Podcast & Book Reviews

November 8, 2024

Book Review | The Founder’s Mentality by Chris Zook & James Allen

The Founder's Mentality: How to Overcome the Predictable Crises of Growth | By Chris Zook & James Allen

A key principle of the NAOS investment thesis is gravitating towards founder led businesses. We, along with many others believe that founder led businesses have the ability to compound successfully over the long term. The analysis conducted by many different parties on this topic identifies this to be true. Why do they typically outperform? If you think about many of the highly successful businesses, they have been led by individuals who shape a performance based company culture, drive empowerment of employees and keeping things simple by having a single minded focus towards achieving a goal. A lot of what this boils down to is a highly valuable intangible. One way to describe this is the founder’s mentality.

This book by Bain & Co.’s Chris Zook & James Allen takes a deep dive into the typical company lifecycle, where the crisis points, and growth inflexion points (up and down) typically occur. Growth creates complexity and in turn, complexity can be the silent killer of growth. It explores some interesting examples of companies which have either been led by successful founders and/or companies which have seen individuals become CEO and adopted the founder’s mentality (also known in the book as an ‘insurgent mindset’) to great success. Interestingly, Perpetual Ltd (ASX: PPT) is a case study talked about in the book.

A good passage from the authors to describe the founder’s mentality:

“An obsession with the front line is fundamental to the founder’s mentality. It shows up in three ways—as an obsession with front-line employees, with individual customers at all levels of the company, and with the details of the business.”

Link to Book

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