In the last days of the summer'23, I saw my colleague's (Dr. Philipp Moser) post in Linkedin about the book by Ben Horowitz: "The Hard Thing About Hard Things". It is a book with many experiences from Ben and the book brings a new perspective to you and make you learn what is going on in the top management side of the business.
“This the real world, homie, school finished. They done stole your dreams, you dunno who did it.” —KANYE WEST, “GORGEOUS”
From Communist to Venture Capitalist
Father turned to me and said, “Son, do you know what’s
cheap?” Since I had absolutely no idea what he was talking about, I replied,
“No, what?” “Flowers. Flowers are really cheap. But do you know what’s
expensive?” he asked. Again, I replied, “No, what?” He said, “Divorce.”
By doing everything, I would fail at the most important
thing. It was the first time that I forced myself to look at the world through
priorities that were not purely my own. I thought that I could pursue my
career, all my interests, and build my family. More important, I always thought
about myself first. When you are part of a family or part of a group, that kind
of thinking can get you into trouble, and I was in deep trouble. In my mind, I
was confident that I was a good person and not selfish, but my actions said
otherwise. I had to stop being a boy and become a man. I had to put first
things first. I had to consider the people who I cared about most before
considering myself.
Until you make the effort to get to know someone or
something, you don’t know anything. There are no shortcuts to curiosity.
“I Will Survive”
“What would you do if capital were free?” is a dangerous
question to ask an entrepreneur. It’s kind of like asking a fat person, “What
would you do if ice cream had the exact same nutritional value as broccoli?”
The thinking this question leads to can be extremely dangerous.
No matter who you are, you need two kinds of friends in your
life. The first kind is one you can call when something good happens, and you
need someone who will be excited for you. Not a fake excitement veiling envy,
but a real excitement. You need someone who will actually be more excited for
you than he would be if it had happened to him. The second kind of friend is
somebody you can call when things go horribly wrong—when your life is on the
line and you only have one phone call. Who is it going to be? Bill Campbell is
both of those friends.
If you are going to eat shit, don’t nibble.
This Time with Feeling
An early lesson I learned in my career was that whenever a
large organization attempts to do anything, it always comes down to a single
person who can delay the entire project.
Note to self: It’s a good idea to ask, “What am I not
doing?”
When Things Fall Apart
Startup CEOs should not play the odds. When you are building
a company, you must believe there is an answer and you cannot pay attention to
your odds of finding it. You just have to find it.
I follow the first principle of the Bushido—the way of the
warrior: keep death in mind at all times. If a warrior keeps death in mind at
all times and lives as though each day might be his last, he will conduct
himself properly in all his actions.
People always ask me, “What’s the secret to being a successful
CEO?” Sadly, there is no secret, but if there is one skill that stands out,
it’s the ability to focus and make the best move when there are no good moves.
It’s the matters not whether your chances are nine in ten or one in a thousand;
your task is the same. In moments where you feel most like hiding or dying that
you can make the biggest difference as a CEO.
The Struggle
The Struggle is when you wonder why you started the company
in the first place. The Struggle is when people ask you why you don’t quit and
you don’t know the answer.
Struggle is when your employees think you are lying and you
think they may be right. The Struggle is when food loses its taste. The
Struggle is when you don’t believe you should be CEO of your company. The
Struggle is when you know that you are in over your head and you know that you
cannot be replaced. The Struggle is when everybody thinks you are an idiot, but
nobody will fire you. The Struggle is where self-doubt becomes self-hatred. The
Struggle is when you are having a conversation with someone and you can’t hear
a word that they are saying because all you can hear is the Struggle. The
Struggle is when you want the pain to stop. The Struggle is unhappiness. The
Struggle is when you go on vacation to feel better and you feel worse. The
Struggle is when you are surrounded by people and you are all alone. The
Struggle has no mercy. The Struggle is the land of broken promises and crushed
dreams. The Struggle is a cold sweat. The Struggle is where your guts boil so
much that you feel like you are going to spit blood.
There is no answer to the Struggle, but here are some things
that helped me: Don’t put it all on your shoulders. It is easy to think that
the things that bother you will upset your people more. That’s not true. The
opposite is true. Nobody takes the losses harder than the person most
responsible. Nobody feels it more than you. You won’t be able to share every
burden, but share every burden that you can. Get the maximum number of brains
on the problems even if the problems represent existential threats. When I ran
Opsware and we were losing too many competitive deals, I called an all hands
and told the whole company that we were getting our asses kicked, and if we
didn’t stop the bleeding, we were going to die. Nobody blinked. The team rallied,
built a winning product, and saved my sorry ass. This is not checkers; this is
motherfuckin’ chess. Technology businesses tend to be extremely complex. The
underlying technology moves, the competition moves, the market moves, the
people move. As a result, like playing three-dimensional chess on Star Trek, there
is always a move. You think you have no moves? How about taking your company
public with $2 million in trailing revenue and 340 employees, with a plan to do
$75 million in revenue the next year? I made that move. I made it in 2001,
widely regarded as the worst time ever for a technology company to go public. I
made it with six weeks of cash left. There is always a move. Play long enough
and you might get lucky. In the technology game, tomorrow looks nothing like
today. If you survive long enough to see tomorrow, it may bring you the answer
that seems so impossible today. Don’t take it personally. The predicament that
you are in is probably all your fault. You hired the people. You made the
decisions. But you knew the job was dangerous when you took it. Everybody makes
mistakes. Every CEO makes thousands of mistakes. Evaluating yourself and giving
yourself an F doesn’t help. Remember that this is what separates the women from
the girls. If you want to be great, this is the challenge. If you don’t want to
be great, then you never should have started a company.
CEOs Should Tell It Like It Is
WHY IT’S IMPERATIVE TO TELL IT LIKE IT IS There are three
key reasons why being transparent about your company’s problems makes sense: 1.
Trust. Without chaotic. 2. The more brains working on the hard problems, the
better. In order to build a great technology company, you have to hire lots of incredibly
smart people. It’s a total waste to have lots of big brains but not let them
work on your biggest problems. A brain, no matter how big, cannot solve a
problem it doesn’t know about. As the open-source community would explain it,
“Given enough eyeballs, all bugs are shallow.” 3. A good culture is like the
old RIP routing protocol: Bad news travels fast; good news travels slow. If you
investigate companies that have failed, you will find that many employees knew
about the fatal issues long before those issues killed the company. If the employees
knew about trust, communication breaks. More specifically: In any human
interaction, the required amount of communication is inversely proportional to
the level of trust. Consider the following: If I trust you completely, then I
require no explanation or communication of your actions whatsoever, because I
know that whatever you are doing is in my best interests. On the other hand, if
I don’t trust you at all, then no amount of talking, explaining, or reasoning
will have any effect on me, because I do not trust that you are telling me the
truth.
If you run a company, you will experience
overwhelming psychological pressure to be overly positive. Stand up to the
pressure, face your fear, and tell it like it is.
A healthy company culture encourages people to share bad
news. A company that discusses its problems freely and openly can quickly solve
them. A company that covers up its problems frustrates everyone involved. The
resulting action item for CEOs: Build a culture that rewards—not
punishes—people for getting problems into the open where they can be solved. As
Lead Bullets
There comes a time in every company’s life where it must
fight for its life. If you find yourself running when you should be fighting,
you need to ask yourself, “If our company isn’t good enough to win, then do we
need to exist at all?”
There comes a time in every company’s life where it must
fight for its life. If you find yourself running when you should be fighting,
you need to ask yourself, “If our company isn’t good enough to win, then do we
need to exist at all?”
Take Care of the People, the Products, and the Profits—in That Order
My old boss Jim Barksdale was fond of saying, “We take care
of the people, the products, and the profits—in that order.” It’s a simple
saying, but it’s deep. “Taking care of the people” is the most difficult of the
three by far and if you don’t do it, the other two won’t matter. Taking care of
the people means that your company is a good place to work.
Why Startups Should Train Their People
Then I read chapter 16 of Andy Grove’s management classic,
High Output Management, titled “Why Training Is the Boss’s Job,” and it changed
my career. Grove wrote, “Most managers seem to feel that training employees is
a job that should be left to others. I, on the other hand, strongly believe
that the manager should do it himself.”
Ironically, the biggest obstacle to putting a training program in place is the perception that it will take too much time. Keep in mind that there is no investment that you can make that will do more to improve productivity in your company. Therefore, being too busy to train is the moral equivalent of being too hungry to eat. Furthermore, it’s not that hard to create basic training courses.
Management Debt
People rarely improve weakness they are unaware of. The
ultimate price you will pay for not giving feedback: systematically crappy
company performance.
Titles and Promotions
People states: For any title level in a large organization,
the talent on that level will eventually converge to the crappiest person with
the title. The rationale behind the law is that the other employees in the
company with lower titles will naturally benchmark themselves against the
crappiest person at the next level. For example, if Jasper is the worst vice
president in the company, then all of the directors will benchmark themselves
against Jasper and demand promotions as soon as they reach his low level of
competency.
Programming Your Culture
If you put something into your culture that is so disturbing
that it always creates a conversation, it will change behavior. As we learned
in The Godfather, ask a Hollywood mogul to give someone a job and he might not
respond. Put a horse’s head in his bed and unemployment will drop by one. Shock
is a great mechanism for behavioral change. Here are three examples: Desks made
out of doors Very early on, Jeff Bezos, founder and CEO of Amazon.com,
envisioned a company that made money by delivering value to rather than
extracting value from its customers. In order to do that, he wanted to be both
the price leader and customer service leader for the long run.
Jeff Bezos spent years auditing every expense and raining
hell on anybody who overspent, but he decided to build frugality into his
culture. He did it with an incredibly simple mechanism: All desks at Amazon.com
for all time would be built by buying cheap doors from Home Depot and nailing
legs to them. These door desks are not great ergonomically, nor do they fit
with Amazon.com’s $150 billion–plus market capitalization, but when a shocked
new employee asks why she must work on a makeshift desk constructed out of
random Home Depot parts, the answer comes back with withering consistency: “We
look for every opportunity to save money so that we can deliver the best
products for the lowest cost.” If you don’t like sitting at a door, then you
won’t last long at Amazon. Ten dollars per minute When we started Andreessen
Horowitz, Marc and I wanted the firm to treat entrepreneurs with great respect.
We remembered how psychologically brutal the process of building a company was.
Mark Zuckerberg believes in innovation and he believes there can be no great innovation without great risk. So, in the early days of Facebook, he deployed a shocking motto: Move fast and break things. Did the CEO really want us to break things? I mean, he’s telling us to break things! A motto that shocking forces everyone to stop and think. When they think, they realize that if you move fast and innovate, you will break things. If you ask yourself, “Should I attempt this breakthrough? It will be awesome, but it may cause problems in the short term,” you have your answer. If you’d rather be right than innovative, you won’t fit in at Facebook. Prior to figuring out the exact form of your company’s shock therapy, be sure that your mechanism agrees with your values. For example, Jack Dorsey will never make his own desks out of doors at Square because at Square, beautiful design trumps bacon-and-egg breakfast of a startup, we were with the chicken and the entrepreneur was the pig: We were involved, but she was committed. We thought that one way to communicate respect would be to always be on time to meetings with entrepreneurs. Rather than make them wait in our lobby for thirty minutes while we attended to more important business like so many venture capitalists that we visited, we wanted our people to be on time, prepared, and focused. Unfortunately, anyone who has ever worked anywhere knows that this is easier said than done. In order to shock the company into the right behavior, we instituted a ruthlessly enforced ten-dollar-per-minute fine for being late to a meeting with an entrepreneur. So, for example: You are on a really important call and will be ten minutes late? No problem, just bring one hundred dollars to the meeting and pay your fine. When new employees come on board, they find this shocking, which gives us a great opportunity to explain in detail why we respect entrepreneurs. If you don’t think entrepreneurs frugality. When you walk into Square, you can feel how seriously they take design.
Taking the Mystery Out of Scaling a Company
Often board members give entrepreneurs two bits of advice
regarding scale: 1. Get a mentor. 2. Find some “been there, done that”
executives who already know how to scale.
How to Lead Even When You Don’t Know Where You Are Going
Perhaps the most important thing that I learned as an
entrepreneur was to focus on what I needed to get right and stop worrying about
all the things that I did wrong or might do wrong.
The Most Difficult CEO Skill
It’s like the fight club of management: The first rule of
the CEO psychological meltdown is don’t talk about the psychological meltdown.
By far the most difficult skill I learned as CEO was the
ability to manage my own psychology. Organizational design, process design,
metrics, hiring, and firing were all relatively straightforward skills to
master compared with remarkably consistent in their answers. They all say, “I
didn’t quit.”
Focus on the road, not the wall. When someone learns to
drive a race car, one of the first lessons taught is that when you are going
around a curve at 200 mph, do not focus on the wall; focus on the road. If you
focus on the wall, you will drive right into it. If you focus on the road, you
will follow the road. Running a company is like that. There are always a
thousand things that can go wrong and sink the ship. If you focus too much on
them, you will drive yourself nuts and likely crash your company. Focus on
where you are going rather than on what you hope to avoid.
The Fine Line Between Fear and Courage
People who watch you judge you on what you do, not how you
feel.
Follow the Leader
Most people define leadership in the same way that Supreme
Court justice Potter Stewart famously defined pornography when he said, “I know
it when I see it.” For our purposes, we can generalize this to be the measure
of the quality of a leader: the quantity, quality, and diversity of people who
want to follow her. So what makes people want to follow a leader? We look for
three key traits:
- The ability to articulate the vision
- The right kind of ambition
- The ability to achieve the vision
Making Yourself a CEO
To become elite at giving feedback, you must elevate
yourself beyond a basic technique like the shit sandwich. You must develop a
style that matches your own personality and values. Here are the keys to being
effective: Be authentic. It’s extremely important that you believe in the
feedback that you give and not say anything to manipulate the recipient’s
feelings. You can’t fake the funk. Come from the right place. It’s important
that you give people feedback because you want them to succeed and not because
you want them to fail. If you really want someone to succeed, then make her
feel it. Make her feel you. If she feels you and you are in her corner, then
she will listen to you.
Don’t get personal. If you decide to fire somebody, fire
her. Don’t prepare her to get fired. Prepare her to succeed. If she doesn’t
take the feedback, that’s a different conversation. Don’t clown people in front
of their peers. While it’s okay to give certain kinds of feedback in a group
setting, you should strive never to embarrass someone in front of their peers.
If you do so, then your feedback will have little impact other than to cause
the employee to be horribly ashamed and to hate your guts. Feedback is not
one-size-fits-all. Everybody is different. Some employees are extremely
sensitive to feedback while others have particularly thick skin and often thick
skulls. Stylistically, your tone should match the employee’s personality, not
your mood. Be direct, but not mean. Don’t be obtuse. If you think somebody’s
presentation sucks, don’t say, “It’s really good, but could use one more pass
to tighten up the conclusion.” While it may seem harsh, it’s much better to
say, “I couldn’t follow it and I didn’t understand your point and here are the
reasons why.” Watered-down feedback can be worse than no feedback at all
because it’s deceptive and confusing to the recipient. But don’t beat them up
or attempt to show your superiority. Doing so will defeat your purpose because
when done properly, feedback is a dialogue, not a monologue.
How to Evaluate CEOs
A company without a story is usually a company without a
strategy. Want to see a great company story? Read Jeff Bezos’s three-page
letter he wrote to shareholders in 1997. In telling Amazon’s story in this
extended form—not as a mission statement, not as a tagline—Jeff got all the
people who mattered on the same page as to what Amazon was about. Decision
making Some employees make products, some make sales; the CEO makes decisions.
Therefore, a CEO can most accurately be measured by the speed and quality of
those decisions. Great decisions come from CEOs who display an elite mixture of
intelligence, logic, and courage.
Staying Great
Who start off world-class often deteriorate over time. If
you are a sports fan, you know that world-class athletes don’t stay world-class
for long. One day you are Terrell Owens and the next day you are Terrell Owens.
While executives don’t age nearly as fast as athletes do, companies, markets,
and technologies change a thousand times faster than the game of football. As a
result, the executive who is spectacular in this year’s hundred-person startup
may be washed-up in next year’s version when the company employs four hundred
people and has $100 million in revenue.
We begin with a strong bias that whoever we hired must be
world-class even before performing one day of work.
It’s important to point out to the executive that when the
company doubles in size, she has a new job. This means that doing things that
made her successful in her old job will not necessarily translate to success in
the new job. In fact, the number-one way that executives fail is by continuing
to do their old job rather than moving on to their new job.
The End of the Beginning
“We walk the same path, but got on different shoes. Live in
the same building, but we got different views.” —DRAKE, “RIGHT ABOVE IT”
Addressing the skill set issue proved to be difficult
because, sadly, the only way to learn how to be a CEO is to be a CEO. Sure, we
might try to teach some skills, but learning to be a CEO through classroom
training would be like learning to be an NFL quarterback through classroom
training. Even if Peyton Manning and Tom Brady were your instructors, in the absence
of hands-on experience, you’d get killed the moment you took the field.
“I know you think my life is good cause my diamond piece But
my life been good since I started finding peace.” —NAS, “LOCO-MOTIVE”
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