What makes great leadership?
Most would agree on certain traits and behaviors like direction, devotion, drive, determination—persistence and creativity, passion, and tireless commitment.
The best leaders bring about the best in other people—they are an undeniable core of company culture, inspiring and encouraging, and they must be able to recognize what is working and what is not.
Great leaders are often optimistic (you could argue ‘realistic,’ but I might challenge that), capable of making the hard decisions, taking action where required, and always keeping the focus on the core purpose being pursued.
One’s view of the necessity or role of leadership can be political, of course. Consider these quotes, from former US Presidents:
“The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things.”
—Ronald Reagan
“Leadership and learning are indispensable to each other.”
—John F. Kennedy
I agree whole-heartedly with both.
Y Combinator co-founder, computer scientist, and entrepreneur Paul Graham fired up recent debates on tech leadership styles (for some, anyway) this September, when he posted an essay on his blog titled Founder Mode.
I encourage you to read it if you haven’t already.
Today I want to consider this a bit from my own experience: namely what can we take from this idea of founder mode—what are the benefits, and dangers, for companies led by strong, iconic leaders? I want to consider the classic, business-school alternative (called manager mode in Graham’s essay), commonly implemented as startups scale.
It seems like a great time to consider leadership, and I’m fascinated by the challenges inherent in trying to harness the best of both approaches.
On Founder Mode
Companies are often synonymous with individuals. Their so-called faces, at least initially.
For Apple it’s Steve Jobs, Meta Mark Zuckerberg, and Nvidia Jensen Huang. These are the people (we assume) who had the big ideas, yes, but who also threw themselves into it from the start, who took big risks, such as the classic image of building something new in one’s garage or basement, alongside a few close friends.
We recently profiled young innovators in tech, and many of them fit this bill: pioneering or pushing new ideas, teaming up with like-minded talent, begging and borrowing what they need to get prototypes or proofs, then landing venture capital, etc.
When a company succeeds, these founders are heroes, and when they fail it’s all their fault. In truth, they are reflections of teamwork, the focal point or outward face of many at work, though their initial behavior goes far beyond management.
These are the people connected to every aspect of an organization—reading every report, aware of all initiatives. They likely lack the “go home and leave work at the office” mentality, instead having a burning desire, or even obsession, to bring the thing together and see it succeed.
We see a lot of people applying (or seeking to) these things in tech leadership, with big names like Steve Jobs, Jensen Huang (Nvidia, as mentioned above, who according to a New York Times report has 60 direct reports), Elon Musk, Zuckerberg, and Sam Altman (OpenAI).
Graham’s piece considers Brian Chesky of Airbnb, someone who studied Jobs, and tried to move to manager mode as he scaled only to find the results disastrous. Instead, he went back to doing more of what had made them successful in the first place, following the Jobs model.
The essay notes that there is much still to be studied and understood here, and also that founder mode is inherently more complex than a manager mode. A founder, in a company at scale, cannot possibly have their hands in every single thing as they do when their organization is tiny.
So what’s founder mode look like in that case?
Taking A Deeper Look
Since this essay hit the news, numerous great articles have been written, and I’ve read many (as well as having more than a few interesting conversations on the subject). Here let’s consider founder mode strengths and weaknesses.
In the arena of statistical proof, Fortune magazine’s Geoff Colvin penned an intriguing piece, noting that the Fortune 500 currently has 22 companies run by their founders. This includes some listed above, as well as Marc Benioff (Salesforce), Michael Dell (Dell Technologies), Mark D. Millet (Steel Dynamics), Niraj S. Shah (Wayfair), and Tiny Xu (DoorDash).
Comparing these 22 companies during the founder’s tenure to the rest of the 500, the founder-run come away as big winners, statistically.
Colvin found a cumulative total return median of 1,126% vs 57%, with the founder-run orgs outperforming the rest of the Fortune 500, and their sectors, by extensive margins.
Of course, as pointed out in the article, these statistics are inherently flawed, because these 22 are already successful (in the Fortune 500) and still run by founders, meaning the companies are stars of the field, rather than some random sampling.
While it may point to the capacity for a founder mode to flourish at its best (which I think we already know), it doesn’t make the case overall, ignoring the unknown number of startups that failed.
It also sheds no light on founder-run companies that failed to achieve what they could because their founder was holding them back.
Still, we see a pattern of success in a potential “best case,” at least for financial performance.
So what do these individuals do that’s unique?
Here I reference an article from the Harvard Business Review (by Samantha Hellauer, Sanja Kos, Julie Vermoote and BJ Wright). Working from the understanding that such founders are not typical executives, this piece conducts an extensive look at some 1400 data points across more than 100 individuals, searching for what they call “founder DNA.”
They find that their so-called founders divert from typical executives in areas such as their cognitive patterns, motivations, and relationship styles. They list the following traits specifically:
- Creativity and especially the ability to communicate it
- Capacity to inspire a diverse array of others to rally on the founder’s goal (aka founder-driven company culture)
- A “customer obsession”
- Drive and resilience exceeding what’s typically expected of work
- Willingness to pivot and learn by trial and error
Non founding leaders often struggle to attain some of these things. (I’ll also point out here that my two quotes in the opening reflect two of these points.)
Okay, so this all sounds wonderful. What can possibly go wrong?
It’s safe to say that most who read this article will have experienced leaders classified as “micro-managers,” or those that exhibit egotism to a point that inhibits the operation of a team.
There is little more frustrating than having great ideas or talents that you cannot apply at work because you don’t have the freedom to do so, and this also drives great talent away, of course.
[For a consideration on nurturing your own founders-of-the-future, check out this article.]
The same HBR piece also profiles some founder blind spots, including:
- With the company as extension of themselves, they struggle to take criticism and there can be delegation challenges for founders
- They can fixate on new ideas and not maximize current successes, arguably one of the core drivers for manager mode (see below)
- Cronyism, that is, delaying upgrade and failing to remove underperformers who’ve been part of the rise
- Struggles with investors and boards (a famous example from last year happened at OpenAI)
- Excessive optimism
Having thrived by taking chances, it only reasons that many founders will underestimate risks and resist risk-conscious planning.
CNN Business’s Allison Morrow makes valid points that this approach can also feed into a cult of personality, allowing leaders to get away with abuses and also fail to look critically at their own failures. They’re also, as she points out, heavily skewed male.
Manager Mode
Manager mode needs less introduction, as this approach is based on delegation, and often associated with a hierarchical structure where branches have greater autonomy.
With an array of professionals driving their own areas, this approach is highly logical, and almost always favored when scaling. (Graham calls these “black boxes” of operation.)
Manager mode is assailed by many as leading away from innovation and into safety, where “group think” ensures nothing too dangerous (or groundbreaking) happens.
Inversely, manager modes thrive at:
- Maximizing what you do well
- Managing risks and establishing safety
- Finding new talent and optimizing existing
- Rounding out blind spots/shortcomings
- Delivering stability and reliability
Driven more on numbers than cultures, this approach is particularly adept at achieving operational excellence and security.
And while organizations led in this fashion may struggle when trying to break bold new ground, they can also thrive at doing well what a company is doing now.
Conclusion
Obviously, leadership is not choosing between founder mode vs manager mode. The key is taking what works best from both, but this is far more easily said than done.
The power of an inspired leader can hardly be matched, and yet, massive companies can fail, or fail to grow in ways they could, when a slavish devotion to a founder vision and company culture grow around blind spots and bad habits.
Graham’s essay notes founders feeling “gaslit” by what they deem as liars, people willing to say the right things but to not actually do what it takes to achieve them. Likewise, employees toiling under the dominion of a leader who believes only they know what the right move should be will never thrive. Choked of freedom, a company can miss out on the contributions of their own talented people, across the board.
I believe that disengagement, which we see in too great abundance today, can thrive from mistakes in either approach.
So how do we find a great balance between the two?
As pointed out regularly in this conversation, many of the most successful of these founders have had truly great managers beside them from the start, such as Tim Cook at Apple.
And while we may not know their names or wear t-shirts with their faces on them, these people, or systems that support visionary leadership, are essential for any founder mode to thrive.
References
Is ‘founder mode’ or ‘manager mode’ better? Here’s what the 22 Fortune 500 companies still run by founders show, Fortune
Why Silicon Valley Is Abuzz Over ‘Founder Mode’, The New York Times DealBook
The Strengths and Weaknesses that Set Founders Apart, Harvard Business Review
‘Founder mode’ is the latest Silicon Valley buzzword telling toxic bosses they’re great, CNN Business
