The Fine Line Between Founder Mode and Failure Mode
Photo by Annie Spratt on Unsplash
By Edward Sullivan, CEO of Velocity
Paul Graham’s post on Founder Mode has certainly struck a nerve. The memes alone have provided days of delight and distraction. But while over-delegating to professional managers can screw things up, the solution is not necessarily to fire them and go back to the inherently unscalable and untenable do-it-all-yourself model. Both of those extremes are failure modes. The true Founder Mode, one that drives high performance at scale, resides somewhere in the middle.
The key argument in Graham’s article is that founders have been fed bad advice for years that at a certain size and scale, they should just “hire smart people and get out of the way.” He’s right–that is bad advice, but not for the reason you might think.
When in hyperscale mode, the ruinous mistake founders make isn’t the act of trusting and delegating in and of itself, as the YC guru suggests. Instead, it’s delegating the core area of the business the founder should still be involved in, and not providing leaders with enough context, feedback, and autonomy to do their jobs well on everything else.
We’ve seen it a million times, and it normally looks like this: after making every important decision for years, the Founder gets feedback from the board and their team that they have become a bottleneck and need to learn to delegate. They interpret it as being told to "hire competent people and then step back.
So, going along with the advice, they do exactly that, and then stand back and watch in horror as the business they’ve put their heart and soul into loses focus, momentum, and even value due to “professional managers” who spend more time managing up than getting anything done. Panicked that they've made a mistake, they fire the executives they recently hired and trusted, reverting back to "Founder Mode."
Nine times out of ten, however, the real issue isn’t the fact that they hired smart people and tried to trust them, it’s that they over-delegated the ONE THING they shouldn’t have and then didn’t provide the proper context, and feedback, and autonomy for their teams to succeed in all areas of the business. But frankly, it shouldn’t be surprising that they made these mistakes.
Most founders, especially first-time founders, have little to no management experience, and many are, shall we say, relationally challenged. So, of course, it all goes sideways the first time they hire professional managers and try to delegate. However, this doesn't mean that trusting and delegating are inherently wrong—they simply haven't mastered how to do it effectively yet.
So, for all those founders who read Graham’s article and thought, “Wait, there must be something between handing over my company to a bunch of b-school bozos and doing it all myself,” here’s what we’ve seen work for the Founders we’ve coached who have learned how to build extremely high performing executive teams:
Be Clear about Your “One Thing” – There will always be mission-critical projects, relationships, and workflows that the Founder has to own. This is part of the job. But doing so without making your team feel undermined or micromanaged takes finesse. The key is ensuring your executives and skip-level managers understand the critical importance of this project to the business and that you're committed to partnering with them to ensure its success. Our client recently did this when her firm was about to launch the most significant upgrade to their product since the company was founded 10 years prior. She took the time to explain her rationale for owning it and was transparent about her thought process. Not only was the launch a success, but the team learned a ton working alongside her.
Institute a Listening Period – New execs tend to come in hot and try to “add value” as soon as they can. Alternatively, we place them on 30-60-90 plans with ambitious goals that will be difficult for them to achieve. But doing so before they deeply understand the business context is almost always a mistake. Instead, what if they just listened for the first month? One client did this with a new President who was brought in to take over the entire commercial side of the business from him. Instead of listening for just a month, the new executive extended it to two months. And when he finally did engage, he created enormous value because he had all the context, relationships, and trust he needed to knock it out of the park.
Do More Coaching than Correcting – When you’re moving fast, it’s easy to jump into the code base or a Google Doc, make a few edits, and move on to the next problem to solve. But the more you do that, the more likely it is you’ll have to continue to do that. You’re not changing people’s behavior, just the end product. Instead, when you slow down, engage the team, interrogate their thinking, and share with them your logic for making changes, you provide them with the opportunity to level up.
Trust, but Clarify and Verify – This is a big one. We often hear from clients that they trusted the new CXO with a big project, let them run with it, and then two months later when the project was delivered, it was a total disaster. The question we always have is, how clear were you in defining “what good looks like” at the outset, and did you check in and provide feedback to make course corrections along the way? It sounds basic, but many Founders either micro-manage the entire process or over-delegate. The sweet spot is in the middle. Our client Tony Xu, Founder of DoorDash, is a master of this. He establishes priorities, clearly defines what success looks like, and provides ongoing support and coaching throughout the process.
Avoid Helicopter Delegation – Helicopter delegation is exactly what it sounds like: you empower an executive to own some part of the business, but do so in name only and undermine their ability to get anything done at every step of the way. This is normally the area of the business in which the founder has unique skills and abilities. They probably could do it better than just about anyone else in the world, but doing so keeps them from all the other tasks of being a CEO like fundraising, managing external stakeholders, focusing on the ONE THING from above, etc. Instead, refer to points 2 and 4 above: Be clear about your One Thing; and Trust but Clarify and Verify.
Stay Flat – For a Founder to stay close to the business and key decisions, it’s critical to keep the organization flat as it grows. Increased layers of hierarchy and titles remove Founders from many of the key decisions and challenges critical to success. Another client with over 10,000 employees has built a leadership team of fewer than 150 people, spread across only four layers: CEO, C-Suite, VPs, and Senior Directors. At that number, he knows all of his leaders by name and influences critical decisions across the entire business without being burdened by too many direct reports.
When founders grow frustrated with poor results from their high-paid execs, their first instinct should not be to fire everyone and go back to doing it all themselves. Instead, the question they question they ask themselves is:
What am I doing or not doing to create this problem?
Simply asking this question demands humility, self-awareness, and patience—qualities that Founders often lack in abundance. But when they do, and when they implement a few of the tips we’ve outlined above, they can actually “do Founder Mode well” and avoid entering into failure mode by over-delegating or trying to do it all themselves.
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Thanks for reading. I lead Velocity, a CEO coaching firm that has helped hundreds of founders—including those from Clear, DoorDash, Flexport, Harry's, Hinge, MasterClass, Sweetgreen, and many others—excel in "founder mode." The big unlock many of our clients have is that leadership, just like coding, is a skill that must be learned. If you have ideas about what other skills Founders should learn to “do Founder Mode well,” please share them below.
Many thanks to Andy Ellwood, Jenny Fielding, John Baird, Matt Hunter, Naveen Ghushe, and Scott Ruffin for providing input on the early drafts of this post.