The Resilience Factor: How Adversity-Driven Founders Build Durable, High-Performing Companies

In an era of geopolitical turbulence, inflationary shocks, and supply chain fragility, the global investment landscape has shifted toward companies that thrive not in spite of volatility but because of it. Founder-led businesses in emerging markets, shaped by adversity and anchored in first-principles thinking, are increasingly outperforming peers in developed economies. These firms, often built by leaders who have weathered economic storms, embed resilience into their DNA through disciplined execution, long-term vision, and a relentless focus on innovation. For investors seeking durable returns, the key lies in identifying undervalued companies that combine these traits with a governance structure that balances founder vision with accountability.

The Adversity-Driven Mindset

Emerging market founders often operate in environments where scarcity and instability are constants. This adversity fosters a unique mindset: one that deconstructs problems to their core truths (first-principles thinking) and rebuilds solutions from the ground up. Consider Hyundai's Chung Ju-Yung, who transformed postwar South Korea's resource constraints into a mantra of frugality and reinvention. His “use both sides of a sheet of paper” philosophy drove Hyundai to maintain a 6% R&D investment during the 1997 Asian Financial Crisis, a stark contrast to competitors who slashed R&D budgets. This strategic patience paid off: Hyundai's 10-year warranty, introduced during the crisis, restored consumer trust and fueled 2% unit sales growth in a collapsing industry by 2010.

The same logic applies to modern-day firms like Indonesia's Alfamart, which has expanded its 20,000+ convenience stores into remote islands with underdeveloped infrastructure. By prioritizing localized execution over global supply chains, Alfamart has built a business model that thrives in fragmented markets. Similarly, Brazil's WEG has navigated hyperinflation and political instability by reinvesting in innovation and ethical governance, becoming a global leader in electrical equipment. These companies exemplify how adversity-driven founders turn constraints into competitive advantages.

First-Principles Thinking and the GRIT Framework

First-principles thinking—breaking down problems to their fundamental truths—enables founder-led companies to innovate beyond conventional wisdom. Tesla's Elon Musk, for instance, redefined the automotive industry by focusing on battery chemistry rather than legacy manufacturing. In emerging markets, this approach is equally transformative. NIO, China's electric vehicle pioneer, leveraged battery-swapping technology to address range anxiety and build a loyal user community. Despite geopolitical tensions, NIO's stock surged 150% in 2025, reflecting investor confidence in its first-principles-driven innovation.

To identify such companies, investors should look for the GRIT framework: Growth, R&D, Innovation, and Trust.
- Growth: Founder-led firms in emerging markets often target underserved populations. BDO Unibank in the Philippines, for example, is expanding to reach 50 million unbanked customers through digital and physical infrastructure.
- R&D: High R&D investment signals a commitment to long-term value creation. WEG's consistent reinvestment in R&D has allowed it to adapt to decades of economic volatility.
- Innovation: Companies like Rivian, which rebounded 120% year-to-date after a 14% delivery drop, demonstrate how founder-driven vision can outlast short-term setbacks.
- Trust: Delta Airlines' Ed Bastian rebuilt trust post-bankruptcy by prioritizing employee engagement and shared sacrifice, creating a culture that became a competitive moat.

The Resilience Premium and Investment Strategy

The “resilience premium” refers to the outperformance of companies that embed adversity into their business models. Stewart Investors and other firms have shifted portfolios toward founder-led emerging market companies, recognizing their ability to navigate inflation, supply chain risks, and local demand dynamics. These firms are less exposed to global trade fluctuations and more attuned to local conditions, making them particularly appealing in an era of fragmentation.

For investors, the playbook is clear:
1. Seek High R&D, Low Leverage: Companies with robust R&D and conservative debt profiles (e.g., WEG, BDO Unibank) are better positioned to weather downturns.
2. Prioritize Governance: Founder-led firms with transparent governance structures—like Hyundai's people-centric model—tend to align stakeholder interests more effectively.
3. Focus on Local Adaptability: Firms like Alfamart, which thrive in fragmented markets, demonstrate the value of localized execution.

Conclusion: Building for the Long Game

The next decade will reward companies that treat volatility as a catalyst, not a threat. Founder-led businesses in emerging markets, shaped by adversity and guided by first-principles thinking, offer a blueprint for durable, high-performing growth. By identifying firms with the GRIT framework—those that innovate from first principles, reinvest in R&D, and build trust with stakeholders—investors can capitalize on the resilience premium. In a world where uncertainty is the only certainty, these companies are not just surviving; they are redefining what it means to thrive.