'The term 'Founder mode' is currently trending in Silicon Valley, praising harsh leaders as top-notch.'
The ongoing argument amongst a small circle of extremely active internet commentators brings up bigger questions concerning how Corporate America has transformed to idolize the supposed genius leader in the top-tier office.
Last week, Paul Graham, co-founder of startup incubator Y Combinator, published an essay praising the concept of "founder mode," a management approach that isn't typically aligned with the conventional "manager mode."
In a nutshell, founder mode implies that the CEO directly manages the business at all levels. On the other hand, manager mode involves delegating day-to-day tasks to a trusted team, which Graham argues often results in hiring incompetent individuals to steer the company towards disaster.
Graham made reference to Brian Chesky, the CEO of Airbnb, who shared a story about how sticking to conventional wisdom in Airbnb's early days was detrimental. However, Chesky drew inspiration from Steve Jobs, renowned for his hands-on approach in every stage of Apple's operations, and this led to substantial improvements.
Chesky's strategy appears to be succeeding, as per Graham, seeing that Airbnb's financial performance is impressive in Silicon Valley. (However, Airbnb's stock has slipped by more than 15% in 2023.)
The principle suggests that a founder has an intimate understanding of their company, similar to how a parent knows their child.
This concept may not be novel, but the essay sparked quite a stir, resulting in both admiration and criticism (plus numerous memes!) on social media.
Graham hasn't delved deeply into the specifics of founder mode, as each founder and organization varies. Nevertheless, the passionate debates around this topic presented some real-life instances.
For instance, there's Jobs, the brain behind Apple's success but also known for his overly meticulous nature and tendency to shout at subordinates. Then there's Jeff Bezos, a renowned micromanager. Or Elon Musk, the head of several companies who frequently spreads misinformation and racial stereotypes. And let's not forget Nvidia's Jensen Huang, who prefers to pressure an underperforming employee towards excellence rather than terminating them.
Another illustration is Ray Dalio, the founder of Bridgewater, one of the world's leading hedge funds. Dalio, who stepped down in 2022, was renowned for his oppressive management style, which included assigning tasks to staff to spy on each other for even minor issues, as reported by NYT's Rob Copeland.
Notice a pattern forming?
Establishing a company often calls for a unique personality. While tech enthusiasts often idolize a founder, they often ignore the challenges and consequences of having a boss who refuses to delegate.
"Most founders who refuse to relinquish their hyper-involved role find it difficult to scale their companies effectively," stated psychologist and consultant Rich Hagberg on LinkedIn. "Many of them burn out, lose focus, and create bottlenecks ... clinging too tightly to Founder Mode can impede, not help, long-term success."
Founder mode isn't inherently flawed. Involvement at all levels can strengthen team relationships, as Ashley Herd, founder of management training firm Manager Method, pointed out. However, this lifestyle isn't sustainable in the long term.
"People have lives outside of work, and this mode can either push employees to leave or cause them to remain but become burnt out and resentful," Herd explained.
The most successful individuals employing the founder mode (seemingly all male, as far as I can see) invariably had a competent manager by their side.
According to journalist Jessica Lessin, who founded information site The Information, while founders must furnish the strategy, they could also be "annoying to work for."
She emphasized the importance of a great management team and pointed to the Steve Jobs example, reiterating that he had Tim Cook.
In the ongoing discourse about leadership styles in Corporate America, Paul Graham's essay advocating for 'founder mode' has sparked significant interest in the business world. This approach encourages the CEO to directly manage various aspects of the company, a strategy that Airbnb's CEO Brian Chesky adopted with notable success.
