“Founder Mode” has been making the rounds on the memosphere largely as a screed against traditional management techniques. You see, they don’t work for founders, according to Paul Graham—Notorious for thinking “founders” need to give his VC firm 80-hour weeks and most of their 20s only to own some small percent of the resulting firm if it works at all.

So, he might know a thing or two about exploiting young, naive folks. Say, by explaining to them that they need to ignore all those folks in their corner claiming the secret to scaling is delegation.

(God forbid those educated management types start pointing out all the ways VCs like Paul might take more than their fair share of the success of a tech firm.)

Well, at least, he seems like he knows a thing or two. He has this choice quote that stood out to me:

The problem is by the time I got this far in his surprisingly (for him) short essay, I already had at least one book in mind. And by the time I’d finished, I knew of two I’d recommend to people looking to learn more about “founder mode.”

Founder Mode Book #1

The first book is a series, so you can search Amazon and see if there’s a more relevant version. It’s called “The E-Myth.” The author, Michael Gerber, makes various arguments, but two stick out to me for the source of Paul Graham’s essay. First, Gerber proposes the concept of a “franchise model” as the mental model to pursue entrepreneurship.

Now, we’re not trying to run a franchise. And the book isn’t about being a franchisee. Instead, Gerber points out that the odds of your new burger joint business increase precipitously if you do one simple thing: franchise an already-known burger joint. What is magical about that? You inherit processes, branding, suppliers, and everything else.

If you think about the Explore-Exploit-Execute model I bring up somewhat often; a franchise approach is a way to skip all of the Explore phase and most of the Exploit phase. What you’re doing when you do Explore-Exploit is searching the “space” of all possible business models for one that works. Franchises have already found models that work — all that’s left for you to do is execute.

Gerber thinks you need to act as if your own business will be franchised one day. What operating manuals, guidelines, and rules of the road would you need to generate to do that? That’s your business—the shared expectations, behaviors, assumptions, policies, and everything else that goes into running a franchise. It’s a systems thinking approach.

Founder Mode Book #2

The second book I’d recommend is how to solve Paul Graham’s problem with the status quo “delegation is how to scale” advice you get from MBA types. He says everyone he knows (wow, how rigorous!) who has used that approach has failed similarly.

(God forbid anyone tries to do a study on what works or what doesn’t rather than just asking their friends. Otherwise, it might appear in one of those management journals, and we’re not allowed to read those.)

Paul explains:

This is a well-known issue in management literature, and Paul would know both what it is and how to solve it if he had ever read any management literature. This is the much-vaunted “Asshole” problem—dealing with this has a variety of books on the subject, but the one that always comes to mind is “The No Asshole Rule”

In his book, Sutton points out ways to both identify “assholes” and deal with them. They aren’t too difficult to spot once you know what to look for—and the solution is to fire any you find and not hire them in the first place if possible. Assholes would score high in the “dark triad” of personality—they’re very good at manipulating other people and using those powers to extract wealth from groups rather than adding to them. They’re deadly to a firm.

Gerber’s book also deals with another version of this — rather than assholes; he points out that if you delegate entirely to experts, you’re beholden to them. And they will eventually get overwhelmed and leave.

“Founder Mode”

So, that’s two takes on avoiding Paul Graham’s problem with the traditional management advice.

Why did Paul Graham miss these? Probably because he doesn’t read management literature. So take his claim that there “are no books on the subject” with a massive grain of salt—clearly, if there were books on the subject, Paul Graham wouldn’t know about them.

He probably doesn’t know that business schools research this stuff, either. Sutton operates out of one and is an organizational psychologist. The academic types that train the MBA types with all their useless knowledge. And Gerber is a serial founder—one business he has set up is helping others set up theirs.

Paul, as we should remember, is a venture capitalist. He sits back at the pool, letting money do the work for him—which, hey, nice work if you can get it. However, the problem with VCs and PE types is that they often confuse their success by thinking they know how to run businesses rather than merely having the money to watch others struggle.