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Founder Mode

paulgraham.com

621–630 of 772 posts

Re: Founder Mode

#621
I feel like Amazon is a great case in point - Bezos exercised direct command-and-control of all major initiatives for his entire tenure at the helm.

Delegation was obviously in play, but responsibility was never diffused. At the end of the day, there was a direct chain of responsibility from you all the way up to Bezos, and he wouldn't hesitate to send one of his personal fixers in if things were going off the rails in a particular branch of the organisational tree.

Re: Founder Mode

#622
Ben Horowitz talks about this in “The Hard Thing about Hard Things”. He uses the metaphor of an Offensive Lineman and the concept of “giving ground begrudgingly”.

His core concept is that one should slowly delegate responsibility. Not delegating anything is like the Offensive Lineman standing still. In that case the defense just runs around around you.

Instead he suggests that you move back slowly, offering resistance the way an O-Line does.

This seems very complimentary to what Paul mentioned.

Re: Founder Mode

#623
It’s surprising that this is surprising.

Every conversation loses information. Something is always lost in translation, even among excellent communicators. If you only rely on your direct reports to get information about your organization you will be flying blind. This will happen in situations where everyone has the purest intentions. Add on top politics and personal interests and the problem compounds.

Here are a few tools I’ve used to get a richer understanding of what’s going:

  - skip level one on ones
  - metrics
  - using the product as a user
  - occasionally looking at a few “low level” artifacts like customer support threads, slack conversations, PR reviews, or user stories. 
You’re essentially doing a virtual walk-around. Imagine in a physical plant, once a week, the CEO walks around the fence perimeter, through the stock rooms, observes the gate for a few minutes, walks the factory floor inconspicuously, makes herself coffee in the back cafeteria, and uses the warehouse bathroom. While she does this she occasionally asks a question here or there, praises a good effort, and very visibly picks up a piece of trash. It’s possible to do a similar thing virtually.

The observations from the above activities are invaluable sources of information. You cross reference it with what your direct reports tell you. You challenge them based on your first hand observations. Ask a lot of questions, and when they can’t answer them, encourage them to also become more intimately involved in their part of the organization.

No single perspective is enough to understand what’s going on

This is not micromanagement. This is being aware.

Re: Founder Mode

#624

Earlier quoted context omitted.

I think the main driver is a lot more simple than other people have said: when you don’t need that efficiency you can focus on resilience instead. As the pandemic showed with JIT supply chains, efficiency and resilience are often at odds. And the bigger you are the more resilience you want to protect your core business and let you just turn the fly wheel that’s making you profitable. That’s also why you see companies…

> This is 100% bad from a country/market level but is what you get when you let local optimizations trump capitalism. In some sense that local optimization also isn’t bad - it’s not uncommon that that behavior is also what lets efficiencies be extracted. Is it really 100% bad? Do people really think that the goal of humanity is to work in the most efficient way to extract the most economic value from everything possi…

There are visible and invisible numbers, which are fundamentally at odds.

If your sole objective is to „number goes up“, you sacrifice everything which is not trivially quantifiable.

Re: Founder Mode

#625

It’s surprising that this is surprising. Every conversation loses information. Something is always lost in translation, even among excellent communicators. If you only rely on your direct reports to get information about your organization you will be flying blind. This will happen in situations where everyone has the purest intentions. Add on top politics and personal interests and the problem compounds. Here are a f…

"management by walking around" is definitely a thing.

Whether it's a good thing or a bad thing depends on your experience with it, mostly.

Re: Founder Mode

#626

There's a fundamental point missing in this analysis. That is the difference in skin in the game and upside/downside game theory dynamics for people involved. An early "founder" by definition has a lot of upside and very little downside and have a lot of ownership. And hence they behave in a particular way. They are actually taking very little risk. A late stage founder or a professional manager ceo has amassed stuff…

I think you're forgetting this:

"often turns out to mean is: hire professional fakers and let them drive the company into the ground."

That's not low risk, that's higher risk. Letting the founders continue in Founder Mode can be both lower risk, and higher expected value, at the same time.

> hiring good people and letting them do etc is all just details of dynamics emanating from this unreasonable risk taking ability

I think not. Instead, the founders have unique insights: in the product, in the business domain, in the people in the company - which lets them do Founder Mode things a professional CEO cannot.

Sth else:

> only really unreasonable people can make huge changes in society.

Nice way of phrasing it :-)

Re: Founder Mode

#627

It’s surprising that this is surprising. Every conversation loses information. Something is always lost in translation, even among excellent communicators. If you only rely on your direct reports to get information about your organization you will be flying blind. This will happen in situations where everyone has the purest intentions. Add on top politics and personal interests and the problem compounds. Here are a f…

There is even a name for it: Gemba Walk, a LEAN practice.

Management self-help guru Tom Peters (of In Search of Excellence fame) built a whole method around it, called Management by Walking Around. It differs from Gemba Walking in lacking a specific focus.

Re: Founder Mode

#628
post #456

Earlier quoted context omitted.

I don’t think it is a bad outcome with misusing a concept. Because it does not affect those truly embracing it. Having an excuse is not going to save bad business run by bad people. It might let them slide a bit more but ultimately it is not doing the job for them.

But it does make it more difficult to talk about a concept when it's been (re)defined and argued about and gaslit about instead of what PaulG is doing: providing a simple definition backed by some real-world examples that actually are founder-mode being done more or less right.

Yes, and when various people start to fake-claim that they work in Founder Mode, you're more likely to hire the wrong managers or CEO, once it's time to find someone for whatever reason.

Re: Founder Mode

#629

Earlier quoted context omitted.

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 think the main driver is a lot more simple than other people have said: when you don’t need that efficiency you can focus on resilience instead. As the pandemic showed with JIT supply chains, efficiency and resilience are often at odds. And the bigger you are the more resilience you want to protect your core business and let you just turn the fly wheel that’s making you profitable. That’s also why you see companies…

> As the pandemic showed with JIT supply chains, efficiency and resilience are often at odds.

I’m not convinced this is necessarily true. JIT implies making all of your buffers more obvious, and you will want to reduce unnecessary buffers to save cost, but maintaining some buffers for the sake of resilience isn’t incompatible with JIT supply chains. The problem comes when you combine short-term oriented management with JIT supply chains; if you quantify the cost of a buffer, you make it easier for that type of management to make that kind of decision.

Toyota, for example, is one of the firms that popularized JIT, but they don’t usually run into the same short-termist problems that afflict other firms. Relatedly, Toyota’s senior management have all spent decades if not their entire careers at Toyota and still includes members of the Toyoda family. Those guys are probably not going to play fast and loose with resiliency just to make quarterly numbers look good. They are going to look at the quantified and understood cost of their resiliency buffers and say, “removing this buffer might save lots of money next quarter but in the long run that represents a risk to a company I intend to pass down to my grandchildren so I won’t do it”. Whereas a different manager at a different company might say, “this will definitely make the next quarter’s numbers look amazing and if there are consequences in the long run, either I’ll have switched companies or I can just say it’s not my fault”.

Re: Founder Mode

#630
"The theme of Brian's talk was that the conventional wisdom about how to run larger companies is mistaken. As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale."

I looked up this company Airbnb. I always used VRBO, which predates Airbnb by over a decade. I booked entire houses months in advance for extended stays.

According to this blog post Airbnb grew. But the stock is down over 8% even after the latest market rally. What's going on.

The question I have is what Airbnb grew into. The company has been around for a while. I let Big Tech show me the latest news. I did not ask for negative news, just any news.

Below is what I got. I must be missing why this Airbnb CEO is doing a good job and is worth listening to in spite the company's name appearing in all of this bad press.

https://www.theglobeandmail.com/business/commentary/article-...

https://www.bbc.com/news/articles/cevj77rdp89o

https://www.kansascity.com/news/local/article291610590.html

https://finance.yahoo.com/news/vrbo-nick-saban-ad-trolling-2...

https://www.kake.com/home/city-of-wichita-looking-to-add-law...

https://www.click2houston.com/news/local/2024/08/26/man-shot...

https://www.houstonpublicmedia.org/articles/news/crime/2024/...

https://globalnews.ca/news/10723835/airbnb-hidden-camera-san...

https://www.businessinsider.com/restoration-train-car-airbnb...

https://www.outsideonline.com/culture/love-humor/airbnb-moun...

https://lfpress.com/news/local-news/jail-sentence-sought-for...

https://www.wxxv25.com/four-arrested-after-shooting-at-gulfp...

https://nypost.com/2024/08/20/lifestyle/i-stayed-in-a-1-a-ni...

https://buffalonews.com/news/local/business/gov-kathy-hochul...

https://www.summitdaily.com/opinion/letter-to-the-editor-fri...

It goes on. The reply will likely be "The reason is ... and this has nothing to do with Airbnb. Airbnb is doing fine. I love Airbnb. And so on." This is a forum sponsored by the Silicon Valley VC firm that financed Airbnb so I expect HN commenters will defend the company's actions or inaction.

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