Leadership at your startup: The founder plus one philosophy

Whlie the founder will always remain the central figure, who they surround themselves with will lead to more startups breaking out, Nishant Rao, founding partner at Avataar Ventures writes

By Nishant Rao

Published: Dec 18, 2024 12:24:18 PM IST

Updated: Jan 2, 2025 12:14:49 PM IST

Founders aren’t afraid to fail and pivot their way to success whereas others think of risk mitigation. Illustration: Chaitanya Dinesh Surpur

Founders are a force of nature. They take risks whereas most others just accept the status quo. They aren’t afraid to fail and pivot their way to success whereas others think of risk mitigation. And they dream big, shake up fundamental industry structures and disrupt the status quo. So I fully support the primacy of founders. However, there were three problems with Paul Graham’s framing of the ‘Founder versus Manager Mode’ debate.

First, the concept was framed incorrectly as a mutually exclusive choice between a ‘founder and manager’. We all know the success formula morphs greatly at various stages of a company’s growth—$0-1 million, $1-10 million, $10-100 million and $100-500 million are very different journeys. And further still, the context around each stage (for example, regulatory environment, available talent, cash on hand etc.) dictates one’s degrees of freedom. So I’d contend that every good leader must operate at different points of the founder-manager spectrum depending on what the situation demands (now popularly known as the ‘Versatile Leadership model’). As per the Harvard Business Review, the percentage of overall leadership effectiveness related to versatility has spiked ~2x over just the past decade given our increasingly VUCA (volatility, uncertainty, complexity, and ambiguity) world. Success here comes from figuring out the key questions to answer plus a maniacal focus on prioritising which to solve and when.

There is another issue with the way Graham has framed the manager paradigm. When all professionals are cast with a broad brush as “skillful liars”, “fakers” and those who “drive companies into the ground”, clearly one should only embrace the founder mode. Yet, the 2023 CB Insights Venture Trends report estimates just 0.1-0.2 percent of startups reach $100 million-plus in revenues. Should that be interpreted as saying most founders are incompetent? If the Harvard Business Review finds that <9 percent of all leaders worldwide manage to truly nail versatile leadership, I’d argue perhaps a combination of complementary skills between founder and manager can help increase these odds.

Using Graham’s example of Steve Jobs, it’s worth noting Apple may not be as huge a scale success without Tim Cook’s contribution. Clearly Jobs was a once-in-a-generation visionary and created hugely disruptive products and a hallowed brand. But it was Cook who worked in the background organising Apple’s supply chain, procurement and ‘go to market’ to make each scalable, repeatable and predictable. This same partnership paradigm can be seen underpinning almost all of tech’s greatest growth stories (Facebook = Zuck + Sheryl, LinkedIn = Reid + Jeff, Google = Larry/Sergey + Eric). How many 100x companies can you name where just the founder made things happen solo?

Finally, the last gap centres around the envisioned partnership model itself. Graham’s description was inherently adversarial (‘micromanagement’). Yet, having been a founder myself, a scale-up operator and now a VC (each with their own successes and failures), I can personally attest for the fact that the trick lies in how the partnership gets constructed. There are times when the founder intuition trumps all else yet others where a manager’s systematic research and data lead to the big unlock.

For example, in leading LinkedIn’s Global BizOps (internal strategy) team, I had the privilege of witnessing the many years of hyper-growth which came upon the forging of a super successful partnership between the founder (Reid Hoffman) and manager (Jeff Weiner). Hoffman’s focus on his vision to create the world’s first professional network helped get through the initial years where there were plenty of sceptics (most encouraged us to pivot to Facebook’s entertainment use-case). Yet, it was Weiner’s push to instrument all aspects of the company (data+process+org) that helped us spot Talent Solutions as the mega-trend to bet on; this contributed to LinkedIn’s successful monetisation, while ironically also unlocking the feedback loop to spur member growth. Meanwhile, other founder mode-only social media companies from Friendster to MySpace fell by the wayside.

Also read: Leadership at your startup: How to own the owner's mode

There are three learnings on how to set up successful founder-manager partnerships:

1. Have clear swim lanes: It’s not about micromanaging one another but rather having an objective assessment of each’s strengths/limitations and divvying up different company priorities/initiatives basis that. We were always clear, between Hoffman and Weiner, on who ‘owned the D’ (decision-maker) on what topic.

2. Be Open, honest and constructive: Rather than avoiding one another, both actively sought out 1:1 time to stay in sync. And, even in group settings, set the tone to always have transparent and intellectually honest conversations. There were times where the founder mode won (like deciding to enter China despite being super tricky and costly because LinkedIn’s fundamental vision to “connect the world’s professionals” could not be delivered without large numbers of professionals in India and China). And yet other times where data, analysis and focus groups attributed to the manager mode won out.

3. Embrace quicker iterations: There are very few decisions at a startup that are irreversible or fatal so action bias is key. Yet, as Weiner used to say, ‘If you can’t measure it, you can’t fix it’. Our BizOps team, mining the data and measuring success/hiccups along the way, became their conscience keepers and helped spot both acceleration opportunities and roadblocks early on to invest time and resources.

In conclusion, the key point I wish to leave you with is: It’s never founder mode versus manager mode. Rather it’s about securing the winning combination of the right context plus the right people plus the right culture. I think Frank Slootman (famous for scaling DataDomain, ServiceNow & Snowflake) nailed it when he said it’s about each getting to the ‘owner mode’.

While the founder will always remain the central figure, what they choose to solve and who they surround themselves with will lead to more startups breaking out.