Founder's Mode vs. Manager Mode: The Leadership Style Every Startup Founder Needs to Understand
'Founder's Mode' is a term coined by Paul Graham, co-founder of Y Combinator, after hearing Brian Chesky of Airbnb share his experiences on leadership and scaling challenges. Paul summarized Chesky's talk at a YC event, describing it as one of the best he had seen due to Chesky's candid insights on leadership, scaling challenges, and his unique approach to taking back control when things went off track. Chesky challenged the wisdom of scaling by just hiring good people and giving them autonomy. He explained that he had tried this approach at Airbnb, and things had started to go off track. To address the issues, Chesky took back more control and adopted a more hands-on approach, inspired by Steve Jobs' leadership style.
So, what is Founder's Mode? It's when the strategic direction and execution of a company are closely controlled by the founder, ensuring that the vision is consistently executed and allowing for rapid decision-making, especially in uncertain or critical phases of growth. Paul Graham contrasts this with 'Manager Mode,' where the approach of 'hiring good people and giving them the room to do their jobs' works well. Manager Mode is more suitable for managers brought in to run an established business it is suggested.
But what is wrong with Manager Mode in a startup context? Many successful VCs advocate the approach of hiring talented people and giving them the space to succeed. After all, if these VCs are successful, they must be doing something right, right? Plus, they have their own money or future bonuses tied to the success of the companies they invest in, so it seems unlikely they'd offer bad advice.
The advice to 'hire good people' is sound but defining what 'good' means can be tricky. Let's assume it means intelligent, experienced, personable and execution oriented. Oh, and analytical, selfless, and motivating. All these qualities in one person, especially someone willing to join an unproven startup, is a tall order. The phrase 'find someone who's done it before and get them to do it for you' is common advice, but the definition of 'it' can vary significantly: building a sales team, an engineering department, a brand, or becoming the industry leader. The specifics matter a lot, and this is where nuance comes into play.
Let's look at a couple of start-up scenarios and explore when you might keep a tight hold of the reins and areas when you can confidently handover responsibility.
Clarity of Market Opportunity but No Product Yet
If you're a founder who has identified a gap in the market and developed a clear way to address it, you have the strategy and product concept, and you just need someone to build it. In this case, hiring a marketing or sales leader and giving them free rein might not be the best approach. Instead, you, as the founder, need to work closely with them, sharing your vision of the opportunity and how it can be leveraged. By proving your insights and demonstrating that your strategy works, you allow your hire to apply their expertise effectively. However, you still need to stay involved day-to-day to ensure that execution remains aligned with the vision. Habits die hard, and experienced hires might revert to familiar strategies, especially if they feel uncertain. For example, a sales leader might default to focusing on high-volume cold calling instead of nurturing strategic partnerships, which might not align with the startup's long-term growth strategy. Until a new strategy is truly successful, people tend to fall back on what they know best.
When it comes to product development, you might choose a capable person who can build the product and trust them to get the job done. You need to set clear requirements but leave decisions about technology, management, and culture to them. As a non-engineer, it doesn't make sense for you to dive into the technical details, but you must ensure that the product meets your vision.
Winning Product but No Clear Sales Strategy
On the other hand, perhaps you've built a groundbreaking product that could be invaluable to enterprises using SaaS solutions. It works well but needs some polishing and more testing. Now, how do you sell it to enterprises? This is where experience is crucial—the more, the better. You need a sales leader who understands enterprise sales, and once they grasp the unique value of your product, you should give them the freedom to operate.
The challenge is finding this highly experienced individual. Many experienced, well-paid enterprise sales leaders won't be interested in joining a risky startup, even with the offer of equity. You're unlikely to be in their top ten—or even top hundred—choices until you've proven that the product can sell. However, you still need a sales leader. You might find someone at the end of their career, someone motivated by the opportunity rather than just money, or perhaps a younger, enthusiastic person without management experience but eager to learn. Their ability to learn quickly, make mistakes, and adapt can be invaluable. Once you've made your choice, you can develop the sales team, accordingly, pairing a less experienced leader with seasoned sales reps or vice versa.
Is Founder's Mode the Right Approach?
Should founders embrace Founder's Mode in their startups? The idea of running everything yourself because 'you know best' might not always be the greatest advice for an entrepreneur starting their journey. However, it's important to be cautious when hiring experienced individuals. Many hires default to replicating what worked in their previous roles. This makes sense—they're applying their experience—but what worked elsewhere might not work for your startup. Their approach might not fit culturally, especially if you hire multiple people from the same company. Even if there's nothing inherently wrong with their previous culture, it could clash with yours, causing friction.
For example, fulfilment cultures may differ: one might be 'move fast and fix mistakes quickly,' while another is 'move slower but minimize mistakes.' Both can work, but they won't work well together in the same company. In sales, you might see 'many pitches, low win rate' versus 'fewer pitches, high conversion rate.' A high-volume approach may suit startups with a broad market and lower customer acquisition costs, while a targeted, high-conversion strategy is better for startups with a niche market and higher-value clients. It's crucial to know which approach fits your company and hire accordingly.
The role of the founder or leader is critical in the early stages. A startup can easily fail if no one is carefully navigating the right path. Founder's Mode means being deeply involved, ensuring alignment across the board, and making sure that your company's unique vision is realized.
