The pitfalls of founder mode
A managerial approach that relies too heavily on one person.
A few weeks ago, JP Morgan Chase ordered all employees to return to the office five days per week, following many other companies that have ended remote work. During a staff meeting, CEO Jamie Dimon stressed efficiency and said that some staff did not pay attention during Zoom calls.
This mandate comes amid record profits in 2024 and a share price that has doubled over the past five years, a sharp rebuke to Dimon's insistence that in-office work will improve efficiency. The company seems to be doing just fine with the current remote/hybrid work arrangements.
Dimon went on to say there is "no chance" that he would leave in-office requirements up to individual managers: "The abuse that took place is extraordinary."
Dimon clearly shows that he doesn't trust the people working for him. That he, and he alone, can make decisions for the company. Even when those decisions fly in the face of actual evidence regarding company performance or employee productivity.
Dimon's assertion that he, and he alone, knows what's best for the company is similar to "founder mode" — a leadership style in which the founder doesn't step back and let talented people run the organization. While Dimon is a CEO, not a founder, he displays the same characteristics of a concept that has taken root in Silicon Valley. A concept that gave permission to founders to be overbearing micromanagers, reclaiming power that they had previously conceded.
The myth of the all-knowing founder
In September 2024, Airbnb founder and CEO Brian Chesky gave a talk at an event hosted by Y Combinator (a venture capital firm). During the talk, Chesky said that he'd been given the advice to "hire good people and give them room to do their jobs" — which ended up being disastrous. After the COVID-19 pandemic, Chesky restructured the company to remove divisions and allow him, the founder, to have input in many more decisions. Chesky later said in an interview with The Verge that founders "need to get into the details."
As a follow-up, Y Combinator Paul Graham wrote an essay entitled Founder Mode. In it, Graham wrote:
Hire good people and give them room to do their jobs. Sounds great when it's described that way, doesn't it?
Except in practice, judging from the report of founder after founder, what this often turns out to mean is: hire professional fakers and let them drive the company into the ground.
With that line, Graham reveals his disdain for everyone who isn't a founder. And based on his own statement, other founders feel the same way. They hold themselves in high regard and think that they, and they alone, know what's best. Employees, even high-level employees, can't be trusted to make the right decisions.
In the same Verge interview, Chesky expressed disappointment in "the idea that founder mode is about micromanagement or pure swagger." Indeed, the concept took on a life of its own after Graham published his essay. But Graham asserted that Chesky's approach is the right one: founders need to be involved in the details.
This perspective is deeply flawed for several reasons. First, founders are not good at everything. They may not be able to make sound financial decisions without a specific financial background, for example. Similarly, they may not be adept in operations. Hiring smart people to handle tasks outside the founder's expertise is crucial for building a sustainable company.
Founder mode is also not scalable. As a company grows, it's not possible for a founder to stay involved in everything. Micromanagement will inevitably slow a company's progress and sidetrack a founder from considering the big picture — which is often considered the founder's primary role.
Founder mode has emerged in response to the classic struggle between The People in Charge and The People Doing the Work.
No one can convince a founder otherwise
For a long time, people working at startups saw themselves as partners in a quest for success. Erik Baker, a lecturer in the history of science at Harvard, says these employees have a perception that they are a "partner in the enterprise," fully committed, regardless of pay or position.
Startups ran on employees like this, those who had an entrepreneurial spirit, even without a founder title. Eric Glyman, the founder of Ramp, a financial software company, focuses on being 1% better every day. In a profile for Every, this approach is described in the following way:
The challenge of the 1 percent strategy—of relying on daily, smart choices—is that a CEO cannot make them all themself. They have to trust their organization to make choices for them. You can think of it as the anti-Steve Jobs approach: You have to preach the Good Word and let your followers do the rest.
There's no denying that the approach has worked well for Ramp, a company now worth $7.6 billion.
But many, many founders take the opposite approach. One of the most prominent examples that comes to mind is Twitter, a company that has dropped in value by 80% since Musk took over, insisting that he could run the company better than prior leadership.
Or take a look at Meta. In The Anti-SNARF Manifesto, BuzzFeed founder and CEO Jonah Peretti writes:
The judgment of the deep learning AIs became more important than the judgment of employees working at these tech companies. Meta employees who used to be involved in shaping content policy have effectively been replaced by AI, undermining their sense of purpose as human judgment becomes less important in designing these systems.
More recently, Zuckerberg has said he will start using AI agents as “mid-level engineers.”
Is the pivot to AI — at the expense of human employees — the best route for Meta, or any company? More than a few founders are willing to give it a try, especially since robots are easier to manage than people. What better way to assert founder mode than to remove human pushback altogether?
Founder mode is deeply rooted in ego. Back in a 2013 article for Forbes, Tom Eisenmann wrote, "If entrepreneurial success hinges on a founder’s mastery of psychology, it stands to reason that a founder’s flawed ego is often the root cause of startup failure." This is the opposite of what most founders believe, which is that if the company succeeds, it must be because the founder is an excellent leader. If it fails, it's because the employees were terrible.
It's a perception that just because someone owns or founded a company, the work belongs to them. Eisenmann suggests instead that startups fail because founders don't recognize their own shortcomings or aren't willing to delegate. Or, they're "fervently committed" to an idea and won't admit that the idea isn't working and that they need to pivot.
I witnessed this firsthand while working for a founder who made every ultimate decision and ignored the opinions of those around him. This approach drove the company into the ground due to a failure to innovate. The founder was so removed from the day-to-day use cases of the product that he didn't understand it anymore. Yet he insisted that he knew best.
Just because someone isn't a founder doesn't mean they aren't profoundly good at what they do. Some people have no desire to run a company because it's risky and time-consuming. They may not have an idea for something brand new, which is often required for founding a company. However, they can take a founder's idea and supercharge it.
If you're stuck in a company run by someone in Founder Mode, you might find yourself stuck working for someone who won't listen. It's not worth trying to change the person's approach since, as Eisenmann pointed out, they're often driven by ego. You have two choices: stay, do the work you're expected to do, and don't think of yourself as a "partner in the enterprise" (because you aren't). Or quit.
Let those companies burn themselves to the ground. If they succeed, it's in spite of the founder, not because of it.
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