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

by Ben Horowitz

Furthermore, each attribute enhances all three. If people trust you, they will listen to your vision even if it is less articulate. If you are super-competent, they will trust you and listen to you. If you can paint a brilliant vision, people will be patient with you as you learn the

CEO skills and give you more leeway with respect to their interests.

Peacetime in business means those times when a company has a large advantage over the competition in its core market, and its market is growing. In times of peace, the company can focus on expanding the market and reinforcing the company’s strengths.

In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources, including competition, dramatic macroeconomic change, market change, supply chain change, and so forth.

when done properly, feedback is a dialogue, not a monologue.

Strategy In good companies, the story and the strategy are the same thing. As a result, the proper output of all the strategic work is the story. Decision making At the detailed level, the output of knowing what to do is the speed and quality of the CEO’s decisions

The story is not the mission statement; the story does not have to be succinct. It is the story. Companies can take as long as they need to tell it, but they must tell it and it must be compelling. A company without a story is usually a company without a strategy.

Some employees make products, some make sales; the CEO makes decisions. Therefore, a CEO can most accurately be measured by the speed and quality of those decisions. Great decisions come from CEOs who display an elite mixture of intelligence, logic, and

The most difficult decisions (and often the most important) are difficult precisely because they will be deeply unpopular with the

CEO’s most important constituencies (employees, investors, and customers).

Netflix’s CEO, Reed Hastings, put great effort into designing a system that enables employees to be maximally effective. His presentation of this design is called Reference Guide on Our Freedom and Responsibility Culture.

As CEO, you can do very little employee development.

it’s neither necessary nor a good idea to evaluate an executive based on what her job will be two years from now.

Evaluate her on how she performs right here and right now.

For the purpose of this discussion, it is useful to think about technology acquisitions in three categories: 1. Talent and/or technology, when a company is acquired purely for its technology and/or its people. These kinds of deals typically range between $5 million and $50 million.

2. Product, when a company is acquired for its product, but not its business. The acquirer plans to sell the product roughly as it is, but will do so primarily with its own sales and marketing capability. These kinds of deals typically range between $25 million and $250 million. 3. Business, when a company is acquired for its actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing), not just the people, technology, or products. These deals are typically valued (at least in part) by their financial metrics and can be extremely large (such as Microsoft’s $30 billion–plus offer for Yahoo).

One way to avoid these traps is to describe the analysis in the prior section: If the company achieves product-market fit in a very large market and has an excellent chance to be number one, then the company will likely remain independent. If not, it will likely be sold.