Founder Mode
The theme of Brian’s talk was that the conventional wisdom about how to run larger companies is mistaken. As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale. Their advice could be optimistically summarized as “hire good people and give them room to do their jobs.” He followed this advice and the results were disastrous. So he had to figure out a better way on his own, which he did partly by studying how Steve Jobs ran Apple. So far it seems to be working. Airbnb’s free cash flow margin is now among the best in Silicon Valley.
[…]
In effect there are two different ways to run a company: founder mode and manager mode. Till now most people even in Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. But we can infer the existence of another mode from the dismay of founders who’ve tried it, and the success of their attempts to escape from it.
[…]
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. That would be micromanaging them, which is bad.
As he says, if this term catches on it will be misused like “agile.”
A prime example of a tech titan embracing founder mode is Nvidia cofounder and CEO Jensen Huang, who has 60 direct reports and still eats in the company cafeteria.
[…]
Chesky spoke about how conventional advice on building and scaling up a startup is broken. He said, as he has before, that investors and outside managers just don’t have the insights that founders do. He said that splitting companies into organizational chart tiers — isolating founders from anyone but their direct reports — often kills the business.
[…]
There are also notable exceptions to positive founder mode: Sam Bankman-Fried and Elizabeth Holmes were both founders who operated with autonomy, then ignominy.
On the other hand, Satya Nadella and Tim Cook are both outside managers touted with turning their companies around — in both cases, building on the legacies of strong founders.
Tim Cook wasn’t CEO during the Apple turnaround.
See also:
- Bryan Cantrill
- Dave Winer
- Ken Kocienda
- Tim O’Reilly
- Ryan Jones
- David Heinemeier Hansson
- Peter Steinberger
- Dan Grover
Previously:
Update (2024-09-06): See also:
- Asad Zaman
- Martin Pilkington
- Marcin Krzyzanowski
- Yana Welinder
- Dare Obasanjo
- Miguel de Icaza
- Ben Sandofsky
Update (2024-09-09): See also: Kent Beck (via Hacker News).
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Founders have to care in a way that managers do not. Founders have to learn things managers do not. Failure to a founder is dream-ending. Failure to most managers is job-ending.
The soul and purpose of a company dies with its founder. When the founder leaves, the fate that awaits any public company is that its core values get /managed/ out of existence, replaced solely by a pursuit of profit. Apple is the best example.
As a founder of a tiny, very non-tech company, there are good points in this counter to Graham's essay. That said, I don't think either is wholly correct/accurate and the other not, and I do think it's important to recognize the differences of perspective and mindset that come from founders and many (most?) who come on board later.
Yes, founders. They are absolutely a homogenous lump.
Like at Uber, we work, open ai, Tesla, Theranos and Facebook.
Indeed.
As a mere prole, the "insight" here seems to be that founders are both inevitably good and inevitably the best people to make decisions. To be clear I don't believe managers are saints either, but there is at least a more plausible operating mode, that is more flat and technocratic, that does indeed entrust "good people", but that is open enough and collaborative enough that limited strata are in fact adequate to move things along. This is the way that most SDOs operate, for instance. But that's clearly out of the playbook of the sensibles, because it's contrary to accepted doctrines for growth.
The initial post also turns a blind eye to the fact that Airbnb is hated by people around the world for driving up tents, contributing to over tourism and eroding communities.
Founders are people, and people are capable of great things and horrible things. Looking at the growth of a company as an indicator of what kind of person someone is, or if the company itself is well run or not, is a bit simplistic.
I'm sure there is an alternative universe where something like Airbnb did not wreak havoc across the globe. The brain rot at the top of SV is a plague, and that initial post is but the latest example.
Haven’t watched the talk Graham refers to, of course, but… confirmation bias. Also, other founders loved the talk? How surprising!
Also, lots of founders are awful people and make awful decisions (as do managers), but unlike managers, founders are already rich by the time anyone cares about their supreme weirdness, and so don’t ultimately much feel the consequences of their actions. In fact, Saudi Arabia would like to invest more in their next venture.
