Cascading Founder Mode
If you are in the startup and VC world (or in tech world in general), chances are you’ve heard a lot of discussions on the topic of Founder Mode vs Manager Mode, based on Paul Graham’s post.
High level, the gist is that Airbnb CEO Brian Chesky shared that traditional wisdom of “letting professional managers help you scale your company” didn’t actually work for him, and this point was echoed by many successful YC founders.
In other words, the thesis is “if you are a founder, you better run your company in founder mode”.
This gets immediate bi-modal reactions.
Strong acknowledgement, especially from successful founders. This also leads to some doubts for current non-founder CEOs.
Strong criticisms that this could legitimize founders’ micromanaging or other jerky behaviors as founder mode.
I have been a professional manager many times (sometimes with founders as CEO and sometimes not), and I’ve been a founder twice. I have seen many variations, and I don’t think this is a black-n-white case. I felt something was missing, but I couldn’t clearly articulate it. Until a conversation with my wife over this weekend helped me crystalize my thoughts.
I call this “Cascading Founder Mode”.
Difference between a founder and a professional manager
I want to start by stating that I agree with Paul that there are clear differences between a founder and a professional manager.
Vision
Founders have specific vision for the product and the company, and have deep understanding where the product should go.
Professional managers by definition inherit and work on founders’ vision. They might adjust / extend the visions, but the original direction was set by the founders already.
Commitment
Good founders have the mental commitment to solve whatever problems that come in the way. Quitting individually isn’t an option.
For professional managers, it’s well known and accepted advice that “if you don’t get along with your manager, you should consider leaving”. Quitting individually is part of the toolkit.
People skills
Founders without good people skills might still be effective founders.
Professional managers without good people skills rarely stay as professional managers.
Need to manage up
There’s nearly no need for founders to manage up. Yes, founders need to be accountable for investors, board, and if successful, eventually shareholders, that’s not the same as “managing up”.
Professional managers have been learning about how to manage up for the majority of their career, and normally are very good at it.
Reward for risk taking
Founders have a bigger safety net for risk taking.
Professional managers might lose their position for risk taking.
Put it simply, for professional managers, they are working for a job, while for founders, it’s their life.
One famous example
It has been well publicized that when Yahoo offered $1B to acquire Facebook in June 2006, Zuck rejected the offer. All the professional managers around him, including investors (who have been founders before), thought this was a great deal, and Facebook should sell.
Zuck thought differently. He was deeply passionate about people connections and had a long vision about this specific direction. He argued that no one at Yahoo would have this vision, and they wouldn’t build such products / features after acquisition. Therefore this $1B offer way undervalued their business.
This is probably the most famous example where a founder mode decision ended up drastically different from a manager mode decision, and we now all agree that the founder mode decision worked out much better for the company, for the professional managers, and for the investors as well.
Decision differences
My personal experience is that decisions like this actually happen all the time, where a different decision would be made depending on whether it’s founder mode or manager mode. It’s just that most of these decisions are at a much smaller scale or impact, and thus harder to tell.
I list some imaginary examples here where founder mode and manager mode decisions could differ:
When we launch this product, do we pick logo color A or B?
Do we prioritize feature C or D?
Do we hire this person X?
Do we open a new office in location Y?
When do we set up a formal performance review process?
Each of these decisions might have a small difference, but as time goes, the difference could accumulate to something that truly changes the company course. It’s just not easy to measure when and how much.
In an ideal situation, a founder learns to be a good professional manager, and keeps that founder mode. Or a professional manager picks up the founder mode (early era of Eric Schmidt in Google comes to mind as an example). Both of these combine the best of both worlds.
So should we just let founders micro-manage to make sure only founder mode decisions are made?
Cascading Founder Mode
The fact is even micro-managing by founders doesn’t actually work.
Ultimately the challenge is that the number of founders in any company is a small fixed number. If the company is successful, the company size grows, more layers are added, and it gets harder for the small fixed number of founders to have direct understanding on the ground. When their feet are no longer on the ground, their micro-managing ability and effectiveness reaches limit, “managing up” becomes more and more prevalent, and miscommunication (intentionally or unintentionally) occurs.
How to solve this inevitable problem that comes with company success? This is what I call “Cascading Founder Mode”.
Before a new layer is added, carefully assess whether the manager candidate can operate with founders’ mindset. We can’t change the fact that they are not founders, and they will have a “I’m working for a job” mindset to some degree. But they can still be closer to founders mindset than “I’m working for a job” mindset.
By taking precautions only, it won’t prevent “I’m working for a job” mindset from showing up. Course correction is also important. If some manager recently hired or converted shows more “I’m working for a job” mindset, the issue needs to be dealt with quickly. Letting it linger will result in it spreading like a cancer, and deteriorating quickly.
Once this is done right, effective delegation will naturally emerge, and micro-managing becomes a non-issue.
Not touched here
It’s worth calling out that I didn’t touch the topic of how to make sure we don’t legitimize founders’ jerky behavior as founder mode. While everyone agrees with this statement, it’s much harder to figure out what behavior crosses the line to become jerky. It’s probably a good topic for another day.