Founder-led companies have outperformed the market by roughly 3x over the past 30 years across 11,000 stocks, growing about four percentage points a year faster than the S&P — the data set behind the Founders 100 ETF (ticker FFF).
Most investors reach for that trend through the technology sector or through venture funds like Peter Thiel's Founders Fund, which has more than $20 billion in assets and no room for an ordinary investor. Michael Monaghan built a public-market ETF instead, and says the outperformance holds across the whole economy, not just tech.
"We think that founders bring something really unique. They have the vision to see where to go. They have the execution to execute that plan they've envisioned. They have the charisma to build a big team around them. And they've got the grit to get through the hard times."
Monaghan spent 15 years at Goldman Sachs and Sanford Bernstein before founding and running his own startup, Beartooth Radio, and now runs FFF with a co-founder he describes as a classically trained Columbia Business School value investor.
The full interview is covered here so you can skip it. 15 minutes of audio, 6 minutes of reading.
Here are the 6 principles that matter.
👤 Guest: Michael Monaghan, partner and portfolio manager of the Founders 100 ETF (FFF), and a former Wall Street analyst, private-market investor, tech startup CEO and public-equity portfolio manager
🎙️ Host: Barry Ritholtz, who hosts Bloomberg's At The Money segment on Masters in Business
📰 Published: 16 September 2026 on the Masters in Business podcast feed, and on YouTube (Bloomberg Podcasts)
🔴 YouTube | ⏱️ 15 min | ✅ Time saved: 6 min
Key Takeaways
Founder-led companies have outperformed by roughly 3x across 11,000 stocks over 30 years, growing about 4 points a year faster than the S&P
Monaghan rejects tech concentration, survivorship bias and risk tolerance as the explanation — founders "de-risk their business even more than non-founders," he says
"Founder-led" means the original founder still running the company day to day, most often as CEO — a board seat or a chairmanship doesn't count Edge cases like Tesla and Berkshire Hathaway get decided by who is actually running the company, not by who filed the paperwork first
FFF narrows roughly 800 currently founder-led stocks to the 200 largest, then a valuation model built by his co-founder picks the 100 in the fund
The fund runs about 80% active share against the Nasdaq 100, with a hard 7.5% position cap rebalanced every quarter
The main sell trigger is a founder's resignation — FFF sells within 90 days of the announcement, not the actual departure
1. The 3x Thesis
Ritholtz opened by asking Monaghan to make the case for founder-led investing before anything else.
The headline number came straight from the fund's own back-test. "The data shows that founders outperform by about 3x. We looked at 11,000 stocks over 30 years. And on average, founder-led companies grow 4% greater than the S&P."
Ritholtz attributed the underlying research to Bain, and Monaghan didn't dispute the source, though he didn't name a specific study himself.
The pitch is built for someone who wants exposure to the Founders Fund kind of thesis — Peter Thiel's venture fund, with "over $20 billion" in assets — without the access a fund like that requires.
2. Not a Risk Bet
He then put three alternative explanations to Monaghan for the 3x figure: sector concentration, age or size effects, and survivorship bias.
Founder-led companies span the whole economy, not just technology. "We've got companies led by founders all across the economy," so it's not just a concentration in technology, "although there is a lot of a technology company that are led by founders."
He rejected survivorship bias outright. "We don't think it's survivorship bias. We think that founders bring something really unique."
Asked whether the edge is really just a higher tolerance for risk, he reversed the framing entirely. "I think if you dig in, a lot of these guys are successful because they de-risk all along the path, right?" He pointed to Marc Andreessen's staged de-risking model as the pattern he sees repeating: "I would gently say that I think founders de-risk their business even more than non-founders."
He contrasted founders with professional managers in one line: a board-hired CEO is chasing "the next quarter and the next PowerPoint presentation."
His own founder experience shaped the view before the fund existed. His startup, Beartooth Radio, "didn't necessarily find an exit," but building it from zero showed him a difference professional-manager jobs at Goldman Sachs and Sanford Bernstein hadn't: "There's a big difference between working at a world-class organization where you fit into their system and building your own system from zero to one."
3. Defining Founder-Led
Ritholtz asked how the fund draws the line between a true founder and someone who later took over, acquired or reinvented a company.
The test is the original founder, still in the seat, running the company day to day — "most often as the chief executive officer," occasionally a chief technology, chief medical or chief scientific officer. A board seat or a chairmanship doesn't qualify: "Board member doesn't have the efficacy we want. Chairman doesn't have the efficacy."
Elon Musk and Tesla is the case Monaghan calls the hardest. He wasn't the company's original incorporator, but "the company defines him as the founder," and a 2012-or-2014 court case settled it: "Elon Musk is one of the five original founders of the Tesla Motor Company." Ritholtz pushed back that Musk "wasn't the original founder," but once he took over he "so totally revamped the company" that "it looks nothing like the prior enterprise" — a distinction Monaghan treated as not worth splitting hairs over.
PayPal and SpaceX get different answers from Tesla. SpaceX is clean, Monaghan said: "He clearly was the founder." PayPal is not: it "was the merger of a couple entities," the original company Musk was building merging into "Peter Thiel's company."
Berkshire Hathaway and Monster Beverage set the precedent for buying a shell and building the real business inside it. "But he bought a failing textile company as part of a massive acquisition," and Monaghan counts Buffett as Berkshire's founder anyway. "They acquired a juice company, but it was really the energy drink company" that followed, he said of Monster Beverage, that counts as the founding.
4. From 11,000 Stocks to 100
The next question was how the fund actually narrows its universe down to a portfolio.
Roughly 800 of the 11,000 stocks in the 30-year data set are founder-led at any given time, Monaghan said, including in the current market.
The next cut is size. From the ~800, the fund takes "the 200 largest by market capitalization."
A valuation model then picks the final 100, built by his co-founder. "She's a classically trained Columbia Business School value investor," Monaghan said. "We build a valuation model using some factors to pick what we then believe are the 100 best out of the 200 largest."
5. Not Just the Nasdaq 100
Ritholtz named FFF's largest holdings (Meta, Nvidia, Oracle, Palantir, Dell, Arista and CrowdStrike) and asked why a founder-screened fund beats simply buying the Nasdaq 100, given the overlap.
FFF runs about 80% active share against the Nasdaq 100, and Monaghan puts the founder exposure gap even higher: "100% founders versus about 20% of the Nasdaq 100."
The sector mix is deliberately less concentrated in chips. "Right now, the Nasdaq 100 is 30% exposed to semiconductors, S&P at 20, and we're only at 10," which he credits to a broader mandate: the Nasdaq 100 is Nasdaq-listed names only, while FFF also picks up NYSE-listed industrials, energy and financials.
Positions are modified market-cap weighted, with a hard 7.5% cap per name, reset every quarter. The point of the cap is diversification, not conviction-sizing: "We don't take any single position more than 7.5% because we want to have some diversification in the portfolio."
The smaller names below the top 10 aren't filler. "There'll be days I wake up, I look at our portfolio, our top holdings are down, and the portfolio is actually up because those other 75 to 80 stocks that make up the balance 50%, they drive sometimes when the big guys aren't working."
Separately, Ritholtz cited Palantir, BlackRock and Apollo — run respectively by Alex Karp, Larry Fink and Marc Rowan — as multi-co-founder companies, to ask how strict the fund's test is when more than one founder remains. Monaghan's answer: as long as at least one original co-founder is still an executive, "that meets our test."
6. The Sell Discipline
He closed on what actually gets a stock removed from the fund.
The primary trigger is a founder's resignation, and the fund doesn't wait for the departure itself. "In the prospectus, we state that if a founder announces their resignation or we will sell within 90 days of that announcement. So we don't wait for them to actually leave."
A second, fundamental overlay can flag a sale even while the founder stays. Built by his co-founder, Monaghan calls it looking for "burnt pizza crust": "We think all of our founders can make great pizza. We don't want to tell them whether to make pepperoni or margarita." When a name's fundamentals deteriorate: "And if so, we'll slide it out and bring in the next best company."
Monaghan's case for FFF is a persistence bet rather than a sector bet: keep buying the roughly 800 public companies still run day to day by the person who built them, cap any one of the 100 winners at 7.5% of the portfolio, and sell fast, within 90 days of the announcement rather than the departure, the moment that stops being true.
Bonus Insights
Monaghan's own founder story wasn't a financial win. He was candid that Beartooth Radio "didn't necessarily find an exit," and said the experience reframed rather than validated how he thinks about founder-led firms — the fund's thesis didn't start from a personal success story.
The team splits the labor between data and judgment. The 11,000-stock, 30-year data set and the market-cap screen are Monaghan's side; the valuation model that picks the final 100 comes from his co-founder's "classically trained" value-investing background at Columbia.
The "burnt pizza crust" line is doing real work, not just color. It draws the boundary the fund holds to on purpose: judge the numbers, not the founder's operating choices.
Products, Companies & Tools Mentioned
Founders Fund (Peter Thiel's venture firm, cited as the $20B-plus thesis ordinary investors can't access directly — the reason FFF exists as a public alternative)
Meta, Nvidia, Oracle, Palantir, Dell Technologies, Arista Networks and CrowdStrike (Named as FFF's largest holdings, the jumping-off point for the fund's active-share case against a passive Nasdaq 100 tracker)
Palantir, BlackRock and Apollo Global Management (Cited by name for their still-serving co-founders — Alex Karp, Larry Fink and Marc Rowan — to probe how the fund's founder test applies when more than one co-founder remains)
Tesla (The hardest edge case: a 2012-or-2014 court case found Musk "one of the five original founders," even though Monaghan says he "wasn't the original founder" himself)
PayPal (Not counted the same way as Tesla — "the merger of a couple entities," including the venture Musk was building, into "Peter Thiel's company")
SpaceX (The clean edge case next to Tesla and PayPal: "he clearly was the founder," with no rival claimant)
Berkshire Hathaway (Buffett bought "a failing textile company" and built the real business inside the shell — the fund's precedent for counting the builder, not the original incorporator)
Monster Beverage (Started as "a juice company" before the energy-drink business that followed became, in the fund's counting, the actual founding)
Books & Resources Mentioned
Bain's research on founder-led-company outperformance (Cited by Ritholtz as the source of the 3x figure; Monaghan didn't dispute it but didn't name a specific study either)
Watch the full episode:
More Michael Monaghan interviews and podcast appearances
If this was worth your time, send it to someone who follows the name.
Get the latest market chatter as it happens: