Founder Mode and the antitrust trial

We hope you’ve been enjoying our deep coverage of the Google antitrust trial. I’m going to make a bit of a diversion this week but try to tie it all together.

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Founders Mode and the antitrust trial

I’m a little behind the trend writing about “Founder Mode”, which seems to have peaked a couple of weeks ago. If you’re not as online as some of us, this started with this essay from Y Combinator founder Paul Graham which approvingly cites a talk by AirBnb founder Brian Chesky asserting that — to grossly oversimplify — founders get better results when they are deeply involved in details, rather than delegating.

As a former founder and CEO I can definitely relate to the point. But I want to build on this to make a slightly different point, which is that founders also set and maintain the vision for their companies in a way few professional managers can.

I don’t think we talk enough about morality in the executive role. We see horrible examples like Theranos, Enron, etc. but we think those are isolated examples, rather than a path that many companies can accidentally stray to without enough leadership and guidance.

A while back I published this satirical diagram, which I still enjoy:

Aside from “Davos”, I would draw your attention to the bottom of the pyramid — “Stay out of jail.” I used this motto at Beeswax many times and it always tip toed along the line of a joke and real guidance. From not paying sales tax, to serious HR violations, there are a surprisingly large number of ways for a CEO to break the law!

Founders can set a very bad example

As a founder, you have unique moral authority to say what’s allowed and what is not. Uber comes to mind as an example. Founder Travis Kalanick was seen as brilliant, and hard driving. But he also encouraged a culture of rule breaking and arguably lawlessness. The company engaged in industrial espionage, regularly defined and deceived regulators, and generally did some very bad stuff. That’s Founder Mode gone bad.

Founders also know where the “north star” is

Because Founders have lived and breathed every aspect of their company from day 1 they can make decisions in ways professional management may not be able to. One famous example is Herb Kelleher, the founder of Southwest Airlines. Herb had a clear vision that Southwest was going to be the low cost airline and was not going to let that get out of sight. In a famous example, when it was suggested to add a chicken salad sandwich to one of his routes. Herb responded to the suggestion with roughly “will adding a sandwich support our goal of being the low-cost airline?” (longer version here)

How does this relate to advertising?

I worked at Google (albeit for only two years), and during that time Larry and Sergey were fully engaged in the business. They had strong opinions about things. Once Sergei totally derailed a meeting I was in to insist we had a strategy to remove our reliance on Adobe's Flash technology — he did that because he thought it was the right thing to do, regardless of my desire to sell some more ad serving crap.

Like them or hate them, Larry and Sergey had a passion for what we now call the “open web.” They came of age in the dawn of the web, when writing your own HTML and publishing a website seemed like an amazing tool for free expression. And I think this sort of founding ethos is why, despite it being a massive pain in the ass, Google still spends so much resourcing on the “open web”, and on efforts like AMP, Chrome, Google News, etc.*

But Larry and Sergey aren’t very involved anymore, and haven’t been for many years. And even when they were involved, display advertising wasn’t really in their comfort zone. With the first week of the Google antitrust trial in the books their names haven’t been mentioned once. The founders left the building, so to speak.

You can see this within all the evidence that’s been shown so far in the trial. There are actions that Google took which clearly were not in publishers' interest. For example, they refused to allow their Google Ads demand to compete fairly with other exchange demand, thus causing publishers to get lower pricing than they should have (this is sometimes called “first look” or, confusingly, “last look”). With journalism in decline and publishers desperate for revenue, how do we think the founders would have seen a program that took pennies away from every auction to put into Google’s coffers?

Within Google there were lively debates about what should be done, and we have those emails (see my Day 5 coverage). They are mostly about the business consequences of various actions. If we reduce our take rate to 10% will that allow us to better compete. But what’s missing from the emails is anyone saying here’s what I think is right. There’s are lots of emails trying to optimize the situation, balancing the desire to make publisher customers happy versus maximizing revenues. But I’m yet to see any email that says “maybe we should just not do this anymore and take the hit to revenue.” And I think that sort of decision is extremely difficult to make when your job, or next promotion, depends on measurable economic success rather than a moral sense of what’s the company stands for. That’s another part of Founder Mode, that’s missing in this case.

* People are going to get in my comments saying AMP or Chrome are self-serving initiatives whose goals are to maintain the Google search monopoly, etc. That’s fine, I’m not saying otherwise. I’m taking the perspective that Google, unlike Meta or Apple, is very focused on the open web and has invested in it.

Reading list

• Snap signals move to smbs for growth (link)

• Ads coming to Rufus (Amazon gen ai search engine) (link)

• Jeff Green at ATS London (link)

• 31.5% of users worldwide use ad blockers (link)

• InMobi raises $100 million in debt (link)