Businesses need more threesomes, reveals market report

Shares in companies with three co-founders have far outperformed the stock market as a whole over the last decade, according to a major new report produced to mark the first International Threesome Month this September.

FIGURE: Graph comparing the growth of the Combined Trindex (in green) over the last 10 years with the growth of the NASDAQ-100 (alias NDX, in black), the S&P 100 (OEX, in yellow) and the Dow Jones (DJI, in red).

So finds The Trindex Report, a market analysis conducted by Photoroom to help mark the company’s new awareness month celebrating the genius of trios.

The new report compares the stock market performance over both the last 10 and five years of the 17 public companies with three founders on three leading stock indices – the Dow Jones, the NASDAQ-100® and the S&P 100 – with the 200 plus companies of all kinds on the same indices.

It finds that trio-founded companies in, for example, the NASDAQ-100® specifically grew six times faster than the NASDAQ-100® as a whole over the last 10 years.

The report also compiled a new combined stock index made up of all trio-founded companies across all three major stock indices (the NASDAQ, Dow and S&P). This “Combined Trindex” grew nine times faster than the Dow Jones over the last 10 years and seven times faster than the S&P 100. It also comfortably outperformed these indices over just the last five years.

“Many of the world’s top companies and brands – from Apple to Nvidia, YouTube to Airbnb – were founded by trios,” says Matthieu Rouif, Photoroom’s CEO. “Is this just a coincidence or maybe something significant, backed by hard data? We wanted to find out.”

Photoroom is also doing its part to make it easier for trios to work together – by opening its popular Photoroom Pro subscription to three users for the price of one. Subscribers can now invite two others to share their accounts at no extra cost and work as a trio on editing photographs.

Methodology – How Photoroom’s Trindex Report crunched the data

Photoroom started by identifying 17 public companies with both a trio of founders and a listing on any of the three big stock indices: the Dow Jones, the NASDAQ-100® and the S&P 100.

These 17 companies represent 8.2% of the total of all 207 different companies across all three indices (fewer than the gross totals of respectively 230 firms overall, or 20 trio-founded ones, since some companies, like Apple, feature in more than one index).

Photoroom’s data scientist then compiled the “Trindex”, a new stock index comprising only listed companies founded by trios.

He compiled, in fact, two different kinds of Trindex: first, a “Combined Trindex” or “Complete Trindex”, including all 17 trio-founded companies across all three indices, and then a second, narrower, more specific Trindex specific to each separate index: one for each of the three parent indices: the Dow, NASDAQ-100® and the S&P 100.

The NASDAQ-100® has the most trio-founded companies, with 11, followed by the S&P 100 with seven and the Dow with three.

Photoroom’s report analyzed stock marketing performance over both the ten years from July 1, 2014 to July 1, 2024 and, separately, the five years from July 1, 2019 to July 1, 2024.

It found that the Combined Trindex, containing all 17 trio-founded companies, grew way more than any of the three parent indices over both the past 10 and five years.

Over the past 10 years, the Combined Trindex has grown over four times faster than the NASDAQ-100, seven times faster than the S&P 100 and nine times faster than the Dow.

Growth of the Combined Trindex vs three leading stock market indices

Even without the input of such rockstar performers as Apple and Nvidia, the remaining trio-founded companies still outperform the stock market in general.

The specific NASDAQ-100® Trindex, featuring only NASDAQ-100® companies founded by trios, outperforms the overall NASDAQ-100® more dramatically still. It grew over twice as fast as the parent NASDAQ-100® over the last five years and six times as fast over the last 10.

The standalone Dow Jones Trindex, comprising trio-founded companies in just the Dow, performed 70% better than Dow shares overall over the last five years and roughly twice as well over the last 10 years.

The only index to buck this pattern was the standalone S&P 100 Trindex, comprising just S&P 100 companies with three founders. It grew three-quarters as fast as the S&P 100 over the last five years and over two-thirds as fast over the last 10.

“The fact that companies with three founders have outperformed the stock market in recent years does not, of course, mean they will continue to do so in the future”, says Matthieu Rouif of Photoroom. “But meanwhile, the findings of our new Trindex Report are striking.”

The figures suggest that companies with three founders have not only far outperformed the stock market but have been particularly effective in capturing the growth of more dynamic, high-growth sectors like tech. 

The venture capital firm First Round Capital noted in a recent annual “State of Startups” report that successful startups often had balanced teams with diverse skill sets, more likely to be present in teams of three or more. 

Data from Y Combinator, a leading startup accelerator, has likewise shown that successful startups often have multiple founders, with three being a popular configuration.

This reflects a common wisdom that the tech startups most likely to succeed have three founders, with complementary expertise in, respectively, tech, marketing/sales, and finance. 

Now Photoroom has taken these insights a stage further and shown with its new Trindex Report, tracing the shares of 207 listed companies over 10 years, that three may indeed be the magic number of founders for a new business, especially in tech. 

In short, Photoroom’s study suggests the best things in business, as in life, are three.

ADDITIONAL NOTES

• IMPORTANT: Neither The Trindex Report nor this blog post comprise investment advice and they should NOT be regarded as such. The fact that companies with three founders have outperformed the stock market in recent years does NOT mean they will do so in the future.

• The Trindex is “an equal-weighted fund”, which means that each company has the same weight, regardless of its stock price or market capitalization. This in turn prevents giant companies from skewing the overall results.

• Some companies, like Airbnb, were not being publicly traded at the start of the periods analyzed but were added to the relevant index as soon as they were publicly listed.