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Founder Mode

paulgraham.com

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Re: Founder Mode

#131

Post by throwadobe »

jodacola wrote: post #126
Chance-Device wrote: post #88

When a company is successful, by which I mean it turns a healthy profit and eventually even enough to go public, it ends up sustaining a lot more employees doing a lot less than a smaller, leaner company that can’t afford inefficiency. That doesn’t matter much to the successful company, it makes more than enough money to cover the inefficiency, and the inefficiency isn’t causing any real trouble - it just means that…

I’ve had a lot of conversations over my career about this general topic, and I still haven’t been able to answer: If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further? What are the disincentives to doing so (beyond the need for requiring more from people)?

It takes effort, requires goodwill, has damaging implications to internal politics and ultimately is not the best way to maximize tenure at C-level roles.

Executives are solving for their job, not for the company's success.

Re: Founder Mode

#132

Post by worstspotgain »

Well put as always. Here's what I think is the primary alternative hypothesis.

Assume that it's very hard to forecast a manager's fit and future performance. With a new CEO, manager mode is the less-risky proposition. Spread risk around by delegating more. The founder has a proven track record leading the company, making founder mode usually preferable.

In other words, the non-founder CEO may just be one of the professional fakers that the essay mentions as plausible subordinates. There's a ton of research literature on adverse selection of CEOs. Some of it goes back decades, so there's always the question of whether the selection process has improved over time. But there will always be people that excel at getting selected and promoted.

The way this hypothesis differs from the essay's is in boiling down to actual performance. A high-performing non-founder does not need manager mode, while a low-performing founder would be better off with it.

Re: Founder Mode

#133

Post by thelastgallon »

jodacola wrote: post #126
Chance-Device wrote: post #88

When a company is successful, by which I mean it turns a healthy profit and eventually even enough to go public, it ends up sustaining a lot more employees doing a lot less than a smaller, leaner company that can’t afford inefficiency. That doesn’t matter much to the successful company, it makes more than enough money to cover the inefficiency, and the inefficiency isn’t causing any real trouble - it just means that…

I’ve had a lot of conversations over my career about this general topic, and I still haven’t been able to answer: If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further? What are the disincentives to doing so (beyond the need for requiring more from people)?

Once a company becomes successful, it attracts the second kind of people in Iron Law of Bureaucracy.

https://www.jerrypournelle.com/reports/jerryp/iron.html

Re: Founder Mode

#134

Post by throwadobe »

Manager mode assumes that workers clock in and do what they can to drive the company forward. But there is no altruism among workers. Their decisions are for themselves first and for the company second.

Re: Founder Mode

#135

Post by rvnx »

gizmo wrote: post #63
sethammons wrote: post #24

Earlier quoted context omitted.

I'm not sure he is a good example. He has 55 direct reports and that is not normal. My best manager nearly burned herself out with 28 direct reports, most of which were individual contributors as opposed to managers. Between what I have read and experienced, you can have more ICs under you the more senior and autonomous they are, but there is a limit and limiting direct reports to 8-12 is a good rule of thumb. It giv…

He is a good example exactly because all exceptional executives are super unusual. Gates, Jobs, Musk, Bezos. They are nothing alike. Huang defies management best practices and doesn’t do 1:1 meetings at all.

It's easy to sail a boat when the wind is behind you. It's during storms that you can see outstanding captains. When Nvidia was firing part of the CUDA core devs 3 years ago, he wasn't considered a genius internally.

Re: Founder Mode

#136

Post by detourdog »

eevilspock wrote: post #53
jasode wrote: post #15

>The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do. That would be micromanaging them, which is bad. >Hire good people and give them room to do their jobs. Sounds great when it's describ…

One might say the same of founders, but with respect to the org they are a part of: society. Founder? Nope, professional money extractor. Anyone who's critical of, which is to say critically aware of, the underlying nature of capitalism will get what I'm saying. Elon Musk (who proofread PG's post) is a master at extracting money from society and its government, while extracting labor from workers for minimal pay.[1]…

I’m not sure the web an Linux can be judged with todays valuation in mind. Both succeeded through openness not capitalism. Einstein was from a whole different society.

Re: Founder Mode

#137

Post by talkingtab »

Our understanding of organizations completely derives from military and manufacturing. It is essentially top down. Heck, our whole society and schooling is top down. Someone else knows more than you and is better at things than you are. So if you want to be good at something, you follow. Guess what?

So what is the alternative to top down? Another model is that the persons in an organization act in two roles. First they effectuate. They take effective action. The people 'in situ' know what the situation is. Secondly they act as sensors. They provide information to others. And groups can act in the same way.

We humans evolved by being very good at this model. There were no CEO's in small communities. There were no schools that taught you how to be a hunter gatherer or make cheese.

Yes I know that large corporations and armies have in the past scaled better. Perhaps that is because we have had better technology to give orders better than to collaborate.

The (mythical) Mythical Man Month tells us that New York City cannot exist. And no corporation runs NYC. So clearly it cannot exist. Right? Yet it does. Perhaps we need to understand how. My attempts have started with 'Hidden Order' by John Holland. Don't follow it. Just use it as a starting point.

Re: Founder Mode

#139

Post by maaaaattttt »

kijin wrote: post #85
maaaaattttt wrote: post #43

Earlier quoted context omitted.

Also, I'm 99% sure that Steve Job once said (paraphrasing): "We don't hire talented people to tell them what to do, we hire them to tell us what to do". Which to me sounds like "Hire good people and give them room to do their jobs". So there is a discrepancy here as Steve Job is also used as an example of a "Founder Mode" CEO. Not saying there is a contradiction, just a piece missing somewhere in the essays logic.

Letting your employees tell you what you need to do is not the same as giving them room to do what they want. In the former, you are immediately aware of what they're doing and why, because they're telling you! You can ask questions if their reasoning doesn't sound convincing, intervene early if there's disagreement as to what should be done, and decide whose project takes priority. Steve Jobs was a very active CEO i…

I believe you're right. That was the piece I was missing. And it makes a big difference indeed.

Re: Founder Mode

#140

Post by Chance-Device »

jodacola wrote: post #126
Chance-Device wrote: post #88

When a company is successful, by which I mean it turns a healthy profit and eventually even enough to go public, it ends up sustaining a lot more employees doing a lot less than a smaller, leaner company that can’t afford inefficiency. That doesn’t matter much to the successful company, it makes more than enough money to cover the inefficiency, and the inefficiency isn’t causing any real trouble - it just means that…

I’ve had a lot of conversations over my career about this general topic, and I still haven’t been able to answer: If a large, successful company operated extremely cleanly, wouldn’t that increase stock price even further? What are the disincentives to doing so (beyond the need for requiring more from people)?

I’d add to the other replies by saying that this isn’t just pure inefficiency - it’s the ability to try things and get them wrong without dying. Often several things. If one of them works out, maybe they justify the rest - just like investing in startups, ironically.

Second, it’s also about redundancy, having more employees covers you from key man syndrome where your operations could be adversely affected by an employee leaving. Even if it means you technically have more employees than you need at a bare minimum.

Third, I’d argue that the level of “efficiency” required by a startup simply isn’t sustainable in the long run, unless you want everyone to burn out. Successful companies likely span a spectrum of efficiency, but none of them need to be on the far efficient end like startups do, and that’s better for everyone working there.

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