Last week at a Y Combinator event, Brian Chesky, the CEO of Airbnb, delivered a talk that left an indelible mark on everyone in attendance. Many founders who were present described it as one of the most impactful speeches they had ever heard, and even renowned investor Ron Conway was so engrossed that he forgot to take notes. While I won’t attempt to replicate Chesky’s talk, it raised a crucial question about scaling startups that warrants a deeper exploration.
Chesky’s address centered on a theme that challenges the conventional wisdom about scaling companies. As Airbnb expanded, he was advised to run the company in a particular manner that was supposed to facilitate growth. This advice can be summarized as: “Hire great people and let them do their jobs.” Unfortunately, Chesky found that this approach led to disastrous results. It was only after studying how Steve Jobs managed Apple that he discovered a more effective strategy. The results speak for themselves—Airbnb’s free cash flow margin is now among the best in Silicon Valley.
The experience of Chesky reflects a broader trend among successful founders. Many of them encountered similar advice about scaling their companies, only to find that it harmed their businesses rather than helped them. This raises an intriguing question: why is this advice so consistently flawed?
Upon reflection, I believe the answer lies in a fundamental misunderstanding about the nature of leadership in startups versus established companies. The conventional advice seems to be tailored for professional managers—those who come into a company that they did not found and are tasked with scaling it. However, this approach appears to be less effective for founders, who have a unique relationship with their companies.
The Dichotomy Between Founder Mode and Manager Mode
There seems to be a distinction between two modes of running a company: “founder mode” and “manager mode.” The prevailing wisdom in Silicon Valley has been to transition to manager mode as a company scales. In manager mode, the focus is on treating subordinates as autonomous units—delegating tasks and allowing them to figure out the details. This method prioritizes minimizing micromanagement and trusting skilled professionals to execute their roles effectively.
However, as Chesky’s experience and other founders’ testimonies suggest, this approach can backfire. Founders who adhere to manager mode often find that their companies suffer because they are not leveraging their unique insights and connections to the same extent. The principles of founder mode, in contrast, recognize that founders have a deeper, more intuitive understanding of their company’s vision and culture. As such, they may need to engage more directly with various levels of their organization.
The Limitations of Manager Mode
Manager mode, with its emphasis on delegation and autonomy, works under the assumption that the higher-ups do not need to be involved in the minutiae of daily operations. The idea is to allow skilled professionals to drive the company’s progress. However, this approach can lead to significant issues if those professionals are not fully aligned with the company’s vision or if they lack the nuanced understanding that the founders possess.
In practice, many founders have discovered that this approach often results in hiring individuals who can give the appearance of competence without delivering meaningful results. These “professional fakers” can undermine the company’s progress, causing what might be perceived as a failure of the founder’s vision when, in reality, it is a failure of the manager mode’s assumptions.
The Concept of Founder Mode
Founder mode, though less well-defined, is characterized by a more engaged and hands-on approach from the company’s founders. It involves:
- Direct Engagement: Unlike manager mode, founder mode often requires founders to be deeply involved in the day-to-day operations. This might mean bypassing traditional reporting structures to engage directly with employees at various levels.
- Vision-Driven Leadership: Founders in founder mode leverage their unique vision and understanding of the company’s culture and mission. They do not just manage but actively shape the direction and ethos of the company.
- Flexible Structure: Rather than adhering strictly to hierarchical management, founder mode can involve unconventional practices, such as hosting annual retreats with key employees regardless of their position in the org chart. Steve Jobs’s retreats at Apple are a prime example of this approach.
The Challenges and Opportunities of Founder Mode
Scaling a company while maintaining founder mode is not without its challenges. As a company grows, it becomes increasingly difficult to stay as hands-on and engaged as when it was smaller. The need for delegation increases, but this does not mean that founders should completely relinquish control. Instead, they need to find a balance that allows for continued direct involvement while empowering others to take on more responsibilities.
Another challenge is the potential for misinterpretation or misuse of founder mode principles. As this concept becomes more widely recognized, there is a risk that it could be appropriated by those who lack the necessary context or understanding. Founders might use it as an excuse for failing to delegate effectively, or non-founders might attempt to mimic founder behaviors without fully grasping the underlying principles.
The Future of Founder Mode
The idea of founder mode is still in its nascent stages, and there is much to learn about how it can be effectively implemented. As more founders experiment with and refine these principles, we may develop a clearer understanding of what works and what does not. The goal is to find ways to harness the unique strengths of founders while scaling their companies effectively.
The evolving nature of founder mode suggests that, once fully understood, it could become a valuable framework for guiding the growth of startups. By combining the deep, visionary engagement of founders with strategic delegation, companies could achieve a balance that maximizes their potential.
In conclusion, Brian Chesky’s insights and the experiences of other founders indicate that the conventional wisdom about scaling startups may be inadequate. Founder mode represents a promising alternative that emphasizes the importance of founder engagement and vision. As we continue to explore and define this concept, we may discover new strategies for scaling startups that are both effective and true to the founding spirit.
