Building Out Loud #14: Founder is a Mode

2 atomic posts.

Founder is a Mode

Paul Graham recently wrote about 'Founder Mode'. I am sure this will gather momentum as a reason for founders to be protected at all costs as a companies scale. But, I think the piece is more nuanced than that.

It is about a mode, not a person. A mode that great founders have which allows them to out perform when contrasted with 'Manager Mode'.

We can't be founder zealots here leading to inexperienced, unhappy people running complex organisations with thousands of employees, just because Paul Graham said. We need to understand what is behind founder mode.

#1

Founders think differently. No doubt. They are the seed. They have a commitment to an idea that needs to become manifest before anyone else believes, before compensation, before proof, before anyone is trying to optimise, automate or build culture. They are the original believer.

I think this is the core of founder mode and it is something that is hard for any future manager to acquire. It is the DNA, the instruction set that weaves through everything that comes next. If it is highly tuned and responding to its environment, it is a powerful force.

#2

Next, founders need a capacity for synthesis and learning that is super human. As the seed grows into a complex organism, the core idea needs to resonate with its environment and the founder needs to know where to flow and adapt. This includes assembling the right team who know how to build the ideas that need to become real.

#3

Finally, there is the important point Graham makes about resisting gaslighting. As companies grow, investors (guilty!) and employees, tell founders they are not thinking about the job to be done 'correctly'. That their experience suggests a better way. They maybe right, but it is the CEOs job to synthesis this and find the clear path through. And Point #1 suggests that founder mode can be a powerful filter for that.

Deep tech needs IMPATIENT capital

I was speaking to another investor last week and she said: "I suppose deep tech needs very patient capital?".

I almost defaulted to the normal, affirmative answer, but it niggled me. And then I said:

"Actually, no. It needs IMPATIENT capital."

Any startup is funded through a series of capital stages. None of these stages can invest along the whole lifecycle of a startup. In the early stages there is too much risk for the big cheques, but there are smaller pools of capital to build the evidence that the big cheques need. Each of these stages is a temporary custodian of capital. For the most part, they need to return that capital with a multiple within a fixed time window. None of them can get there alone.

In deep tech, we might be building rockets, quantum computers or networks of factories all of the world. This takes time and we need 'impatient capital' for each stage. Each stage must be obsessed with how to slingshot the startup to the next investor proof-point in the time we have.

We can't except 'slower' because we might not make it to the next stage.

This sounds like the investor tail wagging the startup dog, but it is actually a useful dynamic in deep tech company building. It aligns us. Everyone that can move a company forward is focused on the next milestone, dragging a complex, game-changing company into existence, often against the odds.

In the end, the whole finance stack needs to add up to patience, but each phase needs radical impatience.