How to Design an Org for Founder Mode

Examples from Apple, Airbnb, Shopify, and Nvidia

Everyone seems to agree on how founders should design their orgs:

Create functions like product and marketing. Hire functional leaders, and delegate decision-making to them. As the team grows, hire managers within each function and further delegate decision-making. As the business develops distinct products, break them out under GMs and replicate the whole structure of functions and managers.

This structure allows a company to make more decisions. The team can scale quickly and focus on many things at once. As accountability is pushed further into the company, it becomes less reliant on the founder until it is a machine with interchangeable parts.

But it comes at the expense of the quality and speed of decisions. Good founders have good judgement, and this reduces their ability to exercise it. If they need to change the direction of the company, it takes much longer and may fail if they have to cascade the message through many layers of management.

This is often not a good trade. It’s certainly not a good trade when the market or technology is changing rapidly, which puts a premium on being right and being fast.

In Founder Mode, Paul Graham wrote about a different way of running a company and how little we know about it:

"There are as far as I know no books specifically about founder mode. Business schools don't know it exists. All we have so far are the experiments of individual founders who've been figuring it out for themselves. But now that we know what we're looking for, we can search for it. I hope in a few years founder mode will be as well understood as manager mode.”

One way to understand founder mode is to understand the kind of organization you need to design to achieve it.

Conventional wisdom is to diffuse decision-making as much as possible throughout the org. In contrast, founder mode organizations maximize the number of decisions made by the founder.

This famous parody of org charts from 2011 was meant to expose the particular dysfunction of each of the tech giants at the time:

Manu Cornet at https://bonkersworld.net/organizational-charts

Apple’s “dysfunction” was that red dot: Steve Jobs. He was intentionally positioned as an organizational bottleneck. Despite having many product lines, there were no business units - every function rolled up directly to him. He was directly involved in the details of every launch.

It’s very hard to argue that this was actually dysfunctional. In 2011, Apple had been on a ten-year tear, launching the iPod, iPhone, and iPad and growing their market cap by nearly 100x to the 2nd largest in the world.

Examples of orgs designed this way are rare. But if you look at just the companies that are leading in the highest growth categories - the best of the best - they are less rare than many people think. Three current examples:

Airbnb

Airbnb was on its way to becoming a “traditional” big company. But when it lost 80% of volume overnight during the pandemic, it gave Brian Chesky an opening to run the company the way he wanted to.

He eliminated the business unit structure, and all functions reported to him. He took out layers of management.

Everyone put what they were working on into a single Google Sheet, and then they cut 80% of it. All of the remaining projects got put on a cadence - Brian would meet with them every 1, 2, 4, 8, or 12 weeks.

This meant that every week, Brian would see what he called a “semi assembly of the entire new product”. He could identify problems and directly force resolution.

In his own words: “I stopped pushing decision-making down, I pulled it in.”

Shopify

Tobi Lütke is famously executing against a 100 year vision. But the plan to achieve that vision evolves much faster.

He reviews the entire roadmap with each team every 6 weeks. Powering these meetings is a custom-built tool that collects information on every project happening across the company. It is focused on what is being built and how the engineers are building it, not on metrics. Teams can’t bring anything except what is in the tool to the meeting - no framing, no presentations.

He then decides what to keep and what to kill, and allocates a certain number of engineers to each team. The rest of headcount planning is done in a GitHub repo based on ratios with engineers.

Nvidia

Jensen Huang has designed the flattest organization possible. He has more than 40 direct reports.

Every meeting is open to whoever wants to join - he shares his perspective as widely as possible so that it doesn’t have to be cascaded through many layers of the org.

In turn, he gets his information from everywhere in the org, not just from leaders. Anyone in the company can email him the "top five things" on their minds. He estimates that he reads 100 of these emails every morning.

There is no formal planning cycle; he evaluates changing market conditions continuously and makes changes whenever needed.

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These examples are highly idiosyncratic and built around the founder and the way that they think. But commonalities across them can help us deduce a few general principles for founder mode org design:

1. They give the founder as much surface area as possible to engage directly with the team (flat orgs, many direct reports, open meetings, often no business units)

2. They give the team as much surface area as possible to feed ground-truth information back to the founder (weekly standups, open communication, custom-built docs)

3. They allow the founder to overwrite the plan whenever needed

Clearly, this approach has limitations. The biggest is that founders must apply constant force to sustain it. No matter how strong their judgement is to start, they only maintain a decision-making edge by continually deepening their knowledge of the customer, the business, and the org. Their strength comes from being the only one who can truly “hold the whole thing in their head”.

This model also works better for decisions about innovation: what new things to build and how to build them. It’s not always necessary or productive for decisions related to doubling down on a known path.

Amazon had a lot of the latter type, and is known for a more traditional structure. Bezos has been openly critical of the “genius with a 1,000 helpers” model of organization design.

But you better believe that Bezos overrode the team on the decisions that really mattered, especially when there was a lot of uncertainty. Here he is at NYT Dealbook:

“I’m a very easy person to influence. I change my mind a lot. But a couple of percent of the time, no force in the world can move me. I can’t tell you how many people tried to talk me out of Fulfillment by Amazon. But I said: you guys will never talk me out of this. We are going to do this. I will do this through sheer force of will.”

A more nuanced version of the principle: founder mode organizations maximize the number of decisions made by the founder, up to the limits of their ability to make better or faster decisions.

Provided they have the humility to recognize those limitations, more founders should design their orgs this way. In fact, if a company is still founder-led and they’re not breaking the so-called “best practices” of org design, it’s a very bad sign.

I work at a 1,000-person wholesale marketplace called Faire. When people join, they’re often surprised at how many everyday decisions our CEO Max makes. At any given time, he’s embedded in at least 10 projects, meeting with the team weekly or even daily and getting into exactly how the product is going to be designed and exactly which words we’re going to use to talk about it with customers.

The teams on these projects have to work harder, and their decisions are more likely to be overridden.

Which brings us to the best counter-argument for founder mode org design: won’t it disempower the team? Don’t great people want autonomy?

Perhaps counter-intuitively, the teams on these projects tend to gain energy, not lose it. The explanation seems to be that in exchange for some autonomy, they get a great deal of clarity. This is a point Brian Chesky made on Lenny’s Podcast:

Way too many founders apologize for the way they want to run the company. They find some midpoint between how they want to run the company and how the people they lead want to run the company. That’s a good way to make everyone miserable. Because what everyone really wants is clarity.

Clarity is the only way to move fast enough to win. Moving fast is fun. And winning is what people want most of all.

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Thank you to Archie, Lenny and Max for their thoughts on a draft of this essay.

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