How to Amplify the Advantages of Working at a Founder-Led Company
“Founder mode” is a real thing. Successful executives at founder-run companies know how to make the most of it.
Mark Airs/Ikon Images
When COVID-19 struck in early 2020, Airbnb CEO Brian Chesky faced a devastating crisis: Bookings on his vacation-rental marketplace plummeted 80% almost overnight, and the company was forced to postpone its planned initial public offering.
Chesky responded by abandoning what he has described as a hands-off leadership style. He laid off 25% of the workforce, reorganized the company from business divisions to functional teams, and consolidated product planning into a single road map. His approach challenged the common wisdom that great leaders, especially ones who have founded a company and hired talented people, should avoid meddling and give their employees room to run. And yet, it worked. After absorbing heavy losses during the pandemic, Airbnb staged a remarkable financial turnaround: In 2021, it generated almost $6 billion in revenue, which it grew to almost $10 billion by 2023, with over 448 million nights booked through its platform.
“Too many founders apologize for how they want to run the company,” Chesky said in a 2023 podcast interview. “People think that a great leader’s job is to hire people and just empower them to do a good job. Well, how do you know they’re doing a good job if you’re not in the details?”
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Can founders run their companies better than hired managers by challenging management conventions? That perennial question has been buzzing especially loudly around the startup world in recent months. In September, Paul Graham, investor and cofounder of the San Francisco startup investment firm Y Combinator, wrote that a hands-on “founder mode” approach to management is far superior to the more traditional delegation approach, which he termed “manager mode.” The latter option, Graham argued, often leads businesses to “hire professional fakers and let them drive the company into the ground.”
Not surprisingly, Graham’s essay ignited fierce debate online: Those who agreed saw founder mode as crucial to building great companies, while critics warned that it could excuse founder overreach, citing counterexamples of professional managers who have been exemplary leaders.
The Three Advantages of Founder Mode
Founders possess three key advantages over professional managers. First, they often possess deep, intuitive domain expertise that, although hard to quantify, can lead them to make unorthodox decisions that can yield outsize returns. Second, founders typically have a unique earned legitimacy stemming from their personal investment and history with the company.