Top Founder-Run Company Stocks That Can Drive Solid Returns

An updated edition of the March 10, 2025, article.

No one is better positioned to understand, nurture and build a company than its founder. Much like a mother devoted to raising her child, founders invest in their ventures with profound passion, unwavering vision and relentless dedication. Their appetite for risk often exceeds that of professional managers, as they willingly embrace new approaches, foster innovation and make bold choices to achieve success. As a result, these companies frequently become genuine manifestations of their founders’ core values and aspirations.

However, founder-run companies represent less than 5% of the S&P 500 index. But that does not make their contribution any less. Everyone is aware of the success stories of visionary founder-owners like Elon Musk, Warren Buffett, Steve Jobs, Jeff Bezos, Mark Zuckerberg and Bill Gates, who have redefined industries, creating trillion-dollar companies that continue to thrive. Some of today’s prominent founder-run companies are NVIDIA Corporation NVDA, Amazon AMZN, Meta META, Tesla, Inc. TSLA, Berkshire Hathaway Inc. (BRK.B) and Netflix NFLX. Founder-led companies represent nearly 15% of the total index’s market capitalization, with technology companies taking the lead.

As these companies are born out of a unique idea, they often involve technological innovation. These companies are built from scratch in a way that they can navigate challenges to stay sustainable over the longer term.   

Initially, others may not relate to a founder’s belief, making it difficult to source funds for the project. The founder often ends up putting personal wealth and savings into such bootstrap companies. If successful, they attract angel investors or raise funds. But it's always the founder-owner whose stake and risk are the highest.   

Moreover, a founder-owner often finds it difficult to delegate responsibilities as they are skeptical if others could do justice to the role. Thus, they often hold multiple senior/leadership positions and also face difficulties in finding a torchbearer. But one cannot be jack of all trades. Owing to their reluctance to delegate duties, these founders/owners tend to lose out on the benefits of professional expertise.

Nevertheless, there is strong evidence that founder-led companies tend to perform better over time.  Per Harvard Business Review Study, founder-led companies had a market-adjusted return of 12% over three years against a return of negative 26% for companies that hired a professional CEO. Our Founder-Run Companies Screen further makes it easy to identify high-potential stocks. Currently, stocks like Netflix, Intercontinental Exchange ICE and Affirm Holdings AFRM look appealing. 

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3 Founder-Run Companies to Add to Your Portfolio

Netflix, with a market capitalization of $387.7 billion, is considered a pioneer in the streaming space. The company evolved from a small DVD rental provider to a dominant streaming service provider, courtesy of its wide-ranging content portfolio and strong international footprint. Wilmot Reed Hastings Jr. co-founded Netflix with Marc Randolph in 1997 and is the executive chairman of the company.

Netflix has been spending aggressively on building its portfolio of original shows. This is helping the company sustain its leading position despite the launch of services like Disney+ and Apple TV+, as well as existing services like Amazon Prime Video. NFLX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company’s focus on streaming regional content has been leading to international growth. Netflix is diversifying its content portfolio and working on projects across India, Mexico, Spain, Italy, Germany, Brazil, France, Turkey and the entire Middle East. The company has launched low-priced mobile plans in India, Indonesia, Malaysia, the Philippines and Thailand. Moreover, the upcoming lower-priced ad tier is expected to further drive growth in these price-sensitive regions. 

Netflix’s 2025 priorities include improving its core business with more series and films to offer an enhanced product experience, growth of its ads business, and newer initiatives such as live programming and games. It believes these initiatives should help it sustain healthy growth and thus projects 2025 revenues between $43.5 billion and $44.5 billion and an operating margin of 29%.

Intercontinental Exchange, with a market capitalization of $95.6 billion, has evolved from a small start-up less than three decades ago to a company whose networks help customers manage risk, harness data and improve workflow efficiency. Jeffrey C. Sprecher, founder, chairman & CEO of ICE, stated, “These efforts saw ICE report its 19th consecutive year of record net revenues and record adjusted earnings per share, something we have achieved every year since we’ve been a public company.” Its competitive advantage lies in the digitization of fixed income workflows and automating mortgage manufacturing.

With over 5,000 indices representing more than $1 trillion in benchmark assets under management, the company boasts being the second-largest fixed income provider globally. This Zacks Rank #2 company has grown over the past two decades, primarily through buyouts and collaborations that have not only fueled its growth but have also led to achieving expense synergies.  

Intercontinental Exchange remains well-positioned for growth on the back of accelerated digitization taking place in the U.S. residential mortgage industry to overcome several inefficiencies across the mortgage origination workflow. While the company already boasts the largest mortgage network across the United States, the integration of Ellie Mae into ICE Mortgage Technology is likely to help the company in boosting its mortgage business.
A healthy and minimal risk-based balance sheet is likely to continue, providing stability and buoyancy over the medium to long term while supporting strategic investments.

Affirm, with a market capitalization of $16.3 billion, a financial technology company, has emerged as a major player in the BNPL space, one of the fastest-growing segments in fintech.  Affirm collaborates with merchants to integrate its pay-over-time solutions at the point of sale, boasting over 337,000 active merchant partners as of Dec. 31, 2024, across diverse sectors. Max Levchin, founder and CEO, believes “Affirm is in the strongest shape it’s ever been.”

Affirm benefits from organic growth, expanding merchant partnerships, advancing technology and product innovation and expansionary measures. Technology is the backbone of a payments company like Affirm, as it powers the company’s cloud-based, data-driven platform. Affirm uses advanced machine learning and predictive models to assess fraud risk and creditworthiness and personalize services, enabling better risk assessment and pricing. Its proprietary technology, with access to data from 215 million loans, improves efficiency and scalability, creating a moat. 

Affirm is steadily evolving into a broader financial services platform. This diversification strategy not only expands Affirm’s addressable market but also creates new revenue streams. The company achieved GAAP profitability in the last reported quarter and aims to maintain profitability starting in the fourth quarter of fiscal 2025. This Zacks Rank #1 company is also eyeing international growth, with launches planned in Australia and Western Europe.

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This article originally published on Zacks Investment Research (zacks.com).

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