The latest episode of All-In Podcast, showcased a hilarious cold open where investor Jason Calacanis showed his version of ‘founder mode’ with white powder dusted around his nose and squealed with energy.
Well, that might not certainly be the founder mode that’s got the whole internet buzzing, it sure showed what founder mode looked like in the 90s.
Paul Graham, entrepreneur, investor and co-founder of Y Combinator, recently sparked a riveting discussion with his blog post on ‘Founder Mode.’ The conversation brought the whole ecosystem of founders to share their two cents on how they think a company should be run. Nobody really understood what it really means as well.
So, everyone pitched in their version of what the lingo meant, but nothing sounded new in it.
Not everyone can, not everyone should, do ‘founder mode’
VC investor Chamath Palihapitiya was pretty straightforward in dissecting Graham’s blog. “I was confused when I read it because everybody was breathlessly panting about how incredibly insightful it was, and when I read it, my first thought was where’s the second half that actually explains what this is so that you can have an opinion.”
Taking an opposite stance to Graham, Palihapitaya cited companies such as Palo Alto Networks and even Microsoft on how the company has enormously scaled – clearly on manager mode. He even says how people have collectively raked “trillions of dollars of market cap way more than all founders added together.”
Graham’s ‘Founder Mode’ started with Brian Chesky, co-founder and CEO of Airbnb, when he delivered what Graham believes is one of the most memorable speeches during a recent YC meeting. Chesky’s talk challenged conventional advice on scaling large companies.
He initially followed the common guidance to “hire good people and give them room to work,” but it led to poor results. Instead, he developed his own approach by studying Steve Jobs’ management style at Apple, which has proven successful.
As per Graham, there are essentially two distinct approaches to running a company: founder mode and manager mode. Until recently, most people, even in Silicon Valley, have implicitly believed that scaling a startup required shifting to manager mode.
“VCs who haven’t been founders themselves don’t know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world,” said Graham in his post.
However, the frustration experienced by founders who’ve tried this, and their success in breaking away from it, suggests the existence of an alternative approach.
Old is New Again
Investor David Sacks, in the same podcast also highlighted how the discussion on these two modes have taken shape in different forms in the past, dating to almost 40 years ago where books on the same have been written.
He goes on to explain how the recent discussion has only kind of stirred an old conversation but has got its own YC-related branding which kind of pushes founder mode.
“The problem with that branding is I think it’s an overly simplistic and mannequin view of the world where it kind of fits into really all of the the PG [Paul Graham] essays and the YC model which is,founders are always right, and everybody else in the ecosystem, especially traditional managers, they’re either liars or fakers,” said Sacks.
Palihapitiya, on the other hand, went on to explain how, in Silicon Valley, he has come across two types of people. Those who tackle problems by breaking them down from first principles, ruthlessly addressing what’s not working, and everyone else.
He believes that this mindset, not limited to founders, is crucial for building successful companies, and people with this psychological makeup tend to create strong businesses.
Mix of Both
As plain vanilla, the explanation by Chesky and Graham might sound insightful or even challenging to those who never believed the method, however, the speech on founder mode coming out of the YC ecosystem, doesn’t seem all that convincing.
It is essential for one to shift from one mode to another based on how things change. Palihapitiya said that if one needs to have a successful business, one must have the courage to change a few things that still need changing.
“Most people don’t have the courage to go through the glass eating that is required to get to the other side of that process,” he said.
Meanwhile, Sacks takes a balanced stance by saying that if a founder gets involved in every nitty gritty and every decision possible, there wouldn’t be an optimised output. However, on the other end, going to extremes of delegating every task to every person, to the last dot, is also not beneficial.
“The way that you figure out what the balance is to apply the gross principle of maximising the output of the team or the organisation,” he said.
It’s probably safe to say that Graham’s and Chesky’s founder and manager mode discussions have reignited an old concept that everyone pretty much knew about. But, considering how in this current era with a number of startups emerging in Silicon Valley and outside, pushing for a founder mode is encouraging for them.
But if you have to ask, then you probably shouldn’t go founder mode.
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