Paul Graham's latest essay explains why conventional business advice doesn't apply to startups. The Y Combinator founder argues that there are two different ways to run a company: founder mode and manager mode. And manager mode is the wrong way:
“The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do.”
You can read the entire essay on his blog.
When Indie Hackers was at Stripe, we were always a small satellite, and Patrick Collison was great about letting us do what we wanted to do, how we wanted to do it. But I heard tell of him making frequent dives into the muck of specific smaller projects within the larger Stripe mothership...
A week on a software engineering team writing code. Days helping a special team craft user survey questions. And he always responded to emails from anyone, including a lot of people outside of the company. And this was during a period where Stripe grew from 600 to roughly 10,000 people.
I don't know if anybody but the founder of a company has the history, the knowledge, or the care to go that deep on everything.
The "Founder Mode" concept is intriguing, but isn't this just a fancy way of saying "being a good CEO?"
Instead of labeling it a separate "mode," maybe the focus should be on identifying and cultivating the qualities that make a founder-CEO effective.
Blindly encouraging founders to "break the principle" of hierarchical management could lead to chaos. What about accountability and clear decision-making processes?
It feels like we're romanticizing founder intuition and risk-taking, while ignoring the very real need for structure and delegation as a company scales.
Perhaps a more valuable discussion would be how to blend the best of both "modes," allowing founders to maintain their vision and drive while building a sustainable and scalable organization.
The best example of founder mode I've ever come across is Deng Xiaoping, the guy who succeeded Mao Zedong as China's "paramount leader" in the 1970s and guided the country from Communist backwater to one of the fastest-growing economies in the history of the world.
A good book on the topic is "How China Escaped the Poverty Trap" by Yuen Yuen Ang.
Deng Xiaoping threw out conventional advice on how to run a country because the conventional advice took certain building blocks for granted, e.g. institutions of good governance, professional bureaucrats, modern courts, formal accountability, etc. But China didn't have any of that in the 60s and 70s. It was in a state of political anarchy with widespread starvation, extreme poverty, and rampant mass killings.
So Deng Xiaoping's playbook was no playbook:
"hire professional fakers and let them drive the company into the ground"
Raises the question... why do managers do this? One answer is that they just don't care as much as the founder. Managers/employees don't have (enough) skin in the game.
Elon musk also comes to mind, after reading his biographies, as a "micromanager". But it's because he cares and is HEAVILY invested (major skin in the game). And he's a genius... so he can actually understand the details and micromanage effectively.
Skin in the game is a big factor. My friend Lynne is tired of running her company. It's very successful and she could easily sell it, but she doesn't want to risk a manager coming in and doing a bad or mediocre job. She has too much pride as a founder and the company is tied to her reputation. I doubt professional managers have the same pride when they're joining a ship they didn't help start.
There's also compensation. Founders own stock from day one and need the company to grow, whereas managers are usually offered a big compensation package regardless of performance, because they have to be recruited to join.
Probably it's not micromanaging, but it can be seen as pure passion for every aspect of the startup/company journey. And for some extent, micromanagement is required until a company becomes an enterprise to gain as much knowledge as possible to drive fundamental decisions.
That is a good way to put it
It's great to see push back against orthodoxy. There are no one-size-fits-all solutions. Great founders should use their brains and reason from first principals as they develop their organization.
Pretty insightful & a mistake many founders do.
It's interesting to see what styles work for different people. Jobs, Chesky, and Huang are definitely always in founder mode, but Reed Hastings was the opposite. Seems that there isn't a one-size-fits-all solution!
Hmm. So, there is a new Founder mode in the market now. I think every startup starts with this mode only but once it reaches a good enough scale, one cannot simply execute operations smoothly without switching to the Manager Mode.
Nice article as usual and thanks for sharing!
Nah I dont think so
I believe that it's also going to depend on whether the person working on something is a good or a bad founder/manager/whatever you call them (scrum master 🫢). There is no one way of teaching managers, and a smart one can know better.
It is much more about passion and alignment towards vision than anything else. Most managers want to earn a living, they would do the same thing at one company or the other. Only a select few join and work for a company because they believe in it, and those select few are what you call founder-mode folks.