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The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
by Ben Horowitz
A lot of people talk about how great it is to start a business, but only Ben Horowitz is brutally honest about how hard it is to run one.
In The Hard Thing About Hard Things, Ben Horowitz, cofounder of Andreessen Horowitz and one of Silicon Valley’s most respected and experienced entrepreneurs, draws on his own story of founding, running, selling, buying, managing, and investing in technology companies to offer essential advice and practical wisdom for navigating the toughest problems business schools don’t cover. His blog has garnered a devoted following of millions of readers who have come to rely on him to help them run their businesses. A lifelong rap fan, Horowitz amplifies business lessons with lyrics from his favorite songs and tells it straight about everything from firing friends to poaching competitors, from cultivating and sustaining a CEO mentality to knowing the right time to cash in.
His advice is grounded in anecdotes from his own hard-earned rise—from cofounding the early cloud service provider Loudcloud to building the phenomenally successful Andreessen Horowitz venture capital firm, both with fellow tech superstar Marc Andreessen (inventor of Mosaic, the Internet’s first popular Web browser). This is no polished victory lap; he analyzes issues with no easy answers through his trials, including
demoting (or firing) a loyal friend;
whether you should incorporate titles and promotions, and how to handle them;
if it’s OK to hire people from your friend’s company;
how to manage your own psychology, while the whole company is relying on you;
what to do when smart people are bad employees;
why Andreessen Horowitz prefers founder CEOs, and how to become one;
whether you should sell your company, and how to do it.
Filled with Horowitz’s trademark humor and straight talk, and drawing from his personal and often humbling experiences, The Hard Thing About Hard Things is invaluable for veteran entrepreneurs as well as those aspiring to their own new ventures.
Key ideas
There’s no recipe or formula for dealing with the complex, hard things
Being scared did not mean you are gutless. What you do matters, and would determine whether you’ll be a hero or coward
Do not judge things by the surfaces. Until you make a great effort to get to know someone or something, you don’t know anything
Leadership is getting somebody else to follow you, even if only through curiosity
Looking at the world through such different prisms and social groups helped him separate the facts from perceptions
Learn to look for alternative narratives and explanations coming from radically different perspectives to inform your outlook
“What is cheap? Flowers. What is expensive? Divorce.
When you are part of a family or group, thinking about yourself first can get you in trouble
Some business relationships become too tense to tolerate, or not tense enough to become productive after a while
In raising money privately: look for a market of one. You only need one investor to say yes so it’s best to ignore the other 30 who say no
In start ups you only experience two emotions: euphoria and terror. Lack of sleep amplifies both
Bill Campbell: the key to his success is no matter where he goes, he’s everybody’s favorite person
You need two kinds of friends in your life:
ones you can call when something good happens and you need someone to be excited for you
the other is the kind of person you call when things go horribly wrong
“If you’re going to eat shit, don’t nibble. Things are always darkest before they go completely black
Treat the people leaving fairly so that the people staying will still have the same trust in you
What are you not doing? Usually what you’re not focusing on is what you should be
Many times conventional wisdom has nothing to do with the truth
Lesson: start up CEOs should not play the odds. When you are building a company, you must believe there is an answer. You cannot pay attention to the odds of finding it
There is no secret to being a successful CEO. But if there is one skill that stands out, it is the ability to focus and make the best move when there are no good moves
It’s in the moments when you feel most like hiding or dying that you can make the biggest difference as CEO
First principle in bushido: keep death in mind at all times
“Life is a struggle” -Carl Marx
The struggle causes failure especially if you’re weak. Most people aren’t strong enough
The struggle is where greatness comes from
Don’t put it all on your shoulders. The burden will hurt hardest to whoever is most responsible. But share every burden you can, get the maximum number of brains on the problems
There’s always a move. Running a business is complex like 3D chess
In the technology world, tomorrow looks nothing like today
Everyone makes mistakes, CEOs make thousands of mistakes. Giving yourself an F doesn’t help
If you want to be great, this is a challenge. If you didn’t want to be great, you should’ve never started a company
CEOs should tell it like it is, never by overly optimistic
Employees can handle loss much better because they aren’t married to the company
Give the problem to the people who can fix it, and would also be personally motivated and excited to solve it
If something goes wrong, people need to know why so that they can fix the problem together
3 reasons why being transparent about your company makes sense:
Trust. Without trust, communication breaks. The required amount of communication is inversely proportional to the level of trust
The more brains working on the hard problems, the better
A brain, no matter how big, cannot solve a problem it doesn’t know about
A good culture is like IP routing protocol: bad news travels fast, good news travels slow
bad company culture discourages spread of bad news
discussing problems openly and freely allows for quick solutions
In laying people off, don’t delay, be clear to the reason, admit to the failure
Managers should lay off. Explain what happened, clear and definitive
Firing an executive:
Root cause analysis, figure out why you hired the wrong person for the company
Hiring for scale too soon, re-qualifying for the same job, leaving a failing leader in their place
Preserve reputation of fired executive, most likely a team failure so best to portray that way
Demoting a loyal friend, Confucius approach: the good of the individual must be sacrificed for the good of the whole
Finding a silver bullet versus many lead bullets
No avoiding the problem, have to go straight through. Sometimes you have to fight
Take care of the people, products, and profits, in that order
Hire for strength rather than lack of weakness
Be clear on what you want them to do, and also why
In good organizations, people can focus on their work and have the confidence that if they do good work, it will benefit both the company and themselves
Being a good company is an end in itself
The manager should do the training for his employees himself
In building a technology company, people are the most important asset
Training is one of the highest leverage activities a manager can perform
Important to clearly set expectations when training the employee
One reason people quit: they hated their manager. They were appalled by the lack of guidance, career development, and feedback. They weren’t learning anything
Start with functional training: the knowledge and skill needed to do job, as well as expectations
Ask managers and highest level performers to help train. This will help build positive company culture
Take your best people and encourage them to share and teach their most developed skills
Training must be mandatory. Two types of training are functional and management training, which should be easily implemented
Two ways for a manager to improve output of an employee: motivation and training
No better time investment that will improve productivity in your company than developing a training program
The best product managers take full responsibility for the product from the top down
The job of a big company executive is very different from a small company executive
Big company execs tend to be interruption-driven
Small company execs, nothing happens until they make it happen
Screen in the interview process, take integration as seriously as interviewing
Time running vs. time creating
As a great general manager, you must hire and manage people who are far more competent at their jobs than you would be
How to hire someone good:
If you have been thinking about starting or growing a YouTube channel or Podcast show, writing your first book or creating your first course. I consult creators all around how to monetize their passion and creative dreams. Book a free consult with me here to find out how we can work together so you can start making money online now.
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Know what you want, act in functional roles, have clear expectations for first 30-days, write what strengths you want and what weaknesses you’re willing to tolerate, will they be effective, who do you need support from
Set metrics that match your priorities. Supplement a great product vision with strong discipline around the metrics
Anything you measure creates a set of employee behaviors
Management debt is when you make a quick and expedient decision that is short-term, but has an expensive long-term consequence
Companies execute well when everybody’s on the same page and everyone is constantly improving
Good CEOs will make the tough decisions and quickly because they’ve paid the management debt before
Good HR organizations can’t create a great company culture, but they can tell you when you and your managers aren’t getting the job done
The best way to approach management QA is through the lens of the employee lifecycle, from hire to retire
Minimizing politics always starts with the CEO
Politics: people advancing their careers by means other than merit and contribution
Giving people a raise when asked and not by merit causes others to follow suit
Hire people with the right kind of ambition
Build strict processes for potentially political issues and do not deviate
Nothing motivates a great employee more than a mission that’s so important, it supersedes everyone’s personal ambition
When interviewing candidates, watch for small distinctions that indicate whether they view the world through the “me-prism” or the “team-prism”
Job titles? Employees want them, and eventually people need to know who is who to get their work done
The Peter Principle: people will be promoted in a hierarchy as long as they perform their job duties competently. They will keep being promoted until they become incompetent at their threshold level
The law of crappy people: for any title in a large organization, the talent on that level will eventually converge to the crappiest person with the title
Mark Andreessen: titles are the cheapest things people ask for from their company, and if it makes them feel better, it’ll cost nothing to outbid other companies in the recruiting process
Mark Zuckerberg: de-levels titles process in order to increase fairness and boost morale
As an organization grows, it’s important to provide organizational clarity whenever possible
Being an effective employee isn’t just about intelligence, it’s also about working hard, reliability, and working well with the team
You can only hold the bus for one person. Sometimes you have to mitigate the negative consequences of a star player, as long as they are a positive contribution to the team
Bringing on someone who has the right experience at the right time can help you radically speed up your time to success
The right reason to hire a senior person is to acquire knowledge and experience in a specific area
Ask yourself: do I value external or internal knowledge more for this position?
This will help you determine whether to go for experience or youth
Managing senior people: will they bring their own habits and culture from their old company? Will they work the system? How do you keep them accountable?
Demand and expect cultural compliance, set a high and clear standard for performance, use standards based on other high performers in their field
Performance: results against objectives, management, innovation (hitting goals but not ignoring future), working with peers
One on ones: well designed communication architecture
The key to a successful one on one meeting is understanding that it is the employee’s meeting, not the manager’s
The primary thing that any tech company must do is build a product that is at least 10x better at doing something than the current prevailing way of doing that thing
The second thing is take the market before somebody else does
Culture does not make your company
Culture matters to the extent that it can help you achieve the above goals, preserve your key values and help performance in the future. It makes people want to work at your company, yourself included
Culture is designing a way of working that distinguishes you from competitors. Helps you identify employees that fit with your mission
If you want to build an important company, you’ll have to learn the black art of scaling
Find a mentor, and find some experienced, been-there-done-that executives who already know how to scale
The challenge is to grow but degrade as slowly as possible
Start up employees start as jack-of-all-trades, but scaling requires specialization
Organizational design: split up a company by function or by mission
Figure out what needs to be communicated. List the most important knowledge and who needs to have it
Figure out what needs to be decided and organize accordingly
Prioritize the most important communication and decision paths
Identify issues and the processes to resolve them
A process is a formal, well-structure communication vehicle
Engineer accountability into the process system
When evaluating an employee, base it off of their ability to perform at current scale, not future scale
Investing in courage and determination is an easy investment
The most important thing learned as an entrepreneur was to focus on what you need to get right, and stop worrying about all the things you did wrong or might do wrong
If you have been thinking about starting or growing a YouTube channel or Podcast show, writing your first book or creating your first course. I consult creators all around how to monetize their passion and creative dreams. Book a free consult with me here to find out how we can work together so you can start making money online now.
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Most difficult skill learned as CEO was the ability to manage his own psychology
Someone doesn’t become a CEO unless they have a high sense of purpose and cares deeply about the work they do. In addition, they must be accomplished enough or smart enough that people will want to work for them
Everyone learns how to be a CEO by being a CEO. There is no job that fully trains or prepares you
Everything that goes wrong is the CEO’s fault, especially founder-CEOs as there is nobody else to blame
The key is to not get married to the positive or dark narratives of your company
If you don’t like choosing between horrible and catechistic, don’t become a CEO
WFIO = we’re fucked, it’s over
Every company goes through 2 to 5 of these
`Make friends and talk to people who have been through similarly challenging situations
Focus on the road, not the wall
Don’t punk out or quit, great CEOs face the pain and deal with it
There’s little difference between a hero and a coward except what they do despite the fear
Two key characteristics they look for in entrepreneurs: brilliance and courage
Courage to make the right decision. Courage, like character, can be developed
In life, many decisions where you’ll choose between easy-crowd-wrong decision, and hard-lonely-right decision. As CEO, consequences of these decisions are magnified 1000 times
Two core skills for running and organization: knowing what to do, and getting the company to do what you know
There are two types of managers:
1) those who like setting the direction of the company
2) those who like making the company perform at the highest level
you need both characteristics to be a great CEO, but those who lean towards one can learn the skills of the other
The primary purpose of a company’s organizational structure is for decision-making efficiency
Most important attribute to be a great CEO: Leadership
The measure of the quality of a leader: the quantity, quality, and diversity of people who want to follow her
Three traits of what makes people want to follow a leader:
1) ability to articulate the vision
interesting, dynamic, compelling – Steve Jobs attribute
2) the right kind of ambition
truly great leaders create an environment where the employees feel the CEO cares more about the employee than herself – Bill Campbell attribute
3) the ability to achieve the vision
Andy Grove attribute
Peacetime and wartime CEOs, hard to be both
Peacetime = a company has a large advantage over its competitors and core market is growing. They can focus on expanding their market and reinforcing the company’s strengths
Wartime = company is fending off an imminent, existential threat
Peacetime and wartime tactics can be extremely effective when employed at the right times
Most management books are written about peacetime management
It’s hard but not impossible to develop skill sets of both
Being a CEO is an unnatural job and requires learning how to do things the unnatural way
Giving feedback as foundational building block, the critique sandwich
Be authentic and come from the right place, such as wanting employees to succeed
Stylistically, your tone should match the employee’s personality. Be direct but not mean
Feedback is a dialogue, not a monologue. The goal should be to open up the discussion because they should have more data about their position than you
As a CEO, you should have an opinion on everything
Key questions they ask regarding a CEO and the company
1) does the CEO know what to do?
2) can the CEO get the company to do what she knows?
3) did the CEO achieve the desired results against an appropriate set of objectives?
Some employees make product, others make sales. A CEO makes decisions. Therefore, a CEO can be most accurately measured by the speed and quality of those decisions
Great decisions are made by CEOs who display an elite mixture of intelligence, logic, and courage
You must systematically and continually make acquire knowledge in the company’s day to day activities
Executing well requires a broad set of operational skills
Great CEOs constantly assess whether they’re building the best team
Accountability vs. creativity paradox: holding people accountable for their deadlines, next to encouraging people for solving the hard problems and having the courage to identify them
Senior people should be able to forecast their results more accurately than junior people
It’s better to believe people have good intentions, are smart, intelligent, and creative, especially with your own employees
You owe it to your people, the employees and all the people that report to your managers and executives, to hold the executives to a high standard
Selling your company rule of thumb: if you are very early on in a very large market and if you have a very good chance of being number one in that market, then you should stand alone
Most important lesson in entrepreneurship: embrace the struggle!
Embrace your weirdness, your background, your instinct. If the keys are not in there, they do not exist
If you have been thinking about starting or growing a YouTube channel or Podcast show, writing your first book or creating your first course. I consult creators all around how to monetize their passion and creative dreams. Book a free consult with me here to find out how we can work together so you can start making money online now.
Download the PDF Summary here
