Is founder mode bullshit?

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By now you’ve probably seen Paul Graham’s post on “Founder Mode”. If you haven’t, it’s short and worth a read.

It’s also totally bullshit.

PG is very well respected. He founded Y Combinator and has been behind countless highly successful startups. His oft-quoted advice, “Make something people want”, is a pithy summary of a much more nuanced and thorough school of thinking (popularized by Eric Ries in Lean Startup).

Founder mode is perhaps another useful oversimplification. But founder mode will likely become an excuse for founders to flail, thrash and do whatever they want–PG even admits as much in the footnotes. But let’s take apart the essay to see what we can learn.

Founder mode

PG never defines “founder mode” beyond saying that it’s not “manager mode”. The main point of his essay–that companies will be more successful if founders manage however they want to, because professionals are lying fakers who are responsible for startup failure–is simply wrong. Here’s why.

First, the logic of founder mode is based on the survivorship bias fallacy. Instead of looking at a sample of companies–say, a cohort of hundreds of startups that began at the same time–PG looks at two companies–Airbnb and Apple. Both were complete outliers in terms of success. PG could easily have looked at an entire YC class to prove his point, but he instead uses on a sample size of 2 companies that succeeded, and extrapolated.

Second, founder mode fails to look at any other factors, such as industry or market growth. Did the company capture lightning in a bottle? Apple, obviously, found or created many, many enormous markets. The microchip movement led to many, many massively successful companies (Tandem Computer, Intel, etc.) and many management styles resulted in success. Moreover Apple has continued to succeed, long after the founders stopped running things. Airbnb also captured the lightning, as the sharing economy and proliferation of mobile devices changed many industries. Was it the founder’s management style, or the bottled lightning that was primarily responsible for success?

Third, in my firsthand observations having worked with or advised over 100 founders, what PG describes as founder mode is exactly what kills companies. Managing skip levels directly is a classic example of dysfunction and one of the worst things a leader can do. Leaving a founder in the CEO chair also didn’t seem to help FTX, WeWork, or countless other “founder mode” companies. Founders lie, fake and even commit fraud.

Misunderstanding manager mode

Manager mode is PG’s name for the opposite of founder mode. Manager mode is what happens when your company grows and you hire professionals (MBAs, specifically). PG paints all as “liars” and “fakers” who subsequently run your company into the ground–ignoring pretty much every company that ever went public on the NASDAQ where the professionals who were brought in did great work. But let’s start at the beginning.

Founders are usually comfortable early on, especially founders who have never managed teams before. Small teams are able to move quickly, operate in an environment of high trust and deep understanding, and there is no reason for management because there is usually no organization to manage.

Somewhere around 50 employees, things change. Talking a problem through with everyone and changing the company’s strategy overnight is no longer possible. By 100 employees, management becomes more about budgeting, culture and true leadership than doing the actual work. My friend and repeat founder Sean Byrnes calls it explicit leadership, meaning you no longer lead by example but rather write things down. In other words, manager mode.

The most valuable companies by enterprise value, such as Apple, Microsoft, Google, Amazon, or Walmart, might have characteristics of founder mode, but they are full of managers and they are led professionally. What separates them from the rest is culture–the way they do things is truly different, and they are participants if not leaders in the largest markets.

Worthwhile takeaways

If founder mode as a concept is bullshit, there are some gems in the article. Being true to your management style is important–even if your management style limits you. That can also mean bringing in a professional CEO or COO. Is Sheryl Sandberg just another professional faker? Being true to yourself is almost always great advice, and trying to act in a way that doesn’t feel right or authentic usually leads to bad outcomes. But that doesn’t mean never replace yourself as CEO, or delegate, when it’s time. That leads to worse outcomes.

Being willing to dive deep on subjects is also key. “Dive deep” is a core Amazon leadership principle for good reason. Steve Jobs famously dropped the first iPhone prototype into water to show there was still more space in it that could be used (bubbles came out). But you don’t have to be a founder to be detail oriented. Costco, Walmart, Proctor & Gamble, Clorox, Disney–they all have very detail oriented management styles, and they absolutely hire and train professional managers, even much disparaged MBAs.

Doing things unconventionally is a key advantage startups have and should never give up. PG talks about Steve Jobs’ retreat for the 100 most influential employees at Apple. Great, why not? There’s no rule against it.

Hiring well is critical. Most founders are bad at hiring. But they aren’t taking responsibility. PG uses his anecdotal conversations to describe why manager mode fails:

How about taking responsibility for hiring well, rather than just painting every professional in the world as a “faker”? Was Eric Schmidt, the CEO Larry Page and Sergey Brin hired at Google, also a faker? Thousands of founders have hired capable, honest managers and been more successful because of it.

Finally, not listening to bad advice is always good advice! As PG says, investors and board members who have not been founders themselves have no idea how to run a company. This rarely stops them from giving advice. As founder/CEO I’ve been on the receiving end of well intentioned, bad advice, and when I didn’t go with my gut it ended badly. Most investors and VCs simply don’t have the operating knowledge to provide good advice. The few who do are gold.

Hiding sins

Brian Chesky, whose YC talk ignited this whole discussion, has a much more nuanced view on founder mode. Lenny Rachitsky interviewed Brian and it’s worth a listen–Brian describes what he did and far from eccentric, it comes off not as a management philosophy but as a timely and intentional intervention. Brian nails how founders can take responsibility, and adapt their style when what they’re doing isn’t achieving the results they expect.

It’s hard–impossible, perhaps–to isolate what makes a startup or founder successful. I would argue management style is not among the most important reasons for success, because there are simply too many successful companies with too many different management styles. My podcast with Lars Leckie speaks to this–startups with great, experienced management teams doing everything “right” fail all the time.

As Sequoia’s Jim Goetz once told me, growth hides a multitude of sins. You can have a dysfunctional team–you can even call it "founder mode"–but if you've captured the lightning in the bottle, everyone will think you're amazing (and they'll put up with founder mode).