The secret of small shares and huge fortunes... Why does Musk own only 9% of Tesla?
It may be surprising that tech giants like Elon Musk, Mark Zuckerberg, and Jensen Huang own small percentages in the companies they founded themselves (9%, 13%, and 3% respectively), yet they sit atop the world's richest billionaires. The secret lies in the growth equation followed in the world of entrepreneurship.
🔴 The equation of growth versus share: The secret of the game.
🔵 The need for funding: Big ideas and rapid growth require massive investments that the founder usually does not have.
🔵 The role of investors: This is where investors come in, providing the necessary capital for expansion in exchange for a stake in the company.
🔵 The critical trade-off: The entrepreneur faces a choice between retaining a large stake in a slow-growing and limited company, or accepting a smaller stake in a rapidly expanding company whose value is growing tremendously.
🔵 Conclusion: Although the founder's percentage decreases, the financial value of this small stake in a giant company becomes much larger than the value of their large stake in a small company.
🔴 Expert opinion: 1% of a billion is better than 10% of a million.
🔵 The Egyptian entrepreneur Mohamed Abu Al-Naga (Najati), who co-founded companies worth $4.5 billion, simply stated: "Rapid growth means investment... 1% of a billion-dollar company is better than 10% of a $10 million company."
🔴 A lesson from history: The story of Apple and its first investor.
🔵 The story of Apple is a classic example. In 1976, co-founders Steve Jobs and Steve Wozniak agreed to give investor Mike Markkula a 26% stake in the company for just $250,000.
🔵 This investment not only provided crucial financial support but also brought management expertise that shaped the company's trajectory in its early days, which Wozniak himself acknowledged, attributing Apple's success to Markkula more than to himself.
If you were an entrepreneur with a promising idea, would you prefer to keep a majority stake in your company with slow growth, or give up a large part of your stake for a chance at rapid growth and global reach?
Gold today@