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Impatient founders
Founders tend to be poor managers. They have little patience for one-on-ones or coaching a team and just want to run, so they often act as individual contributors. CEOs tend to be better managers because they have to build systems and think about how the organization scales.
Pulling in two directions
The two pull against each other, since being impatient at one end and patient at the other creates conflict. The titles can be redesigned in different ways, which makes it possible to be somewhat more patient when patience is needed while staying mostly in founder mode.
Founder mode wins
When a choice has to be made, the founder mode wins, which is why founder-led companies keep outperforming for decades. Big technology shifts make the founder's assets more obvious than the CEO's.
Why do founder-led companies tend to outperform?
Rüdiger Fahlenbrach published a study in the Journal of Financial and Quantitative Analysis in 2009 on large US companies. He found that firms run by their founders had higher valuations and stock returns than comparable firms run by other chief executives. Founders often hold large ownership stakes, which ties their personal wealth to the company's long-term results. They also tend to invest more in research and development.
What is founder mode?
Paul Graham, co-founder of the startup accelerator Y Combinator, wrote an essay called Founder Mode in September 2024. It followed a talk by Airbnb's Brian Chesky, who described how conventional management advice had hurt his company. The essay contrasted managing through layers of delegated managers with staying closely involved in the details. Graham said that the approach was poorly understood because few founders had written about it.
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