Worth Capturing

Ries is warning founders that a company doing well is not safe. The better it does, the more it attracts what he calls “vultures”: buyers looking for something that works and is making money, so they can squeeze more out of it. Its builders can lose it at the very moment it is working.

Sol Price opened FedMart in San Diego in 1954 and ran it on thin markups, a “low margin retailer” in his phrase, and the best wages in town. By Ries’s count it had 40 stores and more than $350 million in yearly sales by 1975. That May the company was sold to retailers from Germany, and in December Price was fired. Ries says the new owners spent $150 million replacing his approach, and that by 1982 all 46 stores had closed and 8,000 people had lost their jobs. “The investors killed their own golden goose.”

Ries told the story in a May 2026 interview with Vikas Shah of Thought Economics about his book Incorruptible. Founders have been told that “success will protect them,” he said: find a product people want, make money, and success brings power and freedom. “If you don’t reckon with that, you are almost guaranteed to lose control of your company.” He cites a Harvard Law School study of venture-backed companies with standard governance: three years after going public, the founder is still CEO about one time in five. Every founder thinks, “Well, I’m in the 20 per cent.”

His example of a company built to survive its own success is Novo Nordisk. In 1922 Marie Krogh, a physician with diabetes, persuaded her husband August Krogh, a Nobel laureate in medicine, to detour to Toronto, where insulin had just been made. He came home with permission to produce it, and the insulin company founded in 1923 came under a nonprofit foundation in its first years. Today the Novo Nordisk Foundation, which those early foundations merged into, controls 76 percent of the votes through shares that its own articles forbid it to sell. Ries says the company once wanted to liquidate itself for a quick gain, and the foundation’s trustees stopped it. The structure, he says, “has proven itself resilient against every kind of golden goose activity.” FedMart had no such owner above it. It was a public company; it was sold, and within the year its founder was out. Ries’s conclusion: “if you don’t get the governance right, in the long run nothing else you do will matter, because you won’t be the one making the decisions.”