In a life of a company that survives long enough there comes a moment of leadership succession. Some of these stories are nearly text-book: Gates stepping back for Ballmer, Bezos handing over to Jassy, Page and Brin ceding operational duties to Schmidt. But those stories are over-told, they are “survivor biased.” The more interesting lessons lie in the less obvious, messier transitions.
Take Philip Greenspun and ArsDigita. On paper, it had everything: early internet momentum, serious customers, brilliant founder. But when the company attracted VCs, the board didn’t nudge Greenspun into a productive evolution—they bulldozed him out. Instead of carefully balancing his role as visionary with professionalized management, they installed the wrong people with the wrong incentives. Within two years the company imploded. Greenspun later called it “a case study in how to kill a promising company with too much money and too little wisdom.”
Founder Mode vs. Stepping Aside
Paul Graham’s post on “Founder Mode” is a fascinating counterpoint. He argues that startups lose something essential when they eject their founders—that an irreplaceable magic gets lost. At first glance, this seems to contradict the idea that founders should learn when to hand over.
But if you read closely, it doesn’t. Graham isn’t saying founders must cling to operational control forever. He’s saying that companies that lose founder energy too early—or through the wrong transition—become soulless bureaucracies. “Founder mode” is about spirit and urgency, not about who signs payroll or manages the next product rollout.
In practice, both are true:
- The company needs “founder mode” to be alive.
- The company also often needs someone elserunning the machine.
The real art is separating “being the founder” from “being the manager.”
Boards Aren’t Always the Adults in the Room
We often treat boards as the safety net that ensures this balance. But boards are just as fallible. Some are greedy. Some are passive. Some mistake “professional management” for “the right management.”
ArsDigita isn’t alone—think of Webvan (where the board cheered unsustainable growth to the edge of bankruptcy) or Better Place (where Shai Agassi’s vision outpaced his operational discipline, but the board failed to stage the right succession). In each case, both sides—founder and board—shared responsibility for the crash.
When a board mistakes its role, it can destroy exactly what it was meant to protect.
The Subtle Skill of Letting Go
Perhaps we need to refine the “two types of founders” framing:
- There are founders who see that their time at the operational helm is finite, and who embrace succession as an act of strength.
- And there are founders who can’t or won’t see it, and risk dragging their company down with them.
But layered on top is a third dimension:
- Boards that recognize how to manage this transition well.
Because the greatest founder skill may be knowing when their operational time is over—but the greatest board skill is knowing how to ensure that ending strengthens rather than destroys the company.