‘Founder mode’ is the latest fault line in Silicon Valley

Filip Dames is one tech figure who has found plenty that resonates with him in the founder mode philosophy.

As a founding partner at investment firm Cherry Ventures and part of the founding team of online retail firm Zalando, Dames has seen “efficiency go out the window” for startup leaders who bring in, say, a “super senior sales guy” to solve problems as they grow in size.

“They will never be as dedicated, they will never have as much skin in the game,” Dames told Business Insider. “For them it’s a job, and for you as a founder, it’s basically your life.”

The idea gets to the heart of what the pro-founder mode camp prizes. In a podcast, Airbnb’s Chesky argued that founders differ from managers by being the “biological parent” of the company they oversee.

“You can love something, but when you’re the biological parent of something, like, it came from you, it is you, there’s a deep passion and love,” he said.

Of course, tech leaders do become encumbered with a growing list of responsibilities as their companies grow. Big Tech firms like Meta and Google went on a huge hiring binge during the pandemic to meet the growing demand for digital services, but they have since laid off layers of middle managers.

For Dames, growth doesn’t necessarily mean companies and founders must switch to manager mode.

In his view, many large companies where the CEO is the founder “manage to run things with the founder DNA” by ensuring the full organization works with the same clear “values” in mind. “I think eventually as the company grows the only way to do it is through values,” he said.

A value-led approach has been key for tech founders who have managed to maintain success at their companies years after they raised their initial round of seed money. Jeff Bezos, for instance, has famously retained Amazon’s “Day 1” culture, first established in 1997.

Others see a risk in sticking to a single operating mode. According to Hussein Kanji, a founder and partner at venture capital firm Hoxton Ventures, it’s easy to end up down the wrong track “if you live just in one mode.”

“People love making things black and white when the world runs in a lot of different shades of truth,” he said. “People have lost their ability to engage with seemingly contradictory ideas at the same time.” In his view, the best leaders are the ones who “know when it’s time to be binary.”

It’s a view that tallies with Dames, though he sees founder mode leaders having more of an edge during times that call for a shift in approach.

“If you have more of the manager mindset and you’re used to just calm waters, that makes things really difficult if you’re in a fast-change environment and you need adaptability,” he said. “The reality just changes.”

That said, some of the most successful tech companies right now are overseen by leaders who weren’t their founders. Satya Nadella at Microsoft is one such leader, as is Dara Khosrowshahi at Uber.

It is unclear how Silicon Valley will resolve this debate. In an X post on Tuesday, venture capitalist Chamath Palihapitiya weighed in by dismissing Graham’s categories and suggesting instead that there is “first principles management and stupid management.”

“When your company isn’t working, the only solution is to take the time, as laborious as it sounds, to break your business down to its core essentials and rebuild it from the ground up with zero nostalgia or loyalty to people or technology,” he wrote.

Expect divides on the leadership merits of founders and managers to continue for some time.