Micromanaging Is Cool Again in Tech

"People like Elon Musk and Steve Jobs at times seemed to have a je ne sais quoi that allowed them to act and behave as leaders of their companies in ways that would have tripped up mere mortals.

This past week, Silicon Valley put a name to it: "Founder Mode."

It's a term coined by Paul Graham, co-founder of Y Combinator, an influential startup incubator in the San Francisco Bay Area. He wrote an essay this month gaining a lot of attention in tech circles that pits his "Founder Mode" against what he calls "Manager Mode."

Graham tries to put his finger on the special relationship entrepreneurs have with their companies that he argues outsiders just lack. Manager Mode "is so much less effective that to founders it feels broken," he wrote. "There are things founders can do that managers can't, and not doing them feels wrong to founders, because it is."

To some, Founder Mode might sound a lot like micromanaging -- the sort of thing cautioned against by business professors and management consultants. They warn such practices won't scale as a business grows, can stifle grass-roots innovation and risk staff burnout and turnover.

But the case for Founder Mode is more than that: It challenges conventional wisdom in Silicon Valley that once a child creates something great, that adults then need to be brought in to make it big. Instead, this principle argues that founders, by their very nature, can do things that professional managers can't.

Founder Mode would say that is why Musk, considered a co-founder of Tesla, could bet the company on the idea of making an electric car mainstream with the Model 3 and change the automotive industry in the process. Or why the late Jobs could make his own similar gamble at Apple with the creation of the iPhone, which went on to change digital life.

Graham wrote that he was inspired by a recent talk Airbnb Chief Executive Officer Brian Chesky gave at a Y Combinator event about the pitfalls of following the conventional wisdom that says founders should give way to seasoned managers.

That wisdom is a path well trodden, and has helped several nascent companies become major forces today.

Take Google. Founders Larry Page and Sergey Brin famously turned over the reins to Silicon Valley veteran Eric Schmidt because of his management experience -- aka "adult supervision" -- in 2001. A few years later, Mark Zuckerberg, then 23 years old, poached seasoned Google executive Sheryl Sandberg to be his chief operating officer as Facebook was quickly growing.

What Founder Mode means exactly is up to interpretation. Graham was deliberately vague, he told me. "The point of the essay is just to argue that it exists -- that there are things the founder of a company can do that a hired CEO couldn't," he said this past week in an email.

Graham points to some examples of how Founder Mode operates, such as so-called skip-level meetings in which a CEO goes around direct reports into the lower rungs of a company for unvarnished answers.

At SpaceX and Tesla, Musk is well known for reaching into the ranks of his engineers with technical questions, bypassing his senior leaders in pursuit of answers.

His stories of sleeping on the factory floor during "production hell" are famous among his acolytes, even if his recent erratic behavior -- what his biographer has dubbed "Demon Mode" -- has taken some of the luster off his management style during his tough slog with the social-media platform X.

That rough go, however, might ultimately be the best endorsement of the Founder Mode principle. Musk's approach might have worked at SpaceX and Tesla, whereas at X he isn't the founder. He is the acquirer (2022) -- the outsider arriving with ideas to make things better.

In a podcast late last year, Chesky, who co-founded Airbnb, talked about the three traits he said better equip a company's founder over an outside manager.

"They're the biological parent -- you can love something but when you're the biological parent of something, like, it came from you, it is you, there's a deep passion and love," Chesky said. "The second thing a founder has is they have the permission. . .like I can't tell another child what to do but if they were my child I probably could."

This empowers a founder to make dramatic changes, such as rebranding.

And finally, according to Chesky, a founder knows how the company was built in the first place. "You know how to rebuild it, you know the freezing temperature of a company, you know at what temperature it melts," he said.

Founder Mode was quickly endorsed by others in tech who see value in founders staying to run things, including Shopify's Tobias Lutke, who posted that he had shared the same experience. "We need founder mode companies in all industries," he tweeted.

This past week, some cautioned that seasoned managers are sometimes better than founders at handling the complexities that come with a growing business.

For all of the examples of Founder Mode successes, there are many other founders who stumbled in obscurity or, as at WeWork, quite publicly, thus making Manager Mode the conventional wisdom.

In the end, execution is what matters, Henrik Torstensson, a venture capitalist, wrote in a blog this past week, saying some creators aren't great at executing. "When a startup has reached sufficient scale, a great executing manager likely does better than a bad to medium executing founder," he concluded.

Jobs's legacy, for example, was cemented in his second go at Apple (his first run ended with his ouster), when he was able to really put a dent in the universe. And he was helped by seasoned operators, such as Tim Cook, who succeeded him -- successfully -- as CEO.

A knock against Musk has been his lack of a Cook-like operator at Tesla, while at SpaceX he was able to find a seasoned No. 2 in Gwynne Shotwell.

Graham concedes that some startup leaders might lean on Founder Mode as an excuse for their inability to properly delegate or other mistakes. And Chesky suggested that not all founders feel empowered to act as he does.

"Women founders have been reaching out to me over the past 24 hours about how they don't have permission to run their companies in Founder Mode the same way men can," he tweeted Tuesday. "This needs to change."

Before publishing his essay, Graham ran it by a few tech titans, including Musk. After it was published, Musk weighed in on X with his own endorsement: "Worth reading."" [1]

1. Micromanaging Is Cool Again in Tech. Higgins, Tim.  Wall Street Journal, Eastern edition; New York, N.Y.. 09 Sep 2024: B.4.