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Founder Mode
Essay from the Paul Graham collection in the Y Combinator library — Paul Graham, 2024
The Bitthere are two ways to run a growing company, as a manager or as a founder; delegating without getting involved works for a professional manager, but it pulls the founder away from what makes their company great.
Collection: https://www.ycombinator.com/library/carousel/Essays%20by%20Paul%20Graham
Essay: https://paulgraham.com/foundermode.html
"There are things founders can do that managers can't, and not doing them feels wrong to founders, because it is."
— Paul Graham
This Bit doesn't come from a book, but from one of the best free resources that exist for a founder: the collection of essays by Paul Graham, cofounder of Y Combinator, which YC gathers in its library. Graham has spent two decades writing short essays on how to start and grow a startup, and several became required reading in Silicon Valley. From that collection we chose one of the most recent and most debated: Founder Mode, from September 2024.
The essay was born from a talk by Brian Chesky, cofounder of Airbnb, at a YC event. As Airbnb grew, well-meaning people advised him to run it the way a big company is run: hire good people and give them room to do their jobs. Chesky followed the advice and the results were disastrous. He had to find another way on his own, partly by studying how Steve Jobs ran Apple, and today Airbnb is one of the most profitable companies in Silicon Valley. In the audience, founder after founder said the same thing had happened to them.
Graham's explanation is that there are two ways to run a company:
- Manager mode. Treat each branch of the org chart as a black box: you tell your direct reports what to do and they decide how, without you getting into the details, because that would be "micromanaging." It's how a professional manager who didn't found the company is taught to lead.
- Founder mode. Break the rule that the CEO engages with the company only through direct reports. Meetings with people several levels down become normal, and the founder stays close to the details that matter.
Graham warns that "hire good people and give them room" sounds very good, but in practice, as founder after founder demonstrates, it often ends in hiring people who appear competent and letting them drive the company into the ground. Founders get the wrong message from two sides: from investors who never founded a company, and from executives who are very skilled at managing upward.
The clearest example is Jobs, who every year organized a retreat with the hundred most important people at Apple, who were not the hundred highest on the org chart. Graham acknowledges that a founder can't run a company of two thousand people the way they did at twenty: they have to delegate, and the limits of that autonomy change from company to company and over time, as executives earn trust. Founder mode is more complicated than manager mode, but it works better. Companies like Apple and Airbnb never lose their startup spirit, even as they grow and require management systems.
Graham himself leaves a warning: as soon as the concept becomes popular, there will be founders who use it as an excuse not to delegate what they should delegate.
How to apply it? Identify the areas of your company that have become black boxes to you and schedule periodic conversations with people several levels down. Make your own list of the most important people in the company, regardless of title. And define in writing where you already delegate with confidence and where you still need to stay close.
As a founder it will help you grow without losing what got you here. And, beyond this topic, Graham's essay collection has great value for the start, growth and consolidation of your company.
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How it helped me
I've known very intelligent people, action-oriented and with enormous intellectual curiosity, capable of finding fantastic shortcuts to save a few pesos on the flight or hotel for their vacation. When they own their business, they use those same capabilities in their company. But when they join a corporation with many stakeholders and a lot of structure, even with stock options, they often put on the manager-mode hat: they delegate important decisions to people of limited capacity, at a high cost in overpriced spending and in opportunities left uncaptured.
Founder mode at its most extreme I've seen in our own customers, women entrepreneurs at the base of the pyramid who know the value of every peso and of what their actions can generate. One of them lost her husband and couldn't pay the loan her business needed to keep running. Because she had a solidarity support group, her friends and neighbors went out to sell tamales outside the schools and, with the profit, stabilized her situation: the business stayed standing, and with it the food, health and education of her children. In that market there's no time to over-analyze and no structure to delegate to. If you don't do things, you don't eat; if you do them, you change the outcome.
I also see it in successful startups. The CEO of one of them told me how much it hurt that her development team said there was no time or resources for a build that would take months and would save her leadership team dozens of hours a week. Without being a programmer, and while caring for her baby of a few months, she threw herself into a whole night of vibe coding and by the next morning had it in production. The message to her team was clear: in founder mode you get a lot more done.
The difference isn't in the person, but in the hat they put on, and that hat is defined by the culture of the company they join. Our job as founders is to make sure founder mode doesn't depend only on us, but becomes part of that culture. It's the best-kept secret of Apple and of the other companies we most admire.
Killer quote: "I train as if I were the worst in order to play as if I were the best." — Cristiano Ronaldo