Calling BS on “Founder Mode”

Founders had never felt more seen than on Sunday when Paul Graham dropped “Founder Mode,” an essay in which he basically permitted them to run riot.

But even though the essay was delivered in his trademark stirring prose and sprinkled with his hard-won insights, I worry that PG has done more harm than good with it.

Before we begin, I should say that PG is a certified GOAT of tech. He built YC, enabling the birth and growth of some of the world’s most transformative companies, from Airbnb to Stripe. His iconic essays have shaped many leading minds—as well as humbler ones like mine—in significant ways.

Since I rate him so highly, my immediate reaction to Founder Mode was to nod along. But as the day went on and I digested its key takeaways, I found myself perturbed.

I have been a founder, but I am no longer one. I am now a non-founder CEO, or, in PG’s words, “merely a professional manager,” like many of you. While founders have been thumping their chests since the essay dropped, our crew has been anxiously waiting for this wave to pass, hoping that the clear flaws of Founder Mode don’t make our already tough jobs 10X harder. But for the vibe shift to happen, we need to challenge the thesis. Otherwise, irrational exuberance will lead to blind implementation, which will wreak havoc in our fragile ecosystem.

So, let’s poke some holes.

Divisional vs. Functional
Founder Mode riffed on a talk Airbnb co-founder and CEO Brian Chesky gave at YC last month. Chesky’s core thesis, per PG, was that the “conventional wisdom about how to run larger companies is mistaken.” This conventional wisdom, per PG, is to “hire good people and give them room to do their jobs.”

Many of the founders in attendance shared that “they’d been given the same advice about how to run their companies as they grew, but instead of helping their companies, it had damaged them.”

While Chesky’s talk was off the record, he has spoken a lot about changing how he ran Airbnb when it faced existential challenges in 2020. His big shift was mainly in corporate organizations.

Airbnb used to use a Divisional structure: business units that operate as businesses within businesses. When done well, it can lead to greater flexibility and increased customer responsiveness. But it can also mean tech debt, higher expenses, duplication of efforts and politicking. By 2020, it was clear that the divisional approach wasn’t working for Airbnb.

So Chesky went Jobsian and turned Airbnb into a Functional Org. He implemented a single product roadmap and one keeper of the flame: himself. Airbnb did fewer things, and focused on doing the right things really well. Teams were more closely integrated, collaboration increased and they shipped better stuff. Things improved drastically.

How a company is organized is one of the most important decisions a CEO can make. Getting it wrong is ok, because you can change course. Blaming others for it isn’t. I’ve never seen Chesky do anything but accept full responsibility for missteps. PG’s essay, though, shifted the blame onto others, which is counterproductive.

Founders complaining that they were given the “same advice” and it didn’t work for them are abdicating responsibility for a critical decision that should be made with a great deal of care and intellectual rigor. And there’s no one right way: Microsoft—with a $3T market cap—is set up as a Divisional Org, and it works quite well for them.

These are hard decisions, and mistakes are part of the process. Part of what makes our ecosystem thrive is that we’ve prized a culture of learning from our mistakes. Pointing fingers mars that process. It suggests that if only we had been left to our devices, we would have gotten it right.

Us and Them
PG asks: “Why was everyone telling these founders the wrong thing?”

Eventually, he realized “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.” Here, he distinguished between “Founder Mode” and “Manager Mode,” with a clear preference for the former.

Look, I’m as guilty of fetishizing founders as the next guy. Our worlds have been made far richer – in all senses of the word – by their brilliance, pluck, and drive. Founder journeys are brutal and they take far more than their share of knocks on the way to victory – IF they ever get there. We’re lucky to have them.

However, PG’s antagonistic framing alienates those non-founder operators who dedicate their careers to helping founders fully realize their visions.

We have yet to see a one-person company sitting atop the S&P 500, and until that happens, we need to remember that creating great companies is a partnership, a partnership between founders and professionals.

There are over a million “professional managers” in North American tech. Within this group, there are tens of thousands who are not very good, and hundreds of others who are cartoon-movie villains. But when PG draws such a bold line, he does a disservice to the hordes of professionals who are doing a stand-up job.

If name-calling was the way to go, managers could certainly invoke examples like FTX’s Sam Bankman-Fried or Theranos’ Elizabeth Holmes and attempt to group others with those charlatans. But it wouldn’t serve anybody.

The reality is that hiring top talent is hard as hell, and every great founder has made hiring mistakes. But that’s what they are – mistakes. Abdicating responsibility for them by damning the entire group of professionals who we need to turn these ideas into elite firms is childish. Remember that for every John Sculley, there is a Dara; for every Laxman Narasimhan, there is a Satya.

We’re far better off celebrating the partnerships between great founders and great professional managers who have helped create world-leading companies. Think of Sheryl Sandberg and Mark Zuckerberg. Meta is the behemoth it is because of that partnership, and there are thousands of other examples.

PG is a legend. But “professional managers” as a “class” are just as legendary, so let’s give them their flowers.