Founders 100 ETF Manager Michael Monahan Explains Founder-Led Outperformance Thesis
In an interview with Bloomberg's At The Money, Michael Monahan, partner and portfolio manager of the Founders 100 ETF (FFF), explains the thesis that founder-led companies outperform by about 3x. He details the definition of a founder-led company, the selection process for the ETF's holdings, and the sell discipline based on founder departure or fundamental deterioration.
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Michael Monahan, partner and portfolio manager of the Founders 100 ETF (stock symbol FFF), appeared on Bloomberg's At The Money podcast to explain the investment thesis behind focusing on publicly traded companies led by their original founders. Monahan stated that data shows founder-led companies outperform by about three times compared to the broader market. This conclusion was drawn from analyzing 11,000 stocks over a 30-year period, where founder-led companies grew approximately 4% greater than the S&P 500 on average.
Monahan addressed potential objections regarding sector concentration and survivorship bias. He noted that while technology companies are heavily represented among founder-led firms, these companies exist across the entire economy. He argued against survivorship bias by suggesting that founders bring unique qualities: vision, execution capability, charisma to build teams, and grit to endure hard times. Crucially, he contrasted the long-term thinking of founders, who plan in decades, with board-hired CEOs who often focus on quarterly results.
When asked if the outperformance stems simply from higher risk tolerance, Monahan countered that successful founders actually de-risk their businesses more effectively than non-founders. He referenced Marc Andreessen's stages of startup development to illustrate how founders systematically reduce uncertainty as they progress. Monahan also shared his personal experience as a founder of Beartooth Radio, explaining how building a company from scratch reframed his understanding of corporate leadership compared to his earlier career at Goldman Sachs and Sanford Bernstein.