The Founder Mode Tradeoff – By Kent Beck
tidyfirst.substack.com
tidyfirst.substack.com
Many of us understand what he's going after, but he really didn't articulate it well. Kent basically makes that point in this essay by attempting to break it down and provide a more concrete foundation for the concept.
My issue with both articles is that they are ignoring the curse of knowledge that these outlier founders have, and from that they are ruining their own paradigm... If you ask a top performing athlete how to be a top performing athlete its likely not going to be very useful advice if its directed at a novice. However in a conversation between those top performers there will be the nuance and the context to what they are trying to express that can make it true.
I'm happy that Kent wrote this article, but I really think PG would benefit from revisiting his article to provide what he actually means to the rest of us.
This isn't what I took away, but it may be that we're saying the same thing differently.
My takeaway was that founders should 'trust, but verify'. And where they disagree/don't understand, they should question and pursue the truth of the matter rather than defer to experience.
I read PG's article as explicitly saying, "I'm not going to talk about what Founder Mode is yet because nobody has any idea what it is. A whole bunch have us have only just realized that it's a thing, and it isn't X. Now that we know it exists, let's try to figure out what it is, rather than what it isn't."
Most of the reactions I've seen so far seem to be implicitly assuming that if Founder Mode isn't X, it must be -X; that is, if it's not "Hire good people and let them do their jobs", then by logical necessity it must be "Hire mediocre people and run around micromanaging, countermanding orders, and generally undermining them." (Or maybe -0.5X, which is like X but more moderate: "Hire decent people and supervise them closely, occasionally countermanding orders.")
I doubt very much that's at all what Paul, or any of the other people at the talk he mentioned, had in mind. It's a false dichotomy. The first step in breaking out of a false dichotomy is realizing that what you're facing isn't a dichotomy; the second step is figuring out what the other options are. Loads of people responding seem not to have made the first step yet.
EDIT: The real goal of Founder Mode is probably to optimize for something completely different, which in some cases means deviating from the "Hire good people and let them do their jobs" guidance. But the point isn't to aim at deviation, the point is to aim at this other thing which might cause deviation. Micromanaging for no other reason than that you see other successful founders sometimes micromanage is just cargo culting.
This is how most corporations operate. Tight budgets for headcount, cunning micromanagers, and emotional manipulation to try and get people to have less opinions and deliver more for a stale salary.
Now these corporations are never going go get any sort of competitive advantage through innovation, but they get a huge amount of corporate and governmental contracts.
Mediocre corporations work in a very different way from results oriented high performance companies. In mediocre places, games of power rule the place, even if it doesn't make sense economically.
It's a privilege. Most corporations are not Google, Apple, Microsoft, Amazon, etc - which a lot of us either work for, or work for companies that were heavily inspired by these top companies.
There's only so many top 1% players, and if you aren't able to pay as well as the GOOG/MSFT/AMZN/AAPLs of the world, then your not going to be able to hire 1000s and 1000s of them.
So most employers are not able to be as selective, especially at scale. Which means they are hiring for B+ players and putting in a lot of "administrivia" to prevent screwups. It's more about hiring for average outcomes and avoiding the downside.
Scrappy startups pre-scale can be an exception in that they have equity and independence to offer to hires in lieu of top tier compensation. Both of those of course are drastically reduced when you have 10s, 100s, 1000s and then 10,000s of employees.
It's not a diss on anyone, so much as the natural order of things.
> The theme of Brian's talk was that the conventional wisdom about how to run larger companies is mistaken. As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale. Their advice could be optimistically summarized as "hire good people and give them room to do their jobs." 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. So far it seems to be working. Airbnb's free cash flow margin is now among the best in Silicon Valley.
> ...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. But we can infer the existence of another mode from the dismay of founders who've tried it, and the success of their attempts to escape from it.
Beck focuses too much on survival, as FWIW Chesky / PG talked about larger companies. Most of them are and will be doing fine either way. Unless this is all about further increasing shareholder value again, which it might. Not a "survival" topic then, or is it?
There are examples of successful companies all over the founder mode spectrum.
What level of "founder mode" is optimal depends on a lot of factors. For example:
- size of the company - available people (at every level of the company) - type and number of products (is it possible to scale the work over different departments?) - qualities/personalities of the founders (trust me when I tell you, being micromanaged by a non-technical founder on a technical product is not effective) - type of business (for example; in aviation, you're going to need a lot of certification management)
And you can execute poorly all over the spectrum, even when making the right choice on the level of "founder mode".
A lot of whether "founder mode" or whatever the opposite works has more to do with the personality of the founder.
Some founders are going to fail in either mode. Successful founders have their preferred mode but aren't succeeding because of the mode. I suppose if a successful founder was in some way forced (by who?) to use the opposite of their preferred mode they'd have more difficulty, but they still are likely to succeed.
The binary state is too simplistic. But it is largely the hook to make the post attractive and successful.
Let's say I'm a founder. I am one with the vision of what we're trying to build. Can a professional manager do that better than I can? Can he/she make the calls about what's in or out of scope, or what the architecture needs to be, better than I can? No and no.
So it's not that professional management is harmful, just that it's worse than the founder can do.
And in a startup, that's likely true. But founders don't scale, and there comes a point in the growth of a company where it quits being true.
Founders often can make decisions more quickly than managers. They can also revisit decisions more quickly than managers. If the company is small, the founders can be a win - especially with higher-quality decisions.
This is just another way of saying that the decisions of founders are not strictly better. Even if it's stipulated that founders always make better decisions given the same time constraints, their advantage will dwindle quickly as they become more time constrained.
> They can also revisit decisions more quickly than managers.
Why? This seems very unclear to me... I would intuitively say the exact opposite. Founders seem far more likely to make a decision, move on, and never think about that particular thing again.
To use a concrete example. Say a founder makes a key hire, essentially unilaterally, but to a position that does not report directly in to them. Who is more likely to notice and revisit that decision if the person isn't working out, the founder who hired them or the manager (and team) who is working with them day to day? It's the manager, clearly. The founder has done their part, they've brought in a key person, they're off focused on something totally different, as they should be, they have no idea how this person is working out.
Even mediocre management is pretty good, but good management is great.
The dumb "Founder mode" discourse hides away two things: a) scale forces you to climb that ladder towards bureaucracy and controls anyway, b) it's scope-specific. You don't want to go "Founder mode" on phone support. Or accounts payable, or probably HR. There are specific objectives, projects and also circumstances that need a more hands-on approach. And honestly a "Marines" analogy where the team is tight and authorized to make decisions, is better than some micro-managing, coke-fueled "Founder mode".
For those who are not familiar with it, check out Jeff Bezos’ 1997 Letter to Shareholders on irreversible (Type 1) vs. reversible (Type 2) decision making.
edit: I think I found it: https://www.sec.gov/Archives/edgar/data/1018724/000119312516...
Something I'd term as an "authority budget", that is, not an approved annual dollars budget of what they can spend, but a defined amount/area of authority that they can flex without needing to escalate.
The most stifling thing to any high performance employee is to have no sense of control, to have the ground constantly shifting under them OR feeling like their company is actively trying to protect themselves from you & making your job harder.
Yet this is the average case for many larger orgs.
Where founder mode can be felt is when a founder has a "Vision" for their company, perhaps one that is difficult for others to see. They lean into the functional areas of their company that make strides into executing that vision and bringing it to reality. This is where they probably should exercise Founder mode. Other functions of the company may be support areas or lower impact areas towards realizing the vision, or just benefit from a particular domain expertise, this is where Manager mode likely comes into play. Although, I don't like the framing of "hire smart people and let them do good work" because it makes it sound like there are no goals or guardrails to what they are doing. The founder still needs to set expectations and monitor, and this even changes over time as next years goals for this team/individual will be different than this years.
In any case, hiring good people is most likely still going to be important. I think in most cases even a founder with a great vision needs to be challenged by their employees (Founder asks for X, but Engineer makes a case for Y). You don't want to squash collaboration and morale. Although, if you're lucky enough to be an exceptional Founder then your employees will tolerate it, it's probably not a good strategy to bank on though.
We humans can be the next best thing to lemmings. We do what we see people around us do whether and what we learn in class and from others who we think know something. Is that because we are lemming like or is it because it allows us to deal with the overwhelming chaos of the world?
My best illustration of this: I had two friend who went to Nepal for two years. This happened a long time ago. They came back to the US and went to a market and nearly had nervous break downs. In Nepal, they had soap. One kind. In the US they had 200 kinds of dish soap alone. They had no idea which soap to choose, and that extended to almost every product they needed.
Our follow instinct - if you see someone else pick up a kind of dish soap, get that - helps us deal with this overwhelming complexity and does well for us. Except when it doesn't.
What happens when you are faced with something new? In lemming mode we tend to go wrong when something is new. Really new. Like networking was new. Or little mp3 players (you know - those things that became iPods then iPhones and all the little iPhone killers like the zune.)
My take away then was about something completely different, although probably unrelated to either Paul's article or this response.
If you are to be a founder, one of the biggest challenges will be to build an organization that does not descend into orthodoxy.
[side note: I think founder mode is a misnomer because you can be an original thinker/doer without being a founder] [side note: There are really two situations where you want to be in original thinker mode: when there is something new or when the environment changes dramatically. We are in a time where the latter is true]
I agree with this so much. I'm a huge fan of PG and his essays have been instrumental for me since I was in college. But that Founder Mode essay was so shallow. It's not a dichotomy. You don't choose between "black box management" and tyrannical micromanager.
You hire smart people. You give them some room, but not black box. You trust but verify. Sometimes you have to be involved in the details, sometimes you don't. It is extremely situational. But that's just management. You have to decide based on the situation how involved you need to be.
So much suffering will result because of misinterpretation of that essay. Founders everywhere thinking "I knew it! I should never trust anyone. I should do everything myself". Yea, good luck with that, Steve Jobs.
Note: I'm a founder, several times over. I've also worked at a FAANG and at mid-stage startups for other founders. Obviously I'm no PG, but I think I've seen multiple perspectives.
I want everyone in an early startup thinking like this.
Which also means it should be treated as the team's company -- not only that of the founders -- and there should be life-changing money and career growth for everyone if this is successful. (Not a pittance in ISOs, and not pushed back to scratch, practicing Leetcode hazing for the chance to work in the next someone-else's company.)
I worry that 'founder mode' will be taken as 'be an a-hole' v2 or something as v1 was to mimic the success of Steve Jobs.
Being an a-hole was an aspect of Jobs but not the source of his success. Being an a-hole is not itself a gateway or required attribute for success as was the popular takeaway there.
Micromanaging, buzzing around, and bypassing structure should not be the takeaway from 'founder mode' or you will have bad leaders excuse those tendencies and chalk it up to being in 'founder mode' after graduating from 'a-hole'.
For the win.
>The principal–agent problem refers to the conflict in interests and priorities that arises when one person or entity (the "agent") takes actions on behalf of another person or entity (the "principal"). The problem worsens when there is a greater discrepancy of interests and information between the principal and agent, as well as when the principal lacks the means to punish the agent. The deviation from the principal's interest by the agent is called "agency costs". - https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
This isn't a conflict that can be escaped, only managed, something inherent within any large organization, notwithstanding the specifics of the startups in discussion here. Hiring employees is hard and costs money that could otherwise be spent on the business or dividends back to founders and investors, and if founders could avoid having to hire others, they would. But, founders having a limited amount of time and specialization, must hire others lest the business die on the vine as opportunities pass them by for lack of available people/time to perform the necessary labor to take advantage of them.
The second and third sentence in that definition from Wikipedia is why I am writing this comment. Within the terms introduced above, I think PG is advocating that founder's should work harder to reduce agency costs by getting better at punishing their agents.
Punish is a strong term here to use for sure! However, if you ask the agents, i.e. the employees of the founder, much of the behavior advocated by proponents of founder mode is punishment. Micromanagement of projects, subverting the established lines of communication, second guessing the details of the agents' work and opinions, all of these things are often seen by agents/employees as undermining their agency and feelings of security within the organization.
Ask a product manager whether they actually want the founder to read and comment on all of the technical specs and reports the PM and their team produce and I imagine most of them would grimace. They would much prefer if the founder stuck to being given the "right" information by the PM and the founder presenting their feedback in the right settings/meetings. Going outside of that would restrict the agency of the product manager and might very much feel like a punishment. I've most often seen founders/higher ups get involved in a team's work directly and it was often as the result of the team fucking up and the "principals" feeling like they had to step in, do some light to heavy punishment through their involvement, and set things right.
Punish is still a harsh word to use here, but there is a fundamental conflict of interest that can't really be escaped. I'll make the assertion that most employees do not directly share the founder's interest in making the founder wealthy. Employees have their own interests, whether it be working on something cool, furthering their own careers, getting their own slice of wealth, or just having a steady job while they live life outside of work. The founder wants tools to win the conflicts that occur between the founder's desire to increase their wealth and the employees sometime desire to do an action that, in the founder's opinion, harms the chance of that happening.
To me, in my eyes, founder mode has been a implicit discussion of this conflict at the heart of the principal agent problem, with both sides talking past each other about the necessity and efficacy of common punishment techniques. Principals keep saying they need more ways to correct deviations from their visions and agents replying by saying that often times those corrections do more harm than good. Neither of them are wrong per se, but it does feel like a misunderstanding between the two groups that'll just cause more harm than good in the long run. Founders giving themselves leeway to indulge in punishing their employees for perceived deviations from the founder's interest will likely end in nothing worthwhile, while agents/startup employees resisting outright or implicitly any punishment/correction from the founder will likely cause the employee to get even more punishment.
The ideal successful founder experiencing success goes through a rapid metamorphosis from exceptional individual contributor, to team lead of a small team, to team manager of a large team, to a manager of managers of many teams, to department head of many such managers, to chief executive officer of many hundreds or thousands. At each stage, the founder needs to learn how to correct and prevent their employees from deviating from the founder's desired outcomes.
A lot of the replies from employees has been from within the context of their experience at the hands of founders who did not manage this transition and learning process well. The CTO that had to approve every pull request of the hundred person technical team, the CEO who had to interview every incoming employee and slammed the recruiting process to a halt, the founder who showed up to the team meeting and threw the product road map away and started over to the dismay of the engineering teams. Each time, the founder trying to keep the organization headed in the right direction, i.e. making the founder and the investors wealthy, but not really knowing how to do this well and fucking up in the process.
MBA's have a set toolbox for how to punish at scale in very large organizations that has been refined over centuries. Founders have tried applying this to their startups and found them to be lacking, too heavy handed and lacking in refinement for the smaller scales they are often operating on. Eventually, the founder hopes that they might lead an organization successful and large enough that they might need to use such tools, but for now, they are stuck making it up on the fly while also trying to do literally everything else. Part of the discussion of founder mode to me has been around founders having a discussion about how to actually effectively make these corrections at various stages of growth of a business.
I'll wrap this up by restating PG's point: the best founders know how to punish in ways that don't scale. The principal-agent problem will always be there, cannot get around it. My hope is that the discussion around founder mode is less about founder's giving themselves license to do whatever they feel like whenever they feel like it, and more around the development of a toolbox for founders to punish employees for deviating from the founder's goals that precludes what could broadly be considered abusive or ineffective.
Of course there are upsides to having leadership that actually cares and is not afraid to get their hands dirty when they spot a problem wherever it may be.
That's not new but I can fully get behind that. Outside of shareholder value, companies and their products actually could care much more, always.
I'd wager Steve Jobs fell just more onto a spectrum there rather than this more discrete proposal.
My guess is, this will likely follow the twitter->x trend we've been observing since 2022 – and as either investor or worker it will be even more about picking the character of a company.