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

by Ben Horowitz

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.

You won’t be able to share every burden, but share every burden that you can. Get the maximum number of brains on the problems even if the problems represent existential threats.

There is always a move.

If you survive long enough to see tomorrow, it may bring you the answer that seems so impossible today.

Every CEO makes thousands of mistakes. Evaluating yourself and giving yourself an F doesn’t help.

give the problem to the people who could not only fix it, but who would also be personally excited and motivated to do so. Another example: If we lost a big prospect, the whole organization needed to understand why, so that we could together fix the things that were broken in our products, marketing, and sales process. If I insisted on keeping the setbacks to myself, there was no way to jump-start that process.

In any human interaction, the required amount of communication is inversely proportional to the level of trust.

A CEO’s ability to build this trust over time is often the difference between companies that execute well and companies that are chaotic.

Too often the answer is that the company culture discouraged the spread of bad news, so the knowledge lay dormant until it was too late to act.

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

The resulting action item for CEOs: Build a culture that rewards—not punishes—people for getting problems into th...

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.

This distinction is critical, because the message to the company and the laid-off individuals should not be “This is great, we are cleaning up performance.” The message must be “The company failed and in order to move forward, we will have to lose some excellent people.” Admitting to the failure may not seem like a big deal, but trust me, it is. “Trust me.”

You did a poor job defining the position in the first place.

You hired for lack of weakness rather than for strengths.

You hired for scale too soon.

You hired for the generic position.

There is only a great head of sales for your company for the next twelve to twenty-four months.

The executive had the wrong kind of ambition.

If an executive has the wrong kind of ambition, then despite her skills, the company may reject her. You failed to integrate the executive. Bringing a new person into your company in an important role is difficult. Other employees will be quick to judge, her expectations may be different from yours, and the job may be largely undefined.

executive is that when the company quadruples in size, the executive no longer does the job effectively at the new size. The reason is that when a company multiplies in size, the management jobs become brand-new jobs.

Nothing will ensure your success like hiring the right executive who has grown an organization like yours very quickly and successfully before.

Make sure you hire the right kind of fast-growth executive. Also, do not hire this person if you are not ready to give them lots of budget to grow their organization; expect them to do what they do.

Realize that in any of these cases the board will be at least somewhat alarmed and there is nothing that you can do about that. But keep in mind that your choices are: (a) alarm the board or (b) enable an ineffective executive to remain in her position. While choice (a) is not great, it’s a heck of a lot better than choice (b). Leaving a failing leader in place will cause an entire department in your company to slowly rot. Let that happen and the board will be more than alarmed.

Get their support and understanding for the difficult task that you will execute.

Get their input and approval for the separation package.

Preserve the reputation of the fired executive.

A mature approach to this issue will help keep the board confident in your ability to be CEO. It’s also the fair and decent thing to do.

Be clear on the reasons. You have thought about this long and hard; don’t equivocate or sugarcoat it. You owe it to them to be clear about what you think happened. 2. Use decisive language. 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.” 3. Have the severance package approved and ready. Once the executive hears the news, she will stop caring about the company and its issues; she will be highly focused on herself and her family. Be ready to provide specific details of the severance package.

“Ben, you cannot let him keep his job, but you absolutely can let him keep his respect.”

The correct order for informing the company is (1) the executive’s direct reports—because they will be most impacted; (2) the other members of your staff—because they will need to answer questions about it; and (3) the rest of the company. All of these communications should happen on the same day and preferably within a couple of hours.

Generally, it’s smart for the CEO to act in the executive role in the meanwhile. If you do act in the role, you must really act—staff meetings, one-on-ones, objective setting, etc. Doing so will provide excellent continuity for the team and greatly inform your thinking on whom to hire next.

The good of the individual must be sacrificed for the good of the whole.

If you are a founder-CEO like I was, it probably won’t be lost on the employee that you are just as underskilled for your job as he is for his. Don’t dodge this fact. In fact, admit that if you were a more experienced CEO, you might be able to develop him into the role, but two people who don’t know what they are doing is a recipe for failure.

The CEO, not wanting to believe that she’s losing product competitiveness, believes the rep. If you hear this lie, try to validate the claim with the actual customer. I’ll bet you can’t.

Do not only rely on the positive indicators of success. If things are slowing down your product is bad not the environment.

There may be nothing scarier in business than facing an existential threat. So scary that many in the organization will do anything to avoid facing it. They will look for any alternative, any way out, any excuse not to live or die in a single battle. I see this often in startup pitches. The conversations go something like this:

There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself, “If our company isn’t good enough to win, then do we need to exist at all?”

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.

All the mental energy you use to elaborate your misery would be far better used trying to find the one seemingly impossible way out of your current mess. Spend zero time on what you could have done, and devote all of your time on what you might do. Because in the end, nobody cares; just run your company.

agree with every single one of those issues. However, Mark Cranney is a sales savant. He has mastered sales to a level that far exceeds anybody that I have ever known. 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.” Marc’s reply came quickly: “Got it. Let’s hire him!”

Andy Grove’s management classic, High Output Management, titled “Why Training Is the Boss’s Job,” and it changed my career.

“Most managers seem to feel that training employees is a job that should be left to others. I, on the other hand, strongly believe that the manager should do it himself.”

Next year they will work a total of about twenty thousand hours for your organization. If your training efforts result in a 1 percent improvement in your subordinates’ performance, your company will gain the equivalent of two hundred hours of work as the result of the expenditure of your twelve hours.

These are all fine questions, but often the right question is the one that isn’t asked: When you fired the person, how did you know with certainty that the employee both understood the expectations of the job and was still missing them?

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.

As success drives the need to hire new engineers at a rapid rate, companies neglect to train the new engineers properly. As the engineers are assigned tasks, they figure out how to complete them as best they can. Often this means replicating existing facilities in the architecture, which leads to inconsistencies in the user experience, performance problems, and a general mess. And you thought training was expensive.

The best place to start is with the topic that is most relevant to your employees: the knowledge and skill that they need to do their job. I call this functional training. Functional training can be as simple as training a new employee on your expectations for them

The other essential component of a company’s training program is management training. Management training is the best place to start setting expectations for your management team.

Once you’ve set expectations, the next set of management courses has already been defined; they are the courses that teach your managers how to do the things you expect

The first thing to recognize is that no startup has time to do optional things. Therefore, training must be mandatory.