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Counter-example: Reed Hastings, co-founder and the CEO of Netflix for 22 years, famously did the opposite of what pg is saying. Reed insisted on a particular s

Counter-example: Reed Hastings, co-founder and the CEO of Netflix for 22 years, famously did the opposite of what pg is saying. Reed insisted on a particular style of employee freedom & responsibility that IMO set the benchmark for innovating year after year and avoiding micro-managers, even as it scaled up past 2000 engineers. This story still has not been fully told. Reed was closely involved but perhaps the opposite of Steve Jobs. Sounds like chesky and pg want to turn the tide on that dominant culture in software companies. And I couldn't agree more! A big problem IMO is that most "professional software managers" are taught a management style that focuses on risk. Risk-aversion permeates every decision from compensation to project priorities. It's so pervasive it's like the air they breathe, they don't even realize their doing it. This is how things run in 99% of companies. So, my fellow hackers. There is a better way. It's neither the Steve Jobs model nor the John Sculley model. Looks like pg has not yet found it. I hope he does, though. It would be great for YC to encourage experimentation here.

tlogan 2y ago
The issue is that we don’t have a clear understanding of what “founder mode” truly entails. But, I predict that once Reed Hastings leaves Netflix, the company will begin to decline.
- swalsh 2y ago
  Has the company not already declined? I've been subscribed for years, but I cant remember the last time I watched something on it. The next time I do a round of canceling subscriptions, there is a very real chance it's gone. I have so many other subscriptions, I'm just not sure it's important enough to me anymore to make the cut.
  - latchkey 2y ago
    Have you looked at the stock price recently?
    - swalsh 2y ago
      I'd argue decline lags value fundumentals. Sears decline took decades. The early metric is probably "viewer hours" per customer or some use base metric. That will probably dip before the revenue dips.
      - latchkey 2y ago
        Zoom out on the chart. Sear's stock looks nothing like Netflix. Sears was killed by totally different circumstances. We're at covid peak ATH again. Anyone who bought the dip in 2022, is looking like a genius with fantastic gains. The more money Netflix has, the more they invest into better content. People look at the base metrics, which is why they are investing... along with a healthy dose of dump money into stonks that are earning more than interest rates. Once the fed starts to cut rates, things go even higher.
      - nvarsj 2y ago
        I don't think Netflix is for you and me. I can't remember the last time I watched a Netflix show. The content is bad, the UI is bad, everything is bad compared to what I remember of the early Netflix days. _But_ the stock is way up and their subscriber count keeps increasing. They have obviously found a formula that keeps the masses happy. And they are succeeding despite heavy competition. Can't argue with the facts.
- fallinditch 2y ago
  PG's commentary is interesting but I think he is leaning towards an unsatisfactory conclusion. He's trying to simplify management into modes but in reality life is more complex and nuanced. Chesky's experience instead says to me that as managers we should be be wary of all advice and management styles and playbooks. For sure it's good to listen to advice and learn about management but life and managing a business are so much more complex than any set of rules or observations can describe. In fact, since every organization's situation is unique, then managers should take all advice and accepted wisdom with a pinch of salt and forge ahead with their own unique set of principles for their own unique set of challenges. This is what Chesky deduced. I would also go one step further and assert that it's a positive sign if a founder goes against the grain and breaks the rules - success is more likely than if they follow the established way of doing things. This is innovation. Perhaps this is the 'founder mode' that PG is trying to uncover: think different.
  - jbs789 2y ago
    This was my takeaway too. We are all different, in the skills we bring to the table and the problems in front of us, and a good leader is self aware and discovers the solutions for their problem, not blindly copy someone else’s.
cynicalpeace 2y ago
I have a feeling the other alternative is just indiehacking + AI. Little management needed, much smaller companies.
- deleted 2y ago
  [deleted]
dsugarman 2y ago
I don't know nearly enough to make a firm claim here but I don't think what you're describing sounds like a definitive counter example. There's a big difference between giving lower level employees creative freedom and letting c level executives have free roam over their domain with little oversight or Founder involvement.
- trunnell 2y ago
  ...letting c level executives have free roam over their domain with little oversight or Founder involvement. I agree with you, I think. pg's point was that "Steve Jobs Mode" is the opposite of founders letting their C-level execs roam free. I don't agree. I think the improved model is "free roaming managers with lots of transparency and accountability." "Free roaming" and "no accountability" are a recipe for disaster. But a CEO/exec/manager who reaches 2, 3, or more levels into their org and gives specific direction is a recipe for mismanagement. It violates the golden rule: don't create a role with two bosses.
  - gwd 2y ago
    > It violates the golden rule: don't create a role with two bosses. Right, but on the other side, in the military they told us: "You can delegate authority, but you can't delegate responsibility." If part of the CEO is to be a manager for the C-suite, then he needs to be able to evaluate how the CxO is behaving as a manager; and that would seem to imply looking 2 or 3 levels down to see what's going on beneath them. That's not to say the CEO should go around randomly countermanding orders and giving new ones. The CxO can't do their job that way. But it does mean that the CEO should have a clear picture about what's going on, form their own opinions, and either give guidance / constructive criticism or fire where appropriate.
xipho 2y ago
Steam (Valve) too.
stroupwaffle 2y ago
I think it’s important to gleam some insights from past successes, but ultimately these “case studies” have over factors. For example, the time with which Apple, Netflix, Facebook, and so on, flourished. Where talent existed, what the landscape looked like, is quite possibly totally different than anything today. Take the iPhone: a product so good at a time when there wasn’t much like it. A guaranteed success. You’re going to have talent rally around it and get excited for it to succeed. But that’s been done, and in the Phone landscape, there’s never going to be such an event again. So in general, it’s never one size fits all. We can learn from the greats, but it’s best to develop our own, situational ideas along the way.
- bookofjoe 2y ago
  "I must say, please don’t post articles plastered with ads. Thank you." try this: chrome://extensions/?id=llimhhconnjiflfimocjggfjdlmlhblm
trunnell 2y ago
Good points in pg's essay: * CEO/founder should engage directly at multiple levels rather than only interact with the company through their direct reports. (Same applies at every management level, btw) * Delegation is good, and it should happen in proportion with trust. * The dominant culture at many tech companies is flawed and sub-optimal. Bad points: * "Founders feel like they're being gaslit from both sides". The two supporting points could both be true: "VCs who haven't been founders themselves don't know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world." However, it does not follow that the only option left is "Steve Jobs Style." * "an annual retreat for [...] the 100 most important people"... I have trouble envisioning an effective org chart with lots of people at the top who would not also be in the "top 100" list. If your department heads are not your most skilled operators, then... maybe that's a good problem to fix. * Assuming that the skills and intuition that make a founder successful will 100% apply to the very different job of being the chief of a 2000-person tribe. We should not assume that. On average, everyone has an equal chance of needing to learn something new to succeed in a new situation-- founders included. Don't let pg's founder flattery go to your head.
- CityOfThrowaway 2y ago
  There are many very good reasons why the top 100 most valuable people would not be the department heads. Cracked engineers, designers, growth people, AEs... the best ICs shouldn't necessarily be in management positions. Yet, the CEO should neither be air-gapped from those people nor managing their work/career on a day to day basis.
  - boredtofears 2y ago
    I don't think there's any reason to believe IC's who follow the "cracked engineer" manifesto would be in the top percentile. It's basically a guideline to make people more manageable and has little to do with engineering talent.
    - CityOfThrowaway 2y ago
      I have no idea what you're talking about. Cracked is just slang for insanely talented, ergo...
nicodjimenez 2y ago
I bet that Reed Hastings has a sub organization at Netflix that is run in founder mode, even if most of the organization is run in manager mode. Whether orgs are run in manager mode or founder mode depends on whether there is a founder level leader available and nature of the changes that need to occur for the organization to remain competitive. Some orgs or sub-orgs cannot afford to have a founder making radical changes, because the risk this will lead to an exponential rise in defects for end customers is greater than the potential benefit. PG tailors to startups and for startups the risk of the wrong product is generally much greater than the risk of product defects. So I tend to agree with his points here.
svnt 2y ago
Hastings is rather unique in the current founder era in that he had previously founded a company, recognized he did not have the ability to manage it, attempted to step down, and then was told by his board to figure it out. He went on to essentially succeed in this and take his company public. Here is a person that recognized the problems of the stage pg was talking about, undertook a deliberate study of them, was successful enough in managing them, and then went on to found and grow Netflix. Most founders have not previously taken a company public, especially via Hasting’s humble route. Having done so would enable him to prevent exactly the kind of problems pg is referring to while still being himself. Jobs and Hastings have very different personalities and methods, but both probably achieved the same function within their organizations.
- trunnell 2y ago
  I agree and I’m following you right up to your last statement. I’m doubtful that Jobs and Hastings had similar functions or operated similarly. I worked with Reed but not with Steve. I know a few people who interacted with Steve, and their stories don’t sound anything at all like how Reed operates.
  - mizzao 2y ago
    GP said "different methods" presumably indicating not operating similarly.
torginus 2y ago
It's a bit off topic, but I've never understood while people hold Netflix as some engineering Holy Grail. Their product is straightforward feature-wise, and pushing a low-teen megabits per second of static video data on the internet in a somewhat timely manner is not a huge technical challenge nowadays (or 10 years ago). Doing stuff like real-time video streaming, where you have to encode and push video to users with very low latency requirements (like Google Stadia) or with moderately relaxed latency but broadcast to a lot of users, like Twitch, or having a mind-bogglingly huge library like Youtube, is probably orders of magnitude harder. I do like their shows, and probably a lot of technical wizardry VFX goes into making them, but getting the bytes to the end user is not it. I'm sure there's a lot of adversarial smarts there, where brilliant engineers come up with incredibly complex solutions to simple problems, and it requires even more brilliance to make things run smoothly, but I'm sure their problems could be solved with simple pragmatic engineering.
- j45 2y ago
  It’s not straight forward at scale
  - sieabahlpark 2y ago
    Care to elaborate? Most things boil down to client side features like streaming the video with HLS or DASH, even if it's not live just to get the encoding benefits. DRM is its own thing. I think it's important to have the distinction between delivering video content and the in-app experience. I do think streaming VOD is way easier than live content.
    - YZF 2y ago
      You also need a CDN. NetFlix deploys boxes all over the place to cache the content. I agree there's nothing in there that's not understood from an engineering/technology perspective. It's not fusion or curing cancer. But scale and complexity compound simple engineering problems. There monitoring, there's billing, there's machine learning, there's software lifecycle, multitude of different devices types and networks, all of that at extreme scales that need to work pretty reliably.
tptacek 2y ago
I don't think this is incompatible with what Graham is saying. Netflix has a famously distinctive organization and management style; I don't know if it's literally Reed Hastings' stamp, but you can imagine it might be. Towards the end of the post, Graham talks about how he's not saying there won't be delegation; it just won't be black-box cookie-cutter delegation, into "engineering" and "marketing" and "sales" and "support". It rang pretty true to me. Bear in mind he's also responding to Brian Chesky's case study, which we're probably not going to get to hear much more about.
manojbajaj95 2y ago
Yes. This is important, rather than treating it as a gospel, each company/founder has to find out a way that work for them. It doesn't have to Steve Jobs model nor the John Sculley model.
kapad 2y ago
Reed Hastings is also equally famous for having a rather non-traditional managerial style. Especially the "keeper test". > If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now and look for a star, someone you would fight to keep. I agree with some of the other replies. That Hastings was very aware of two things - He's not the best manager - Corporate manager's are full of bs IMO, the "keeper test" and some of the other famous and/or controversial policies at Netflix are a direct approach at avoid "manager mode".
knallfrosch 2y ago
If we just keep extrapolating from success stories, we'll inevitably run into survivorshop bias. We can find a thousand companies where founders returned and made the company bigger, but what about those where the founder blocked growth and they never rose to prominence in the first place?
- scott_w 2y ago
  Honestly, it's really tough to pick it out from such a high level. You can also see countless companies that succeed in spite of the fact they're doing the wrong things, if you follow the business success playbooks. Businesses and markets are really complex and it's difficult to look at individual businesses or decisions and make definitive claims. It takes a lot of time and research to pick apart the different factors that correlate most strongly with success. Does that mean PG's observations are worthless? Not at all. Between today and those research papers being written, we need to make decisions based on observations that we or others make. Some of those things will be helpful, some will be harmful and some will be irrelevant. We do the best we can with the information we have access to.

tlogan 2y ago

The issue is that we don’t have a clear understanding of what “founder mode” truly entails. But, I predict that once Reed Hastings leaves Netflix, the company will begin to decline.

swalsh 2y ago
Has the company not already declined? I've been subscribed for years, but I cant remember the last time I watched something on it. The next time I do a round of canceling subscriptions, there is a very real chance it's gone. I have so many other subscriptions, I'm just not sure it's important enough to me anymore to make the cut.
- latchkey 2y ago
  Have you looked at the stock price recently?
  - swalsh 2y ago
    I'd argue decline lags value fundumentals. Sears decline took decades. The early metric is probably "viewer hours" per customer or some use base metric. That will probably dip before the revenue dips.
    - latchkey 2y ago
      Zoom out on the chart. Sear's stock looks nothing like Netflix. Sears was killed by totally different circumstances. We're at covid peak ATH again. Anyone who bought the dip in 2022, is looking like a genius with fantastic gains. The more money Netflix has, the more they invest into better content. People look at the base metrics, which is why they are investing... along with a healthy dose of dump money into stonks that are earning more than interest rates. Once the fed starts to cut rates, things go even higher.
    - nvarsj 2y ago
      I don't think Netflix is for you and me. I can't remember the last time I watched a Netflix show. The content is bad, the UI is bad, everything is bad compared to what I remember of the early Netflix days. _But_ the stock is way up and their subscriber count keeps increasing. They have obviously found a formula that keeps the masses happy. And they are succeeding despite heavy competition. Can't argue with the facts.
fallinditch 2y ago
PG's commentary is interesting but I think he is leaning towards an unsatisfactory conclusion. He's trying to simplify management into modes but in reality life is more complex and nuanced. Chesky's experience instead says to me that as managers we should be be wary of all advice and management styles and playbooks. For sure it's good to listen to advice and learn about management but life and managing a business are so much more complex than any set of rules or observations can describe. In fact, since every organization's situation is unique, then managers should take all advice and accepted wisdom with a pinch of salt and forge ahead with their own unique set of principles for their own unique set of challenges. This is what Chesky deduced. I would also go one step further and assert that it's a positive sign if a founder goes against the grain and breaks the rules - success is more likely than if they follow the established way of doing things. This is innovation. Perhaps this is the 'founder mode' that PG is trying to uncover: think different.
- jbs789 2y ago
  This was my takeaway too. We are all different, in the skills we bring to the table and the problems in front of us, and a good leader is self aware and discovers the solutions for their problem, not blindly copy someone else’s.

cynicalpeace 2y ago

I have a feeling the other alternative is just indiehacking + AI. Little management needed, much smaller companies.

deleted 2y ago
[deleted]

dsugarman 2y ago

I don't know nearly enough to make a firm claim here but I don't think what you're describing sounds like a definitive counter example. There's a big difference between giving lower level employees creative freedom and letting c level executives have free roam over their domain with little oversight or Founder involvement.

trunnell 2y ago
...letting c level executives have free roam over their domain with little oversight or Founder involvement. I agree with you, I think. pg's point was that "Steve Jobs Mode" is the opposite of founders letting their C-level execs roam free. I don't agree. I think the improved model is "free roaming managers with lots of transparency and accountability." "Free roaming" and "no accountability" are a recipe for disaster. But a CEO/exec/manager who reaches 2, 3, or more levels into their org and gives specific direction is a recipe for mismanagement. It violates the golden rule: don't create a role with two bosses.
- gwd 2y ago
  > It violates the golden rule: don't create a role with two bosses. Right, but on the other side, in the military they told us: "You can delegate authority, but you can't delegate responsibility." If part of the CEO is to be a manager for the C-suite, then he needs to be able to evaluate how the CxO is behaving as a manager; and that would seem to imply looking 2 or 3 levels down to see what's going on beneath them. That's not to say the CEO should go around randomly countermanding orders and giving new ones. The CxO can't do their job that way. But it does mean that the CEO should have a clear picture about what's going on, form their own opinions, and either give guidance / constructive criticism or fire where appropriate.

xipho 2y ago

Steam (Valve) too.

stroupwaffle 2y ago

I think it’s important to gleam some insights from past successes, but ultimately these “case studies” have over factors. For example, the time with which Apple, Netflix, Facebook, and so on, flourished. Where talent existed, what the landscape looked like, is quite possibly totally different than anything today. Take the iPhone: a product so good at a time when there wasn’t much like it. A guaranteed success. You’re going to have talent rally around it and get excited for it to succeed. But that’s been done, and in the Phone landscape, there’s never going to be such an event again. So in general, it’s never one size fits all. We can learn from the greats, but it’s best to develop our own, situational ideas along the way.

bookofjoe 2y ago
"I must say, please don’t post articles plastered with ads. Thank you." try this: chrome://extensions/?id=llimhhconnjiflfimocjggfjdlmlhblm

trunnell 2y ago

Good points in pg's essay: * CEO/founder should engage directly at multiple levels rather than only interact with the company through their direct reports. (Same applies at every management level, btw) * Delegation is good, and it should happen in proportion with trust. * The dominant culture at many tech companies is flawed and sub-optimal. Bad points: * "Founders feel like they're being gaslit from both sides". The two supporting points could both be true: "VCs who haven't been founders themselves don't know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world." However, it does not follow that the only option left is "Steve Jobs Style." * "an annual retreat for [...] the 100 most important people"... I have trouble envisioning an effective org chart with lots of people at the top who would not also be in the "top 100" list. If your department heads are not your most skilled operators, then... maybe that's a good problem to fix. * Assuming that the skills and intuition that make a founder successful will 100% apply to the very different job of being the chief of a 2000-person tribe. We should not assume that. On average, everyone has an equal chance of needing to learn something new to succeed in a new situation-- founders included. Don't let pg's founder flattery go to your head.

CityOfThrowaway 2y ago
There are many very good reasons why the top 100 most valuable people would not be the department heads. Cracked engineers, designers, growth people, AEs... the best ICs shouldn't necessarily be in management positions. Yet, the CEO should neither be air-gapped from those people nor managing their work/career on a day to day basis.
- boredtofears 2y ago
  I don't think there's any reason to believe IC's who follow the "cracked engineer" manifesto would be in the top percentile. It's basically a guideline to make people more manageable and has little to do with engineering talent.
  - CityOfThrowaway 2y ago
    I have no idea what you're talking about. Cracked is just slang for insanely talented, ergo...

nicodjimenez 2y ago

I bet that Reed Hastings has a sub organization at Netflix that is run in founder mode, even if most of the organization is run in manager mode. Whether orgs are run in manager mode or founder mode depends on whether there is a founder level leader available and nature of the changes that need to occur for the organization to remain competitive. Some orgs or sub-orgs cannot afford to have a founder making radical changes, because the risk this will lead to an exponential rise in defects for end customers is greater than the potential benefit. PG tailors to startups and for startups the risk of the wrong product is generally much greater than the risk of product defects. So I tend to agree with his points here.

svnt 2y ago

Hastings is rather unique in the current founder era in that he had previously founded a company, recognized he did not have the ability to manage it, attempted to step down, and then was told by his board to figure it out. He went on to essentially succeed in this and take his company public. Here is a person that recognized the problems of the stage pg was talking about, undertook a deliberate study of them, was successful enough in managing them, and then went on to found and grow Netflix. Most founders have not previously taken a company public, especially via Hasting’s humble route. Having done so would enable him to prevent exactly the kind of problems pg is referring to while still being himself. Jobs and Hastings have very different personalities and methods, but both probably achieved the same function within their organizations.

trunnell 2y ago
I agree and I’m following you right up to your last statement. I’m doubtful that Jobs and Hastings had similar functions or operated similarly. I worked with Reed but not with Steve. I know a few people who interacted with Steve, and their stories don’t sound anything at all like how Reed operates.
- mizzao 2y ago
  GP said "different methods" presumably indicating not operating similarly.

torginus 2y ago

It's a bit off topic, but I've never understood while people hold Netflix as some engineering Holy Grail. Their product is straightforward feature-wise, and pushing a low-teen megabits per second of static video data on the internet in a somewhat timely manner is not a huge technical challenge nowadays (or 10 years ago). Doing stuff like real-time video streaming, where you have to encode and push video to users with very low latency requirements (like Google Stadia) or with moderately relaxed latency but broadcast to a lot of users, like Twitch, or having a mind-bogglingly huge library like Youtube, is probably orders of magnitude harder. I do like their shows, and probably a lot of technical wizardry VFX goes into making them, but getting the bytes to the end user is not it. I'm sure there's a lot of adversarial smarts there, where brilliant engineers come up with incredibly complex solutions to simple problems, and it requires even more brilliance to make things run smoothly, but I'm sure their problems could be solved with simple pragmatic engineering.

j45 2y ago
It’s not straight forward at scale
- sieabahlpark 2y ago
  Care to elaborate? Most things boil down to client side features like streaming the video with HLS or DASH, even if it's not live just to get the encoding benefits. DRM is its own thing. I think it's important to have the distinction between delivering video content and the in-app experience. I do think streaming VOD is way easier than live content.
  - YZF 2y ago
    You also need a CDN. NetFlix deploys boxes all over the place to cache the content. I agree there's nothing in there that's not understood from an engineering/technology perspective. It's not fusion or curing cancer. But scale and complexity compound simple engineering problems. There monitoring, there's billing, there's machine learning, there's software lifecycle, multitude of different devices types and networks, all of that at extreme scales that need to work pretty reliably.

tptacek 2y ago

I don't think this is incompatible with what Graham is saying. Netflix has a famously distinctive organization and management style; I don't know if it's literally Reed Hastings' stamp, but you can imagine it might be. Towards the end of the post, Graham talks about how he's not saying there won't be delegation; it just won't be black-box cookie-cutter delegation, into "engineering" and "marketing" and "sales" and "support". It rang pretty true to me. Bear in mind he's also responding to Brian Chesky's case study, which we're probably not going to get to hear much more about.

manojbajaj95 2y ago

Yes. This is important, rather than treating it as a gospel, each company/founder has to find out a way that work for them. It doesn't have to Steve Jobs model nor the John Sculley model.

kapad 2y ago

Reed Hastings is also equally famous for having a rather non-traditional managerial style. Especially the "keeper test". > If a person on your team were to quit tomorrow, would you try to change their mind? Or would you accept their resignation, perhaps with a little relief? If the latter, you should give them a severance package now and look for a star, someone you would fight to keep. I agree with some of the other replies. That Hastings was very aware of two things - He's not the best manager - Corporate manager's are full of bs IMO, the "keeper test" and some of the other famous and/or controversial policies at Netflix are a direct approach at avoid "manager mode".

knallfrosch 2y ago

If we just keep extrapolating from success stories, we'll inevitably run into survivorshop bias. We can find a thousand companies where founders returned and made the company bigger, but what about those where the founder blocked growth and they never rose to prominence in the first place?

scott_w 2y ago
Honestly, it's really tough to pick it out from such a high level. You can also see countless companies that succeed in spite of the fact they're doing the wrong things, if you follow the business success playbooks. Businesses and markets are really complex and it's difficult to look at individual businesses or decisions and make definitive claims. It takes a lot of time and research to pick apart the different factors that correlate most strongly with success. Does that mean PG's observations are worthless? Not at all. Between today and those research papers being written, we need to make decisions based on observations that we or others make. Some of those things will be helpful, some will be harmful and some will be irrelevant. We do the best we can with the information we have access to.