How does the founder of a successful company instantly become super rich?
idiocracy69 asked:
Let’s say I start a company from the ground up, then soon it becomes a multi-million dollar company. Now, even though I started it, all of the money is in the company. This happens all of the time, so do those founders just take lots of money from the company since they started it, or is most of it tied up in the company, and they are just rich because they own the company, and the money is technically theirs?
Let’s say I start a company from the ground up, then soon it becomes a multi-million dollar company. Now, even though I started it, all of the money is in the company. This happens all of the time, so do those founders just take lots of money from the company since they started it, or is most of it tied up in the company, and they are just rich because they own the company, and the money is technically theirs?
I could start a business that became a billion dollar business, but as a CEO, I could just have the company pay me a $hitty $20,000 a year salary, then I wouldn’t get rich until I sold the company. But you don’t really see that happening.
MONTE
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May 31st, 2009 at 8:58 pm
EMORY
They take a salary just like everyone else. If the company is making millions, they are likely taking a big chunk of that out in salary.
June 3rd, 2009 at 12:19 am
ROCKY
You’re mistaken that you don’t really see founders sell the company. When a company “goes public” the founders sell part of it by issuing stock. The best example of this might be Bill Gates. He still owns a portion of Microsoft. But, he got rich by selling millions of shares to the general public.
June 5th, 2009 at 5:05 pm
VICKY
Well, its really quite simple. Once the company has achieved a certain level of sales average over two years, they can go public. Once public, they hold on to the majority of shares and then sell. If you have say 10,000,000 shares and they are worth $14.00 each. Well, you do the math. That’s how Mark Cuban on the Dallas Mavericks did it.
Or, like the original owner of Ebay or the George Forman Grill, wait for someone to buy it from you.
June 6th, 2009 at 5:44 am
MAUREEN
Nobody gets rich right off the bat like that. I have a cousin who tries to invent stuff for just that purpose, and I think he’s a hoser for doing it. You have to find a market, tap into it, and supply the demand. That’s not something that happens in a flash, and anyone who tries to tell you it can with their system is full of it. I don’t see it happening, because it doesn’t happen. Ever. Period. . . .
June 7th, 2009 at 10:55 pm
BENTON
If the company becomes successful eventually the market becomes mature, the company needs less cash and produces more than it needs. Still a large amount of the owners net worth is tied up in the company. Another way is to take a portion of the company public, then the founder sells part of the shares he retained. Again a large part of it their net worth is probably tied up in remaining shares of the company.
June 8th, 2009 at 12:05 pm
MITCHELL
The founder of a successful company become super rich on paper but not on cash flow. Now, if the founder sells additional stock to other shareholder, then you can actually take some of the money for personal use. Most of the time, business people try to increase the value of their company’s stock by improving the company’s performance (profitability). Once you take the company public, you can make a lot of money. When you create a company, you can get a significant number of shares approved, and later you can sell them via an IPO (initial public offering).