The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers

by Ben Horowitz

There are no shortcuts to knowledge, especially knowledge gained from personal experience. Following conventional wisdom and relying on shortcuts can be worse than knowing nothing at all.

During this time I learned the most important rule of 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 thirty who say “no.”

“Remember, Ben, things are always darkest before they go completely black.”

Needs always trump wants in mergers and acquisitions.

If we hadn’t treated the people who were leaving fairly, the people who stayed would never have trusted me again.

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.

As a result of Bill’s advice, we focused our engineering team on fixing the performance issues while working on the other things in the background. We eventually beat Microsoft’s performance and grew the server line to become a $400 million business, and we would never have done it without those lead bullets.

All these approaches reinforced to me was that we weren’t facing a market problem. The customers were buying; they just weren’t buying our product. This was not a time to pivot. So I said the same thing to every one of them: “There are no silver bullets for this, only lead bullets.” They did not want to hear that, but it made things clear: We had to build a better product. There was no other way out. No window, no hole, no escape hatch, no back door. We had to go through the front door and deal with the big, ugly guy blocking it. Lead bullets.

Parcells: “Al, I am just not sure how we can win without so many of our best players. What should I do?” Davis: “Bill, nobody cares, just coach your team.” That might be the best CEO advice ever. Because, you see, nobody cares. When things go wrong in your company, nobody cares. The media don’t care, your investors don’t care, your board doesn’t care, your employees don’t care, and even your mama doesn’t care. Nobody cares. And they are right not to care.

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.

In good organizations, people can focus on their work and have confidence that if they get their work done, good things will happen for both the company and them personally.

“In a poor organization, on the other hand, people spend much of their time fighting organizational boundaries, infighting, and broken processes. They are not even clear on what their jobs are, so there is no way to know if they are getting the job done or not.

Training is, quite simply, one of the highest-leverage activities a manager can perform.

If you don’t train your people, you establish no basis for performance management. As a result, performance management in your company will be sloppy and inconsistent.

Good product managers know the market, the product, the product line, and the competition extremely well and operate from a strong basis of knowledge and confidence. A good product manager is the CEO of the product. Good product managers take full responsibility and measure themselves in terms of the success of the product. They are responsible for right product/right time and all that entails.

many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product.

Some things that you want to encourage will be quantifiable, and some will not. If you report on the quantitative goals and ignore the qualitative ones, you won’t get the qualitative goals, which may be the most important ones. Management purely by numbers is sort of like painting by numbers—it’s strictly for amateurs.

Another challenge is a phenomenon that I call the Law of Crappy People. The Law of Crappy 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.

But if you want to make something from nothing, you have to take risks and you have to win your race against time. This means acquiring the very best talent, knowledge, and experience even if it requires dealing with some serious age diversity.

In the end, the most important thing is that the best ideas, the biggest problems, and the most intense employee life issues make their way to the people who can deal with them. One-on-ones are a time-tested way to do that, but if you have a better one, go ahead with your bad self.

You want to optimize the organization for the people—for the people doing the work—not for the managers. Most large mistakes in organizational design come from putting the individual ambitions of the people at the top of the organization ahead of the communication paths for the people at the bottom of the organization.

Not only did you come see me, but you were more determined and convinced you would succeed than guys running giant businesses. Investing in courage and determination was an easy decision for me.”

On the other hand, if you don’t hold her accountable for her commitment, then the people who actually do the work to meet their commitments might feel like idiots.

The answer is that your loyalty must go to your employees—the people who report to your executives. Your engineers, marketing people, salespeople, and finance and HR people who are doing the work. You owe them a world-class management team. That’s the priority.