The Founder Mode vs Management Mode debacle
Why Paul Graham's advice is sound, but will be misused like the term "MVP" was.
I never wrote an article with the latest tech controversy because I aim to write evergreen content. But I want to share my take on the latest Paul Graham article, “Founder Mode.” Not the least because I have a feeling this term is here to stay, like “MVP” after
and Eric Ries popularized it.And like “MVP,” it will be wildly misused until it loses its real meaning.
Founder Mode vs Management Mode
The center of Paul Graham’s article is that there are two ways to run a company: Founder Mode and Management Mode. The former argued to be more effective than the latter. But most founders, as they scale their company, were advised to adopt Management Mode, which was disastrous for the business.
The “misguided” advice can be summarized by “hire great people and let them work”. And the article adds to that advice:
(…) what this often turns out to mean is: hire professional fakers and let them drive the company into the ground.
Then he closes the article with the example of Steve Jobs vs John Scully as Apple’s CEO.
How Founder Mode will be misused
Just because Steve Jobs was brilliant, he is often given a pass for being an a**hole at times. Then some founders justify their abrasiveness (unpaired with Jobs’ consumer insight brilliance) by using him as an example, not realizing the part they needed to emulate was not Job’s a**hole-ness.
The same will happen with Founder Mode.
Founders will justify micromanaging and decision-making centralization by saying it’s Founder Mode. This will happen even in areas where they are infinitely less brilliant than the person who should be running the initiative.
I have a real example of this from my career:
I was once a product leader at a company whose CEO was the main driving force behind product initiative prioritization. He was solidly in Founder Mode regarding the product. The end result was that the product's initial vision was brilliant, but having passed that, it was underperforming: Roadmap items rarely delivered on the business's goals. Then, we created a new team in a domain that the CEO didn’t have a clue about, so he allowed us to figure out what we could do. The result was that we achieved insanely high results. That led to the product function earning more trust, with other teams operating more independently, which, in turn, started bringing better results.
In defense of Founder Mode (but not what you are thinking)
Until now, you might have thought I was advocating against Founder Mode.
I am not.
Founder Mode and Management Mode is a flawed dichotomy, though.
What is being called Founder Mode is a set of conditions and behaviors that are more often present or easier to display as founders. But a company doesn’t need to be founder-led to have it.
Instead of learning the (easy) lesson of “let’s micromanage everything and call it Founder Mode,” we should learn the (hard) lessons:
1. Risk-taking appetite and acceptance of failure
As the startup failure rate is so high, founders are more risk-takers by definition. As a company scales, it starts to bring “adult supervision.” Professional managers, especially those with extensive careers in massive companies (as scale-ups often prefer to hire), have a lower risk threshold. Not only that, but they are employees, which means they are more easily fireable than a founder.
Shocker: No one wants to get fired.
Professional managers prioritize low-risk initiatives. They don’t want to be blamed for failures, especially early on in their tenure. They start thinking more about ROI (which inevitably passes through the cost of doing something) than raw impact. This inevitably pulls things down into the lowest and safest denominator of low risk and low impact. It’s managing the day-to-day and incremental improvements mode.
Do this exercise: Of all the roadmap items in your company right now, how many would be in the low-risk and low-impact corner?
If most things are “do or die,” professional managers will focus on safe bets. If failure is not an option, guess what? Risk-taking won’t be an option either. Companies need to incentivize bold bets by being okay with failure and learning fast. Disruptive things often fail.
Look at Google. Remember when they launched Gmail with 1 GB free storage (vs. the competitors’ 10MB), Maps, Wave (which was the foundation for Docs), Drive, Orkut and Plus? Look at them now. They invented the transformers technology that underpin the AI revolution we live today and did nothing besides safe bets. They had a human-sounding AI demo (Duplex) in 2018 (!!!!) and did jack shit with that:
2. Inspected trust
The best managers don’t want to be micromanagers. They want to empower and trust their team. But here is an important lesson:
Trust isn’t a management technique.
You absolutely should trust your team, but it should not be unquestioning trust. You shouldn't avoid inspecting the work and diving deep where necessary. You can trust someone while doing your independent investigation of the facts.
3. First-team mentality and breaking down silos.
Another trait founders have is an extreme unwillingness to stay in their lane. It’s their company. They don’t care about the organizational structure. If they see something that needs fixing, they skip management levels if necessary.
On the other hand, professional managers don’t want others sniffing their pants, so they don’t go about doing it to others. They are specialists, not generalists like the founders who needed to write code AND take out the trash. This leads to siloing. These siloed sub-organizations optimize for their silo instead of optimizing for the company.
To break this up, the company needs to develop a first-team mentality with the executive team: they are executives for the company first, then second leaders of their functions.
You don’t need to be a founder to develop that mentality; you just have to be a good leader and manager.
4. Stop hiring fakers
When hiring executives, the so-called “adult supervision,” the founders almost always know less about the function than the people they hire. However, this means that they are not skilled enough to fully understand the competence of who they are hiring, which leads to hiring phonies and bozos.
I don’t have a magic formula to stop this from happening, but some recommendations to hire better:
Is the company size they are most effective in similar to what you will be in 12 months or so? Too big of a gap will result in hardship for everyone.
Is there a leader in the function, for example, outside of the company, who you trust and who could help with the hiring assessment?
Can you promote someone from within, even if it takes a little more time to get up to speed? You could always hire the trusted leader mentioned above to be a coach.
Don’t tune your hiring process for the absence of weaknesses, hire for the fantastic strengths your company needs the most.
Closing thoughts
I hope this shines a little light on the Founder Mode discussion, especially since it is not about being a founder or a micromanager but about:
Increasing the risk-taking appetite and acceptance of failure;
Trusting, but verifying;
Breaking down silos and having a first-team mentality;
Stop hiring phonies.
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