Founder Mode

2024/09/02

Tags: today-i-learned management founder leadership

Paul Graham’s “Founder Mode”

Paul Graham’s essay Founder Mode is doing the rounds in social media:

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.

There are as far as I know no books specifically about founder mode. Business schools don’t know it exists. All we have so far are the experiments of individual founders who’ve been figuring it out for themselves.

VCs who haven’t been founders themselves don’t know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world.

Curiously enough it’s an encouraging thought that we still know so little about founder mode. Look at what founders have achieved already, and yet they’ve achieved this against a headwind of bad advice. Imagine what they’ll do once we can tell them how to run their companies like Steve Jobs instead of John Sculley.

Paul Graham’s essay challenges the conventional business wisdom for CEOs of delegate to competent people. He advocates for “Founder Mode”—founder(s) are deeply involved in all aspects of the business. This includes micromanagement, frequent interactions across the organization, bypassing formal channels, and addressing even minor details.

It doesn’t seem controversial to me that founders, with significant skin in the game, can and often do run their companies differently than professional executives. However, while I believe Graham’s core idea has merit, his presentation lacks depth and nuance and therefore it is hard to argue one way or the other.

Alternative perspectives: Tim O’Reilly #

There’s also a great essay from another founder, Tim O’Reilly, How I failed. It has much more substance to it. I suggest to read the whole thing.

A candid post about some of the things that kept me, my employees, and our company from achieving our full potential.

The same lesson applies on the product and marketing side. I never regretted raising the bar — sending a book back for more work at the last minute, even though the author and editor thought it was done (in the early days, I used to read every O’Reilly book), deciding that the hotel the team had selected for the first Perl Conference was too cheap and didn’t set the right tone, and we had to move to another one — but I look back at the many times I let something go by that I shouldn’t have because the team would be upset, and I regret every one of them. You can be uncompromising without being a jerk. I sometimes wish I’d channeled my inner Steve Jobs a little more often.

Bill Gates and the bureaucracy problem #

The HNers resurfaced some other great posts on the subject. Looks like Bill Gates operated in a founder mode for a long time: My First BillG Review from Joel Spolsky.

In my BillG review meeting, the whole reporting hierarchy was there, along with their cousins, sisters, and aunts, and a person who came along from my team whose whole job during the meeting was to keep an accurate count of how many times Bill said the F word. The lower the f***-count, the better.

… and THERE WERE NOTES IN ALL THE MARGINS. ON EVERY PAGE OF THE SPEC. HE HAD READ THE WHOLE GODDAMNED THING AND WRITTEN NOTES IN THE MARGINS.

“Bill doesn’t really want to review your spec, he just wants to make sure you’ve got it under control. His standard M.O. is to ask harder and harder questions until you admit that you don’t know …”

But even he failed to win with the managerial class: Bill Gates tries to install Movie Maker from Internal Tech Emails.

Bill complains about many (and I mean MANY) usability issues:

I am quite disappointed at how Windows Usability has been going backwards and the program management groups don’t drive usability issues.

So they told me that using the download page to download something was not something they anticipated

So I did the reboot because it INSISTED on it. Of course that meant completely getting rid of all my Outlook state.

And so on. You get the point.

The execs initially take notice, but it goes downhill quickly:

From: Dave Fester
Sent: Wednesday, January 15, 2003 3:58 PM
To: Amir Majidimehr; Mike Beckerman; Tim Lebel
Subject: RE: Windows Usability Systematic degradation flame

I replied as well. I am owning the website issues, but Mike should own the others.

From: Mike Beckerman
Sent: Friday, January 17, 2003 7:36 AM
To: Mike Beckerman; John Martin; lan Mercer; Michael Halcoussis; Linda Averett
Cc: Chadd Knowlton; Ming-Chieh Lee
Subject: RE: Windows Usability Systematic degradation flame

haven’t heard anything from any of you on this.

My take is that this web-experience mess spans many groups and deliverables (like Plus), that we need one person/team to own the overall picture, driving it, tracking the experience, etc., and that WMPG isn’t really the right place. I’m thinking Dave’s team. What do you think?

From: John Martin
Sent: Friday, January 17, 2003 11:52 AM
To: Mike Beckerman; Ian Mercer; Michael Halcoussis; Linda Averett
Cc: Chadd Knowlton; Ming-Chieh Lee
Subject: RE: Windows Usability Systematic degradation flame

I have always been concerned about this and feel that this has a lot of engineering implications. I also feel that the reason is it such a mess is because marketing teams own release to web in this company. (…)

If only they’d created the Usability Committee to oversee the cross-functional program …

Jensen Huang’s unconventional leadership #

Another interesting founder is Jensen Huang of Nvidia. See The Unconventional Leadership of Jensen Huang: Inside Nvidia’s Unique Organizational Culture.

Renowned for his unconventional approach, Huang’s management methods defy the traditional corporate hierarchy. Instead, he champions empowerment, transparency, and adaptability.

Breaking away from tradition, Huang dismisses conventional status reports as too refined and disconnected from the company’s ground reality. He prefers a dynamic approach – encouraging every member of the organization to email him their “top five things” that are currently top of mind. This unique strategy enables him to “stochastically sample the system,” maintaining an authentic connection with Nvidia’s real challenges and ideas.

Quotes from Jensen Huang:

“The flattest organization is the most empowering one.”
“None of my management team is coming to me for career advice - they already made it, they’re doing great.”
“I do a lot of reasoning out loud.”
“If there is something I don’t like, I just say it publicly.”

The case for professional CEOs

Dare Obasanjo shared an interesting observation on Twitter:

This is a valid observation. I bet there are more very component CEOs who where not the original founders or early employees.

Beyond anecdotes

Can we get past the anecdotes? Maybe, as there’s an ETF for that: Global X Founder-Run Companies ETF (BOSS)!

Credit goes to Gergerly Orosz:

There are problems with using this ETF as a benchmark:

  1. It closed trading in Nov 2023 (today we have Sept 2024).
  2. It was rather small.
  3. It contained only public companies, and many founder-lead companies are private.

Point (3) is also interesting, founder-led companies are often earlier stage and private.

I guess we’ll stick to the anagoges for now. If nothing else, the “Founder Mode” at least started a good discussion on how to run a company.

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