also Rises: Surnames and the History of Social Mobility" by G. Clark. Who's right?

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Yep. It’s pretty hard to get rich from idle capital when the risk-free interest rate on idle capital is below inflation.

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The referenced study is also consistent with the observation that the majority of professional sports athletes are in financial dire straits or bankrupt within 5 years of retirement. So if they stop working, things fall apart. That's arguably a sign of bad management rather than "value add", as some posters have already said upstream.

There's a prioritization issue because value add, like statistics, can be a feeling based business, not a decision science type based business. I mean, you got paid millions of dollars to play a sport. To play a sport you would have paid to play. Fuck it. What's the downside? Well, risk management.

@ a clockwork orange - yes, either bad value add or, as you say, bad risk management, which might be the same thing. If Warren Buffett somehow stakes his entire company's future on the spin of a roulette wheel in a senior moment, when he's about to die of dementia, and somehow the bet is taken and he loses, that's bad value add / bad risk management. Should we celebrate that founders have that kind of freedom, or, ask them to be more prudent?

Bonus trivia: it's been said the Canton Chinese don't like insurance, preferring to be risk-loving rather than risk-adverse. I think that's a net bad to society, arguably, though like the spiked steering wheel aimed at the heart, or everybody mandated to drive WITHOUT seatbelts, it might encourage more prudent behavior.

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I'm reminded of the post a few weeks ago about the endurance of rock groups. The Rolling Stones have lasted for over 50 years; The Beatles lasted what, fewer than 8 years?

But what was largely missing from that conversation was this question: should a rock group aim to have longevity? Under what circumstances?

Similarly there are a variety of owner-operated businesses. Some doctors still own their own clinics or operate their own offices; when they retire it's the end of that clinic. A feature, not a bug.

I don't know what The Heartbreakers have been doing since Tom Petty died, but even if they're still performing it'll be at a reduced level of popularity. The surviving Doors sometimes still performed after Jim Morrison died, but where they really still The Doors? Led Zeppelin stopped performing after Bonham died; The Who still perform, sort of, despite losing Moon and Entwistle.

But the Berlin Philharmonic keeps going regardless of the comings and goings of conductors and musicians.

Different models, different reasons for seeking longevity.

When the entrepreneur builds a really big business with a lot of employees, the stakes get higher. There are people whose jobs and livelihoods are dependent on that leader.

But I don't see an easy answer there. For their sakes, the entrepreneur ought to create a succession plan. But as other commenters have noted, this can be very difficult.

And it's not clear to me that it's really the responsibility of the entrepreneur to plan for the succession. Should Tom Petty have had a designated successor for after he passed away?

Nice! I was reading either Bergson's Creative Evolution or Poincare's Science and Hypothesis when I realized that the logical conclusions that spawned relativity aren't that the speed of light is constant, but that no reference time frame can be considered canonical. That's it. It was stretched to 'the speed of light is constant' as a hueristic.

I thought the same thing about that music piece. Longevity of fecundity as a metric misses the point entirely. All good things in ther own time. Let's not be inept actuaries for a life of bad art, bad business, and easy calculations.

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I grew 2 inches at 26 and it literally changed everything for me. Anyone looking for a life changing confidence boost definitely check out heightify.com. They sell subliminal tracks that increase height at any age, which I didnt even think was possible.

I think we've reached Peak Thiago.

I do not get your point.

I concur.

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Economists read this and imagine John Galt while the Straussians among us understand these founders are a bunch of car dealers and others whose wealth hinges on a network of rent-seeking relationships that perish with them.

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Here is the model - 1 in perhaps 1000 people are capable of developing and running a new business. Part of this is IQ, part emotional intelligence including distribution of the big 5 personality traits, part is the experiences they have and part is luck (50:50 calls going the right way). This elements vary widely depending on the particular nature of the firm, the same person who would be successful in fast food would fail in engineering for instance. So the argument is you cannot accurately measure or determine if any random person has these skills ahead of time to be successful. And by simple law of genetics it is very unlikely that the needed success package will be inherited in the same way. So it is almost impossible to replace the founder . Once companies get big enough they have established enough of a moat around their business to survive anyway (either via brands, or high capital requirements, or IP). This is a small to medium company problem. The conclusion is that any founders with successful small to medium companies should not expect their companies to survive them. So they perhaps pay lip service to this idea, but don't invest a lot in finding their replacements, because they know the odds of being able to do this is very very low. Probably the best they can do is establish trust funds for their kids which support them and give the rest to charity. They should also try to find a big company buyer for their business once they have reached the age when they want to stop working.

Sounds like a good model, you could write a business book on this theme. Today's unicorn company however skips the hard work of building a successful small company and goes straight to finding a big company to buy it out. Shame on them, or do they implicitly believe in our host TC's thesis of a Great Stagnation and realize they don't have the ability to create a moat or anything really unique around their company? So why are they bought out by Google? Maybe "deal fever" driven by M&A types working at Google? (my hunch) Recall Google is first and foremost an advertising company and second a tech company. They are into following fads for the headlines (self-driving car, etc). Fashion is fashion, also true in economics.

Bonus trivia: I'm still waiting for patents to become fashionable in economics. By the process of elimination economists will eventually get around to it, and some Nobel prize will be awarded in the next 50 years. Possibly Trump's trade war, if carried to the logical extreme and nothing really bad happens to the USA (the World Bank in their 2019 report is predicting a mere 0.3% to 1.5% nominal GDP hit due to a full-scale trade war, smaller by 2x than China's hit, and I would argue not that big a deal) will induce economists to reconsider their stance that patents are monopolies are bad. Time will tell.

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Thinking about this further, shouldn't the big ask be, "why is this leading to more inequality today than 50 years ago"? It's good to identify the right place to look, but I think this is really the question that needs to be answered. Were the social and policy conditions 50 years ago such that highly productive management of medium sized business was harder to achieve? Or was it that it was simply harder for such managers to capture the full benefits of their productivity? If you are wanting to return inequality to the level of a previous state, this seems like the question you really want to answer.

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People who treat their business like they own it whether they do or not, I would propose are more successful than those who consider themselves just caretakers. It's human nature.

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At a guess a lot of this is due to owners who have failed to find capable successors (who may not be relatives) and integrate them into the day-to-day managing if the company. Result: chaos when the owners suddenly dies. You can see th he same thing on history in monarchies that lacked well-trained successors.

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