Interview with Hunter Hastings
Organizations create more value when entrepreneurial leadership replaces bureaucracy, empowering teams to innovate faster and respond directly to customer needs.
Hunter Hastings is a venture capital investor, former startup CEO, and co-author of Venture Mode with Mark Packard. In this Q&A, he draws on Austrian economics and decades of experience in consulting, startups, and investing to explain why administration mode constrains both growth and engagement, and why venture mode enables companies to create much more value.
To start, your work spans economics, startups, and investing. Which experiences most shaped how you think about entrepreneurship and how businesses actually create value?
There is a little-known branch of economics that, in academia is called Austrian economics, but I call entrepreneurial economics. The principles of entrepreneurial economics map directly and precisely to successful value creation in business. As I journeyed through corporate operations, consulting, startup CEO roles, and early stage venture investing, I continuously reinforced my understanding that entrepreneurial economics provides the principles for business value creation at every scale – the perfect partner for entrepreneurship, and one that many people haven’t discovered, making it a competitive advantage.
Is bureaucracy the real constraint on economic growth today, and why do you describe “administration mode” as such a persistent trap inside organizations?
No one craves bureaucracy. It emerges in organizations as soon as the passion to grow – to serve more customers in more markets with better and better products and services to meet more and higher needs – gives way to the goal of preserving what has already been achieved.
It most definitely is. Value creation means serving customers by meeting their needs. Bureaucracy has no customers. No one craves bureaucracy. It emerges in organizations as soon as the passion to grow – to serve more customers in more markets with better and better products and services to meet more and higher needs – gives way to the goal of preserving what has already been achieved. It’s explained by prospect theory in behavioural economics: business managers fear losses more than twice as much as they enjoy gains. Therefore, they work to exert more control over activities and outcomes to try to emphasize safety and short-term maintenance over longer term experimental innovation and R&D investment. Control takes the form of supervisory management layers, multiple levels of decision approval, rigid processes, plans and resource allocation constraints. Entrepreneurial leaders become demotivated and disengaged and growth grinds to a halt. It’s a mindset change that leads to organizational sclerosis.
You argue that venture mode replaces hierarchies with networks. How does that shift change the way decisions get made inside companies?
In administration mode, decisions are made by managers— who are called on to approve or disapprove, to allocate resources, to set budgets and goals, and to rate employees, workers and team members in the layer below them. In venture mode, there are no management layers, and there are no decisions. There is one foundational action of establishing entrepreneurial intent and creating the conditions within which everyone works. The dynamics of growth are a result of feedback loops not decisions. Work is performed as a service to a customer, whether internal or external, and customers feedback – i.e. evaluate – the quality of service. If the feedback signal points towards the opportunity for improvement, the service provider acts, and draws the resources needed for that action. Budgets are rolling, plans are dynamic, and change happens at the speed of the market. Coherence is a result of clear entrepreneurial intent internalized by all team members.
Can large, established companies realistically operate in venture mode, or is this approach only viable for startups and smaller organizations?
Venture mode can occur at any scale. For example, we would argue that Nvidia operates in venture mode. Jensen Huang has over 60 direct reports with no management layers in between. But it is very difficult for corporations stuck in administration mode to get out. Venture mode companies are born, and administration mode companies must be reborn. There is no gradual transition or transformation or change management process that can accomplish that.
Elon Musk famously cut roughly 65% of the management at Twitter before he turned it into the venture mode company we now know as X. Most corporations couldn’t do that. We recommend setting up a standalone unit in venture mode, giving the people in it all the autonomy, freedom and release from bureaucratic management they need. Their success, and the joy they experience as a result, will become contagious and spread virally through the main body.
Why do you place so much emphasis on value creation, and what do most companies misunderstand about it in practice today?
Value creation for customers is the only legitimate purpose of the firm. Everything else follows as a consequence – revenue, profits, reinvestable cash flow, shareholder distributions and equity appreciation, and a proud place in the community. A single-minded focus on value creation can solve all problems and trigger innovative solutions to serve customers and grow markets. Importantly, only the customer can be the author of their own value experience. This understanding drives the value-oriented company to focus outside the firm rather than on its own internal metrics, and to develop excellence in interpreting customer signals regarding their needs in order to build productive capacity for the future. Otherwise they get trapped in administration mode.
How does Austrian economics shape your thinking on value, decision-making, and growth?
Entrepreneurship is not management, not strategy, not planning. It is action – taking action, often experimental because future outcomes are unknown, and learning from the customer’s response, adjusting, and acting again.
There are four principles from Austrian economics that are critical to business performance. The first is the systemic understanding of value: that it is subjectively experienced and defined by the customer. The customer evaluates which tells us that value is a verb, not a noun; it’s dynamic, relative, contextual, always changing. The second principle follows from the first: customer sovereignty. The customer is the boss, the one who gives direction. This is the opposite of the traditional way of thinking about business, which is the production view – that businesses make products and services to deliver to customers. Amazon calls the Austrian way “working backwards”: the first step is establishing the customer need, and Amazon works backwards from there to develop innovations. The third principle is entrepreneurship, the ethic that transforms customer need and working backwards into unit sales, revenue, profit, and growth. Entrepreneurship is not management, not strategy, not planning. It is action – taking action, often experimental because future outcomes are unknown, and learning from the customer’s response, adjusting, and acting again. That leads to the fourth principle of recursive self-improvement – Austrian economics calls it spontaneous order – through which the system self-organizes for continuous improvement and growth through repeated cycles of feedback and feedforward.
You’ve said technology is a threat to administration mode but an accelerator of venture mode. What does that difference look like in practice?
We can see exactly this pattern in AI today. AI agents operate in two modes in business, the process mode and the innovation mode. The process mode is about efficiency, simplifying, accelerating and implementing processes at speed and with accuracy; bureaucrats are not needed and administration is eliminated. In innovation mode, AI agents process the feedback loop information that comes from customers and markets, find new patterns, and turn these into actionable knowledge, and help to explore new possibility spaces. Entrepreneurial humans are needed for the elements only they can provide, including empathy, taste, judgment, instinct, insight, emotion, and imagination. It’s the support and augmentation of these attributes by AI that accelerates venture mode.
Finally, what practical steps can leaders take today to move their organizations from administration mode toward venture mode?
Start with the customer. How well, how deeply, how intimately, how emotionally do you understand your customer? Understanding is not in numbers, and it’s not even in what customers say. It’s in what they do, the choices they make, the actions they take, the system they assemble around themselves for living and working. From that understanding, you must derive an insight, an element of understanding that has great business leverage and that only you have and where only you can build a relationship advantage. Do you have such an insight? Does everyone in the company know it and understand its implications? If they do, give them all the freedom in the world to explore those implications. That’s the pathway for venture mode.
