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. The problem with these books is that they attempt to provide a recipe for challenges that have no recipes. There’s no recipe for really complicated, dynamic situations.

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.

Joining NetLabs turned out to be a horrible decision for me. The company was run by Andre Schwager, a former Hewlett-Packard executive, and more important, Roselie’s husband. Andre and Roselie had been brought in by the venture capitalists as the “professional management team.” Unfortunately, they understood very little about the products or the technology, and they sent the company off in one crazy direction after the next. This was the first time that I started to understand the importance of founders running their companies.

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.” Something about that joke, which was not really a joke, made me realize that I had run out of time. Up until that point, I had not really made any serious choices. I felt like I had unlimited bandwidth and could do everything in life that I wanted to do simultaneously. But his joke made it suddenly clear that by continuing on the course I was on, I might lose my family. By doing everything, I would fail at the most important thing. It was the first time that I forced myself to look at the world through priorities that were not purely my own. I thought that I could pursue my career, all my interests, and build my family. More important, I always thought about myself first. When you are part of a family or part of a group, that kind of thinking can get you into trouble, and I was in deep trouble. In my mind, I was confident that I was a good person and not selfish, but my actions said otherwise. I had to stop being a boy and become a man.

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.

By virtue of my position and the fact that we were a public company, nobody besides me had the complete picture. I knew we were in deep, deep trouble. Nobody besides me could get us out of the trouble, and I was through listening to advice about what we should do from people who did not understand all the pieces. I wanted all the data and information I could get, but I didn’t need any recommendations about the future direction of the company. This was wartime. The company would live or die by the quality of my decisions, and there was no way to hedge or soften the responsibility.

That small piece of advice from Bill proved to be the foundation we needed to rebuild the company. If we hadn’t treated the people who were leaving fairly, the people who stayed would never have trusted me again. Only a CEO who had been through some awful, horrible, devastating circumstances would know to give that advice at that time.

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

As painful as it might be, I knew that we had to get into the broader market in order to understand it well enough to build the right product. Paradoxically, the only way to do that was to ship and try to sell the wrong product. We would fall on our faces, but we would learn fast and do what was needed to survive.

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

“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.” —PETER THIEL

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.

People always ask me, “What’s the secret to being a successful CEO?” Sadly, there is no secret, but if there is one skill that stands out, it’s the ability to focus and make the best move when there are no good moves. It’s the moments where you feel most like hiding or dying that you can make the biggest difference as a CEO. In the rest of this chapter, I offer some lessons on how to make it through the struggle without quitting or throwing up too much.

I follow the first principle of the 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. Similarly, if a CEO keeps the following lessons in mind, she will maintain the proper focus when hiring, training, and building her culture.

Every entrepreneur starts her company with a clear vision for success. You will create an amazing environment and hire the smartest people to join you. Together you will build a beautiful product that delights customers and makes the world just a little bit better. It’s going to be absolutely awesome. Then, after working night and day to make your vision a reality, you wake up to find that things did not go as planned. Your company did not unfold like the Jack Dorsey keynote that you listened to when you started. Your product has issues that will be very hard to fix. The market isn’t quite where it was supposed to be. Your employees are losing confidence and some of them have quit. Some of the ones who quit were quite smart and have the remaining ones wondering if staying makes sense. You are running low on cash and your venture capitalist tells you that it will be difficult to raise money given the impending European economic catastrophe. You lose a competitive battle. You lose a loyal customer. You lose a great employee. The walls start closing in. Where did you go wrong? Why didn’t your company perform as envisioned? Are you good enough to do this? As your dreams turn into

muito bom esse trecho

When you are in the Struggle, nothing is easy and nothing feels right.

Telling things as they are is a critical part of building this 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.

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 a company starts to lose its major battles, the truth often becomes the first casualty. CEOs and employees work tirelessly to develop creative narratives that help them avoid dealing with the obvious facts. Despite their intense creativity, many companies often end up with the same false explanations.

Check out this quote.

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: Entrepreneur: “We have the best product in the market by far. All the customers love it and prefer it to competitor X.” Me: “Why does competitor X have five times your revenue?” Entrepreneur: “We are using partners and OEMs, because we can’t build a direct channel like competitor X.” Me: “Why not? If you have the better product, why not knuckle up and go to war?” Entrepreneur: “Ummm.” Me: “Stop looking for the silver bullet.” 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?”

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.

melanie carreira

—THE GAME, “SCREAM ON ’EM”

old boss Jim Barksdale was fond of saying, “We take care of the people, the products, and the profits—in that order.” It’s a simple saying, but it’s deep. “Taking care of the people” is the most difficult of the three by far and if you don’t do it, the other two won’t matter. Taking

Andy Grove’s management classic, High Output Management,

Good Product Manager/Bad Product Manager,” which I used to train the team on my basic expectations. I was shocked by what happened next. The performance of my team instantly improved. Product managers whom I had almost written off as hopeless became effective. Pretty soon I was managing the highest-performing team in the company.

Almost everyone who builds a technology company knows that people are the most important asset.

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.

Andy Grove writes, there are only two ways for a manager to improve the output of an employee: motivation and training.

there are only two ways for a manager to improve the output of an employee: motivation and training.

atenção a isso daniel

Good product managers focus the team on revenue and customers. Bad product managers focus the team on how many features competitors are building.

Bad product managers get very confused about the differences among delivering value, matching competitive features, pricing, and ubiquity. Good product managers decompose problems. Bad product managers combine all problems into one.

Good product managers err on the side of clarity. Bad product managers never even explain the obvious. Good product managers define their job and their success. Bad product managers constantly want to be told what to do.

The Good, the Bad and the Ugly, Clint Eastwood “The Good” and Eli Wallach “The Ugly” are partners in crime.

For a complete explanation of the dangers of managers with the wrong kind of ambition, I strongly recommend Dr. Seuss’s management masterpiece Yertle the Turtle.

read

the other hand, people who view the world purely through the team prism will very seldom use the words I or me even when answering questions about their accomplishments. Even in an interview, they will deflect credit to others on

linkedin

get extremely specific and even name names: “should be a superstar recruiter—as good as Jenny Rogers.” Next, define a formal process for all promotions. One key requirement of the process should be that promotions will be leveled across groups. If

But if you want to make something from nothing, you have to take risks and you have to win your race against time. This means acquiring the very best talent, knowledge, and experience even if it requires dealing with some serious age diversity.

recruiting

The primary thing that any technology startup must do is build a product that’s at least ten times better at doing something than the current prevailing way of doing that thing. Two

one. If you fail to do both of those things, your culture won’t matter one bit. The world is full of bankrupt companies with world-class cultures. Culture does not make a company.

“We look for every opportunity to save money so that we can deliver the best products for the lowest cost.” If

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

good to anticipate growth, but it’s bad to overanticipate growth.

What I saw was two guys come visit me when every other public company CEO and chairman was hiding under their desk. Not only did you come see me, but you were more determined and convinced you would succeed than guys running giant businesses. Investing in courage and determination was an easy decision for me.”

ver sempre

By far the most difficult skill I learned as CEO was the ability to manage my own psychology. Organizational design, process design, metrics, hiring, and firing were all relatively straightforward skills to master compared with keeping my mind in check. I thought I was tough going into it, but I wasn’t tough. I was soft.

CEO unless she has a high sense of purpose and cares deeply about the work she does. In