Paul Graham, cofounder of Y Combinator, was so inspired by a speech by Airbnb cofounder and CEO that he wrote an essay about well-intentioned advice that, to scale a business, founders must shift modes and become managers.
It went viral.
In the essay, he argued that:
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.
With curiosity and an open mind, I read on.
I finished with a deep sigh and an eye roll.
This is why.
Manager Mode: The realm of liars and professional fakers
On the off chance that you thought Graham’s essay would be a balanced and reflective examination of management styles in different corporate contexts, his description of Manager Mode should relieve you of that thought:
The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it’s up to them to figure out how. But you don’t get involved in the details of what they do. That would be micromanaging them, which is bad.
Hire good people and give them room to do their jobs. Sounds great when it’s described that way, doesn’t it? Except in practice, judging from the report of founder after founder, what this often turns out to mean is: hire professional fakers and let them drive the company into the ground.
Later, he writes about how founders are gaslit into adopting Manager Mode from every angle, including by “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.”
Founder Mode: A meritocracy of lifelong learners
For Graham, Founder Mode boils down to two things:
- Sweating the details
- Engaging with employees throughout the organization beyond just direct reports. He cites Steve Jobs’ practice of holding “an annual retreat for what he considered the 100 most important people at Apple, and these were not the 100 people highest on the org chart.”
To his credit, Graham acknowledges that getting involved in the details is micromanaging, “which is bad,” and that delegation is required because “founders can’t keep running a 2000 person company the way they ran it when it had 20.” A week later, he acknowledged that female founders “don’t have permission to run their companies in Founder Mode the same way men can.”
Yet he persists in believing that Founder, not Manager, Mode is critical to success,
“Look at what founders have achieved already, and yet they’ve achieved this against a headwind of bad advice. Imagine what they’ll do once we can tell them how to run their companies like Steve Jobs instead of John Sculley.”
Leader Mode: Manager Mode + Founder Mode
The essay is interesting, but I have real issues with two of his key points:
- Professional managers are disconnected from the people and businesses they manage, and as a result, their practices and behaviors are inconsistent with startup success.
- Founders should ignore conventional wisdom and micromanage to their heart’s content.
Most “professional managers” I’ve met are deeply connected to the people they manage, committed to the businesses they operate, and act with integrity and authenticity. They are a far cry from the “professional fakers” and “skillful liars” Graham describes.
Most founders I’ve met should not be allowed near the details once they have a team in place. Their meddling, need for control, and soul-crushing FOMO (Fear of Missing Out) lead to chaos, burnout, and failure.
The truth is, it’s contextual. The leaders I know switch between Founder and Manager mode based on the context. They work with the passion of founders, trust with the confidence of managers, and are smart and humble enough to accept feedback when they go too far in one direction or the other.
Being both manager and founder isn’t just the essence of being a leader. It’s the essence of being a successful corporate innovator. You are a founder, investing in, advocating for, and sweating the details of ambiguous and risky work. And you are a manager navigating the economic, operational, and political minefields that govern the core business and fund your paycheck and your team.
I wonder whether Graham has looked at the stats on how many startups are unable to scale because they don’t understand and/or fail to act upon the talent, processes, capabilities, culture-building and other requirements that go into leading (not managing) a high-growth business that is scaling rapidly (e.g., the increased scrutiny of regulators and, these days, politicians)?
His generalizations and judgmental comments about what it really means to grow and sustain a large enterprise seem to reflect an extremely limited frame of reference and/or deep biases.
In my book, The Change Maker’s Playbook: How to Seek, Seed and Scale Innovation In Any Company, there is a chapter called “The Green Light Moment.” It’s the first chapter of the section dedicated to advice and real stories about scaling, and speaks specifically to the point in time when the founder and their team are funded — and expected by investors — to scale.
The chapter speaks to four priorities that now must be front and center:
1. Purpose: knowing why you exist and sustaining that as your team’s beacon
2. People: Selection, motivating, exiting, setting goals, etc so you’ve got a team that can deliver within your culture and environment
3. Strategy: Where you are heading, and how you envision getting there – the basis for execution
4. Execution: Implementing in line with Purpose, Vision and Strategy, ready to deal with the inevitable surprises along the way.
It’s just not so black and white as Graham claims. Leadership is nuanced. Leadership of a scaling/scale business surely benefits from many of the attributes that great founders bring to the party — but the best founders will learn, unlearn and relearn when (and if) they arrive at their company’s “green light moment.”
I agree 1000% percent, Amy! Leadership is nuanced and great leaders are willing to learn, unlearn, and learn again. Your point about Purpose is especially important. In my experience, leaders have a Purpose bigger than themselves, one that inspires people to follow them and aims to leave a place better than they found it. Managers have Purposes focused on them and checking the boxes to get to bigger and better places for themselves. Thanks for adding to the conversation!
I am always saying “A good leader is a contextual leader” – totally on board with that Robyn!! Thanks!
Love that phrase, Theresa! I feel like you should have t-shirts, posters, bumper stickers, notebooks, and all other types of SWAG with that wisdom. Thanks for sharing it!
There are plenty of Founders who are “professional fakers” and “Skillful liars.” If that were not true, perhaps the VC industry would have a better track record of success vs failure.
I agree, successful leaders need to be both.
As someone who spends a lot of time with Founders, your perspective is incredibly valuable Andrew. Thanks for chiming in!
Founders often struggle with the transition to management, where they’re used to having total control and living with their decisions. But when they delegate, I imagine they start meetings with their team by spending 30 minutes pointing out everything they see went wrong, but then add, “I’m not here to point fingers; I’m focused on looking ahead and solving problems.”
Your comment made me laugh, John. Management is a skill that needs to be learned and practiced. I’m pretty sure 99.9% of people are terrible managers when they first start, but if they’re willing to learn, evolve, and change, they can grow into great leaders. I suspect that most founders don’t get the support they need to grow or have the patience to learn, especially when they think that what they’ve always done will always work. As for pointing fingers, it reminds me of the adage that when you point the finger at someone, you need to remember that three other fingers are pointing back at you.
Ever ceases to amaze me the bad behaviors of Silicon Valley and our willingness to venerate them.
I love your blog and the excellent refreshing perspectives you offer. Thank you!
Thank you, Linda! Yes, it was striking how quickly Graham’s original essay went viral and was embraced as Truth. Truth is rarely at the extremes, so this felt more like a way to validate and justify founders who never change, learn, or evolve their styles to meet the business’s and their people’s needs. And that’s before we get into the gendered nature of the device (micro-managing is applauded in male founders but used to villainize female founders)