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

by Ben Horowitz

The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.

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.

Looking at the world through such different prisms helped me separate facts from perception. This ability would serve me incredibly well later when I became an entrepreneur and CEO. In particularly dire circumstances when the “facts” seemed to dictate a certain outcome, I learned to look for alternative narratives and explanations coming from radically different perspectives to inform my outlook. The simple existence of an alternate, plausible scenario is often all that’s needed to keep hope alive among a worried workforce.

My father turned to me and said, “Son, do you know what’s cheap?” Since I had absolutely no idea what he was talking about, I replied, “No, what?” “Flowers. Flowers are really cheap. But do you know what’s expensive?” he asked. Again, I replied, “No, what?” He said, “Divorce.”

Media companies focused on things like creating great stories whereas technology companies focused on creating a better way of doing things.

The valuation and the size of the funding were signs of the times and created an imperative to get big and capture the market before similarly well-funded competitors could. Andy said to me, “Ben, think about how you might run the business if capital were free.”

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.”

Marc: “Do you know the best thing about startups?” Ben: “What?” Marc: “You only ever experience two emotions: euphoria and terror. And I find that lack of sleep enhances them both.”

No matter who you are, you need two kinds of friends in your life. The first kind is one you can call when something good happens, and you need someone who will be excited for you. Not a fake excitement veiling envy, but a real excitement. You need someone who will actually be more excited for you than he would be if it had happened to him. The second kind of friend is somebody you can call when things go horribly wrong—when your life is on the line and you only have one phone call. Who is it going to be? Bill Campbell is both of those friends.

IF YOU ARE GOING TO EAT SHIT, DON’T NIBBLE

I let them present all forty-five slides without my asking them a single question. When they finished I said, “Did I ask for this presentation?” Those were the first words I spoke as I made the transition from a peacetime CEO to a wartime CEO.

“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.”

“I move onward, the only direction Can’t be scared to fail in search of perfection.” —JAY Z, “ON TO THE NEXT ONE”

An early lesson I learned in my career was that whenever a large organization attempts to do anything, it always comes down to a single person who can delay the entire project.

It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job.

I’d learned that all decisions were objective until the first line of code was written. After that, all decisions were emotional.

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

Note to self: It’s a good idea to ask, “What am I not doing?”

“Well, boys, if you are going to have a dog race, then you are going to need a rabbit. And Oracle will be one hell of a rabbit.”

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. You just have to find it. It matters not whether your chances are nine in ten or one in a thousand; your task is the same.

Bushido—the way of the warrior: keep death in mind at all times. If a warrior keeps death in mind at all times and lives as though each day might be his last, he will conduct himself properly in all his actions.

You won’t be able to share every burden, but share every burden that you can.

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.

Managers must lay off their own people.

Because people won’t remember every day they worked for your company, but they will surely remember the day you laid them off.

If you get lucky, the person you hired to run the twenty-five-person team will have learned how to run the two-hundred-person team. If not, you need to hire the right person for the new job. This is neither an executive failure nor a system failure; it is life in the big city.

Do not leave the discussion open-ended. This is not a performance review; it’s a firing. Use words and phrases like “I have decided” rather than “I think.”

Every CEO likes to say she runs a great company. It’s hard to tell whether the claim is true until the company or the CEO has to do something really difficult.

CEOs and employees work tirelessly to develop creative narratives that help them avoid dealing with the obvious facts.

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.”

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.

If he didn’t have the things wrong with him that you enumerated, he wouldn’t be willing to join a company that just traded at thirty-five cents per share; he’d be CEO of IBM.”

In fact, 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.

People at McDonald’s get trained for their positions, but people with far more complicated jobs don’t.

A lot of companies think their employees are so smart that they require no training. That’s silly.

What will you do in your first month on the job? Beware of answers that overemphasize learning. This may indicate that the candidate thinks there is more to learn about your organization than there actually is.

“If you don’t know what you want, the chances that you’ll get it are extremely low.”

The difference between managing executives and managing more junior employees can be thought of as the difference between being in a fight with someone with no training and being in a ring with a professional boxer.

Generally, it’s best to say nothing at all. At most, you might ask “why?” but if you do so be sure not to react to the reasons. If you indicate what you are thinking, that information will leak, rumors will spread, and you plant the seeds for all kinds of unproductive discussions.

It is particularly important that managers have the right kind of ambition, because anything else will be exceptionally demotivating for their employees.

Nothing motivates a great employee more than a mission that’s so important that it supersedes everyone’s personal ambition.

While it may work to have individual employees who optimize for their own careers, counting on senior managers to do all the right things for all the wrong reasons is a dangerous idea.

During the meeting, since it’s the employee’s meeting, the manager should do 10 percent of the talking and 90 percent of the listening. Note that this is the opposite of most one-on-ones.

As a result, as soon as you roll out the new organization, people will find fault with it and they will be right.

If you want people to communicate, the best way to accomplish that is to make them report to the same manager.

Perhaps the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong.

Focus on the road, not the wall.

Your employee should know more about her function than you. She should have more data than you. You may be wrong. As a result, your goal should be for your feedback to open up rather than close down discussion.

The CEO doesn’t have to be the creator of the vision. Nor does she have to be the creator of the story. But she must be the keeper of the vision and the story.