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Sharing the Wealth in a Technology Startup: How Much Stock is Enough?
Colleagues,
Fascinating article, reported in Xconomist, by the founder, J. Robert Beyster , of Science Applications International Corporation (SAIC), a $8.9 billion a year U.S. federal contractor. Mr. Beyster opines eloquently on how much equity a founder should retain in their company to maintain management control, motivate & attract top talent, and set the foundation for sustainable growth. Interesting take...unexpected from what is now a major corporate power in the Nation's capital...
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When I founded Science Applications International Corporation (SAIC) in 1969, I owned 100 percent of the company’s stock. However, I soon realized that to attract talented employees—and keep them—I would need to offer them real ownership in the business by allocating some of the stock I held. So, within a year after I founded the company, I had reduced my ownership stake to roughly 10 percent. The company continued to issue new stock every year (as well as recycling stock repurchased from departing employees) and by the time I retired in 2004, I owned less than 2 percent of SAIC’s stock.
There is no doubt that this approach to structuring SAIC’s ownership was an unqualified success. The prospect of owning and running a piece of the business attracted many extremely talented men and women to the company, and we were able to grow SAIC from nothing in 1969 to about $6 billion of annual revenues by 2004. Today SAIC’s annual revenues top $8.9 billion a year.
But for entrepreneurs and company owners, there is another question that I am sometimes asked: How much stock does the founder need to maintain control of the company?
I can only answer this question using my own example, as each situation is unique.
Read on at: http://www.xconomy.com/san-diego/2009/03/02/sharing-the-wealth-in-a...
ENJOY!
CC
Fascinating article, reported in Xconomist, by the founder, J. Robert Beyster , of Science Applications International Corporation (SAIC), a $8.9 billion a year U.S. federal contractor. Mr. Beyster opines eloquently on how much equity a founder should retain in their company to maintain management control, motivate & attract top talent, and set the foundation for sustainable growth. Interesting take...unexpected from what is now a major corporate power in the Nation's capital...
---------------------------------------------------------------------------------------------------------------------------------
When I founded Science Applications International Corporation (SAIC) in 1969, I owned 100 percent of the company’s stock. However, I soon realized that to attract talented employees—and keep them—I would need to offer them real ownership in the business by allocating some of the stock I held. So, within a year after I founded the company, I had reduced my ownership stake to roughly 10 percent. The company continued to issue new stock every year (as well as recycling stock repurchased from departing employees) and by the time I retired in 2004, I owned less than 2 percent of SAIC’s stock.
There is no doubt that this approach to structuring SAIC’s ownership was an unqualified success. The prospect of owning and running a piece of the business attracted many extremely talented men and women to the company, and we were able to grow SAIC from nothing in 1969 to about $6 billion of annual revenues by 2004. Today SAIC’s annual revenues top $8.9 billion a year.
But for entrepreneurs and company owners, there is another question that I am sometimes asked: How much stock does the founder need to maintain control of the company?
I can only answer this question using my own example, as each situation is unique.
Read on at: http://www.xconomy.com/san-diego/2009/03/02/sharing-the-wealth-in-a...
ENJOY!
CC
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