In Paul Graham’s latest essay, he writes:
The theme of Brian's talk was that the conventional wisdom about how to run larger companies is mistaken. 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.
Readers are not privy to the exact talk; Graham presents it as a dichotomy between “manager mode” and “founder mode”, where founder mode exists not as a distinct methodology but as a rejection of “manager mode” practices:
Hire good people and give them room to do their jobs. Sounds great when it's described that way, doesn't it? Except in practice, judging from the report of founder after founder, what this often turns out to mean is: hire professional fakers and let them drive the company into the ground.
This dichotomy is reductive, but it hints at two commingled and pernicious issues facing most scaling organizations:
- The process of interviewing and evaluating managers is incredibly inaccurate.
- There exists very few organizational incentives or backstops to curtail growth.
Insofaras management is a science, we are still in the “leeches and humours” stage of things — we do not know how to organize knowledge workers and we do not know how to evaluate knowledge work. (To paraphrase Huemer, we are more likely to kill companies through bloodletting than save them through germ theory), and it makes sense that “founder mode” (as defined by a bias towards, more bluntly, dancing with the corporate ethos that brought you) is on net better than the current state of the art.
But “don’t overhire and don’t overstratify your management” is necessary, but not sufficient: if that’s all it took, presumably we’d see a dynamic wherein there were more Valve-shaped companies (small, flat, incredibly prolific.) I think it’s important to cultivate what Sebastian Bensusan calls lieutenancy:
Most people don’t realize it is their job to unblock themselves and that they don’t need permission to do it. You need people who act even when they hit “extraordinary blockers”.
Okay, so how do you cultivate lieutenancy? In three ways, each of which is probably worth writing about more:
- Prioritize tenure as an organizational health metric.
- Align compensation with business outcomes.
- Draw very clear lines of ownership, and very high demands for owners.
