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

by Ben Horowitz

That’s the hard thing about hard things—there is no formula for dealing with them.

Because hip-hop artists aspire to be both great and successful and see themselves as entrepreneurs, many of the themes—competing, making money, being misunderstood—provide insight into the hard things.

The block was a collection of hippies, crazy people, lower-class people working hard to move up, and upper-class people taking enough drugs to move down.

Until you make the effort to get to know someone or something, you don’t know anything. 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.

Former secretary of state Colin Powell says that leadership is the ability to get someone to follow you even if only out of curiosity. I was certainly curious to see what Coach Mendoza would say next.

“Gentlemen, I’ve done many deals in my lifetime and through that process, I’ve developed a methodology, a way of doing things, a philosophy if you will. Within that philosophy, I have certain beliefs. I believe in artificial deadlines. I believe in playing one against the other. I believe in doing everything and anything short of illegal or immoral to get the damned deal done.”

However, if I’d learned anything it was that conventional wisdom had nothing to do with the truth and the efficient market hypothesis was deceptive.

No, markets weren’t “efficient” at finding the truth; they were just very efficient at converging on a conclusion—often the wrong conclusion.

“There are several different frameworks one could use to get a handle on the indeterminate vs. determinate question. The math version is calculus vs. statistics. In a determinate world, calculus dominates. You can calculate specific things precisely and deterministically. When you send a rocket to the moon, you have to calculate precisely where it is at all times. It’s not like some iterative startup where you launch the rocket and figure things out step by step. Do you make it to the moon? To Jupiter? Do you just get lost in space? There were lots of companies in the ’90s that had launch parties but no landing parties. “But the indeterminate future is somehow one in which probability and statistics are the dominant modality for making sense of the world. Bell curves and random walks define what the future is going to look like. The standard pedagogical argument is that high schools should get rid of calculus and replace it with statistics, which is really important and actually useful. There has been a powerful shift toward the idea that statistical ways of thinking are going to drive the future.”

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.

The Struggle is where greatness comes from.

A healthy company culture encourages people to share bad news. A company that discusses its problems freely and openly can quickly solve them.

“Don’t bring me a problem without bringing me a solution.” What if the employee cannot solve an important problem?

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.

When the facts don’t align with the good news, a clever manager will find the narrative to make everybody feel better—until the next meeting.

People at McDonald’s get trained for their positions, but people with far more complicated jobs don’t. It makes no sense.

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.

Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible.

The key to a good one-on-one meeting is the understanding that it is the employee’s meeting rather than the manager’s meeting.

Very few products are ten times better than the competition’s, so unseating the new incumbent is much more difficult than unseating the old one.

The only thing that prepares you to run a company is running a company.

“I tell my kids, what is the difference between a hero and a coward? What is the difference between being yellow and being brave? No difference. Only what you do. They both feel the same. They both fear dying and getting hurt. The man who is yellow refuses to face up to what he’s got to face. The hero is more disciplined and he fights those feelings off and he does what he has to do. But they both feel the same, the hero and the coward. People who watch you judge you on what you do, not how you feel.” —CUS D’AMATO, LEGENDARY BOXING TRAINER

The right decision is often obvious, but the pressure to make the wrong decision can be overwhelming.

Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.

Peacetime CEO spends time defining the culture. Wartime CEO lets the war define the culture.

A company without a story is usually a company without a strategy.

Some employees make products, some make sales; the CEO makes decisions.

Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic. They are hard because you don’t know the answer and you cannot ask for help without showing weakness.