The Hard Thing About Hard Things

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.

No matter who you are, you need two kinds of friends in life. 1) The kind you can call when something good happens to you. They’ll be more excited than you are. 2) The kind you can call when something horrible happens. Be both of those friends.

In the midst of Loudcloud failing, Ben asked himself, “What would I do if we went bankrupt [in order to personally succeed]?” This helped him see the idea to rescue Loudcloud.

When EDS was about to yank the Opsware contract and doom Opsware, Ben bought Tangram so he could bundle it for free with Opsware for the client that accounted for 90% of Opsware’s revenue because Tangram was what “Frank” really wanted. They learned about Frank and only survived because they learned what Frank truly wanted.

Markets aren’t efficient at finding the truth; they’re efficient at converging on a conclusion – often the wrong conclusion.

It’s a good idea to ask: “What am I not doing?” As in – as opposed to reviewing all of the things we are doing and looking at how we can do them better, what are we not doing that we should/could be in the market?’

Really interesting to hear some of Ben’s internal dialogue as he’s trying to make decisions that literally can not be mulled over with anyone else due to his position and the nature of the questions. It’s lonely at the top.

• Don’t put it all on your shoulders
• This is not checkers; this is chess
• Play long enough and you might get lucky
• Don’t take it personally
• Remember that this is what separates the women from the girls.

• “Cartheu said, ‘Yeah, I know Fred. He comes by once a quarter to blow a little sunshine up my ass!’”
• • People know that reality is more nuanced than you’re describing and accentuating the positive while skirting the negative isn’t fooling anyone but makes you seem less than trustworthy.
• Telling like it is has 3 major benefits:
• • Trust
  • The more brains working on the problem, the better.
  • Build a culture where bad news is embraced; knowing about a problem sooner can buy you time to save you from death.

Laying people off

• Get your head right
• Don’t delay
• • Additional issues arise quickly if news leaks early
• Be clear in your own mind about why
• • No positive spin. The company has failed to execute it’s plan. This isn’t an ‘opportunity.’
• Train your managers
• • Managers MUST lay off their own employees. Not HR or peers.
  • • Explain briefly what happened and why
    • Be clear and that the decision is nonnegotiable
    • Be fully prepared with details of benefits and support plans the company will provide.
• Address the entire company
• • This message is for people who are staying
  • • “The people who stay will care deeply about how you treat their colleagues in this time.”
• Be visible, be present

Firing an Executive

• At the executive level, it’s rarely the executive’s fault. It’s a hiring/integration problem. So do a RCA to find out why you hired the wrong person.
• • Position was poorly defined
  • Hired for ‘lack of weakness’ rather than for strengths
  • Scaled too fast
  • Hired for a generic position
  • Exec has the “wrong kind of ambition”
  • You failed to integrate the exec
• Inform the board
• • Get their support and understanding
  • Get their approval for the severance package
  • Preserve the reputation of the fired executive.
• Preparing for the conversation:
• • Be clear on why
  • Use decisive language – “I have decided” rather than “I think”
  • Have the severance package already approved and ready.
• Communicating with the company
• • In this order – 1) the exec’s direct reports, 2) other members of your exec staff 3) the rest of the company

Demoting a loyal friend

• Be very, very clear about why
• Use appropriate language (decisive, final)
• Admit reality
• Acknowledge their contributions

There is no secret to being a successful CEO. But on of the skills that stands out is the ability to focus and make the best move when there are no good moves. “It’s the moment where you feel like hiding or dying that you can make the biggest difference as a CEO.”

Bushido principle: Keep death in mind at all times. 

The Struggle is where greatness comes from.

“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.”

The proper strategy when things get tough isn’t usually a silver bullet; it’s lead bullets. Meaning it’s not an easy answer or one thing that fixes everything; it’s war, and it’s a hard grind to get back on top.

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?”

“Nobody cares” – A great reason for failing won’t preserve one dollar for your investors, won’t save one employee’s job, or get you one new customer. Spend zero time on what you could have done and devote all your time to what you might do. Because in the end, nobody cares; just run your company.

The only thing that keeps an employee at a company when things go horribly wrong – other than needing a job – is that she likes her job.

Why train your people?

Big company execs in a little company often equals:

• Rhythm mismatch
• Skill set mismatch

Hiring executives:

• Know what you want
• Run a process that figures out the right match
• Make the decision alone as a CEO

Just as in “technical debt,” there is a concept of “management debt.” You WILL pay shortcuts and easy decisions back with interest.

To avoid politics, hire people with “the right kind of ambition.” The right kind of ambition, as defined by Andy Grove, is ambition for the company’s success with the executive’s own success coming as a by-product of the company’s victory.

To scale reliably, “give ground slowly”

What makes a leader:

• The ability to articulate the vision
• The right kind of ambition
• The ability to achieve the vision