There's a new meme going around in Silicon Valley: Founder mode.
These discussions are closely related to a recent blog post by Paul Graham, the founder of Y Combinator and a disseminator of startup wisdom. In his article, Graham discusses how founders like Brian Chesky of Airbnb often disregard conventional wisdom about running large companies. The traditional advice is: "Hire great people and let them do their thing." However, Graham points out that this approach often ends up as "Hire posers who will lead your company to failure."
Blog link: https://paulgraham.com/foundermode.html.
General content:
Last week at a YC event, Brian Chesky's speech left a deep impression on everyone present. Most of the founders I spoke with afterward said it was the best talk they'd ever heard. Even Ron Conway, who usually takes notes, forgot to do so this time. I won't attempt to recap the entire speech here, but instead want to discuss one of the issues it raised.
Brian's talk was about how the conventional wisdom on how to manage a large company is wrong. As Airbnb grew, many well-meaning people told him that he had to run the company a certain way if he wanted it to scale. Simplifying outrageously, their advice was: "Hire good people and then give them lots of room to do their thing." Brian tried this for a while and it was a disaster—it almost broke the company. He ended up having to figure out his own way, part of which involved studying how Steve Jobs ran Apple. So far, this seems to be working—Airbnb now has one of the highest free cash flow margins in the Valley.
In the audience were many of the most successful founders we've ever funded, and one after another they said they'd had the same experience. As their companies scaled, they too were given the same management advice, which not only didn't help but actively harmed their companies.
Why is everyone giving these founders bad advice? This was the confusing part. After some thought, I figured it out: what they're being told is how to run a company you didn't start—i.e., how to run a company as a professional manager. But this is not very effective for founders, and can even feel wrong. Founders can do things professional managers can't, and not doing them is a mistake because it goes against their instincts and experience.
There are really two ways to run a company: founder mode and manager mode. Until now, even in Silicon Valley, the default assumption has been that as startups scale, founders have to switch into manager mode. But we can infer the existence of an alternative from the disappointment of founders who try manager mode and then flee it.
As far as I know, there are currently no books about founder mode. Business schools don’t even know it exists. What we have now is just experimental knowledge discovered by individual founders reinventing it themselves. But now that we know what to look for, I hope that in a few years founder mode will be as well understood as manager mode. We already know enough to predict that it will differ in several important ways.
Managers are taught to run companies in a way that resembles modular design, specifically by treating the branches on the organizational chart as "black boxes." You tell your direct reports what to do and then let them figure out how to accomplish it themselves. You don't interfere with their detailed work processes because that would be considered "micromanagement," which is taboo in management.
"Hire great people and give them enough space to perform" sounds reasonable, doesn't it? However, according to reports from founders, reality often turns out this way: you hire professional posers, and then let them lead your company to failure.
One theme I noticed in Brian's talk and in conversations with founders was the sense of being "fooled." Founders feel caught between two forces: those who tell them they must manage the company like professional managers, and the employees who work for them when they try to do so. Usually, when you find yourself surrounded by people who disagree with you, you assume you're wrong. But this is a rare exception. Investors who haven't started companies themselves don't know how founders should run companies, and some C-level executives include some of the world's most skilled posers.
Whatever the founder model ultimately entails, one thing is becoming increasingly clear: it will break the rule that CEOs can only interact with the company through their direct reports. "Skipping levels" meetings will become the norm rather than a rarity that requires a special name. Once this constraint is abandoned, there are countless options to choose from.
For example, Steve Jobs used to hold an annual strategic meeting for the 100 people he considered most important at Apple, and these were not necessarily the top 100 executives on the company hierarchy chart. Imagine how much determination it would take to implement such a practice in an ordinary company? Yet, how helpful could it be? It allows a large company to have the atmosphere of a startup. Clearly, Steve wouldn't have continued holding this meeting year after year if it hadn't been effective. But I've never heard of another company copying this practice. So is it a good idea or a bad one? We still don't know, and this reflects just how little we understand about the founder model.
Obviously, the founder cannot manage a company with 2000 employees in the same way as running a team of 20 people. A certain degree of delegation is inevitable. How the boundaries of autonomy will be defined, and the flexibility of these boundaries may vary from company to company, and even within the same company, as management gradually earns trust, these boundaries will change over time. Therefore, the founder model will be more complex than the manager model, but it will also be more effective. We have already seen some clues from the explorations of individual founders.
In fact, another prediction I have about the founder model is: once we figure out what it is, we will find that many individual founders have already come largely close to this model - although their behavior is often seen as strange or even worse.
Interestingly, the fact that we know so little about the founder model is actually encouraging. Look at what founders have already achieved, and these achievements were made while overcoming resistance to bad advice. Imagine what they could achieve if we could tell them how to run their companies like Steve Jobs rather than like John Sculley.
Opposing Views
I also saw some opposing views on social media. For example, the graph below (as if low stock prices are the original sin).
Manager mode (blue) vs Founder mode (pink)
Founder mode (AirBnB) versus Manager Mode (Uber)
My feelings:
As a small company, compared to those large companies that have already built commercial barriers, we obviously need the founder to be more hands-on. How can you expect to find a capable person to solve these problems if you yourself don't understand some core issues? At this point, you should first ask yourself:
. If things go well, the company benefits and grows stronger, but the employees' gains are limited; if things go poorly, team members lose their jobs and face the risks and responsibilities of failure. Clearly, the level of risk and reward borne by both parties is not on the same level.
, ensuring that they do not get eliminated in the fierce competition of the business world.