Founder Mode vs Manager Mode

Paul Graham's essay on Founder Mode vs Manager Mode inspired by Brian Chesky 's experience running AirBnB seems to have taken the tech world by a storm. While WhatsApp's product culture is very much a Founder Mode culture (worth another note later), I have been very uneasy with the root cause analysis from Brian that led to him taking the reins of the company himself and centralize decision-making.

Brian mentions the following areas that led to the company not functioning well.

1. He became a capital allocator and believed that he had to hire good people and just get out their way. The company was then overtaken by professional managers.
2. The company became too growth focused losing touch with customer problems

So his fix was to go back to owning product decisions and outcomes himself, which is likely the right fix for a company of the size of AirBnB. However, when you run a company of the size of an Amazon, a Meta, a GE etc. you can not humanly do this. At that scale you have to focus on the system you are building that delivers multiple products, rather than just the one product you are building. Becoming a micro-manager of every detail of every product will slow the company down to the point of hurting progress.

Here are the gaps I see in his analysis of why his approach didn't work.

CEO as a Capital Allocator (Gap: Not hiring great talent)

If your approach as a CEO is to become a capital allocator, you can't just assume your role ends here. You are essentially functioning as a pseudo-VC. And, what do great VCs look for ? Visionary founders who can build. If you are taking your eyes off of the product, then you do need to find employees who will be able to build the product. And, if you haven't found these folks, then you haven't spent enough time or built the judgment needed to find the right talent. For ex. in the case of Meta they organically found the talent through acquisitions of IG/WhatsApp and let the founders run the companies, fairly independently, for a long time.

Company becoming experimentation focused (Gap: Not setting up the culture intentionally)

It appears that the people AirBnB hired brought their own cultures from other companies they'd been at. Brian himself is a design-led founder, but found his employees running A/B tests to build products. You can't let people bring their own cultures. You have to set the culture that the company lives and breathes. In fact that's how you orient the company to your mission and values. And, yes, one of the ways you coach the company to live and breathe your values is by being in the details. But you don't have to be in the details of every decision to do that. You prioritize key decisions that you choose to be involved in and ensure that they are broadly communicated to be used as an example for how to operate. Additionally it's not just important to demonstrate how the founder operates but also to set up the incentives to reward those who operate by those values. If you want a design-led culture, you have to hire design-led people and reward design-led outcomes.

Company not focused on customer problems (Gap: Missing Feedback Loop)

If you do take the approach of capital allocation, you have to ensure that the system you are building is designed to produce the outcomes you desire. You need to have a feedback cycle built in. And, often that means actually talking to your customers yourself and being rooted in their problems. This is why Jeff Bezos would monitor customer emails and email his executives to diagnose when things were broken. This is the "dipstick" method of monitoring to check if the system is functioning well. Jensen Huang's approach for example is to randomly sit in on meetings and also to talk to customers. Why "dipstick" ? Because if you centralize monitoring of every product your company produces, you can't scale. You can't just assume just hiring the best people naturally produces the right outcomes. As organizations scale, even with the best of intentions, you have to constantly debug people and incentives that need to be tweaked to ensure the company is moving in the right direction.

While I am a big believer in Founder Mode, the conclusion that it requires taking ownership of every roadmap and every detail in the company is the wrong one. Founder Mode to me signifies extreme accountability to the company and its mission and values, specifically to the customers of the company. There are multiple ways of getting there (more on this in another note) that do not require centralizing decision-making with the CEO .