‘Founder mode’ is the latest Silicon Valley buzzword telling toxic bosses they’re great

New York (CNN) — The battle over “founder mode” versus “manager mode” is one of those manufactured dramas that only a small segment of the world cares about — like going to Davos or Cannes or the Vanity Fair Oscar Party.

But the debate raging within a tiny group of Extremely Online commentators speaks to broader questions about the way Corporate America has evolved to venerate the alleged visionary in the corner office.

Here’s the deal: Last week, Paul Graham, the co-founder of startup incubator Y Combinator, wrote an essay trumpeting the value of what he coined the “founder mode,” management style that flies in the face of the conventional “manager mode.”

Founder mode, in short, is when a chief executive runs the business with a hands-on approach at all levels.

Manager mode involves delegating to a trusted team that execute on day-to-day issues — a strategy that, Graham argues, too often turns into “hire professional fakers and let them drive the company into the ground.”

Graham recounted a speech from Airbnb CEO Brian Chesky, who told an audience at Y Combinator about how, in Airbnb’s early days, following the conventional wisdom was “disastrous.” But Chesky took inspiration from Steve Jobs, famously involved in every stage of Apple’s operations, and only then did the pieces fall into place.

Chesky’s approach appears to be working, Graham argues, as “Airbnb’s free cash flow margin is now among the best in Silicon Valley.” (Not mentioned: Airbnb’s stock is down more than 15% this year.)

The idea is that a founder knows their company the way a parent knows their child.

It’s not a groundbreaking idea, but the essay clearly hit a nerve as equal amounts of praise and criticism (and memes!) lit up social media.

Graham doesn’t really define founder mode because every founder and every firm is different. But the passionate discourse around the subject offered some real-life examples.

There’s Jobs, of course — the genius behind Apple’s world-dominant success, who was also an exhaustingly fastidious person prone to yelling at subordinates. Or there’s Jeff Bezos, one of the world’s richest people and a notorious micromanager. Or Elon Musk, the head of six companies who regularly peddles misinformation and racist tropes. Or Nvidia’s Jensen Huang, who has 60 direct reports and has said that he’d rather “torture” an underperforming employee into greatness than fire them.

I’ll offer another: Ray Dalio, the founder of Bridgewater, one of the world’s biggest hedge funds. Dalio, who stepped down in 2022, was an almost cartoonishly tyrannical boss whose staffers were directed to narc on one another for even the pettiest of problems, according to reporting from the New York Times’ Rob Copeland.

Sensing a pattern here?

It often takes a certain personality to start a company. And while tech bros love to glorify a founder, they often gloss over the realities of a boss so committed to the vision that they refuse to delegate.

The folks Graham and other founder-mode enthusiasts hold up as icons are the exception — not the rule — when it comes to turning a startup into an empire.

“Most founders who refuse to step out of this hyper-involved role struggle to scale their companies effectively,” wrote Rich Hagberg, a psychologist and consultant, on LinkedIn. “Many burn out, lose focus, and create bottlenecks … clinging too tightly to Founder Mode can hinder, not help, long-term success.”

Founder mode isn’t inherently bad, to be clear — being involved at all levels can foster personal connections with team members, Ashley Herd, founder of management training firm Manager Method, told me. But it’s not sustainable.

“People have lives outside of work, and this mode can either push employees to leave or lead them to stay but become burnt out and resentful,” she said.

The most successful “founder mode” guys (they’re almost all male, as far as I can tell) seemed to always have a trusted manager by their side.

Journalist Jessica Lessin, who founded the news site The Information, wrote that while she believes founders must dictate strategy, they can are also “usually pretty annoying to work for.”

A great founder needs a great management team, she wrote on X. Returning to the Steve Jobs example, she notes: “He had Tim Cook.”

The-CNN-Wire
™ & © 2024 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.