Founder modes, missionaries and mercenaries

Everyone seems to be talking about "founder mode" nowadays. And I realise I'd written about this ages ago. So tying the two concepts together here.

For the last week or two, social media and LinkedIn have been abuzz with this notion of “founder mode”, based on an article by Paul Graham of the same name.

I finally got down to reading it this morning, and I realise that I’d written a version of this a couple of years ago! (for the uninitiated, I often claim that “there is nothing in the world I haven’t blogged about” - something that comes with 20 years of blogging)

Graham’s article is not easily quotable, so I’ll just quote the first meaningful paragraph here. You should read the whole thing to get the full essence:

As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale. Their advice could be optimistically summarized as "hire good people and give them room to do their jobs." He followed this advice and the results were disastrous. So he had to figure out a better way on his own, which he did partly by studying how Steve Jobs ran Apple. So far it seems to be working. Airbnb's free cash flow margin is now among the best in Silicon Valley.

I had written my blogpost on the topic a few months after the company I was then working for went public, and around the time when Elon Musk had just taken control of Twitter. Rather than focussing on the leadership / founders (like Graham does), I was talking about the kinds of employees - basically you have “missionaries and mercenaries”.

The names are self-explanatory - missionaries believe enough in the mission of the company that they do their job for the heck of it - they take a lower cash salary instead of equity, they are willing to put in long hours and do things well outside the scope of the work they were hired for, and (perhaps most importantly) live with the founders’ idiosyncrasies (by definition, all founders have them. Else they would be in jobs).

So early on in the company’s journey, you need loads of these. However, the problem is that you can’t scale infinitely with missionaries (okay, I’m talking like one of those people who give random advice - my company is nowhere close to getting to this stage). You can’t find enough missionaries as the company scales, and that’s when you hire mercenaries, who are “conventional employees”.

The challenge, as I’d written two years ago, is about timing - when do you start moving from missionaries to mercenaries?

The choice of this timing is something a lot of companies don’t get right. Some do it too late – they try to run on missionary fuel for way longer than it is sustainable, and then find it impossible to change culture. This leads to a revolving door of mercenaries and the company unable to leverage their talents.

Others – such as Twitter – do it way too early. One thing that seems to be clear (to me) from the recent wave of layoffs at the company, and also having broadly followed the company for a long time (I’ve had a twitter account since 2008), is that the company “went professional” too early.

Conventional wisdom is that as you hire more and more mercenaries, you operate the way they want you to do - by moving from “founder mode” to “manager mode”. Basically you operate the way the people you’ve hired have been used to operating. And that’s where you give up your founding idiosyncrasy - and possibly the company’s identity.

Being in founder mode for too long also a problem - you end up running the company chaotically at a stage where it needs a more steady hand. Also - what areas you move from founder to manager mode is also important. The worst you can do is for the CXOs to operate chaotically and then force people lower down the hierarchy to accept insane bureaucracy.

So it is tricky - somewhere you have to go from founder mode to manager mode, but do it neither too early nor too late. As Graham says, there is no science to this and depends wholly upon your company.

The way I think of it - it is about the company’s growth. We can assume that every well run company grows exponentially, albeit with vastly different exponents (also keep in mind that most exponential curves are sigmoids in disguise). For every company, there comes a point when you run out of missionaries to hire and have to hire lots of mercenaries at once. Faster growing companies reach this point earlier on in their lives.

My intuition (I’ll confirm this in a few years’ time when my company actually gets there) is that this (when you suddenly hire lots of senior mercenaries) is the point where conventional wisdom says you should snap from founder to manager mode. What might be better (speaking as someone running a still-tiny company) is to hold on to founder mode until sufficient number of the mercenaries have bought into the company’s philosophy.

That said, every company ultimately needs to move to manager mode (in steady state - either by growing sufficiently or getting acquired). It is only the trajectory that varies.