Leader Mode

Refuting the "Founder vs. Manager" False Dichotomy

Paul Graham’s recent essay on "Founder Mode" presents a compelling narrative that founders and professional managers operate in fundamentally different ways. While this argument may seem intuitive, it presents a false dichotomy that ultimately disparages the skills of professional managers while over-idealizing founders. Both founders and managers share the same qualities needed to build successful companies, and suggesting that founders have some innate advantage undermines the value of effective leadership at any stage of growth.

Shared Core Qualities: Vision, Execution, and Adaptability

Graham implies that founders possess unique, irreplaceable qualities that allow them to run companies more effectively than professional managers. However, this assumption overlooks the reality that both founders and managers share many of the same core qualities essential for running a company—vision, execution, and adaptability.

Successful founders and managers alike must have a clear vision of where the company needs to go. This is evident in the leadership of Satya Nadella at Microsoft and Jack Welch at GE—neither of whom were founders. Nadella turned Microsoft around by focusing on cloud computing, a strategic vision that led to the company’s resurgence. Similarly, Welch transformed GE into a global powerhouse by doubling down on efficiency and focus. Vision is not the sole domain of founders; any leader with the right foresight and strategic instincts can drive transformative growth.

Execution is another shared competency. Both founders and managers must be deeply involved in turning ideas into operational realities. While Graham suggests that delegation is the realm of professional managers, the truth is that founders also rely on delegation as their companies grow. Steve Jobs, for example, built Apple’s success by surrounding himself with experts and giving them room to innovate—just like any skilled manager would.

Sheryl Sandberg exemplifies how professional managers can play a pivotal role in scaling a company, even when they are not the original founders. As COO of Facebook (now Meta), Sandberg transformed the company from a popular social network into a global advertising giant. While founder Mark Zuckerberg laid the initial groundwork, it was Sandberg who implemented the scalable business processes and revenue models that fueled Facebook's exponential growth. She adeptly managed complex global operations and played a key role in navigating public relations crises, all while driving operational efficiency and profitability. Her success highlights that the skills needed to manage and grow a company—vision, adaptability, and execution—are not unique to founders. Sandberg’s impact on Facebook serves as a powerful reminder that professional managers are capable of delivering transformational results, often as critical to the company's success as its founders.

Finally, adaptability is vital in both founder and manager roles. While Brian Chesky’s anecdote about scaling Airbnb might suggest that founders need to operate differently, the reality is that all great leaders—whether founders or not—must evolve their leadership style as their companies scale. Founders might begin by being deeply involved in every detail, but as companies grow, the best founders shift toward broader strategic oversight, just as professional managers do.

The Myth of “Founder Magic”

The idea that founders have an inherent ability to outperform professional managers is simply unfounded. Jack Welch, one of the greatest CEOs of all time, was not a founder, yet he built GE into one of the most valuable companies in the world. Similarly, Satya Nadella, Tim Cook, and Bob Iger were not founders, yet they each transformed their companies by leveraging the same skills that Graham attributes to “founder mode.”

What these managers demonstrate is that great leadership isn’t about being a founder; it’s about the ability to inspire, innovate, and execute a vision. The false notion that founders have some "magic" that managers lack ignores the fact that managers like Welch and Iger have consistently delivered exceptional results by combining vision with operational excellence. The qualities of leadership are not defined by one’s title or origin but by one’s ability to adapt, inspire, and lead a company through complexity.

The Danger of Over-Glorifying Founders

Graham’s argument implies that companies should prioritize founder-style leadership at all stages of growth, which could have damaging implications for how businesses are run. Founders often face difficulty delegating, leading to micromanagement and inefficiencies. This behavior, if unchecked, can cripple a company’s ability to scale.

By promoting the idea that founders have some special insight into how to run companies that managers do not, we risk encouraging founders to overreach, holding onto control even when the business would benefit from bringing in professional leadership. As businesses grow in complexity, leadership evolves from hands-on involvement to strategic oversight, and professional managers excel in navigating these transitions.

Take Lou Gerstner’s transformation of IBM, for example. Gerstner was brought in during a time of crisis and turned the company around by focusing on services and consulting rather than hardware. His success came not from being a founder, but from bringing in a fresh perspective and strong execution. The same is true for Alan Mulally, who rescued Ford by leveraging his operational expertise and vision for the company’s future. Their successes refute the idea that founders alone can guide companies through challenging phases.

Collaboration, Not Competition

Rather than perpetuating a false dichotomy between founders and managers, it’s more productive to see both roles as collaborative and complementary. Founders often bring the initial spark of innovation, while managers provide the operational expertise to scale that vision. The most successful companies have founders and managers who recognize their shared mission—to build something enduring—and who work together to navigate the complexities of scaling.

A notable example of this collaboration is at Google, where Larry Page and Sergey Brin founded the company but brought in Eric Schmidt as CEO to lead its rapid growth. Together, they combined founder-led innovation with managerial discipline, allowing Google to scale into the giant it is today. Their relationship underscores that being a great founder or manager is not about what you are, but what you do.

Survivorship Bias in the Founder vs. Manager Debate

One of the reasons Paul Graham's argument may seem compelling is due to survivorship bias—the tendency to focus on the few highly successful founders while ignoring the vast number of founders whose companies fail or stagnate. The narrative around legendary founders like Steve Jobs, Jeff Bezos, and Elon Musk makes it seem as though founders have inherently better outcomes. In reality, this bias distorts our perception by disproportionately highlighting rare successes and neglecting the larger population of founders who didn’t achieve similar results. When managers take over, it's often during a later stage when success is more visible, yet they are rarely celebrated with the same reverence as the visionary founder.

Research on startup survival rates offers a sobering contrast to the myth of "founder magic." According to data from the U.S. Small Business Administration, only about 50% of startups survive five years or more, and only one-third make it to 10 years. Many of these failed companies were run by their original founders. This suggests that being a founder doesn’t automatically guarantee success. In fact, professional managers often come in during critical moments to rescue struggling companies or scale businesses beyond what the founder was capable of managing. For instance, venture-backed startups with experienced managers tend to have a better chance of survival and scaling, as evidenced by multiple analyses of startup performance from venture capital firms like Andreessen Horowitz.

On the other hand, Harvard Business Review found that the success rate for companies managed by non-founders could be higher in the long run, as managers bring operational discipline, experience, and the ability to scale complex organizations. By focusing solely on outlier founders who made it big, we overlook the essential role managers play in the long-term sustainability of most companies, creating an incomplete view of what drives successful outcomes.

This bias toward exceptional founders over professional managers skews the perception of leadership, failing to acknowledge the broader reality: most companies need a combination of founder-led innovation and professional management to thrive.

Unified Leadership: Harnessing the Strengths of Founders and Managers

The qualities that make a great founder—vision, adaptability, and execution—are the same qualities that make a great manager. Paul Graham’s argument draws a false distinction between founders and managers that is both unproductive and inaccurate. Founders may start companies, but it takes great leadership, regardless of title, to build something lasting. Both founders and managers have essential roles to play in the evolution of a company, and the best businesses are those that can harness the strengths of both.