Introduction: The Lightbulb Moment

In the world of private equity, the allure of ownership can be intoxicating. There’s a sense of pride—perhaps even ego—attached to how large your equity slice is in any given investment. After all, a bigger slice typically means greater returns, right? But there’s a catch to this fixation on “more”—it can blind you to the broader vision. In chasing after a bigger percentage of the pie, you risk missing the ultimate prize: a bigger pie altogether.

This is the Pie Dilemma. If you focus only on how big your slice is, you lose sight of the strategies that could expand total value. The true “lightbulb moment” comes when you realize that your slice grows when you grow the pie. This principle is incredibly powerful in shaping deal structures, negotiation tactics, and long-term value creation for investors, operators, and entrepreneurs alike.

In this blog post, we’ll dive into why fixating on ownership percentages limits potential, explore real-world examples of businesses that have thrived by focusing on growing the pie, and outline strategies you can use to foster collaboration that expands total value for everyone at the table.

1. Why Fixating on Ownership Percentages Limits Potential

The Short-Sightedness of Equity Battles

Equity negotiations can sometimes feel like a high-stakes poker game—each party pushing, bluffing, and maneuvering to secure the largest possible percentage. While a hard-nosed approach to equity splits can yield short-term advantages, it often causes friction among partners that stifles collaboration and ambition down the line.

  • Ego Over Execution: When the focus remains narrowly on “me vs. you,” time and energy are siphoned away from the operational execution that drives sustainable growth. Instead of brainstorming ways to elevate the business, the core team ends up locked in zero-sum thinking.
  • Resource Fragmentation: A fixation on ownership can also lead to diluted resources—whether that’s management attention, capital allocation, or strategic decision-making. When each stakeholder fights for their slice, the most critical resources are not always deployed efficiently for overall growth.
  • Toxic Culture: The long-term impact of acrimonious equity battles can be toxic culture. If everyone feels they must protect their territory, you end up with siloed teams, weaker communication, and a lack of trust that permeates all levels of the organization.

Limiting the Upside

A narrow focus on percentages ignores the possibility of exponential growth. Even if you own a relatively small slice of a rapidly growing pie, your absolute returns can be colossal. Conversely, having a majority stake in a stagnant or slow-growth company can cap your eventual payout.

  • Risk-Return Imbalance: With a limited pie, the pressure to scale the business is sometimes overshadowed by the security of “ownership.” But in private equity, the real payoff comes from outsized growth. By constraining the pie, you’re effectively settling for a lower ceiling of returns.
  • Missed Opportunities: When the conversation is dominated by who gets what, you can miss market opportunities that require collaboration. Especially in fast-moving sectors—think tech, healthcare, or renewable energy—being agile and forging strategic partnerships can unlock entirely new markets.

The Value of Alignment

Private equity thrives on successful exits and value creation over time. Alignment among management, investors, and key stakeholders is essential to push a business forward quickly and efficiently. If each stakeholder is laser-focused on equity percentages rather than strategic alignment, you diminish the potential for synergy.

  • Shared Incentives: Aligning incentives across management teams, founders, and investors can galvanize everyone to drive value. Stock option plans, carried interest, and revenue-sharing models can all be structured to reward growth more than ownership.
  • Long-Term Partnerships: Over the typical holding period of a private equity investment (often 3–7 years), it’s paramount that all parties stay motivated. A smaller slice of a huge pie can yield significantly higher returns than a large slice of something that isn’t growing.

2. Real-World Examples of Businesses Thriving by Focusing on Growth

Case Study 1: Amazon’s Relentless Expansion

Amazon’s origin story is now the stuff of legend. In 1995, Jeff Bezos took a bold leap into e-commerce, famously starting out of his garage in Seattle. Early on, Amazon secured around $1 million in angel funding from family and friends. By 1996, famed venture capital firm Kleiner Perkins Caufield & Byers invested $8 million, acquiring equity that would later be worth billions.
Questco has built a phenomenal organization that proudly supports small businesses and the people that enable their success,” said Jason Randall, CEO of Questco.

Amazon’s IPO in 1997 valued the company at a modest $438 million. Bezos, his early team, and investors were not overly concerned about short-term profitability or ownership control—they were focused on scale. Over time, Amazon plowed significant capital into logistics, warehousing, and eventually Amazon Web Services (AWS).

  • Outcome: Even though Bezos and early investors experienced equity dilution through multiple funding rounds, the value of their remaining slices skyrocketed. By 2020, Amazon’s market capitalization had soared above $1 trillion, and it has since continued to grow, often hovering well above $1.3 trillion. The lesson? Sacrificing a bigger slice early allowed the overall pie to expand exponentially.

Case Study 2: WhatsApp’s Acquisition by Facebook

When Facebook (now Meta) acquired WhatsApp for $19 billion in 2014, many were shocked by the massive price tag for a company that generated negligible revenue at the time. WhatsApp’s founders, Jan Koum and Brian Acton, had spent years focusing on user growth rather than monetization—or personal ownership battles.

They had raised around $58 million in total venture capital from firms like Sequoia, which took a significant equity stake. But the founders and investors knew that rapid user adoption would potentially yield a far larger return than quibbling over slices.

  • Outcome: By 2014, WhatsApp had nearly half a billion users, making it an attractive asset for Facebook, which saw the opportunity to expand its global messaging footprint. Though WhatsApp’s founders and investors gave up equity through its funding rounds, the $19 billion acquisition ensured that every stakeholder’s slice was worth far more than if they had simply fought to keep a bigger share of a smaller entity.

Case Study 3: Apple’s Strategic Partnerships and Acquisitions

Apple has a long history of acquisitions and partnerships that have helped it become one of the world’s most valuable companies—frequently sporting a market cap above $2 trillion. From the $429 million acquisition of NeXT in 1997 (which brought Steve Jobs back to Apple) to the $3 billion acquisition of Beats in 2014, Apple’s growth has been fueled by strategic moves rather than territorial thinking.

Moreover, Apple allocates substantial resources to R&D—exceeding $27 billion annually in recent years—to nurture innovation and new product categories. While Apple’s end-to-end control is legendary, it also engages in key partnerships, such as initial collaborations with major carriers to ensure wide-scale iPhone adoption.

  • Outcome: Although Apple prides itself on a cohesive ecosystem, it consistently joins forces with third-party developers, manufacturers, and service providers to grow the overall market. By forging partnerships and integrating acquisitions, Apple enlarged the total “pie” of its ecosystem, benefiting shareholders, developers, and users alike.

Lessons Learned

In each of these cases, the businesses did not reach iconic status by obsessing over ownership percentages. Instead, they deployed strategies that prioritized scale, user adoption, and ecosystem building. They understood that a smaller stake in a company that dominates a market is more valuable than a large stake in a niche player.

3. Strategies for Fostering Collaboration to Expand Total Value

Expanding the pie requires shifting away from zero-sum thinking toward a collaborative, long-term approach. Below are actionable strategies you can use—either as an investor, operator, or founder—to break the ownership deadlock and unlock greater returns.

1. Align Incentives Early

Why It Matters
Ensuring that all parties stand to benefit from growth is crucial for motivating collaboration. If key stakeholders feel undervalued or excluded, growth initiatives can stall due to internal friction.

How to Do It

  • Equity Pooling: Create an option pool or incentive pool early that sets aside equity for future hires or rewards for milestones. This not only motivates current employees but also allows you to attract top talent without endless renegotiations.
  • Milestone-Based Vesting: Tie vesting schedules to performance metrics and growth milestones rather than just time. This way, everyone is focused on the same targets.
  • Alignment with Capital Partners: Whether through preferred equity structures or performance-based ratchets, structure deals so that both founders and investors share upside potential in a clear, fair manner.

2. Embrace Transparent Communication

Why It Matters
Miscommunication often breeds distrust, which leads to defensive posturing and territorial thinking. Transparency fosters a sense of unity and shared purpose.

How to Do It

  • Regular Check-Ins: Schedule periodic all-hands or leadership meetings where growth metrics, financials, and strategic pivots are openly discussed.
  • Open Book Management: Some companies adopt an “open book” approach, sharing financial statements and performance data broadly with their teams. The more people understand the state of the business, the more they feel like genuine partners.
  • Seek External Validation: Bringing in external advisors or consultants to validate the business plan and projections can also reduce internal skepticism. When everyone sees the same objective data, they’re more likely to unite around shared goals.

3. Cultivate a Culture of Collaboration

Why It Matters
Culture is the invisible framework that guides daily decision-making. If the culture promotes collaboration over competition, the entire team or syndicate will more naturally seek ways to grow the pie.

How to Do It

  • Hire Team Players: When evaluating new hires—especially leadership—look for those who demonstrate collaborative values. This sets the tone from the top and cascades down.
  • Cross-Functional Teams: Encourage cross-departmental projects and pair people from different functions or portfolio companies. These interactions can spark innovation and uncover new revenue streams.
  • Celebrate Collective Wins: Recognize successes as team achievements rather than highlighting individual performances. This reinforces the idea that success is a shared outcome.

4. Pursue Strategic Partnerships and Ecosystems

Why It Matters
Partnerships can rapidly accelerate growth by leveraging another entity’s audience, distribution, or technology. Rather than building everything in-house, you can expand the pie by pooling resources.

How to Do It

  • Identify Complementary Players: Look for companies that offer adjacent products or services. For instance, a SaaS platform might partner with a cybersecurity firm to provide an integrated solution.
  • Collaborate with Competitors: Sometimes, even direct competitors can form alliances for mutual benefit—such as standardizing an industry protocol or co-marketing in new geographic regions.
  • Co-Invest and Co-Develop: If you’re in private equity, consider co-investments alongside strategic partners. This can expand deal size, reduce risk, and lead to broader market dominance.

5. Reinvest in Growth

Why It Matters
Growth doesn’t happen overnight or by accident; it often requires substantial reinvestment of capital, human talent, and time.

How to Do It

  • Flexible Capital Structures: Work with your portfolio companies to establish capital structures that provide adequate runway for expansion—whether through lines of credit, mezzanine financing, or convertible notes.
  • R&D and Innovation: Allocate a fixed percentage of revenue or investment capital to research and development. This fosters long-term innovation and keeps you ahead of industry shifts.
  • Talent Development: Growth depends on people as much as capital. Invest in training, leadership development, and recruitment to build a team capable of scaling the business.

4. Flip the Switch: Are You Fighting Over Slices or Making the Pie Bigger?

Let’s pause and ask the all-important question: Are you fighting for bigger slices of a static pie, or are you focused on expanding the pie itself? This question goes to the heart of value creation in private equity—and, frankly, in any high-growth venture.

  • Assess Your Mindset: Take a hard look at your most recent negotiations, term sheets, or boardroom discussions. Were they centered on how to grab or retain more control, or on how to partner up for exponential growth?
  • Examine the Opportunity Cost: What market opportunities might you be overlooking because you’re too busy defending your slice? Could a strategic partnership, an alliance, or even short-term dilution open the door to a much larger market?
  • Implement a Growth-First Strategy: If you find your organization overly fixated on equity battles, institute structural changes. Adjust incentive schemes, bring in a neutral advisor, or reframe the conversation to emphasize long-term outcomes. Cultivating this mindset shift is not always easy, but it’s often the deciding factor between incremental improvements and game-changing success.

Conclusion: Think Bigger, Grow Bigger

Growing the pie is not just a phrase—it’s a strategic imperative, particularly in private equity. By moving the focus from immediate ownership percentages to long-term value creation, you align all stakeholders toward a single goal: making the business more successful. And in so doing, you end up with a slice that’s not only bigger in size but also infinitely more valuable when it comes time for an exit or secondary round.

The most successful entrepreneurs, investors, and operators understand that collaboration, alignment, and long-term thinking are the driving forces behind market dominance. As the old saying goes, “If you want to go fast, go alone; if you want to go far, go together.” In private equity, going far is usually the difference between a decent return and a transformative outcome.

So, the next time you’re in the boardroom or on a call, debating the finer points of equity splits, take a step back. Ask: Are we fighting over the slices, or are we making the pie bigger? Because the latter is often the key to truly remarkable success.

Final Thought: The moment you shift your focus from individual stakes to collective growth, you open up avenues for synergy, creativity, and market expansion. That’s the lightbulb moment. When you grow the pie, everybody wins—so let’s start baking.