Are you presently struggling with any of the following?
- You’d like to hire the best people in the world but don’t have a product, track record, or a single customer, and you’ll be out of money in 30 days.
- You talked friends into working for your start-up, but then things took off and they aren’t a perfect fit anymore. You need to fire them.
- You’re 28 years-old and having trouble identifying world-class candidates for your VP of Global Sales position.
- You want to create a company culture but swear like a truck driver and don’t like dogs or yoga.
- You’ll be out of money in 4 weeks, but you need to inspire your staff, who have mortgages and kids, to stay at their desks 20 hours a day for the next 8 weeks.
- Your spouse, your partner (who was recently on the cover of Time), and everyone on your board (billionaire geniuses all), are demanding you do A, but your gut says they’re idiots and you need to do B.
- Your company has $2M in annual revenue. You’d like to take it public in a few weeks.
- Your company is public but the stock price just dropped below $1 and you’re going to be delisted in a few weeks. What should you do? (Spoiler: get a personal introduction to Herbert Allen.)
If you answered yes to one or more of these questions, you might enjoy Ben Horowitz’s new book, The Hard Thing About the Hard Things. If you answered no to all of them, you might read it, feel a little inadequate and worry that you’re turning 35 in a few weeks and have done nothing with your life and that you have no control over anything and everyone is against you and there’s no way you’ll ever pay off the credit cards from that year you lived in New York, let alone build and sell a billion dollar company. But you should still read the book. Horowitz writes with a very genuine voice. His story is singular and almost performance art in how dislocated it is from most of our lives. Feelings of inspiration might smother the feelings of inadequacy.
Most start-ups, even the successful ones, share a similar narrative around their early years: blind death march with occasional moments of delusional euphoria. Horowitz has attempted a road-map for this death march.
The first third of the book tells the story of his start-up, LoudCloud/Opsware, whose highs were higher and lows lower than most. Horowitz and his friend Marc Andreessen started their company by raising $21M dollars ($15M from Benchmark and $6M from Andreessen’s personal money) at a post-valuation of $66M. They then hired 200+ people in the following six months. Soon they burned through the money and were nosediving into bankruptcy, but… at the last second, weeks from running out of money, they’re saved by– going public. With only $2M in annual revenue. Which bought them a few more months until their stock price began dropping below a dollar and the prospect of being delisted loomed. Horowitz had to do something drastic again– so he sold the cloud hosting services (LoudCloud) part of the company to EDS for $63.5 million (and a three-year contract for another $60M). He kept the software part of the business (Opsware). A year or so later, he almost went bankrupt again, so he sold Opsware to HP for $1.6 Billion.
(Does any of this make sense? It shouldn’t. None of this is possible. Except Horowitz did it. This alone is reason to check out The Hard Thing About The Hard Things.)
The rest of the book are specific lessons on running a young company:
- How to hire and, more importantly, fire. (Horowitz did 3 rounds of layoffs before successfully selling the company.)
- How to create a company culture when you’re in a death spiral.
- Why 1-on-1’s are so important and how to conduct them.
- How to perfectly time the hiring of senior people who can scale operations.
- How to morph from a geek/product CEO into a leader.
- And The Struggle.
One the most valuable aspects of this part of the book is that Horowitz conveys most of these lessons as if he learned them while under his desk in the fetal position. There’s a rawness and honesty you’ll find in few business books outside Jessica Livingston’s seminal Founders at Work.
For example, he reveals, “By far the most difficult skill I learned as a CEO was the ability to manage my own psychology.” As the CEO of a young company, every day is a failure, and you’re spending huge amounts of psychic energy trying to project the opposite to the outside world. As Horowitz says toward the end of the book, most founders don’t want to be CEOs. They want to build a cool product. They eventually become CEO for lack of any other choice. No one in her right mind wants to ‘be a leader’. There’s a fine line between being a leader and being an asshole, and if you’re trying to be a leader by reading a book, there’s a good chance you’re the latter. (Did I just admit something?)
Reading a book on how to be a leader is like reading a book on how to skydive. Leadership is mostly forged on the move, in the air, especially in the moments of complete free fall. Leadership is essentially an insane proposition that no one would accept on the front end if they knew what it entailed. What’s funny is that as hard as Horowitz tries to give direct lessons on being a leader, he continually undermines his message, by saying that leadership is a matter of being authentic, being who you are. Great advice, but, amusingly, contradicts the very act of reading a book on how to lead.
To his credit, Horowitz seems vaguely aware of this contradiction and I don’t personally fault him for it. One of my favorite Flannery O’Connor quotes is “I write because I don’t know what I think until I read what I say.”
The essential message of the book is that some ways are better than others but ultimately it’s your company and the world’s best selection of advisers can’t save you from yourself. You can only be who you are. Wearing a black turtleneck will not make your company Apple any more than practicing Catholicism will make you write like Flannery O’Connor. As your company claws its way to profitability and slides back toward insolvency and does everything in between, you’re going to make countless bad decisions. Most of your decisions, in fact, involve two, maybe more, shitty choices. You’re going to make one shitty choice after another. Do you lay off amazing people or go bankrupt? Do you ship a product you know isn’t fully tested or go bankrupt? Do you make 1000 cold calls by Friday or go bankrupt? Do you give away half your company to investors or go bankrupt? All you can do is show up and make your crappy choice and move on. Hopefully at some point your decisions get less and less painful as you get comfortable making decisions between two horrible options. If you survive this process, your options eventually improve.
One of my favorite bits of hard-won wisdom concerns the question, “What is the point of your company?” It’s a question every CEO must learn to answer and it’s one of the hardest questions I’ve ever answered. Even if you start the company with a Utopian goal like “Make the Universe Searchable” or “Make the World a More Open Place,” sooner or later you’ll find that the real priority is “Make Money So Your Employees Don’t Leave and Your Shareholders Don’t Ask For Your Head.” Call me squishy, but Horowitz deals with these competing pressures to define his company in a way I find inspiring. He declares, “Being a Good Company is an End in Itself.” Excuse me while I dab a tear from my eye. But seriously, make your company an engaging thoughtful place to be every day, and you and your employees might end up with a decent life in the bargain. Awesome.
The last chapter is a thinly-veiled and unnecessary sales pitch for the VC firm that he and Andreessen launched in 2009, Andreessen-Horowitz. There’s no need to read it. Google them. They are better than most. The principals are founders themselves who have built a VC firm that aims to be supportive of geeks who suddenly find themselves as CEO. If they offer you money, take it. In the meantime you could do worse than to console yourself while your company flails by reading The Hard Thing About The Hard Things.