Team of Owners

You can’t “think like an owner”. You either are an owner, or you have different incentives. The Agency Problem is the conflict of interest that exists when one party is expected to act on the behalf of others. Interest alignment only goes so far. The Managers of an Equity Fund may claim, for example, that they co-invest and fees are performance based. But interests are holistic. You can easily hedge your exposure on the side, only invest a small part of your assets, or just be so wealthy that losses matter less (maybe less easy without family wealth). Owner Managed firms get around this because getting a firm off the ground typically requires most of your capital. Participation in profits is not the same as ownership. Participation tails off when the individual stops working. Ownership is foundational and cross-generational. Real long-term wealth is created over a longer time frame than any one working life. Real long-term wealth creation is a team sport that requires a team of owners.

Agency Problem