On “Founding vs Inheriting”

The COVID crisis was a competence test for organizations.

  • Amazon delivered billions of packages in 2020, while the US government struggled to send millions of checks.
  • Doordash had over 99.9% uptime, while local governments flip-flopped on restaurant closures.
  • Moderna delivered 94% effective vaccine doses in 2020, while Johnson and Johnson delayed until 2021 to deliver a dose with 66% efficacy.

Balaji traces a common thread: the organizations led by their founders prospered while the rest mostly floundered.

Why? Because the latter inherited organizations exist in a read-only state. Meaning they work fine, until a change of operational landscape demands adaptation and the existing systems break. Inherited organizations select leaders through heirs — genetic or political — while founder organizations select leaders through industriousness-from-scratch. Balaji argues we see a failure of competence in our institutions, because they no longer are lead by those who could build them in the first place.

2.

The big question this post raises for me is are organizations doomed once their founders retire?

A great example of a non-founder leader leading an incredible turn around is Lisa Su at AMD.

What is Lisa Su’s secret? If cloud cities and countries are to prosper, this is a critical question. We cannot rely on founders to have infinite appetite or stamina to run their organizations (I’m reminded that two months ago Jeff Bezos retired from Amazon). Existing organizations often have strong lock-in effects — mortgages to technical integration — that are expensive to migrate from.

If founders and builders could be trained to lead existing organizations, we could avoid a tremendous amount of wasted time, money, and effort. Andrew Yang is a promising politician of this shape — a former Tech CEO who is currently leading the polls for New York City mayor. He seems more focused on Forward than Right or Left — to refound NYC into a greater place for future generations.

I believe a failure to take this refounding problem seriously is part of why Tech made little improvement to San Francisco politics during the heydays of the 2010s. From the perspective of a software engineer living and working in the city for 5 years, SF housing politics felt beyond my reach. This was not the case for the anti-housing constituents. They had a playbook and took seriously winning over existing roles. My peers and I didn’t see the glory.

3.

The mystery for me is how to structure organizations such that they naturally promote leaders like Lisa Su.

SF and NYC have a big difference — NYC has a history of occasionally embracing competent outsider leaders like Bloomberg, while SF is a political machine town. Despite the strength of labor unions and legacy organizations, NYC still seems like it is in a read-write state. Miami seems even more writable.

Balaji is interested in forking and founding organizations. Frankly, that seems a lot more fun to me than trying to repair a half-sunken ship. I would rather escape to the cloud or Mars than diving in whatever toxic sludge has taken over San Francisco. Let them observe our prosperity (and failures) and fix themselves.

Yet retirement and inheritance are inevitable, even among transhumanists. Until technologists build a playbook for refounding and turning around existing organizations, we will find ourselves constantly on the run. Resources that could be compounding instead put towards switching costs.

Let’s figure out how to consistently fight and win.

Thanks to Kamil Michnicki for reading a draft of this post.

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