Founder Mode or Manager Mode? Yes
It's neither founder mode all the way nor manager mode all the way. The right way to manage a company is being both at different times, in different situations
In September 2024 Paul Graham stirred Silicon Valley with his Founder Mode essay, where he tried to capture the essence of a talk Brian Chesky had given a while back at YC.
In the essay, PG describes Chesky's agony after following Silicon Valley “conventional wisdom”:
“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.” That conventional wisdom is what PG calls “manager mode”: "hire good people and give them room to do their jobs."
PG then goes on to describe what Chesky incorporated after realizing he was on the wrong track: “founder mode”. The essay doesn't quite describe what it looks like. He points out that it has to do with bold-contrarian moves: “there are things founders can do that managers can't, and not doing them feels wrong to founders, because it is”. In other Chesky talks that came after that one he mentions centralizing some decisions (i.e., around product releases), going into the weeds of things, and reports being inspired by how things were done by Steve Jobs at Apple. [1]
Nobody tried to define founder mode and manager mode well. What we have are highly partial views of these “two systems of management”.
This resonated with many founders. But it also confused them. Nobody tried to define founder mode and manager mode well. What we have are highly partial views of these “two systems of management”, to borrow from Kahneman (Managing, Fast and Slow?).
That's why I wrote this article. I hope it helps.
Management by absence
PG describes manager mode as hiring great people and giving them room to do their jobs. But that's not bad advice. You do want to hire good people and give them space to work. So what I think PG is actually describing as bad is another thing: (i) hiring “great” people and (ii) delegating everything on their domains to them and (iii) never looking back. That's management by absence. That's not good.
The second job of a startup CEO
Curiously, an essay from YC had really resonated with me many years ago, and I think it rightly captures a good chunk of what “good manager mode” is. It's called The Second Job of a Startup CEO, and describes how after finding product market fit (the first job), founders' jobs must change to creating a company to explore the product-market fit created in the first place.
In the essay, which was written by Ali Rowghani, then YC partner and head of its growth investing efforts (YC Continuity), the second job of a startup CEO is to:
Hire a leadership team and make sure it works well together
Create purpose and alignment
Nurture/reinforce the company's culture
Is this bad? No, it's an AMAZING starting point. I think it captures a significant part of what I think “manager mode” should be. All CEOs should do that, and doing it right doesn't mean managing by absence.
Anyway, I'd add a few things to Rowghani's job description to make more whole. I'll call this more complete job description's proper application “systems mode”.
Systems mode
I think “good manager” mode is also specifically about creating management systems and a culture that encourages managers to care both about how things are done and the results the work is causing. Peter Drucker made a bit of a disservice when he articulated management by objectives as the better way to manage executives, because objectives are usually outputs, or results. But many people articulated this balance well.
Vicente Falconi, a Japanese Total Quality Management scholar and consultant, does a great job at teaching how management should care about both inputs and outputs: in a very loose definition edited for simplicity, inputs are measures of how things are done (i.e., the process), and outputs are the actual results of the process.
is it enough to, as a CEO, be a systems designer, and then let the system do its thing? No. Systems have entropy, and even if they hadn't, it's impossible to design human systems perfectly. That's where founder mode comes in, or, better, “right founder mode”.
Jeff Bezos talks a bit about inputs and outputs as well in his 2009 annual letter to shareholders as CEO of Amazon, saying that you can't actually manage outputs: you have to manage (managing meaning assessing and improving) inputs, and if you do it well, the results will come. He says “Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs. To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time”.
Bill Walsh, the most famous coach of the San Francisco 49ers, puts the same concept into a very catchy phrase: “the score takes care of itself”.
But is it enough to, as a CEO, be a systems designer, and then let the system do its thing? No. Systems have entropy, and even if they hadn't, it's impossible to design human systems perfectly. That's where founder mode comes in, or, better, “right founder mode”.
Founder mode done right: roll-up your sleeves/go see for yourself
Now, the way people interpreted founder mode is also not fair. Operating on founder mode doesn't mean going tyrannical: not listening to your people, making all decisions yourself, refusing to delegate, overlooking hiring a great management team.
Founder is all about selectively doing two things: rolling up your sleeves to do work yourself, and not relying on second (or third or fourth) hand observations of what's going on in your company.
Rolling up your sleeves and doing work yourself is about not losing touch with how the work is being done. Tobi Lutke, for example, reports coding himself whenever he can (which is very infrequently, of course, because he has a company to run). It's the concept of having managers be “player coaches”, as opposed to “coaches only”. I think it's also about setting the example for excellence and commitment.
Now let's talk about going and seeing for yourself, and not relying only on second-hand reports.
The Japanese Total Quality Manangent/Lean people had two interesting concepts [2] that I think can serve as interesting mental models for founders: the first is called “gemba walks” where management (defined as the people with managerial knowledge more than managerial power) would be expected to walk around where the work happens (the gemba, usually the factory floor); the second is called Genchi Genbutsu, which management literature translated as “go and see”, which is more pointed than a gemba walk: you go and see for yourself, firsthand, the problem that's causing the company trouble.
Rolling up your sleeves and doing work yourself is about not losing touch with how the work is being done… It's the concept of having managers be “player coaches”, as opposed to “coaches only”. I think it's also about setting the example for excellence and commitment.
Well, gemba walks and Genchi Genbutsu are two amazing ways for a founder to check on how the system is working (checking the inputs, auditing the process), and helping fix what's going wrong with the system. Elon Musk's Genchi Genbutsu sprints are notorious: many sources including himself describe how during some of the tensest moments of building Tesla's factory in the East Bay he would work himself on getting it running, even sleeping on the factory floor. Elon Musk's extremeness aside, I think Genchi Genbutsu's a good part of what “good founder mode” looks like. It's also a great thing to be built into the culture of the company. Having managers at all levels be expected to go see for themselves and to expect having their managers also go see stuff for themselves and not rely on their reports alone.
But it's not all there is to good founder mode: It's also about the founder being more active in areas where he's the expert. If the founder has differentiated knowledge about some domain within the company (this could be product, or customer needs, or whatever), he has the duty of being more active there, because his differentiated knowledge will produce competitive advantages. Now, of course, that rests on the founder's assessment of his own skills being right.
A better mental model: both, or, in-and-out
Now we have a better grasp of what (good) manager mode and (good) founder mode mean. But which should you pick?
In my humble opinion, the answer is yes.
Founders should definitely build their companies and view them as systems. That means hiring the best possible executives, articulating and enforcing an effective culture, putting together management systems (such as OKRs when well implemented) and processes, and giving their executives room to work. But they should also dive deep when they think something is wrong, or in areas where they think they have a differentiated insight that must be reflected in how the company does things, or even doing regular “gemba walks” when nothing's problematic. A founder that's great at product should be around the major product decisions. A founder that's great at sales should be around the major sales decisions (e.g., the creation of the company's sales processes).
At all times, a great founder should be operating on (good) manager mode. Thinking in systems, building the company, hiring great people, managing inputs and outputs, designing and reinforcing the culture.
But he should add, on top of (good) manager mode, (good) founder mode, at times:
In all company defining decisions (life or death, success or failure, etc., which are often the decisions PG says nobody else can take)
In important-but-not-company-defining decisions in areas where he has domain knowledge or skills that are superior to his executives’
In important areas/decisions where the founder has a spider-sense that things aren't being done right/optimally
In his regular gemba walks around the company (and it's Slack channels lol)
I think the mental model is both, stacking founder mode on top of manager mode at specific moments and areas of the company.
Notes
[1] Another prominent founder mode type is Elon Musk. He goes notoriously deep in things he deems important.
[2] It's CRAZY how much good stuff there is to be learned from old lean/TQM books. Go read for yourself.