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

by Ben Horowitz

you should strive to hire people with the right kind of ambition.

At a macro level, a company will be most successful if the senior managers optimize for the company’s success (think of this as a global optimization) as opposed to their own personal success (local optimization).

You may find yourself with an employee who fits one of the above descriptions but nonetheless makes a massive positive contribution to the company. You may decide that you will personally mitigate the employee’s negative attributes and keep her from polluting the overall company culture. That’s fine, but remember: You can only hold the bus for her.

The proper reason to hire a senior person is to acquire knowledge and experience in a specific area

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.

If you like structured agendas, then the employee should set the agenda. A good practice is to have the employee send you the agenda in advance. This will give her a chance to cancel the meeting if nothing is pressing. It also makes clear that it is her meeting and will take as much or as little time as she needs.

If we could improve in any way, how would we do it?

What’s the number-one problem with our organization? Why?

Who is really kicking ass in the company? Whom do you admire?

What’s the biggest opportunity that we’re missing out on?

What are we not doing that we should be doing?

Distinguish you from competitors Ensure that critical operating values persist such as delighting customers or making beautiful products Help you identify employees who fit with your mission

Shock is a great mechanism for behavioral change.

Nonetheless, it’s not culture. It will not establish a core value that drives the business and helps promote it in perpetuity. It is not specific with respect to what your business aims to achieve. Yoga is a perk.

Perks are good, but they are not culture.

Designing a proper company culture will help you get your company to do what you want in certain important areas for a very long time.

There is a great analogue to this concept in American football. An offensive lineman’s job is to protect the quarterback from onrushing defensive linemen. If the offensive lineman attempts to do this by holding his ground, the defensive lineman will easily run around him and crush the quarterback. As a result, offensive linemen are taught to lose the battle slowly or to give ground grudgingly. They are taught to back up and allow the defensive lineman to advance, but just a little at a time.

You will lose ground, but

you will prevent your company from descending into chaos.

The first rule of organizational design is that all organizational designs are bad. With any design, you will optimize communication among some parts of the organization at the expense of other parts. For example, if you put product management in the engineering organization, you will optimize communication between product management and engineering at the expense of communication between product management and marketing. As a result, as soon as you roll out the new organization, people will find fault with it and they will be right.

When you get really big, you’ll need to decide whether to organize the entire company around functions (for example, sales, marketing,

product management, engineering) or around missions—self-contained business units that contain multiple functions.

Think of the organizational design as the communications architecture for your company.

the further away people are in the organizational chart, the less they will communicate.

The organizational design is also the architecture for how the company communicates with the outside world.

Figure out what needs to be communicated.

Figure out what needs to be decided.

Prioritize the most important communication and decision paths.

Decide who’s going to run each group.

Identify the paths that you did not optimize.

Build a plan for mitigating the issues identified in step five.

If you are looking for the first process to implement in your

company, consider the interview process.

Who should design a process? The people who are already doing the work in an ad hoc manner.

have found the “The Basics of Production,” the first chapter of Andy Grove’s High Output Management, to be particularly helpful.

Focus on the output first.

Figure out how you’ll know if you are getting what you want at each step.

Engineer accountability into the system.

Make some friends.

Get it out of your head and onto paper.

Focus on the road, not the wall.

Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers. They all say, “I didn’t quit.”

Every time you make the hard, correct decision you become a bit more courageous and every time you make the easy, wrong decision you become a bit more cowardly.

While people tend to be Ones or Twos, with discipline and hard work natural Twos can be competent at One tasks and Ones can be competent at Two tasks. If a CEO ignores the dimension of management she doesn’t like, she generally fails. Ones end up in chaos and Twos fail to pivot when necessary.

Truly great leaders create an environment where the employees feel that the CEO cares more about the employees than she cares about herself. In this kind of environment, an amazing thing happens: A huge number of employees believe it’s their company and behave accordingly. As the company grows large, these employees become quality control for the entire organization. They set the work standard that all future employees must live up to. As in, “Hey, you need to do a better job on that data sheet—you are screwing up my company.”

completely authentic.

When you talk to Bill, you get the feeling that he cares deeply about you and what you have to say, because he does. And all of that shows up in his actions and follow-through.

Articulating the vision

Alignment of interests

Ability to achieve the vision