Founder Mode in Practice

Inflection Point

Paul Graham, retired founder of Y-Combinator, stirred a great deal of discussion on X in early September with his article: Founder Mode. In it he takes the position that founders are better equipped than hired managers to scale their business for much the same reason that founders are successful in founding businesses. They operate the business in “founder mode.” But just what founder mode is, he posits, we don’t really understand. 

Many commented with their own explications of founder mode, the best of which, I think, express it something like this: The founder mindset works from first-principles, not convention. It continuously tears into things to find what works and what doesn’t, then creates the systems that exploit those learnings. Everything else is ejected with extreme prejudice.

This first-principles approach works because every uniquely successful business will have to operate in some unique ways to cultivate its differentiation. Founder mode is a first-principles approach to building what uniquely works in a business rather than merely applying standard management theory. Yogi Berra long ago expressed this base principle in his own unique way: “In theory there is no difference between theory and practice. In practice there is.”

Yet there are many examples of non-founders who have led companies to tremendous success and scale, think: Tim Cook or Satya Nadella. So, it would seem that Graham’s founder mode is not so much a matter of being a founder as it is having that first-principles mindset. It is the mindset that drives one to tear deeply into issues, understand them at their roots, then emphatically build what works in practice, not just in theory.

Which means that you don’t need to be a founder to successfully scale a business. But you do need that first-principles approach so often exemplified by founders. Which also means that those with long experience in taking the first-principles approach are people you want on your team. 

Bill Haines, Partner