> A former Harvard Business School professor recently released research into the effect of founder control on startup valuations. > He found that valuations of

> A former Harvard Business School professor recently released research into the effect of founder control on startup valuations. > He found that valuations of founder-controlled companies are 17% – 44% lower than non-founder-controlled companies. > This would seem to indicate that giving up control is a key to creating more value. A bit of rambling here, but it seems to me that shedding founders is a common stage of growth among companies that are "making it big". Companies hire c-suite level people in roles that didn't exist on-paper before (COO, CFO, CPO), from established public companies. From an investor/equity-rich-employee point of view, the path to cashing-in on your big, higher-valued company is made more clear with each such hire; as you can convince IPO underwriters that the future of the company is in the hands of people they should trust ("household" c-suite names). Of course, this has the effect of diluting the founder's ownership, which is what this researcher observed. Although, in exchange for diluting ownership, you're definitely growing the probability of being able to sell that ownership on the market one day.