(2024-09-13) Davies General Theory Of Founders, Managers And Systems

Dan Davies: the general theory of founders, managers and systems. I’ve been fascinated by the fact that left to themselves in charge of something, intelligent people with an engineering background will always seem to independently come up with something that looks quite like Stafford Beer’s cybernetics... Obviously therefore the first thing that struck me about the “founder mode” essay is that there’s a hell of a lot of cybernetics-adjacent material in there – he even talks about black boxes! (2024-09-01) Graham Founder Mode

there is no reason at all to believe that the best way to design a system of information flows and allocate bandwidth will produce something which looks like a normal org chart. And even less reason to believe that the relationship between the org chart and the correct information design will be stable at different moments in time

what the jargon calls “algedonic signals”. These are low-frequency, high-priority messages which bypass the usual channels to direct signals from the immediate environment to the level of organisation at which the system itself can be redesigned

in order to identify what information has the red-handle property, you have to know what the purpose of the company is – “purpose” in this sense meaning “the criterion of what makes something relevant to the company”.

Although Paul Graham is correct to say “There are as far as I know no books specifically about founder mode”, I’d argue that there are a few very good books on general principles of information engineering, which have founder mode as one of their special cases. There’s a list of them in the back of my book (Unaccountability Machine) if he doesn’t mind paying academic prices.

Sept19 update: i am a mode, you are a syndrome. There was always going to be a part 2 on this one – do check out the comments to the previous “founder mode” post if you’re interested in this general subject because they’re very good. I think I want to expand on one point I made there.

I try to make a case that outsourcing is a bit dangerous and needs to be carefully engineered.

ensuring that communication happens across organisational boundaries, and all the interesting and unpleasant things that can result when it doesn’t.

My guess is that a lot of what Paul Graham and Brian Chesky find frustrating about being pushed into “manager mode” is something like the teething troubles that often accompany an outsourcing project

The relationship between a founder-CEO and a brand new professional management team that’s just been hired on the advice of one of the venture investors … is, I’m going to assert, going to look and feel much more like an outsourcing contract than an internal relationship between colleagues.

And that means that if the work isn’t done to ensure that the communication links happen and attention isn’t paid to the “translation and transduction” problem, delegation isn’t going to work.

now a compromise between different levels. That is going to cause frustration, and the frustration is going to be even greater because the founder is likely to only learn about these departures at a later stage

So this is my diagnosis; “founder mode” is the same thing as “founder syndrome”, just viewed from a different angle and at a different point in time

I think we struck a balance in that book between recognising that it took someone as founder-mode-maxed as he was to get the folding bike into existence at all, and also recognising that in the end, founder mode really did restrict the ability of Brompton to grow.

Maybe that you want the founder to be in control of the identity of the company. That is to say, the founder is the person who gives the answer to the graphic designers when they ask “what is this company really about?” (Strategic Context)

And (here’s an important Stafford Beer point) you need to ensure that this “keeper of the corporate soul” role is not an emeritus position – the identity of the company is what determines how it balances present and future, so it has to be completely integrated into the management. The founder has to preserve the ability to say “Action X is not-us, Action Y is us”, for anything the company does.

The founder is going to make decisions based on the model of the company contained in his or her head. That model is going to be a homomorphism of the company

As long as the homomorphism is preserved, the founder’s decisions will be relevant to the company – they might not be right, but they will have roughly the effects intended

If it isn’t, then the mental model no longer corresponds to reality and the founder’s decisions are not going to make sense

The system no longer has the founder’s identity, but nor will it be allowed to develop an emergent identity of its own – it has just become unregulated and will likely blow up.

we ought to identify a parallel “manager syndrome”, which is the attempt to leave founder mode while the founder is still capable of maintaining it. And I think what Graham and Chesky could talking about could be called an “anti-founder syndrome”, which is the conscious attempt to destroy the homomorphism.