By defending the pro rata rights of early backers against new, powerful investors, founders play an "infinite game." This builds a reputation for fairness that compounds over time, attracting higher-quality partners and investors in future rounds.

For a seed investor, the most critical downside protection isn't a legal term in a document, but the implicit guarantee that the founder will never quit. This psychological commitment is the ultimate, unwritten liquidation preference.

To prevent the next generation of leaders from being burdened by debt, WCM's founders transfer their ownership stakes at book value—not market value. This massive personal financial sacrifice is designed to ensure the firm's long-term health and stability over founder enrichment.

In the 1950s, founder Jonathan Bell Lovelace's near-death experience became a catalyst for innovation. Realizing the firm's immense key-person risk, he designed the "Capital System" where multiple managers contribute to portfolios, ensuring client continuity and firm resilience.

The founder's partnership allowed him to build a company without shouldering the initial financial risk. This "halfsies on risk" structure meant he never had true control or ownership, ultimately capping his upside and leaving him with nothing. To get the full reward, you must take the full risk.

Despite making millions, Chip and Joanna never took on outside investors. They knew private equity could accelerate growth and ease operational pain, but they chose to reinvest every dollar earned back into the business. This deliberate decision ensured they maintained complete control over their brand.

Founder Jonathan Bell Lovelace established a rule that ownership must pass to current employees, not be retained by his descendants. This ensures the firm's incentives always align with its active contributors and clients, a rare model for a family-founded firm.

A business transitions from a founder-dependent "practice" to a scalable "enterprise" only when the founder shares wealth and recognition. Failing to provide equity and public credit prevents attracting and retaining the talent needed for growth, as top performers will leave to become owners themselves.

Granting a full co-founder 50% equity is a massive, often regrettable, early decision. A better model is to bring on a 'partner' with a smaller, vested equity stake (e.g., 10%). This provides accountability and complementary skills without sacrificing majority ownership and control.