Beware of people who are better at capturing the value others create than creating value themselves.
Building a successful business requires years of experimentation, risk-taking, problem-solving, and execution.
But once a business begins to succeed, it attracts people who want to participate in its success.
Some bring valuable capabilities that help the company grow. Others may be more interested in controlling what already exists than creating something new.
The ability to claim ownership, authority, or recognition is not the same as the ability to create the underlying value.
This is the distinction behind the mental model: Those Who Can’t Build, Steal.
Value Creation vs. Value Capture
Economists distinguish between value creation—producing something valuable—and value capture—obtaining a share of the benefits that value produces.
In his landmark 1986 paper, Profiting from Technological Innovation, David Teece demonstrated that innovators do not necessarily capture the economic rewards from their inventions.
Those rewards may instead flow to other parties who control important complementary assets, such as distribution, manufacturing, or market access.
This is not necessarily theft. Such parties may make genuine contributions.
But the research establishes a crucial fact: the person who creates the value and the person who captures it need not be the same.
The Problem of Opportunism
Economist Oliver Williamson developed the concept of opportunism, which he famously defined as:
“Self-interest seeking with guile.”
Opportunism occurs when individuals pursue their interests through deception, concealment, or other exploitative behavior.
Lucian Bebchuk, Jesse Fried, and David Walker subsequently examined how executives can use managerial power to extract economic benefits from organizations.
Research on knowledge theft has also examined how employees claim unjustified ownership or recognition for others’ contributions.
These findings help explain a danger facing founders: someone may be highly skilled at negotiating authority, cultivating influential relationships, and presenting themselves as indispensable without demonstrating a comparable ability to build.
Why This Matters
Founders often recruit experienced executives to solve problems beyond their own expertise.
This can be entirely appropriate. Research on founder succession shows that bringing in professional management can help businesses develop.
The danger arises when someone demands the rewards or control associated with exceptional performance before demonstrating an exceptional contribution.
A charismatic executive may promise to transform the company, seek substantial equity, demand control over key relationships, or attempt to marginalize the people who created its success.
None of these actions alone proves dishonest intent.
But they justify careful scrutiny of the individual’s actual contribution, incentives, and proposed authority.
The Practical Principle
Before giving someone significant control over a business:
- Verify what they have built. Examine specific achievements, independent references, and measurable contributions—not merely prestigious titles or persuasive claims.
- Distinguish contribution from appropriation. Determine whether they created results or primarily claimed credit for other people’s work.
- Grant authority progressively. Match decision-making power, compensation, and equity to demonstrated capability and contribution.
- Protect what has been created. Clearly establish ownership, intellectual-property rights, board authority, voting rights, and contractual protections.
- Observe how they treat existing builders. Be wary of someone who consistently discredits contributors while positioning themselves as the only person capable of leading the organization.
The principle is not to distrust talented outsiders or assume founders are always right.
It is to recognize that impressive rhetoric, confidence, and political skill can conceal an absence of genuine productive capability.
Don’t confuse the ability to take control of something valuable with the ability to create it.
And before handing someone the keys to what you have built, make sure you know which capability they actually possess.
References
- Teece, D. J. (1986). Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy. Research Policy, 15(6), 285–305.
- Williamson, O. E. (1985). The Economic Institutions of Capitalism. Free Press.
- Bebchuk, L. A., Fried, J. M., & Walker, D. I. (2002). Managerial Power and Rent Extraction in the Design of Executive Compensation. University of Chicago Law Review, 69, 751–846.
- Damp, A. M., & Zweig, D. (2021). Knowledge Theft in Organizations. Academy of Management Annual Meeting Proceedings.
- Wasserman, N. (2003). Founder-CEO Succession and the Paradox of Entrepreneurial Success. Organization Science, 14(2), 149–172.
- Kaplan, S. N., & Strömberg, P. (2003). Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts. The Review of Economic Studies, 70(2), 281–315.