How to Amplify the Advantages of Working at a Founder-Led Company

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?”

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. Often, this allows them to move from idea to action faster. And third, they tend to engender stakeholder forgiveness when they misstep or are involved in controversial behavior, enabling them to recover from setbacks more quickly. These advantages often spur founders to pursue a high-stakes approach to leadership that’s particularly suited for scaling venture-backed startups.

While some professional managers (like Satya Nadella of Microsoft) have been able to successfully lead an established company after its founders departed, many other managers work alongside active founders as they grow the business. In these cases, professional managers have a unique opportunity to create value by amplifying founders’ natural advantages while helping to manage their inherent risks rather than fighting against this distinctive leadership style.

As a Y Combinator-backed founder turned executive coach, I typically work with 12 to 15 entrepreneurs as active clients. One of the things I advise them on is how to make the most of their status as founders and how to equip their management teams to best support them. Below, I discuss the advantages that CEO-founders and professional managers can leverage to help their companies — and where they can go wrong.

Domain Expertise

Founders often possess a “unique depth of knowledge” around their companies and markets that transcends traditional credentials. Take Deepak Chhugani, founder of Nuvocargo, an emerging leader in U.S.-Mexico freight logistics. On paper, his background — a stint at Merrill Lynch followed by his founding of a recruiting startup that never took off — wouldn’t suggest he was someone poised to revolutionize cross-border shipping by unifying freight forwarding, customs, insurance, and other fragmented processes in a single digital platform.

When I interviewed Chhugani in 2023, he revealed how his upbringing in Ecuador, where he’d watched his father navigate complex import-export relationships with Asia, had given him unique insights into the challenges of international trade. This experience shaped two key strategic decisions: to build a predominantly bilingual team that could navigate both U.S. and Latin American business cultures, and to focus on U.S.-Mexico trade routes, where trucking offered significant cost and speed advantages over the ocean or air freight — challenges his father’s Asia trade business had faced. His timing proved prescient: In 2023, Mexico unseated China as the United States’ largest trading partner. His earlier experiences, while not traditional qualifications, enabled him to build Nuvocargo into a rapidly growing logistics platform that has raised over $74 million in venture funding.

How can managers complement founders’ expertise? Task-relevant maturity, a concept articulated by former Intel CEO Andy Grove, helps explain how founders should calibrate their involvement based on their team’s expertise and motivation in specific domains. While founders often excel at bold direction-setting, they may lack the technical or operational knowledge needed for execution in some domains.

I saw this dynamic play out during my time as a product manager at Etsy, which was founded by a team of four entrepreneurs that included CEO Rob Kalin. As a furniture maker who had struggled to sell his own handmade pieces online, Kalin deeply understood the artisan’s perspective. He made bold early decisions that prioritized the seller community — like banning mass-manufactured goods and requiring sellers to personally photograph their items — which helped establish Etsy as a leader in the emerging craft movement. He would often spend hours personally responding to seller forum posts and visited craftspeople in their studios, fostering a thriving ecosystem of craftspeople and conscious consumers.

A founder who has deep expertise in one domain will inevitably lack expertise in others. That’s where professional managers come in. While Etsy benefited from Kalin’s authentic connection to the craft community, its technical infrastructure was straining under mounting site traffic. The website suffered frequent outages during peak holiday shopping periods, as well as page load times of up to 30 seconds and regular maintenance windows that forced the site offline. Etsy hired Yahoo engineering leader Chad Dickerson as CTO in 2008 to overhaul its engineering foundation. Dickerson introduced continuous deployment that allowed over 50 code updates per day, and a “code slush” period to prevent peak holiday traffic from overwhelming Etsy’s systems. This partnership exemplifies how professional managers can amplify a founder’s vision: While Kalin had built a passionate craft community, Dickerson provided the technical know-how needed to scale it to millions of daily visitors. Dickerson was elevated to CEO in 2011 and led Etsy to a $1.8 billion IPO in 2015.

Earned Legitimacy

Founders carry unique earned legitimacy due to their extended tenure, early risks, and personal sacrifices; Airbnb’s Chesky has likened it to being “the biological parent” of the company. In a study conducted by researchers at leadership advisory firm ghSmart, 86% of founders “possessed an ability to inspire through passion, charisma, and loyalty,” whereas two-thirds of nonfounder CEOs struggled to do so. Researchers have also determined that founder CEOs are more likely to take a longer-term view of managing their companies than do nonfounder CEOs, which contributes to their authority.

The example of Reddit’s leadership history highlights the contrast between founder and professional CEO authority. Under the leadership of nonfounder CEOs Yishan Wong (from 2012 to 2014) and Ellen Pao (2014-15), the company faced intense employee and user backlash for some of their decisions, which included Pao’s banning of several controversial Reddit communities. When cofounder Steve Huffman returned to Reddit as CEO in 2015, he enacted further bans, including the quarantine of a problematic Donald Trump fan community and the removal of communities promoting violence — changes that, while similar to Pao’s initiatives, faced notably less community resistance. Huffman’s earned legitimacy as a founder and prolific user allowed him to unite stakeholders behind difficult but necessary changes.

Professional managers can strategically benefit from and complement founders’ earned legitimacy. Thanks to his two-decade partnership with visionary Apple cofounder Steve Jobs, former Apple design chief Jony Ive became the voice of the company’s new product releases and was able to cultivate an aura of reverent authority. Rather than attempting to replicate Jobs’s founder authority, Ive developed his own complementary source of influence that strengthened Apple’s creative culture.

Stakeholder Forgiveness

As a consequence of their earned legitimacy, founders also have extraordinary leeway with stakeholders when it comes to controversial decisions and missteps, including instances of lying, that are typically not afforded professional managers. Uber cofounder Travis Kalanick’s tenure as CEO exemplified this dynamic: Despite a series of controversies, including aggressive regulatory battles, allegations of a toxic workplace culture, and a scandal involving the company’s development and use of software to evade law enforcement, investors continued to back his overall vision for the company, enabling it to raise billions in funding rounds to fuel his ambitious vision for transforming transportation. This level of stakeholder patience would be nearly unthinkable for a professional executive, yet under Kalanick’s leadership, Uber’s valuation grew from $60 million in 2011 to nearly $70 billion by 2017.

Professional managers often play a crucial role in managing the aftermath of unpopular founder decisions and controversies, though this requires careful navigation. History shows the importance of trusted executives who can both support and temper bold founders: As Uber’s chief adviser and a board member, David Plouffe leveraged his political expertise to help legitimize Uber’s disruptive approach to hired-car service, reframing the company’s aggressive expansion tactics as part of a broader mission to create economic opportunity and transform urban transportation. By articulating Uber’s impact in terms of job creation, reduced drunk driving, and transportation accessibility, Plouffe helped build crucial political capital for the company while providing a more measured public face to balance Kalanick’s combative style.

Nonfounder leaders like Plouffe can be crucial for creating a foundation of stability that enables founders to take bigger risks. Their ability to reassure key stakeholders while mitigating fallout from founder missteps often proves to be crucial to company success.

The Role of Professional Managers

For professional managers joining founder-led companies, adapting to these unique dynamics might feel like a step back from traditional corporate roles — but it shouldn’t. By joining a startup or early-stage company, managers have already placed a massive bet on the founder’s long-term vision and capabilities.

The most successful executives lean into this bet, using their experiences to amplify founder strengths in a few ways. (See “How Professional Managers Can Amplify Founder Advantages.”) First, they act as translators between the founder’s intuitive leaps and the rest of the organization by breaking down unorthodox decisions into actionable steps, testing and validating those intuitions with data and feedback loops, and scaling the founder’s domain knowledge across the organization without requiring their direct involvement. Next, they position themselves as extensions of the founder’s vision and establish complementary credibility in areas where the founder is less involved. Finally, they help the founder pick and fight their battles — advising them on which controversial moves are worth sacrificing some goodwill, managing stakeholder relationships, and creating guardrails and contingency plans around the founder’s risky bets.

To be clear, the unique advantages of founder leadership can be a double-edged sword. For every instance of a Brian Chesky successfully scaling a company through aggressive expansion, there’s a cautionary tale where the same founder advantages he demonstrated ended up being liabilities. Adam Neumann’s unchecked authority at WeWork led to questionable related-party transactions and unsustainable growth, while John Foley’s belief in Peloton drove him to make overconfident supply chain expansion and inventory decisions that nearly bankrupted the company. In both scenarios, founders were wielding their full authority and stakeholder trust. But the advantages founders enjoy are not a panacea against poor judgement, ethical lapses, or simply bad market timing.

The key is recognizing when founder leadership serves the company’s needs and when different approaches might be required. As COO of Apple, Tim Cook focused on executing on Jobs’s vision and driving his big bets on new products. After becoming CEO in 2011, he shifted from Jobs’s autocratic and highly secretive style and emphasized delegation, charitable contributions, and renewable-energy efforts — leading as a professional manager rather than in founder mode. Cook’s tenure demonstrates how skilled executives can both amplify founder vision and forge their own leadership path when circumstances demand it.

Understanding these three distinct founder advantages — intuitive domain expertise, earned legitimacy, and stakeholder leniency — can help professional managers recognize that their experience and expertise should enhance rather than override founder strengths. The most effective professional managers create systems and relationships that maximize the impact of founder leadership while developing their own complementary sources of influence and expertise.