Hi Product People,
As you can imagine, Paul Graham's article on "Founder Mode" has sparked much discussion in the tech community. I had dinner with a few Product Leaders in Berlin the other night that turned into a discussion on how they can work better with founder CEOs. This has always been a tense subject, and I’ve seen a lot of friction firsthand between these two groups. Now, I’m worried this article is going to make it worse.
Graham's insights on founder CEOs' strengths are valuable. But, it overlooks key aspects of scaling a business. It may also undermine non-founder leaders' contributions. As someone who has worked extensively with founder CEOs through board work and consulting, I'd like to offer a different perspective.
The journey from startup to scale-up is not an easy or straight path. I’ve seen it topple even the most promising companies. Founder CEOs, praised for their vision and drive in the early stages, often struggle to adapt as their organizations grow. The focus on customer problems, product-market fit, and experimentation should never die. But, the way you operate a scaled or scaling company around these activities is very different than in a startup's early days, going from 0 to 1.
In the early days of a startup, the energy is palpable. Small teams work tirelessly, pivoting on a dime to meet customer needs and secure those first crucial sales. Processes are fluid, and standardization is an afterthought. It's an exhilarating phase, one that I've experienced firsthand in several early-stage startups. But as companies grow, the game changes dramatically.
Scaling brings a new set of challenges. The focus shifts from gaining those first customers to growing and keeping a large user base. Product offerings must expand, and operations need to run efficiently at a much larger scale. Innovation still is critical, but it can't come at the expense of the core business that's now supporting hundreds or thousands of customers.
This is where many founder CEOs falter. They often struggle to shift from a startup's, do-whatever-it-takes mentality to a larger organization's, strategic, delegating role. I've witnessed billion dollar companies get acquired by PE firms or larger competitors for pennies because their founders couldn't get out of their own way.
Graham's article critiques the common advice given to scaling founders: "hire good people and give them room to do their jobs." I see founders misunderstand this all the time. They think this means they should get out of the way and let everyone make all the decisions. “Bubble up” strategy from the teams! But when you do this, you are not providing any context. That is not strategy, and not what Steve Jobs or Jeff Bezos advocates.
Founders here will typically focus on creating a lofty, exciting vision. This vision can be super vague like “make the world a better place for doctors”. How can you make decisions on this? How do you specify what direction the company should go in? You cannot. This is not enough.
You need a clear strategy that explains how to focus the company to reach this vision. How do we prioritize? Without this, companies devolve into siloed fiefdoms. Product, marketing, sales, and engineering all stop working together. They focus only on their areas. That unifying direction that brings everyone together is lost. This needs to come in the form of a company and portfolio strategy, which experienced executives and product leaders can help with.
Without this alignment, I see a common pattern. A founder CEO, yearning for the dopamine hit of early-stage success, begins to chase new "innovations" at the expense of the core business. They distract teams with shiny new projects, ignoring the mounting technical debt and user experience issues in their flagship products. When metrics start to decline, they often blame the product team for lack of innovation, failing to recognize that their own actions have contributed to the company's struggles.
The truth is, founder CEOs don't inherently know how to be CEOs of large organizations. They typically lack prior executive experience, haven't had executive coaching, and are learning on the job. I have tremendous empathy for founders in this scenario. They started because they wanted to solve a problem, they did it well (yay!), but now their job has changed.
The most successful founder CEOs, like Mark Zuckerberg at Facebook, actively learn and adapt. They surround themselves with experienced leaders (like Sheryl Sandberg) and are open to evolving their leadership style. They recognize that scaling requires a different set of skills and are willing to grow into the role of a large-company CEO.
The best founder CEOs I work with are eager to learn how to set strategy and deploy it well. They want to be better at their jobs. They hire leaders to partner with and fill in their gaps, while they rally the company around a vision and mission.
The ones who are not successful... they play the blame game. They constantly point fingers to others in their organizations for the failings on their part. "It's sales fault!" "Our product managers suck!" They sow discord and competition in their c-suite, and they do not want to evolve with the new role. They forget that your "first team" is your executive team, and they're a key part of it.
As companies scale, the role of experienced product leaders becomes critical. These professionals work closely with executive teams to allocate resources effectively, balance innovation with maintaining core products, and manage the increased risks that come with a growing customer base. They build portfolio strategies that unify products. They work with the rest of the executive team to help set the company priorities through rigorous data and customer research. They bring a structured approach to prioritization and strategy that complements the founder's vision.
The key to successful scaling lies in finding the right balance. Founder CEOs need to provide clear, overarching vision and strategy while allowing their teams the autonomy to execute. They must learn to trust their experienced hires while still maintaining enough involvement to ensure alignment across the organization. They also need to decide if they really want to be the CEO or if they would be better in a different role. I’ve worked with great founders who knew when they could not provide what the company needed, and stepped back into a board position or took on a less demanding role to run innovation teams. The path is not always about becoming CEO.
While "Founder Mode" has its place, especially in early-stage companies, it's not a panacea for the challenges of scaling a company. By recognizing the unique demands of growth, embracing the expertise of seasoned leaders and product managers, and committing to personal growth, founder CEOs can successfully navigate the transition from startup to scaled enterprise. This approach not only honors the founder's original vision but also leverages the diverse skills needed to build truly great, lasting companies.
How do you feel about founder mode? Have you noticed any changes about how people are acting? Let me know on LinkedIn and share this article with others!
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See you next week,
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Melissa Perri
Founder Product Institute, Board Member, and Teacher
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