Founder Mode

At a YC event last week Brian Chesky gave a talk that everyone who was there will remember. Most founders I talked to afterward said it was the best they'd ever heard. Ron Conway, for the first time in his life, forgot to take notes. I'm not going to try to reproduce it here. Instead I want to talk about a question it raised.

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.

"The audience at this event included a lot of the most successful founders we've funded, and one after another said that the same thing had happened to them."

Why was everyone telling these founders the wrong thing? That was the big mystery to me. And after mulling it over for a bit I figured out the answer: what they were being told was how to run a company you hadn't founded — how to run a company if you're merely a professional manager. But this m.o. is so much less effective to founders that it feels broken. There are things founders can do that managers can't, and not doing them feels wrong to founders, because it is.

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.

Whatever founder mode consists of, it's going to be breaking the principle that the CEO should only interact with the company through his or her direct reports. "Skip-level" meetings will become the norm rather than a subset of something to be avoided because it might undermine the authority of the intermediate managers.

The Manager Trap

Traditional management structures often insulate the decision-maker from the ground truth. Founder mode is about reconnecting the nervous system of the organization.

It's not just about micromanagement. It's about maintaining a level of detail and intensity that is native to those who built the thing from scratch. The professional manager is a caretaker; the founder is an inventor. You cannot caretake an invention into its next evolution.