Understanding Founder vs. Manager Modes

Sep 5, 2024

Founder Mode: An Essay by Paul Graham

Introduction

  • Speaker & Occasion: At a recent YC event, Brian Chesky delivered a memorable talk.
  • Impact: Attendees claimed it was the best talk they'd heard; Ron Conway didn't take notes for the first time.
  • Focus: The talk raised questions about conventional wisdom in running large companies.

Key Themes

Conventional Wisdom Challenged

  • Advice Given: As Airbnb grew, Chesky was advised to "hire good people and give them room."
  • Outcome: This advice led to disastrous results, prompting Chesky to find a better method.

Alternative Approach

  • Study of Steve Jobs: Chesky studied how Jobs ran Apple, leading to better results.
  • Current Success: Airbnb's cash flow margin is among the best in Silicon Valley.

Common Experience Among Founders

  • Shared Experience: Many successful YC founders reported similar misleading advice.
  • Insight: The advice was suited for managers, not founders, creating a sense of dysfunction.

Two Modes of Running a Company

  • Founder Mode vs. Manager Mode:
    • Founder Mode: Emphasizes direct involvement and unique founder capabilities.
    • Manager Mode: Focuses on delegation and treating org chart as modular design.

Problems with Manager Mode

  • "Professional Fakers": Managerial advice may lead to hiring ineffective employees.
  • Gaslighting Feeling: Founders feel pressured to conform to traditional manager mode.

Founder Mode Characteristics

  • CEO Engagement: Likely to involve skip-level meetings, breaking the norm of only engaging through direct reports.
  • Steve Jobs' Retreats: Held annual retreats for the 100 most important people, not just those high on the org chart.

Unknowns and Discoveries

  • Lack of Knowledge: Founder mode is not well-documented or understood.
  • Customization: Autonomy and delegation will vary by company and time.

Predictions and Encouragement

  • Founder Achievements: Founders have succeeded despite poor advice.
  • Future Potential: Better understanding of founder mode could lead to greater accomplishments.

Conclusion

  • Significance: Discovering founder mode fully could revolutionize the way companies are run, akin to Steve Jobs rather than traditional managers like John Sculley.