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Aswath Damodaran Profile picture
@AswathDamodaran
Dec 11, 2021 • 7 tweets • 4 min read • Read on X
Jack Dorsey's departure as Twitter's CEO, and the market's positive reaction to it, led me to thinking about founder CEOs and their complex relationships with the companies they run. Are they net pluses or minuses? Is there a prototype for a great CEO? bit.ly/3pKxFQ8
The Harvard Business Review and McKinsey have templates for great CEOs, but I am skeptical that they list only wholesome qualities. Great CEOs are not always nice people, many are over confident, and they come in so many different packages. bit.ly/3pKxFQ8
In my opinion, the right CEO for a company reflects where it falls in the corporate life cycle. Young companies need visionaries, growth companies benefit from builders, mature companies crave defenders and declining companies are best run by liquidators. bit.ly/3pKxFQ8 Image
A mismatch between a CEO and a company can arise because of a bad hire, a gamble on corporate rebirth or the company changing, and its consequences can range from benign, if the mismatched CEO is aware & willing to share power, to devastation, if not. bit.ly/3pKxFQ8 Image
The tech revolution in markets has created companies that age in dog years, with a 20-year tech company resembling a century-old manufacturing firm. Tech companies grow fast, don't stay at the top long and decline just as fast. bit.ly/3pKxFQ8 Image
The compressed life cycles at tech firms will cause mismatches of CEOs and companies to occur earlier, and more often. That should cause more turnover, but shares with divergent voting rights at many of these firms may entrench mismatched CEOs. bit.ly/3pKxFQ8
With family groups that operate in businesses that are spread across the life cycle, the challenges of finding family member CEOs that fit diverse needs will increase. Power sharing and outside CEOs may be needed to fill the gaps. bit.ly/3pKxFQ8

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More from @AswathDamodaran

Aswath Damodaran Profile picture
Feb 24
In my eighth data update, I look at the use of debt at businesses in 2024 to fund operations, with fictional, real and frictional reasons all causing differences in debt usage across sectors and regions. bit.ly/3D5jnnR
The debt versus equity choice begins with an understanding of the criteria that separate them - contractual vs residual cash flows, tax benefits and control of management. bit.ly/3D5jnnRImage
The illusory reasons for borrowing money include increasing ROE and debt being cheaper than equity, and for not borrowing are lower net income, lower bond ratings and debt's higher explicit costs. bit.ly/3D5jnnRImage
Read 14 tweets
Aswath Damodaran Profile picture
Feb 8
In my sixth data update for 2025, I move from macro topics (interest rates, risk premiums) to micro and look at why hurdle rates matter, what goes into them and how to estimate them, using my estimates of costs of capital across global firms to illustrate. bit.ly/4hOFmy3
If you own or run a business, you need hurdle rates to decide whether and how much to invest, how best to fund yourself and how much cash you can take out of the business. That is corporate finance in a nutshell, and the cost of capital is everywhere, bit.ly/4hOFmy3Image
In investing and valuation, the cost of capital reenters the stage, as the risk adjusted discount rate you use in valuing a business, based on its cash flows, or in the background, when you price companies. bit.ly/4hOFmy3Image
Read 14 tweets
Aswath Damodaran Profile picture
Jan 31
In my valuation writing/teaching, I argue that a good valuation is a bridge between story and numbers, and how stories can change overnight. DeepSeek's entry into the AI business has changed the AI story, but is it a break, a change or a shift? aswathdamodaran.blogspot.com/2025/01/deepse…
The AI story, pre-DeepSeek, was built around a lucrative end market for AI products/services, and high entry costs (investments in computing power & data), leading to a profitable, big business, with a (few) winners collection huge spoils. aswathdamodaran.blogspot.com/2025/01/deepse…Image
The pre-DeepSeek AI story played out in markets, pushing up the pricing of players in the space, from firms building the architecture (chips, power) to firms aiming for the product/service market (from Palantir to big tech). aswathdamodaran.blogspot.com/2025/01/deepse…Image
Read 13 tweets
Aswath Damodaran Profile picture
Jan 10
It the end of the first full week in 2025, and my annual data update for 2025 is ready. You can find the details on the companies used, the variables that I measure and the estimation processes here. bit.ly/408MIW5
The sample includes all publicly traded companies, listed globally, with a market price greater than zero. There are 47810 companies in the sample, and the US dominates, at least in terms of market capitalization. bit.ly/408MIW5Image
Over the last three years, the US has increased its share of global market cap from 42% to 49%, as China and Europe have seen their shares shrink. bit.ly/408MIW5Image
Read 10 tweets
Aswath Damodaran Profile picture
Dec 11, 2024
At the start of every year, I invite people to sit in the classes that I teach at NYU Stern, at least virtually. As the spring 2025 semester approaches, I am having an open house for all of my classes. Drop by, if you have the time. bit.ly/3ZA956q
I teach because I like the stage, making a difference in how people think and their career choices and not having a boss. Teaching may not be held in much esteem any more, but I love teaching, and there is nothing else that I would rather do. bit.ly/3ZA956q
There is no one template for teaching, but mine is built around teaching classes that have a story line, and using real companies in real time. I hope that I stay true to my motto that I would rather be transparently wrong than opaquely right. bit.ly/3ZA956q
Read 14 tweets
Aswath Damodaran Profile picture
Oct 28, 2024
The Sugar Daddy (or Molasses Mommy) is a bounteous benefactor who funds your needs, making you incapable of self-reliance. I use it to explain why corporate venture capital, sovereign wealth funds and green investing punch well below their weights. bit.ly/48mZFzj
In the aggregate, these groupings control immense and growing funding, under perform relative to their conventional peers (VC for CVC, active funds for SWF and energy companies/investors for green companies.funds) and often face no accountability. bit.ly/48mZFzj
The best players within the assured funding groupings, though, match up much well with the best investors in the conventional groupings, and and they tend to more independent, more transparent and clearer about their core and side missions. bit.ly/48mZFzj
Read 4 tweets

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