According to data from the Bureau of Labour Statistics, around 20% of small businesses will fail within their first year and 65% will fail by their 10th year. Starting and building a startup requires patience, consistency, money, courage, time and commitment.
As one of the founders of Y Combinator (YC), a startup incubator, Paul Graham knows what it takes to start and build a successful startup. YC has funded and developed over 5,000 startups, including Stripe, Airbnb, Instacart, DoorDash and Reddit.
Graham recently published an essay about two ways to run a startup:
- Manager mode is a philosophy in which a founder delegates tasks to others as the startup is built. This approach focuses on building teams and automation.
- Founder mode is a philosophy in which a founder remains involved in the startup’s day-to-day tasks and decisions even as it scales.
To make a case for founder mode, Graham referenced how Steve Jobs ran Apple. In his opinion, no one will care about a startup more than its founder, which makes a difference in the efforts to build the business.
This conversation about founder versus manager mode is also happening at 23andMe, as their entire board resigned over management differences. Co-founder Anne Wojcicki wanted to take the publicly traded company back to being a private company. The directors disagreed with Wojcicki’s plans for the company’s future but could not stop the co-founder because she controls 49% of 23andme votes, calling into question whether Wojcicki should step aside and let the company be run in manager mode.
There is a lot of conflicting advice on which approach is best for growing a startup into a global brand. There’s no denying the importance of the founders being involved as a startup grows—it makes a difference in the business’s success. Here’s how to consider which startup managerial style is best for your business.
Running a startup in founder mode
I’m a startup founder of two businesses. I’ve grown both companies in founder mode because I felt no one would care about the business as much as I would. I’m also a parent, and I can tell you a startup feels like one of your children. When considering which approach you’ll use to grow your startup, you must understand the best management style for you.
Elayna Fernandez, founder of The Positive Mom, has coached many startup founders. “As a founder, I feel it’s important to stay involved as the business grows to ensure a healthy company culture that aligns with the original vision and core values,” she says. “When a business grows, there is a risk of mission creep or dilution of the core values. A mismatch in the company philosophy on paper and the culture in everyday operations can destroy trust, increase employee turnover and decrease brand equity.”
Growing a startup in founder mode allows you to shape your company’s growth without becoming a micromanager. It’s still possible to delegate tasks in founder mode because you can’t be everywhere simultaneously. You stay informed of what’s being done and weigh in on what you feel is best for your company.
“When the company is scaling or growing at a rapid rate, it is essential to rely on the founder’s passion, intuition and insights to ensure wise decision-making so the expansion is sustainable and the team is supported through the challenges that might come up due to transition and change,” Fernandez says.
Graham was inspired to write his essay on founder mode after Airbnb co-founder Brian Chesky gave a talk at a YC event. Chesky said he was advised to run his startup in manager mode and would do things differently if he knew then what he knows now.
Running a startup in manager mode
This approach involves much more delegation as your startup grows, and you may not know all the details. The theory is that with others taking care of more tasks, you free up your time to focus on the bigger vision and higher-level founder growth activities. Saving time is the big appeal here, as well as multiplying your efforts.
If you think of Apple as an example, Jobs would be an example of running the business in founder mode, and Tim Cook would be an example of manager mode. You can grow a startup in manager mode, but you won’t have the personal touch and knowledge of what’s happening in the growth phases.
Julia McCoy, president of BrandWell and founder of two startups she was able to successfully exit, notes: “Howard Schultz, former CEO of Starbucks, believed that no task should be beneath anyone, including himself—and he was the CEO. Before I started my startup, I was a writer. That helped me understand more deeply than any other approach how to hire writers and understand the art of writing, which we delivered as our service. In our early years (years one to three), I took it on as my responsibility to understand every role to understand what it took to close a lead—marketing, project managing, editing, etc.
“As a founder, I believed operating in manager mode, especially at the beginning of my startup, was vital to understanding how to run my business well. I felt this was important so I could understand before I delegated—rather than simply delegate and hope it would get done right,” says McCoy.
How to think about which approach is best for your business
Self-awareness is important for personal and professional growth; spending time to know yourself better will help you find your path to success. It’s also an ingredient you’ll need when figuring out how to start and grow a startup.
“As a startup founder, I’ve found that having my hands in all the cookie jars—aka, every moving part—ensures everything is built on a strong foundation,” says Blake Nubar, co-founder and CEO of Rocketeer. “It’s my job to set the vision, steer the ship and create a culture that doesn’t implode under the weight of limited resources. Delegating this role too early puts you at risk of missing the early successes needed to gain momentum. And, believe me, you already have enough risk on your plate with a startup.”
The reality is that most founders will start their startup in founder mode because there aren’t extra funds to hire employees initially. When a startup grows—or you get funding—you’ll have to think through your managerial approach.
A founder should always know what’s happening with their company—even if you decide to run your startup in manager mode. Remember: No one can build your startup for you or care about its growth as much as you will.
Photo courtesy of insta_photos/Shutterstock
