Item — HN Reader

Professional managers will absolutely run a company at 20% optimization while founders might get to 80%.

But if the founder gets hit by a bus it's going to drop to 2% or die. Professional management is like a lot of software tools, you can build a better framework yourself that is better suited to your usecase but no one else knows how to use it or can learn in a reasonable amount of time.

This isn't saying management is always the right route. A founder can lead for 30+ years, but they could also quit or get hit by a bus tomorrow so its not always irrational for shareholders to pick the "less efficient" option here

4 comments

A benign summary of what professional management brings to large orgs is essentially variance reduction.

Set up organization, process, systems, etc such that 99% of the staff becomes more or less interchangeable in the long run. This allows organizations to outlive their founders.

It's a numbers game. If you're in a position where you suddenly have to hire for the top of a tree, then you're virtually certain to have a hiring pool of people who have become successful acting as though the sort of culture you want to sustain is impossible and can't exist.

There's a lot of management "common sense" which is oriented to that 20% solution and denying that 80% is even possible. I don't think the framework is impossible to learn as much as that the lessons needed are culturally out of alignment with how the professional management class speak. MBA courses have a lot to answer for.

I like this analogy. And I suppose that’s the risk-reward trade off: a founder can really get more out of a company than a manager but when you lose them it’s a drop. But I would argue that you can always find professional management when the founder is out.

Running at 20% optimization means certain death or at best zombification for startups that haven’t reached escape velocity so there’s that